<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended June 30, 1997
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission file numbers 340-28130
SUIZA FOODS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-2559681
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
3811 Turtle Creek Boulevard, Suite 1300
Dallas, Texas 75219
(214) 528-0939
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
---------- ------------
As of August 8, 1997 the number of shares outstanding of each class of
common stock was:
Common Stock, $.01 par value: 15,952,005
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
1996 1997
----------- ------------
(unaudited)
(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,951 $ 7,130
Accounts receivable 50,608 50,784
Inventories 19,228 21,536
Prepaid expenses and other current assets 2,754 3,369
Refundable income taxes 2,312 ---
Deferred income taxes 3,672 3,796
----------- ----------
Total current assets 87,525 86,615
PROPERTY, PLANT AND EQUIPMENT 123,260 136,281
DEFERRED INCOME TAXES 8,524 8,319
INTANGIBLE AND OTHER ASSETS 164,839 171,091
----------- ----------
TOTAL $ 384,148 $ 402,306
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 46,664 $ 42,118
Income taxes payable 1,105 1,154
Current portion of long-term debt 12,876 17,323
----------- ----------
Total current liabilities 60,645 60,595
LONG-TERM DEBT 226,693 128,150
DEFERRED INCOME TAXES 3,278 4,928
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share;
100,000,000 shares authorized, 10,741,729 and
15,286,968 shares issued and outstanding 107 153
Additional paid-in capital 89,337 183,263
Retained earnings 4,088 25,217
----------- ----------
Total stockholders' equity 93,532 208,633
----------- ----------
TOTAL $ 384,148 $ 402,306
----------- ----------
----------- ----------
See notes to condensed consolidated financial statements.
<PAGE>
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
1996 1997 1996 1997
---- ---- ---- ----
(Dollars in thousands, except share data)
<S> <C> <C> <C> <C>
NET SALES $ 116,272 $ 171,694 $ 225,307 $ 336,819
COST OF SALES 83,302 125,478 165,917 252,047
----------- ----------- --------- ----------
GROSS PROFIT 32,970 46,216 59,390 84,772
OPERATING COSTS AND EXPENSES:
Selling and distribution 17,180 22,102 32,682 42,244
General and administrative 4,884 7,583 9,805 16,397
Amortization of intangibles 1,023 1,510 1,960 2,982
----------- ----------- --------- ----------
Total operating costs and expenses 23,087 31,195 44,447 61,623
----------- ----------- --------- ----------
INCOME FROM OPERATIONS 9,883 15,021 14,943 23,149
OTHER (INCOME) EXPENSE:
Interest expense, net 3,872 2,910 8,488 6,580
Other income, net (172) (222) (252) (18,575)
----------- ----------- --------- ----------
Total other (income) expense 3,700 2,688 8,236 (11,995)
----------- ----------- --------- ----------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY LOSS 6,183 12,333 6,707 35,144
INCOME TAXES 1,630 3,376 1,771 10,745
----------- ----------- --------- ----------
INCOME BEFORE EXTRAORDINARY LOSS 4,553 8,957 4,936 24,399
EXTRAORDINARY LOSS FROM EARLY
EXTINGUISHMENT OF DEBT (2,215) --- (2,215) (3,270)
----------- ----------- --------- ----------
NET INCOME $ 2,338 $ 8,957 $ 2,721 $ 21,129
----------- ----------- --------- ----------
----------- ----------- --------- ----------
NET EARNINGS (LOSS) PER SHARE:
Income before extraordinary loss $ 0.46 $ 0.55 $ 0.58 $ 1.57
Extraordinary loss (0.22) --- (0.26) (0.21)
----------- ----------- --------- ----------
Net income $ 0.24 $ 0.55 $ 0.32 $ 1.36
----------- ----------- --------- ----------
----------- ----------- --------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING 9,921,715 16,342,250 8,455,332 15,509,388
----------- ----------- --------- ----------
----------- ----------- --------- ----------
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
(Dollars in thousands)
1996 1997
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,721 $ 21,129
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 4,479 6,512
Amortization of intangible assets, including deferred
financing costs 2,297 3,401
Loss on the sales of assets 20 38
Extraordinary loss from early extinguishment of debt 2,215 3,270
Noncash and imputed interest 236 ---
Deferred income taxes 767 1,731
Changes in operating assets and liabilities:
Accounts and notes receivable (2,625) 104
Inventories (899) (2,082)
Prepaid expenses and other assets 37 (1,676)
Accounts payable and other accrued expenses (1,959) (4,465)
Income taxes payable (511) 5,535
--------- ----------
Net cash provided by operating activities 6,778 33,497
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (7,984) (9,067)
Proceeds from the sale of property, plant and equipment 245 67
Cash outflows for acquisitions (4,176) (16,278)
--------- ----------
Net cash used in investing activities (11,915) (25,278)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt 8,653 28,000
Repayment of debt (52,322) (122,096)
Payment of deferred financing costs and debt prepayment penalties (1,800) (4,970)
Issuance of common stock, net of expenses 48,608 89,026
--------- ----------
Net cash provided by (used in) financing activities 3,139 (10,040)
--------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS (1,998) (1,821)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,177 8,951
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,179 $ 7,130
--------- ----------
--------- ----------
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements as of June 30, 1997 and for
the three month and six month periods ended June 30, 1997 and 1996 have
been prepared by Suiza Foods Corporation (the "Company" or "Suiza Foods")
without audit. In the opinion of management, all necessary adjustments
(which include only normal recurring adjustments) to present fairly, in all
material respects, the consolidated financial position, results of
operations and cash flows of the Company as of June 30, 1997 and for the
three month and six month periods ended June 30, 1997 and 1996 have been
made. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements should
be read in conjunction with the Company's 1996 financial statements
contained in its Annual Report on Form 10-K as filed with the Securities
and Exchange Commission on March 29, 1997.
2. INVENTORIES
At December 31, At June 30,
1996 1997
----------- -----------
Pasteurized and raw milk and raw materials $ 7,693 $ 9,795
Parts and supplies 5,584 6,067
Finished goods 5,951 5,674
----------- -----------
$ 19,228 $ 21,536
----------- -----------
----------- -----------
3. LONG-TERM DEBT
At December 31, At June 30,
1996 1997
----------- -----------
Senior credit facility:
Revolving loan facility $ 8,600 $ 2,800
Acquisition loan facility 69,100 ---
Term loan facility 125,000 142,000
Subordinated notes 36,000 ---
Capital lease obligations and other debt 869 673
----------- -----------
239,569 145,473
Less: current portion (12,876) (17,323)
----------- -----------
$ 226,693 $ 128,150
----------- -----------
----------- -----------
5
<PAGE>
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
JUNE 30, 1997
3. LONG-TERM DEBT (Continued)
On January 28, 1997, the Company sold 4,270,000 shares of common
stock, $.01 par value per share, in a public offering (the "Offering")
at a price to the public of $22.00 per share. The Offering provided
net cash proceeds to the Company of approximately $89.0 million. Of
this amount, $36.0 million was used to repay subordinated notes and
$4.3 million was used to pay prepayment penalties related to the early
extinguishment of the subordinated notes, which, along with the related
balance of unamortized deferred loan costs and net of related income
tax benefits, was reported as an extraordinary loss from the early
extinguishment of debt. The remainder of the net proceeds were used to
repay a portion of the outstanding balance of the acquisition loan
facility of the Company's Senior Credit Facility.
On March 5, 1997, the Company amended its Senior Credit Facility.
Pursuant to this amendment, the Company's term loans were expanded from
a $130.0 million facility into a $150.0 million facility. Quarterly
amortization payments beginning March 31, 1997 on this facility are
$4.0 million, increasing to: 1) $4.5 million on March 31, 1998; 2)
$5.0 million on March 31, 1999; 3) $5.5 million on March 31, 2000; 4)
$6.0 million on March 31, 2001; 5) $6.5 million on March 31, 2002, with
a final installment of $24.0 million due on March 31, 2003. The
Company further amended its Senior Credit Facility to increase the
acquisition loan facility from $90.0 million to $100.0 million. The
Company is required to pay interest only on amounts drawn under the
acquisition loan facility until June 30, 1999, at which time any
outstanding balance will convert into a term loan facility with
scheduled amortization.
On July 31, 1997, the Company amended its Senior Credit Facility to
provide for an aggregate of $700.0 million comprised of: (i) a $150.0
million term loan; (ii) a $50.0 million revolving credit facility;
(iii) a $325.0 million revolving acquisition facility, and (iv) a
$175.0 million acquisition term loan. Under the terms of the Senior
Credit Facility, the $150.0 million term loan will be amortized over
six years beginning September 30, 1997 and the revolving credit
facility expires on September 30, 2003. The availability under the
revolving acquisition facility will decrease at the end of each
calendar quarter beginning December 31, 2000 by $20.3 million until
December 31, 2002, when it begins reducing by $40.6 million each
quarter until maturity on September 30, 2003. The $175.0 million
acquisition term loan will be amortized over five years beginning
December 31, 1999. Amounts outstanding under the Senior Credit Facility
will bear interest at a rate per annum equal to one of the following
rates, at the Company's option: (i) the sum of a base rate equal to the
higher of the Federal Funds rates plus 50 basis points or First Union
National Bank's prime commercial lending rate, plus a margin that
varies from 0 to 50 basis points depending on the Company's ratio of
defined indebtedness to EBITDA (as defined in the Senior Credit
Facility); or (ii) The London Interbank Offered Rate ("LIBOR") plus a
margin that varies from 75 to 150 basis points depending on the
Company's ratio of defined indebtedness to EBITDA. The Company will pay
a commitment fee on unused amounts of the revolving facility and the
revolving acquisition facility that ranges from 20 to 37.5 basis
points, based on the Company's ratio of defined indebtedness to EBITDA.
6
<PAGE>
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
JUNE 30, 1997
4. TAXES
In December 1995, the Commonwealth of Puerto Rico adopted the Puerto
Rico Agricultural Tax Incentives Act of 1995, which reduced the
effective income tax rate for qualified agricultural businesses from
39% to 3.9% and provided for a 50% tax credit for certain "eligible
investments" in qualified agricultural businesses in Puerto Rico.
During 1996, the Company made investments in its Suiza-Puerto Rico
dairy, fruit, plastics and coffee operations, all of which were
certified as qualified agricultural businesses in Puerto Rico during
1996.
During 1996, the Company recognized $15.75 million in tax credits
related to qualifying investment made in its Puerto Rico dairy
subsidiary which met the eligible investment criteria of this act.
However, in 1996 the Company did not recognize any of the potential tax
credits related to its investments in its Puerto Rico fruit, plastics
and coffee operations since certain rulings in 1996 by Puerto Rico tax
authorities created uncertainty as to whether these investments met the
eligible investment criteria of the act and whether these additional
tax credits had been earned.
During the first quarter of 1997, the Company obtained a ruling from
the Commonwealth of Puerto Rico confirming that its investments in its
Suiza-Puerto Rico fruit and plastics subsidiaries qualified for the 50%
tax credit. Accordingly, in March 1997, the Company recognized a
nonrecurring gain of $18.1 million, net of discounts and related
expenses ($11.5 million after income taxes) for earned tax credits
which at March 31, 1997, it had agreed to sell to third parties.
During the second quarter of 1997, the Company completed the sale of
substantially all of these tax credits to the third parties.
The Company is currently investigating whether its investment in its
coffee business will qualify for additional tax credits based on recent
rulings by Puerto Rico tax authorities and is awaiting a ruling from
the Treasury Department in Puerto Rico on the availability of such tax
credits. If the Company ultimately qualifies for such credits, the
Company will account for these tax benefits as an adjustment of the
purchase price of the coffee business, which would result in a
reduction of goodwill.
5. ACQUISITIONS
During the quarter, the Company acquired four small ice businesses for
total consideration of approximately $10.7 million. Estimated annual sales
of these ice companies are $8.3 million. Since June 30, 1997, the Company
has acquired three ice companies for approximately $5.9 million, bringing
the total number of acquired ice companies in 1997 to ten, with estimated
aggregate annual sales of $15.8 million.
On July 1, 1997, the Company completed the acquisition of substantially all
the assets of Dairy Fresh L.P., a Delaware limited partnership ("Dairy
Fresh"), for approximately $104.5 million in cash (subject to adjustment
and excluding transaction costs), plus the assumption of certain current
liabilities. Dairy Fresh is a manufacturer of fresh milk and ice cream
products based in Winston-Salem, North Carolina. During its fiscal year
ended December 31, 1996,
7
<PAGE>
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
JUNE 30, 1997
5. ACQUISITIONS (continued)
Dairy Fresh reported net sales of approximately $117.0 million throughout
the southeastern United States. The Company will use the acquired assets to
continue operating the business previously operated by Dairy Fresh. The
Company financed the acquisition with borrowings under its Senior Credit
Facility.
On July 31, 1997 the Company completed the purchase of all the outstanding
stock of three affiliated dairy manufacturing and distribution companies,
as well as an affiliated water bottling and distribution company, and 16
affiliated plastic manufacturing companies headquartered in Franklin,
Massachusetts (collectively, the "Garelick Companies"). In connection with
this acquisition the Company paid aggregate cash consideration of
approximately $293.7 million (subject to adjustment and excluding
transaction costs) and issued 446,100 shares of common stock to acquire the
outstanding stock and repay existing indebtedness of the Garelick
Companies. The combined businesses operated by the Garelick Companies
reported net sales of approximately $363 million during the fiscal year
ended September 30, 1996. The dairy operations of the Garelick Companies
are operated through Garelick Farms in Franklin, Massachusetts, Fairdale
Farms in Bennington, Vermont, and Grant's Dairy in Bangor, Maine. The
Garelick Companies also operate the Miscoe Springs water bottling company
in Mendon, Massachusetts and 16 plastic bottle manufacturing operations
located in Connecticut, Florida, Georgia, Illinois, Louisiana, Maine,
Massachusetts, New Jersey, North Carolina, Ohio, Pennsylvania, Texas and
Virginia. The acquisition of the Garelick Companies expands the geographic
presence of the Company's dairy operations into the northeastern United
States and expands the Company's operations into the related business of
plastic container manufacturing.
In connection with the acquisition of the Garelick Companies, the Company
increased the size of its Senior Credit Facility from $300.0 million to
$700.0 million in the aggregate (see footnote 3 - Long-Term Debt).
6. STOCKHOLDERS' EQUITY
On January 28, 1997, the Company sold 4,270,000 shares of common stock,
$.01 par value per share, in a public offering at a price to the public of
$22.00 per share. On March 12, 1997, the Company issued 133,000 shares of
its common stock in partial consideration of the purchase of an ice
company. As of June 30, 1997 the Company had 15,286,968 shares of common
stock issued and outstanding.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
Suiza Foods is a leading manufacturer and distributor of fresh milk and related
dairy products, plastic containers and packaged ice in the United States. The
Company has grown primarily through strategic and consolidating acquisitions.
Through these acquisitions, the Company has realized regional economies of scale
and operating efficiencies by consolidating manufacturing and distribution
operations in each of its core businesses. The Company conducts its dairy
operations through several Puerto Rico subsidiaries ("Suiza-Puerto Rico"), Velda
Farms Inc. ("Velda Farms"), Swiss Dairy Corporation ("Swiss Dairy"), Model
Dairy, Inc. ("Model Dairy"), Dairy Fresh, Inc. ("Dairy Fresh"), Garelick Farms,
Inc. and certain related dairy subsidiaries ("Garelick Farms"), its plastics
operations through Franklin Plastics, Inc. and its subsidiaries ("Franklin
Plastics" or "Plastics") and its ice operations through Reddy Ice Corporation
("Reddy Ice"). Each of these subsidiaries is a strong regional competitor with
an established reputation for customer service and product quality. The
Company's dairy and ice subsidiaries market their products through extensive
distribution networks to a diverse group of customers, including convenience
stores, grocery stores, other retail outlets, schools and institutional food
service customers.
On April 22, 1996, the Company sold 3,795,000 shares of common stock, $.01 par
value per share, in a public offering (the "IPO") at a price to the public of
$14.00 per share. Prior to the IPO, there was no public market for the
Company's stock. The IPO provided net cash proceeds to the Company of
approximately $48.6 million. On August 7, 1996, the Company sold 625,000 shares
of its common stock in a private placement to a single investor, which provided
net cash proceeds to the Company of approximately $9.7 million. On January 28,
1997 the Company sold 4,270,000 shares of its common stock in a public offering
at a price to the public of $22.00 per share, providing net cash proceeds to the
Company of approximately $89.0 million. On March 12, 1997 the Company issued
133,000 of its common stock in partial consideration for the purchase of an ice
company. As of June 30, 1997 the Company had 15,286,968 shares of common stock
issued and outstanding. In addition, in connection with the acquisition of the
Garelick Companies, the Company issued 446,100 shares of common stock.
Outlook and Uncertainties
Certain information in this Quarterly Report on Form 10-Q may contain
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact are "forward-looking statements" for purposes
of these provisions, including any projections of earnings, revenues or other
financial items, any statements of the plans and objectives of management for
future operations, any statements concerning proposed new products or
services, any statements regarding future economic conditions or performance,
and any statement of assumptions underlying any of the foregoing. Although
the Company believes that the expectations reflected in its forward-looking
statements are reasonable, it can give no assurance that such expectations or
any of its forward-looking statements will prove to be correct, and actual
results could differ materially from those projected or assumed in the
Company's forward-looking statements. The Company's future financial
condition and results, as well as any forward-looking statements, are subject
to inherent risks and uncertainties, including, without limitation, potential
limitations on the Company's ability to pursue its acquisition strategy,
significant competition, limitations arising from the Company's substantial
indebtedness, government regulation, seasonality and dependence on key
management. Additional information concerning these and other risk factors is
contained in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, a copy of which may be obtained from the Company
upon request.
9
<PAGE>
Results of Operations
The Company currently operates in two distinct businesses: Dairy, which
includes the operations of Suiza - Puerto Rico, Velda Farms, Swiss Dairy and
Model Dairy; and Ice, which includes Reddy Ice. Beginning in the Company's
third fiscal quarter, Dairy operations will include Dairy Fresh and Garelick
Farms and the Company will begin operating in the plastics business under its
Franklin Plastics subsidiaries.
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
Percent to Percent to Percent to Percent to
1996 Net Sales 1997 Net Sales 1996 Net Sales 1997 Net Sales
----- ---------- ---- ---------- ---- ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales:
Dairy $ 99,876 $ 153,417 $ 202,090 $ 310,293
Ice 16,396 18,277 23,217 26,526
---------- --------- ---------- ----------
Net sales 116,272 100.0% 171,694 100.0% 225,307 100.0% 336,819 100.0%
Cost of sales 83,302 71.6 125,478 73.1 165,917 73.6 252,047 74.8
---------- ----- --------- ----- ---------- ----- ---------- ------
Gross profit 32,970 28.4 46,216 26.9 59,390 26.4 84,772 25.2
Operating expenses:
Selling and distribution 17,180 14.8 22,102 12.9 32,682 14.5 42,244 12.5
General and administrative 4,884 4.2 7,583 4.4 9,805 4.4 16,397 4.9
Amortization of intangibles 1,023 0.9 1,510 0.9 1,960 0.9 2,982 0.9
---------- ----- --------- ----- ---------- ----- ---------- ------
Total operating expenses 23,087 19.9 31,195 18.2 44,447 19.8 61,623 18.3
Operating income (loss):
Dairy 5,660 4.9 12,438 7.2 12,120 5.3 23,492 7.0
Ice 4,901 4.2 3,989 2.3 4,428 2.0 3,151 0.9
Corporate office (678) (0.6) ( 1,406) (0.8) (1,605) (0.7) (3,494) (1.0)
---------- ----- --------- ----- ---------- ----- ---------- ------
Total operating income $ 9,883 8.5% $ 15,021 8.7% $ 14,943 6.6% $ 23,149 6.9%
---------- ----- --------- ----- ---------- ----- ---------- ------
---------- ----- --------- ----- ---------- ----- ---------- ------
</TABLE>
SECOND QUARTER AND YEAR-TO-DATE 1997 COMPARED TO SECOND QUARTER AND YEAR-TO-DATE
1996
NET SALES. The Company's net sales increased by 47.7% and 49.5% for the
second quarter and first six months of 1997 when compared to like periods of
1996. Dairy net sales increased by 53.6% and 53.5% for the second quarter and
first six months of 1997 when compared to like periods of 1996, primarily due to
(i) the acquisitions of Garrido y Compania into Suiza-Puerto Rico, Swiss Dairy
and Model Dairy in the last half of 1996, (ii) an increase in prices charged for
milk resulting from increased raw milk costs compared to the second quarter and
first six months of last year and (iii) increased unit volumes in Suiza - Puerto
Rico and Velda Farms. Ice net sales increased by 11.5% and 14.3% for the second
quarter and first six months of 1997 when compared to like periods of 1996 due
to the acquisition of eleven ice businesses during 1996 and seven in the first
six months of 1997.
COST OF SALES. The Company's cost of sales margins were 73.1% and 74.8% for
the second quarter and first six months of 1997 compared to 71.6 % and 73.6%
for the same periods in 1996. Dairy cost of sales margins were essentially
unchanged from the prior year, as higher inherent cost of sales margins at
Swiss Dairy and Model Dairy were offset by increased volumes at the other
dairy operations. Ice cost of sales margins increased reflecting lower unit
volumes due to unseasonably cool weather during the second quarter of 1997
when compared to the second quarter of 1996.
10
<PAGE>
OPERATING EXPENSES. The Company's operating expense ratios were 18.2% and
18.3% for the second quarter and first six months of 1997 compared to 19.9%
and 19.8% for the same periods in 1996. Dairy operating expense margins
decreased in the quarter and six month comparisons because of (i) the
addition of Swiss Dairy during the last half of 1996, which had lower
operating expense margins than the other operations and (ii) more efficient
operations at dairies owned for more than one year. Ice operating expense
margins increased due to the increased level of operating expense related to
acquired businesses and due to reduced volumes related to unseasonably cool
weather during the second quarter of 1997.
OPERATING INCOME. The Company's operating income increased 52.0% to $15.0
million in the second quarter of 1997 from $9.9 million in the second quarter of
1996 primarily as a result of the aforementioned acquisitions during the last
half of 1996. For the first six months of 1997, operating income was $23.1
million, an increase of 54.9% from 1996 operating income of $14.9 million. The
Company's operating income margin increased to 8.7% in the second quarter of
1997 from 8.5% in the second quarter of 1996 and increased to 6.9% in the first
six months of 1997 from 6.6% in the first six months of 1996 primarily due to
the acquisitions and to operating expense efficiencies at the Company's Dairy
operations.
OTHER (INCOME) EXPENSE. Interest expense declined to $2.9 million in the second
quarter of 1997 from $3.9 million in the second quarter of 1996 primarily due to
a decrease in interest rates from the repayment of certain subordinated notes in
1996 and 1997 and lower average debt levels during the 1997 period. For the
same reasons, interest expense declined to $6.6 million during the first six
months of 1997 from $8.5 million in the first six months of 1996. Other income
rose to $18.6 million in the first six months of 1997 primarily as a result of
the nonrecurring gain of $18.1 million from the recognition of tax credits as
discussed below and in footnote 4 to the condensed consolidated financial
statements.
EXTRAORDINARY ITEMS. The Company incurred a $3.3 million extraordinary loss
(net of a $2.0 million tax benefit) on January 28, 1997 related to the losses on
the early extinguishment of subordinated debt, which included the write-off of
deferred financing costs and certain prepayment penalties. During the second
quarter of 1996, the Company incurred $2.2 million in extraordinary costs (net
of a $0.9 million tax benefit) as a result of the early extinguishment of debt
from the net cash proceeds of the Company's initial public offering.
NET INCOME. The Company reported net income of $9.0 million in the second
quarter of 1997 compared to net income of $2.3 in the second quarter of 1996
($4.6 million excluding the extraordinary loss). The Company reported net
income of $21.1 million in the first six months of 1997 ($12.9 million excluding
the nonrecurring after-tax gain from the recognition of tax credits and the
extraordinary loss) compared to $2.7 million in the first six months of 1996
($4.9 million excluding the extraordinary loss).
Seasonality
The Company's Ice business is seasonal with peak demand for its products
occurring during the second and third calendar quarters. Over the past two
fiscal years, the Company's Ice business has recorded an average of
approximately 69% of it annual net sales during these two quarters. While this
percentage for the second and third quarters has remained relatively constant
over recent years, the timing of the hottest summer weather can impact the
distribution of sales between these two quarters.
11
<PAGE>
Liquidity and Capital Resources
As of June 30, 1997, the Company had total stockholders' equity of $208.6
million and total indebtedness of $145.5 million (including long-term debt and
the current portion of long-term debt). The Company is currently in compliance
with all covenants and financial ratios contained in its debt agreements.
CASH FLOW. Historically, the working capital needs of the Company have been
met with cash flow from operations along with borrowings under revolving credit
facilities. Net cash provided by operating activities was $33.5 million for the
first six months of 1997 as contrasted with net cash provided by operations of
$6.8 million for the first six months of 1996. This increase is partially the
result of the sale of certain tax credits earned pursuant to provisions of the
Puerto Rico Agriculture Tax Incentives Act of 1995, which generated net proceeds
of approximately $11.5 million after taxes. Investing activities in the first
six months of 1997 included approximately $9.1 million in capital expenditures
of which $5.6 million was spent at Dairy and $3.5 million was spent at Ice.
Investing activities also included $16.3 million for acquisitions.
On January 28, 1997, the Company sold 4,270,000 shares of newly issued common
stock, $.01 par value per share, in a public offering (the "Offering") at a
price to the public of $22.00 per share. The Offering provided net cash
proceeds to the Company of approximately $89.0 million. Of this amount, $36.0
million was used to repay subordinated notes and $4.3 million was used to pay
prepayment penalties related to the early extinguishment of the subordinated
notes, which, along with the remaining balance of unamortized deferred loan
costs, was reported as an extraordinary loss from the early extinguishment of
debt. The remainder of the net proceeds were used to repay a portion of the
outstanding balance of the acquisition loan facility of the Company's Senior
Credit Facility.
In July 1997, the Company acquired substantially all the assets of Dairy Fresh,
a regional dairy based in North Carolina, for cash consideration of
approximately $104.5 million (subject to adjustment and excluding transaction
costs), plus the assumption of certain indebtedness. The purchase price for
this acquisition was funded through additional borrowing under the acquisition
facility of the Senior Credit Facility.
In July 1997, the Company also acquired the outstanding equity interests of the
Garelick Companies. At the closing of this acquisition, the Company paid $293.7
million in cash and issued 446,100 shares of common stock having a value of
$15.0 million as of the day prior to the date of execution of the acquisition
agreement. Of the 446,100 shares of common stock issued as part of the purchase
price, 148,700 shares were issued into escrow, subject to the satisfaction of an
earnout provision related to the Garelick Companies' fluids business. The cash
portion of the purchase price was funded through additional borrowing under the
acquisition facility of the Senior Credit Facility.
FUTURE CAPITAL REQUIREMENTS. During 1997, the Company intends to invest a total
of approximately $33.0 million in its manufacturing facilities and distribution
capabilities, including planned post-acquisition expenditures for Dairy Fresh
and the Garelick Companies. Of this amount, Dairy intends to spend
approximately $21.0 million for the year to expand and maintain its
manufacturing facilities and for fleet replacement; Ice intends to spend a total
of approximately $8.0 million in 1997, including $4.8 million for maintenance of
existing facilities and $3.2 million to increase production capacity; and
Plastics intends to spend approximately $4.0 million. The Company also plans to
substantially expand its Plastics operations, including spending approximately
$17.0 million in addition to the amounts noted above during the remainder of
1997 and 1998.
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CURRENT DEBT OBLIGATIONS. On March 5, 1997 the Company amended its Senior Credit
Facility. Pursuant to this amendment the Company's term loans were expanded from
a $130.0 million facility into a $150.0 million facility, and the acquisition
loan facility was increased from a $90.0 million facility to a $100.0 million
facility. At June 30, 1997, $47.2 million was available under the revolving
loan facility.
The Company expects that cash flow from operations will be sufficient to meet
the Company's requirements for the remainder of 1997 and for the foreseeable
future. During the remainder of 1997 and in the future, the Company intends
to pursue additional acquisitions in its existing regional markets and to
seek strategic acquisition opportunities that are compatible with it core
businesses. Management believes that the Company has the ability to secure
additional financing to pursue its acquisition and consolidation strategy.
There can be no assurance, however, that the Company will have sufficient
available capital resources to realize its acquisition and consolidation
strategy.
On July 31, 1997, in connection with the acquisition of the Garelick Companies,
the Company amended its Senior Credit Facility to provide for an aggregate of
$700.0 million comprised of: (i) a $150.0 million term loan; (ii) a $50.0
million revolving credit facility; (iii) a $325.0 million revolving acquisition
facility, and (iv) a $175.0 million acquisition term loan. Under the terms of
the Senior Credit Facility, the $150.0 million term loan will be amortized over
six years beginning September 30, 1997 and the revolving credit facility expires
on September 30, 2003. The availability under the revolving acquisition facility
will decrease at the end of each calendar quarter beginning December 31, 2000 by
$20.3 million until December 31, 2002, when it begins reducing by $40.6 million
each quarter until maturity on September 30, 2003. The $175.0 million
acquisition term loan will be amortized over five years beginning December 31,
1999. Amounts outstanding under the Senior Credit Facility will bear interest at
a rate per annum equal to one of the following rates, at the Company's option:
(i) the sum of a base rate equal to the higher of the Federal Funds rates plus
50 basis points or First Union National Bank's prime commercial lending rate,
plus a margin that varies from 0 to 50 basis points depending on the Company's
ratio of defined indebtedness to EBITDA (as defined in the Senior Credit
Facility); or (ii) The London Interbank Offered Rate ("LIBOR") plus a margin
that varies from 75 to 150 basis points depending on the Company's ratio of
defined indebtedness to EBITDA. The Company will pay a commitment fee on unused
amounts of the revolving facility and the revolving acquisition facility that
ranges from 20 to 37.5 basis points, based on the Company's ratio of defined
indebtedness to EBITDA. After the acquisition of the Garelick Companies on July
31, 1997 the Company had a total of $149.5 million available under the revolving
credit facility and the revolving acquisition facility.
Additional Factors That May Affect Future Results
The Company's quarterly operating results may fluctuate in the future as a
result of a variety of factors, many of which are outside the Company's
control. Factors that may adversely affect the Company's future operating
results attributable to its dairy operations include changes in the cost of
raw materials, federal, Puerto Rico and state government regulation of the
dairy industry and competition. Factors that may adversely affect the
Company's quarterly operating results attributable to its ice operations
include weather, seasonality and competition. The Company's operating
results in the future are also dependent on the ability of the Company to
identify suitable acquisition candidates and successfully integrate any
acquired businesses into the Company's existing business and retain key
customers of acquired businesses. There can be no assurance that the Company
will have sufficient available capital resources to realize its acquisition
strategy.
13
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is from time to time party to legal proceedings that arise in the
ordinary course of business. Management does not believe that the resolution of
any threatened or pending legal proceedings will have a material adverse affect
on the Company's financial position, results of operations or liquidity.
ITEM 2. CHANGES IN SECURITIES
On June 10, 1997, the Company issued an additional 15,182 shares of common stock
to a former stockholder of PureIce of the South, Inc. ("PureIce"), which was
acquired by the Company in March 1997. These additional shares constitute a
portion of the purchase price of PureIce. On July 1, 1997, the Company issued
an aggregate of 9,000 shares of common stock to the stockholders of Plainview
Ice and Cold Storage, Inc. ("Plainview Ice") as part of the purchase price for
the assets of Plainview Ice, which were acquired by the Company on June 30,
1997. The total purchase price for the assets of Plainview Ice was $375,000.
The issuance of common stock in connection with these acquisitions was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended. No underwriter participated in these transactions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 13, 1997, the Company held its annual meeting of stockholders (the
"Annual Meeting"). At the Annual Meeting, the Company submitted the following
matters to a vote of its stockholders: (i) the election of Messrs. Cletes O.
Beshears, David F. Miller, and Hector M. Nevares as Class II directors to serve
until the expiration of their terms and until their successors are elected and
qualified; (ii) the approval of an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock, $.01
par value per share, from 20,000,000 shares to 100,000,000 shares (the
"Amendment") ; (iii) the approval of the Suiza Foods Corporation 1997 Stock
Option and Restricted Stock Plan (the "1997 Stock Option Plan") ; (iv) the
approval of the 1997 Employee Stock Purchase Plan of Suiza Foods Corporation
(the "1997 Stock Purchase Plan"); (v) the ratification of the selection of
Deloitte & Touche LLP as the Company's independent auditors for fiscal year
1997. At the Annual Meeting, the stockholders elected the Class II directors
noted above, approved the Amendment, the 1997 Stock Option Plan and the 1997
Stock Purchase Plan, and ratified the selection of Deloitte & Touche as the
Company's independent auditors. The vote of the stockholders with respect to
each such matter was as follows:
(i) Election of Class II directors:
Cletes O. Beshears - 12,657,694 votes for; 1,500 votes withheld.
David F. Miller - 12,657,694 votes for; 1,500 votes withheld.
Hector M. Nevares - 12,657,694 votes for; 1,500 votes withheld.
(ii) Approval of the Amendment
9,588,604 votes for; 3,060,675 against; 9,915 abstentions.
14
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(continued)
(iii) Approval of the 1997 Stock Option Plan
9,441,644 votes for; 2,821,382 votes against; 396,168 abstentions.
(iv) Approval of the 1997 Stock Purchase Plan
12,174,689 votes for; 97,452 votes against; 387,053 abstentions.
(v) Ratification of selection of independent auditors
12,657,769 votes for; 1,225 votes against; 200 abstentions.
ITEM 5. OTHER INFORMATION
On July 31, 1997, the Company acquired the outstanding equity interests of
the privately owned Garelick Companies for aggregate consideration of
approximately $308.7 million (subject to adjustment and excluding transaction
costs). The Garelick Companies consist of three affiliated dairy
manufacturing and distribution companies and an affiliated water bottling and
distribution company (collectively, "Garelick Farms"), and 16 affiliated
plastic manufacturing companies (collectively, "Franklin Plastics"). The
acquisition of the Garelick Companies expands the geographic presence of the
Company's dairy operations into the northeastern United States and expands
the Company's operations into the related business of manufacturing plastic
containers. At the closing of this acquisition, the Company paid $293.7
million in cash and issued 446,100 shares of common stock having a value of
$15.0 million as of the day prior to the date of execution of the acquisition
agreement. Of the 446,100 shares of common stock issued as part of the
purchase price, 148,700 shares were issued into escrow, subject to the
satisfaction of an earnout provision related to the Garelick Companies'
fluids business. The cash portion of the purchase price was funded through
additional borrowing under the acquisition facility of the Senior Credit
Facility. The historical financial statements and the pro forma financial
information required in connection with the acquisition of the Garelick
Companies will be filed within 60 days after the date of this report.
As part of the acquisition of the Garelick Companies, the Company capitalized
Franklin Plastics with a leveraged acquisition structure. This capital
structure includes, in addition to common stock, preferred stock and senior
and subordinated indebtedness issued by Franklin Plastics to the Company and
ten-year warrants to acquire up to 17.5% of the outstanding common stock, on
a fully diluted basis, of Franklin Plastics sold to certain of the sellers of
the Garelick Companies. The Company and certain of the sellers entered into
a shareholders agreement containing certain registration, co-sale and
pre-emptive rights and certain put and call options with respect to common
stock of Franklin Plastics.
Alan J. Bernon, who, along with other members of his family, owned the
Garelick Companies, became a director of the Company following the
consummation of the acquisition.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Certificate of Incorporation of the Company
3.2 Certificate of Amendment of Certificate of Incorporation of the Company
3.3 Certificate of Correction of Certificate of Amendment of
Certificate of Incorporation
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (continued)
3.4 Certificate of Amendment of Certificate of Incorporation of the
Company
3.5 Certificate of Amendment of Certificate of Incorporation of the
Company
10.1 Suiza Foods Corporation 1997 Stock Option and Restricted Stock Plan
10.2 Form of Stock Option Agreement for Messrs. Gregg L. Engles, William P.
Brick, Hector M. Nevares, and Tracy L. Noll under the Suiza Foods
Corporation 1997 Stock Option Plan and Restricted Stock Plan
10.3 Form of Stock Option Agreement for P. Eugene Pender and Robert
Piccinini under the Suiza Foods Corporation 1997 Stock Option and
Restricted Stock Plan
10.4 1997 Employee Stock Purchase Plan of Suiza Foods Corporation
10.5 First Amendment to the 1997 Employee Stock Purchase Plan of Suiza
Foods Corporation
10.6 Second Amendment to the 1997 Employee Stock Purchase Plan of Suiza
Foods Corporation
10.7 Stock Purchase Agreement dated June 20, 1997 among Suiza Foods
Corporation, Peter M. Bernon, Alan J. Bernon and the other
stockholders named therein and the Garelick Companies
10.8 Amendment No. 1 to Stock Purchase Agreement dated July 30, 1997 among
Suiza Foods Corporation, Peter M. Bernon, Alan J. Bernon and the
other stockholders named therein and the Garelick Companies
10.9 Stockholders Agreement dated July 31, 1997 among Suiza Foods
Corporation, Franklin Plastics, Peter M. Bernon and Alan J.
Bernon
10.10 Third Amended and Restated Credit Agreement dated as of July 31,
1997 with First Union National Bank as administrative agent and
The First National Bank of Chicago as syndication agent for the
lenders named therein
10.11 Second Amended and Restated Supplemental Credit Agreement dated
as of July 31, 1997 with First Union National Bank as administrative
agent and The First National Bank of Chicago as syndication agent for
the lenders named therein
10.12 Consulting Agreement between Cletes O. Beshears and Suiza Foods
Corporation
11. Statement re computation of per share earnings
27. Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUIZA FOODS CORPORATION
/s/ Tracy L. Noll
--------------------------------------
Tracy L. Noll
Vice President, Chief Financial Officer
(Principal Accounting Officer)
Date: August 11, 1997
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CERTIFICATE OF INCORPORATION
OF
SUIZA FOODS CORPORATION
ARTICLE I
The name of the Corporation is Suiza Foods Corporation.
ARTICLE II
The name of the Corporation's registered agent and the address of its
registered office in the State of Delaware is The Prentice-Hall Corporation
System, Inc., 32 Loockerman Square, Suite L-100, Dover, County of Kent,
Delaware 19904.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
ARTICLE IV
A. The total number of shares of capital stock that the Corporation
shall have the authority to issue is thirty-one million (31,000,000) shares
consisting of (a) one million (1,000,000) shares of Preferred Stock, $.01 par
value per share, and (b) thirty million (30,000,000) shares of Common Stock,
$.01 par value per share.
B. DESIGNATIONS OF PREFERRED STOCK
1. Shares of Preferred Stock may be issued from time to time in one
or more series, each such series to have distinctive serial designations,
as shall hereafter be determined in the resolution or resolutions
providing for the issue of such series from time to time adopted by the
Board of Directors pursuant to the authority which is hereby vested in the
Board of Directors.
2. Each series of Preferred Stock
(i) may have such number of shares;
(ii) may have such voting power, full or limited, or may be
without voting power;
(iii) may be subject to redemption at such time or times and at
such prices;
(iv) may be entitled to receive dividends (which may be
cumulative or noncumulative), payable in cash, securities or property,
at such rate or rates, on such conditions, and at such times, and
payable in preference to, or in such relation to, the dividends payable
in any other class or classes or series of stock;
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(v) may be made convertible into, or exchangeable for, shares
of any other class or classes or of any other series of the same or
any other class or classes of stock of the Corporation at such price
or prices or at such rates of exchange, and with such adjustments;
(vi) may be entitled to the benefit of a sinking fund or purchase
fund to be applied to the purchase or redemption of shares of such
series in such amount or amounts;
(vii) may be entitled to the benefit of conditions and
restrictions upon the creation of indebtedness of the Corporation or
any subsidiary, upon the issue of any additional stock (including
additional shares of such series or of any other series) and upon
payment of dividends or the making of other distributions on, and the
purchase, redemption, or other acquisition by the Corporation or any
subsidiary, of any outstanding stock of the Corporation, or of other
affirmative or negative covenants;
(viii) may have certain rights in the event of voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation,
and relative rights of priority of payment of shares of that series;
and
(ix) may have such other relative, participating, optional or
other special rights and qualifications, limitations or restrictions
thereof;
all as shall be stated in a resolution or resolutions providing for the
issue of such Preferred Stock. Except where otherwise set forth in the
resolution or resolutions adopted by the Board of Directors providing for
the issue of any series of Preferred Stock, the number of shares comprising
such series may be increased or decreased (but not below the number of
shares then outstanding) from time to time by action of the Board of
Directors.
ARTICLE V
In furtherance and not limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors is expressly authorized to
alter, amend, or repeal the bylaws of the Corporation or to adopt new bylaws.
ARTICLE VI
The incorporator is Albert R. Fox, Jr., whose mailing address is 2800
Bank One Center, 1717 Main Street, Dallas, Texas 75201.
ARTICLE VII
Cumulative voting for the election of directors shall not be permitted.
ARTICLE VIII
No stockholder of the Corporation shall by reason of his holding shares
of any class of its capital stock have any preemptive or preferential right
to purchase or subscribe for any
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shares of any class of the Corporation, now or hereafter to be authorized, or
any notes, debentures, bonds or other securities convertible into or carrying
warrants, rights, or options to purchase shares of any class or any other
security, now or hereafter to be authorized, whether or not the issuance of
any such shares or such notes, debentures, bonds, or other securities would
adversely affect the dividend, voting, or any other rights of such
stockholder; and the Board of Directors may issue shares of any class of the
Corporation, or any notes, debentures, bonds, or other securities convertible
into or carrying warrants, rights, or options to purchase shares of any
class, without offering any such shares of any class, either in whole or in
part, to the existing holders of any class of stock of the Corporation.
ARTICLE IX
A. The number of directors constituting the initial Board of Directors
is three and thereafter the number of directors shall be as set forth in, or
pursuant to the Bylaws of, the Corporation. The Board of Directors shall be
divided into three classes, designated Classes I, II and III, which shall be
as nearly equal in number as possible. Initially, directors of Class I shall
be elected to hold office for a term expiring at the next succeeding annual
meeting of stockholders, directors of Class II shall be elected to hold
office for a term expiring at the second succeeding annual meeting of
stockholders and directors of Class III shall be elected to hold office for a
term expiring at the third succeeding annual meeting of stockholders. At each
annual meeting of stockholders following such initial classification and
election, the respective successors of each class shall be elected for three
year terms. The initial directors, each of whose mailing is 3811 Turtle Creek
Blvd., Suite 1950, Dallas, Texas 75219, shall be as follows:
Class I
Gayle O. Beshears
Class II
Cletes O. Beshears
Class III
Gregg L. Engles
B. Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding to elect or remove directors, any or all of the
directors of the Corporation may be removed at any time, but only for cause
and only by the affirmative vote of a majority of the stockholders then
entitled to vote in the election of directors. For this purpose, "cause"
means (i) the director's commission of an act of fraud or embezzlement
against the Corporation; (ii) conviction of the director of a felony or a
crime involving moral turpitude; (iii) the director's gross negligence or
wilful misconduct in performing the director's duties to the Corporation or
its stockholders; or (iv) a director's breach of fiduciary duty owed to the
Corporation.
ARTICLE X
Special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the chief executive officer of the
Corporation or by a majority of the members of the Board of Directors. Special
meetings of the stockholders of the Corporation may not be called by any
other person or persons.
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ARTICLE XI
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware Corporation Law is amended
after the filing of this Certificate of Incorporation to authorize corporate
action further eliminating or limiting the personal liability of directors,
then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
ARTICLE XII
A. RIGHT TO INDEMNIFICATION. Each person who was or is made a party
or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director or officer of another corporation or of a
partnership, joint venture, trust, or other enterprise, including service
with respect to an employee benefit plan (hereinafter an "indemnitee"),
whether the basis of such proceeding is alleged action in an official
capacity as a director or officer or in any other capacity while serving as a
director or officer shall be indemnified and held harmless by the corporation
to the fullest extent authorized by the Delaware General Corporation Law, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than permitted prior thereto), against
all expense, liability and loss (including, without limitation, attorneys'
fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith and such indemnification shall continue as to an
indemnitee who has ceased to be a director or officer and shall inure to the
benefit of the indemnitee's heirs, executors, and administrators; PROVIDED,
HOWEVER, that, except as provided in paragraph (b) hereof with respect to
proceedings to enforce rights to indemnification, the Corporation shall
indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the board of directors of the Corporation. The
right to indemnification conferred in this Article XII shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); PROVIDED, HOWEVER, that, if the
Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the Corporation of an undertaking
(hereinafter an "undertaking"), by or on behalf of such
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indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Article or otherwise.
B. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under paragraph A of
this Article is not paid in full by the Corporation within sixty days after a
written claim has been received by the Corporation (except in the case of a
claim for an advancement of expenses, in which case the applicable period
shall be twenty days), the indemnitee may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit.
In any suit brought by the indemnitee to enforce a right to indemnification
hereunder (but not in a suit brought by the indemnitee to enforce a right to
an advancement of expenses) it shall be a defense that the indemnitee has not
met the applicable standard of conduct set forth in the Delaware General
Corporation Law, and in any suit by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking, the Corporation shall be
entitled to recover such expenses upon a final adjudication that the
indemnitee has not met the applicable standard of conduct set forth in the
Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that the indemnitee has not met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual determination by
the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) that the indemnitee has not met such applicable standard
of conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right to indemnification or to an advancement of expenses
hereunder or by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified or to such advancement of
expenses under this Article or otherwise shall be on the Corporation.
C. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification and to the
advancement of expenses conferred in this Article XII shall not be exclusive
of any other right that any person may have or hereafter acquire under this
Certificate of Incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise.
D. INSURANCE. The Corporation may maintain insurance, at its expense,
to protect itself and any director or officer of the Corporation or another
corporation, partnership, joint venture, trust, or other enterprise against
any expense, liability, or loss, whether or not the Corporation would have
the power to indemnify such person against such expense, liability, or loss
under the Delaware General Corporation Law.
E. INDEMNITY OF EMPLOYEES AND AGENTS OF THE CORPORATION. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article XII with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
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IN WITNESS WHEREOF, the undersigned incorporator of the Corporation
hereby certifies that the facts herein stated are true, and accordingly has
signed this instrument this 19th day of September, 1994.
INCORPORATOR:
/s/ ALBERT R. FOX, JR.
---------------------------------
Albert R. Fox, Jr.
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SUIZA FOODS CORPORATION
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
Suiza Foods Corporation, a corporation organized and existing under the
Delaware General Corporation Law (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: that a meeting of the Board of Directors of Corporation,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendments
to be advisable, and directing that said amendments be submitted to the
stockholders of said corporation for their consideration. The resolutions
setting forth the proposed amendments are as follows:
RESOLVED, that the Board of Directors of the Company hereby adopts,
approves, and declares advisable a proposal to amend the Certificate of
Incorporation of the Company, which proposed amendment would strike in its
entirety Article IV of the Certificate of Incorporation of the Company and
insert in its place a new Article IV, which would be and read as follows:
"The total number of shares of capital stock that the Corporation
shall have the authority to issue is two hundred and ten thousand
shares consisting of (a) 10,000 shares of Preferred Stock, $.01 par
value per share, and (b) 200,000 shares of Common Stock, $.01 par
value per share."
SECOND: that thereafter, stockholders of said corporation holding the
necessary number of shares as required by statute duly adopted and approved
said amendment by written consent pursuant to Section 228 of the Delaware
General Corporation Law.
THIRD: that said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Board of Directors of the Corporation has caused
this Certificate of Amendment to be signed by Gregg L. Engles, its Chairman
of the Board and Chief Executive Officer, and Tracy Noll, its Secretary, this
27th day of March, 1995.
SUIZA FOODS CORPORATION
By: /s/ GREGG L. ENGLES
------------------------------
Gregg L. Engles
Chairman of the Board and
Chief Executive Officer
ATTEST:
By: /s/ TRACY NOLL
-------------------------------
Tracy Noll
Secretary
<PAGE>
SUIZA FOODS CORPORATION
CERTIFICATE OF CORRECTION OF
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
Suiza Foods Corporation, a corporation organized and existing under the
Delaware General Corporation Law (the "Corporation"),
DOES HEREBY CERTIFY THAT:
1. The Certificate of Amendment of Certificate of Incorporation (the
"Certificate of Amendment") of the Corporation, which was filed with the
Secretary of State of Delaware on March 28, 1995, is hereby corrected in
order to conform the resolution stated therein to that duly adopted by the
Corporation's Board of Director's.
2. The portion of the Certificate of Amendment to be corrected is as
follows:
"RESOLVED, that the Board of Directors of the Company
hereby adopts, approves, and declares advisable a proposal
to amend the Certificate of Incorporation of the Company,
which proposed amendment would strike in its entirety
Article IV of the Certificate of Incorporation of the
Company and insert in its place a new Article IV, which
would be and read as follows:"
4. The portion of the Certificate of Amendment instrument in corrected
form, which form accurately reflects the resolution duly adopted by the
Corporation's Board or Directors, is as follows:
"RESOLVED, that the Board of Directors of the Company
hereby adopts, approves, and declares advisable a proposal
to amend the Certificate of Incorporation of the Company,
which proposed amendment would strike in its entirety
Paragraph A of Article IV of the Certificate of
Incorporation of the Company and insert in its place a new
Paragraph A of Article IV, which would be and read as
follows:"
Signed on June 6, 1995.
SUIZA FOODS CORPORATION
By: /s/ Gregg L. Engles
-------------------------------
Gregg L. Engles
Chairman of the Board and
Chief Executive Officer
<PAGE>
SUIZA FOODS CORPORATION
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
Suiza Foods Corporation, a corporation organized and existing under the
Delaware General Corporation Law (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: that the Board of Directors of the Corporation at a special
meeting of the Board of Directors called for such purpose, duly adopted
resolutions by unanimous vote setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable, and directing that said amendment be submitted to the
stockholders of said corporation for their consideration. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that the Board of Directors of the Corporation hereby
adopts, approves, and declares advisable a proposal to amend the
Certificate of Incorporation of the Corporation, which proposed
amendment would strike in its entirety paragraph (A) of Article IV of
the Certificate of Incorporation of the Corporation and insert in its
place a new paragraph (A) of Article IV, as follows:
"The total number of shares of capital stock that the Corporation
shall have the authority to issue is 21,000,000, consisting of (a)
1,000,000 shares of Preferred Stock, $.01 par value per share, and (b)
20,000,000 shares of Common Stock, $.01 par value per share."
SECOND: that thereafter, stockholders of said corporation, which hold the
necessary number of shares as required by statute, duly adopted and approved
said amendment by written consent pursuant to Section 228 of the Delaware
General Corporation Law.
THIRD: that said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
FOURTH: that written notice of the adoption of said amendment by less
than unanimous consent of the stockholders has been given in accordance with
Section 228 of the Delaware General Corporation Law.
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of the Company has caused this
Certificate of Amendment to be signed by Gregg L. Engles, its Chairman and
Chief Executive Officer, as of February 29, 1996.
SUIZA FOODS CORPORATION
By: /s/ Gregg L. Engles
-----------------------------------------
Gregg L. Engles
Chairman and Chief Executive Officer
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
SUIZA FOODS CORPORATION
Suiza Foods Corporation, a corporation organized and existing under the
Delaware General Corporation Law (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: that the Board of Directors of the Corporation at a special
meeting of the Board of Directors called for such purpose, duly adopted
resolutions by unanimous vote setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable, and directing that said amendment be submitted to the
stockholders of said corporation for their consideration. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that the Board of Directors of the Corporation hereby
adopts, approves, and declares advisable a proposal to amend the
Certificate of Incorporation of the Corporation, which proposed
amendment would strike in its entirety paragraph (A) of Article IV of
the Certificate of Incorporation of the Corporation and insert in its
place a new paragraph (A) of Article IV, as follows:
"The total number of shares of capital stock that the Corporation
shall have the authority to issue is 101,000,000, consisting of (a)
1,000,000 shares of Preferred Stock, $.01 par value per share, and (b)
100,000,000 shares of Common Stock, $.01 par value per share."
SECOND: that thereafter, stockholders of said corporation, which hold
the necessary number of shares as required by statute, duly adopted and
approved said amendment at the annual meeting of the stockholders of the
Company pursuant to Section 222 of the Delaware General Corporation Law.
THIRD: that said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Board of Directors of the Company has caused
this Certificate of Amendment to be signed by Gregg L. Engles, its Chairman
and Chief Executive Officer, as of May 15, 1997.
SUIZA FOODS CORPORATION
By: /s/ Gregg L. Engles
----------------------
Gregg L. Engles
Chairman of the Board and
Chief Executive Officer
<PAGE>
SUIZA FOODS CORPORATION
1997 STOCK OPTION AND RESTRICTED STOCK PLAN
1. PURPOSE OF THE PLAN. This Plan shall be known as the
Suiza Foods Corporation 1997 Stock Option and Restricted Stock Plan. The
purpose of the Plan is to attract and retain the best available personnel for
positions of substantial responsibility and to provide incentives to such
personnel to promote the success of the business of Suiza Foods Corporation
and its subsidiaries.
Certain options granted under this Plan are intended to
qualify as "incentive stock options" pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended from time to time, while certain other
options granted under the Plan will constitute nonqualified options.
2. DEFINITIONS. As used herein, the following definitions
shall apply:
"Board" means the Board of Directors of the Corporation.
"Common Stock" means the Common Stock, $.01 par value per
share, of the Corporation. Except as otherwise provided herein, all Common
Stock issued pursuant to the Plan shall have the same rights as all other
issued and outstanding shares of Common Stock, including but not limited to
voting rights, the right to dividends, if declared and paid, and the right to
pro rata distributions of the Corporation's assets in the event of
liquidation.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Committee" means the committee described in Section 19
that administers the Plan or, if no such committee has been appointed, the
full Board.
"Consultant" means any consultant or advisor who renders
bona fide services to the Corporation or one of its Subsidiaries, which
services are not in connection with the offer or sale of securities in a
capital-raising transaction.
"Corporation" means Suiza Foods Corporation, a Delaware
corporation.
"Date of Grant" means the date on which an Option is
granted or Restricted Stock is awarded pursuant to this Plan or, if the Board
or the Committee so determines, the date specified by the Board or the
Committee as the date the award is to be effective.
"Employee" means any officer or other key employee of the
Corporation or one of its Subsidiaries (including any director who is also an
officer or key employee of the Corporation or one of its Subsidiaries).
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
1
<PAGE>
"Fair Market Value" means the closing sale price (or
average of the quoted closing bid and asked prices if there is no closing
sale price reported) of the Common Stock on the trading day immediately prior
to the date specified as reported by the principal national exchange or
trading system on which the Common Stock is then listed or traded. If there
is no reported price information for the Common Stock, the Fair Market Value
will be determined by the Board or the Committee, in its sole discretion. In
making such determination, the Board or the Committee may, but shall not be
obligated to, commission and rely upon an independent appraisal of the Common
Stock.
"Non-Employee Director" means an individual who is a
"non-employee director" as defined in Rule 16b-3 under the Exchange Act and
also an "outside director" within the meaning of Treasury Regulation Section
1.162-27(e)(3).
"Nonqualified Option" means any Option that is not a
Qualified Option.
"Option" means a stock option granted pursuant to Section
6 of this Plan.
"Optionee" means any Employee, Consultant or director who
receives an Option.
"Participant" means any Employee, Consultant or director
who receives an Option or Restricted Stock pursuant to this Plan.
"Plan" means this Suiza Foods Corporation 1997 Stock
Option and Restricted Stock Plan, as amended from time to time.
"Qualified Option" means any Option that is intended to
qualify as an "incentive stock option" within the meaning of Section 422 of
the Code.
"Restricted Stock" means Common Stock awarded to an
Employee, Consultant or director pursuant to Section 7 of this Plan.
"Rule 16b-3" means Rule 16b-3 of the rules and
regulations under the Exchange Act, as Rule 16b-3 may be amended from time to
time, and any successor provisions to Rule 16b-3 under the Exchange Act.
"Subsidiary" means any now existing or hereinafter
organized or acquired company of which more than fifty percent (50%) of the
issued and outstanding voting stock is owned or controlled directly or
indirectly by the Corporation or through one or more Subsidiaries of the
Corporation.
3. TERM OF PLAN. The Plan has been adopted by the Board
effective as of February 24, 1997. To permit the granting of Qualified
Options under the Code, and to qualify awards of Options or Restricted Stock
hereunder as "performance based" under Section 162(m) of the Code, the Plan
will be submitted for approval by the stockholders of the Corporation by the
affirmative votes of the holders of a majority of the shares of Common Stock
then issued and
2
<PAGE>
outstanding, for approval no later than the next annual meeting of
stockholders. If the Plan is not so approved by the stockholders of the
Corporation, then any Options previously granted under the Plan will be
Nonqualified Options, regardless of whether the option agreements relating
thereto purport to grant Qualified Options. The Plan shall continue in
effect until terminated pursuant to Section 19(a).
4. SHARES SUBJECT TO THE PLAN. Except as otherwise provided
in Section 18 hereof, the aggregate number of shares of Common Stock issuable
upon the exercise of Options or upon the grant of Restricted Stock pursuant
to this Plan shall be 1,150,000 shares. Such shares may either be authorized
but unissued shares or treasury shares. The Corporation shall, during the
term of this Plan, reserve and keep available a number of shares of Common
Stock sufficient to satisfy the requirements of the Plan. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, or Restricted Stock should fail to vest and be forfeited
in whole or in part for any reason, then the shares that were subject thereto
shall, unless the Plan has terminated, be available for the grant of
additional Options or Restricted Stock under this Plan, subject to the
limitations set forth above.
5. ELIGIBILITY. Qualified Options may be granted under
Section 6 of the Plan to such Employees of the Corporation or its
Subsidiaries as may be determined by the Board or the Committee.
Nonqualified Options may be granted under Section 6 of the Plan to such
Employees, Consultants and directors of the Corporation or its Subsidiaries
as may be determined by the Board or the Committee. Restricted Stock may be
granted under Section 7 of the Plan to such Employees, Consultants and
directors of the Corporation or its Subsidiaries as may be determined by the
Board or the Committee. Subject to the limitations and qualifications set
forth in this Plan, the Board or the Committee shall also determine the
number of Options or shares of Restricted Stock to be granted, the number of
shares subject to each Option or Restricted Stock grant, the exercise price
or prices of each Option, the vesting and exercise period of each Option and
the vesting and/or forfeiture provisions relating to Restricted Stock,
whether an Option may be exercised as to less than all of the Common Stock
subject thereto, and such other terms and conditions of each Option or grant
of Restricted Stock, if any, as are consistent with the provisions of this
Plan. In connection with the granting of Qualified Options, the aggregate
Fair Market Value (determined at the Date of Grant of a Qualified Option) of
the shares with respect to which Qualified Options are exercisable for the
first time by an Optionee during any calendar year (under all such plans of
the Optionee's employer corporation and its parent and subsidiary
corporations as defined in Section 424(e) and (f) of the Code, or a
corporation or a parent or subsidiary corporation of such corporation issuing
or assuming an Option in a transaction to which Section 424(a) of the Code
applies (collectively, such corporations described in this sentence are
hereinafter referred to as "Related Corporations")) shall not exceed $100,000
or such other amount as from time to time provided in Section 422(d) of the
Code or any successor provision.
6. GRANT OF OPTIONS. Except as provided in Section 19(b),
the Board or the Committee shall determine the number of shares of Common
Stock to be offered from time to time pursuant to Options granted hereunder
and shall grant Options under the Plan. The grant of Options shall be
evidenced by Option agreements containing such terms and provisions as are
3
<PAGE>
approved by the Board or the Committee and executed on behalf of the
Corporation by an appropriate officer. In connection with the granting of any
Options under the Plan, the aggregate number of shares of Common Stock
issuable to any single Participant shall not exceed the number of shares
subject to the Plan referred to in Section 4.
Unless the Board or the Committee determines otherwise
with respect to a particular year, each Non-Employee Director will
automatically be granted a Nonqualified Option to purchase 7,500 shares of
Common Stock (subject to adjustment pursuant to Section 18 hereof), at an
exercise price equal to the Fair Market Value of the Common Stock on the Date
of Grant, on June 30 of each year; provided that such number of shares will
be reduced to the extent (if any) that such director receives options on such
date under an automatic grant pursuant to the Corporation's 1995 Stock Option
and Restricted Stock Plan.
7. RESTRICTED STOCK. The Board or the Committee shall
determine the number of shares of Common Stock to be granted as Restricted
Stock from time to time under the Plan. The grant of Restricted Stock shall
be evidenced by Restricted Stock agreements containing such terms and
provisions as are approved by the Board or the Committee and executed on
behalf of the Corporation by an appropriate officer.
8. TIME OF GRANT OF OPTIONS. The date of grant of an Option
or Restricted Stock under the Plan shall be the date on which the Board or
the Committee awards the Option or Restricted Stock or, if the Board or the
Committee so determines, the date specified by the Board or the Committee as
the date the award is to be effective. Notice of the grant shall be given to
each Participant to whom an Option or Restricted Stock is granted promptly
after the date of such grant.
9. PRICE. The exercise price for each share of Common Stock
subject to an Option (the "Exercise Price") granted pursuant to Section 6 of
the Plan shall be determined by the Board or the Committee at the Date of
Grant; provided, however, that (a) the Exercise Price for any Option shall
not be less than 100% of the Fair Market Value of the Common Stock at the
Date of Grant, and (b) if the Optionee owns on the Date of Grant more than 10
percent of the total combined voting power of all classes of stock of the
Corporation or its parent or any of its subsidiaries, as more fully described
in Section 422(b)(6) of the Code or any successor provision (such stockholder
is referred to herein as a "10-Percent Stockholder"), the Exercise Price for
any Qualified Option granted to such Optionee shall not be less than 110% of
the Fair Market Value of the Common Stock at the Date of Grant. The Board or
the Committee in its discretion may award shares of Restricted Stock under
Section 7 of the Plan to Participants without requiring the payment of cash
consideration for such shares.
10. VESTING. Subject to Section 12 of this Plan, each Option
and Restricted Stock award under the Plan shall vest or be subject to
forfeiture in accordance with the provisions set forth in the applicable
Option agreement or Restricted Stock agreement. The Board or the Committee
may, but shall not be required to, permit acceleration of vesting or
termination of forfeiture provisions upon any sale of the Corporation or
similar transaction. A Participant's
4
<PAGE>
Option or Restricted Stock agreement may contain such additional provisions
with respect to vesting as the Board or the Committee may specify.
11. EXERCISE. A Participant may pay the Exercise Price of
the shares of Common Stock as to which an Option is being exercised by the
delivery of cash, check or, at the Corporation's option, by the delivery of
shares of Common Stock having a Fair Market Value on the date immediately
preceding the exercise date equal to the Exercise Price.
If the shares to be purchased are covered by an effective
registration statement under the Securities Act of 1933, as amended, any
Option granted under the Plan may be exercised by a broker-dealer acting on
behalf of an Optionee if (a) the broker-dealer has received from the Optionee
or the Corporation a fully- and duly-endorsed agreement evidencing such
Option, together with instructions signed by the Optionee requesting the
Corporation to deliver the shares of Common Stock subject to such Option to
the broker-dealer on behalf of the Optionee and specifying the account into
which such shares should be deposited, (b) adequate provision has been made
with respect to the payment of any withholding taxes due upon such exercise,
and (c) the broker-dealer and the Optionee have otherwise complied with
Section 220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor
provision.
12. WHEN QUALIFIED OPTIONS MAY BE EXERCISED. No Qualified
Option shall be exercisable at any time after the expiration of ten (10)
years from the Date of Grant; PROVIDED, HOWEVER, that if the Optionee with
respect to a Qualified Option is a 10-Percent Stockholder on the Date of
Grant of such Qualified Option, then such Option shall not be exercisable
after the expiration of five (5) years from its Date of Grant. In addition,
if an Optionee of a Qualified Option ceases to be an employee of the
Corporation or any Related Corporation for any reason, such Optionee's vested
Qualified Options shall not be exercisable after (a) 90 days following the
date such Optionee ceases to be an employee of the Corporation or any Related
Corporation, if such cessation of service is not due to the death or
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) of the Optionee, or (b) twelve months following the date such Optionee
ceases to be an employee of the Corporation or any Related Corporation, if
such cessation of service is due to the death or permanent and total
disability (as defined above) of the Optionee. Upon the death of an
Optionee, any vested Qualified Option exercisable on the date of death may be
exercised by the Optionee's estate or by a person who acquires the right to
exercise such Qualified Option by bequest or inheritance or by reason of the
death of the Optionee, provided that such exercise occurs within both the
remaining option term of the Qualified Option and twelve months after the
date of the Optionee's death. This Section 12 only provides the outer limits
of allowable exercise dates with respect to Qualified Options; the Board or
the Committee may determine that the exercise period for a Qualified Option
shall have a shorter duration than as specified above.
13. OPTION FINANCING. Upon the exercise of any Option
granted under the Plan, the Corporation may, but shall not be required to,
make financing available to the Participant for the purchase of shares of
Common Stock pursuant to such Option on such terms as the Board or the
Committee may specify.
5
<PAGE>
14. WITHHOLDING OF TAXES. The Board or the Committee shall
make such provisions and take such steps as it may deem necessary or
appropriate for the withholding of any taxes that the Corporation is required
by any law or regulation of any governmental authority to withhold in
connection with any Option or Restricted Stock including, but not limited to,
withholding the issuance of all or any portion of the shares of Common Stock
subject to such Option or Restricted Stock until the Participant reimburses
the Corporation for the amount it is required to withhold with respect to
such taxes, canceling any portion of such issuance in an amount sufficient to
reimburse the Corporation for the amount it is required to withhold or taking
any other action reasonably required to satisfy the Corporation's withholding
obligation.
15. CONDITIONS UPON ISSUANCE OF SHARES. The Corporation
shall not be obligated to sell or issue any shares upon the exercise of any
Option granted under the Plan or to deliver Restricted Stock unless the
issuance and delivery of shares complies with all provisions of applicable
federal and state securities laws and the requirements of any national
exchange or trading system on which the Common Stock is then listed or traded.
As a condition to the exercise of an Option or the grant
of Restricted Stock, the Corporation may require the person exercising the
Option or receiving the grant of Restricted Stock to make such
representations and warranties as may be necessary to assure the availability
of an exemption from the registration requirements of applicable federal and
state securities laws.
The Corporation shall not be liable for refusing to sell
or issue any shares covered by any Option or for refusing to issue Restricted
Stock if the Corporation cannot obtain authority from the appropriate
regulatory bodies deemed by the Corporation to be necessary to sell or issue
such shares in compliance with all applicable federal and state securities
laws and the requirements of any national exchange or trading system on which
the Common Stock is then listed or traded. In addition, the Corporation
shall have no obligation to any Participant, express or implied, to list,
register or otherwise qualify the shares of Common Stock covered by any
Option or Restricted Stock.
No Participant will be, or will be deemed to be, a holder
of any Common Stock subject to an Option unless and until such Participant
has exercised his or her Option and paid the purchase price for the subject
shares of Common Stock. Each Qualified Option under this Plan shall be
transferable only by will or the laws of descent and distribution and shall
be exercisable during the Participant's lifetime only by such Participant.
Each nonqualified Option under this Plan shall be transferable only by will,
the laws of descent and distribution, pursuant to a domestic relations order
issued by a court of competent jurisdiction, or to a trust established by the
Participant for estate planning purposes.
16. RESTRICTIONS ON SHARES. Shares of Common Stock issued
pursuant to the Plan may be subject to restrictions on transfer under
applicable federal and state securities laws. The Board may impose such
additional restrictions on the ownership and transfer of shares of Common
Stock issued pursuant to the Plan as it deems desirable; any such
restrictions shall be set forth in any Option agreement entered into
hereunder.
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<PAGE>
17. MODIFICATION OF OPTIONS. Except as provided in Section
19(b) of this Plan, at any time and from time to time, the Board or the
Committee may execute an instrument providing for modification, extension or
renewal of any outstanding Option, provided that no such modification,
extension or renewal shall impair the Option without the consent of the
holder of the Option. Notwithstanding the foregoing, in the event of such a
modification, substitution, extension or renewal of a Qualified Option, the
Board or the Committee may increase the exercise price of such Option if
necessary to retain the qualified status of such Option.
18. EFFECT OF CHANGE IN STOCK SUBJECT TO THE PLAN. In the
event that each of the outstanding shares of Common Stock (other than shares
held by dissenting stockholders) shall be changed into or exchanged for a
different number or kind of shares of stock of the Corporation or of another
corporation (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise), or in the
event a stock split or stock dividend occurs, then there shall be substituted
for each share of Common Stock then subject to Options or Restricted Stock
awards or available for Options or Restricted Stock awards the number and
kind of shares of stock into which each outstanding share of Common Stock
(other than shares held by dissenting stockholders) shall be so changed or
exchanged, or the number of shares of Common Stock as is equitably required
in the event of a stock split or stock dividend, together with an appropriate
adjustment of the Exercise Price. The Board may, but shall not be required
to, provide additional anti-dilution protection to a Participant under the
terms of the Participant's Option or Restricted Stock agreement.
19. ADMINISTRATION.
(a) The Plan shall be administered by the Board or by a
committee of the Board comprised solely of two or more Non-Employee Directors
appointed by the Board (the "Committee"). Options and Restricted Stock may be
granted under Sections 6 and 7, respectively, only (i) by the Board as a
whole, or (ii) by majority agreement of the members of the Committee. Option
agreements and Restricted Stock agreements, in the forms as approved by the
Board or the Committee, and containing such terms and conditions consistent
with the provisions of this Plan as are determined by the Board or the
Committee, may be executed on behalf of the Corporation by the Chairman of
the Board, the President or any Vice President of the Corporation. The Board
or the Committee shall have complete authority to construe, interpret and
administer the provisions of this Plan and the provisions of the Option
agreements and Restricted Stock agreements granted hereunder; to prescribe,
amend and rescind rules and regulations pertaining to this Plan; to suspend
or discontinue this Plan; and to make all other determinations necessary or
deemed advisable in the administration of the Plan. The determinations,
interpretations and constructions made by the Board or the Committee shall be
final and conclusive. No member of the Board or the Committee shall be liable
for any action taken, or failed to be taken, made in good faith relating to
the Plan or any award thereunder, and the members of the Board or the
Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense (including
attorneys' fees) arising therefrom to the fullest extent permitted by law.
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<PAGE>
(b) Although the Board or the Committee may suspend or
discontinue the Plan at any time, all Qualified Options must be granted
within ten (10) years from the effective date of the Plan or the date the
Plan is approved by the stockholders of the Corporation, whichever is earlier.
(c) Subject to any applicable requirements of Rule 16b-3
or of any national exchange or trading system on which the Common Stock is
then listed or traded, the Board may amend any provision of this Plan in any
respect in its discretion.
20. CONTINUED EMPLOYMENT NOT PRESUMED. Nothing in this Plan
or any document describing it nor the grant of any Option or Restricted Stock
shall give any Participant the right to continue in the employment of the
Corporation or affect the right of the Corporation to terminate the
employment of any such person with or without cause.
21. LIABILITY OF THE CORPORATION. Neither the Corporation,
its directors, officers or employees or the Committee, nor any Subsidiary
which is in existence or hereafter comes into existence, shall be liable to
any Participant or other person if it is determined for any reason by the
Internal Revenue Service or any court having jurisdiction that any Qualified
Option granted hereunder does not qualify for tax treatment as an incentive
stock option under Section 422 of the Code.
22. GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF TEXAS AND THE UNITED
STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
23. SEVERABILITY OF PROVISIONS. If any provision of this
Plan is determined to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect the remaining provisions of
the Plan, but such invalid, illegal or unenforceable provision shall be fully
severable, and the Plan shall be construed and enforced as if such provision
had never been inserted herein.
8
<PAGE>
FORM OF STOCK OPTION AGREEMENT
The individuals listed below received options to purchase the indicated
number of shares of Common Stock pursuant to Stock Option Agreements dated as
of May 13, 1997, in the form attached, which were granted under the Company's
1997 Stock Option and Restricted Stock Plan.
NUMBER OF SHARES
PARTICIPANT SUBJECT TO OPTION
----------- -----------------
Gregg L. Engles 300,000
William P. Brick 200,000
Hector M. Nevares 60,000
Tracy L. Noll 60,000
<PAGE>
SUIZA FOODS CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT (this "Agreement"), effective as of May 13, 1997, is made
and entered into by and between Suiza Foods Corporation, a Delaware
corporation (the "Corporation"), and _______________________ (the
"Participant").
WITNESSETH:
WHEREAS, the Corporation has implemented the Suiza Foods Corporation 1997
Stock Option and Restricted Stock Plan (the "Plan"), which was adopted by the
Corporation's Board of Directors (the "Board") and approved by the
Corporation's stockholders, and which provides for the grant of stock options
and restricted stock to certain selected officers, directors and key
employees of the Corporation or its subsidiaries with respect to shares of
Common Stock, $.01 par value, of the Corporation (the "Common Stock");
WHEREAS, the stock options and restricted stock provided for under the
Plan are intended to comply with the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
WHEREAS, the committee appointed by the Board to administer the Plan (the
"Committee") has selected the Participant to participate in the Plan and has
awarded the non-qualified stock option described in this Agreement (the
"Option") to the Participant;
WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee of the Corporation or its subsidiaries
and to promote the success of the business of the Corporation and its
subsidiaries, the parties hereby agree as follows:
1. GRANT OF OPTION. The Corporation hereby grants to the Participant,
upon the terms and subject to the conditions, limitations and restrictions
set forth in the Plan and in this Agreement, the Option to acquire __________
shares of Common Stock (the "Option Shares"), at an exercise price per share
of $29.25, effective as of the date of this Agreement (the "Award Date").
The Participant hereby accepts the Option from the Corporation.
2. VESTING. The Option shall vest in full as to all of the Option
Shares on the seventh anniversary of the Award Date; provided that the Option
will vest automatically upon the death of the Participant and may vest
earlier in accordance with the following provisions:
(a) If, by the applicable "Target Date" set forth below, the
closing price of the Common Stock on the New York Stock Exchange (or the
principal exchange on which the
<PAGE>
Common Stock is then traded) exceeds the applicable "Target Price" for 20
consecutive trading days, then, at the end of such 20 trading day period, the
Option will be considered vested as to the indicated percentage of the total
number of Option Shares:
CUMULATIVE PERCENTAGE
TARGET DATE TARGET PRICE OF TOTAL OPTION SHARES
----------- ------------ ----------------------
First anniversary of Award Date $33.64 20%
Second anniversary of Award Date $38.68 40%
Third anniversary of Award Date $44.49 60%
Fourth anniversary of Award Date $51.16 80%
Fifth anniversary of Award Date $58.83 100%
(b) The Option shall immediately vest in full as to all of the
Option Shares upon any "Sale of the Corporation". A "Sale of the
Corporation" shall occur if the Corporation engages in a merger,
consolidation, recapitalization, reorganization or sale, lease or transfer of
all or substantially all of the Corporation's assets or a tender offer is
completed with respect to the Common Stock and the Corporation or its
stockholders or affiliates immediately before such transaction beneficially
own, immediately after or as a result of such transaction, equity securities
of the surviving or acquiring corporation or such corporation's parent
corporation possessing less than fifty-one percent (51%) of the voting power
of the surviving or acquiring corporation or such corporation's parent
corporation; provided that a Sale of the Corporation shall not be deemed to
occur upon any public offering or series of such offerings of securities of
the Corporation or its affiliates that results in any such change in
beneficial ownership.
3. EXERCISE. In order to exercise the Option with respect to
any vested portion of the Option Shares, the Participant shall provide
written notice to the Corporation at its principal executive office. At the
time of exercise, the Participant shall pay to the Corporation the exercise
price per share set forth in Section 1 times the number of vested Option
Shares as to which the Option is being exercised. The Participant shall make
such payment in cash, check or at the Corporation's option, by the delivery
of shares of Common Stock having a Fair Market Value (as defined in the Plan)
on the date immediately preceding the exercise date equal to the aggregate
exercise price. If the Option is exercised in full, the Participant shall
surrender this Agreement to the Corporation for cancellation. If the Option
is exercised in part, the Participant shall surrender this Agreement to the
Corporation so that the Corporation may make appropriate notation hereon or
cancel this Agreement and issue a new agreement representing the unexercised
portion of the Option.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), the
Option may be exercised by a broker-dealer acting on behalf of the
Participant if (a) the broker-dealer has received from the Participant or the
Corporation a fully-and duly-endorsed agreement evidencing such option,
together with instructions signed by the Participant requesting the
Corporation to deliver the shares of Common Stock subject to such option to
the broker-dealer on behalf of the Participant and specifying the account
into which such shares should be deposited, (b) adequate provision has
<PAGE>
been made with respect to the payment of any withholding taxes due upon such
exercise, and (c) the broker-dealer and the Participant have otherwise
complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220, or any
successor provision.
4. WHO MAY EXERCISE. The Option shall be exercisable during the
lifetime of the Participant only by the Participant. To the extent
exercisable after the Participant's death, the Option shall be exercised only
by the Participant's representatives, executors, successors or beneficiaries.
5. EXPIRATION OF OPTION. The Option shall expire, and shall not be
exercisable with respect to any vested Option Shares as to which the Option
has not been exercised, on the first to occur of: (a) the tenth anniversary
of the Award Date; or (b) 60 days after any termination of the Participant's
employment with the Corporation for any reason other than death (or 120 days
after any such death). The Option shall expire, and shall not be
exercisable, with respect to any unvested Option Shares immediately upon the
termination of the Participant's employment with the Corporation for any
reason, other than death.
6. TAX WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, the Corporation may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic
or foreign, to withhold in connection with any of the shares of Common Stock
subject hereto.
7. DILUTION. The number of Option Shares subject to the Option and the
exercise price therefor set forth in Section 1 shall be subject to adjustment
for any Dilutive Event. A "Dilutive Event" shall include any of the
following events that results in dilution to the shares of Common Stock
acquired or acquirable upon exercise of the Option: any increase or decrease
in the shares of Common Stock or any other capital stock of the Corporation
or any change or exchange of any such securities for a different number or
kind of securities, any of which results from one or more stock splits,
reverse stock splits, stock dividends, recapitalizations, reorganizations or
other corporate actions with a similar effect. A "Dilutive Event" shall not
include, however, among other things: (i) the issuance or exercise of
options granted pursuant to the Plan or pursuant to any other stock-based
compensation plan adopted by the Corporation's Board of Directors; or (ii)
any issuance of capital stock by the Corporation for Fair Market Value or any
issuance or grant to any person or entity of any right to subscribe for or to
purchase any capital stock or securities convertible into any capital stock
of the Corporation for Fair Market Value.
8. TRANSFER OF OPTION. The Participant shall not, directly or
indirectly, sell, transfer, pledge, encumber or hypothecate ("Transfer") any
unvested portion of the Option or the rights and privileges pertaining
thereto. In addition, the Participant shall not, directly or indirectly,
Transfer any vested portion of the Option or any shares of Common Stock
acquired upon exercise of the Option other than (i) with the prior written
consent of the Corporation, (ii) by will or the laws of descent and
distribution, (iii) with respect to shares of Common Stock acquired upon
exercise of the Option, pursuant to an effective registration statement filed
under the Act, or
<PAGE>
(iv) with respect to shares of Common Stock acquired upon exercise of the
Option, pursuant to an exemption from the registration requirements of the
Act. Any permitted transferee to whom the Participant shall Transfer the
Option pursuant to (i) or (ii) above shall agree to be bound by this
Agreement. Neither the Option nor the underlying shares of Common Stock is
liable for or subject to, in whole or in part, the debts, contracts,
liabilities or torts of the Participant, nor shall they be subject to
garnishment, attachment, execution, levy or other legal or equitable process.
9. CERTAIN LEGAL RESTRICTIONS. The Corporation shall not be obligated
to sell or issue any shares of Common Stock upon the exercise of the Option
or otherwise unless the issuance and delivery of such shares shall comply
with all relevant provisions of law and other legal requirements including,
without limitation, any applicable federal or state securities laws and the
requirements of any stock exchange upon which shares of the Common Stock may
then be listed. As a condition to the exercise of the Option or the sale by
the Corporation of any additional shares of Common Stock to the Participant,
the Corporation may require the Participant to make such representations and
warranties as may be necessary to assure the availability of an exemption
from the registration requirements of applicable federal or state securities
laws. The Corporation shall not be liable for refusing to sell or issue any
shares if the Corporation cannot obtain authority from the appropriate
regulatory bodies deemed by the Corporation to be necessary to lawfully sell
or issue such shares. In addition, the Corporation shall have no obligation
to the Participant, express or implied, to list, register or otherwise
qualify any of the Participant's shares of Common Stock. The shares of
Common Stock issued upon the exercise of the Option may not be transferred
except in accordance with applicable federal or state securities laws. At
the Corporation's option, the certificate evidencing shares of Common Stock
issued to the Participant may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED OR PLEDGED EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS
OF SUCH ACT AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION.
Any Common Stock issued pursuant to the exercise of Options granted
pursuant to this Agreement to a person who would be deemed an officer or
director of the Corporation under Rule 16b-3 shall not be transferred until
at least six months have elapsed from the date of grant of such Option to the
date of disposition of the Common Stock underlying such Option, unless, at
the time of transfer, the Participant is not subject to the provisions of
Section 16 of the Exchange Act.
10. PLAN INCORPORATED. The Participant accepts the Option subject to
all the provisions of the Plan, which are incorporated into this Agreement,
including the provisions that authorize the Committee to administer and
interpret the Plan and which provide that the Committee's decisions,
determinations and interpretations with respect to the Plan are final and
conclusive on all persons affected thereby. Except as otherwise set forth in
this Agreement, terms defined in the Plan have the same meanings herein.
<PAGE>
11. MISCELLANEOUS.
(a) The Option is intended to be a non-qualified stock option under
applicable tax laws, and it is not to be characterized or treated as an
incentive stock option under such laws.
(b) The granting of the Option shall impose no obligation upon the
Participant to exercise the Option or any part thereof. Nothing contained in
this Agreement shall affect the right of the Corporation to terminate the
Participant at any time, with or without cause, or shall be deemed to create
any rights to employment on the part of the Participant.
(c) The rights and obligations arising under this Agreement are not
intended to and do not affect the employment relationship that otherwise
exists between the Corporation and the Participant, whether such employment
relationship is at will or defined by an employment contract. Moreover, this
Agreement is not intended to and does not amend any existing employment
contract between the Corporation and the Participant; to the extent there is
a conflict between this Agreement and such an employment contract, the
employment contract shall govern and take priority.
(d) Neither the Participant nor any person claiming under or
through the Participant shall be or shall have any of the rights or
privileges of a stockholder of the Corporation in respect of any of the
shares issuable upon the exercise of the Option herein unless and until
certificates representing such shares shall have been issued and delivered to
the Participant or such Participant's agent.
(e) Any notice to be given to the Corporation under the terms of
this Agreement or any delivery of the Option to the Corporation shall be
addressed to the Corporation at its principal executive offices, and any
notice to be given to the Participant shall be addressed to the Participant
at the address set forth beneath his or her signature hereto, or at such
other address for a party as such party may hereafter designate in writing to
the other. Any such notice shall be deemed to have been duly given if
mailed, postage prepaid, addressed as aforesaid.
(f) Subject to the limitations in this Agreement on the
transferability by the Participant of the Option and any shares of Common
Stock, this Agreement shall be binding upon and inure to the benefit of the
representatives, executors, successors or beneficiaries of the parties hereto.
(g) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE AND THE
UNITED STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
(h) If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, in whole or in part, then the parties shall
be relieved of all obligations arising under such provision, but only to the
extent that it is illegal, unenforceable or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
<PAGE>
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if that is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives.
(i) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions
of this Agreement.
(j) The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be necessary
or appropriate to achieve the purposes of this Agreement.
(k) This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
(l) No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to
exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement
or condition.
(m) This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or
the same counterpart.
(n) At any time and from time to time the Committee may execute an
instrument providing for modification, extension, or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall (i) impair the Option in any respect without the consent of the holder
of the Option or (ii) conflict with the provisions of Rule 16b-3. Except as
provided in the preceding sentence, no supplement, modification or amendment
of this Agreement or waiver of any provision of this Agreement shall be
binding unless executed in writing by all parties to this Agreement. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement (regardless of
whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
(o) In addition to all other rights or remedies available at law or
in equity, the Corporation shall be entitled to injunctive and other
equitable relief to prevent or enjoin any violation of the provisions of this
Agreement.
(p) The Participant's spouse joins this Agreement for the purpose
of agreeing to and accepting the terms of this Agreement and to bind any
community property interest he or she has or may have in the Option, any
vested portion or any unvested portion of the Option, any shares of Common
Stock acquired upon exercise of the Option and any other shares of Common
Stock held by the Participant.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SUIZA FOODS CORPORATION
By:
---------------------------------
Gregg L. Engles
Chairman of the Board
PARTICIPANT:
--------------------------------------
Name:
Address:
-----------------------------
--------------------------------------
--------------------------------------
Fax:
---------------------------------
PARTICIPANT'S SPOUSE:
--------------------------------------
Name:
--------------------------------
<PAGE>
FORM OF STOCK OPTION AGREEMENT
The individuals listed below received options to purchase the indicated
number of shares of Common Stock pursuant to Stock Option Agreements dated as
of June 30, 1997, in the form attached, which were granted under the
Company's 1997 Stock Option and Restricted Stock Plan.
Number of Shares
Participant Subject to Option
----------- -----------------
P. Eugene Pender 7,500
Robert Piccinini 7,500
<PAGE>
SUIZA FOODS CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT (this "Agreement"), effective as of June 30, 1997, is made
and entered into by and between Suiza Foods Corporation, a Delaware corporation
(the "Corporation"), and ________________ (the "Participant").
WITNESSETH:
WHEREAS, the Corporation has implemented the Suiza Foods Corporation 1997
Stock Option and Restricted Stock Plan (the "Plan"), which was adopted by the
Corporation's Board of Directors (the "Board") and approved by the Corporation's
stockholders, and which provides for the grant of stock options and restricted
stock to certain selected officers, directors and key employees of the
Corporation or its subsidiaries with respect to shares of Common Stock, $.01 par
value, of the Corporation (the "Common Stock");
WHEREAS, the stock options and restricted stock provided for under the Plan
are intended to comply with the requirements of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
WHEREAS, the committee appointed by the Board to administer the Plan (the
"Committee") has selected the Participant to participate in the Plan and has
awarded the non-qualified stock option described in this Agreement (the
"Option") to the Participant;
WHEREAS, the parties hereto desire to evidence in writing the terms and
conditions of the Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee of the Corporation or its subsidiaries
and to promote the success of the business of the Corporation and its
subsidiaries, the parties hereby agree as follows:
1. GRANT OF OPTION. The Corporation hereby grants to the Participant,
upon the terms and subject to the conditions, limitations and restrictions set
forth in the Plan and in this Agreement, the Option to acquire 7,500 shares of
Common Stock, at an exercise price per share of $41.00, effective as of the date
of this Agreement (the "Award Date"). The Participant hereby accepts the Option
from the Corporation.
2. VESTING. The Option is immediately vested in full as to all shares of
Common Stock subject hereto.
3. EXERCISE. In order to exercise the Option with respect to any vested
portion, the Participant shall provide written notice to the Corporation at its
principal executive office. At the time of exercise, the Participant shall pay
to the Corporation the exercise price per share set forth in Section 1 times the
number of vested shares as to which the Option is being exercised. The
1
<PAGE>
Participant shall make such payment in cash, check or at the Corporation's
option, by the delivery of shares of Common Stock having a Fair Market Value (as
defined in the Plan) on the date immediately preceding the exercise date equal
to the aggregate exercise price. If the Option is exercised in full, the
Participant shall surrender this Agreement to the Corporation for cancellation.
If the Option is exercised in part, the Participant shall surrender this
Agreement to the Corporation so that the Corporation may make appropriate
notation hereon or cancel this Agreement and issue a new agreement representing
the unexercised portion of the Option.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended (the "Act"), the Option
may be exercised by a broker-dealer acting on behalf of the Participant if (a)
the broker-dealer has received from the Participant or the Corporation a fully-
and duly-endorsed agreement evidencing such option, together with instructions
signed by the Participant requesting the Corporation to deliver the shares of
Common Stock subject to such option to the broker-dealer on behalf of the
Participant and specifying the account into which such shares should be
deposited, (b) adequate provision has been made with respect to the payment of
any withholding taxes due upon such exercise, and (c) the broker-dealer and the
Participant have otherwise complied with Section 220.3(e)(4) of Regulation T, 12
CFR Part 220, or any successor provision.
4. WHO MAY EXERCISE. The Option shall be exercisable during the lifetime
of the Participant only by the Participant. To the extent exercisable after the
Participant's death, the Option shall be exercised only by the Participant's
representatives, executors, successors or beneficiaries.
5. EXPIRATION OF OPTION. The Option shall expire, and shall not be
exercisable with respect to any vested portion as to which the Option has not
been exercised, on the first to occur of: (a) the tenth anniversary of the Award
Date; or (b) 60 days after any termination of the Participant's employment with
the Corporation for any reason other than death (or 120 days after any such
death). The Option shall expire, and shall not be exercisable, with respect to
any unvested portion, immediately upon the termination of the Participant's
employment with the Corporation for any reason, including death.
6. TAX WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, the Corporation may take such steps as it deems necessary or
desirable for the withholding of any taxes that it is required by law or
regulation of any governmental authority, federal, state or local, domestic or
foreign, to withhold in connection with any of the shares of Common Stock
subject hereto.
7. DILUTION. The number of shares of Common Stock subject to the Option
and the exercise price therefor set forth in Section 1 shall be subject to
adjustment for any Dilutive Event. A "Dilutive Event" shall include any of the
following events that results in dilution to the shares of Common Stock acquired
or acquirable upon exercise of the Option: any increase or decrease in the
shares of Common Stock or any other capital stock of the Corporation or any
change or exchange of any such securities for a different number or kind of
securities, any of which results from one or more stock splits, reverse stock
splits, stock dividends,
2
<PAGE>
recapitalizations, reorganizations or other corporate actions with a similar
effect. A "Dilutive Event" shall not include, however, among other things:
(i) the issuance or exercise of options granted pursuant to the Plan or
pursuant to any other stock-based compensation plan adopted by the
Corporation's Board of Directors; or (ii) any issuance of capital stock by
the Corporation for Fair Market Value or any issuance or grant to any person
or entity of any right to subscribe for or to purchase any capital stock or
securities convertible into any capital stock of the Corporation for Fair
Market Value.
8. TRANSFER OF OPTION. The Participant shall not, directly or
indirectly, sell, transfer, pledge, encumber or hypothecate ("Transfer") any
unvested portion of the Option or the rights and privileges pertaining thereto.
In addition, the Participant shall not, directly or indirectly, Transfer any
vested portion of the Option or any shares of Common Stock acquired upon
exercise of the Option other than (i) with the prior written consent of the
Corporation, (ii) by will or the laws of descent and distribution, (iii) with
respect to shares of Common Stock acquired upon exercise of the Option, pursuant
to an effective registration statement filed under the Act, or (iv) with respect
to shares of Common Stock acquired upon exercise of the Option, pursuant to an
exemption from the registration requirements of the Act. Any permitted
transferee to whom the Participant shall Transfer the Option pursuant to (i) or
(ii) above shall agree to be bound by this Agreement. Neither the Option nor
the underlying shares of Common Stock is liable for or subject to, in whole or
in part, the debts, contracts, liabilities or torts of the Participant, nor
shall they be subject to garnishment, attachment, execution, levy or other legal
or equitable process.
9. CERTAIN LEGAL RESTRICTIONS. The Corporation shall not be obligated to
sell or issue any shares of Common Stock upon the exercise of the Option or
otherwise unless the issuance and delivery of such shares shall comply with all
relevant provisions of law and other legal requirements including, without
limitation, any applicable federal or state securities laws and the requirements
of any stock exchange upon which shares of the Common Stock may then be listed.
As a condition to the exercise of the Option or the sale by the Corporation of
any additional shares of Common Stock to the Participant, the Corporation may
require the Participant to make such representations and warranties as may be
necessary to assure the availability of an exemption from the registration
requirements of applicable federal or state securities laws. The Corporation
shall not be liable for refusing to sell or issue any shares if the Corporation
cannot obtain authority from the appropriate regulatory bodies deemed by the
Corporation to be necessary to lawfully sell or issue such shares. In addition,
the Corporation shall have no obligation to the Participant, express or implied,
to list, register or otherwise qualify any of the Participant's shares of Common
Stock. The shares of Common Stock issued upon the exercise of the Option may
not be transferred except in accordance with applicable federal or state
securities laws. At the Corporation's option, the certificate evidencing shares
of Common Stock issued to the Participant may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED OR PLEDGED EXCEPT IN
3
<PAGE>
COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND THE APPLICABLE SECURITIES
LAWS OF ANY STATE OR OTHER JURISDICTION.
Any Common Stock issued pursuant to the exercise of Options granted
pursuant to this Agreement to a person who would be deemed an officer or
director of the Corporation under Rule 16b-3 shall not be transferred until at
least six months have elapsed from the date of grant of such Option to the date
of disposition of the Common Stock underlying such Option, unless, at the time
of transfer, the Participant is not subject to the provisions of Section 16 of
the Exchange Act.
10. PLAN INCORPORATED. The Participant accepts the Option subject to all
the provisions of the Plan, which are incorporated into this Agreement,
including the provisions that authorize the Committee to administer and
interpret the Plan and which provide that the Committee's decisions,
determinations and interpretations with respect to the Plan are final and
conclusive on all persons affected thereby. Except as otherwise set forth in
this Agreement, terms defined in the Plan have the same meanings herein.
11. MISCELLANEOUS.
(a) The Option is intended to be a non-qualified stock option under
applicable tax laws, and it is not to be characterized or treated as an
incentive stock option under such laws.
(b) The granting of the Option shall impose no obligation upon the
Participant to exercise the Option or any part thereof. Nothing contained in
this Agreement shall affect the right of the Corporation to terminate the
Participant at any time, with or without cause, or shall be deemed to create any
rights to employment on the part of the Participant.
(c) The rights and obligations arising under this Agreement are not
intended to and do not affect the employment relationship that otherwise exists
between the Corporation and the Participant, whether such employment
relationship is at will or defined by an employment contract. Moreover, this
Agreement is not intended to and does not amend any existing employment contract
between the Corporation and the Participant; to the extent there is a conflict
between this Agreement and such an employment contract, the employment contract
shall govern and take priority.
(d) Neither the Participant nor any person claiming under or through
the Participant shall be or shall have any of the rights or privileges of a
stockholder of the Corporation in respect of any of the shares issuable upon the
exercise of the Option herein unless and until certificates representing such
shares shall have been issued and delivered to the Participant or such
Participant's agent.
(e) Any notice to be given to the Corporation under the terms of this
Agreement or any delivery of the Option to the Corporation shall be addressed to
the Corporation at its principal executive offices, and any notice to be given
to the Participant shall be addressed to the Participant at the address set
forth beneath his or her signature hereto, or at such other
4
<PAGE>
address for a party as such party may hereafter designate in writing to the
other. Any such notice shall be deemed to have been duly given if mailed,
postage prepaid, addressed as aforesaid.
(f) Subject to the limitations in this Agreement on the
transferability by the Participant of the Option and any shares of Common Stock,
this Agreement shall be binding upon and inure to the benefit of the
representatives, executors, successors or beneficiaries of the parties hereto.
(g) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE AND THE UNITED STATES, AS
APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
(h) If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, in whole or in part, then the parties shall be
relieved of all obligations arising under such provision, but only to the extent
that it is illegal, unenforceable or void, it being the intent and agreement of
the parties that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same
objectives.
(i) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions of
this Agreement.
(j) The parties shall execute all documents, provide all information,
and take or refrain from taking all actions as may be necessary or appropriate
to achieve the purposes of this Agreement.
(k) This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
(l) No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
(m) This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
(n) At any time and from time to time the Committee may execute an
instrument providing for modification, extension, or renewal of any outstanding
option, provided that no such modification, extension or renewal shall (i)
impair the Option in any respect without the consent of the holder of the Option
or (ii) conflict with the provisions of Rule 16b-3. Except
5
<PAGE>
as provided in the preceding sentence, no supplement, modification or
amendment of this Agreement or waiver of any provision of this Agreement
shall be binding unless executed in writing by all parties to this Agreement.
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision of this Agreement
(regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
(o) In addition to all other rights or remedies available at law or
in equity, the Corporation shall be entitled to injunctive and other equitable
relief to prevent or enjoin any violation of the provisions of this Agreement.
(p) The Participant's spouse joins this Agreement for the purpose of
agreeing to and accepting the terms of this Agreement and to bind any community
property interest he or she has or may have in the Option, any vested portion or
any unvested portion of the Option, any shares of Common Stock acquired upon
exercise of the Option and any other shares of Common Stock held by the
Participant.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SUIZA FOODS CORPORATION
By:
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Gregg L. Engles
Chairman of the Board
PARTICIPANT:
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Name:
Address:
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Fax:
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PARTICIPANT'S SPOUSE:
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Name:
6
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1997 EMPLOYEE STOCK PURCHASE PLAN
OF
SUIZA FOODS CORPORATION
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan
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TABLE OF CONTENTS
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I. INTRODUCTION........................................................ 1
II. DEFINITIONS ........................................................ 1
III. PARTICIPATION ...................................................... 3
IV. OPTIONS TO PURCHASE; MAXIMUM SHARES AVAILABLE ...................... 5
V. PURCHASE OF STOCK PURSUANT TO OPTIONS .............................. 5
VI. ADMINISTRATION OF PLAN ............................................. 7
VII. ADJUSTMENT UPON CHANGES IN COMMON STOCK ............................ 8
VIII. AMENDMENT; TERMINATION OF PLAN ..................................... 8
IX. MISCELLANEOUS ...................................................... 9
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan
<PAGE>
1997 EMPLOYEE STOCK PURCHASE PLAN OF
SUIZA FOODS CORPORATION
I. INTRODUCTION
The purpose of the 1997 Employee Stock Purchase Plan is to make
available to eligible employees of Suiza Foods Corporation (the "COMPANY"),
and certain related companies a means of purchasing shares of Suiza Common
Stock through voluntary, regular payroll deductions. The Plan is not subject
to the provisions of the Employee Retirement Income Security Act of 1974, but
is intended to qualify as an "Employee Stock Purchase Plan" under Section 423
of the Internal Revenue Code of 1986, as amended (the "CODE"). The Plan shall
be administered, interpreted and construed in accordance with Section 423 of
the Code.
Participation in the Plan is entirely voluntary, and the Company makes no
recommendations to employees as to whether they should or should not
participate.
II. DEFINITIONS
2.1. DEFINITIONS. The following words and phrases shall have the
following meanings:
"ADMINISTRATOR" means the entity or person designated to act as
Administrator of the Plan pursuant to SECTION 6.1.
"BASE COMPENSATION" means gross compensation for the relevant pay period,
including overtime pay, but excluding all bonuses, severance pay, any
extraordinary pay, expense allowances/reimbursements, moving expenses and income
from restricted stock or stock option awards. For these purposes, gross
compensation includes any amount that would be included in taxable income but
for the fact that it was contributed to a qualified plan pursuant to an elective
deferral under Section 401(k) of the Code or contributed under a salary
reduction agreement pursuant to Section 125 of the Code.
"BOARD" means the Board of Directors of the Company.
"BROKER" means a duly licensed securities dealer, broker or agent
designated to act as Broker of the Plan pursuant to SECTION 6.2.
"COMMITTEE" means the Compensation Committee of the Board, which, to the
extent required by Rule 16b-3, shall consist entirely of non-employee directors
(as defined in Rule 16b-3).
"COMPANY" means Suiza Foods Corporation.
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 1
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"COMMON STOCK" means the Company's Common Stock, par value $.01 per share.
"CODE" has the meaning set forth in ARTICLE I.
"ELIGIBLE EMPLOYEE" means any employee of any Suiza Company, excluding any
employee (a) who has been employed by a Suiza Company for less than six months,
(b) whose customary employment with the employee's Employer is 20 hours or less
per week, (c) whose customary employment with the employee's Employer is not for
more than five months in any calendar year, or (d) who immediately after the
grant of an option under this Plan to the employee would (in accordance with the
provisions of Sections 423 and 424(d) of the Code) own stock possessing 5% or
more of the total combined voting power or value of all classes of stock of the
"employer corporation" or of its "parent corporations" or "subsidiary
corporations," as defined in Section 424 of the Code.
"EMPLOYER" means, with respect to any Participant, the Suiza Company of
which the Participant is an Eligible Employee.
"FAIR MARKET VALUE" means, with respect to a share of Common Stock, the
last sales price (or average of the quoted closing bid and asked prices if there
is no closing sales price reported) of a share of Common Stock as reported by
the New York Stock Exchange (or by the principal national stock exchange on
which the Common Stock is then listed) on the date of valuation, if such date is
a business day, or the immediately preceding business day, if such date is not a
business day.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 9.2.
"INITIAL OPTION PERIOD" means the Option Period commencing on the Plan
Start Date and ending on July 31, 1997.
"1933 ACT" means the Securities Act of 1933, as amended.
"OPTION" means an option granted pursuant to this Plan at the beginning of
each Option Period to acquire Common Stock.
"OPTION EXERCISE DATE" means the last day of each Option Period.
"OPTION PERIOD" means each calendar month during the period beginning on
the Plan Start Date and ending on June 30, 2007, unless the Plan is terminated
earlier.
"PAYROLL DEDUCTION ACCOUNT" means, with respect to each Participant, the
amounts credited to the Participant's account from the payroll deductions made
by the Participant under this Plan, less any amounts withdrawn from such account
(for payment of Common Stock, payment to the Participant, payment of withholding
and other taxes or amounts or payment of other obligations or amounts).
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 2
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"PARTICIPANT" has the meaning set forth in SECTION 3.2.
"PLAN" means the Suiza Foods Corporation 1997 Employee Stock Purchase Plan
as the same may be amended from time to time.
"PLAN START DATE" means July 1, 1997.
"RELATED CORPORATION" means any present or future corporation which (i)
would be a "subsidiary corporation" or "parent corporation" of Suiza Foods
Corporation as such terms are defined in Section 424 of the Code, and (ii) is
designated as a participating employer in this Plan by the Board.
"RULE 16b-3" means Rule 16b-3 under the 1933 Act.
"SUIZA COMPANY" means Suiza Foods Corporation or a Related Corporation.
"STOCK ACCOUNT" means, with respect to each Participant, the number of
whole shares of Common Stock credited under this Plan to the Participant's
account. Dividends with respect to shares of Common Stock credited to a
Participant's Stock Account shall be paid to the Participant and shall not be
held in either the Participant's Stock Account or Payroll Deduction Account.
III. PARTICIPATION
3.1. ELIGIBLE EMPLOYEES. Subject to ARTICLE VIII, all Eligible
Employees as of the beginning of each Option Period may participate in the
Plan for such Option Period at their election.
3.2. PARTICIPATION PROCEDURES. If an Eligible Employee does not otherwise
have an election to become a Participant in effect, each Eligible Employee
choosing to participate in the Plan (herein called a "PARTICIPANT") during an
Option Period shall enroll as a Participant in the Plan by filing with the
Participant's Employer a completed enrollment form (authorized by the
Administrator) no later than 15 days prior to the beginning of any Option
Period, (including the Initial Option Period) except that for the Initial Option
Period, the 15 day period may be waived at the discretion of the Administrator.
3.3. EMPLOYEE CONTRIBUTIONS. Subject to other limitations provided in this
Plan, a Participant may contribute under the Plan a minimum of one percent (1%)
and a maximum of fifteen percent (15%) of the Participant's Base Compensation.
Contributions may be made only through regular payroll deductions, net of any
tax or other withholdings.
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 3
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An enrollment form and payroll deduction authorization will remain
effective for each Option Period until terminated in writing by a Participant or
until the Participant is no longer eligible to participate in the Plan. The
payroll deduction authorization may be reduced or terminated at any time by the
Participant's written request submitted to the Participant's Employer;
PROVIDED, HOWEVER, that a Participant may not recommence or increase payroll
deductions until the beginning of the next Option Period, nor may a Participant
make more than one revision of the Participant's payroll deduction authorization
in any Option Period. Termination of deductions shall constitute withdrawal
from the Plan as set forth in SECTION 3.5 and cancellation of any outstanding
Options of the Participant. Reduction or termination of deductions will become
effective as soon as practicable after a Participant's written request is
received by the Participant's Employer.
3.4. PARTICIPANT RESTRICTION. Notwithstanding any provisions of this Plan
to the contrary, no Participant will be granted an option under this Plan which
would permit the Participant's rights to purchase shares of stock under all
employee stock purchase plans of Suiza and "parent corporations" and "subsidiary
corporations" (within the meaning of Section 424 of the Code) to accrue at a
rate which exceeds $25,000 of the Fair Market Value of such stock (determined at
the time each Option is "granted" (within the meaning of Code Section
423(b)(8)) for each calendar year during which any Option granted to such
Participant is outstanding at any time, as provided in Sections 423 and 424(d)
of the Code.
3.5. WITHDRAWAL FROM PLAN. A Participant may withdraw from the Plan
(thereby canceling all Options then in existence) at any time by giving written
notice to the Participant's Employer and to the Administrator. The Administrator
shall, as soon as practicable after receiving written notice of a Participant's
withdrawal from the Plan, cause to be delivered to the Participant (i) a
certificate issued in the name of the Participant representing the number of
full shares of Common Stock held in the Participant's Stock Account, and (ii) a
check representing any funds held to the credit of the Participant's Payroll
Deduction Account. A Participant who has withdrawn from the Plan may thereafter
reenter the Plan by following the procedure described under SECTION 3.2, but not
sooner than the beginning of the next Option Period after the Participant has
withdrawn from participation.
3.6. TERMINATION OF PARTICIPANT'S EMPLOYMENT. Upon termination of a
Participant's employment from the Suiza Companies for any reason, including
death or disability, the Participant's Stock Account and Payroll Deduction
Account in the Plan shall be closed, and all existing Options held by the
Participant shall be canceled. The Administrator shall, as soon as practicable
after termination of a Participant's employment, cause to be delivered to the
Participant or the Participant's estate or the Participant's designated
beneficiary as provided below, as applicable, (i) a certificate issued in the
name of the Participant representing the number of full shares of Common Stock
in the Participant's Stock Account, and (ii) a check representing any funds held
to the credit of the Participant's Payroll Deduction Account. In the event of a
Participant's death, the Participant's Common Stock and Payroll Deduction
Account shall be delivered and paid to the estate of such Participant or to a
beneficiary designated by the Participant in writing on a form approved by the
Administrator.
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 4
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IV. OPTIONS TO PURCHASE STOCK; MAXIMUM SHARES AVAILABLE
4.1. MAXIMUM SHARES. The maximum number of shares which shall be issued
under the Plan, subject to adjustment upon changes in Common Stock under
ARTICLE VII, shall be 250,000 shares.
4.2. OFFERINGS. Subject to ARTICLE XIII, the Company shall make
consecutive offerings on the beginning of each Option Period to Participants to
purchase Common Stock as long as shares authorized remain available for
issuance. Each offering as of the beginning of each Option Period shall be the
total number of shares authorized under SECTION 4.1, less the number of shares
issued by purchases of Common Stock under SECTION 5.5 in prior Option Periods.
V. PURCHASE OF STOCK PURSUANT TO OPTIONS
5.1. PAYROLL DEDUCTION ACCOUNTS. Each Suiza Company will deduct from its
Participants' paychecks such amounts as have been authorized by the Participants
and, promptly after the end of each month, remit to the Administrator all
amounts so deducted during the month, together with a report showing each
Participant and the amounts allocable to the Payroll Deduction Account of
each Participant. The Administrator shall credit each Participant's Payroll
Deduction Account with the amount of such deposits, and shall reduce the
Participant's Payroll Deduction Account by the purchase price of all Common
Stock purchased by the Participant under this Plan and by any other
withdrawals from the Participant's Payroll Deduction Account. The Plan,
through its Administrator, shall purchase for the Stock Accounts of the
Participants shares of Common Stock with funds received under the Plan.
5.2. STOCK ACCOUNTS. The Administrator will open and maintain a Stock
Account in the name of each Participant to which will be credited all shares of
Common Stock purchased for the Participant's benefit. All shares held under the
Plan will be registered in the name of the Plan, the Administrator or the
Administrator's nominee, and will remain so registered until the shares are
delivered to the Participant. The Participant shall have the right to sell all
or any part of the shares held in the Participant's Stock Account, pursuant to
procedures established by the Administrator.
5.3 GRANT OF OPTIONS AND PURCHASE. Subject to ARTICLE VIII, each person
who is a Participant on the first day of an Option Period will as of the first
day of such Option Period be granted an Option for such period. Such Option
will be for the number of whole shares of Common Stock to be determined by
dividing (a) the balance in the Participant's Payroll Deduction Account on the
Option Exercise Date, by (b) the purchase price per share of Common Stock
determined under SECTION 5.4 below; PROVIDED, HOWEVER, that the quotient in this
SECTION 5.3 shall be rounded down to a whole number. The number of shares of
Common Stock
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 5
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receivable by each Participant upon exercise of an Option for an Option
Period shall be reduced, on a substantially proportionate basis, in the event
that the number of shares then available under the Plan is otherwise
insufficient.
5.4 PURCHASE PRICE. The purchase price of each share of Common Stock sold
pursuant to the exercise of an Option shall be 0.90 multiplied by the Fair
Market Value of the Common Stock on the last day of the Option Period.
5.5 EXERCISE OF OPTIONS. Each person who is a Participant in the Plan on
the Option Exercise Date will be deemed to have exercised on the Option Exercise
Date the Option granted to the Participant for that Option Period. Upon such
exercise, the balance of the Participant's Payroll Deduction Account shall be
applied to the purchase of the number of whole shares of Common Stock determined
under SECTION 5.3, and the amount of shares of Common Stock purchased shall be
credited to the Participant's Stock Account. In the event that the balance of
the Participant's Payroll Deduction Account following an Option Period is in
excess of the total purchase price of the shares of Common Stock so sold, the
balance of the Payroll Deduction Account shall be returned to the Participant;
PROVIDED, HOWEVER, that if the balance in the Payroll Deduction Account consists
solely of an amount equal to the value of a fractional share it will be retained
in the Payroll Deduction Account and carried over to the next Option Period. No
fractional shares shall be issued hereunder.
Notwithstanding anything herein to the contrary, the Company's obligation
to sell and deliver shares of Common Stock under the Plan is subject to the
approval required of any governmental authority in connection with the
authorization, issuance, sale or transfer of such shares, to any requirements of
the New York Stock Exchange or any national securities exchange applicable
thereto, and to compliance by the Company with other applicable legal
requirements in effect from time to time, including without limitation any
applicable tax withholding requirements.
5.6. NO ASSIGNMENT OF PARTICIPANT'S INTEREST IN PLAN. A Participant may
not assign, sell, transfer, pledge, hypothecate or alienate any Options or other
interests in or rights under the Plan. Options under the Plan are exercisable
by a Participant during the Participant's lifetime only by the Participant. All
employees shall have the same rights and privileges under the Plan.
5.7. VESTING. Each Participant will immediately acquire full ownership of
all shares of Common Stock at the time such shares are credited to the
Participant's Stock Account.
5.8. DELIVERY OF STOCK. A Participant may instruct the Administrator, in
writing, at any time to deliver to the Participant a certificate, issued in the
name of the Participant, representing any or all of the full shares of Common
Stock held in the Participant's Stock Account. As soon as practicable after
receiving such instructions, the Administrator shall cause the certificate to be
mailed to the Participant. Such instruction to the Administrator, requesting
delivery of a certificate, will not affect the Participant's status under the
Plan unless the Participant also terminates the payroll deduction authorization.
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 6
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5.9. DIVIDENDS, SPLITS AND DISTRIBUTIONS. Any stock dividends or stock
splits in respect of shares held in the Participant's Stock Account will be
credited to the Participant's account without charge. Any distributions to
holders of Common Stock or other securities or rights to subscribe for
additional shares of Common Stock will be sold and the proceeds will be handled
in the same manner as a cash dividend, unless the Participant instructs the
Administrator to the contrary.
5.10. VOTING RIGHTS. The Administrator will deliver to each
Participant as promptly as practicable, by mail or otherwise, all notices of
meetings, proxy statements and other material distributed by the Company to its
stockholders. The full shares of Common Stock in each Participant's Stock
Account will be voted in accordance with the Participant's signed proxy
instructions duly delivered to the Administrator or pursuant to any other method
of voting available to holders of Common Stock. There will be no charge to the
Participant for the Administrator's retention or delivery of stock certificates,
or in connection with notices, proxies or other such material.
5.11. NO INTEREST TO BE PAID. No interest will be paid to or credited
to the Payroll Deduction Accounts or Stock Accounts of the Participants.
VI. ADMINISTRATION OF PLAN
6.1. THE ADMINISTRATOR AND THE COMMITTEE. To carry out the purposes of
the Plan, the Committee shall appoint an Administrator. The Administrator
may be any company or individual that the Committee deems qualified,
including the Company. The Administrator shall be responsible for the
implementation of the Plan, including allocation of funds and stock to the
Payroll Deduction Accounts and Stock Accounts and keeping adequate and
accurate records for the Participants.
The Committee shall be entitled to adopt and apply guidelines and
procedures consistent with the purposes of the Plan. In order to effectuate the
purposes of the Plan, the Committee shall have the discretionary authority to
construe and interpret the Plan, to supply any omissions therein, to reconcile
and correct any errors or inconsistencies, to decide any questions in the
administration and application of the Plan, and to make equitable adjustments
for any mistakes or errors made in the administration of the Plan, and all such
actions or determinations made by the Committee, and the application of rules
and regulations to a particular case or issue by the Committee, in good faith,
shall not be subject to review by anyone, but shall be final, binding and
conclusive on all persons ever interested hereunder.
6.2. BROKER. The Administrator may, in its discretion, with the consent
and approval of the Committee, appoint a Broker. The Broker may be any company
or individual that the Committee deems qualified; PROVIDED, HOWEVER, that the
Broker shall be a licensed security dealer, broker, or agent authorized to make
purchases and sales of Common Stock.
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 7
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6.3. REPORTING TO PARTICIPANTS. The Administrator will send to each
Participant a statement at the end of each calendar quarter (or such other
period as determined by the Committee in its sole discretion). Each such
statement shall contain information concerning transactions in the Participant's
Payroll Deduction Account and Stock Account during the relevant period and
reflect the balance in the Participant's Payroll Deduction Account and Stock
Account at the end of such period.
VII. ADJUSTMENT UPON CHANGES IN COMMON STOCK
7.1. CHANGES IN COMMON STOCK. If any change is made in the Common Stock
(through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Administrator may make appropriate adjustments
in the number of shares and price per share of Common Stock subject to the
Plan or to any Option granted under the Plan.
7.2. DISSOLUTION; MERGER; CAPITAL REORGANIZATION; ETC. In the event of (i)
a dissolution or liquidation of the Company (ii) a merger or consolidation in
which the Company is not the surviving corporation, or a reverse merger in which
the Company is the surviving corporation but the shares of Common Stock by
virtue of the merger are converted into other property, whether in the form of
securities, cash or otherwise; or (iii) any other capital reorganization in
which more than 50 percent of the shares of Common Stock entitled to vote are
exchanged, the Plan shall terminate, unless another corporation assumes the
responsibility of continuing the operation of the Plan or the Committee
determines in its discretion that the Plan shall nevertheless continue in full
force and effect. If the Committee elects to terminate the Plan, the
Administrator shall send to each Participant a stock certificate representing
the number of whole shares to which the Participant is entitled. In addition,
the Administrator shall send checks drawn on the Plan's account to each
Participant in an amount equal to the funds held to the credit of such
Participant's Payroll Deduction Account.
7.3. COMPANY'S RIGHT TO RESTRUCTURE, ETC. The grant of any right to a
Participant pursuant to the Plan shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
VIII. AMENDMENT; TERMINATION OF PLAN
8.1. AMENDMENT AND TERMINATION. The Company, acting through the
Committee, reserves the right to amend or terminate the Plan at any time or
times; PROVIDED, HOWEVER, any amendment that would require the consent of
stockholders under applicable law, rule or
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 8
<PAGE>
regulation (including, without limitation, the Code, the Exchange Act or any
self regulatory organization such as a national securities exchange), will
not be made unless such stockholders' consent is obtained.
In addition, the Plan shall terminate automatically on the tenth
anniversary of the Plan Start Date, or on any Option Exercise Date when
Participants become entitled to purchase a number of shares greater than the
number of reserved shares remaining available for purchase, subject to the
allocation of remaining shares pursuant to the last sentence of SECTION 5.3.
Upon termination of the Plan, all amounts held in the Payroll Deduction Accounts
shall, to the extent not used to purchase shares of Common Stock, be refunded to
the Participants entitled thereto.
IX. MISCELLANEOUS
9.1. EXPENSES OF PLAN. The Broker's brokerage commissions, if any,
incurred in connection with transactions in Common Stock under the Plan, and
the Administrator's administrative charges for maintaining Participants'
accounts relating to purchases of securities and all other expenses of
administering or maintaining the Plan will be paid by the Company. If the
Company is acting as Administrator, no expenses will be charged to the
Participants.
9.2. INDEMNIFICATION. In the event and to the extent not insured against
under any contract of insurance with an insurance company, the Company shall
indemnify and hold harmless each "INDEMNIFIED PERSON," as defined below, against
any and all claims, demands, suits, proceedings, losses, damages, interest,
penalties, expenses (specifically including, but not limited to, counsel fees to
the extent approved by the Board or otherwise provided by law, court costs and
other reasonable expenses of litigation), and liability of every kind, including
amounts paid in settlement, with the approval of the Board, arising from any
action or cause of action related to the Indemnified Person's act or acts or
failure to act. Such indemnity shall apply regardless of whether such claims,
demands, suits, proceedings, losses, damages, interest, penalties, expenses and
liability arise in whole or in part from (a) the negligence or other fault of
the Indemnified Person, or (b) from the imposition on such Indemnified Person of
any civil penalties or excise taxes pursuant to the Code or any other applicable
laws; except when the same is judicially determined to be due to gross
negligence, fraud, recklessness, or willful or intentional misconduct of such
Indemnified Person. "INDEMNIFIED PERSON" shall mean each member of the Board,
the Administrator, each member of the Committee and each other employee of any
Suiza Company who is allocated fiduciary responsibility hereunder.
9.3. NO CONTRACT OF EMPLOYMENT INTENDED. The granting of any rights to an
Eligible Employee under this Plan shall not constitute an agreement or
understanding, express or implied, on the part of any Suiza Company, to employ
such Eligible Employee for any specified period.
9.4. GOVERNING LAW. The construction, validity and operation of this Plan
shall be governed by the laws of the State of Delaware.
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 9
<PAGE>
9.5. SEVERABILITY OF PROVISIONS. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforcability shall not affect the remaining provisions of this Plan, but
such invalid, illegal or unenforceable provisions shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.
9.6. NO LIABILITY OF SUIZA. Neither the Company, its directors, officers
or employees of the Committee, nor any Related Corporation which is in existence
or hereafter comes into existence, shall be liable to any Participant or other
person if it is determined for any reason by the Internal Revenue Service or any
court having jurisdiction that the Plan does not qualify under Section 423 of
the Code.
IN WITNESS WHEREOF, the Company has caused this Plan to be adopted
effective as of the Plan Start Date.
SUIZA FOODS CORPORATION
By: /s/ Tracy L. Noll
-----------------------------------
Name: Tracy L. Noll
Title: Vice President, Secretary and
Chief Financial Officer
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Suiza Foods Corporation 1997 Employee Stock Purchase Plan Page 10
<PAGE>
FIRST AMENDMENT TO THE 1997 EMPLOYEE STOCK PURCHASE PLAN
OF SUIZA FOODS CORPORATION
WHEREAS, the Directors of Suiza Foods Corporation (the
"Company") established the 1997 Employee Stock Purchase Plan of Suiza Foods
Corporation (the "Plan") for the exclusive benefit of eligible employees of
the Company and certain of its subsidiaries; and
NOW, THEREFORE, pursuant to the powers reserved in Section 8.1
of the Plan, the Plan is hereby amended as follows:
I.
Article II of the Plan is hereby amended by deleting the word
"whole" from the definition of "STOCK ACCOUNT."
II.
Article III of the Plan is hereby amended by adding the
following sentence to the end of the first paragraph of Section 3.3:
"The Employee Contributions may be expressed either as a
percentage or as a dollar amount, but in no event will they be less than 1%
of a Participant's Base Compensation or more than 15% of a Participant's Base
Compensation."
III.
Article III of the Plan is further amended by replacing the
current Section 3.5 with the following new Section 3.5:
"3.5. WITHDRAWAL FROM PLAN. A Participant may withdraw from
the Plan (thereby canceling all Options then in existence) at any time by
giving written notice to the Participant's Employer and to the Administrator.
The Administrator shall, as soon as practicable after receiving written
notice of a Participant's withdrawal from the Plan, cause to be delivered to
the Participant (i) a certificate issued in the name of the Participant
representing the number of full shares of Common Stock held in the
Participant's Stock Account (ii) a check representing any fractional shares,
and (iii) a check representing any funds held to the credit of the
Participant's Payroll Deduction Account. A Participant who has withdrawn from
the Plan may thereafter reenter the Plan by following the procedure described
under SECTION 3.2, but not sooner than the beginning of the next Option
Period after the Participant has withdrawn from participation."
IV.
Article V of the Plan is hereby amended by deleting the word
"whole" from Section 5.3 of the Plan.
<PAGE>
V.
Article V of the Plan is further amended by replacing the
first paragraph of the current Section 5.5 with the following new first
paragraph for Section 5.5:
"5.5 EXERCISE OF OPTIONS. Each person who is a Participant in
the Plan on the Option Exercise Date will be deemed to have exercised on the
Option Exercise Date the Option granted to the Participant for that Option
Period. Upon such exercise, the balance of the Participant's Payroll
Deduction Account shall be applied to the purchase of the number of shares of
Common Stock determined under SECTION 5.3, and the amount of shares of Common
Stock purchased shall be credited to the Participant's Stock Account. In the
event that the balance of the Participant's Payroll Deduction Account
following an Option Period is in excess of the total purchase price of the
shares of Common Stock so sold, the balance of the Payroll Deduction Account
shall be returned to the Participant."
VI.
Article VII of the Plan is hereby amended by replacing the
current Section 7.2 with the following new Section 7.2:
"7.2. DISSOLUTION; MERGER; CAPITAL REORGANIZATION; ETC. In
the event of (i) a dissolution or liquidation of the Company (ii) a merger or
consolidation in which the Company is not the surviving corporation, or a
reverse merger in which the Company is the surviving corporation but the
shares of Common Stock by virtue of the merger are converted into other
property, whether in the form of securities, cash or otherwise; or (iii) any
other capital reorganization in which more than 50 percent of the shares of
Common Stock entitled to vote are exchanged, the Plan shall terminate, unless
another corporation assumes the responsibility of continuing the operation of
the Plan or the Committee determines in its discretion that the Plan shall
nevertheless continue in full force and effect. If the Committee elects to
terminate the Plan, the Administrator shall send to each Participant a stock
certificate representing the number of whole shares to which the Participant
is entitled and a check representing the amount of any fractional shares to
which the Participant is entitled. The Administrator shall send checks drawn
on the Plan's account to each Participant in an amount equal to the funds
held to the credit of such Participant's Payroll Deduction Account."
VII.
Except as amended by this instrument, the Plan as previously
amended, shall remain in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed effective as of June 19, 1997.
SUIZA FOODS CORPORATION, a Delaware corporation
By: /s/ Tracy L. Noll
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Name: Tracy L. Noll
Title: Vice President, Secratary and Chief Financial Officer
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SECOND AMENDMENT TO THE 1997 EMPLOYEE STOCK PURCHASE PLAN
OF SUIZA FOODS CORPORATION
WHEREAS, the Directors of Suiza Foods Corporation (the "Company")
established the 1997 Employee Stock Purchase Plan of Suiza Foods Corporation
(the "Plan") for the exclusive benefit of eligible employees of the Company
and certain of its subsidiaries; and
NOW, THEREFORE, pursuant to the powers reserved in Section 8.1 of the
Plan, the Plan is hereby amended as follows:
I.
The definition of "Eligible Employee" is hereby deleted and replaced with
the following:
""ELIGIBLE EMPLOYEE" means any employee of any Suiza Company, excluding
any employee (a) who has been employed by a Suiza Company for less than six
months, (b) whose customary employment with the employee's Employer is 20
hours or less per week, (c) whose customary employment with the employee's
Employer is not for more than five months in any calendar year, or (d) who
immediately after the grant of an option under this Plan to the employee
would (in accordance with the provisions of Sections 423 and 424(d) of the
Code) own stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the "employer corporation" or of its "parent
corporations" or "subsidiary corporations," as defined in Section 424 of the
Code.
However, any individual who was employed by an entity whose assets or
stock was purchased by the Company shall receive credit toward the six month
employment requirement in (a) for all continuous employment with such entity
immediately prior to the purchase of such entity's assets or stock."
II.
Except as amended by this instrument, the Plan as previously
amended, shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
effective as of July 21, 1997.
SUIZA FOODS CORPORATION, a Delaware corporation
By: /s/ Tracy L. Noll
--------------------
Name: Tracy L. Noll
Title: Vice President, Secretary and Chief Financial Officer
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this 20th day of June, 1997, by and among
Suiza Foods Corporation, a Delaware corporation (the "Buyer"), Garelick
Farms, Inc., a Massachusetts corporation ("Garelick"), Fairdale Farms, Inc.,
a Vermont corporation ("Fairdale"), Grant's Dairy, Inc., a Maine corporation
("Grant's"), Miscoe Springs, Inc., a Massachusetts corporation ("Miscoe," and
together with Fairdale, Garelick and Grant's, the "Fluids Companies"),
Plastics Management Group, LLC, a Massachusetts Limited Liability Company,
Marlborough Plastics, Inc., a Massachusetts corporation, Maine Plastics,
Inc., a Maine corporation, First Capital Plastics, Inc., a Pennsylvania
corporation, Sherman Plastics, Inc. a Texas corporation, New Jersey Plastics
Inc., a New Jersey corporation, Illinois Plastics, Inc., an Illinois
corporation, Allentown Plastics Inc., a Pennsylvania corporation, Kentwood
Plastics, Inc., a Louisiana corporation, Franklin Plastics, Inc., a
Massachusetts corporation, Richmond Container, Inc., a Virginia corporation,
North Carolina Plastics, Inc., a North Carolina corporation, Florida
Plastics, Inc., a Florida corporation, Chester County Container Corporation,
a Pennsylvania corporation, Atlanta Container, Inc., a Georgia corporation,
Ohio State Plastics, Inc., an Ohio corporation and Middlesex Container, Inc.,
a Connecticut corporation (collectively, the "Plastics Companies" and
together with the Fluids Companies, the "Companies") and the parties whose
names are set forth on EXHIBIT A attached hereto (the "Sellers").
WHEREAS, the Sellers own all of the issued and outstanding common stock
and limited liability interests of the Companies; and
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WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires
to purchase from the Sellers, all of the issued and outstanding common stock
and limited liability company interests of the Companies;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, representations, warranties and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; SALE OF STOCK AND TERMS OF PAYMENT
1.01 DEFINITIONS. The terms defined in this Section 1.01, whenever used
herein, shall have the following meanings for all purposes of this Agreement.
"Balance Sheet" shall have the meaning set forth in Section 3.09 hereof.
"Benefit Agreements" shall have the meaning set forth in Section 5.11
hereof.
"Buyer Material Adverse Effect" shall have the meaning set forth in
Section 4.01 hereof.
"Code" means the Internal Revenue Code of 1986, as amended and the rules
and regulations promulgated thereunder.
"Common Stock" means (i) all of the Voting and Non-Voting Common Stock of
Garelick, par value $1.00 per share, (ii) all of the Common Stock of
Fairdale, no par value, (iii) all of the Common Stock of Grant's, no par
value, (iv) all of the Common Stock of Miscoe, no par value, and (v) all of
the common stock, no par value, and limited liability company interests of
the Plastics Companies.
"Closing Date" shall have the meaning set forth in Section 1.04 hereof.
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"Companies' Knowledge" means the actual knowledge, after due inquiry, of
Peter M. Bernon, Alan J. Bernon, Philip Drexler, Norman Carr, Gary Warren,
Ray Whitehead and Stephen Lincoln.
"Encumbrance" means any lien, encumbrance, security interest, charge,
pledge, adverse claim or restriction on transfer of any nature whatsoever.
"Environmental Laws" shall have the meaning set forth in Section 3.17.
"GAAP" shall mean generally accepted accounting principles applied in a
manner consistent with the Companies' historical financial statements
referred to in Section 3.05.
"Governmental Entity" shall have the meaning set forth in Section 3.04
hereof.
"HSR Act" means Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"HSR Filings" means filings required under the HSR Act.
"Insurance Policies" shall have the meaning set forth in Section 3.16
hereof.
"Material Adverse Effect" shall have the meaning set forth in Section
3.01 hereof.
"Person" means any individual, corporation, partnership, trust or other
entity.
"Purchase Price" shall have the meaning set forth in Section 1.02 hereof.
"Shares" shall have the meaning set forth in Section 1.02 hereof.
Unless otherwise specified or the context otherwise requires, when
corporate terms such as stock certificates, Corporate Charter, By-Laws,
incorporation and the like are used herein with respect to the Companies,
such corporate terms shall be deemed to refer to the analogous limited
liability company terms to the extent they cover or apply to Plastics
Management Group LLC.
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Additional definitions are set forth within this Agreement and shall have
the meanings given them in this Agreement. All accounting terms not
otherwise defined herein have the meanings assigned to them in accordance
with generally accepted accounting principles.
1.02 THE SALE.
(a) Upon the terms and subject to the conditions contained in this
Agreement, at the Closing (as defined in Section 1.04 hereof), the Sellers
will sell, assign, transfer and deliver to the Buyer, and the Buyer will
accept and purchase from the Sellers the Shares of Common Stock and limited
liability company interests of the Companies (the "Shares") set forth on
EXHIBIT A hereto, constituting all of the issued and outstanding Common Stock
and limited liability company interests of the Companies on the Closing Date,
for the respective amounts set forth therein, with an aggregate purchase
price of $286,000,000 in cash (the "Initial Purchase Price"), as adjusted
below, plus 446,100 shares of the Buyer's common stock $.01 par value per
share ("Buyer Common Stock" and, collectively with the Initial Purchase Price
as so adjusted, the "Aggregate Purchase Price").
(b) The Initial Purchase Price will be reduced by the amount of
Estimated Indebtedness and by the amount of any Estimated Adjusted Working
Capital Shortfall and shall be increased by the amount of Expansion Capex and
by the amount of any Estimated Excess Adjusted Working Capital (the "Purchase
Price"). The Purchase Price will be subject to further adjustment pursuant
to Sections 1.02(d) through (f).
(c) At least two days prior to the Closing, the Sellers will cause
a certificate signed by the chief financial officer of the Companies to be
delivered to the Buyer setting forth
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the amount of Estimated Indebtedness, the amount of Estimated Expansion Capex
and the amount of Estimated Adjusted Working Capital.
(d) No later than 60 days after the Closing Date, the Buyer shall
prepare in accordance with generally accepted accounting principles applied
in a manner consistent with the Companies' March 31, 1997 balance sheet
referred to in Section 5.12 and deliver to the Sellers a combined balance
sheet for the Companies as of the Closing Date after giving effect to any
distributions made under Section 5.01(f) (the "Closing Balance Sheet"). Both
the March 31, 1997 balance sheet and the Closing Balance Sheet shall exclude
from current liabilities $650,000 attributable to the final cooler expansion
bill at Garelick. The Closing Balance Sheet shall be prepared under the
supervision of Ray Whitehead with input from Peter and Alan Bernon. To the
extent that the actual amount of Adjusted Working Capital of the Companies as
shown on the Closing Balance Sheet is more or less than the amount of
Estimated Adjusted Working Capital, the Buyer shall pay to the Sellers, or
the Sellers shall pay to the Buyer, the amount of such excess or shortfall,
respectively, in cash within 30 days of the delivery of the Closing Balance
Sheet, if no objection to the Closing Balance Sheet is raised by the Sellers
pursuant to Section 1.02(e), or within 5 days after the resolution of any
objection pursuant to Sections 1.02(e) and (f). To the extent that the
actual amount of Indebtedness as of the Closing Date after giving effect to
any distribution made or to be made prior to the Closing pursuant to Section
5.02(f) is more or less than the amount of Estimated Indebtedness, the
Sellers shall pay to the Buyer, or the Buyer shall pay to the Sellers, the
amount of such excess or shortfall, respectively, in cash within 30 days of
the delivery of the Closing Balance Sheet, if no objection to the Closing
Balance Sheet is raised
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by the Sellers pursuant to Section 1.02(e), or within 5 days after the
resolution of any objection pursuant to Sections 1.02(e) and (f). To the
extent that the actual amount of Expansion Capex of the Companies as shown on
the Closing Balance Sheet is more or less than the amount of Estimated
Expansion Capex, the Buyer shall pay to the Sellers, or the Sellers shall pay
to the Buyer, the amount of such excess or shortfall, respectively, in cash
within 30 days of the delivery of the Closing Balance Sheet, if no objection
to the Closing Balance Sheet is raised by the Sellers pursuant to Section
1.02(e), or within 5 days after resolution of any objection pursuant to
Sections 1.02(e) and (f).
(e) After receipt of the Closing Balance Sheet, the Sellers shall
have 30 days to review the Closing Balance Sheet, together with the work
papers used in the preparation thereof. The Buyer agrees that
representatives of the Sellers shall be given access to all work papers,
books, records and other information related to the preparation of the
Closing Balance Sheet to the extent reasonably required to complete their
review of the Closing Balance Sheet. The Sellers may dispute items reflected
on the Closing Date Balance Sheet only on the basis that such amounts were
not arrived at in accordance with the consistent application of generally
accepted accounting principles used in the preparation of the Companies'
historical financial statements referred to in Section 3.05. Unless the
Sellers deliver written notice to the Buyer on or prior to the 30th day after
the Sellers' receipt of the Closing Balance Sheet specifying in reasonable
detail all disputed items and the basis therefor, the Sellers shall be deemed
to have accepted and agreed to the Closing Balance Sheet. If the Sellers so
notify the Buyer of their objections to the Closing Balance Sheet, the Buyer
and the Sellers shall, within 30 days
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following such notice (the "Resolution Period"), attempt to resolve their
differences and any resolution by them as to any disputed amounts shall be
final, binding and conclusive.
(f) If at the conclusion of the Resolution Period there remain
amounts in dispute, then all amounts remaining in dispute shall be submitted
to a firm of nationally recognized independent public accountants who shall
not have had a material relationship with the Buyer, the Companies or the
Sellers within the past two years (the "Neutral Auditors") and who shall be
selected by mutual agreement of the Buyer and the Sellers within 10 days
after the expiration of the Resolution Period. Each party agrees to execute,
if requested by the Neutral Auditors, a reasonable engagement letter. All
fees and expenses relating to the work, if any, to be performed by the
Neutral Auditors shall be borne equally by the Buyer and the Sellers. The
Neutral Auditors shall act as an arbitrator to determine, based solely on
presentations by the Buyer and the Sellers, and not by independent review or
audit, only those issues still in dispute. The Neutral Auditors'
determination shall be made within 30 days of their selection, shall be set
forth in a written statement delivered to the Buyer and the Sellers and shall
be final, binding and conclusive.
(g) For purposes of this Agreement, "Indebtedness" means as of a
particular date, without duplication, all direct and indirect indebtedness
for borrowed money, capitalized lease obligations and any other indebtedness
evidenced by notes, bonds, debentures, guaranties or other instruments or
documents of the Companies (provided that for purposes of this Section 1.02
"Indebtedness" shall not include letters of credit or guaranties provided by
the Companies in the ordinary course of business consistent with past
practice); "Estimated Indebtedness" means
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the good faith estimate of the Sellers of the amount of Indebtedness of the
Companies as of the Closing Date after giving effect to any distribution made
or to be made prior to the Closing pursuant to Section 5.01(f) as shown in
the certificate delivered pursuant to Section 1.02(c); "Expansion Capex"
means as of any particular date (i) any capital expenditure made by the
Companies subsequent to March 31, 1997 (which expenditures through June 18,
1997 are listed on Schedule 1.02(g)) that are of the type set forth on
Schedule 1.02(g) and not in the ordinary course of business for the purpose
of expanding the business of the Companies and (ii) $750,000, the purchase
price to be paid by Fairdale for the real property on which its facility is
located as of the date hereof; "Estimated Expansion Capex" means the good
faith estimate of the Sellers of the amount of Expansion Capex of the
Companies as of the Closing Date; "Adjusted Working Capital" means as of any
particular date (A) the current assets (including any cash and Federal tax
deposits but excluding the current assets that were reclassified from
long-term assets after March 31, 1997) of the Companies less (B) the current
liabilities (other than short-term Indebtedness but including all Section
338(h)(10) Entity Taxes, as defined in Section 5.09(a)) of the Companies less
(C) the unpaid fees and expenses of the Sellers and the Companies in
connection with the transactions contemplated hereby, including without
limitation, the fees set forth in Section 3.13 to the extent they are not
included in current liabilities; "Estimated Adjusted Working Capital" means
the good faith estimate of the Sellers of the Adjusted Working Capital as of
the Closing Date as shown in the certificate delivered pursuant to Section
1.02(c); "Estimated Adjusted Working Capital Shortfall" means the amount by
which the Estimated Adjusted Working Capital is less than the Adjusted
Working Capital as of March 31, 1997 as set
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forth in the audited balance sheets of the Companies prepared by Coopers &
Lybrand L.L.P. as part of the Audits (as hereinafter defined); "Estimated
Excess Adjusted Working Capital" means the amount by which the Estimated
Adjusted Working Capital is more than the Adjusted Working Capital as of
March 31, 1997 as set forth in the audited balance sheets of the Companies
prepared by Coopers & Lybrand L.L.P. as part of the Audits. All estimates
and calculations made pursuant to this Section 1.02 shall be made in
accordance with GAAP, except as otherwise provided in this Section 1.02.
1.03 CONSIDERATION. Upon the terms and subject to the conditions
contained in this Agreement, in reliance upon the representations, warranties
and agreements of the Sellers and the Companies contained herein, and in
consideration of the aforesaid sale, assignment, transfer and delivery of the
Shares, the Buyer will (i) pay in cash, by wire transfer of immediately
available funds, to the Sellers (or to an agent or any other Person or
Persons designated by the Sellers in writing two days prior to the Closing)
the Purchase Price, (ii) deliver 297,400 shares of Buyer Common Stock having
the benefit of the provisions of the Buyer Equityholders Agreement (as
hereinafter defined) as unrestricted shares thereunder and (iii) deliver
148,700 shares of Buyer Common Stock having the benefits of the provisions of
the Buyer Equityholders Agreement as restricted shares thereunder, which
Aggregate Purchase Price reflects the amounts paid for the Shares as more
specifically set forth on EXHIBIT A.
1.04 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices
of Hutchins, Wheeler & Dittmar, A Professional Corporation, 101 Federal
Street, Boston, MA, United States, 02110 at 10:00 a.m. on
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the last day of the month after the satisfaction or waiver of the Closing
Conditions set forth in Article VI herein, or at such other place or time as
the parties may agree. The date and time at which the Closing actually
occurs is hereinafter referred to as the "Closing Date."
1.05 DELIVERIES BY THE SELLERS. At the Closing, the Sellers will deliver
the following to the Buyer:
(a) stock certificates representing the Shares, as set forth in
EXHIBIT A, duly endorsed for transfer or accompanied by stock powers duly
executed in blank, and any other documents that are necessary to transfer to
the Buyer good and marketable title to all such Shares;
(b) the certificate contemplated by Section 6.02(e);
(c) all other documents required to be delivered to the Buyer
pursuant to Section 6.02; and
(d) all other documents, instruments and writings reasonably
requested by the Buyer or required hereby.
1.06 DELIVERIES BY THE BUYER. At the Closing, the Buyer will deliver the
following to the Sellers:
(a) the Purchase Price;
(b) the certificate contemplated by Section 6.01(e);
(c) all other documents required to be delivered to the Sellers
pursuant to Section 6.01; and
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(d) all other documents, instruments and writings reasonably
requested by such Seller or required hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
RELATING TO THE SHARES
The Sellers jointly and severally represent and warrant to the Buyer as
follows:
2.01 CAPITALIZATION. All Shares owned by the Sellers are validly issued,
fully paid and nonassessable. Other than this Agreement, there is no
subscription, option, warrant, call, right, agreement or commitment relating
to the issuance, sale, delivery, repurchase or transfer by the Sellers
(including any right of conversion or exchange under any outstanding security
or other instrument) of such Shares. The Sellers own good and marketable
title to the Shares, free and clear of all Encumbrances. Upon the sale of
the Shares to the Buyer at Closing, such Seller will transfer to the Buyer
the entire legal and beneficial interest in all Shares, free and clear of any
Encumbrances by or through the Sellers. Except as set forth in Section 2.01
of the Disclosure Schedule, the Sellers are not party to and are not aware of
any voting trusts, proxies or any other agreements or understandings with
respect to the voting of the Shares.
2.02 EXECUTION. This Agreement has been duly and validly executed and
delivered by the Sellers and constitutes a valid and binding agreement of the
Sellers, enforceable against the Sellers in accordance with its terms, except
that (a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other similar
laws now or hereafter in effect relating to creditors' rights generally and
(b) the remedy of
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specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
2.03 CONSENTS AND APPROVALS; NO VIOLATION. Except for filings under the
HSR Act, there is no requirement applicable to the Sellers to make any filing
with, or to obtain any permit, authorization, consent or approval of, any
governmental or regulatory authority as a condition to the lawful
consummation by the Sellers of the sale of the Shares pursuant to this
Agreement, other than any such requirement that is applicable to the Sellers
as a result of the specific legal or regulatory status of the Buyer. Neither
the execution and delivery of this Agreement by the Sellers nor the sale by
the Sellers of the Shares pursuant to this Agreement will (a) result in a
default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any
agreement, lease or other instrument or obligation to which the Sellers are a
party, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been or shall
prior to the Closing be obtained, or (b) violate any order, writ, injunction
or decree applicable to such Seller or any of the Sellers' assets, excluding
from the foregoing clause (a) such defaults, rights and violations which, in
the aggregate, would not have a materially adverse effect on the ability of
the Sellers to consummate the transactions contemplated by this Agreement and
such defaults, rights and violations which would occur as a result of the
specific legal or regulatory status of the Buyer.
2.04 ACQUISITION OF STOCK FOR INVESTMENT. The Sellers receiving Buyer
Common Stock as part of the Aggregate Purchase Price are acquiring such
shares for investment and not with a
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view toward, or for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling such shares in
violation of the Securities Act of 1933 or any applicable state securities
laws. Such Sellers agree that none of such shares may be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act of 1933 except pursuant to an exemption
from such registration available under such Act. Each of the Sellers is an
accredited investor, as such term is defined in Regulation D promulgated
under the Securities Act of 1933, as amended.
2.05 SOLE REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in this Article II constitute the only such
representations and warranties of the Sellers in connection with this
Agreement and the transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
RELATING TO THE COMPANIES
The Companies jointly and severally represent and warrant to the Buyer as
follows:
3.01 CORPORATE ORGANIZATION; ETC. Each of the Companies is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to conduct its business as it is now being conducted and to own,
lease and operate its properties and assets, except where the failure to be
so organized, existing and in good standing or to have such power or
authority is not, in the aggregate, reasonably likely to have a material
adverse effect on the business, assets, financial condition or results of
operations of the Companies taken as a whole (a "Material
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Adverse Effect"). Each of the Companies is qualified or licensed to do
business as a foreign corporation and is in good standing in each
jurisdiction in which ownership of property or the conduct of its business
requires such qualification or license, except where the failure to be so
qualified or licensed is not reasonably likely to have a Material Adverse
Effect. True and complete copies of the Corporate Charter, By-Laws minute
books (containing all records of the meetings of the shareholders, the board
of directors and any committees of the board of directors), the stock
certificate books and the stock record books of each of the Companies, have
previously been made available to the Buyer. Section 3.01 of the Disclosure
Schedule sets forth each jurisdiction in which the Companies are licensed or
qualified to do business.
3.02 CAPITALIZATION OF THE FLUIDS COMPANIES; NO SUBSIDIARIES. The
capitalization of each of the Companies is set forth on Section 3.02 of the
Disclosure Schedule. There are no outstanding shares of capital stock or
other equity interests of the Companies other than the Shares. There is no
subscription, option, warrant, call, right, agreement or commitment relating
to the issuance, sale, delivery, repurchase or transfer by the Companies of
any capital stock or other equity interests or security convertible into or
exchangeable for any capital stock or other equity interests of the
Companies. All of the issued and outstanding shares of capital stock and
limited liability company interests of the Companies are duly authorized,
validly issued, fully paid and non-assessable and free of any preemptive
rights. None of the Companies own stock or have any equity investment in, or
the right to acquire any such interest or control, directly or indirectly, in
any Person.
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3.03 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Companies has all
requisite corporate authority and power to execute and deliver this Agreement
and to consummate the transactions provided for herein. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Boards of
Directors of each of the Companies and no other corporate proceedings on the
part of any Company is necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by each Company and, assuming this Agreement
has been duly authorized, executed and delivered by the Buyer, this Agreement
constitutes a valid and binding agreement of each Company, enforceable
against each such Company in accordance with its terms, except that (a) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
3.04 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth in
Section 3.04 of the Disclosure Schedule, neither the execution and delivery
of this Agreement by the Companies nor the consummation of the transactions
contemplated hereby by the Companies will (a) violate any provision of the
Corporate Charter or By-Laws of any of the Companies, (b) require any
consent, waiver, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, agency or
commission, including courts, domestic or foreign (a
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"Governmental Entity"), except for (i) HSR filings, (ii) such filings as may
be required as a result of the specific legal or regulatory status of Buyer,
and (iii) such consents, waivers, approvals, authorizations, permits, filings
or notifications which, in the aggregate, are not material, (c) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination,
cancellation or acceleration or any obligation to repay) under, any of the
terms, conditions or provisions of any agreement, lease or other instrument
or obligation to which any of the Companies is a party or by which any of the
Companies may be bound, except such violations, breaches and defaults which,
in the aggregate, are not reasonably likely to have a Material Adverse Effect
or with respect to which requisite waivers or consents identified in Section
3.04 of the Disclosure Schedule have been or shall prior to the Closing be
obtained or (d) violate any applicable order, writ, judgment, injunction,
decree, statute, ordinance, rule or regulation of any Governmental Entity,
except such violations which, in the aggregate, are not reasonably likely to
have a Material Adverse Effect.
3.05 FINANCIAL STATEMENTS. Attached hereto as Section 3.05 of the
Disclosure Schedule are the following financial statements (collectively,
"Financial Statements"): (i) audited balance sheets and statements of
income, retained earnings and cash flows of Garelick as of and for the fiscal
years ended June 30, 1995 and 1996 (the "Audited Financial Statements"); (ii)
unaudited balance sheets and unaudited statements of income, retained
earnings and cash flows of Miscoe
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and Grant's as of and for the fiscal year ended December 31, 1996 and of
Fairdale for the fiscal year ended September 30, 1996 ("Historical Fluids
Financial Statements"); (iii) unaudited balance sheet and unaudited
statements of income, retained earnings and cash flows of Miscoe and Grant's,
Fairdale and Garelick as of and for the three, six and nine months,
respectively, ended March 31, 1997 ("Most Recent Fluids Financial
Statements"); (iv) unaudited combined balance sheets and unaudited combined
statements of income, retained earnings and cash flows of the Plastics
Companies as of and for the fiscal year ended September 30, 1996 ("Historical
Plastics Financial Statements"); and (v) unaudited combined balance sheet and
unaudited combined statements of income, retained earnings and cash flows of
the Plastics Companies as of and for the six months ended March 31, 1997
("Most Recent Plastics Financial Statements"). The Audited Financial
Statements are accurate and complete in all material respects, are consistent
with the books and records of Garelick and fairly present in all material
respects the financial position, operations and cash flows of Garelick as of
the dates or for the periods presented therein in conformity with GAAP.
Each of the Historical Fluids Financial Statements, Historical Plastics
Financial Statements, the Most Recent Fluids Financial Statements and the
Most Recent Plastics Financial Statements are accurate and complete in all
material respects, are consistent with the books and records of the
respective Fluids and Plastics Companies and fairly present in all material
respects the financial position, operations and cash flows of the respective
Fluids and Plastics Companies, as of the dates or for the periods presented
therein in conformity with GAAP, subject to the items set forth on Schedule
3.05 and to absence of footnote disclosures and with respect to the Most
Recent Fluids Financial Statements and the Most Recent Plastics Financial
Statements, normal year-end adjustments. When delivered in accordance with
the terms of this Agreement, the Audits (as hereinafter defined) will be
accurate and complete in all material respects, will be consistent with the
books and records of the Fluids Companies and
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the Plastics Companies and will fairly present in all material respects the
combined financial position, operations and cash flows of the Fluids
Companies and the Plastics Companies as of the dates or for the periods
presented therein in conformity with GAAP.
3.06 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 3.06 of
the Disclosure Schedule, since March 31, 1997, the Companies have not (a)
suffered any change in their business, operations or financial position,
except such changes which, in the aggregate, are not reasonably likely to
have a Material Adverse Effect, (b) conducted their business in any material
respect not in the ordinary and usual course consistent with past practice,
(c) amended any of the Corporate Charters or By-Laws of the Companies, (d)
issued any notes, bonds or other debt securities or any capital stock or
other equity securities or any securities convertible, exchangeable or
exercisable into any capital stock or other equity or debt securities, (e)
borrowed any amount or incurred or become subject to any liabilities therefor
in excess of $100,000, except amounts incurred under existing credit
facilities in the ordinary course of business consistent with past practice
and liabilities under contracts entered into in the ordinary course of
business consistent with past practice, (f) declared or made any payment or
distribution of cash or other property to their shareholders with respect to
their capital stock or other equity securities or purchased or redeemed any
shares of its capital stock or other equity securities (including, without
limitation, any warrants, options or other rights to acquire its capital
stock or other equity securities), except for those distributions described
in clauses (i) and (ii) in Section 5.01(f), (g) mortgaged or pledged any of
its properties or assets or let them become subject to any material
Encumbrance, except Encumbrances for current property taxes not yet due and
payable (h) sold,
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assigned or transferred any of its tangible assets, except in the ordinary
course of business consistent with past practice, or canceled any material
debts or claims, (i) sold, assigned or transferred any patents or patent
applications, trademarks, service marks, trade names, corporate names,
copyrights or copyright registrations, trade secrets or other intangible
assets, (j) made capital expenditures or commitments therefor that aggregate
in excess of $250,000, (k) made any loans or advances to, guarantees for the
benefit of, or any investments in, any Person that aggregate in excess of
$100,000, (l) suffered any damage, destruction or casualty loss exceeding in
the aggregate $100,000, whether or not covered by insurance, or (m) entered
into any other material transaction outside of the ordinary course of
business.
3.07 COMPLIANCE WITH LAW. Except as set forth in Section 3.07 of the
Disclosure Schedule, the Companies are not in violation of any applicable
order, judgment, decree, statute, rule or regulation of any Governmental
Entity, except such violations which, in the aggregate, are not reasonably
likely to have a Material Adverse Effect. No action suit, proceeding,
hearing, charge, complaint, claim, demand or notice has been filed or
commenced against the Companies alleging any such violation and, to the
Companies' Knowledge, no investigation has been commenced against the
Companies alleging any such violation.
3.08 CONTRACTS AND COMMITMENTS.
(a) Section 3.08(a) of the Disclosure Schedule lists the following
agreements (including all amendments thereto), whether written or oral, to
which any of the Companies is a party or a beneficiary or by which any of the
Companies or any of their assets is bound (collectively, the "Material
Contracts"): (i) each agreement pursuant to which any of the
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Companies sells or distributes any products in excess of $5,000,000 in any
twelve month period or on a requirements or output basis; (ii) each real
estate lease or arrangement; (iii) each agreement evidencing, securing or
otherwise relating to any Indebtedness of the Companies; (iv) each capital or
operating lease or conditional sales agreement relating to vehicles,
equipment or other assets and involving payments in excess of $100,000 in any
twelve month period; (v) each agreement pursuant to which any of the
Companies are entitled or obligated to acquire any assets in excess of
$250,000 in any twelve month period from a third party; (vi) insurance
policies; (vii) each employment, consulting, noncompetition, separation,
collective bargaining, union or labor agreement; (viii) agreements with or
for the benefit of any shareholder or employee of the Companies or any
affiliate or immediate family member thereof involving payments in excess of
$100,000 in any twelve month period;(ix) any other agreement pursuant to
which any of the Companies is required to make or entitled to receive
aggregate payments or other value in excess of $100,000 in any twelve month
period; and (x) any other contract or agreement, the termination of which is
reasonably likely to have a Material Adverse Effect.
(b) The Companies have delivered to the Buyer a copy of each written
Material Contract and a written summary of each unwritten Material Contract.
Except as set forth in Section 3.08(b) of the Disclosure Schedule, (i) each
written Material Contract is valid, binding and in full force and effect and
enforceable in accordance with its terms; (ii) the Companies have performed all
of their material obligations under each Material Contract, and there exists no
material breach or default (or event that with notice or lapse of time would
constitute a material breach or default) on the part of the Companies or, to the
Companies'
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Knowledge, on the part of any other party under any Material Contract; (iii)
there has been no termination or notice of default or, to the Companies'
Knowledge, any threatened termination under any Material Contract; and (iv)
to the Companies' Knowledge, no party to a Material Contract intends to alter
its relationship with the Companies in any material respect as a result of or
in connection with the acquisition contemplated by this Agreement.
3.09 NO UNDISCLOSED LIABILITIES. Except as and to the extent set forth
in (i) the Most Recent Fluids Financial Statements and the Most Recent
Plastics Financial Statements, (ii) the Audited Financial Statements or (iii)
the Audits (when delivered pursuant to this Agreement) (collectively, the
"Delivered Financial Statements"), the Companies did not have at March 31,
1997 any material direct or indirect debts, obligations or liabilities of any
nature, whether absolute, accrued, contingent, liquidated or otherwise, and
whether due or to become due, asserted or unasserted, known or unknown which
were required to be set forth in the Most Recent Fluids Financial Statements
or the Most Recent Plastics Financial Statements in accordance with GAAP,
including any information required to be set forth in footnotes which would
have been required under GAAP if such financial statements were year-end
financial statements (collectively, "Liabilities"). Except as and to the
extent set forth in Section 3.09 of the Disclosure Schedule, since March 31,
1997, none of the Companies has incurred any Liabilities, except liabilities
incurred in the ordinary course of business consistent with past practice.
3.10 NO DEFAULT. Except as set forth in Section 3.10 of the Disclosure
Schedule, none of the Companies is in default or violation (and no event has
occurred which with notice or the
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lapse of time or both would constitute a default or violation) of any term,
condition or provision of (i) its Corporate Charter or By-Laws or (ii) any
order, judgment, decree, statute, rule or regulation of any Governmental
Entity applicable to such Company, except such defaults and violations which,
in the aggregate, are not reasonably likely to have a Material Adverse Effect.
3.11 LITIGATION. Except as set forth in Section 3.11(a) of the
Disclosure Schedule, there are no pending or, to the Companies' Knowledge,
threatened material lawsuits, administrative proceedings, reviews,
arbitrations or formal or informal complaints or investigations by any
Governmental Entity or Person against or relating to the Companies or any of
their shareholders, directors, employees or agents (in their capacities as
such). The Companies are not subject to or bound by any currently existing
judgment, order of court, writ, injunction or decree.
3.12 TAXES. Except as set forth in Section 3.12(a) of the Disclosure
Schedule, each of the Companies has, within the time and manner prescribed by
law, filed all material returns, declarations, reports and statements
required to be filed by it (together, "Returns") in respect of any Taxes (as
hereinafter defined), each such Return has been prepared in compliance in
all material respects with all applicable laws and regulations and is true
and correct in all material respects, and each of the Companies has, within
the time and in the manner prescribed by applicable law, paid all Taxes that
are shown to be due and payable with respect to the periods covered thereby.
Each of the Companies which is a corporation is an "S-corporation" under the
Code, has had in effect since its respective corporate inception, or such
other date as set forth in Section 3.12(b) of the Disclosure Schedule, a
valid, binding, timely filed election to be taxed pursuant to Subchapter S of
the Code, and is not liable for any federal income taxes as a "C-
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corporation" under the Code. Except as set forth in Section 3.12(b) of the
Disclosure Schedule (i) none of the Companies has requested or been granted
an extension of the time for filing any Return which has not yet been filed;
(ii) none of the Companies has consented to extend to a date later than the
date hereof the time in which any Tax may be assessed or collected by any
taxing authority; (iii) no deficiency or proposed adjustment which has not
been settled or otherwise resolved for any amount of Tax has been proposed,
asserted or assessed by any taxing authority against any of the Companies;
(iv) there is no action, suit, taxing authority proceeding, or audit now in
progress, pending or, to the Companies' Knowledge, threatened against or with
respect to any of the Companies; (v) no claim has been made by a taxing
authority in a jurisdiction where any of the Companies do not file Tax
Returns that one or more the Companies are subject to Taxes assessed by such
jurisdiction; (vi) there are no liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of any of the Companies; (vii) none
of the Companies will be required to include any amount in taxable income or
exclude any item of deduction or loss from taxable income for any taxable
period (or a portion thereof) ending after the Closing Date as a result of
any of the following: (A) a change in method of accounting for a taxable
period ending on or prior to the Closing Date, (B) any "closing agreement,"
as described in Code Section 7121 (or any corresponding provision of state,
local or foreign income Tax law) entered into on or prior to the Closing
Date, (C) any sale reported on the installment method where such sale
occurred on or prior to the Closing Date, and (D) any prepaid amount received
on or prior to the Closing Date; and (viii) none of the Companies has any
obligation or liability for the payment of Taxes of any other Person as a
result from any expressed obligation to indemnify
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another Person, or as a result of such Company assuming or succeeding to the
Tax liability of any other Person as successor, transferee or otherwise. For
purposes of this Agreement, "Taxes" shall mean all taxes, assessments and
charges (including, interest and penalties) imposed by any federal, state,
local or foreign taxing authority.
3.13 BROKERS AND FINDERS. None of the Companies or any of their
respective officers, directors, shareholders or employees has employed any
broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the
transactions contemplated by this Agreement, except for fees and expenses to
J.P. Morgan Securities Inc. and Scott P. Mason for financial advisory
services.
3.14 TITLE TO PROPERTIES.
(a) Except as set forth in Section 3.14 of the Disclosure Schedule,
each of the Companies has good and merchantable title to all of the material
assets and properties (other than real property) which it owns (except for
assets and properties sold, consumed or otherwise disposed of by the
Companies in the ordinary course of business since the date of the Balance
Sheets) and good and marketable title to all of the real property which it
owns, and such assets and properties are owned free and clear of all
Encumbrances, except for (a) Encumbrances listed in Section 3.14 of the
Disclosure Schedule, (b) liens for current Taxes not yet due and payable or
for Taxes the validity of which is being contested in good faith and for
which adequate reserves have been set aside, (c) Encumbrances to secure
indebtedness reflected on the Balance Sheets or Schedule 3.08(a)(iv) or
indebtedness incurred in the ordinary course of business and consistent with
past practice after the date thereof, (d) mechanic's, materialmen's and other
Encumbrances
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which have arisen in the ordinary course of business and which in the
aggregate, are not material, and (e) Encumbrances which, in the aggregate,
are not reasonably likely to materially interfere with the Companies' use of
such assets.
(b) The real property owned or leased by the Companies as described
in Section 3.14 of the Disclosure Schedule (the "Real Property") is, to the
Companies' knowledge, zoned for a classification that permits the continued
use of the Real Property in the manner currently used by the Companies in all
material respects. Improvements at Garelick's Franklin facility were
constructed in compliance in all material respects, and improvements on the
real property owned by the Companies are in compliance in all material
respects, with all applicable laws, statutes, regulations, codes, covenants,
conditions and restrictions affecting the Real Property. Final certificates
of occupancy have been issued for the improvements of the Real Property
permitting the existing use of such improvements. None of the Companies has
received written notice of any pending or threatened action that would
materially alter the current zoning classification of the Real Property or
alter any applicable laws, statutes, regulations, codes, covenants,
conditions or restrictions that would adversely affect the use of the Real
Property in the Companies' business. None of the Companies has received
written notice from any insurance company or Governmental Entity of any
defects or inadequacies in the Real Property or the improvements thereon that
would materially and adversely affect the insurability or usability of the
Real Property or such improvements or prevent the issuance of new insurance
policies thereon at rates not materially higher than present rates.
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3.15 PATENTS, TRADEMARKS, ETC. Except as set forth in Section 3.15 of the
Disclosure Schedule, (a) the Companies own or possess adequate licenses or other
valid rights to use all patents, trademarks, trade names, service marks,
copyrights and applications therefor which are material to the conduct of the
business of the Companies taken as a whole, all of which are set forth in
Section 3.15 of the Disclosure Schedule (the "Patent and Trademark Rights"), (b)
the validity of the Patent and Trademark Rights and the title thereto of the
Companies are not being questioned in any investigation, complaint, proceeding
or litigation to which any Company is a party or of which it has Knowledge, nor
to the Companies' Knowledge, is any such investigation, complaint, proceeding or
litigation threatened and (c) to the Companies' Knowledge, the conduct of the
business of the Companies does not conflict with or infringe upon any patents,
trademarks, trade name, service marks or copyrights of others in any way which
is reasonably likely to have a Material Adverse Effect.
3.16 INSURANCE. All insurance policies (the "Insurance Policies") of the
Companies are in full force and effect and are set forth in Section 3.16 of the
Disclosure Schedule. Except as set forth in Section 3.16 of the Disclosure
Schedule, there are no pending material claims against the Insurance Policies of
any Company as to which the insurers have denied liability. To the Companies'
knowledge, none of the Companies has been refused insurance coverage due to any
alleged defect or inadequacy in the Real Property or the improvements thereon or
has received any notice of termination or non-renewal with respect to any of
such policies. The Companies make no representation or warranty that such
insurance will be continued or is continuable after the Closing.
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3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 3.17 of the Disclosure Schedule:
(i) each of the Companies has conducted its business in compliance in all
material respects with all applicable Environmental Laws, including without
limitation by having all material permits required under any Environmental Laws
for the operation of its business; (ii) to the Companies' knowledge none of the
Real Property contains any Hazardous Substance in amounts exceeding the levels
permitted by applicable Environmental Laws; (iii) none of the Companies has
received any notices, demand letters or written requests for information from
any Governmental Entity or other Person indicating that the Companies may be in
material violation of, or liable in any material amount under, any Environmental
Law; (iv) except as delivered to the Buyer prior to the date hereof no reports
have been filed with any Governmental Entity, or are required to be filed, by
any of the Companies concerning the release of any Hazardous Substance or the
actual violation of any Environmental Law; (v) no Hazardous Substance has been
disposed of, released or transported in material violation of any applicable
Environmental Law to or from any Real Property as a result of any activity of
the Companies; and, to the Companies' Knowledge, no Hazardous Substance has been
disposed of, released or transported in material violation of any applicable
Environmental Law to or from any Real Property as a result of any activity of
any third party; (vi) there have been no material environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance or
noncompliance with any Environmental Law conducted by or which are in the
possession of the Companies relating to the activities of the Companies or any
of the Real Property that have not been delivered to the Buyer prior to the date
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hereof; (vii) to the Companies' knowledge, except as in compliance with
Environmental Laws, there are no underground storage tanks for storage of oil or
Hazardous Substances on, in or under any of the Real Property, and no
underground storage tanks have been closed or removed from any of the Real
Property; (viii) there is no friable asbestos in violation of any Environmental
Law present in any of the Real Property, and no asbestos has been removed from
any of the Real Property except in compliance with Environmental Laws; and (ix)
the Companies are not subject to any Liabilities or material expenditures
relating to any suit, settlement, court order, administrative order, judgment
asserted or arising under any Environmental Law.
(b) As used herein, "Environmental Law" means the Federal Water
Pollution control Act, the Claim Air Act, the Toxic Substances Control Act, the
Solid Waste Disposal Act, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Emergency Planning and Community
Right-To-Know Act and the Safe Drinking Water Act, and the rules and regulations
thereunder and all other federal, state, local and foregoing statutes, rules,
regulations and other provisions having the force and effect of law and relating
to the pollution or protection of the environment, natural resources or worker
health and safety.
(c) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous under any Environmental Law. Hazardous
Substance includes any substance to which exposure is regulated by an
Governmental Entity or any Environmental Law, including without limitation any
toxic waste, pollutant, containment, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-products thereof, radon,
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radioactive materials, asbestos or asbestos containing material, urea
formaldehyde, foam insulation, lead or polychlorinated biphenuls.
3.18 LABOR RELATIONS. Except as set forth in Section 3.18 of the Disclosure
Schedule, none of the Companies has any collective bargaining, union or labor
agreements, contracts or other arrangements with any group or employees, labor
union or employee representative. To the Companies' Knowledge, there is no
organizing effort currently being made or threatened by or on behalf of any
labor union with respect to employees of any of the Companies. None of the
Companies has experienced, and none of the Companies know or have reasonable
grounds to know of any basis for any strike, material labor trouble, work
stoppage, slow down or other interference with or impairment of the businesses
of the Companies. Since March 31, 1997, there have been no increases in
compensation of any employee, other than in the ordinary course of business for
normal merit and seniority raises. Except as set forth in Section 3.18 of the
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not accelerate the time of payment or vesting or increase the
amount of compensation payable by any of the Companies to any director, officer
or current or former employee of the Companies.
3.19 EMPLOYEES BENEFIT PLANS.
(a) Set forth in Schedule 3.19(a) of the Disclosure Schedule is a
complete and correct list of all "employee benefit plans" (as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), all
material plans or material policies providing for "fringe benefits" (including
but not limited to vacation, paid holidays, personal leave, employee discount,
educational benefit or similar programs), and each other bonus, incentive,
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compensation, deferred compensation, profit sharing, stock, severance,
retirement, health, life, disability, group insurance, employment, stock option,
stock purchase, stock appreciation right, supplemental unemployment, layoff,
consulting, or any other similar plan, agreement, policy, or understanding
(whether written or oral, qualified or nonqualified), and any trust, escrow or
other similar agreement related thereto that (a) is maintained or contributed to
by the Companies or any ERISA Affiliate or with respect to which the Companies
or any ERISA Affiliate has any liability, or (b) provides benefits to any
officer, employee, director, former officer, former employee, or former director
of the Companies or any ERISA Affiliate, or any dependent thereof, regardless of
whether funded (each, an "Employee Plan," and collectively, the "Employee
Plans"). "ERISA Affiliate" means each Company and each Person that is or has
been treated as a single employee or controlled group member with any of the
Companies pursuant to Section 414 of the Code or Section 4001 of ERISA.
(b) Except as set forth in Section 3.19 of the Disclosure Schedule,
no written or oral representations have been made to any employee or officer or
former employee or officer of the Companies promising or guaranteeing any
coverage under any employee welfare plan for any period of time beyond the end
of the current plan year (except to the extent of coverage required under Code
section 4980B), and no Employee Plan provides benefits to any employee of any of
the Companies or any ERISA Affiliate or any employee's dependents after the
employee terminates employment other than as required by law. Except as set
forth in Section 3.19 of the Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not accelerate the time of
payment or vesting, or increase the amount of
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compensation (including amounts due under Employee Plans) due to any
employee, officer, former employee, or former officer of the Companies.
(c) With respect to each Employee Plan, the Companies have made
available to the Buyer, where applicable, true, correct and complete copies of
(i) any plan documents and summary plan description; (ii) the most recent
determination letter received from the Internal Revenue Service; (iii) the
annual reports required to be filed for the three most recent plan years of each
such Employee Plan; (iv) all related trust agreements, insurance contracts or
other funding agreements that implement such Employee Plan; and (v) all other
documents, records, or other materials related thereto reasonably requested by
the Buyer.
(d) None of the Companies, any ERISA Affiliate, or, to the Companies'
Knowledge, any plan fiduciary of any Employee Plan, has engaged in any
transaction in violation of Section 406(a) or (b) of ERISA or any "prohibited
transaction" (as defined in Section 4975(c)(1) of the Code), which would subject
any of the Companies, any ERISA Affiliate, or the Buyer to any taxes, penalties
or other liabilities resulting from such prohibited transaction which
individually or in the aggregate could have a Material Adverse Effect.
(e) None of the Companies is a party to any agreement that will or
may provide payments to any officer, employee, shareholder, or highly
compensated individuals that will be non-exempt "parachute payments" under Code
section 280G that are nondeductible to the Companies or subject to tax under
Code section 4999 for which the Companies or any ERISA Affiliate would have
withholding liability.
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(f) Except as set forth in Section 3.19 of the Disclosure Schedule:
there is no Employee Plan that is or was subject to Part 3 of Title I of ERISA
or Title IV of ERISA; each Employee Plan has been operated in all respects in
compliance with ERISA, the Code, and all other applicable laws, except to the
extent that such noncompliance would not have a Material Adverse Effect; none of
the Employee Plans is or was a "multiple employer plan" or "multiemployer plan"
(as described or defined in ERISA or the Code), nor has the Companies or any
ERISA Affiliate ever contributed or been required to contribute to any such
plan; each Employee Plan which has not been terminated could be terminated as of
the Closing Date without any material liability to the Buyer, Companies, or any
ERISA Affiliate (other than any liability relating to (i) claims incurred on or
before the Closing Date, (ii) accrued but unpaid vacation days, (iv) accrued but
unpaid bonuses, (v) the Company-paid executive life insurance program, (vi) the
health insurance extension of coverage for Tom Hazabrouck and Gerry Marchand,
(vii) the benefits and compensation policies described in any collective
bargaining agreements, and (viii) termination charges or other limitations
applicable to guaranteed investment contract accounts under group annuity
contracts for the qualified plans).
(g) There are no actions, suits, claims, audits, or investigations
pending or, to the Companies' Knowledge, overtly threatened against, or with
respect to, any of the Employee Plans or their assets (other than ordinary
claims for benefits); and all contributions required to be made to the Employee
Plans have been made timely.
(h) Each Employee Plan which is intended to qualify under Section
401(a) of the Code meets the qualification requirements of the Code in form and
operation in all material
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respects, and, the Companies or an ERISA Affiliate has received a favorable
determination letter from the Internal Revenue Service as to the
qualification under the Code of such plans and the tax-exempt status of such
related trusts. All Employee Plans purporting to qualify for special tax
treatment under any provision of the Code, including, without limitation,
Code sections 79, 105, 106, 125, 129, 132, 421 or 501(c)(9), meet the
requirement of such sections in form and in operation, except to the extent
that the failure to do so would not have a Material Adverse Effect. All
reports, returns, or filings required by any government agency have been
timely filed in accordance with all applicable requirements, except to the
extent that the failure to do so would not have a Material Adverse Effect.
(i) With respect to each employee benefit plan, as defined in Section
3(2) of ERISA which is subject to the minimum funding requirements of Code
Section 312 which any Company or any ERISA Affiliate maintains or contributes
to, or has maintained or has contributed to: (i) with respect to such plans
which have been terminated, the plan sponsor has received a favorable
determination letter on termination from the Internal Revenue Service; (i) the
Companies and the ERISA Affiliates have paid all premiums (and interest charges
and penalties for late payment, if applicable) due to the Pension Benefit
Guaranty Corporation ("PBGC") with respect to each such plan and each plan year
thereof for which premiums were required; and (iii) the Company has no basis to
believe that the termination of such plan will subject any Company, any ERISA
Affiliate, or the Buyer to any liability to the PBGC nor to any other Person.
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3.20 PERMITS. Each of the Companies owns or possesses from each
appropriate Governmental Entity all right, title and interest in and to all
permits, licenses, authorizations, approvals, quality certifications, franchises
or rights (collectively, "Permits") issued by any Governmental Entity that are
material to the conduct of their business. No revocation of any such Permit is
pending or, to the Companies' Knowledge, threatened.
3.21. COMPETING INTERESTS. Except as set forth in Section 3.21 of the
Disclosure Schedule, none of the Companies, any shareholder or, to the
Companies' Knowledge, any individual identified in the definition of "Companies'
Knowledge," or any affiliate or immediate family member of any of the foregoing
owns, directly or indirectly, an interest in any Person that is a competitor,
customer or supplier of the Companies or that otherwise has material business
dealings with any of the Companies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each Seller as follows:
4.01 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted except where the failure to be so
organized, existing and in good standing or to have such power or authority (a)
is not, in the aggregate, reasonably likely to have a material adverse effect on
the business, assets or financial condition of the Buyer or (b) would not
impair, hinder or adversely affect the ability of the Buyer to perform any of
its obligations under this Agreement or to
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consummate the transactions contemplated hereby (either of such effects, a
"Buyer Material Adverse Effect"). The Buyer has heretofore delivered to the
Sellers complete and correct copies of its Corporate Charter and By-laws, as
currently in effect.
4.02 AUTHORITY RELATIVE TO THIS AGREEMENT. The Buyer has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of the Buyer and no other corporate
proceedings on the part of the Buyer are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Buyer and constitutes a valid and
binding agreement of the Buyer, enforceable against the Buyer in accordance with
its terms, except that (a) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium (whether general or specific) or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
4.03 CONSENTS AND APPROVALS; NO VIOLATION. Except for HSR filings, there
is no requirement applicable to the Buyer to make any filing with, or to obtain
any permit, authorization, consent or approval of, any governmental or
regulatory authority as a condition to lawful consummation by the Buyer of the
purchase of the Shares pursuant to this Agreement. Neither the execution and
delivery of this Agreement by the Buyer nor the purchase by the Buyer
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of the Shares pursuant to this Agreement will (a) conflict with or result in
any breach of any provision of the Corporate Charter or By-laws of the Buyer,
(b) require any consent, waiver, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except for such
consents, waivers, approvals, authorizations, permits, filings or notifications
which, in the aggregate, are not reasonably likely to have a Buyer Material
Adverse Effect, (c) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any agreement, lease or other instrument or obligation to
which the Buyer or any of its subsidiaries is a party, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been or shall prior to the Closing be
obtained or which, in the aggregate, would not have a Buyer Material Adverse
Effect or (d) violate any applicable order, writ, injunction or decree
applicable to the Buyer, which would have a Buyer Material Adverse Effect.
4.04 ACQUISITION OF STOCK FOR INVESTMENT. The Buyer is acquiring the
Shares for investment and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling such Shares. The Buyer agrees that none of the Shares may be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act of 1933 except pursuant to an
exemption from such registration available under such Act.
4.05 FINANCIAL ABILITY TO PERFORM. The Buyer has delivered to the Sellers
a true and correct copy of an executed commitment letter dated June 20, 1997
from First Union Bank of North Carolina, First Union Capital Markets Corp., The
First National Bank of Chicago and First
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Chicago Capital Markets, Inc. (the "Commitment") regarding the financing
necessary to permit the Buyer to consummate the transactions contemplated by
this Agreement (the "Financing"). Information concerning the Companies
provided by the Buyer to the signatories to the Commitment is consistent with
the information provided to the Buyer by the Sellers and the Companies.
4.06 LITIGATION. There is no action, suit or proceeding pending, or, to
the knowledge of the Buyer, action, suit or proceeding threatened, against the
Buyer before any Governmental Entity which is reasonably likely to have a Buyer
Material Adverse Effect. The Buyer has not received notice that it is subject
to any outstanding judgment, order or decree of any Governmental Entity which is
reasonably likely to have a Buyer Material Adverse Effect.
4.07 BROKERS AND FINDERS. None of the Buyer or any of its officers,
directors or employees has employed any investment banker, broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
4.08 BUYER'S ACKNOWLEDGMENTS. The Buyer acknowledges and agrees that it
(a) has made its own inquiry and investigation into, and, based thereon, has
formed an independent judgment concerning, the Companies, and (b) has been
furnished with or given such access to such representatives of the Companies and
the Sellers, and books, records and other information about the business of the
Companies as it has requested.
4.09 BUYER'S REPRESENTATIONS CONCERNING BUYER COMMON STOCK. The shares of
Buyer Common Stock to be issued to the Sellers hereunder, when issued, shall be
duly authorized,
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validly issued, fully paid and nonassessable. Upon the sale of such shares
to such Sellers at Closing, the Buyer will transfer to such Sellers the
entire legal and beneficial interest in all of such shares free and clear of
any Encumbrances arising by or through the Buyer. The execution and delivery
of the Buyer Equityholders Agreement has been duly authorized by the Board of
Directors of the Buyer and no other corporate proceedings on the part of the
Buyer are necessary to authorize the Buyer Equityholders Agreement or to
consummate the transactions contemplated thereby. When executed and
delivered by the Buyer, the Buyer Equityholders Agreement shall be duly and
validly executed and delivered by the Buyer and shall constitute a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance
with its terms, except that (a) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium (whether general or
specific) or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 CONDUCT OF THE BUSINESS OF THE COMPANIES. Except as contemplated by
this Agreement, during the period from the date of this Agreement to the Closing
Date, the Sellers will cause the Companies to conduct their business and
operations according to their ordinary and usual course of business consistent
with past practice. Without limiting the generality of the
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foregoing, the Sellers will not, without the prior written consent of the
Buyer, permit any Company to:
(a) (i) create, incur or assume any Indebtedness; or (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person; PROVIDED,
that the Companies may (i) incur Indebtedness in the ordinary course of business
consistent with past practice in an amount not to exceed $1,000,000 or to fund
dividends permitted by Section 5.01(f) hereof, and (ii) endorse negotiable
instruments in the ordinary course of business;
(b) redeem or otherwise acquire any Shares;
(c) except in the ordinary course of business consistent with past
practice, (i) sell, transfer or otherwise dispose of any of its property or
assets or (ii) mortgage or encumber any of its property or assets;
(d) enter into any agreement, commitment or transaction (including
without limitation any borrowing, capital expenditure or capital financing)
material to the Companies, except agreements, commitments or transactions in the
ordinary course of business consistent with past practice or as contemplated
herein;
(e) materially change the accounting methods, principles or practices
employed by the Companies;
(f) declare or pay any dividend or distribution on any shares of the
capital stock of the Companies, other than (i) the payment of dividends to fund
the Tax liabilities of the Sellers through the Closing Date in accordance with
past practice and (ii) the payment of
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dividends equal to the net income of the Companies from the beginning of the
current fiscal year of each Company through the Closing Date (after
subtracting the amount of any dividend paid under clause (i) with respect to
such period); and
(g) increase the compensation or benefits of any management level
employee or other key employee of any of the Companies, other than for normal
merit and seniority raises in the ordinary course of business consistent with
past practice.
5.02 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Closing Date, the
Sellers will cause the Companies, during ordinary business hours and upon
reasonable advance notice, (i) to give the Buyer and its authorized
representatives reasonable access to all books, records, offices and other
facilities and properties of the Companies, (ii) to permit the Buyer to make
such inspections thereof as the Buyer may reasonably request, and (iii) to cause
their officers to furnish the Buyer with such financial and operating data and
other information with respect to the business and properties of the Companies
as the Buyer may from time to time reasonably request; PROVIDED, HOWEVER, that
any such investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Companies.
(b) Any information provided pursuant to this Agreement shall be held
by the Buyer in accordance with and shall be subject to the terms of the
Confidentiality Agreement, dated March 28, 1997, between the Buyer and Garelick,
on behalf of itself and its affiliates, including the Companies (the
"Confidentiality Agreement").
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5.03 FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, the Sellers and the Buyer agree to use their respective best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement and to
cooperate in connection with the foregoing, including using their respective
commercially reasonable efforts (a) to obtain all necessary waivers, consents
and approvals from other parties to leases and other contracts, (b) to obtain
all consents, approvals and authorizations that are required to be obtained
under any federal, state or local law or regulation, (c) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties hereto to consummate the transactions contemplated hereby, (d) to
effect all necessary registrations and filings including, but not limited to,
HSR filings and submissions of information requested by Governmental Entities,
(e) to obtain sufficient financing in order to consummate the transactions
contemplated hereby and (f) to fulfill all conditions to this Agreement. The
Sellers and the Buyer further covenant and agree, with respect to a threatened
or pending preliminary or permanent injunction or other order, decree or ruling
or statute, rule, regulation or executive order that would adversely affect the
ability of the parties hereto to consummate the transactions contemplated
hereby, to use their respective best efforts to prevent the entry, enactment or
promulgation thereof, as the case may be. From time to time after the Closing
Date, without further consideration, each Seller will, at his or its own
expense, execute and deliver such documents to the Buyer as the Buyer may
reasonably request in order more
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effectively to vest in the Buyer good and marketable title to the Shares sold
by such Seller pursuant hereto.
5.04 SOLVENCY AFTER THE CLOSING. After the Closing, the Buyer agrees that
it shall not, and that it shall cause the Companies not to, take or cause to be
taken or omit to take any action which would result in a determination pursuant
to state or federal law that, after giving effect to the transactions
contemplated hereby (or after giving effect to such transactions and to such
other subsequent actions or omissions), such Company (a) was insolvent at the
time of the Closing, (b) became insolvent as a result of the transactions
contemplated hereby, (c) was left with unreasonably small capital with which to
engage in its business or (d) incurred debts beyond its ability to pay such
debts as they mature, such that the payment of the Purchase Price pursuant
hereto may be deemed a "fraudulent conveyance" or impermissible dividend or
distribution under applicable law or otherwise subject to claims of certain
creditors of any of the Companies or its trustees in a bankruptcy proceeding.
5.05 FILINGS. The Buyer will use its best efforts to make or cause to be
made as soon as practicable all such HSR filings and submissions under laws and
regulations applicable to the Buyer, if any, as may be required of the Buyer for
the consummation of the purchase of the Shares pursuant to this Agreement. Each
Seller will use his or her best efforts to make or cause to be made as soon as
practicable all such other filings and submissions under laws and regulations
applicable to the Seller, if any, as may be required of the Seller or the
Companies for the consummation of the sale of the Shares pursuant to this
Agreement. The parties hereto will
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coordinate and cooperate with one another in exchanging such information and
providing reasonable assistance as may be requested in connection with all of
the foregoing.
5.06 PUBLIC ANNOUNCEMENTS. The Companies, the Sellers and the Buyer will
consult with each other before issuing any press releases or otherwise making
any public statements with respect to this Agreement and the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement prior to the Closing (i) without the consent of the Buyer, in
the case of the Companies, the Sellers, and (ii) without the consent of the
Companies, the Sellers, in the case of the Buyer except that such approval shall
not be required for a public statement to the extent the Buyer is advised by its
legal counsel that such disclosure is required by applicable law or by rule or
regulation of the New York Stock Exchange.
5.07 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, each party agrees to bear its own expenses in connection with the
Transactions except that the fees and expenses of the Sellers and the Companies,
including, without limitation, the fees set forth in Section 3.13, will be paid
by the Companies simultaneously with the Closing. The Sellers shall provide to
the Buyer not more than two days prior to Closing an estimate of such fees and
expenses.
5.08 DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing, the
Sellers and the Companies will supplement or amend the Disclosure Schedule with
respect to any matter hereafter arising which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule or which is necessary to complete or
correct any information in the Disclosure Schedule or in any representation or
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warranty of the Sellers or the Companies which has been rendered inaccurate
thereby. For purposes of determining the satisfaction of the conditions set
forth in Article VI hereof, no such supplement or amendment shall be given
effect.
5.09 CERTAIN TAX MATTERS.
(a) The Sellers will join with the Buyer in making an election under
Code Section 338(h)(10) and Treasury Regulation Section 1.338(h)(10)-1(a) and
(d)(1)(i), and any corresponding elections permitted under state, local or
foreign law, with respect to the purchase and sale of the Shares (the
"338(h)(10) Elections"). The Buyer will prepare copies of Internal Revenue
Service Form 8023-A, required schedules thereto, and any similar state, local or
foreign forms or schedules, for execution by the Sellers, as soon as practicable
after the Closing Date. The Sellers and the Buyer agree that as a result of the
338(h)(10) Elections, the deemed asset sale resulting from the 338(h)(10)
Elections must be included in the final short S-corporation tax periods of the
Companies. The Sellers will not, and will not permit any of the Companies to,
take, cause or permit to be taken any action that would disqualify this
transaction as deemed asset sales under Section 338(h)(10) and Treasury
Regulation Section 1.338(h)(10)-1(a) and (d)(1)(i) of the Code. Notwithstanding
anything to the contrary contained herein, the Companies shall pay all federal,
state, local and foreign entity level taxes incurred by the Companies as a
result of, arising from or attributable to the making of the Section 338(h)
Elections (the "Section 338(h)(10) Entity Taxes").
(b) The Sellers shall provide the Buyer, and the Buyer shall or shall
cause the Companies to provide the Sellers, with such assistance as may
reasonably be requested by either
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of them in connection with the preparation of any tax Return with respect to
periods ending on or before the Closing Date or including the Closing Date,
any notice, letter, correspondence, claim, audit or other examination by any
taxing authority, or any judicial or administrative proceedings relating to
liability for Taxes, and for a period of at least 5 years from the Closing
Date each will retain and provide the other with any records or information
which may be relevant to such Return, audit or examination, proceedings or
determination. Any information obtained pursuant to this Section to any other
Section hereof providing for the sharing of information or the review of any
tax Return or other schedule relating to Taxes shall be kept confidential by
the parties hereto. The parties agree that the allocation of any items of
income, gain, deduction or credit (except for Section 338(h)(10) Entity Taxes,
which are the responsibility of the Companies) shall be allocated as if there
were a closing of the books applying the principles of Sections 1362(e)(3) and
1362(e)(6)(D) of the Code, and the parties will make all elections consistent
therewith.
(c) Except for tax Returns described in Section 5.09(e) hereof,
Sellers shall be responsible for filing and shall have the sole authority to
file all federal, state, local and foreign tax Returns filed by or with respect
to the Companies for any taxable period ending on or before the Closing Date,
which returns shall be prepared in a manner and employing principles consistent
with past Returns. The parties agree that the Companies shall pay all entity
level taxes due with respect to such tax Returns. Buyer shall cause the
Companies, on their income tax Returns for the short taxable year beginning on
or after the Closing Date, to allocate any items of income, gain, deduction or
credit for the calendar year including the Closing Date in a manner consistent
with the allocations of such items made by the Sellers in the tax Returns
described in
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the preceding sentence. Neither the Buyer nor the Companies shall amend any
tax Return described in the first sentence of this paragraph or take any
other action, except as required by law, to cause any adjustments to the
allocations of any items of income, gain, deduction or credit set forth
therein.
(d) Buyer shall promptly notify Sellers in writing of any notice,
letter, correspondence, claim, audit or other administrative proceedings,
dispute or contest by any taxing authority concerning any tax Return of the
Companies filed with respect to any taxable year or period ending on or before
the Closing Date.
(e) Buyer, on the one hand, and the Sellers, on the other, shall each
be responsible for one half of all stock transfer taxes, sales taxes,
documentary stamp taxes, recording charges and other similar taxes resulting
from, arising under or in connection with the transfer of the Shares hereunder
or any other related transaction under this Agreement.
(f) Except for tax returns described in Section 5.09(e) hereof,
Sellers shall have the sole authority and exclusive right, at their own expense,
to control any audit or determination by any authority, initiate any claim for
refund or amended Return, and contest, resolve and defend against any
assessment, notice of deficiency, or other adjustment or proposed adjustment of
Taxes for tax years ending on or prior to the Closing Date.
(g) Buyer shall be responsible for, and shall have sole authority to
file, any C corporation tax return for any period beginning on the Closing Date.
(h) Buyer will not take and will cause the Companies not to take any
position on any tax Return for any period ending on or after the Closing Date
which is inconsistent with
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any position taken by the Companies on its tax Returns for any period ending
on or prior to the Closing Date, so long as the statute of limitations
(determined without regard to any extensions thereof by the Sellers) has not
expired on the pre-Closing Date Return(s) in question.
(i) The Buyer will prepare or cause to be prepared and filed or cause
to be filed any Tax Returns of the Companies for Tax periods which begin before
the Closing Date and end after the Closing Date. The Sellers will pay to the
Companies within 15 days of the date on which Taxes are paid with respect to
such period an amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date, to the extent such
Taxes were not taken into account in computing the Adjusted Working Capital
Shortfall or the Excess Adjusted Working Capital, as the case may be.
Notwithstanding the foregoing, in no event shall the Sellers be responsible for
payment of Section 338(h)(10) Entity Taxes. For purposes of this Section
5.9(i), in the case of any Taxes that are imposed on a periodic basis and are
payable for a taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such taxable
period ending on the Closing Date will (x) in the case of any Taxes other than
income Taxes, be deemed to be the amount of such Tax for the entire taxable
period multiplied by a fraction the numerator of which is the number of days in
the taxable period ending on the Closing Date and the denominator of which is
the number of days in the entire taxable period, and (y) in the case of any
income Tax, be deemed equal to the amount which would be payable if the relevant
taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations will be made in a manner consistent with
prior practice of the Companies. Notwithstanding any obligation or
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rights set out in this Section 5.9(i), the Buyer will retain any rights to
indemnification as set forth in Article VIII.
5.10 CERTAIN SELLER COVENANTS.
(a) NONCOMPETITION. For a period of 5 years following the Closing,
none of the Sellers will, directly or indirectly, on its own behalf or as an
officer, director, employee, consultant or other agent of, or as a stockholder,
partner or other investor in, any Person (other than Buyer):
(i) engage in the business of manufacturing, processing,
distributing, marketing or selling dairy products, fruit drinks, bottled water
or blow mold PET or high density plastic containers (the "Business") within the
United States and Puerto Rico ( the "Territory");
(ii) directly or indirectly influence or attempt to influence any
customer or prospective customer of any of the Companies or Buyer located within
the Territory to purchase goods or services related to the Business from any
Person other than the Companies or Buyer; or
(iii) employ, attempt to employ or solicit for employment any
individual who is an employee of any of the Companies or Buyer at such time or
was an employee of any of the Companies or Buyer during the year prior to such
time;
provided that the foregoing will not apply to any investment in publicly traded
securities constituting less than 5% of the outstanding securities in such
class.
(b) ENFORCEMENT.
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(i) The Sellers acknowledge and agree that their obligations
under this Section 5.10 are a material inducement and condition to Buyer's
entering into this Agreement and performing its obligations hereunder and that
the restrictions and remedies contained in this Section 5.10 are reasonable as
to time, geographic area and scope of activity and do not impose a greater
restraint than is necessary to protect the goodwill and other legitimate
business interests of Buyer.
(ii) If the provisions of this Section 5.10 are found by a court of
competent jurisdiction to contain unreasonable or unnecessary limitations as to
time, geographic area or scope of activity, then such court is hereby directed
to reform such provisions to the minimum extent necessary to cause the
limitations contained therein as to time, geographical area and scope of
activity to be reasonable and enforceable.
(iii) The Sellers acknowledge and agree that Buyer would be
irreparably harmed by any violation of their obligations under this Section 5.10
and that, in addition to all other rights or remedies available at law or in
equity, Buyer will be entitled to seek injunctive and other equitable relief to
prevent or enjoin any such violation. If any Person is finally determined by a
court of competent jurisdiction to have violated Section 5.10(a), the period of
time during which the provisions thereof are applicable will automatically be
extended for a period of time equal to the time that such Person began such
violation until such violation permanently ceases.
5.11 EMPLOYEE BENEFIT MATTERS.
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(a) BENEFIT ARRANGEMENTS. The Buyer agrees that on and after the
Closing Date, it will cause each of the Companies to honor, without offset,
deduction, counterclaims, interruptions or deferment (other than withholdings
under applicable law), all written or oral employment, severance, termination
and retirement agreements and arrangements to which such Company is a party that
are set forth in Section 5.11(a) of the Disclosure Schedule (the "Benefit
Agreements"). On and after the Closing Date, the Buyer shall cause the
Companies to take all such actions as are necessary so that, for not less than
one year after the Closing Date, employees of each of the Companies during such
period (other than employees holding or being a party to Benefit Agreements for
which provision is made elsewhere in this Section 5.11) will be provided
employee benefit and similar plans and programs as will provide benefits which
in the aggregate are not materially less favorable than those provided to such
employees as of the date hereof. Except as otherwise provided in or pursuant
to any collective bargaining agreement listed on Schedule 5.11(a), the Buyer may
terminate, amend, or modify any Employee Plan (other than any Benefit Agreement)
at any time.
(b) INDEMNIFICATION. The Buyer agrees that all rights to
indemnification or exculpation for acts or omissions prior to Closing now
existing in favor of the employees, agents, directors or officers of the
Companies (the "Company Indemnified Parties") as provided in their respective
Corporate Charter or By-Laws in effect on the date hereof shall continue in full
force and effect for a period of not less than seven years from the Closing
Date; PROVIDED, HOWEVER, that, in the event any claim or claims are asserted or
made within such seven-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of
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any and all such claims. Any determination required to be made with respect
to whether a Company Indemnified Party's conduct complies with the standards
set forth in such Corporate Charter or By-Laws shall be made by independent
counsel selected by the Company Indemnified Party reasonably satisfactory to
the Companies (whose fees and expenses shall be paid by the Companies unless
such independent counsel determines that such fees and expenses should be paid
by the Company Indemnified Party, in which case they shall be paid by the
Company Indemnified Party). The Sellers hereby waive any rights to
indemnification they may have resulting from any breach of the representations
or warranties made by the Companies hereunder.
(c) BINDING ON SUCCESSORS. If any of the Companies or any of their
successors or assigns consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, then and in each such case, proper provision shall be
made so that the successors and assigns of such Company (or their successors and
assigns) shall assume the obligations set forth in this Section 5.11.
5.12 AUDIT. The Sellers, at their expense, will cause (A) audited balance
sheets of the respective Fluids Companies and a combined audited balance sheet
of the Plastics Companies as of March 31, 1997, (B) audited combined balance
sheets of: (i) the Fluids Companies and (ii) the Plastics Companies, as of
September 30, 1995 and 1996 and (C) the related audited combined statements of
operations and cash flow for (i) the Fluids Companies and (ii) the Plastics
Companies, for the years ended September 30, 1994, 1995 and 1996 (the "Audits"),
to be prepared as promptly as practicable by Coopers & Lybrand L.L.P. Upon
receipt of the Audits, the Sellers will immediately deliver a copy of the Audits
to the Buyer.
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5.13 PLASTICS DOCUMENTS. The Sellers, the Buyer and a wholly-owned
subsidiary of the Buyer to be formed for the purpose of acquiring all of the
Shares of the Plastics Companies (such subsidiary being referred to herein as
the "Plastics Holding Company") shall enter into a warrant agreement and equity
holders agreement containing the terms set forth on Schedule 5.13 of the
Disclosure Schedule attached hereto (collectively, the "Plastics Documents").
5.14 BUYER DOCUMENTS. The Sellers receiving shares of the Buyer pursuant
to the terms of this Agreement and the Buyer shall enter into a shareholder
agreement (the "Buyer Equityholders Agreement") containing the terms set forth
on Schedule 5.14 hereto.
ARTICLE VI
CLOSING CONDITIONS
6.01 CONDITIONS TO THE OBLIGATIONS OF THE SELLERS TO EFFECT THE
TRANSACTIONS CONTEMPLATED HEREBY. The obligations of each Seller to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any one or more of which may be
waived by the Sellers (which waiver must be unanimous):
(a) The representations and warranties of the Buyer contained herein
shall be true and correct in all material respects as of the date hereof and at
and as of the Closing Date as though such representations and warranties were
made at and as of the Closing Date.
(b) The Buyer shall have performed and complied in all material
respects with all agreements, obligations, covenants and conditions required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
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(c) No statute, rule, regulation, executive order, decree,
preliminary or permanent injunction or restraining order shall have been
enacted, entered, promulgated, enforced or pending by any Governmental Entity
which prohibits or restricts or seeks to prohibit or restrict the consummation
of the transactions contemplated hereby. No action or proceeding by any
Governmental Entity shall have been commenced (and be pending) against the
Buyer, the Sellers, the Companies or any of their respective affiliates,
associates, officers or directors seeking to prevent or delay the transactions
contemplated hereby or challenging any of the terms or provisions of this
Agreement or seeking material damages in connection therewith.
(d) All material consents and approvals of Governmental Entities
necessary for consummation of the transactions contemplated hereby shall have
been obtained.
(e) The Buyer shall have furnished the Sellers with such certificates
of its officers and others to evidence its compliance with the conditions set
forth in Section 6.01 as may be reasonably requested by the Sellers.
(f) The Sellers shall have received an opinion addressed to the
Sellers dated as of the Closing Date, of Hughes & Luce, L.L.P., counsel to the
Buyer, substantially in the form attached as EXHIBIT B hereto.
(g) The Buyer shall have executed the Buyer Equityholders' Agreement
and the Buyer and the Plastics Holding Company shall have executed the Plastics
Documents and the transactions contemplated by the Buyer Equityholders'
Agreement and the Plastics Documents to be performed on the Closing Date shall
have been performed simultaneously with the Closing.
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(h) Alan J. Bernon shall have been elected to the Board of Directors
of the Buyer effective as of the Closing.
6.02 CONDITIONS TO THE OBLIGATIONS OF THE BUYER TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY. The obligations of the Buyer to effect the transactions
contemplated hereby shall be further subject to the fulfillment at or prior to
the Closing Date of the following conditions, any one or more of which may be
waived by the Buyer:
(a) The representations and warranties of the Sellers and the
Companies contained herein shall be true and correct in all material respects as
of the date hereof and at and as of the Closing Date as though such
representations and warranties were made at and as of the Closing Date.
(b) The Sellers and the Companies shall have performed and complied
in all material respects with all agreements, obligations, covenants and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing Date.
(c) No statute, rule, regulation, executive order, decree,
preliminary or permanent injunction or restraining order shall have been
enacted, entered, promulgated, enforced or pending by any Governmental Entity
which prohibits or restricts or seeks to prohibit or restrict the consummation
of the transactions contemplated hereby. No action or proceeding by any
Governmental Entity shall have been commenced (and be pending) against the
Sellers, the Companies or the Buyer or any of their respective affiliates,
associates, officers or directors seeking to prevent or delay the transactions
contemplated hereby or challenging any of the terms or provisions of this
Agreement or seeking material damages in connection therewith.
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(d) All materials consents and approvals of Governmental Entities
necessary for consummation of the transactions contemplated hereby shall have
been obtained.
(e) The Sellers and the Companies shall have furnished the Buyer with
such certificates of the Sellers and the Companies' officers and others to
evidence their compliance with the conditions set forth in this Section 6.02 as
may be reasonably requested by the Buyer.
(f) The Sellers shall have obtained each of the consents and
approvals listed in Section 3.04 of the Disclosure Schedule.
(g) The Financing shall be available to the Buyer pursuant to the
terms and conditions of the Commitment.
(h) The Sellers shall have delivered the certificates required by
Section 1.02.
(i) The Buyer shall have received an opinion addressed to the Buyer
dated as of the Closing Date, of Hutchins, Wheeler & Dittmar, counsel to the
Companies and the Sellers substantially in the form attached as EXHIBIT C
hereto.
(j) The Sellers shall have delivered to the Buyer the Audits not less
than 10 days prior to the Closing Date, and with respect to each period
presented therein, the Audits of the Companies taken as a whole for each period
presented shall not be materially and adversely different from the Financial
Statements, taken as a whole, with respect to such period.
(k) The Sellers party to the Buyer Equityholders' Agreement and the
Plastics Documents shall have executed the Buyer Equityholders' Agreement and
the Plastics Documents.
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<PAGE>
(l) Garelick and The Bernon Land Trust shall have entered into a real
estate purchase option agreement containing the terms set forth on Schedule
6.02(l) of the Disclosure Schedule and Fairdale shall have acquired the real
estate it currently occupies for $750,000.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.01 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual consent of the Buyer and a majority in interest (based
on aggregate Purchase Price) of the Sellers;
(b) by a majority in interest (based on aggregate Purchase Price) of
the Sellers or by the Buyer at any time after August 31, 1997 or, in the event
the Buyer receives a so-called "second request" under the HSR Act, 90 days after
the date hereof, PROVIDED, HOWEVER, that the right to terminate this Agreement
under this Section 7.01 shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date;
(c) by the Buyer, if there has been a material violation or breach by
the Companies or the Sellers of any agreement, representation or warranty
contained in this Agreement which has rendered the satisfaction of any condition
to the obligations of the Buyer impossible and such violation or breach has not
been waived by the Buyer; or
(d) by a majority in interest (based on aggregate Purchase Price) of
the Sellers, if there has been a material violation or breach by the Buyer of
any agreement,
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<PAGE>
representation or warranty contained in this Agreement which has rendered the
satisfaction of any condition to the obligations of the Sellers impossible and
such violation or breach has not been waived by the Sellers.
7.02 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination of
this Agreement and abandonment of the transactions contemplated hereby by any or
all of the parties pursuant to Section 7.01, written notice thereof shall
forthwith be given to the other parties and this Agreement shall terminate and
the transactions contemplated hereby shall be abandoned, without further action
by any of the parties hereto. If this Agreement is terminated as provided
herein, this Agreement, other than the obligations of each party under Sections
5.02(b) and 5.07 hereof, shall forthwith become null and void, without any
liability on the part of any party hereto, or any subsidiaries or affiliates of,
or any officers, directors or employees of, any party. Nothing contained in
this Section 7.02 shall relieve any party for any intentional breach of any
covenant, agreement, representation or warranty contained in this Agreement.
ARTICLE VIII
INDEMNIFICATION AND LIMITATIONS
8.1 INDEMNIFICATION BY THE SELLERS. Subject to the other provisions of
this Article VIII, and notwithstanding any investigation at any time made by the
Buyer or on behalf of the Buyer, from and after the Closing Date, the Sellers,
jointly and severally, will indemnify and hold Buyer, its affiliates and its
respective employees, representatives, officers, directors and agents (the
"Buyer Parties") harmless from and against any and all monetary losses, claims,
damages, costs, fees, fines, penalties, obligations, payments and liabilities,
together with all
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<PAGE>
reasonable costs and expenses incurred in connection with any of the foregoing
("Damages") suffered by any Buyer Party arising out of:
(a) the breach of any representation or warranty made by the Sellers
or the Companies contained in this Agreement (including any applicable
disclosures in the Disclosure Schedule) or any certificate delivered by the
Sellers or the Companies at the Closing pursuant to this Agreement;
(b) the failure of the Sellers or the Companies to perform any
covenant, agreement or obligation by the Sellers or the Companies contained in
this Agreement; and
(c) any environmental liability or claim relating to or arising from
any fact, circumstance or event occuring or alleged to have occured prior to the
Closing with respect to or arising from 14 Industrial Parkway, Woburn, MA.
8.2 INDEMNIFICATION BY THE BUYER. Subject to the other provisions of this
Article VIII, and notwithstanding any investigation at any time made by the
Sellers or on behalf of the Sellers, from and after the Closing Date, the Buyer
will indemnify and hold the Sellers and their respective representatives and
agents (the "Seller Parties") harmless from and against any Damages suffered by
any Seller Party arising out of:
(a) the breach of any representation or warranty made by the Buyer
contained in this Agreement or any certificate delivered by the Buyer at the
Closing pursuant to this Agreement; and
(b) the failure of the Buyer to perform any covenant, agreement or
obligation by the Buyer contained in this Agreement.
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<PAGE>
8.3 NOTICE AND RESOLUTION OF CLAIMS.
(a) Each Person entitled to indemnification pursuant to Section 8.1
or Section 8.2 (an "Indemnified Party") will give written notice to the party
who has the duty of indemnification under this Article VIII (the "Indemnifying
Party") promptly after obtaining knowledge of any claim that it may have
pursuant to this Article VIII. Such notice will set forth in reasonable detail
the claim and the basis for indemnification; provided, however, the failure to
give such notice shall not relieve the Indemnifying Party from any liability
except to the extent actually prejudiced thereby.
(b) If such claim for indemnity arises from a claim or action
involving a third party (a "Third-Party Claims"), the Indemnified Party will
permit the Indemnifying Party to assume its defense. If the Indemnifying Party
assumes the defense of such Third-Party Claim, it will take all steps necessary
to investigate, defend or settle such action and will, subject to Section 8.4,
hold the Indemnified Party harmless from and against any and all Damages caused
by or arising out of any settlement approved by the Indemnifying Party or any
judgment in connection with such Third-Party Claim. Without the written consent
of the Indemnified Party, the Indemnifying Party will not consent to entry of
any judgment or enter into any settlement that does not include an unconditional
and complete release of the Indemnified party by the claimant or plaintiff
making the Third-Party Claim. The Indemnified Party may participate in such
defense or settlement through its own counsel, but at its own expense. Failure
by the Indemnifying Party to notify the Indemnified Party of its election to
assume the defense of any Third-Party Claim within 30 days after its receipt of
notice thereof pursuant to Section 8.3(a) will
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<PAGE>
be deemed a waiver by the Indemnifying Party of its right to assume the
defense of such Third-Party Claim. In such event, the Indemnified Party may,
at the Indemnifying Party's cost and expense, defend against such Third-Party
Claim in any manner it deems appropriate and settle such Third-Party Claim or
consent to the entry of any judgment with respect thereto, provided that it
acts reasonably and in good faith.
8.4 LIMITS ON INDEMNIFICATION; EXCLUSIVE REMEDY.
(a) The Sellers will be liable to the Buyer Parties for Damages that
are indemnifiable pursuant to Section 8.1(a), and the Buyer will be liable to
the Seller Parties for Damages that are indemnifiable pursuant to Section
8.2(a), only to the extent and in the amount that the aggregate amount of
Damages to all Buyer Parties or all Seller Parties, respectively exceeds
$1,500,000 (the "Deductible").
(b) The total aggregate liability of the Sellers for all claims for
Damages that may arise under Section 8.1(a) will not exceed $20,000,000;
provided that this Section 8.4 shall not apply to Damages arising as a result of
breaches of the representations and warranties contained in (i) the third and
fourth sentences of Section 2.01 and the first four sentences of Section 3.02
and (ii) the second sentence of Section 3.12.
(c) Notwithstanding the foregoing, indemnification for Damages
identified in Section 8.1(c) shall not be subject to the limitations contained
in this Section 8.4.
8.5 OTHER INDEMNITEES. The Buyer will cause the Buyer Parties, and the
Sellers will cause the Seller Parties, to comply with the provisions and to
abide by the limitations set forth in this ARTICLE VIII.
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<PAGE>
8.6 SURVIVAL. All representations and warranties made herein or in any
exhibit, schedule or certificate delivered pursuant to this Agreement will
expire and be of no further force and effect on March 31, 1999, except for the
representations and warranties (i) set forth in Sections 3.12, 3.13, 3.17 and
3.19 which will survive until the third anniversary of the Closing and (ii) set
forth in Sections 2.01, 2.02, 3.02 and 4.02 which will survive the Closing Date
until the expiration of the applicable statute of limitations with respect
thereto. The parties acknowledge that this contractual term of limitations is
reasonable and necessary to provide conclusion to the parties' obligations under
this Agreement.
8.7 PURCHASE PRICE ADJUSTMENT. Any indemnification paid pursuant to this
Article VIII shall be treated by all parties hereto as an adjustment to purchase
price. To the extent Indemnified Party is at any time paid by an insurance
company for any losses with respect to which payment was previously received by
or due to the Indemnified Party from the Indemnifying Party under this
Article VIII, the Indemnified Party will reimburse the Indemnifying Party from
such insurance proceeds in an amount up to the amount of the Indemnifying
Party's prior payment. The Indemnified Party agrees that it shall diligently
pursue claims against any insurance company that provides coverage for any
Damage or, in the discretion of the Indemnifying Party, it will assign such
claims to the Indemnifying Party upon receipt of the amount due to the
Indemnified Party from the Indemnifying Party pursuant to this Article VIII.
Damages pursuant to this Article VIII shall be calculated after giving effect to
any tax benefits arising as a result of such Damages and any tax costs arising
as a result of the reduction of Purchase Price attributable to the
indemnification paid in respect of such Damages.
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<PAGE>
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of a majority
in interest (based on aggregate Purchase Price) of the Sellers and the Buyer at
any time prior to the Closing Date with respect to any of the terms contained
herein.
9.02 WAIVER OF COMPLIANCE; CONSENTS. Any failure of any of the parties to
comply with any obligation, covenant, agreement or condition contained herein
may be waived by the party entitled to the benefits thereof, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
9.03 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telegram or telex, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
If to the Buyer:
Suiza Foods Corporation
3811 Turtle Creek Boulevard, Suite 1300
Dallas, Texas 75219
Attention: Gregg L. Engles, Chairman
with a copy to:
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
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<PAGE>
Dallas, Texas 75201
Attention: Alan J. Bogdanow
If to the Sellers:
c/o Garelick Companies
1199 West Central Street
Franklin, MA 02038-0923
Attention: Peter M. Bernon, Chairman
with a copy to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
Attention: Charles W. Robins
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
9.04 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, nor is this Agreement
intended to confer upon any other person except the parties hereto any rights or
remedies hereunder, except that the Buyer may assign any or all of its rights,
but not its obligations, hereunder to one or more wholly owned subsidiaries.
9.05 GOVERNING LAW. This Agreement shall be governed by the laws of The
Commonwealth of Massachusetts (regardless of the laws that might otherwise
govern under
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<PAGE>
applicable Massachusetts principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies.
9.06 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.07 INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
9.08 ENTIRE AGREEMENT. This Agreement, including the documents, schedules,
certificates and instruments referred to herein, and the Confidentiality
Agreement embody the entire agreement and understanding of the parties hereto in
respect of the transactions contemplated by this Agreement. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein or therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such transactions other than the Confidentiality Agreement.
[The Remainder Of This Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the Sellers have signed and the Companies and the Buyer
have caused to be signed by a duly authorized officer this Agreement as of the
date first above written.
BUYER:
SUIZA FOODS CORPORATION
By: /s/ Gregg L. Engles
------------------------------------
Name: Gregg L. Engles
Title: Chairman of the Board and
Chief Executive Officer
FLUIDS COMPANIES:
GARELICK FARMS, INC.
By: /s/ Alan J. Bernon
------------------------------------
FAIRDALE FARMS, INC.
By: /s/ Alan J. Bernon
------------------------------------
GRANT'S DAIRY, INC.
By: /s/ Alan J. Bernon
------------------------------------
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<PAGE>
MISCOE SPRINGS, INC.
By: /s/ Alan J. Bernon
------------------------------------
PLASTICS COMPANIES:
PLASTICS MANAGEMENT GROUP,
LLC, a Massachusetts Limited Liability
Company,
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
MARLBOROUGH PLASTICS, INC., a
Massachusetts Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
MAINE PLASTICS, INC. a Maine
Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
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<PAGE>
FIRST CAPITAL PLASTICS, INC., a
Pennsylvania Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
SHERMAN PLASTICS, INC., a Texas
Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
NEW JERSEY PLASTICS, INC., a New
Jersey Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
ILLINOIS PLASTICS, INC., an Illinois
Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
ALLENTOWN PLASTICS INC., a
Pennsylvania Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
KENTWOOD PLASTICS, INC., a
Louisiana Corporation
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<PAGE>
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
FRANKLIN PLASTICS, INC., a
Massachusetts Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
RICHMOND CONTAINER, INC., a
Virginia Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
NORTH CAROLINA PLASTICS, INC., a
North Carolina Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
FLORIDA PLASTICS, INC., a Florida
Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
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<PAGE>
CHESTER COUNTY CONTAINER
CORPORATION, a Pennsylvania
Corporation
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
ATLANTA CONTAINER, INC.
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
OHIO STATE PLASTICS, INC.
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
MIDDLESEX CONTAINER, INC.
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
Chairman
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<PAGE>
SELLERS:
By: /s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
/s/ Alan J. Bernon
------------------------------------
Alan J. Bernon
QSST FOR THE BENEFIT OF
JACQUELINE BERNON
/s/ Jonathan R. Bernon
------------------------------------
By: , Trustee
/s/ Drew P. Kaplan
------------------------------------
By: , Trustee
QSST FOR THE BENEFIT OF
ALEXANDER BERNON
/s/ Jonathan R. Bernon
------------------------------------
By: , Trustee
/s/ Drew P. Kaplan
------------------------------------
By: , Trustee
QSST FOR THE BENEFIT OF DAVID
BERNON
Jonathan R. Bernon
------------------------------------
By: , Trustee
Drew P. Kaplan
------------------------------------
By: , Trustee
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<PAGE>
QSST FOR THE BENEFIT OF PAUL
BERNON
/s/ Jonathan R. Bernon
------------------------------------
By: , Trustee
/s/ Drew P. Kaplan
------------------------------------
By: , Trustee
QSST FOR THE BENEFIT OF CHARLES
BERNON
/s/ Jonathan R. Bernon
------------------------------------
By: , Trustee
/s/ Drew P. Kaplan
------------------------------------
By: , Trustee
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<PAGE>
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
AMENDMENT NO. 1, DATED AS OF JULY 30, 1997 (THE "AMENDMENT") TO STOCK
PURCHASE AGREEMENT, dated as of June 20, 1997 (the "Agreement") by and among
Suiza Foods Corporation, a Delaware corporation (the "Buyer"), Garelick
Farms, Inc., a Massachusetts corporation ("Garelick"), Fairdale Farms, Inc.,
a Vermont corporation ("Fairdale"), Grant's Dairy, Inc., a Maine corporation
("Grant's"), Miscoe Springs, Inc., a Massachusetts corporation ("Miscoe," and
together with Fairdale, Garelick and Grant's, the "Fluids Companies"),
Plastics Management Group, LLC, a Massachusetts Limited Liability Company,
Marlborough Plastics, Inc., a Massachusetts corporation, Maine Plastics,
Inc., a Maine corporation, First Capital Plastics, Inc., a Pennsylvania
corporation, Sherman Plastics, Inc. a Texas corporation, New Jersey Plastics
Inc., a New Jersey corporation, Illinois Plastics, Inc., an Illinois
corporation, Allentown Plastics Inc., a Pennsylvania corporation, Kentwood
Plastics, Inc., a Louisiana corporation, Franklin Plastics, Inc., a
Massachusetts corporation, Richmond Container, Inc., a Virginia corporation,
North Carolina Plastics, Inc., a North Carolina corporation, Florida
Plastics, Inc., a Florida corporation, Chester County Container Corporation,
a Pennsylvania corporation, Atlanta Container, Inc., a Georgia corporation,
Ohio State Plastics, Inc., an Ohio corporation and Middlesex Plastics, Inc.,
a Connecticut corporation (collectively, the "Plastics Companies" and
together with the Fluids Companies, the "Companies") and the parties whose
names are set forth on EXHIBIT A attached hereto (the "Sellers").
WHEREAS, the parties hereto desire to modify certain terms and conditions
of the Agreement as specifically set forth in this Amendment;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A. AMENDMENTS TO THE AGREEMENT.
1. The second "WHEREAS" clause in the preamble of the Agreement is
hereby amended by deleting the same in its entirety and inserting in lieu
thereof the following:
"WHEREAS, the Sellers desire to sell to the Buyer, and
the Buyer desires to purchase from the Sellers, all of
the issued and outstanding Common Stock and limited
liability company interests of each of the Companies
other than Miscoe, and pursuant to the Agreement and
Plan of Merger referred to herein, the Buyer will
acquire all of the issued and outstanding Common Stock
of Miscoe;"
2. Section 1.02(a) of the Agreement is hereby amended (i) by deleting
the following:
<PAGE>
"set forth on EXHIBIT A hereto, constituting all of the issued and
outstanding Common Stock and limited liability company interests of
the Companies"
and inserting in lieu thereof the following:
"set forth on EXHIBIT A hereto (other than the shares of Miscoe set
forth on EXHIBIT A hereto), constituting all of the issued and
outstanding Common Stock and limited liability company interests of
the Companies (other than Miscoe)"
and (ii) by deleting "446,100" and inserting in lieu thereof
"148,700".
3. Section 1.02(d) of the Agreement is hereby amended by adding after
the first sentence thereof the following sentence:
"The March 31, 1997 balance sheet shall exclude from current assets an
aggregate of $1,193,160 of loans made to shareholders of the Companies
or their affiliates".
4. Section 1.02(g) of the Agreement is hereby amended by inserting
after the semicolon that precedes "Estimated Expansion Capex" therein the
following:
", plus actual out-of-pocket expenses incurred by the Sellers and
their affiliates in connection with the purchase of such real
property, the transfer of such real property to its current owner, and
the transfer of such property by its current owner to Fairdale, which
expenses shall not exceed $30,000 in the aggregate".
5. Section 1.03 of the Agreement is hereby amended by deleting
therefrom the following:
", (ii) deliver 297,400 shares Buyer Common Stock having the benefit
of the provisions of the Buyer Equityholders Agreement (as hereinafter
defined) as unrestricted shares thereunder and (iii)"
and inserting in lieu thereof "and (ii))".
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<PAGE>
6. The following shall be added as a new Article IA to the Agreement:
"ARTICLE IA
MISCOE AGREEMENT AND PLAN OF MERGER
Miscoe, the Buyer and Miscoe Springs Acquisition Corp., a newly formed
subsidiary of the Buyer, have entered into an Agreement and Plan of
Merger, dated as of July 31, 1997 (the "Miscoe Merger Agreement"),
pursuant to which a wholly-owned subsidiary of the Buyer shall be
merged with and into Miscoe, with Miscoe the surviving entity in such
merger. In connection with such merger, the outstanding Shares of
Miscoe shall be converted into 297,400 shares of the Buyer Common
Stock and Miscoe shall become a wholly-owned subsidiary of the Buyer.
The representations, warranties and covenants of the parties to this
Agreement have been made in contemplation of the Miscoe Merger
Agreement and the transactions contemplated thereby."
7. Section 2.01 of the Agreement is hereby amended by deleting the
fourth sentence thereof in its entirety and inserting in lieu thereof the
following:
"Upon the sale of the Shares of the Companies (other than Miscoe) to
the Buyer at Closing pursuant to this Agreement, the Sellers will
transfer to the Buyer the entire legal and beneficial interest in all
such Shares, free and clear of any Encumbrances by or through the
Sellers."
8. Section 3.08(a)(ix) of the Agreement is hereby amended by deleting
therefrom the following:
"; and"
and inserting in lieu thereof the following:
", other than agreements entered into in the ordinary course of
business; and"
9. Section 6.01 of the Agreement is hereby amended by adding as a new
subparagraph (g), and Section 6.02 of the Agreement is hereby amended by
adding as a new subparagraph (m), the following:
"The merger contemplated by the Miscoe Merger Agreement shall have
become effective simultaneously with the Closing hereunder."
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<PAGE>
10. The Agreement is hereby amended by deleting EXHIBIT A thereto in its
entirety and inserting in lieu thereof the EXHIBIT A attached hereto.
11. Section 2.01 of the Disclosure Schedule is hereby amended by
deleting therefrom "none" and inserting in lieu thereof "The Miscoe Merger
Agreement".
12. Section 3.08 of the Disclosure Schedule is hereby amended by
inserting after Item VIII.9. the following:
"Pursuant to Garelick's redemption of shares of capital stock from
Ronnie Bernon, Garelick is obligated to pay to Ms. Bernon following
the Closing of the transactions contemplated hereby a contingent
redemption price of $900,000 (which shall reduce Adjusted Working
Capital for purposes of determining the purchase price pursuant to
Article I of the Agreement)."
13. The Agreement (including the Exhibits and Schedules thereto, as well
as all closing documents necessary for the consummation of the transactions
contemplated by the Agreement), is hereby amended by deleting therefrom all
references to "Middlesex Container" and inserting in lieu of each reference
thereto "Middlesex Plastics".
B. RATIFICATION, ETC. Except as otherwise expressly set forth herein,
all terms and conditions of the Agreement are hereby ratified and confirmed
and shall remain in full force and effect. Except as expressly set forth
herein, nothing herein shall be construed to be an amendment or a waiver of
any requirements of the Agreement. All references in the Agreement to the
Agreement shall, from and after the date hereof, be deemed to be references
to the Agreement as amended by this Amendment.
C. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
D. GOVERNING LAW. This Amendment shall be governed by the laws of The
Commonwealth of Massachusetts (regardless of the laws that might otherwise
govern under applicable Massachusetts principles of conflict of law) as to
all matters, including but not limited to matters of validity, construction,
effect, performance and remedies.
* * * * * * * * * * * * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as an
instrument under seal to be effective as of the date first above written.
BUYER:
SUIZA FOODS CORPORATION
By: /s/ Gregg L. Engles
-------------------------------------
Name: Gregg L. Engles
Title: Chairman of the Board and
Chief Executive Officer
FLUIDS COMPANIES:
GARELICK FARMS, INC.
By: /s/ Peter M. Bernon
-------------------------------------
FAIRDALE FARMS, INC.
By: /s/ Peter M. Bernon
-------------------------------------
GRANT'S DAIRY, INC.
By: /s/ Peter M. Bernon
-------------------------------------
MISCOE SPRINGS, INC.
By: /s/ Peter M. Bernon
-------------------------------------
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<PAGE>
PLASTICS COMPANIES:
PLASTICS MANAGEMENT GROUP,
LLC, a Massachusetts Limited Liability
Company,
By: /s/ Alan J. Bernon
-------------------------------------
MARLBOROUGH PLASTICS, INC.
By: /s/ Alan J. Bernon
-------------------------------------
MAINE PLASTICS, INC. a Maine Corporation
By: /s/ Alan J. Bernon
-------------------------------------
FIRST CAPITAL PLASTICS, INC., a
Pennsylvania Corporation
By: /s/ Alan J. Bernon
-------------------------------------
SHERMAN PLASTICS, INC., a Texas
Corporation
By: /s/ Alan J. Bernon
-------------------------------------
NEW JERSEY PLASTICS, INC., a New
Jersey Corporation
By: /s/ Alan J. Bernon
-------------------------------------
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<PAGE>
ILLINOIS PLASTICS, INC., an Illinois Corporation
By: /s/ Alan J. Bernon
-------------------------------------
ALLENTOWN PLASTICS INC., a Pennsylvania Corporation
By: /s/ Alan J. Bernon
-------------------------------------
KENTWOOD PLASTICS, INC., a Louisiana Corporation
By: /s/ Alan J. Bernon
-------------------------------------
FRANKLIN PLASTICS, INC.
By: /s/ Alan J. Bernon
-------------------------------------
RICHMOND CONTAINER, INC., a Virginia Corporation
By: /s/ Alan J. Bernon
-------------------------------------
NORTH CAROLINA PLASTICS, INC., a
North Carolina Corporation
By: /s/ Alan J. Bernon
-------------------------------------
-7-
<PAGE>
FLORIDA PLASTICS, INC., a Florida Corporation
By: /s/ Alan J. Bernon
-------------------------------------
CHESTER COUNTY CONTAINER
CORPORATION, a Pennsylvania
Corporation
By: /s/ Alan J. Bernon
-------------------------------------
ATLANTA CONTAINER, INC.
By: /s/ Alan J. Bernon
-------------------------------------
OHIO STATE PLASTICS, INC.
By: /s/ Alan J. Bernon
-------------------------------------
MIDDLESEX PLASTICS, INC.
By: /s/ Alan J. Bernon
-------------------------------------
-8-
<PAGE>
SELLERS:
/s/ Peter M. Bernon
----------------------------------------------
Peter M. Bernon
/s/ Alan J. Bernon
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Alan J. Bernon
QSST FOR THE BENEFIT OF JACQUELINE BERNON
/s/ Peter M. Bernon
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By: , Trustee
/s/ Alan J. Bernon
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By: , Trustee
/s/ Jonathan R. Bernon
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By: , Trustee
QSST FOR THE BENEFIT OF ALEXANDER BERNON
/s/ Drew P. Kaplan
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By: , Trustee
/s/ Alan J. Bernon
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By: , Trustee
/s/ Jonathan R. Bernon
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By: , Trustee
-9-
<PAGE>
QSST FOR THE BENEFIT OF DAVID BERNON
/s/ Drew P. Kaplan
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By: , Trustee
/s/ Alan J. Bernon
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By: , Trustee
/s/ Jonathan R. Bernon
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By: , Trustee
QSST FOR THE BENEFIT OF PAUL BERNON
/s/ Drew P. Kaplan
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By: , Trustee
/s/ Alan J. Bernon
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By: , Trustee
/s/ Jonathan R. Bernon
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By: , Trustee
QSST FOR THE BENEFIT OF CHARLES BERNON
/s/ Drew P. Kaplan
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By: , Trustee
/s/ Alan J. Bernon
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By: , Trustee
/s/ Jonathan R. Bernon
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By: , Trustee
-10-
<PAGE>
STOCKHOLDERS AGREEMENT
This Stockholders Agreement ("Agreement") is entered into on this 31st
day of July, 1997, among Franklin Plastics, Inc., a Delaware corporation (the
"Company"), Suiza Foods Corporation, a Delaware corporation ("Suiza"), Peter
M. Bernon and Alan J. Bernon (collectively, the "Purchasers"). Capitalized
terms not defined elsewhere herein shall have the respective meanings
assigned to them in part 11 of this Agreement.
RECITALS:
Suiza has entered into a Stock Purchase Agreement (the "Purchase
Agreement") dated as of June 20, 1997 and amended as of July 30, 1997,
providing, among other things, for the purchase by Suiza from certain sellers
named therein, including the Purchasers, of all of the shares of outstanding
common stock and limited liability company interests of the Plastics
Companies, as that term is defined in the Purchase Agreement (the "Plastic
Interests").
Suiza desires to contribute all of the Plastic Interests to the Company
in exchange for (i) a Senior Note in the original principal amount of
$71,500,000 and in substantially the form of EXHIBIT A (the "Senior Note"),
(ii) a Mezzanine Note in the original principal amount of $32,500,000 and in
substantially the form of EXHIBIT B (the "Mezzanine Note"), (iii) 21,667
shares of Series A Preferred Stock, and (iv) 433,049 shares of the Common
Stock.
The Purchasers desire to purchase from the Company certain Common Stock
Purchase Warrants in substantially the form of EXHIBIT C (the "Warrants"),
providing for the right to purchase an aggregate of 91,880 shares of Common
Stock for $10.00 per share.
This is one of the Plastics Documents referred to in the Purchase
Agreement. The execution and delivery of this Agreement is a closing
condition to the obligations of Suiza and the Purchasers to effect the
transactions contemplated by the Purchase Agreement.
The parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF SECURITIES.
1A. AUTHORIZATION. The Company has, or before the Closing, will have
duly authorized the issuance and sale, pursuant to the terms of this
Agreement, of (i) the Senior Note, (ii) the Mezzanine Note, (iii) 21,667
shares of its Series A Preferred Stock, having the rights, restrictions,
privileges and preferences set forth in the Certificate of Designation of
Series A Redeemable Preferred Stock in substantially the form attached as
EXHIBIT D (the "Certificate of Designation"), (iv) 433,049 shares of Common
Stock, and (v) Warrants for the purchase of an aggregate of 91,880 shares of
Common Stock. The Company has, or before Closing will have, adopted and
filed the Certificate of Designation with the Secretary of State of the State
of Delaware. The shares of Common Stock issued or issuable upon the exercise
of the Warrants are referred to as the "Warrant Shares." The shares of
Common Stock and the shares of Series A
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<PAGE>
Preferred Stock being issued to Suiza under this Agreement are referred to
collectively as the "Suiza Shares." The Senior Note, the Mezzanine Note, the
Suiza Shares and the Warrants are referred to collectively as the
"Securities."
1B. SALE OF SECURITIES TO SUIZA. Subject to the terms and conditions of
this Agreement, at the Closing, the Company will issue and sell to Suiza, and
Suiza will purchase, the Senior Note, the Mezzanine Note, and the Suiza
Shares in exchange for the Plastics Interests.
1C. SALE OF WARRANTS. Subject to the terms and conditions of this
Agreement, at the Closing, the Company will issue and sell to each of the
Purchasers, and each of the Purchasers will purchase, Warrants entitling each
such Purchaser to purchase the number of Warrant Shares set forth opposite
such Purchaser's name on EXHIBIT E attached hereto, for the purchase price of
$4.17 per underlying Warrant Share.
2. THE CLOSING.
The closing of the issuance, sale and purchase of the Securities under
this Agreement (the "Closing") shall take place as soon as practicable after
the satisfaction or waiver of the conditions to the Closing set forth in part
4, at the same location as that of the closing under the Purchase Agreement,
or at such other location or such other time as the Company, Suiza and the
Purchasers may agree. At the Closing, (i) the Company shall deliver to Suiza
(a) the Senior Note, (b) the Mezzanine Note, (c) a certificate representing
the number of shares of Series A Preferred Stock being issued to Suiza,
registered in the name of Suiza, and (d) a certificate representing the
number of shares of Common Stock being issued to Suiza, registered in the
name of Suiza, (ii) Suiza will deliver to the Company certificates
representing the Plastics Interests, endorsed for transfer to the Company,
and (iii) the Company shall deliver to each Purchaser a Warrant, to purchase
the number of Warrant Shares set forth opposite such Purchaser's name on
EXHIBIT E, registered in the name of such Purchaser, against payment to the
Company of the purchase price therefor, by wire transfer, check, or other
method acceptable to the Company.
3. REPRESENTATIONS AND WARRANTIES.
3A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Suiza and the Purchasers as follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter
into and perform this Agreement and to carry out the transactions
contemplated in this Agreement. The Company is duly qualified and in
good standing to do business as a foreign corporation in each
jurisdiction in which the failure to so qualify would have a material
adverse effect on its business or properties.
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<PAGE>
(ii) The execution, delivery and performance by the Company of
this Agreement, and the consummation by the Company of the
transactions contemplated herein, have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, and upon due execution and delivery, the
Senior Note, the Mezzanine Note and the Warrants will represent the
valid and binding obligations of the Company upon payment of the
applicable purchase price therefore to the Company. The execution,
delivery and performance of the transactions contemplated in this
Agreement and compliance with its provisions by the Company will not
violate any provision of law and will not conflict with or result in
any breach of any of the terms, conditions or provisions of, or
constitute a default under, or require a consent or waiver under, its
Certificate of Incorporation or Bylaws (each as amended and currently
in effect) or any indenture, lease, agreement or other instrument to
which the Company is a party or by which it or any of its properties
is bound, or any decree, judgment, order, statute, rule or regulation
applicable to the Company.
(iii) Immediately prior to the Closing, the authorized capital
stock of the Company shall consist of 5,000,000 shares of Common Stock,
of which only 100 shares shall be issued, and outstanding and owned by
Suiza, and 1,000,000 shares of Preferred Stock, none of which shares
shall be issued and outstanding.
(iv) The issuance, sale and delivery of the Securities in
accordance with this Agreement, and the issuance and delivery of the
Warrant Shares upon exercise of the Warrants, have been, or will be on
or prior to the Closing, duly authorized by all necessary corporate
action on the part of the Company. The Suiza Shares, when so issued,
sold and delivered against payment therefor in accordance with the
provisions of this Agreement, and the Warrant Shares, when issued upon
exercise of the Warrants in accordance with the terms of the Warrants,
will be duly and validly issued, fully paid and non-assessable.
(v) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with,
any governmental authority is required on the part of the Company in
connection with the execution and delivery of this Agreement, or the
transactions to be consummated at the Closing as contemplated in this
Agreement, except such filings as shall have been made prior to and
shall be effective on and as of the Closing.
(vi) Since its formation and as of the date hereof, the Company
has no material assets or liabilities, except as otherwise
contemplated by this Agreement and the Purchase Agreement.
3
<PAGE>
3B. REPRESENTATIONS AND WARRANTIES OF SUIZA. Suiza hereby represents
and warrants to the Company and the Purchasers as follows:
(i) Suiza is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full
corporate power and authority to conduct its business as presently
conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated
in this Agreement. Suiza is duly qualified and in good standing to do
business as a foreign corporation in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its
business or properties.
(ii) The execution delivery and performance by Suiza of this
Agreement, and the consummation by Suiza of the transactions
contemplated herein, have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered
by Suiza and constitutes the valid and binding obligation of Suiza
enforceable against Suiza in accordance with its terms.
(iii) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
governmental authority is required on the part of Suiza in connection
with the execution and delivery of this Agreement, or the transactions
to be consummated at the Closing as contemplated in this Agreement,
except such filings as shall have been made prior to and shall be
effective on and as of the Closing.
3C. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the
Purchasers severally represents and warrants to the Company and Suiza as
follows:
(i) Such Purchaser is acquiring the Warrants for his own account
for investment and not with a view to, or for sale or resale in
connection with, any distribution thereof, nor with any present
intention of distributing or selling the same, and, except as
contemplated in this Agreement, such Purchaser has no present or
contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof.
Such Purchaser acknowledges the restrictions on transfer of the
Warrants and the Warrant Shares set forth in this Agreement.
(ii) Such Purchaser has full power and authority to enter into
and to perform this Agreement in accordance with its terms.
(iii) Such Purchaser is an "accredited investor," as such term is
defined in Regulation D promulgated under the Securities Act.
4
<PAGE>
(iv) Such Purchaser acknowledges that he is able to fend for
himself, can bear the economic risk of his investment, and has such
knowledge and experience in financial or business matters that he is
capable of evaluating the merits and risks of the investment in the
Warrants and the Warrant Shares.
(v) Such Purchaser understands that the Warrants and the Warrant
Shares will be "restricted securities" pursuant to Rule 144 under the
Securities Act inasmuch as they are being acquired from the Company or
an Affiliate of the Company in a transaction not involving a public
offering, and that such securities may be resold without registration
under the Securities Act only in certain limited circumstances. In
this connection, such Purchaser represents that it is familiar with
Rule 144 promulgated under the Securities Act, as presently in effect,
and understands the resale limitations imposed thereby and by the
Securities Act.
4. CONDITIONS TO CLOSING.
4A. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING. The
respective obligations of the parties to effect the transactions contemplated
herein are subject to the satisfaction, on or prior to the Closing, of the
following conditions:
(i) The closing under the Purchase Agreement shall have been
consummated.
(ii) All authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods
imposed by, any governmental entity or other public or private third
party, the failure of which to obtain would have a material adverse
effect on the Company, shall have been filed, occurred or been
obtained.
(iii) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the transactions contemplated herein shall be in effect (each party
agreeing to use all reasonable efforts to have any such order reversed
or injunction lifted).
4B. CONDITIONS OF OBLIGATIONS OF THE COMPANY AND SUIZA. The obligation
of the Company and Suiza to effect the transactions contemplated herein is
subject to the satisfaction of the following conditions, on or prior to the
Closing, unless waived by the Company and Suiza:
(i) The representations and warranties of the Purchasers
contained herein shall be true and correct in all material respects as
of the Closing as though made on and as of the Closing.
5
<PAGE>
(ii) The Purchasers shall have performed in all material respects
all of their respective obligations required to be performed by them
under this Agreement at or prior to the Closing.
(iii) The Purchasers shall have delivered all of the items
set forth in part 2.
4C. CONDITIONS OF OBLIGATIONS OF THE PURCHASERS. The obligation of each
Purchaser to effect the transactions contemplated herein is subject to the
satisfaction of the following conditions, on or prior to the Closing, unless
waived by such Purchaser:
(i) The representations and warranties of the Company and Suiza
contained herein shall be true and correct in all material respects as
of the Closing as though made on and as of the Closing.
(ii) The Company and Suiza shall have performed in all material
respects all of their respective obligations required to be performed
by them under this Agreement at or prior to the Closing.
(iii) The Company and Suiza shall have delivered all of the items
set forth in part 2.
5. PURCHASE OF WARRANTS.
5A. RIGHT TO PUT WARRANTS. For a period of 15 calendar days commencing
on April 1 of each year beginning on April 1, 2002 (each, a "Put Exercise
Period"), each Purchaser shall have the right and option (the "Put Option")
to sell to Suiza and to require Suiza to purchase from such Purchaser, at the
Put Price, all of such holder's right, title and interest in the Warrants
held by such Purchaser and his Permitted Transferees.
5B. RIGHT TO CALL WARRANTS. For a period of 15 calendar days commencing
on March 15 of each year beginning on March 15, 2004 (each a "Call Exercise
Period"), Suiza shall have the right and option (the "Call Option") to
purchase from the holders of the Warrants and to require such holders to
sell, at the Call Price, all of such holder's right, title and interest in
the Warrants held by such holder.
5C. CHANGE IN CONTROL PUT. For a period commencing on the date that
there has been a change in control of Suiza and ending 15 calendar days after
all holders of Warrants receive notice that there has been a change in
control of Suiza (the "Change in Control Put Period"), each Purchaser shall
have the right and option (the "Change in Control Option") to sell to Suiza
and to require Suiza to purchase from such Purchaser and his Permitted
Transferees, at the Call Price, all of such holder's right, title and
interest in the Warrants held by such Purchaser and his Permitted
Transferees. For purposes of this paragraph 5C, a change in control of Suiza
shall be deemed to occur when (i) Suiza shall have been merged or
consolidated with or into another corporation, shall have sold, leased or
otherwise disposed of all or substantially all of its assets,
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<PAGE>
and as the result thereof the stockholders of Suiza shall own less than 50%
of the common stock of the surviving corporation after such transaction, (ii)
the stockholders of Suiza shall have adopted a plan of liquidation, or (iii)
any corporation, person or group (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of voting securities of Suiza
representing more than 50% of the total number of votes eligible to be cast
at any election of directors of Suiza. Suiza shall give the Purchasers 15
calendar days prior notice of any anticipated change of control of Suiza
pursuant to clauses (i) and (ii) above and, to the extent practicable clause,
(iii) above and shall give the Purchasers prompt notice of the actual
occurrence of a change of control.
5D. NOTICE. To exercise the Put Option, a Purchaser shall give Suiza
written notice during the Put Exercise Period (the "Put Notice") and shall
specify in such notice the number of Warrant Shares underlying the Warrants
held by such Purchaser and his Permitted Transferees and may specify in such
notice a proposed date of sale. To exercise the Call Option, Suiza shall
give each record holder of the Warrants written notice during the Call
Exercise Period (the "Call Notice"), and may specify in such notice a
proposed date of sale. To exercise the Change in Control Option, a Purchaser
shall give Suiza written notice during the Change in Control Exercise Period
(the "Change in Control Notice") and shall specify in such notice the number
of Warrant Shares underlying the Warrants held by such Purchaser and his
Permitted Transferees and may specify in such notice a proposed date of sale.
The closing of any purchase of the Warrants pursuant to paragraphs 5A, 5B or
5C shall take place at the offices of Suiza at 10:00 a.m., Dallas, Texas
time, on a Business Day (the "Warrant Closing Date") which shall not be later
than the latest to occur of (i) the date specified in the Put Notice, the
Call Notice or the Change in Control Notice, as the case may be (which shall
not be less than 15 Business Days after the date of the Put Notice, the Call
Notice or the Change in Control Notice), and (ii) the date 15 Business Days
after a final determination of the Put Price or the Call Price, as the case
may be.
5E. PAYMENT. On or prior to the Warrant Closing Date, Suiza shall
deliver to each holder of the Warrants being purchased an amount equal to the
aggregate Put Price or Call Price, as the case may be, for the Warrants being
purchased from such holder by wire transfer of immediately available funds to
any account specified in writing, at least two Business Days prior to the
Warrant Closing Date, by such holder to Suiza. At its sole option, Suiza may
make payment to any holder of Warrants pursuant to this paragraph 5E by
tendering to the holder of the Warrants being purchased shares of Suiza
Common Stock having an aggregate Market Value Per Share that is not greater
than the aggregate Put Price or Call Price for the Warrants being purchased
and by paying any remaining amount of the Put Price or Call Price in cash, as
provided above.
5F. RESTRICTIONS ON PAYMENTS. In the event that Suiza is restricted
from paying the holders of the Warrants any or all of the Put Price pursuant
to paragraph 5A or the Call Price pursuant to paragraph 5C, as the case may
be, because of the provisions contained in any agreement or instrument, the
obligation to purchase the Warrants shall remain an obligation of Suiza and
shall be performed as soon as the payment thereof is allowed under such
agreement or instrument. If Suiza is so prohibited, it shall, to the extent
permitted by any such agreement or
7
<PAGE>
instrument, if requested by any holder of the Warrants, make payment to such
holder by tendering shares of Suiza Common Stock having an aggregate Market
Value Per Share that is not greater than the aggregate Put Price or Call
Price for the Warrants being purchased. Suiza may not exercise its right to
purchase the Warrants under paragraph 5B unless it is able to pay the holders
of the Warrants the entire Call Price or unless it elects to issue Suiza
Common Stock pursuant to paragraph 5E.
5G. DELIVERY OF CERTIFICATES: REISSUANCE. Upon the timely receipt of
the Put Price or the Call Price, as the case may be, for Warrants sold to
Suiza pursuant to paragraphs 5A, 5B or 5C, the holder thereof shall forward,
on or prior to the Warrant Closing Date, the Warrants so sold to Suiza, free
and clear of any liens or other encumbrances of any kind, other than security
interests of third party creditors of the Company or Suiza.
6. VOTING PROVISIONS.
6A. COMPOSITION OF BOARD OF DIRECTORS. Suiza and the Purchasers agree
that in any election of directors of the Company, they shall vote all shares
of capital stock of the Company owned or controlled by them, including the
Warrant Shares issuable upon exercise of the Warrants, to elect a Board of
Directors comprising not less than three directors designated as follows:
(i) one director shall be designated by the holders of a
majority of the Warrant Shares, assuming full exercise of each of the
Warrants (the "Purchaser Director"); and
(ii) the remaining directors shall be designated by Suiza (each a
"Suiza Director").
Until notice is given to the contrary, the Purchaser Director shall be Peter
M. Bernon and the Suiza Directors shall be Gregg L. Engles and Tracy L. Noll.
The obligation to vote shares in accordance with this paragraph 6A shall be
specifically applicable to and enforceable against any transferees of the
parties hereto.
6B. VACANCIES; REMOVAL. In the event of any vacancy in the Board of
Directors, each of the Purchasers and Suiza agree to vote all Warrant Shares
and shares of Common Stock owned or controlled by them and to otherwise use
their best efforts to fill such vacancy so that the Board of Directors of the
Company will include directors designated as provided in paragraph 6A. Each
of the Purchasers and Suiza agree to vote all Warrant Shares and shares of
Common Stock owned or controlled by them for the removal of a director
whenever (but only whenever) there shall be presented to the Board of
Directors the written direction that such director be removed, signed by the
holders of a majority of the Warrant Shares, assuming full exercise of the
Warrants, in the case of a Purchaser Director, or by Suiza, in the case of
the Suiza Director. Each of the parties agrees to use its best efforts to
cause designees to be elected to the Board of Directors as provided in
paragraph 6A.
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<PAGE>
7. PROVISIONS RELATING TO TRANSFERS OF COMPANY SECURITIES.
7A. GENERAL RESTRICTIONS ON TRANSFER OF SECURITIES.
(i) For purposes of this Agreement, "Restricted Securities" are
the Warrants, Warrant Shares and other Equity Securities of the
Company now owned or subsequently acquired by any Purchaser, a
Permitted Transferee or Suiza. During the term of this Agreement,
none of the Restricted Securities may be sold, assigned, transferred,
pledged, encumbered or otherwise disposed of (a "transfer") except in
a "Permitted Transfer" (as defined below).
(ii) Any attempted transfer of Restricted Securities other than
in accordance with this Agreement shall be null and void and the
Company shall refuse to recognize any such transfer and shall not
reflect on its records any change in record ownership of Restricted
Securities pursuant to any such transfer.
(iii) The following transfers by any holder other than Suiza
of Restricted Securities may be made free of the restrictions: (a) an
individual holder of Restricted Securities may transfer any or all of
the Restricted Securities owned by him to his spouse or children, or
to trusts established for the benefit of his spouse or children,
provided that (1) the transferor Purchaser retains all rights to
consent to any action hereunder, including the right to amend this
Agreement, (2) the transferee grants to the transferor an irrevocable
proxy coupled with an interest to vote all of the Restricted
Securities so transferred and (3) the transferee agrees to be bound by
the provisions of this Agreement; (b) a holder may sell Warrants to
Suiza pursuant to part 5 of this Agreement; and (c) a holder may
transfer Warrants to the underwriters of a Qualified Public Offering.
(iv) The following transfers by Suiza of Restricted Securities
may be made free of the restrictions: (a) sales allowed under
paragraph 7B; (b) Suiza may transfer any of the Suiza Shares to the
underwriters of an underwritten public offering involving the
securities of the Company; (c) a bona fide pledge of any of the Suiza
Shares in connection with any third party financing provided to Suiza
or the Company and (d) transfers which in the aggregate do not exceed
5% of the Suiza Shares.
(v) Each of transfers in paragraphs 7A(iii) and 7A(iv) are
referred to herein as a "Permitted Transfer."
7B. CO-SALE - SALES BY SUIZA.
(i) Whenever and as often as Suiza desires to sell any shares of
Common Stock pursuant to a bona fide written offer to purchase such
shares (but excluding any offers not exceeding in the aggregate for
all such offers 5% of the Suiza Shares), Suiza shall give written
notice (the "Sale Notice," for purposes of this
9
<PAGE>
paragraph 7B) to the Purchasers to such effect, enclosing a copy of such
offer and specifying the number of shares of Common Stock that Suiza
desires to sell, the name of the Person or Persons to whom Suiza desires
to make such sale and the consideration per share of Common Stock that
has been offered in connection with such offer. Upon receipt of the Sale
Notice, each Purchaser shall have the right, at such Purchaser's option,
to participate in the sale to the prospective purchaser pursuant to
paragraph 7B(ii).
(ii) Suiza will use best efforts to arrange for the sale to the
prospective purchaser of the number of shares of Common Stock of each
Purchaser or his Permitted Transferees that bears the same proportion
to the total number of shares of Common Stock (including Warrant
Shares purchasable upon exercise of Warrants) owned by such Purchaser
and his Permitted Transferees as the number of shares of Common Stock
being sold by Suiza bears to the total number of shares of Common
Stock owned by Suiza, at the purchase price per share and on the terms
and conditions specified in the Sale Notice. If the prospective
purchaser will not purchase all the shares of Common Stock that Suiza
and the Purchasers and their Permitted Transferees wish to sell
pursuant to this paragraph 7B(ii), the number of shares of Common
Stock that Suiza and the Purchasers and their Permitted Transferees
shall be entitled to sell to such prospective purchaser shall be a
number of shares equal to the number of shares of Common Stock that
the prospective purchaser desires to purchase times a fraction, the
numerator of which is the number of shares of Common Stock
beneficially owned by Suiza or each selling Purchaser and its
Permitted Transferees, as appropriate, and the denominator of which is
the Outstanding Common Stock.
(iii) A Purchaser may exercise his right to participate in the sale
to the prospective purchaser pursuant to paragraph 7B(ii) by giving written
notice of exercise to Suiza within ten Business Days after receipt of the
Sale Notice.
(iv) The Purchasers acknowledge that their right to participate
in a sale to the prospective purchaser pursuant to paragraph 7B(ii)
does not apply to any bona fide pledge by Suiza of any Common Stock in
connection with any third party financing provided to Suiza or the
Company, or the sale or other transfer by such third party of any of
such shares.
7C. PURCHASERS OR TRANSFEREES OF RESTRICTED STOCK. Except as otherwise
specifically provided herein, any Permitted Transferee or other Person who
shall acquire any shares of Restricted Stock shall have all of the rights and
be bound by all the terms and conditions of this Agreement to the same extent
as the parties hereto and, prior to registration of the transfer of any such
securities on the books of the Company, any Purchaser or other transferee
shall execute an agreement with the parties hereto agreeing to be bound
hereby.
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<PAGE>
8. PREEMPTIVE RIGHTS.
If, prior to a Qualified Public Offering, the Company shall issue any
Equity Securities, each Purchaser shall be entitled to purchase the portion
of such Equity Securities to be issued necessary in order that the aggregate
shares of Common Stock held by such Purchaser and his Permitted Transferees
constitute the same percentage of the Outstanding Common Stock after the
issuance of such Equity Securities as before the issuance thereof; PROVIDED,
HOWEVER, that such preemptive right shall not apply to (a) issuances of
Common Stock or Equity Securities (1) pursuant to or in connection with a
Qualified Public Offering or (2) pursuant to an Approved Plan, (b) issuances
to third parties as consideration for acquisitions by the Company, (c)
issuances of Common Stock or Equity Securities upon the conversion, exercise
or exchange of Equity Securities to which the preemptive right was applicable
(d) issuances of Common Stock or Equity Securities in connection with an
exercise of the preemptive rights granted hereunder, (e) issuances of Warrant
Shares upon exercise of Warrants, or (f) issuances of Equity Securities
contemplated in this Agreement. The price of Equity Securities that each
Purchaser becomes entitled to purchase by reason hereof shall be the same
price at which such Equity Securities are offered to others. If such Equity
Securities are being offered in combination with any other Equity Securities
that are not Common Stock or convertible into Common Stock, each Purchaser
electing to exercise his preemptive right hereunder must also purchase such
other Equity Securities in the same proportion as such other Equity
Securities are being purchased by others. A Purchaser may exercise his right
under this paragraph 8 to purchase Equity Securities by paying the purchase
price therefor at the principal office of the Company at the same time as the
purchase price is paid by others in connection with the issuance giving rise
to the rights granted hereunder. The Company shall give the Purchasers notice
of any such issuance (which notice by the Company shall be given at least 35
calendar days before the issuance of the Equity Securities) stating the
number or amount of Equity Securities (including the other Equity Securities,
if any) it intends to issue, the price and characteristics thereof and the
date payment therefor must be made. The Purchaser shall pay such purchase
price by wire transfer of immediately available funds, to the extent such
purchase price is cash. A Purchaser's contractual preemptive rights
hereunder shall be deemed to be exercised immediately prior to the close of
business on the day of payment of the purchase price in accordance with the
foregoing provisions, and at such time such Purchaser shall be treated for
all purposes as the record holder of the Equity Securities. As promptly as
practicable (and in any event within ten calendar days) after the purchase
date, the Company shall issue and deliver at its principal office a
certificate or certificates for the number of full shares or amount,
whichever is applicable, of Equity Securities, together with cash for any
fraction of a share or portion of an Equity Security at the purchase price to
which the Purchaser is entitled hereunder.
9. REGISTRATION RIGHTS.
9A. REGISTRABLE SHARES. As used in this part 9, the term "Registrable
Stock" shall mean all Warrant Shares issued or issuable as a result of
exercise of the Warrants held by a Purchaser or his Permitted Transferee.
For purposes of this part 9, the Warrant Shares to be issued upon exercise of
the Warrants are deemed to be issued.
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9B. REQUIRED REGISTRATION. In the event that:
(i) after the closing of a Qualified Public Offering, any of the
Purchasers or their Permitted Transferees propose to dispose of at
least the Minimum Number (as defined in paragraph 9C) of shares of
Registrable Stock;
(ii) at the time of such proposal the Company is not actively
considering or pursuing a public offering of Equity Securities within
60 days (other than on Form S-8 or successor form); and
(iii) in the opinion of counsel for the Company such disposition may
not be effected pursuant to Rule 144 (other than pursuant to Rule 144(k))
in three months or less without registration of such shares under the
Securities Act;
then the Purchasers may request the Company in writing to effect such
registration, stating the number of shares of Registrable Stock to be
disposed of and the intended method of disposition of such shares. Upon
receipt of such request of such proposed registration (the "Registration
Request"), the Company will give prompt written notice (the "Registration
Notice") to all other Persons owning Registrable Stock. The holder or
holders of any shares of Registrable Stock shall have ten calendar days after
receipt of such Registration Notice to request in writing (collectively, the
"Additional Registration Requests") that the Company also register all or a
portion of such holder's or holders' Registrable Stock by stating the number
of shares of Registrable Stock to be disposed of and the intended method of
disposition of such shares by such holder or holders. The Company will use
its best efforts to effect promptly the registration under the Securities Act
of (a) all shares of Registrable Stock specified in the Registration Request
and the Additional Registration Requests, and (b) such other shares of Common
Stock as may be required to be registered under other agreements of the
Company with respect to registration rights covering securities of the
Company.
9C. MINIMUM NUMBER. The Minimum Number shall mean 30% of the Warrant
Shares issuable or issued pursuant to the exercise of any and all Warrants;
provided, however, if the number of Warrant Shares not previously sold
pursuant to an effective registration statement or Rule 144 is less than 30%,
then the Minimum Amount shall be all of the remaining Warrant Shares.
9D. LIMITATION ON REQUIRED REGISTRATIONS.
(i) The Company shall not be required to effect more than two
registrations pursuant to paragraph 9B.
(ii) The Company shall not be required to effect more than one
registration pursuant to paragraph 9B during any 12 month period.
(iii) The Company shall not be required to cause a registration
statement requested pursuant to paragraph 9B to become effective prior
to 90 calendar days following the effective date of the most recent
registration by the Company under
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the Securities Act (except with respect to registration statements on
Forms S-4 or S-8 or another form not available for registering the
Registrable Stock for sale to the public or in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock
option or other employee benefit plans of the Company); PROVIDED,
HOWEVER, that the Company shall use its best efforts to achieve such
effectiveness promptly following such 90-day period if the request
pursuant to paragraph 9B has been made prior to the expiration of such
90-day period.
(iv) The Company shall not register securities for sale for its
own account or for any other Person's account in any registration
requested pursuant to paragraph 9B other than to the extent it is
required to do so under registration rights outstanding at the date
the Registration Request is actually received by the Company or unless
permitted to do so by written consent of the holders of at least 50%
of the Registrable Stock as to which registration has been requested
in the Registration Request and the Additional Registration Requests
pursuant to paragraph 9B.
9E. INCIDENTAL REGISTRATION. If shares of Common Stock are proposed to
be registered under the Securities Act (except with respect to registration
statements on Forms S-4 or S-8 or another form not available for registering
the Registrable Stock for sale to the public or in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option or
other employee benefit plans of the Company), the Company will each such time
give written notice to the Purchasers of such event. Upon the written
request of a Purchaser given within ten calendar days after receipt of any
such notice (stating the number of shares of Registrable Stock to be disposed
of and the intended method of disposition of such shares), the Company will
use its best efforts to cause promptly all such shares of Registrable Stock
intended to be disposed of, the Purchasers shall have so requested
registration thereof, to be registered under the Securities Act so as to
permit the sale or other disposition (in accordance with the intended methods
thereof as aforesaid) by such holder or holders of the shares so registered,
subject to the limitations set forth in paragraph 9F.
9F. LIMITATIONS ON INCIDENTAL REGISTRATION. If the Company gives notice
pursuant to paragraph 9E for the purpose of permitting a disposition (either
underwritten or otherwise) of securities of the Company, the Company shall
have the right to exclude (i) all shares to be sold on behalf of selling
shareholders if the Company's underwriters or financial advisors determine
such exclusion is necessary or advisable to insure a successful offering of
Company securities, and (ii) any shares to be sold on behalf of any
shareholder who has twice previously registered shares of Common Stock
pursuant to paragraph 9E. If the Company limits the number of (but does not
exclude) shares sold by selling shareholders, the number of shares to be
registered on behalf of any holder of Registrable Stock shall be determined
by multiplying the number of shares of Registrable Stock such holder has
requested be registered by a fraction, the numerator of which is the number
of shares of selling shareholders to which the registration is limited, and
the denominator of which is the number of shares of Common Stock validly
requested to be included in such registration by all holders of Common Stock
having registration rights.
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9G. DESIGNATION OF UNDERWRITER. The Company shall have the right to
designate the managing underwriter for any public offering of the Company's
securities effected through a registration under paragraph 9B; provided
however, that such designation shall be subject to the approval of the
holders of a majority of Registrable Stock being included in such offering,
which approval shall not be unreasonably withheld.
9H. REGISTRATION PROCEDURES. If and whenever the Company is required by
the provisions of this part 9 to use its best efforts to effect promptly the
registration of shares of Registrable Stock under the Securities Act, the
Company will:
(i) prepare and file with the Commission a registration
statement with respect to such shares and use its best efforts to
cause such registration statement to become effective as soon as
practicable and remain effective as provided herein for a period of
not less than six months except that the Company shall not be required
to conduct any special audit and if such an audit would be required,
the Company may delay such registration statement until such time as
such special audit is no longer required;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and current and to comply with the provisions of
the Securities Act with respect to the sale or other disposition of
all shares covered by such registration statement, including such
amendments and supplements as may be necessary to reflect the intended
method of disposition from time to time of the prospective seller or
sellers of such shares for a period of not less than six months;
(iii) furnish to each prospective seller such number of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such
seller may reasonably request in order to facilitate the public sale or
other disposition of the shares owned by such seller; and
(iv) use its best efforts to register or qualify the shares
covered by such registration statement under such other securities or
blue sky or other applicable laws of such jurisdictions within the
United States, as each prospective seller shall reasonably request, to
enable such prospective seller to consummate the public sale or other
disposition in such jurisdictions of the shares owned by such seller.
Each prospective seller of Registrable Stock, and each underwriter
designated by such seller, shall be required to furnish to the Company such
information as the Company may reasonably require from such seller or
underwriter for inclusion in the registration statement (and the prospectus
included therein).
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Each Purchaser will notify the Company two Business Days prior to any
sale of Registrable Stock pursuant to the registration statement by such
Purchaser or his Permitted Transferee. If, upon receipt of such a notice,
the Company certifies to such Purchaser in writing that (i) due to a change
in circumstances or a pending transaction, the registration statement
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the public disclosure required to
correct such misstatement or omission would be injurious to the Company, then
such Purchaser or Permitted Transferee will refrain from selling any shares
pursuant to the registration statement for the period of time requested by
the Company; but the obligations of the Company with respect to maintaining
any registration statement current and effective shall be extended by a
period of days equal to such time period. The Company will use reasonable
efforts to minimize the time period during which any holder of Registrable
Stock is required to refrain from selling under this paragraph 9H, and
notwithstanding anything to the contrary contained herein, the aggregate of
such time periods will not exceed 180 calendar days during any 12 month
period.
9I. EXPENSES OF REGISTRATION. All expenses incurred in effecting any
registration pursuant to this part 9 including, without limitation, all
registration and filing fees, printing expenses, expenses of compliance with
Blue Sky laws, fees and disbursements of counsel for the Company, and
reasonable fees and disbursements of one counsel for the Purchasers, shall be
borne by the Company, save and except the following which shall be borne by
the holders of the securities registered pursuant to such registration, pro
rata based upon the value of their securities so registered as compared to
all securities so registered:
(i) all fees and disbursements of any additional counsel for
such holders;
(ii) the cost of any special audit required by the Securities Act
or the regulations thereunder as a result of the Company's obligation
or election to maintain a registration statement current for six
months pursuant to subparagraphs (i) and (ii) of paragraph 9H; and
(iii) underwriting discounts and commissions.
9J. INDEMNIFICATION.
(i) The Company agrees to indemnify each holder requesting or
joining in a registration, each person or entity who controls such
holder within the meaning of Section 15 of the Securities Act, and
each underwriter and selling broker of the securities so registered,
and their respective successors, against all claims, losses, damages,
liabilities, fines and penalties (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification
or the like) or any omission (or alleged omission) to state therein a
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material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of
any rule or regulation promulgated under the Securities Act applicable
to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or
compliance, and agrees to reimburse each such holder, each person or
entity who controls such holder within the meaning of Section 15 of
the Securities Act, and each such underwriter, and their respective
successors, for any legal and any other expenses reasonably incurred
in connection with investigating or defending any such claim, loss,
damage, liability or action, PROVIDED, HOWEVER, that the Company will
not be liable in any such case if (and to the extent that) such
statement or omission was made in reliance upon information
(including, without limitation written negative responses to
inquiries) furnished to the Company by an instrument duly executed by
such holder or underwriter and stated to be specifically for use in
such prospectus, offering circular or other document (or related
registration statement, notification or the like) or any amendment or
supplement thereto.
(ii) Each holder requesting or joining in a registration and each
underwriter of the securities so registered will indemnify the Company
and its officers and directors and each person, if any, who controls
any thereof within the meaning of Section 15 of the Securities Act and
their respective successors against all claims, losses, damages,
liabilities, fines and penalties (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification
or the like) or any omission (or alleged omission) to state therein a
material fact required to be stated or necessary to make the
statements therein not misleading, and will reimburse the Company, as
applicable, and each other person indemnified pursuant to this
subparagraph (ii) for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action, PROVIDED, HOWEVER, that this
subparagraph (ii) shall apply only if (and only to the extent that)
such statement or omission was made in reliance upon information
(including, without limitation, written negative responses to
inquiries) furnished to the Company by an instrument duly executed by
such holder or underwriter and stated to be specifically for use in
such prospectus, offering circular or other document (or related
registration statement, notification or the like) or any amendment or
supplement thereto.
9K. OPTION TO PURCHASE REGISTRABLE STOCK. For a period of 20 calendar
days commencing on the date that the Company receives a request by the
Purchasers to include Registrable Stock in a registration statement pursuant
to this part 9, the Company shall have the right and option, in lieu of
including such Registrable Stock in such registration, to purchase for cash
from the holders of the Registrable Stock requested to be included in such
registration and to require such holders to sell, at the Market Value Per
Share, all of such Registrable Stock. In order to exercise its option to
purchase Registrable Stock pursuant to this paragraph 9K, the
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Company must give written notice to the Purchasers of such exercise (the
"Purchase Notice") during such 20-day period. The closing of any purchase of
Registrable Stock pursuant to this paragraph 9K shall take place at the
offices of Suiza at 10:00 a.m., Dallas, Texas time, on a Business Day which
shall be no earlier than 30 calendar days after the date of the Purchase
Notice. If the Company exercises its option to purchase Registrable Stock
under this paragraph 9K in lieu of a registration under paragraph 9B, upon
the payment of the purchase price in cash for such Registrable Stock, the
Company shall be considered as effecting one registration pursuant to
paragraph 9B.
10. POST-CLOSING COVENANTS.
10A. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company shall
deliver to each Eligible Purchaser:
(i) within 90 calendar days after the end of each fiscal year of
the Company, an audited balance sheet of the Company as at the end of
such year and audited statements of operations and of cash flows of
the Company for such year, certified by a firm of certified public
accountants of established national reputation selected by the
Company, and prepared in accordance with generally accepted accounting
principles; and
(ii) within 45 calendar days after the end of each fiscal
quarter, an unaudited balance sheet of the Company as at the end of
such quarter and unaudited statements of operations and of cash flows
of the Company for such quarter and for the current fiscal year to the
end of such quarter.
The foregoing financial statements shall be prepared on a consolidated basis;
PROVIDED, HOWEVER, that for purposes of determining Excess Cash Flow and Net
Income, the Company will be treated for tax purposes as an independent
company and not as part of a consolidated group.
10B. APPLICATION OF COMPANY CASH FLOW. To the extent permissible under
applicable law and the third party credit facilities of the Company and Suiza
for each quarter, all Excess Cash Flow will be applied by the Company as
follows: (i) first, to accrued and unpaid dividends on the Series A Preferred
Stock; (ii) second, to the repayment of principal of the Senior Note, until
repaid in full; (iii) third, to the repayment of principal of the Mezzanine
Note, until repaid in full; (iv) fourth, to the redemption or repurchase of
the Series A Preferred Stock, as provided in the Certificate of Designation,
until no shares of the Series A Preferred Stock are outstanding; and (v)
fifth, to the holders of Common Stock, as dividends.
10C. MANAGEMENT SERVICES BY SUIZA. The parties acknowledge that Suiza
will be providing management services to the Company after the Closing, for
which Suiza will receive management fees from the Company equal to its direct
and indirect costs of providing such services. In connection therewith,
Suiza and the Company will execute a management services agreement (or a
similar agreement or series of agreements) reasonably acceptable to the
Purchasers.
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10D. ACQUISITIONS BY SUIZA. Suiza agrees that it will not make an
acquisition of any Person primarily engaged in the Company Business, except
through the Company. Notwithstanding the foregoing, Suiza will not be
required to contribute to the Company any of the existing operations of Suiza
or the plastics operations of any future acquisitions whose primary business
is not the Company Business. However, if Suiza determines to contribute any
of its operations engaged in the Company Business to the Company, Suiza and
the Purchasers will agree to the consideration to be received by Suiza from
the Company for such operations prior to such contribution. In addition,
Suiza will consult with the Purchasers prior to the sale by Suiza to a third
party of any of its operations engaged in the Company Business.
10E. ADDITIONAL FUNDING BY SUIZA. Suiza may, at its sole option, provide
additional financing of up to $10,000,000 to the Company, but has no
obligation to do so. If any future financing of the Company by Suiza is for
working capital purposes, such financing will be pursuant to a revolving debt
facility with terms and conditions similar to those contained in the Senior
Note. In addition, Suiza may provide the Company with cash management
services, pursuant to which Suiza will provide the Company with its daily
cash requirements and the Company will transfer to Suiza all of its excess
cash on a daily basis. All other financing of the Company by Suiza,
including for acquisitions by the Company, will be made in exchange for
securities of the Company in the following percentages: (i) 55% in
indebtedness with economic terms similar to the Senior Note; (ii) 25% in
indebtedness with economic terms similar to the Mezzanine Note; (iii) 16-2/3%
in additional shares of Series A Preferred Stock or other Preferred Stock
with economic terms similar to the Series A Preferred Stock; and (iv) 3-1/3%
in shares of Common Stock. If on or about the third anniversary of the
Closing, Suiza determines after reasonable inquiry that the Company is then
able to receive third party financing on terms materially more favorable than
those of the Senior Note and the Mezzanine Note, and Suiza does not match the
terms of such third party financing, the Purchasers may require the Company
to refinance in full all of its indebtedness to Suiza, whether pursuant to
the Senior Note, the Mezzanine Note, or any additional financing contemplated
by this paragraph 10E, with such third party financing.
10F. LINE OF BUSINESS. The Company shall not enter any line of Business
other than the Company Business except pursuant to acquisitions permitted by
paragraph 10D.
10G. AFFILIATE TRANSACTIONS. Suiza shall cause the Company not to enter
into any transaction with an affiliate of the Company unless such transaction
is on fair and reasonable terms, which are not less favorable to the Company
than could be obtained in a comparable arms-length transaction with a
non-affiliated person.
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11. DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
meanings set forth below:
"AFFILIATE" means with respect to any Person, a Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person, and, in the case of an individual,
includes any relative or spouse of such person, or any relative or such
spouse, who has the same home as such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"APPROVED PLAN" means any written stock option, stock purchase or similar
incentive plan approved by the Board of Directors, pursuant to which up to 5%
of the Outstanding Common Stock would be available for issuances to officers
and key employees of the Company.
"BOARD OF DIRECTORS" means the board of directors of the Company.
"BUSINESS DAY" means any day of the year on which banks in Dallas, Texas
and New York, New York are open to the public for conducting all regular
business and are not required to close.
"BYLAWS" means the bylaws of the Company, as amended and in effect at the
Closing.
"CALL PRICE" means, for each Warrant (determined on the basis of the
number of Warrant Shares into which it is then exercisable) which is to be
purchased by Suiza pursuant to paragraphs 5B or 5C, the amount obtained by
multiplying (i) the Call Share Value by (ii) the number of Warrant Shares
into which such Warrant is then exercisable.
"CALL SHARE VALUE" means the excess over the exercise price per Warrant
Share of the Warrant of the product obtained by multiplying (i) 14 by (ii)
the quotient obtained by dividing (a) the Net Income for the last full fiscal
year immediately preceding the Call Notice or the Change in Control Notice,
as the case may be, by (b) the Outstanding Common Stock as of the date of the
Call Notice or the Change in Control Notice, as the case may be.
"COMMON STOCK" means the Company's Common Stock, par value $0.001 per
share.
"COMPANY BUSINESS" means the business of manufacturing, distributing,
marketing or selling of blow mold PET or high density polyethylene plastic
containers.
"ELIGIBLE PURCHASER" means a Purchaser holding at least 5% of the
Outstanding Common Stock, and for purposes of determining whether the number
of shares held by a Purchaser
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qualifies such Purchaser as a Eligible Purchaser, shall include shares held
by Affiliates of such Purchaser.
"EQUITY SECURITIES" means any capital stock or similar security,
including without limitation, securities containing equity features
(including dividend or liquidation preferences) and securities containing
profit participation features, or any security convertible or exchangeable,
with or without consideration, into or for any stock or similar security, or
any security carrying any warrant or right to subscribe for or purchase any
stock or similar security, or any such warrant or right.
"EXCESS CASH FLOW" means for any period, Net Income plus all non-cash
expense items, minus (i) all scheduled payments of principal on the Senior
Debt or any other indebtedness of the Company and (ii) all capital
expenditures of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"MARKET VALUE PER SHARE" means, with respect to either Common Stock or
Suiza Common Stock, as the case may be, the average closing price for such
stock for the ten trading-day period ending on the Warrant Closing Date, or
the date of the Purchase Notice, as the case may be, as reported in THE WALL
STREET JOURNAL.
"NET INCOME" for any period means the net income of the Company for such
period, determined in accordance with generally accepted accounting
principles and the provisions of paragraph 10A; PROVIDED, HOWEVER, that all
extraordinary items will be excluded and only those management fees charged
to the Company by Suiza for services actually rendered will be included.
"OUTSTANDING COMMON STOCK" means all of the outstanding Common Stock,
including in such outstanding Common Stock the Warrant Shares and all shares
of Common Stock which could be acquired from the Company upon exercise or
conversion of any outstanding options or other Equity Securities then
exercisable or convertible into Common Stock.
"PERMITTED TRANSFEREE" means any transferee of a Purchaser in a
Permitted Transfer.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization or a governmental entity or
any department, agency or political subdivision thereof.
"PREFERRED STOCK" means the Company's Preferred Stock, par value $0.001
per share.
"PUT PRICE" means, for each Warrant (determined on the basis of the
number of Warrant Shares into which it is then exercisable) which is to be
purchased by Suiza pursuant to paragraph 5A, the product obtained by
multiplying (i) the Put Share Value by (ii) the number of Warrant Shares into
which such Warrant is then exercisable.
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"PUT SHARE VALUE" means the excess over the exercise price per Warrant
Share of the Warrant of the product obtained by multiplying (i) 12 by (ii)
the quotient obtained by dividing (a) the Net Income for the last full fiscal
year immediately preceding the Put Notice by (a) the Outstanding Common Stock
as of the date of the Put Notice.
"QUALIFIED PUBLIC OFFERING" means (i) any underwritten offering by the
Company of shares of Common Stock to the public pursuant to an effective
registration statement under the Securities Act in which the aggregate cash
proceeds to be received by the Company and selling shareholders from such
offering (without deducting underwriting discounts, expenses and commissions)
are at least $20,000,000, or (ii) any distribution or offering by Suiza of
shares of Common Stock to the stockholders of Suiza, which distribution or
offering is registered pursuant to the Securities Act or the Exchange Act, in
which the aggregate Market Value Per Share of the Common Stock transferred to
the stockholders of Suiza after such distribution or offering is at least
$20,000,000.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SERIES A PREFERRED STOCK" means the Company's Series A Redeemable
Preferred Stock, $0.001 par value, more fully described in the Certificate of
Designation.
"SUBSIDIARY" means any corporation more than 50% of the outstanding
voting securities of which are owned by the Company or any Subsidiary,
directly or indirectly, or a partnership or limited liability company in
which the Company or any Subsidiary is a general partner or manager or holds
interests entitling it to receive more than 50% of the profits or losses of
the partnership or limited liability company.
"SUIZA COMMON STOCK" means the common stock of Suiza, $0.01 par value.
12. GENERAL PROVISIONS.
12A. LEGENDS ON CERTIFICATES. During the term of this Agreement, each
certificate representing shares of Common Stock will bear a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SALE, ASSIGNMENT,
TRANSFER, PLEDGE OR OTHER DISPOSITION AND VOTING THEREOF ARE SUBJECT TO
CERTAIN RESTRICTIONS AND AGREEMENTS CONTAINED IN A STOCKHOLDERS AGREEMENT, AS
AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS. A
COPY OF THE STOCKHOLDERS AGREEMENT AND ALL APPLICABLE AMENDMENTS THERETO WILL
BE FURNISHED BY THE COMPANY TO THE RECORD HOLDER OF THE SHARES REPRESENTED BY
THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS
PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE."
The Company shall make a notation on its records and give instructions to any
transfer agent of the Common Stock in order to implement the restrictions on
transfer established in this Agreement.
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12B. TERMINATION; AMENDMENT.
(i) This Agreement may be terminated at any time prior to the
Closing (a) with the written agreement of Suiza and the Purchasers or
(b) upon the termination of the Purchase Agreement prior to the
closing thereunder.
(ii) This Agreement may be terminated at any time after the
Closing (a) with the written agreement of Suiza and the holders of 66-2/3%
or more of the Warrant Shares outstanding (assuming the exercise of all
of the Warrants), or (b) upon the acquisition by a single Person of all
of the Outstanding Common Stock.
(iii) The provisions of parts 5 through 8 and part 10 of this
Agreement shall terminate immediately prior to the closing of a
Qualified Public Offering.
(iv) In the event of a termination of this Agreement as provided
in this paragraph 12B, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of any party
hereto or their Affiliates; PROVIDED, HOWEVER, that any such
termination shall not relieve any party from liability for willful
breach of this Agreement.
(v) This Agreement may be amended only with the written
agreement of Suiza and the holders of 66-2/3% or more of the Warrant
Shares outstanding (assuming the exercise of all of the Warrants).
12C. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered personally or
by facsimile transmission or by overnight delivery service or 72 hours after
having been mailed by first class certified or registered mail, return
receipt requested, postage prepaid:
If to the Company or Suiza, at Suiza Foods Corporation, 3811 Turtle Creek
Boulevard, Suite 1300, Dallas, Texas 75219, Attention: Gregg L. Engles,
Chairman, or at such other address or addresses as may have been furnished in
writing by the Company or Suiza to the Purchasers, with a copy to Hughes &
Luce, L.L.P., 1717 Main Street, Suite 2800, Dallas, Texas 75201, Attention:
Alan J. Bogdanow.
If to a Purchaser, at 1199 West Central Street, Franklin, Massachusetts
02038-0923, or at such other address or addresses as may have been furnished
to the Company and Suiza in writing by such Purchaser, with a copy to
Hutchins, Wheeler & Dittmar, a Professional Corporation, 101 Federal Street,
Boston Massachusetts 02110, Attention: Charles W. Robins.
12D. GOVERNING LAW. The construction, validity and interpretation of
this Agreement and the related Senior Note, Mezzanine Note and Warrants will
be governed by the internal laws of the State of Delaware without giving
effect to any choice of law or conflict of law provision or rule
22
<PAGE>
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
12E. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which shall be one and the same document.
12F. REORGANIZATION. The provisions of this Agreement shall apply to any
shares or other securities resulting from any stock split or reverse split,
stock dividend, reclassification, subdivision, consolidation or
reorganization of any shares or other equity securities of the Company and to
any shares or other securities of the Company or of any successor company
which may be received by any of the parties hereto by virtue of their
respective ownership of any shares of securities of the Company.
12G. HEADINGS. The headings of this Agreement are for convenience only
and do not constitute a part of this Agreement.
12H. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
12I. BINDING EFFECT. Notwithstanding the transfer of Warrants or Warrant
Shares to a Permitted Transferee, the rights and obligations of each
Purchaser under this Agreement may not be assigned by such Purchaser to any
Permitted Transferee without the written consent of the Company and Suiza.
23
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first written above.
COMPANY:
FRANKLIN PLASTICS, INC.
By: /s/ Gregg L. Engles
-------------------------------
Gregg L. Engles,
Chairman
SUIZA:
SUIZA FOODS CORPORATION
By: /s/ Gregg L. Engles
-------------------------------
Gregg L. Engles,
Chairman
PURCHASERS:
/s/ Peter M. Bernon
------------------------------------
Peter M. Bernon
/s/ Alan J. Bernon
------------------------------------
Alan J. Bernon
24
<PAGE>
EXECUTION COPY
**********************************************************
SUIZA FOODS CORPORATION
----------------------------
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
$200,000,000 of $700,000,000 Aggregate Credit Facility
Dated as of July 31, 1997
----------------------------
FIRST UNION NATIONAL BANK,
as Administrative Agent
BHF-BANK AKTIENGESELLSCHAFT (NEW YORK)
BANK BOSTON, N.A.
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND"
CREDIT LYONNAIS
FLEET NATIONAL BANK
MERRILL LYNCH ASSET
MANAGEMENT, INC.,
as Co-Agents
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent
**********************************************************
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is attached
but is inserted for convenience of reference only.
<TABLE>
PAGE
----
<S> <C> <C>
Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . . . . 2
1.01 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Accounting Terms and Determinations. . . . . . . . . . . . . . . . 27
1.03 Classes and Types of Loans . . . . . . . . . . . . . . . . . . . . 28
Section 2. Commitments, Loans, Notes and Prepayments. . . . . . . . . . . . . 29
2.01 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.02 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.03 Changes of Commitments . . . . . . . . . . . . . . . . . . . . . . 32
2.04 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.05 Lending Offices. . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.06 Several Obligations; Remedies Independent. . . . . . . . . . . . . 33
2.07 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.08 Optional Prepayments and Conversions or Continuations of Loans . . 35
2.09 Mandatory Prepayments and Reductions of Commitments. . . . . . . . 36
2.10 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3. Payments of Principal and Interest . . . . . . . . . . . . . . . . 45
3.01 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . 45
3.02 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . . 47
4.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.02 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . 48
4.03 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.04 Minimum Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.05 Certain Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.06 Non-Receipt of Funds by the Agent. . . . . . . . . . . . . . . . . 51
4.07 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . 52
Section 5. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . . . . 53
5.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.02 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . 56
5.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.04 Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . 57
5.05 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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<PAGE>
<S> <C> <C>
5.06 Net Payments; Taxes. . . . . . . . . . . . . . . . . . . . . . . . 59
5.07 Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . 61
5.08 Additional Costs in Respect of Letters of Credit . . . . . . . . . 62
Section 6. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 63
6.01 Conditions to Effectiveness. . . . . . . . . . . . . . . . . . . . 63
6.02 Conditions to all Extensions of Credit . . . . . . . . . . . . . . 66
Section 7. Representations and Warranties . . . . . . . . . . . . . . . . . . 67
7.01 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . 67
7.02 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . 67
7.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.04 No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.05 Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.06 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.07 Use of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.08 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.09 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.10 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . 70
7.11 Public Utility Holding Company Act . . . . . . . . . . . . . . . . 70
7.12 Material Agreements and Liens. . . . . . . . . . . . . . . . . . . 71
7.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 71
7.14 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . 74
7.15 Subsidiaries, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 75
7.16 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.17 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . 76
7.18 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.19 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 8. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . 77
8.01 Financial Statements, Etc. . . . . . . . . . . . . . . . . . . . . 77
8.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
8.03 Existence, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.04 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.05 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . 84
8.06 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . 86
8.07 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.08 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.09 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . 90
8.10 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 90
8.11 Minimum Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . 91
8.12 Fixed Charges Ratio. . . . . . . . . . . . . . . . . . . . . . . . 91
8.13 Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . 91
8.14 [Intentionally left blank] . . . . . . . . . . . . . . . . . . . 91
8.15 Interest Rate Protection Agreements. . . . . . . . . . . . . . . . 91
(ii)
<PAGE>
<S> <C> <C>
8.16 Lines of Business. . . . . . . . . . . . . . . . . . . . . . . . . 91
8.17 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 91
8.18 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 92
8.19 Certain Obligations Respecting Subsidiaries; Additional Mortgaged
Properties. . . . . . . . . . . . . . . . . . . . . . . . . . 92
8.20 Modifications of Certain Documents . . . . . . . . . . . . . . . . 94
8.21 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 94
8.22 Puerto Rico Security Documents . . . . . . . . . . . . . . . . . . 94
Section 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 10. The Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.01 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . 99
10.02 Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . 100
10.03 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
10.04 Rights as a Lender . . . . . . . . . . . . . . . . . . . . . . . . 101
10.05 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.06 Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . 102
10.07 Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.08 Resignation or Removal of Agent. . . . . . . . . . . . . . . . . . 103
10.09 Agency Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.10 Consents under Other Loan Documents. . . . . . . . . . . . . . . . 103
10.11 Syndication Agent and Co-Agents. . . . . . . . . . . . . . . . . . 104
Section 11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
11.03 Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11.04 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 106
11.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 107
11.06 Assignments and Participations . . . . . . . . . . . . . . . . . . 107
11.07 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.08 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
11.10 Governing Law; Submission to Jurisdiction;
Service of Process and Venue . . . . . . . . . . . . . . . . . 112
11.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 113
11.12 Treatment of Certain Information; Confidentiality. . . . . . . . . 113
11.13 Intention of Parties . . . . . . . . . . . . . . . . . . . . . . . 114
</TABLE>
(iii)
<PAGE>
SCHEDULE I - Existing Material Agreements and Liens
SCHEDULE II - Environmental Matters
SCHEDULE III - Subsidiaries and Investments
SCHEDULE IV - Real Property
SCHEDULE V - Litigation
SCHEDULE VI - Existing Puerto Rico Security Documents
SCHEDULE VII - Existing Mortgages
EXHIBIT A-1 - Form of Facility A Note
EXHIBIT A-2 - Form of Facility B Note
EXHIBIT B - Form of Mortgage
EXHIBIT C - Form of Deed of Trust
EXHIBIT D-1 - Form of Opinion of Counsel to the Obligors
EXHIBIT D-2 - Form of Opinion of Puerto Rico Counsel to the Obligors
EXHIBIT E - Form of Opinion of Local Counsel
EXHIBIT F - Form of Opinion of Special New York Counsel to First Union
EXHIBIT G - Form of Confidentiality Agreement
EXHIBIT H - Form of Assignment and Acceptance
EXHIBIT I - [Intentionally Left Blank]
EXHIBIT J-1 - Form of Notice of Borrowing
EXHIBIT J-2 - Form of Notice of Prepayment
EXHIBIT J-3 - Form of Notice of Conversion/Continuation
EXHIBIT J-4 - Form of Notice of Account Designation
(iv)
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 31, 1997
between: SUIZA FOODS CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "COMPANY"); each of the
lenders that is a signatory hereto identified under the caption "LENDERS" on the
signature pages hereto or that, pursuant to Section 11.06(b) hereof, shall
become a "Lender" hereunder (individually, a "LENDER" and, collectively, the
"LENDERS"); and FIRST UNION NATIONAL BANK (formerly First Union National Bank of
North Carolina), a national banking association, as administrative agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"AGENT").
WHEREAS, the Company, certain of the Lenders and the Agent are party
to a Second Amended and Restated Credit Agreement dated as of March 5, 1997 as
amended by an Amendment and Consent dated as of May 15, 1997 (as heretofore
modified and supplemented and in effect immediately prior to the Effective Date
referred to below, the "EXISTING CREDIT AGREEMENT") (which Existing Credit
Agreement in turn amended and restated an Amended and Restated Credit Agreement
dated as of July 17, 1996 as amended by Amendment and Waiver dated as of August
7, 1996, Amendment No. 2 dated as of September 6, 1996, and Amendment No. 3
dated as of December 2, 1996) providing, subject to the terms and conditions
thereof, for extensions of credit (by making of loans and issuing letters of
credit) to be made by such Lenders to the Company in an aggregate principal or
face amount not exceeding $200,000,000.
WHEREAS, the parties hereto now wish to amend and restate the Existing
Credit Agreement by, among other things, extending the term of the Facility A
Commitments under the Existing Credit Agreement, restoring the available amount
of Facility B Commitments under the Existing Credit Agreement, changing the
amortization and extending the final maturity of the Facility B Loans under the
Existing Credit Agreement, and by amending certain of the other provisions
thereof and, in that connection, wish to amend and restate the Existing Credit
Agreement in its entirety, it being the intention of the parties hereto that the
loans and letters of credit outstanding under the Existing Credit Agreement to
or for the account of the Company on the Effective Date (as hereinafter defined)
shall continue and remain outstanding and not be repaid on the Effective Date,
and accordingly the Loans and Commitments (as hereinafter defined) are not in
novation or discharge thereof.
CREDIT AGREEMENT
<PAGE>
-2-
WHEREAS, each of the Obligors (as hereinafter defined) expects to
derive benefit, directly or indirectly, from the loans so made to the Company,
both in its separate capacity and as a member of the integrated group, since the
successful operation of each of the Company and its Subsidiaries is dependent on
the continued successful performance of the functions of the integrated group as
a whole.
Accordingly, the parties hereto hereby agree that the Existing Credit
Agreement shall, as of the Effective Date (the occurrence of which is subject to
the satisfaction of the conditions precedent specified in Section 6.01 hereof),
be amended and restated in its entirety as follows:
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01 CERTAIN DEFINED TERMS. As used herein, the following terms shall
have the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and vice versa):
"ADDITIONAL PUERTO RICO SECURITY DOCUMENTS" shall have the meaning
assigned to such term in Section 8.21 hereof.
"AFFILIATE" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family (including
parents, spouse, children and siblings) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
"controlled by" and "under common control with") shall mean possession, directly
or indirectly, of power to direct or cause the direction of management or
policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise), PROVIDED that, in any event, any
Person that owns directly or indirectly securities having 10% or more of the
voting power for the election of directors or other governing body of a
corporation or 10% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing,
CREDIT AGREEMENT
<PAGE>
-3-
(a) no individual shall be an Affiliate solely by reason of his or
her being a director, officer or employee of the Company or any of its
Subsidiaries and (b) none of the Wholly Owned Subsidiaries of the Company shall
be Affiliates.
"APPLICABLE COMMITMENT FEE RATE" shall mean 0.25% per annum; PROVIDED
that if the Leverage Ratio as at the last day of any fiscal quarter of the
Company ending on or after the Effective Date shall fall within any of the
ranges set forth below then, upon the delivery to the Agent of a certificate of
a Responsible Financial Officer of the Company (which shall accompany the
financial statements for such fiscal quarter delivered under Section 8.01(a)
hereof on which the calculation of such Leverage Ratio is based) demonstrating
such fact prior to the end of the next succeeding fiscal quarter, the
"Applicable Commitment Fee Rate" shall be adjusted upwards or downwards, as the
case may be, to the rate per annum set forth below opposite such range during
the period commencing on the third Business Day following the date of receipt of
such certificate to but not including the date the next such certificate to be
delivered under this definition is delivered or due, whichever is earlier
(except that, notwithstanding the foregoing, the Applicable Commitment Fee Rate
shall not as a consequence of this proviso be so reduced for any period during
which an Event of Default shall have occurred and be continuing):
Range
of
Leverage Ratio Applicable Commitment Fee Rate
-------------- ------------------------------
Less than 2.0:1 0.20%
Equal to or greater than 0.25%
2.0:1 but less
than 2.50:1
Equal to or greater than
2.50:1 0.375%
; provided that in the event that there is an Equity Issuance by the Company
resulting in Net Available Proceeds to the Company of at least $50,000,000, and
the Company provides the Agent with the written advice required by
Section 2.09(c) hereof with respect to such Equity Issuance and makes the
application of Net Available
CREDIT AGREEMENT
<PAGE>
-4-
Proceeds provided therein, the Applicable Commitment Fee Rate shall upon such
application be immediately adjusted to give effect to the change in the
Leverage Ratio resulting from such application.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for each
Type of Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or such
other office of such Lender (or of an affiliate of such Lender) as such Lender
may from time to time specify to the Agent and the Company as the office by
which its Loans of such Type are to be made and maintained.
"APPLICABLE MARGIN" shall mean: with respect to Loans that are Base
Rate Loans, 0.50% and/or Eurodollar Loans, 1.75% per annum; PROVIDED that if the
Leverage Ratio as at the last day of any fiscal quarter of the Company ending on
or after the Effective Date shall fall within any of the ranges set forth below
then, upon the delivery to the Agent of a certificate of a Responsible Financial
Officer of the Company (which shall accompany the financial statements for such
fiscal quarter delivered under Section 8.01(a) hereof on which the calculation
of such Leverage Ratio is based) demonstrating such fact prior to the end of the
next succeeding fiscal quarter, the "Applicable Margin" for each Loan shall be
adjusted upwards or downwards, as the case may be, to the rate per annum for the
respective Type and Class of Loan set forth below opposite such range during the
period commencing on the third Business Day following the date of receipt of
such certificate to but not including the date the next succeeding such
certificate to be delivered hereunder is delivered or due, whichever is earlier
(except that, notwithstanding the foregoing, the Applicable Margin for any such
Loan shall not as a consequence of this proviso be so reduced for any period
during which an Event of Default shall have occurred and be continuing):
CREDIT AGREEMENT
<PAGE>
-5-
Applicable Margin (%p.a.)
Range -------------------------
of
Leverage Base Rate Loans Eurodollar Loans
-------- --------------- ----------------
Less than 2.0:1 0% 0.75%
Equal to or greater than 0% 1.0%
2.0:1 but less
than 2.50:1
Equal to or greater than 0% 1.25%
2.50:1 but less than
3.25:1
Equal to or greater than 0.25% 1.50%
3.25:1 but less than
3.75:1
Equal to or greater than 0.50% 1.75%
3.75:1
; PROVIDED that in the event that there is an Equity Issuance by the Company
resulting in Net Available Proceeds to the Company of at least $50,000,000, and
the Company provides the Agent with the written advice required by
Section 2.09(c) hereof with respect to such Equity Issuance and makes the
application of Net Available Proceeds provided therein, the Applicable Margin
shall upon such application be immediately adjusted to give effect to the change
in the Leverage Ratio resulting from such application.
"BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.
"BASE RATE" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Rate for such day PLUS 1/2 of 1% and (b) the
Prime Rate for such day. 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 at the time of such change in the Base Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates based
upon the Base Rate.
CREDIT AGREEMENT
<PAGE>
-6-
"BASIC DOCUMENTS" shall mean, collectively, the Loan Documents and,
except for purposes of the definitions of "Secured Obligations" and "Guaranteed
Obligations" in any of the Security Documents, the Purchase Agreements.
"BERNON ACQUISITION" shall have the meaning set forth in the Second
Restated Supplemental Credit Agreement.
"BUSINESS DAY" shall mean any day on which (a) commercial banks are
not authorized or required to close in North Carolina and (b) if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a
notice by the Company with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, any day on which dealings in Dollar deposits are
carried out in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Company or any of its
Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs)
during such period computed in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CASUALTY EVENT" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds, proceeds of a condemnation award or other compensation.
"CLASS" shall have the meaning assigned to such term in Section 1.03
hereof.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL ACCOUNT" shall mean with respect to the Company and any of
its Subsidiaries, the Collateral Account as defined in the Security Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission or any
governmental agency substituted therefor.
"COMMITMENTS" shall mean the Facility A Commitments and the Facility B
Commitments.
"COMMONWEALTH" shall mean the Commonwealth of Puerto Rico and its
political subdivisions, municipalities, agencies and instrumentalities.
"COMPANY" shall have the meaning assigned to such term in the preamble
of this Agreement.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation pursuant to Section 2.08 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion
pursuant to Section 2.08 hereof of one Type of Loans into another Type of Loans,
which may be accompanied by the transfer by a Lender (at its sole discretion) of
a Loan from one Applicable Lending Office to another.
"DAIRY FRESH" shall mean Dairy Fresh, Inc., a Delaware corporation and
a Wholly Owned Subsidiary of the Company.
"DEBT SERVICE" shall mean, for any period, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) all payments of principal of
Indebtedness (including, without limitation, the principal component of any
payments in respect of Capital Lease Obligations) scheduled to be made during
such period PLUS (b) all Interest Expense for such period, it being understood
that, if any installment of principal of the Facility B Loans or the Facility D
Loans shall have been prepaid during or prior to such period, the amount of
principal of the Facility B Loans and the Facility D Loans included in Debt
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Service for such period shall be equal to the aggregate amount of principal of
the Facility B Loans and the Facility D Loans originally scheduled to be paid
hereunder and under the Second Restated Supplemental Credit Agreement during
such period.
"DEFAULT" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"DISPOSITION" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Company or any of its Subsidiaries to any other Person, excluding any sale,
assignment, transfer or other disposition of any Property sold or disposed of in
the ordinary course of business and on ordinary business terms.
"DIVIDEND PAYMENT" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Company or of any warrants, options or other rights to
acquire the same (or to make any payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market or equity value of the Company or any of its Subsidiaries), but excluding
dividends payable solely in shares of common stock of the Company.
"DOLLARS" and "$" shall mean lawful money of the United States.
"EBITDA" shall mean, for any period, the sum, for the Company and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) operating income (calculated
before income taxes, Interest Expense, extraordinary and unusual items and
income or loss attributable to equity in Affiliates) for such period PLUS
(b) depreciation and amortization (to the extent deducted in determining
operating income) for such period PLUS (c) other income not exceeding $2,000,000
for such period.
"EFFECTIVE DATE" shall mean the date on which all of the conditions to
effectiveness of this Agreement set forth in Section 6.01 hereof shall have been
satisfied or waived.
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"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
written or oral notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (a) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law. The term "Environmental Claim" shall
include, without limitation, any claim by any governmental authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAWS" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
"EQUITY ISSUANCE" shall mean (a) any issuance or sale by the Company
or any of its Subsidiaries after the Effective Date of (i) any capital stock,
(ii) any warrants or options exercisable in respect of capital stock (other than
any warrants or options issued to directors, officers or employees of the
Company or any of its Subsidiaries, pursuant to employee benefit plans
established in the ordinary course of business and any capital stock of the
Company or any of its Subsidiaries issued upon the exercise of such warrants or
options) or (iii) any other security or instrument representing an equity
interest (or the right to obtain any equity interest) in the Company or any of
its
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Subsidiaries or (b) the receipt by the Company or any of its Subsidiaries
whether directly (or indirectly through one or more of its Subsidiaries) after
the Effective Date of any capital contribution (whether or not evidenced by any
equity security issued by the recipient of such contribution); PROVIDED that
Equity Issuance shall not include (x) any such issuance or sale by any
Subsidiary of the Company to the Company or any Wholly Owned Subsidiary of the
Company or (y) any capital contribution by the Company or any Wholly Owned
Subsidiary of the Company to any Subsidiary of the Company.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which the Company is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the Company
is a member.
"EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar Loan
for any Interest Period therefor, the rate per annum for deposits in Dollars for
a period comparable to such Interest Period which appears on display page 3750
(British Bankers Association - LIBOR) of the Dow Jones Markets Service as of
11:00 a.m. London time two Business Days preceding the first day of such
Interest Period or, if such display page 3750 is unavailable at such time, the
rate which appears on the Reuters Screen ISDA Page as of such date and time;
PROVIDED, however, that if the Agent determines that the relevant foregoing
source is unavailable for the relevant Interest Period, Eurodollar Base Rate
shall mean the rate of interest determined by the Agent to
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be the average (rounded upward, if necessary, to the nearest 1/100th of 1%) of
the rates per annum at which deposits in Dollars in immediately available
funds are offered to the Agent or other money center banks two Business Days
preceding the first day of such Interest Period by leading banks in the London
interbank market as of 11:00 a.m. London time for delivery on the first day of
such Interest Period, for the number of days comprised therein and in an
amount comparable to the amount of the relevant Loan.
"EURODOLLAR LOANS" shall mean Loans that bear interest at rates based
on rates referred to in the definition of "Eurodollar Base Rate" in this
Section 1.01.
"EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the Eurodollar Base Rate for
such Loan for such Interest Period divided by 1 MINUS the Reserve Requirement
(if any) for such Loan for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 9 hereof.
"EXCESS CASH FLOW" shall mean, for any period, the sum, determined
without duplication, for the Company and its Subsidiaries, of (a) EBITDA for
such period MINUS (b) Capital Expenditures made during such period (other than
Capital Expenditures made from the proceeds of Indebtedness permitted under
Section 8.07 hereof) MINUS (c) the aggregate amount of Debt Service for such
period PLUS (d) decreases (if any) (or MINUS increases (if any)) in Working
Capital for such period, MINUS (e) income taxes paid in cash for such period.
"EXCLUDED DISPOSITION" shall mean the Disposition of (i) an Investment
Tax Credit or (ii) any motor vehicles or other equipment no longer used or
useful in the business of the Company or any of its Subsidiaries to the extent
the proceeds thereof are used to acquire similar replacement Property within a
period of 30 days after the end of the fiscal quarter in which such Disposition
was made.
"EXISTING LENDER" shall mean each Lender under the Existing Credit
Agreement.
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"EXISTING SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT" shall mean the
Subsidiary Guarantee and Security Agreement dated as of March 31, 1995 between
each Subsidiary of the Company party thereto and the Agent, as the same shall be
modified and supplemented and in effect from time to time.
"FACILITY A COMMITMENT" shall mean, for each Facility A Lender, the
obligation of such Lender to make Facility A Loans to the Company in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount set opposite the name of such Lender on the signature pages hereof
under the caption "Facility A Commitment" (as the same may be reduced from time
to time pursuant to Section 2.03 hereof). The original aggregate principal
amount of the Facility A Commitments is $50,000,000.
"FACILITY A COMMITMENT PERCENTAGE" shall mean, with respect to any
Facility A Lender, the ratio of (a) the amount of the Facility A Commitment of
such Lender to (b) the aggregate amount of the Facility A Commitments of all of
the Facility A Lenders.
"FACILITY A LENDERS" shall mean the Lenders having Facility A
Commitments and/or holding Facility A Loans from time to time.
"FACILITY A LOANS" shall mean the loans provided for by
Section 2.01(a)(i) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"FACILITY A NOTES" shall mean the promissory notes provided for by
Section 2.07(a) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"FACILITY B COMMITMENT" shall mean, for each Facility B Lender, the
obligation of such Lender to make a Facility B Loan to the Company in a
principal amount up to but not exceeding the amount set opposite the name of
such Lender on the signature pages hereof under the caption "Facility B
Commitment" (as the same may be reduced from time to time pursuant to
Section 2.03 hereof). The aggregate principal amount of the Facility B
Commitments as of the Effective Date is $150,000,000.
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"FACILITY B LENDERS" shall mean the Lenders having Facility B
Commitments and/or holding Facility B Loans from time to time.
"FACILITY B LOANS" shall mean the loans provided for by
Section 2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"FACILITY B NOTES" shall mean the promissory notes provided for by
Section 2.07(b) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time. The term "Facility B Notes" shall include any
Registered Notes evidencing Facility B Loans executed and delivered pursuant to
Section 2.07(e).
"FACILITY C COMMITMENTS" shall have the meaning set forth in the
Second Restated Supplemental Credit Agreement.
"FACILITY C COMMITMENT TERMINATION DATE" shall have the meaning set
forth in the Second Restated Supplemental Credit Agreement.
"FACILITY C LENDER" shall have the meaning set forth in the Second
Restated Supplemental Credit Agreement.
"FACILITY C LOANS" shall have the meaning set forth in the Second
Restated Supplemental Credit Agreement.
"FACILITY C NOTES" shall have the meaning set forth in the Second
Restated Supplemental Credit Agreement.
"FACILITY D COMMITMENTS" shall have the meaning set forth in the
Second Restated Supplemental Credit Agreement.
"FACILITY D LENDER" shall have the meaning set forth in the Second
Restated Supplemental Credit Agreement.
"FACILITY D LOAN COMMITMENT TERMINATION DATE" shall have the meaning
set forth in the Second Restated Supplemental Credit Agreement.
"FACILITY D LOANS" shall have the meaning set forth in the Second
Restated Supplemental Credit Agreement.
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"FACILITY D NOTES" shall have the meaning set forth in the Second
Restated Supplemental Credit Agreement.
"FACTOR'S LIEN CONTRACT" shall mean one or more certain
agreements for the creation of a factor's lien under the provisions of Act
No. 86 of June 24, 1954 of the Commonwealth, as amended, between each of the
Obligors operating in the Commonwealth and the Agent, as the same shall be
modified and supplemented and in effect from time to time.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 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 for any Business Day, the Federal Funds Rate
for such Business Day shall be the average rate charged to First Union on
such Business Day on such transactions as determined by the Agent.
"FIRST UNION" shall mean First Union National Bank (formerly
First Union National Bank of North Carolina).
"FIXED CHARGES" shall mean, for any period, the sum, for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) the aggregate
amount of Debt Service for such period, PLUS (b) the aggregate amount of
taxes paid in respect of the income or profit of the Company and its
Subsidiaries for such period, PLUS (c) Capital Expenditures made during such
period, PLUS (d) any Dividend Payments made for such period PLUS (e)
Management Fees for such period (but only to the extent such Management Fees
are not included in the calculation of EBITDA); PROVIDED that Capital
Expenditures shall not include the following: (i) the acquisition of
replacement Property in respect of an Excluded Disposition, (ii) the purchase
price paid by the Company or any of its Subsidiaries in respect of any
acquisition permitted under Section 8.05(b)(iv) hereof, and (iii) Capital
Expenditures made with the proceeds of property or
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casualty insurance for the purposes of repairing or replacing damaged or
destroyed fixed or capital assets.
"FIXED CHARGES RATIO" shall mean, as at any date, the ratio of
(a) EBITDA for the period of four consecutive fiscal quarters ending on or
most recently ended prior to such date to (b) Fixed Charges for such period.
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those that, in accordance with the last
sentence of Section 1.02(a) hereof, are to be used in making the calculations
for purposes of determining compliance with this Agreement.
"GARRIDO" shall mean Garrido y Compania, Inc., a Puerto Rico
corporation.
"GARRIDO NEGATIVE PLEDGE AGREEMENT" shall mean the Garrido
Negative Pledge Agreement dated as of September 6, 1996 between the Agent and
Garrido, as the same shall be modified and supplemented and in effect from
time to time.
"GUARANTEE" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or
with respect to, the Indebtedness, other obligations, net worth, working
capital or earnings of any Person, or a guarantee of the payment of dividends
or other distributions upon the stock or equity interests of any Person, or
an agreement to purchase, sell or lease (as lessee or lessor) Property,
products, materials, supplies or services primarily for the purpose of
enabling a debtor to make payment of such debtor's obligations or an
agreement to assure a creditor against loss, and including, without
limitation, causing a bank or other financial institution to issue a letter
of credit or other similar instrument for the benefit of another Person, but
excluding endorsements for collection or deposit in the ordinary course of
business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall have a
correlative meaning.
"GUARANTEE AGREEMENT" shall mean the Guarantee Agreement dated
as of September 6, 1996 between Suiza Dairy, Suiza Fruit, Neva Plastics,
Reddy Ice Corporation, Velda Farms, Inc., Suiza Management Corporation and
the Agent, as the same
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shall be modified and supplemented and in effect from time to time.
"HAZARDOUS MATERIAL" shall mean, collectively, (a) any
petroleum or petroleum products, flammable materials, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, and transformers or
other equipment that contain polychlorinated biphenyls ("PCB'S"), (b) any
chemicals or other materials or substances that are now or hereafter become
defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of similar import under any
Environmental Law and (c) any other chemical or other material or substance,
exposure to which is now or hereafter prohibited, limited or regulated under
any Environmental Law.
"INDEBTEDNESS" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by
loan, the issuance and sale of debt securities or the sale of Property to
another Person subject to an understanding or agreement, contingent or
otherwise, to repurchase such Property from such Person); (b) obligations of
such Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable within 120 days of the date
the respective goods are delivered or the respective services are rendered;
(c) Indebtedness of others secured by a Lien on the Property of such Person,
whether or not the respective indebtedness so secured has been assumed by
such Person; (d) obligations of such Person in respect of letters of credit
or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of
such Person; and (f) Indebtedness of others Guaranteed by such Person.
"INTEREST COVERAGE RATIO" shall mean, as at any date, the
ratio of (a) EBITDA for a period of four consecutive fiscal quarters ending
on, or most recently ended prior to, such date to (b) Interest Expense for
such period.
"INTEREST EXPENSE" shall mean, for any period, the sum, for
the Company and its Subsidiaries (determined on a
CREDIT AGREEMENT
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consolidated basis without duplication in accordance with GAAP), of the
following: (a) all interest in respect of Indebtedness (including, without
limitation, the interest component of any payments in respect of Capital
Lease Obligations, but excluding amortization of any deferred loan costs
incurred in connection with the transactions contemplated hereby and by the
Second Restated Supplemental Credit Agreement) capitalized or expensed during
such period (whether or not actually paid during such period), but excluding
any non-cash interest, PLUS (b) the net amount payable (or MINUS the net
amount receivable) under Interest Rate Protection Agreements during such
period (whether or not actually paid or received during such period) MINUS
(c) all interest income for such period.
"INTEREST PERIOD" shall mean with respect to any Eurodollar
Loan, each period commencing on the date such Eurodollar Loan is made or
Converted from a Base Rate Loan or the last day of the next preceding
Interest Period for such Loan and ending on the numerically corresponding day
in the first, second, third or sixth calendar month thereafter, as the
Company may select as provided in Section 4.05 hereof, except that each
Interest Period for a Eurodollar Loan that 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: (i) if any Interest Period for any Facility A
Loan would otherwise end after the Revolving Credit Commitment Termination
Date, such Interest Period shall end on the Revolving Credit Commitment
Termination Date; (ii) no Interest Period for any Facility B Loan may
commence before and end after any Principal Payment Date for such Facility B
Loan unless, after giving effect thereto, the aggregate principal amount of
the Facility B Loans having Interest Periods that end after such Principal
Payment Date shall be equal to or less than the aggregate principal amount of
such Facility B Loans scheduled to be outstanding after giving effect to the
payments of principal required to be made on such Principal Payment Date;
(iii) each Interest Period that would otherwise end on a day that is not a
Business Day shall end on the next succeeding Business Day (or, if such next
succeeding Business Day falls in the next succeeding calendar month, on the
next preceding Business Day); and (iv) notwithstanding clauses (i) through
(iii) above, no Interest Period shall have a duration of less than one month
for any Eurodollar Loan and, if the Interest Period for any such Loan
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would otherwise be a shorter period, such Loan shall not be available as a
Eurodollar Loan hereunder for such period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, for any
Person, an interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies.
"INTEREST RATE PROTECTION OBLIGATIONS" shall mean the
obligations of any Obligor in respect of Interest Rate Protection Agreements
permitted under Section 8.08(d) hereof.
"INVESTMENT" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of
any securities at a time when such securities are not owned by the Person
entering into such sale); (b) the making of any deposit with, or advance,
loan or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such Person),
but excluding any such advance, loan or extension of credit having a term not
exceeding 90 days representing the purchase price of inventory or supplies
sold by such Person in the ordinary course of business); (c) the entering
into of any Guarantee of, or other contingent obligation with respect to,
Indebtedness or other liability of any other Person and (without duplication)
any amount committed to be advanced, lent or extended to such Person; or (d)
the entering into of any Interest Rate Protection Agreement.
"INVESTMENT TAX CREDIT" shall have the meaning set forth in
the Second Restated Supplemental Credit Agreement.
"ISSUING BANK" shall mean First Union, as the issuer of
Letters of Credit under Section 2.10 hereof, together with its successors and
assigns in such capacity.
"LETTER OF CREDIT" shall have the meaning assigned to such
term in the first sentence of Section 2.10 hereof.
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"LETTER OF CREDIT DOCUMENTS" shall mean, with respect to any
Letter of Credit, collectively, any application therefor and any other
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or at
risk with respect to such Letter of Credit or (b) any collateral security for
any of such obligations, each as the same shall be modified and supplemented
and in effect from time to time.
"LETTER OF CREDIT INTEREST" shall mean, for each Facility A
Lender, such Facility A Lender's participation interest in the Issuing Bank's
liability under Letters of Credit (or, in the case of the Issuing Bank, the
Issuing Bank's retained interest therein) and such Facility A Lender's rights
and interests in Reimbursement Obligations and fees, interest and other
amounts payable in connection with Letters of Credit and Reimbursement
Obligations.
"LETTER OF CREDIT LIABILITY" shall mean, without duplication,
at any time and in respect of any Letter of Credit, the sum of (a) the
undrawn face amount of such Letter of Credit PLUS (b) the aggregate unpaid
principal amount of all Reimbursement Obligations of the Company at such time
due and payable in respect of all drawings made under such Letter of Credit.
For purposes of this Agreement, a Facility A Lender (other than the Issuing
Bank) shall be deemed to hold a Letter of Credit Liability in an amount equal
to its participation interest in the related Letter of Credit under Section
2.10 hereof, and the Issuing Bank shall be deemed to hold a Letter of Credit
Liability in an amount equal to its retained interest in such Letter of
Credit after giving effect to the acquisition by the Facility A Lenders other
than the Issuing Bank of their participation interests under said Section
2.10, together with its successors and assigns in such capacity.
"LEVERAGE RATIO" shall mean, as at any date, the ratio of (a)
the aggregate outstanding principal amount of Indebtedness at such date to
(b) EBITDA for the period of four consecutive fiscal quarters ending on, or
most recently ended prior to, such date; provided that if the Company or any
of its Subsidiaries shall have acquired any business, Property or Person
during such period (whether before, on or after the Effective Date), EBITDA
shall, to the extent the Company shall have delivered audited financial
statements (or, if audited financial statements are not
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available to the Company, unaudited financial statements (i) reviewed by
independent certified accountants of recognized national standing and
acceptable to the Agent and (ii) in form satisfactory to the Agent) for the
acquired business, Property or Person for such period, be adjusted to reflect
on a pro forma basis EBITDA for such business, Property or Person as if such
business, Property or Person had been acquired at the beginning of such
period.
"LIEN" shall mean, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such Property. For purposes of this Agreement and the other Loan
Documents, a Person shall be deemed to own, subject to a Lien, any Property
that it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement (other than an operating lease) relating to such Property.
"LOANS" shall mean the Facility A Loans and the Facility B Loans.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Second Restated Supplemental Credit Agreement, the Notes, the Facility C
Notes, the Facility D Notes, the Letter of Credit Documents and the Security
Documents.
"MAJORITY LENDERS" shall mean, as at any time, Facility A
Lenders and Facility B Lenders having at least a majority of the sum of (a)
the aggregate unused amount, if any, of the Facility A Commitments and the
Facility B Commitments as at such time PLUS (b) the aggregate outstanding
principal amount of the Facility A Loans and Facility B Loans at such time PLUS
(c) the aggregate amount of all Letter of Credit Liabilities at such time.
"MANAGEMENT FEES" shall mean, for any period, any amounts paid
or incurred by the Company or any of its Subsidiaries to any Person on
account of fees, salaries and other compensation in respect of services
rendered in connection with the management or supervision of the Company
and/or any of its Subsidiaries (but excluding customary and reasonable
compensation and other benefits paid or provided to officers, employees and
directors for services rendered to the Company or any of its Subsidiaries in
such capacities or any such amounts by any
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Subsidiary of the Company to the Company or any other Subsidiary of the
Company).
"MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations U and X.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Subsidiaries taken as a
whole, (b) the ability of any Obligor to perform its obligations under any of
the Loan Documents to which it is a party, (c) the validity or enforceability
of any of the Loan Documents, (d) the rights and remedies of the Lenders and
the Agent under any of the Loan Documents or (e) the timely payment of the
principal of or interest on the Loans or the Reimbursement Obligations or
other amounts payable in connection therewith or under the Loan Documents.
"MODEL DAIRY" shall mean Model Dairy, Inc., a Delaware
corporation.
"MORTGAGES" shall mean, collectively, (a) the mortgages or
deeds of trust identified in Schedule VII hereto and (b) one or more
mortgages or deeds of trust, in the respective forms of Exhibits B and C
hereto or of Exhibits C and D to the Second Restated Supplemental Credit
Agreement (with such modifications thereto requested by the Agent as may be
appropriate to effect a lien on real property in the state where the
respective property to be covered by such instrument is located), executed by
the respective Obligors who own or lease such property in favor of the Agent
(or, in the case of a deed of trust, in favor of the trustee for the benefit
of the Agent and the Lenders) pursuant to Section 8.19(c) and 8.19(d) hereof
or Section 8.19(c) and 8.19(d) of the Second Restated Supplemental Credit
Agreement covering the respective Properties and/or leasehold interests
identified in Schedule IV hereto or subject to the requirements of said
Section 8.19(c) and 8.19(d) hereof or Section 8.19(c) and 8.19(d) of the
Second Restated Supplemental Credit Agreement, as the case may be, in each
case as the same shall be modified and supplemented and in effect from time
to time.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions
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have been made by the Company or any ERISA Affiliate and that is covered by
Title IV of ERISA.
"NET AVAILABLE PROCEEDS" shall mean:
(a) in the case of any Disposition, the amount of Net Cash
Payments received in connection with such Disposition;
(b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation
received by the Company and its Subsidiaries in respect of such
Casualty Event net of (i) reasonable expenses incurred by the Company
and its Subsidiaries in connection therewith and (ii) contractually
required repayments of Indebtedness to the extent secured by a Lien
on such Property and any income and transfer taxes payable by the
Company or any of its Subsidiaries in respect of such Casualty Event;
and
(c) in the case of any Equity Issuance, the aggregate amount of
all cash received by the Company and its Subsidiaries in respect of
such Equity Issuance net of reasonable expenses incurred by the
Company and its Subsidiaries in connection therewith.
"NET CASH PAYMENTS" shall mean, with respect to any
Disposition, the aggregate amount of all cash payments, and the fair market
value of any non-cash consideration, received by the Company and its
Subsidiaries directly or indirectly in connection with such Disposition;
PROVIDED that (a) Net Cash Payments shall be net of (i) the amount of any
legal, title and recording tax expenses, commissions and other fees and
expenses paid by the Company and its Subsidiaries in connection with such
Disposition and (ii) any Federal, state and local income or other taxes
estimated to be payable by the Company and its Subsidiaries as a result of
such Disposition (but only to the extent that such estimated taxes are in
fact paid to the relevant Federal, state or local governmental authority
within six months of the date of such Disposition) and (b) Net Cash Payments
shall be net of any repayments by the Company or any of its Subsidiaries of
Indebtedness to the extent that (i) such Indebtedness is secured by a Lien on
the Property that is the subject of such Disposition and (ii) the transferee
of (or holder of a Lien on) such Property requires that such Indebtedness be
repaid as a condition to the Disposition thereof.
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"NET PURCHASE PRICE" shall have the meaning set forth in the
Second Restated Supplemental Credit Agreement.
"NET WORTH" shall mean, as at any date, the sum for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication) of (a) the amount of capital stock PLUS (b) the amount of
additional paid-in capital PLUS (c) the amount of retained earnings (or, in
the case of any retained earnings deficit, MINUS the amount of such deficit).
"NEVA PLASTICS" shall mean Neva Plastics Manufacturing Corp.,
a Delaware corporation.
"NEW LENDER" shall mean each Lender party to this Agreement on
the Effective Date which is not a party to the Existing Credit Agreement.
"NOTES" shall mean the Facility A Notes and the Facility B Notes.
"OBLIGOR" shall mean the Company and each Subsidiary of the
Company party to any Security Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"PERMITTED ACQUISITION" shall have the meaning set forth in
the Second Restated Supplemental Credit Agreement.
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of
the United States, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States, or of any agency thereof, in
either case maturing not more than one year from the date of acquisition
thereof; (b) direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and, at
the time of such acquisition, having the highest rating obtainable from
either Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc.
("S&P") or Moody's Investors Services, Inc. ("MOODY'S"); (c) certificates of
deposit issued by any bank or trust company organized under the laws of the
United States or any state thereof or the Commonwealth and
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having capital, surplus and undivided profits of at least $500,000,000,
maturing not more than six months from the date of acquisition thereof; (d)
commercial paper rated A-1 or better or P-1 by S&P or Moody's, respectively,
maturing not more than six months from the date of acquisition thereof; and
(e) Eurodollar time deposits having a maturity of less than six months
purchased directly from any bank meeting the criteria set forth in clause (c)
above (whether such deposit is with such bank or any other such bank).
"PERSON" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"PLAN" shall mean an employee benefit or other plan
established or maintained by the Company or any ERISA Affiliate and that is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"POST-DEFAULT RATE" shall mean, in respect of any principal of
any Loan, any Reimbursement Obligation or any other amount under this
Agreement, any Note or any other Loan Document that is not paid when due
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), and in respect of any principal of any Loan during any period
commencing upon the occurrence of any Event of Default and thereafter for so
long as any Event of Default shall be continuing, a rate per annum during the
period from and including the due date to but excluding the earlier of the
date on which such amount is paid in full or such Event of Default ceases to
be continuing equal to 2% PLUS the Base Rate as in effect from time to time
PLUS the Applicable Margin for Base Rate Loans (PROVIDED that, if the amount
so in default is principal of a Eurodollar Loan and the due date thereof is a
day other than the last day of the Interest Period therefor, the
"Post-Default Rate" for such principal shall be, for the period from and
including such due date to but excluding the last day of such Interest
Period, 2% PLUS the interest rate for such Loan as provided in Section
3.02(b) hereof and, thereafter, the rate provided for above in this
definition).
"PRIME RATE" shall mean the rate of interest from time to time
announced by First Union at its principal office as its prime commercial
lending rate.
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"P.R. INVENTORY AGREEMENT" shall mean the P.R. Inventory
Agreement dated as of July 17, 1996 between each Subsidiary of the Company
that owns Inventory in the Commonwealth (other than Garrido) and the Agent,
as the same shall be modified and supplemented and in effect from time to
time.
"PRINCIPAL PAYMENT DATES" shall mean the Quarterly Dates
falling on or nearest to March 31, June 30, September 30 and December 31 of
each year, commencing with September 30, 1997, through and including
September 30, 2003.
"PROCESS AGENT" shall have the meaning assigned to such term
in Section 11.10(c) hereof.
"PROPERTY" shall mean any right or interest in or to property
of any kind whatsoever, whether real, personal (including, without
limitation, cash) or mixed and whether tangible or intangible.
"PUERTO RICO SECURITY DOCUMENTS" shall mean each of the
agreements listed in Schedule VI hereto, the P.R. Inventory Agreement, and
each of the Additional Puerto Rico Security Documents, in each case, as any
such agreement shall be modified and supplemented and in effect from time to
time.
"PURCHASE AGREEMENTS" shall have the meaning set forth in the
Second Restated Supplemental Credit Agreement.
"QUARTERLY DATES" shall mean the last Business Day of March,
June, September and December in each year, the first of which shall be
September 30, 1997.
"REGISTER" shall have the meaning assigned to such term in
Section 11.06(g) hereof.
"REGISTERED HOLDER" shall have the meaning assigned to such
term in Section 5.06(b)(ii) hereof.
"REGISTERED LOANS" shall have the meaning assigned to such
term in Section 2.07(e) hereof.
"REGISTERED NOTE" shall have the meaning assigned to such term
in Section 2.07(e) hereof.
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"REGULATIONS A, D, U AND X" shall mean, respectively, Regulations A,
D, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any change
after the date of this Agreement in United States, Federal, state or foreign law
or regulations or in the law or regulations of the Commonwealth (including,
without limitation, Regulation D) or the adoption or making after such date of
any interpretation, directive or request applying to a class of banks including
such Lender of or under any Federal, state or foreign law or regulations or in
the law or regulations of the Commonwealth (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"REIMBURSEMENT OBLIGATIONS" shall mean, at any time, the obligations
of the Company then outstanding, or that may thereafter arise in respect of all
Letters of Credit then outstanding, to reimburse amounts paid by the Issuing
Bank in respect of any drawings under a Letter of Credit.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"RESERVE REQUIREMENT" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, 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
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change with respect to (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or
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(ii) any category of extensions of credit or other assets that
includes Eurodollar Loans.
"RESPONSIBLE FINANCIAL OFFICER" shall mean, with respect to any
Person, the Chairman of the Board of Directors, the President, the Chief
Executive Officer, the Chief Financial Officer or the Treasurer of such Person.
"REVOLVING CREDIT COMMITMENT TERMINATION DATE" shall mean the
Quarterly Date falling on or nearest to September 30, 2003.
"SECOND RESTATED SUPPLEMENTAL CREDIT AGREEMENT" shall mean the Second
Restated Supplemental Credit Agreement dated as of the date hereof between the
Company, the Lenders and the Agent providing for the Facility C Commitments and
the Facility C Loans and the Facility D Commitments and the Facility D Loans, as
the same may be amended, modified and supplemented and in effect from time to
time.
"SECURITY AGREEMENT" shall mean the Security Agreement dated as of
March 31, 1995 between the Company and the Agent, as the same may be amended,
modified and supplemented and in effect from time to time.
"SECURITY DOCUMENTS" shall mean, collectively, the Security Agreement,
the Mortgages, each Supplemental Subsidiary Guarantee and Security Agreement,
the Existing Subsidiary Guarantee and Security Agreement, the Guarantee
Agreement, the Puerto Rico Security Documents and all Uniform Commercial Code
financing statements and/or other filings required hereby or thereby to be filed
with respect to the security interests in personal Property and fixtures created
pursuant hereto or thereto.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at
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the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.
"SUBSIDIARY GUARANTORS" shall mean Suiza Dairy, Suiza Fruit, Model
Dairy, Neva Plastics, Reddy Ice Corporation, Swiss Dairy, Velda Farms, Inc.,
Dairy Fresh and Suiza Management Corporation, each a Delaware corporation, and
each Supplemental Guarantor.
"SUIZA DAIRY" shall mean Suiza Dairy Corporation, a Delaware
corporation.
"SUIZA FRUIT" shall mean Suiza Fruit Corporation, a Delaware
corporation.
"SUPPLEMENTAL CREDIT AGREEMENT" shall mean the Amended and Restated
Supplement Credit Agreement dated as of March 5, 1997 between the Company,
certain lenders and the Agent which amended and restated the Supplemental Credit
Agreement dated as of September 6, 1996, as amended by Amendment No. 1 thereto
dated as of December 2, 1996, between the Company, certain lenders and the
Agent.
"SUPPLEMENTAL GUARANTOR" shall mean each Subsidiary of the Company
party to a Supplemental Subsidiary Guarantee and Security Agreement.
"SUPPLEMENTAL SECURITY DOCUMENTS" shall mean, collectively, each
Supplemental Subsidiary Guarantee and Security Agreement between a Supplemental
Guarantor and the Agent, each Amendment to the Security Agreement, the Existing
Subsidiary Guarantee and Security Agreement and the Guarantee Agreement and all
Uniform Commercial Code financing statements and/or other filings required
hereby or thereby to be filed with respect to the security interests in personal
Property and fixtures created pursuant hereto or thereto.
"SUPPLEMENTAL SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT" shall mean,
collectively, (i) the Supplemental Subsidiary Guarantee and Security Agreement
dated as of September 6, 1996 between the Agent and Swiss Dairy, (ii) the
Supplemental Subsidiary Guarantee and Security Agreement dated as of December 2,
1996 between the Agent and Model Dairy, (iii) the Supplemental Subsidiary
Guarantee and Security Agreement dated as
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of June 10, 1997 between the Agent and Dairy Fresh (formerly known as DF
Acquisition Corp.), and (iv) each other Supplemental Subsidiary Guarantee and
Security Agreement, substantially in the form of Exhibit B to the Second
Restated Supplemental Credit Agreement, as the same shall be modified and
supplemented from time to time.
"SWISS DAIRY" shall mean Swiss Dairy Corporation, a Delaware
corporation and a Wholly Owned Subsidiary of the Company.
"TAXES" shall have the meaning assigned to such term in
Section 5.06(a) hereof.
"TERM LOAN COMMITMENT TERMINATION DATE" shall mean September 22, 1997.
"TYPE" shall have the meaning assigned to such term in Section 1.03
hereof.
"UNITED STATES" shall mean the United States of America.
"U.S. TAXES" shall have the meaning assigned to such term in
Section 5.06(b) hereof.
"WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
"WORKING CAPITAL" shall mean, for any period, the excess of (a) the
aggregate amount of inventory, accounts receivable and prepaid expenses of the
Company and its Subsidiaries over (b) the aggregate amount of accounts payable
and current accrued expenses of the Company and its Subsidiaries.
1.02 ACCOUNTING TERMS AND DETERMINATIONS.
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all
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financial statements and certificates and reports as to financial matters
required to be delivered to the Lenders hereunder shall (unless otherwise
disclosed to the Lenders in writing at the time of delivery thereof in the
manner described in subsection (b) below) be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with
those used in the preparation of the latest financial statements furnished to
the Lenders hereunder. All calculations made for the purposes of determining
compliance with this Agreement shall (except as otherwise expressly provided
herein) be made by application of generally accepted accounting principles
applied on a basis consistent with those used in the preparation of the latest
annual or quarterly financial statements furnished to the Lenders pursuant to
Section 8.01 hereof unless (i) the Company shall have objected to determining
such compliance on such basis at the time of delivery of such financial
statements or (ii) the Majority Lenders shall so object in writing within 30
days after delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection
shall not have been made.
(b) The Company shall deliver to the Lenders at the same time as the
delivery of any annual or quarterly financial statement under Section 8.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance with the last sentence of
subSection (a) above and (ii) reasonable estimates of the difference between
such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 8 hereof, the Company will not, without
the prior consent of the Majority Lenders, change the last day of its fiscal
year from December 31 of each year, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 30 of
each year, respectively.
1.03 CLASSES AND TYPES OF LOANS. Loans hereunder are distinguished by
"Class" and by "Type". The "Class" of a Loan (or of a Commitment to make a Loan
or the related Note) refers to
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whether such Loan is a Facility A Loan, or a Facility B Loan, each of which
constitutes a Class. The "Type" of a Loan refers to whether such Loan is a
Base Rate Loan or a Eurodollar Loan, each of which constitutes a Type. Loans
may be identified by both Class and Type.
Section 2. COMMITMENTS, LOANS, NOTES AND PREPAYMENTS.
2.01 LOANS.
(a) FACILITY A LOANS.
(i) On the Effective Date, (i) the "Facility A Loans" (as defined in
the Existing Credit Agreement) held by the Existing Lenders under the
Existing Credit Agreement shall automatically, and without any action on
the part of any Person, be deemed to be Facility A Loans hereunder,
(ii) the New Lenders shall be Facility A Lenders and parties hereto, and
(iii) the Facility A Lenders shall take such steps, which may include the
making of assignments and Facility A Loans and other adjustments among the
Facility A Lenders, as shall be necessary so that after giving effect to
such assignments and adjustments, the Facility A Lenders shall hold
Facility A Loans hereunder ratably in accordance with their respective
Facility A Commitments. On the Effective Date all Interest Periods under
the Existing Credit Agreement in respect of the "Facility A Loans" under
and as defined in the Existing Credit Agreement shall automatically be
terminated (and the Company shall on the Effective Date make payments to
the Existing Lenders that held such "Facility A Loans" under Section 5.05
thereof to compensate for such termination as if such termination were a
payment or prepayment referred to in said Section 5.05), and, subject to
the provisions of paragraph (c) below, the Company shall be permitted to
Continue such "Facility A Loans" as Eurodollar Loans hereunder, or to
convert such "Facility A Loans" into Base Rate Loans hereunder.
(ii) Each Facility A Lender severally agrees, on the terms and
conditions of this Agreement, to make loans to the Company in Dollars
during the period from and including the Effective Date to but not
including the Revolving Credit Commitment Termination Date in an aggregate
principal amount (including any Loans outstanding to it by reason of the
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assignments and other adjustments under the immediately preceding paragraph
and also taking into account the provisions of clause (c) below) at any
one time outstanding up to but not exceeding the amount of the Facility A
Commitment of such Lender as in effect from time to time (such Loans being
herein called "FACILITY A LOANS"); PROVIDED that in no event shall the
aggregate principal amount of all Facility A Loans, together with the
aggregate amount of all Letter of Credit Liabilities, exceed the aggregate
amount of the Facility A Commitments as in effect from time to time.
Subject to the terms and conditions of this Agreement, during such period
the Company may borrow, repay and reborrow the amount of the Facility A
Commitments by means of Base Rate Loans and/or Eurodollar Loans and may
Convert Facility A Loans of one Type into Facility A Loans of another Type
(as provided in Section 2.08 hereof) or Continue Facility A Loans of one
Type as Facility A Loans of the same Type (as provided in Section 2.08
hereof).
(b) FACILITY B LOANS.
(i) On the Effective Date, (i) the "Facility B Loans" (as defined in
the Existing Credit Agreement) held by the Existing Lenders under the
Existing Credit Agreement shall automatically, and without any action on
the part of any Person, be deemed to be Facility B Loans hereunder,
(ii) the New Lenders shall be Facility B Lenders and parties hereto, and
(iii) the Facility B Lenders shall take such steps, which may include the
making of assignments and Facility B Loans and other adjustments among the
Facility B Lenders, as shall be necessary and as the Agent shall reasonably
direct so that after giving effect to such assignments and adjustments, the
Facility B Lenders shall hold Facility B Loans hereunder ratably in
accordance with their respective Facility B Commitments. On the Effective
Date all Interest Periods under the Existing Credit Agreement in respect of
the "Facility B Loans" under and as defined in the Existing Credit
Agreement shall automatically be terminated (and the Company shall on the
Effective Date make payments to the Existing Lenders that held such
"Facility B Loans" under Section 5.05 thereof to compensate for such
termination as if such termination were a payment or prepayment referred to
in said Section 5.05), and, subject to the provisions of paragraph
(c) below, the Company shall be permitted to Continue such "Facility B
Loans" as Eurodollar Loans
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hereunder, or to convert such "Facility B Loans" into Base Rate Loans
hereunder.
(ii) Each Facility B Lender severally agrees, on the terms and
conditions of this Agreement, to make a single term loan to the Company in
Dollars on the Effective Date (PROVIDED that the same shall occur no later
than the Term Loan Commitment Termination Date) in a principal amount up to
but not exceeding the amount of the Facility B Commitment of such Lender
less the amount of any Facility B Loan outstanding to it by reason of the
assignments and Loans and other adjustments under the immediately preceding
paragraph and also taking into account the provisions of clause (c) below.
Subject to the terms and conditions of this Agreement, the Company may
borrow the amount of the Facility B Commitments by means of Base Rate Loans
and/or Eurodollar Loans and thereafter may Convert Facility B Loans of one
Type into Facility B Loans of another Type (as provided in Section 2.08
hereof) or Continue Facility B Loans of one Type as Facility B Loans of the
same Type (as provided in Section 2.08 hereof).
(c) CONVERSIONS. On the Effective Date, outstanding Facility A Loans
(after giving effect to Section 2.01(a)(i) hereof) shall be deemed converted to
Facility B Loans (or other appropriate adjustments shall be made upon the
instructions of the Agent) in such amounts as may be required so that, after
giving effect to the transactions contemplated by clause (b) above and by this
clause (c), the aggregate principal amount of Facility B Loans outstanding
hereunder shall be $150,000,000. On the Effective Date, after giving effect to
the conversions provided for under the preceding sentence, remaining outstanding
Facility A Loans shall be deemed converted to Facility D Loans under the Second
Restated Supplemental Credit Agreement in an amount which, together with the
amount borrowed under Section 2.01(b) of the Second Restated Supplemental Credit
Agreement on the Effective Date, does not exceed the Facility D Commitments.
Each Lender hereby agrees to the provisions contained in this clause (c) in its
capacity as a Lender hereunder and as a Facility D Lender under the Second
Restated Supplemental Credit Agreement.
(d) ADJUSTMENTS GENERALLY. On the date three Business Days prior to
the Effective Date, the Agent shall notify each Lender of the amount of Loans
required to be made by such Lender
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(if any) to the Company on the Effective Date, the amount of increase or
decrease in each Commitment of such Lender and of any other assignments or
adjustments that the Agent deems necessary and advisable such that after
giving effect to the transactions contemplated in this Section to occur on the
Effective Date, each Lender's Commitments shall be in accordance with the
Commitments set forth opposite its name on the signature pages hereof, each
Lender's Loans of any Class to the Company shall not exceed its pro rata
portion of all Loans of any such Class then outstanding to the Company
hereunder and the unused Commitments of all the Lenders plus all outstanding
Loans under this Agreement shall not exceed $200,000,000 in aggregate
principal amount. Any such assignments shall be deemed to occur hereunder
automatically on the Effective Date and without any requirement for additional
documentation and in the case of any such assignment, the assigning party
shall be deemed to represent and warrant to each assignee that it has not
created any adverse claim upon the interest being assigned and that such
interest is free and clear of any adverse claim. Each Lender hereby agrees to
give effect to the instructions of the Agent to such Lender contained in the
notice described above.
(e) LIMIT ON CERTAIN LOANS. No more than six separate Interest
Periods in respect of Eurodollar Loans of any Class from each Lender may be
outstanding at any one time.
2.02 BORROWINGS.
(a) The Company shall give the Agent notice of each borrowing
hereunder as provided in Section 4.05 hereof.
(b) With respect to each borrowing, not later than 3:30 p.m.
Charlotte, North Carolina time on the date specified for such borrowing, each
Lender shall make available the amount of the Loan or Loans to be made by it to
the Company on such date to the Agent at any account designated by the Agent, in
immediately available funds, for account of the Company. The amount so received
by the Agent shall, subject to the terms and conditions of this Agreement, be
made available to the Company by depositing the same, in immediately available
funds, in the deposit account of the Company identified in the most recent
Notice of Account Designation substantially in the form of Exhibit J-4 hereto
delivered by the Company to the Agent or as may be otherwise agreed by the
Company and the Agent from time to time.
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2.03 CHANGES OF COMMITMENTS.
(a) The aggregate amount of each of the Facility A Commitments shall
be automatically reduced to zero on the Revolving Credit Commitment Termination
Date.
(b) The Company shall have the right at any time or from time to time
(i) to terminate or reduce the aggregate unused amount of any of the Facility B
Commitments, (ii) so long as no Facility A Loans or Letter of Credit Liabilities
in respect of Letters of Credit are outstanding, to terminate the Facility A
Commitments, and (iii) to reduce the aggregate unused amount of any of the
Facility A Commitments (for which purpose use of the Facility A Commitments
shall be deemed to include the aggregate amount of Letter of Credit
Liabilities); PROVIDED that (x) the Company shall give notice of each such
termination or reduction as provided in Section 4.05 hereof and (y) each such
partial reduction shall be in an aggregate amount at least equal to $2,000,000
(or a larger multiple of $1,000,000).
(c) Any portion of the Facility B Commitments not used on the
Effective Date shall be automatically terminated.
(d) The Commitments once terminated or reduced may not be reinstated.
2.04 COMMITMENT FEE. The Company shall pay to the Agent for account
of each Facility A Lender a commitment fee on the daily average unused amount of
such Lender's Facility A Commitment (for which purpose the aggregate amount of
any Letter of Credit Liabilities in respect of Letters of Credit shall be deemed
to be a pro rata (based on the Facility A Commitments) use of each Facility A
Lender's Facility A Commitment), for the period from and including the Effective
Date to but not including the earlier of the date such Commitment is terminated
and the Revolving Credit Commitment Termination Date, at a rate per annum equal
to the Applicable Commitment Fee Rate. Accrued commitment fees shall be payable
in arrears on each Quarterly Date and on the earlier of (i) the date the
relevant Commitments are terminated and (ii) the Revolving Credit Commitment
Termination Date.
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2.05 LENDING OFFICES. The Loans of each Type made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
2.06 SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT. The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither any Lender nor the Agent shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender, and no Lender shall
have any obligation to the Agent or any other Lender for the failure by such
Lender to make any Loan required to be made by such Lender. The amounts payable
by the Company at any time hereunder and under the Notes to each Lender shall be
a separate and independent debt and each Lender shall be entitled, subject to
the prior written consent of the Majority Lenders, to protect and enforce its
rights arising out of this Agreement and the Notes, and it shall not be
necessary for any other Lender or the Agent to be joined as an additional party
in any proceedings for such purposes.
2.07 NOTES.
(a) The Facility A Loans made (or continued, as the case may be) by
each Lender shall be evidenced by a single promissory note of the Company
substantially in the form of Exhibit A-1 hereto, dated the Effective Date,
payable to such Lender in a principal amount equal to the amount of its
Facility A Commitment as originally in effect and otherwise duly completed.
(b) The Facility B Loan made (or continued, as the case may be) by
each Lender shall be evidenced by a single promissory note of the Company
substantially in the form of Exhibit A-2 hereto, dated the Effective Date,
payable to such Lender in a principal amount equal to the amount of its
Facility B Commitment as originally in effect and otherwise duly completed.
(c) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Loan of each Class made by each Lender, and each
payment made on account of the principal thereof, shall be recorded by such
Lender on its books and, prior to any transfer of the Note evidencing the Loans
of such Class held by it, endorsed by such Lender on the schedule
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attached to such Note or any continuation thereof; PROVIDED that the failure
of such Lender to make any such recordation or endorsement or an error therein
shall not affect the obligations of the Company to make a payment when due of
any amount owing hereunder or under such Note in respect of the Loans to be
evidenced by such Note.
(d) No Lender shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Lender's
relevant Commitments, Loans and Notes pursuant to Section 11.06(b) hereof.
(e) Notwithstanding the foregoing, any Lender that is not a U.S.
Person and is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code may request the Company (through the Agent), and the Company agrees
thereupon, to record on the Register referred to in Section 11.06(g) hereof any
Facility B Loans held by such Lender under this Agreement. Loans recorded on
the Register ("REGISTERED LOANS") may not be evidenced by promissory notes other
than Registered Notes as defined below and, upon the registration of any
Facility B Loan, any promissory note (other than a Registered Note) evidencing
the same shall be null and void and shall be returned to the Company. The
Company agrees, at the request of any Lender that is the holder of Registered
Loans, to execute and deliver to such Lender a promissory note in registered
form to evidence such Registered Loans and registered as provided in
Section 11.06(g) hereof (herein, a "REGISTERED NOTE"), dated the Effective Date,
payable to such Lender and otherwise duly completed. A Facility B Loan once
recorded on the Register may not be removed from the Register so long as it
remains outstanding and a Registered Note may not be exchanged for a promissory
note that is not a Registered Note.
2.08 OPTIONAL PREPAYMENTS AND CONVERSIONS OR CONTINUATIONS OF LOANS.
Subject to Section 4.04 hereof, the Company shall have the right to prepay
Loans, or to Convert Loans of one Type into Loans of another Type or Continue
Loans of one Type as Loans of the same Type, at any time or from time to time,
PROVIDED that:
(a) the Company shall give the Agent notice of each such prepayment,
Conversion or Continuation as provided in Section 4.05 hereof (and, upon the
date specified in any such
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notice of prepayment, the amount to be prepaid shall become due and payable
hereunder);
(b) Eurodollar Loans may be prepaid or Converted on any day, PROVIDED
that, if such prepayment or Conversion falls on a day other than the last day of
an Interest Period for such Loans, the Company shall pay any and all amounts
required by Section 5.05 hereof as a result thereof; and
(c) prepayments of the Facility B Loans under this Section 2.08 shall
be applied ratably as among the remaining installments of the Facility B Loans.
Notwithstanding the foregoing, and without limiting the rights and remedies of
the Lenders under Section 9 hereof, in the event that any Event of Default shall
have occurred and be continuing, the Agent may (and at the request of the
Majority Lenders shall) suspend the right of the Company to borrow any Loan as a
Eurodollar Loan or to Convert any Loan into a Eurodollar Loan, or to Continue
any Loan as a Eurodollar Loan, in which event all Eurodollar Loans outstanding
shall be automatically Converted (on the last day(s) of the respective Interest
Periods therefor) to, or all Base Rate Loans shall be Continued, as the case may
be, as Base Rate Loans.
2.09 MANDATORY PREPAYMENTS AND REDUCTIONS OF COMMITMENTS.
(a) CASUALTY EVENTS. Not later than 60 days following the receipt by
the Company or any of its Subsidiaries (other than a Supplemental Guarantor) of
the proceeds of insurance, condemnation award or other compensation in respect
of any Casualty Event affecting any Property of the Company or any of its
Subsidiaries (other than Property of a Supplemental Guarantor or acquired with
the proceeds of Facility C Loans or Facility D Loans under the Second Restated
Supplemental Credit Agreement) (or upon such earlier date as the Person owning
such Property shall have determined not to repair or replace the Property
affected by such Casualty Event), the Company shall prepay the Loans (and/or
provide cover for Letter of Credit Liabilities as specified in paragraph (f)
below), and the Facility A Commitments shall be subject to automatic reduction,
in an aggregate amount, if any, equal to 100% of the Net Available Proceeds of
such Casualty Event not theretofore applied to the repair or replacement of such
Property or prepayment of the Facility B
CREDIT AGREEMENT
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Loans, such prepayment and reduction to be effected in each such case in the
manner and to the extent specified in paragraph (e) below. Nothing in this
paragraph (a) shall be deemed to limit any obligation of the Company or any
of its Subsidiaries pursuant to any of the Security Documents to remit to a
collateral or similar account (including, without limitation, the Collateral
Account) maintained by the Agent pursuant to any of the Security Documents
the proceeds of insurance, condemnation award or other compensation received
in respect of any Casualty Event. Notwithstanding the foregoing, in the
event that a Casualty Event shall occur with respect to Property of the
Company or any of its Subsidiaries (other than Property of a Supplemental
Guarantor or acquired with the proceeds of Facility C Loans or Facility D
Loans under the Second Restated Supplemental Credit Agreement) and covered by
any Mortgage, the Company shall prepay the Loans (and/or provide cover for
Letter of Credit Liabilities) on the dates and in the amounts to the extent
specified in such Mortgage. In the event of a Casualty Event involving
Property of a Supplemental Guarantor or acquired with the proceeds of
Facility C Loans or Facility D Loans under the Second Restated Supplemental
Credit Agreement, the Net Available Proceeds of such Casualty Event shall be
applied in accordance with the terms of the Second Restated Supplemental
Credit Agreement.
(b) SALE OF ASSETS. Without limiting the obligation of the Company
to obtain the consent of the Majority Lenders pursuant to Section 8.05(c) hereof
to any Disposition not otherwise permitted hereunder, in the event that the Net
Available Proceeds of any Disposition of Property of the Company or any of its
Subsidiaries (other than Property of a Supplemental Guarantor or acquired with
the proceeds of Facility C Loans or Facility D Loans under the Second Restated
Supplemental Credit Agreement) other than an Excluded Disposition (herein, the
"CURRENT DISPOSITION"), and of all prior Dispositions of Property of the Company
or any of its Subsidiaries (other than Property of a Supplemental Guarantor or
acquired with the proceeds of Facility C Loans or Facility D Loans under the
Second Restated Supplemental Credit Agreement) as to which a prepayment has not
yet been made under this Section 2.09(b), shall exceed $1,000,000 then, no later
than 5 Business Days prior to the occurrence of the Current Disposition, the
Company will deliver to the Lenders a statement, certified by a Responsible
Financial Officer of the Company, in form and detail satisfactory to the Agent,
of the amount of the Net Available Proceeds of the Current Disposition and of
all such prior Dispositions and the Company will prepay
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the Loans (or cause the Loans to be prepaid) and the Facility A Commitments
shall be subject to automatic reduction, in an aggregate amount equal to 100%
of the Net Available Proceeds of the Current Disposition and such prior
Dispositions not theretofore used to prepay Facility B Loans, such prepayment
and reduction to be effected in each case in the manner and to the extent
specified in paragraph (e) below. In the case of all Dispositions of
Property of a Supplemental Guarantor or acquired with the proceeds of
Facility C Loans or Facility D Loans under the Second Restated Supplemental
Credit Agreement, the Company will make (or cause to be made) prepayments of
the Facility C Loans and the Facility D Loans as required by the Second
Restated Supplemental Credit Agreement.
(c) EQUITY ISSUANCE; INVESTMENT TAX CREDITS. Upon any Equity
Issuance or the issuance of any Indebtedness (other than Indebtedness permitted
under Section 8.07 hereof) or the Disposition of any Investment Tax Credit after
the Effective Date, the Company shall (i) prepay the Facility C Loans or the
Facility D Loans or the Facility B Loans in an aggregate amount equal to 100% of
the Net Available Proceeds thereof or (ii) in connection with a Disposition of
any Investment Tax Credit, apply any part of the Net Available Proceeds thereof,
within six months of receipt, to the purchase price of a Permitted Acquisition
if any and use the balance of such Net Available Proceeds to prepay the
Facility C Loans or the Facility D Loans or the Facility B Loans as contemplated
in clause (i) above. Promptly after each such Equity Issuance the Company shall
advise the Agent in writing of its designated application of such Net Available
Proceeds thereof. Any such prepayments of the Facility C Loans and the
Facility D Loans shall be effected in the manner specified in the Second
Restated Supplemental Credit Agreement. Any such prepayment of the Facility B
Loans shall be effected in the manner and to the extent specified in paragraph
(e) below.
(d) EXCESS CASH FLOW. Not later than 90 days after the end of each
fiscal year of the Company, commencing with the fiscal year ending December 31,
1997, the Company shall prepay the Facility B Loans, the Facility C Loans and
the Facility D Loans in an aggregate amount equal to the excess of (A) 50% of
Excess Cash Flow for such fiscal year (or, if the Leverage Ratio is less than
3.25 to 1, 0% of such Excess Cash Flow) over (B) the aggregate amount of
prepayments of Facility B Loans, Facility C Loans and Facility D Loans made
during such fiscal year pursuant to Section 2.08 hereof and Section 2.08 of the
Second Restated
CREDIT AGREEMENT
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Supplemental Credit Agreement. Mandatory prepayments arising from Excess
Cash Flow shall be applied to the Facility B Loans, the Facility C Loans and
the Facility D Loans pro rata based on the aggregate principal amounts
thereof then outstanding and such prepayments of Facility B Loans shall be
effected in each case in the manner and to the extent specified in paragraph
(e) below.
(e) APPLICATION. Prepayments and reductions of Commitments described
in paragraphs (a), (b), (c) and (d) above shall be effected as follows:
(i) first, the amount of the prepayment specified in such paragraphs
shall be applied to the Facility B Loans then outstanding, 50% of which
amount shall be applied in the inverse order of the maturities of the
installments thereof and (after taking into account such application) the
remainder thereof shall be applied ratably to then remaining installments
of principal of the Facility B Loans; and
(ii) second, the Facility A Commitments shall be automatically reduced
in an amount equal to any excess over the amount referred to in the
foregoing clause (i) (and to the extent that, after giving effect to such
reduction, the aggregate principal amount of Facility A Loans, together
with the aggregate amount of all Letter of Credit Liabilities, would exceed
the Facility A Commitments, the Company shall prepay Facility A Loans in an
aggregate amount equal to such excess (and, to the extent that the amount
of any such prepayment to be applied to the Facility A Loans exceeds the
outstanding amount thereof, provide cover for Letter of Credit Liabilities
as specified in paragraph (f) below).
(f) COVER FOR LETTER OF CREDIT LIABILITIES. In the event that the
Company shall be required pursuant to this Section 2.09 to provide cover for
Letter of Credit Liabilities, the Company shall effect the same by paying to the
Agent in immediately available funds an amount equal to the required amount,
which funds shall be retained by the Agent in the Collateral Account (as
collateral security in the first instance for the Letter of Credit Liabilities)
until such time as the Letters of Credit shall have been terminated and all of
such Letter of Credit Liabilities paid in full.
CREDIT AGREEMENT
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2.10 LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, the Facility A Commitments may be utilized, upon the request of
the Company, in addition to the Facility A Loans provided for by Section
2.01(a) hereof, by the issuance by the Issuing Bank of letters of credit
(collectively, "LETTERS OF CREDIT") including (a) Letters of Credit issued
under the Existing Credit Agreement and outstanding on the Effective Date,
for account of any of the Subsidiaries of the Company, and (b) in respect of
all (1) Letters of Credit described in clause (a) above that are amended,
renewed or otherwise modified and (2) other Letters of Credit, for account of
the Company and any of its Subsidiaries PROVIDED that in no event shall (i)
the aggregate amount of all Letter of Credit Liabilities, together with the
aggregate principal amount of the Facility A Loans, exceed the aggregate
amount of the Facility A Commitments as in effect from time to time and (ii)
the expiration date of any Letter of Credit extend beyond the earlier of the
Revolving Credit Commitment Termination Date and the date 12 months following
the issuance of such Letter of Credit. The following additional provisions
shall apply to Letters of Credit:
(a) The Company shall give the Agent at least three Business Days'
irrevocable prior notice (effective upon receipt) specifying the Business
Day (which shall be no later than 30 days preceding the Revolving Credit
Commitment Termination Date) each Letter of Credit is to be issued and the
account party or parties therefor and describing in reasonable detail the
proposed terms of such Letter of Credit (including the beneficiary thereof)
and the nature of the transactions or obligations proposed to be supported
thereby (including whether such Letter of Credit is to be a commercial
letter of credit or a standby letter of credit). Upon receipt of any such
notice, the Agent shall advise the Issuing Bank of the contents thereof.
(b) On each day during the period commencing with the issuance by the
Issuing Bank of any Letter of Credit (from the Effective Date in the case
of outstanding Letters of Credit) and until such Letter of Credit shall
have expired or been terminated, the Facility A Commitment of each
Facility A Lender shall be deemed to be utilized for all purposes of this
Agreement in an amount equal to such Lender's Facility A Commitment
Percentage of the then undrawn face amount of such Letter of Credit. Each
Facility A Lender (other than the Issuing Bank) agrees that,
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upon the issuance of any Letter of Credit hereunder, it shall automatically
acquire a participation in the Issuing Bank's liability under such Letter
of Credit in an amount equal to such Lender's Facility A Commitment
Percentage of such liability, and each Facility A Lender (other than the
Issuing Bank) thereby shall absolutely, unconditionally and irrevocably
assume, as primary obligor and not as surety, and shall be unconditionally
obligated to the Issuing Bank to pay and discharge when due, its Facility A
Commitment Percentage of the Issuing Bank's liability under such Letter of
Credit.
(c) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment under such Letter of Credit, the Issuing Bank shall
promptly notify the Company (through the Agent) of the amount to be paid by
the Issuing Bank as a result of such demand and the date on which payment
is to be made by the Issuing Bank to such beneficiary in respect of such
demand (but the failure to give such notice shall not impair the Company's
obligations). Notwithstanding the identity of the account party of any
Letter of Credit, the Company hereby unconditionally agrees to pay and
reimburse the Agent for account of the Issuing Bank for the amount of each
demand for payment under such Letter of Credit that is in substantial
compliance with the provisions of such Letter of Credit at or prior to the
date on which payment is to be made by the Issuing Bank to the beneficiary
thereunder, without presentment, demand, protest or other formalities of
any kind and irrespective of any claim, set-off, defense or other right
which the Company or any of its Subsidiaries or Affiliates may have at any
time against such Issuing Bank or any other Person, under all
circumstances, including without limitation, any of the following
circumstances: (i) any lack of validity or enforceability of this
Agreement or any of the Loan Documents; (ii) the existence of any claim,
set-off, defense or other right which the Company or any of its
Subsidiaries or Affiliates may have at any time against a beneficiary named
in any Letter of Credit or any transferee thereof (or any Person for whom
any such transferee may be acting), the Issuing Bank, any Lender or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the Company or any of its
Subsidiaries
CREDIT AGREEMENT
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or Affiliates and the beneficiary named in any Letter of Credit; (iii) any
draft, certificate or any other document presented under a 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;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents; or (v) the
existence of any Default.
(d) Forthwith upon its receipt of a notice referred to in
paragraph (c) of this Section 2.10, the Company shall advise the Agent
whether or not the Company intends to borrow hereunder to finance its
obligation to reimburse the Issuing Bank for the amount of the related
demand for payment and, if it does, submit a notice of such borrowing as
provided in Section 4.05 hereof.
(e) Each Facility A Lender (other than the Issuing Bank) shall pay to
the Agent for account of the Issuing Bank at its principal office in
Dollars and in immediately available funds, the amount of such Lender's
Facility A Commitment Percentage of any payment under a Letter of Credit
upon notice by the Issuing Bank (through the Agent) to such Facility A
Lender requesting such payment and specifying such amount. Each such
Facility A Lender's obligation to make such payment to the Agent for
account of the Issuing Bank under this paragraph (e), and the Issuing
Bank's right to receive the same, shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever (except as provided in
the proviso at the end of this sentence), including, without limitation,
the failure of any other Facility A Lender to make its payment under this
paragraph (e), the financial condition of the Company (or any other account
party), the existence of any Default or the termination of the Commitments;
PROVIDED that no Facility A Lender shall be obligated to make any payment
to the Agent for account of the Issuing Bank in respect of any payment made
by the Issuing Bank under a Letter of Credit where such payment was made in
respect of a demand for payment that was not in substantial compliance with
the provisions of such Letter of Credit or to the extent that the Company
shall not be required to indemnify any Lender or the Agent in the
circumstances provided in clause (x) of the penultimate sentence of the
last paragraph of this Section 2.10. Each such payment to the Issuing Bank
shall
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be made without any offset, abatement, withholding or reduction whatsoever.
If any Facility A Lender shall default in its obligation to make any such
payment to the Agent for account of the Issuing Bank, for so long as such
default shall continue the Agent may at the request of the Issuing Bank
withhold from any payments received by the Agent under this Agreement or
any Note for account of such Facility A Lender the amount so in default
and, to the extent so withheld, pay the same to the Issuing Bank in
satisfaction of such defaulted obligation.
(f) Upon the making of each payment by a Facility A Lender to the
Issuing Bank pursuant to paragraph (e) above in respect of any Letter of
Credit, such Lender shall, automatically and without any further action on
the part of the Agent, the Issuing Bank or such Lender, acquire (i) a
participation in an amount equal to such payment in the Reimbursement
Obligation owing to the Issuing Bank by the Company hereunder and under the
Letter of Credit Documents relating to such Letter of Credit and (ii) a
participation in a percentage equal to such Lender's Facility A Commitment
Percentage in any interest or other amounts payable by the Company
hereunder and under such Letter of Credit Documents in respect of such
Reimbursement Obligation (other than the commissions, charges, costs and
expenses payable to the Issuing Bank pursuant to paragraph (g) of this
Section 2.10). Upon receipt by the Issuing Bank from or for account of the
Company of any payment in respect of any Reimbursement Obligation or any
such interest or other amount (including by way of setoff or application of
proceeds of any collateral security), the Issuing Bank shall promptly pay
to the Agent for account of each Facility A Lender entitled thereto, such
Facility A Lender's Facility A Commitment Percentage of such payment, each
such payment by the Issuing Bank to be made in the same money and funds in
which received by the Issuing Bank. In the event any payment received by
the Issuing Bank and so paid to the Facility A Lenders hereunder is
rescinded or must otherwise be returned by the Issuing Bank, each
Facility A Lender shall, upon the request of the Issuing Bank (through the
Agent), repay to the Issuing Bank (through the Agent) the amount of such
payment paid to such Lender, with interest at the rate specified in
paragraph (j) of this Section 2.10.
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(g) The Company shall pay to the Agent for account of each Facility A
Lender (ratably in accordance with their respective Commitment Percentages)
a letter of credit fee in respect of each Letter of Credit in an amount
equal to the percentage equivalent of the Applicable Margin for Eurodollar
Loans (less 0.25%) of the daily average undrawn face amount of such Letter
of Credit for the period from and including the date of issuance of such
Letter of Credit (i) in the case of a Letter of Credit that expires in
accordance with its terms, to and including such expiration date and
(ii) in the case of a Letter of Credit that is drawn in full or is
otherwise terminated other than on the stated expiration date of such
Letter of Credit, to but excluding the date such Letter of Credit is drawn
in full or is terminated (such fee to be non-refundable, to be paid in
arrears on each Quarterly Date and on the Revolving Credit Commitment
Termination Date and to be calculated for any day after giving effect to
any payments made under such Letter of Credit on such day). In addition,
the Company shall pay to the Agent for account of the Issuing Bank a
fronting fee in respect of each Letter of Credit in an amount equal to
0.25% per annum of the daily average undrawn face amount of such Letter of
Credit for the period from and including the date of issuance of such
Letter of Credit (i) in the case of a Letter of Credit that expires in
accordance with its terms, to and including such expiration date and
(ii) in the case of a Letter of Credit that is drawn in full or is
otherwise terminated other than on the stated expiration date of such
Letter of Credit, to but excluding the date such Letter of Credit is drawn
in full or is terminated (such fee to be non-refundable, to be paid in
arrears on each Quarterly Date and on the Revolving Credit Commitment
Termination Date and to be calculated for any day after giving effect to
any payments made under such Letter of Credit on such day) plus all
commissions, charges, costs and expenses in the amounts customarily charged
by the Issuing Bank from time to time in like circumstances with respect to
the issuance of each Letter of Credit and drawings and other transactions
relating thereto.
(h) Promptly following the end of each fiscal quarter, the Issuing
Bank shall deliver (through the Agent) to each Facility A Lender and the
Company a notice describing the aggregate amount of all Letters of Credit
outstanding at the end of such quarter. Upon the request of any Facility A
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Lender from time to time, the Issuing Bank shall deliver any other
information reasonably requested by such Lender with respect to each Letter
of Credit then outstanding.
(i) The issuance by the Issuing Bank of each Letter of Credit shall,
in addition to the conditions precedent set forth in Section 6 hereof, be
subject to the conditions precedent that (i) such Letter of Credit shall be
in such form, contain such terms and support such transactions as shall be
reasonably satisfactory to the Issuing Bank consistent with its then
current practices and procedures with respect to letters of credit of the
same type and (ii) the Company shall have executed and delivered such
applications, agreements and other instruments relating to such Letter of
Credit as the Issuing Bank shall have reasonably requested consistent with
its then current practices and procedures with respect to letters of credit
of the same type, PROVIDED that in the event of any conflict between any
such application, agreement or other instrument and the provisions of this
Agreement or any Security Document, the provisions of this Agreement and
the Security Documents shall control.
(j) To the extent that any Lender shall fail to pay any amount
required to be paid pursuant to paragraph (e) or (f) of this Section 2.10
on the due date therefor, such Lender shall pay interest to the Issuing
Bank (through the Agent) on such amount from and including such due date to
but excluding the date such payment is made at a rate per annum equal to
the Federal Funds Rate, PROVIDED that if such Lender shall fail to make
such payment to the Issuing Bank within three Business Days of such due
date, then, retroactively to the due date, such Lender shall be obligated
to pay interest on such amount at the Post-Default Rate.
(k) The issuance by the Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the same
conditions applicable under this Section 2.10 to the issuance of new
Letters of Credit, and no such modification or supplement shall be issued
hereunder unless either (i) the respective Letter of Credit affected
thereby would have complied with such conditions had it originally been
issued hereunder in such modified or
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supplemented form or (ii) each Facility A Lender shall have consented
thereto.
The Company hereby indemnifies and holds harmless each Facility A Lender and the
Agent from and against any and all claims and damages, losses, liabilities,
costs or expenses that such Lender or the Agent may incur (or that may be
claimed against such Lender or the Agent by any Person whatsoever) by reason of
or in connection with the execution and delivery or transfer of or payment or
refusal to pay by the Issuing Bank under any Letter of Credit; PROVIDED that the
Company shall not be required to indemnify any Lender or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, caused by (x) the willful misconduct or gross negligence of the
Issuing Bank in determining whether a request presented under any Letter of
Credit complied with the terms of such Letter of Credit or (y) in the case of
the Issuing Bank, such Lender's failure to pay under any Letter of Credit after
the presentation to it of a request strictly complying with the terms and
conditions of such Letter of Credit. Nothing in this Section 2.10 is intended
to limit the other obligations of the Company, any Lender or the Agent under
this Agreement.
Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.
3.01 REPAYMENT OF LOANS.
(a) The Company hereby promises to pay to the Agent for account of
each Facility A Lender the entire outstanding principal amount of such Lender's
Facility A Loans, and each such Facility A Loan shall mature, on the Revolving
Credit Commitment Termination Date.
(b) The Company hereby promises to pay to the Agent for account of
each Facility B Lender the principal of such Lender's Facility B Loan in 25
installments payable on the Principal Payment Dates falling on or nearest to the
dates specified below, each in an amount equal to such Lender's ratable share of
the aggregate amount set forth opposite such date, as follows:
Date Amount of Installment ($)
---- -------------------------
September 30, 1997 4,000,000
December 31, 1997 4,000,000
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March 31, 1998 4,000,000
June 30, 1998 4,000,000
September 30, 1998 4,500,000
December 31, 1998 4,500,000
March 31, 1999 4,500,000
June 30, 1999 4,500,000
September 30, 1999 5,000,000
December 31, 1999 5,000,000
March 31, 2000 5,000,000
June 30, 2000 5,000,000
September 30, 2000 5,500,000
December 31, 2000 5,500,000
March 31, 2001 5,500,000
June 30, 2001 5,500,000
September 30, 2001 6,000,000
December 31, 2001 6,000,000
March 31, 2002 6,000,000
June 30, 2002 6,000,000
September 30, 2002 6,500,000
December 31, 2002 6,500,000
March 31, 2003 6,500,000
June 30, 2003 6,500,000
September 30, 2003 24,000,000
------------
$150,000,000
If the Company does not borrow the full amount of the aggregate Facility B
Commitments on or before the Term Loan Commitment Termination Date, the
shortfall shall be applied to reduce the foregoing installments ratably.
3.02 INTEREST. The Company hereby promises to pay to the Agent for
account of each Lender interest on the unpaid principal amount of each Loan for
the period from and including the date of such Loan to but excluding the date
such Loan shall be paid in full, at the following rates per annum:
(a) during such periods as such Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time) PLUS the Applicable Margin, and
(b) during such periods as such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period PLUS the Applicable Margin.
CREDIT AGREEMENT
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Notwithstanding the foregoing, the Company hereby promises to pay to the Agent
for account of each Lender interest at the applicable Post-Default Rate as
follows:
(i) on any principal of any Loan made by such Lender, on any
Reimbursement Obligation held by such Lender and on any other amount
payable by the Company hereunder or under the Notes held by such
Lender to or for account of such Lender that shall not be paid in
full when due (whether at stated maturity, by acceleration, by
mandatory prepayment or otherwise), for the period from and including
the due date thereof to but excluding the date the same is paid in
full; and
(ii) on the principal of all Loans made by such Lender commencing
upon the occurrence of any Event of Default, and thereafter for so
long as any Event of Default shall be continuing.
Accrued interest on each Loan shall be payable (i) in the case of a Base Rate
Loan, quarterly on the Quarterly Dates, (ii) in the case of a Eurodollar Loan,
on the last day of each Interest Period therefor and, if such Interest Period is
longer than three months, at three-month intervals following the first day of
such Interest Period, and (iii) at the option of the Agent, in the case of any
Loan upon the payment or prepayment thereof or the Conversion of such Loan to a
Loan of another Type (but only on the principal amount so paid, prepaid or
Converted) except that interest payable at the Post-Default Rate shall be
payable from time to time on demand. Promptly after the determination of any
interest rate provided for herein or any change therein, the Agent shall give
notice thereof to the Lenders to which such interest is payable and to the
Company.
Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
4.01 PAYMENTS.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest, Reimbursement Obligations and other amounts
to be made by the Company under this Agreement and the Notes of the Company,
and, except to the extent otherwise provided therein, all payments to be made
by the Obligors under
CREDIT AGREEMENT
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any other Loan Document, shall be made in Dollars, in immediately available
funds, to the Agent at any account designated by the Agent not later than
2:00 p.m. Charlotte, North Carolina time 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).
(b) Any Lender for whose account any such payment is to be
made may (but shall not be obligated to) debit the amount of any such payment
that is not made by such time to any ordinary deposit account of the Company
with such Lender (with notice to the Company and the Agent).
(c) The Company shall, at the time of making each payment
under this Agreement or any Note for account of any Lender, specify to the
Agent (which shall so notify the intended recipient(s) thereof) the Loans,
Reimbursement Obligations or other amounts payable hereunder to which such
payment is to be applied (and in the event that the Company fails to so
specify, or if an Event of Default has occurred and is continuing, the Agent
may distribute such payment to the Lenders for application in such manner as
it or the Majority Lenders, subject to Section 4.02 hereof, may determine to
be appropriate).
(d) Except to the extent otherwise provided in the last
sentence of Section 2.10(e) hereof, each payment received by the Agent under
this Agreement or any Note for account of any Lender shall be paid by the
Agent promptly to such Lender, in immediately available funds, for account of
such Lender's Applicable Lending Office for the Loan or other obligation in
respect of which such payment is made.
(e) If the due date of any payment under this Agreement or
any Note would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall be
payable for any principal so extended for the period of such extension.
4.02 PRO RATA TREATMENT. Except to the extent otherwise
provided herein: (a) each borrowing of Loans of a particular Class from the
Lenders under Section 2.01 hereof shall be made from the relevant Lenders,
each payment of commitment fee under Section 2.04 hereof in respect of
Commitments of a particular Class shall be made for account of the relevant
Lenders, and each termination or reduction of the amount of the
CREDIT AGREEMENT
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Commitments of a particular Class under Section 2.03 hereof shall be applied
to the respective Commitments of such Class of the relevant Lenders, pro rata
according to the amounts of their respective Commitments of such Class; (b)
the making, Conversion and Continuation of Loans of a particular Type and
Class (other than Conversions provided for by Section 5.04 hereof) shall be
made pro rata among the relevant Lenders according to the amounts of their
respective Commitments (in the case of making of Loans) or their respective
Loans (in the case of Conversions and Continuations of Loans); (c) each
payment or prepayment of principal of Loans of any Class by the Company shall
be made for account of the relevant Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loans of such Class held by them;
and (d) each payment of interest on any Loans of any Class by the Company
shall be made for account of the relevant Lenders pro rata in accordance with
the amounts of interest on such Loans then due and payable to the respective
Lenders.
4.03 COMPUTATIONS. Interest on Eurodollar Loans, commitment
fees and letter of credit fees shall be computed on the basis of a year of
360 days and actual days elapsed (including the first day but, except as
otherwise provided in Section 2.10(g) hereof, excluding the last day)
occurring in the period for which payable and interest on Base Rate Loans and
Reimbursement Obligations shall be computed on the basis of a year of 365 or
366 days, as the case may be, and actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.
4.04 MINIMUM AMOUNTS. Except for mandatory prepayments made
pursuant to Section 2.09 hereof and Conversions or prepayments made pursuant
to Section 5.04 hereof, (a) each borrowing and Conversion of principal of
Base Rate Loans shall be in an aggregate amount at least equal to $1,000,000
or a larger multiple of $500,000, (b) each borrowing and Conversion of
Eurodollar Loans shall be in an aggregate amount at least equal to $5,000,000
or a larger multiple of $1,000,000, (c) each partial prepayment of principal
of Eurodollar Loans shall be in an aggregate amount at least equal to
$5,000,000 or a larger multiple of $1,000,000 and each partial prepayment of
principal of Base Rate Loans shall be in an aggregate amount at least equal
to $1,000,000 or a larger multiple of $500,000 (borrowings, Conversions or
prepayments of or into Loans of different Types or, in the case of Eurodollar
Loans, having different Interest
CREDIT AGREEMENT
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Periods at the same time hereunder to be deemed separate borrowings,
Conversions and prepayments for purposes of the foregoing, one for each Type
or Interest Period).
4.05 CERTAIN NOTICES. Notices by the Company to the Agent of
terminations or reductions of the Commitments, of Borrowings, Conversions,
Continuations and optional prepayments of Loans and of Classes of Loans, of
Types of Loans and of the duration of Interest Periods shall be irrevocable
(other than with respect to notices of optional prepayments, which shall be
revocable, PROVIDED that upon any such revocation the Company shall be
obligated to pay the Lenders any amounts payable under Section 5.05 hereof as
a consequence of such revocation) and shall be effective only if received by
the Agent not later than 1:30 p.m. Charlotte, North Carolina time on the
number of Business Days prior to the date of the relevant termination,
reduction, borrowing, Conversion, Continuation or prepayment or the first day
of such Interest Period specified below:
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of Commitments 3
Borrowing or prepayment of, or
Conversions into,
Base Rate Loans Same Day
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Each such notice of termination or reduction shall specify the amount and the
Class of the Commitments to be terminated or reduced. Each such notice of
borrowing, Conversion, Continuation or optional prepayment shall specify the
Class of Loans to be borrowed, Converted, Continued or prepaid and the amount
(subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each
such notice of the duration of an Interest Period shall specify the Loans to
which such Interest Period is
CREDIT AGREEMENT
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to relate. The Agent shall promptly notify the Lenders of the contents of
each such notice. In the event that the Company fails to select the Type of
Loan, or the duration of any Interest Period for any Eurodollar Loan, within
the time period and otherwise as provided in this Section 4.05, such Loan (if
outstanding as a Eurodollar Loan) will be automatically Converted into a Base
Rate Loan on the last day of the then current Interest Period for such Loan
or (if outstanding as a Base Rate Loan) will remain as, or (if not then
outstanding) will be made as, a Base Rate Loan. The Company agrees that each
notice of borrowing, each notice of prepayment and each notice of Conversion
or Continuation hereunder shall be substantially in the form of Exhibit J-1,
Exhibit J-2 and Exhibit J-3 hereto, respectively.
4.06 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent
shall have been notified by a Lender or the Company (the "PAYOR") prior to
the date on which the Payor is to make payment to the Agent of (in the case
of a Lender) the proceeds of a Loan to be made by such Lender hereunder or
(in the case of the Company) a payment to the Agent for account of one or
more of the Lenders hereunder (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(s)on such date; and, if the Payor has not in fact
made the Required Payment to the Agent, the recipient(s) of such payment
shall, on demand, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date (the "ADVANCE 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 day and, if such recipient(s) shall fail
promptly to make such payment, the Agent shall be entitled to recover such
amount, on demand, from the Payor, together with interest as aforesaid,
PROVIDED that if neither the recipient(s) nor the Payor shall return the
Required Payment to the Agent within three Business Days of the Advance Date,
then, retroactively to the Advance Date, the Payor and the recipient(s) shall
each be obligated to pay interest on the Required Payment as follows:
CREDIT AGREEMENT
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(i) if the Required Payment shall represent a payment to be
made by the Company to the Lenders, the Company and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the Post-Default Rate
(and, in case the recipient(s) shall return the Required Payment to
the Agent, without limiting the obligation of the Company under
Section 3.02 hereof to pay interest to such recipient(s) at the
Post-Default Rate in respect of the Required Payment) and
(ii) if the Required Payment shall represent proceeds of a Loan
to be made by the Lenders to the Company, the Payor and the Company
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the rate of interest
provided for such Required Payment pursuant to Section 3.02 hereof
(and, in case the Company shall return the Required Payment to the
Agent, without limiting any claim the Company may have against the
Payor in respect of the Required Payment).
4.07 SHARING OF PAYMENTS, ETC.
(a) The Company agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Lender
may otherwise have, each Lender shall be entitled, at its option but with the
prior written consent of the Majority Lenders, to offset balances held by it
for account of the Company at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Lender's Loans,
Reimbursement Obligations or any other amount payable to such Lender
hereunder, that is not paid when due (regardless of whether such balances are
then due to the Company), in which case it shall promptly notify the Company
and the Agent thereof, PROVIDED that such Lender's failure to give such
notice shall not affect the validity thereof.
(b) If any Lender shall obtain from any Obligor payment of
any principal of or interest on any Loan of any Class or Letter of Credit
Liability owing to it or payment of any other amount under this Agreement or
any other Loan Document through the exercise of any right of set-off,
Lender's lien or counterclaim or similar right or otherwise (other than from
the Agent as provided herein), and, as a result of such payment, such Lender
shall have received a greater percentage of the principal
CREDIT AGREEMENT
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of or interest on the Loans of such Class or Letter of Credit Liabilities or
such other amounts then due hereunder or thereunder by such Obligor to such
Lender than the percentage received by any other Lender, it shall promptly
purchase from such other Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Loans of such Class or
such other amounts, respectively, owing to such other Lenders (or in interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such excess payment (net of any expenses
that may be incurred by such Lender in obtaining or preserving such excess
payment) pro rata in accordance with the unpaid principal of and/or interest
on the Loans of such Class or Letter of Credit Liabilities or such other
amounts, respectively, owing to each of the Lenders. To such end all the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off,
banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or
other amounts (as the case may be) owing to such Lender in the amount of such
participation.
(d) Nothing contained herein shall require any Lender to
exercise any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any
other indebtedness or obligation of any Obligor. If, under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured
claim in lieu of a set-off to which this Section 4.07 applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section 4.07 to share in the benefits of any recovery on such
secured claim.
Section 5. YIELD PROTECTION, ETC.
5.01 ADDITIONAL COSTS.
(a) The Company shall pay directly to each Lender from time
to time such amounts as such Lender may determine to be
CREDIT AGREEMENT
<PAGE>
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necessary to compensate such Lender for any costs that such Lender determines
are attributable to its making or maintaining of any Eurodollar Loans or its
obligation to make any Eurodollar Loans hereunder or any reduction in any
amount receivable by such Lender hereunder in respect of any of such Loans or
such obligation (such increases in costs and reductions in amounts receivable
being herein called "ADDITIONAL COSTS"), resulting from any Regulatory Change
that:
(i) shall subject any Lender (or its Applicable Lending Office
for any of such Loans) to any tax, duty or other charge in respect of
such Loans or its Notes or changes the basis of taxation of any
amounts payable to such Lender under this Agreement or its Notes in
respect of any of such Loans (excluding changes in the rate of tax on
the overall net income of such Lender or of its Applicable Lending
Office by the jurisdiction in which such Lender is organized or has
its principal office or in which its Applicable Lending Office is
organized or located or, in each case, any political subdivision or
taxing authority thereof or therein); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender (including, without limitation, any of
such Loans or any deposits referred to in the definitions of
"Eurodollar Base Rate" in Section 1.01 hereof), or any commitment of
such Lender (including, without limitation, the Commitments of such
Lender hereunder); or
(iii) imposes any other condition affecting this Agreement or
its Notes (or any of such extensions of credit or liabilities) or its
Commitments.
If any Lender requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Lender (with a copy to the Agent), suspend
the obligation of such Lender thereafter to make or Continue Eurodollar Loans,
to Convert Loans of another Type into Eurodollar Loans or to Convert Eurodollar
Loans into Loans of another Type until the Regulatory Change giving rise to such
request ceases to be in effect (in which case the provisions of Section 5.04
hereof shall be applicable),
CREDIT AGREEMENT
<PAGE>
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PROVIDED that such suspension shall not affect the right of such Lender to
receive the compensation so requested.
(b) Without limiting the effect of the provisions of
paragraph (a) of this Section 5.01, in the event that, by reason of any
Regulatory Change, any Lender (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 Lender that includes deposits by
reference to which the interest rate on Eurodollar Loans is determined as
provided in this Agreement or a category of extensions of credit or other
assets of such Lender that includes Eurodollar Loans or (ii) becomes subject
to restrictions on the amount of such a category of liabilities or assets
that it may hold then, if such Lender so elects by notice to the Company
(with a copy to the Agent), the obligation of such Lender to make or
Continue, or to Convert Loans of another type into, Eurodollar Loans,
hereunder (as the case may be) shall be suspended until any such Regulatory
Change ceases to be in effect (in which case the provisions of Section 5.04
hereof shall be applicable).
(c) Without limiting the effect of the foregoing provisions
of this Section 5.01 (but without duplication), the Company shall pay
directly to each Lender from time to time on request such amounts as such
Lender may determine to be necessary to compensate such Lender (or, without
duplication, the bank holding company of which such Lender is a subsidiary)
for any costs that it determines are attributable to the maintenance by such
Lender (or any Applicable Lending Office or such bank holding company),
pursuant to any law or regulation or any interpretation, directive or request
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) of any court or governmental or monetary
authority (i) following any Regulatory Change or (ii) hereafter implementing
any risk-based capital guideline or other requirement (whether or not having
the force of law and whether or not the failure to comply therewith would be
unlawful) heretofore or hereafter issued by any government or governmental or
supervisory authority implementing at the national level the Basle Accord
(including, without limitation, the Final Risk-Based Capital Guidelines of
the Board of Governors of the Federal Reserve System (12 C.F.R. Part 208,
Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based Capital
Guidelines of the Office of the Comptroller of the Currency (12 C.F.R. Part 3,
Appendix A)), of capital in respect of its Commitments or
CREDIT AGREEMENT
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Loans (such compensation to include, without limitation, an amount equal to
any reduction of the rate of return on assets or equity of such Lender (or
any Applicable Lending Office or such bank holding company) to a level below
that which such Lender (or any Applicable Lending Office or such bank holding
company) could have achieved but for such law, regulation, interpretation,
directive or request). For purposes of this Section 5.01(c) and Section 5.08
hereof, "BASLE ACCORD" shall mean the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, modified and
supplemented and in effect from time to time or any replacement thereof.
(d) Each Lender shall notify the Company of any event
occurring after the date of this Agreement entitling such Lender to
compensation under paragraph (a) or (c) of this Section 5.01 as promptly as
practicable, but in any event within 45 days, after such Lender obtains
actual knowledge thereof; PROVIDED that (i) if any Lender fails to give such
notice within 45 days after it obtains actual knowledge of such an event,
such Lender shall, with respect to compensation payable pursuant to this
Section 5.01 in respect of any costs resulting from such event, only be
entitled to payment under this Section 5.01 for costs incurred from and after
the date 45 days prior to the date that such Lender does give such notice and
(ii) each Lender will designate a different Applicable Lending Office for the
Loans of such Lender 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 Lender, be disadvantageous to such Lender, except that
such Lender shall have no obligation to designate an Applicable Lending
Office located in the United States. Each Lender will furnish to the Company
a certificate setting forth the basis and amount of each request by such
Lender for compensation under paragraph (a) or (c) of this Section 5.01.
Determinations and allocations by any Lender for purposes of this Section
5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or (b)
of this Section 5.01, or of the effect of capital maintained pursuant to
paragraph (c) of this Section 5.01, on its costs or rate of return of
maintaining Loans or its obligation to make Loans, or on amounts receivable
by it in respect of Loans, and of the amounts required to compensate such
Lender under this Section 5.01, shall be conclusive in the
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absence of manifest error, PROVIDED that such determinations and allocations
are made on a reasonable basis.
5.02 LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Base Rate for any Interest Period:
(a) the Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Base Rate"
in Section 1.01 hereof are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining rates of
interest for Eurodollar Loans as provided herein; or
(b) The Majority Lenders determine, which determination shall be
conclusive, and notify the Agent that the relevant rates of interest
referred to in the definitions of "Eurodollar Base Rate" in Section
1.01 hereof upon the basis of which the rate of interest for
Eurodollar Loans for such Interest Period is to be determined are not
likely adequately to cover the cost to such Lenders of making or
maintaining Eurodollar Loans for such Interest Period;
then the Agent shall give the Company and each Lender prompt notice thereof
(describing the circumstances giving rise to such event) and, so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Eurodollar Loans, to Continue Eurodollar Loans, to Convert Loans of
another Type into Eurodollar Loans and the Company shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans either
prepay such Loans or Convert such Loans into Loans of another Type in accordance
with Section 2.08 hereof.
5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain
Eurodollar Loans hereunder, then such Lender shall promptly notify the
Company thereof (with a copy to the Agent) and such Lender's obligation to
make or Continue, or to Convert Loans of any other Type into, Eurodollar
Loans shall be suspended until such time as such Lender may again make and
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maintain Eurodollar Loans (in which case the provisions of Section 5.04
hereof shall be applicable).
5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any
Lender to make Eurodollar Loans ("AFFECTED LOANS"), or to Continue, or to
Convert Loans of another Type into Affected Loans shall be suspended pursuant
to Section 5.01 or 5.03 hereof, such Lender's Affected Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) therefor (or, in the case of a Conversion required
by Section 5.01(b), 5.01(c) or 5.03 hereof, on such earlier date as such
Lender may specify to the Company with a copy to the Agent) and, unless and
until such Lender gives notice as provided below that the circumstances
specified in Section 5.01 or 5.03 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Affected Loans shall be made or Continued instead as Base
Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be Converted into Affected Loans (as the case may be) shall
remain as Base Rate Loans.
If such Lender gives notice to the Company with a copy to the Agent that the
circumstances specified in Section 5.01 or 5.03 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 5.04 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Affected Loans made by other Lenders, and of
the same Class as such Lender's Loans are outstanding, such Lender's Base Rate
Loans of each Class (subject to Section 2.10 hereof) shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Affected Loans and of such Class, to the extent necessary so
that, after giving effect thereto, all Loans of such Class held by the Lenders
holding Affected Loans and by such Lender are held pro rata (as to principal
amounts, Types and Interest Periods) in accordance with their respective
Commitments.
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5.05 COMPENSATION. The Company shall pay to the Agent for account of
each Lender, upon the request of such Lender through the Agent, such amount
or amounts as shall be sufficient (in the reasonable opinion of such Lender)
to compensate it for any loss, cost or expense that such Lender determines is
attributable to:
(a) any payment, mandatory or optional prepayment or Conversion of
a Eurodollar Loan made by the Company for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 9 hereof)
on a date other than the last day of the Interest Period for such Loan;
or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 6 hereof to be satisfied) to borrow a Eurodollar Loan from such
Lender on the date for such borrowing specified in the relevant notice
of borrowing given pursuant to Section 2.02 hereof or in the notice from
the Agent given pursuant to Section 2.01(c);
(c) any failure for any reason (including, without limitation, as
provided in Section 5.02 or 5.03 hereof) of a Loan of such Lender to be
Continued as or Converted into a Eurodollar Loan on the date for such
Continuation or Conversion specified in the relevant notice given under
Section 4.05 hereof; or
(d) the revocation of any notice of optional prepayment or any
failure for any reason to make any optional prepayment on the date
specified therefor in the relevant notice of prepayment given pursuant
to Section 4.05 hereof.
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 that otherwise would have accrued on the principal amount so paid,
prepaid, Converted or not borrowed or prepaid for the period from the date of
such payment, prepayment, Conversion or failure to borrow or prepay to the
last day of the then current Interest Period for such Loan (or, in the case
of a failure to borrow, the Interest Period for such Loan that would have
commenced on the date specified for such borrowing) at the applicable rate of
interest for such Loan (MINUS the Applicable Margin) provided for herein over
(ii) the
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amount of interest that otherwise would have accrued on such principal amount
at a rate per annum equal to the interest component of the amount such Lender
would have bid on the date of such payment, prepayment, Conversion or failure
to borrow or prepay in the London interbank market for Dollar deposits of
leading banks in amounts comparable to such principal amount and with
maturities comparable to such period (as reasonably determined by such
Lender).
5.06 NET PAYMENTS; TAXES.
(a) All payments to be made hereunder and under the Notes and any other
Loan Documents by the Company shall be made without setoff, counterclaim or
other defense. Subject to Section 5.06(b) hereof with respect to U.S. Taxes,
all such payments shall be made free and clear of and without deduction for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any governmental
authority (other than taxes imposed on the Agent, any Lender or its
Applicable Lending Office by the jurisdiction in which the Agent or such
Lender is organized or has its principal office or in which its Applicable
Lending Office is organized or located or, in each case, any political
subdivision or taxing authority thereof or therein) (collectively, "TAXES").
If any Taxes are imposed and required to be withheld from any amount payable
by the Company hereunder or under the Notes, the Company shall be obligated
to (i) pay such additional amount so that the Agent and the Lenders will
receive a net amount (after giving effect to the payment of such additional
amount and to the deduction of all Taxes) equal to the amount due hereunder,
(ii) pay such Taxes to the appropriate taxing authority for the account of
the Agent, for the benefit of the Lenders and (iii) as promptly as possible
thereafter, sending the Agent a certified copy of any original official
receipt showing payment thereof, together with such additional documentary
evidence as the Agent may from time to time reasonably require. If the
Company fails to pay any Taxes when due to the appropriate taxing authority
or fails to remit to the Agent the required receipts or other required
documentary evidence, the Company shall be obligated to indemnify the Agent
and each Lender for any incremental taxes, interest or penalties that may
become payable by the Agent or such Lender as a result of such failure. The
obligations of the Company under this
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Section 5.06(a) shall survive the repayment of the Loans and the termination
of the Commitments.
(b) The Company agrees to pay to each Lender that is not a U.S. Person
such additional amounts as are necessary in order that the net payment of any
amount due to and received by such non-U.S. Person hereunder after deduction
for or withholding in respect of any U.S. Tax imposed with respect to such
payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S.
Person), will not be less than the amount stated herein to be then due and
payable, PROVIDED that the foregoing obligation to pay such additional
amounts shall not apply:
(i) to any payment to a Lender (other than in respect of a
Registered Loan) hereunder unless such Lender is, on the date hereof (or
on the date it becomes a Lender as provided in Section 11.06(b) hereof)
and on the date of any change in the Applicable Lending Office of such
Lender, either entitled to submit a Form 1001 (relating to such Lender
and entitling it to a complete exemption from withholding on all
interest to be received by it hereunder in respect of the Loans) or Form
4224 (relating to all interest to be received by such Lender hereunder
in respect of the Loans), or
(ii) to any payment to any Lender hereunder in respect of a
Registered Loan (a "REGISTERED HOLDER"), unless such Registered Holder
(or, if such Registered Holder is not the beneficial owner of such
Registered Loan, the beneficial owner thereof) is, on the date hereof
(or on the date such Registered Holder becomes a Lender as provided in
Section 11.06(b) hereof) and on the date of any change in the Applicable
Lending Office of such Lender, entitled to submit a Form W-8, together
with an annual certificate stating that (x) such Registered Holder (or
beneficial owner, as the case may be) is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code, and (y) such Registered Holder (or
beneficial owner, as the case may be) shall promptly notify the Company
if at any time, such Registered Holder (or beneficial owner, as the case
may be) determines that it is no longer in a position to provide such
certificate to the Company (or any other form of certification adopted
by the relevant taxing authorities of the United States of America for
such purposes), or
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(iii) to any U.S. Tax imposed solely by reason of the failure by
such non-U.S. Person (or, if such non-U.S. Person is not the beneficial
owner of the relevant Loan, such beneficial owner) to comply with
applicable certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or
connections with the United States of such non-U.S. Person (or such
beneficial owner, as the case may be) if such compliance is required by
statute or regulation of the United States as a precondition to relief
or exemption from such U.S. Tax.
For the purposes of this Section 5.06(b), (v) "FORM 1001" shall mean Form
1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of
the Treasury of the United States, (w) "FORM 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States, (x) "FORM W-8" shall mean Form W-8
(Certificate of Foreign Status of the Department of Treasury of the United
States of America) (or in relation to any of such Forms such successor and
related forms as may from time to time be adopted by the relevant taxing
authorities of the United States to document a claim to which such Form
relates), (y) "U.S. PERSON" shall mean a citizen, national or resident of the
United States, a corporation, partnership or other entity created or
organized in or under any laws of the United States, or any estate or trust
that is subject to Federal income taxation regardless of the source of its
income and (z) "U.S. TAXES" shall mean any present or future tax, assessment
or other charge or levy imposed by or on behalf of the United States or any
taxing authority thereof or therein.
Within 30 days after paying any amount to the Agent or any Lender from
which it is required by law to make any deduction or withholding, and within
30 days after it is required by law to remit such deduction or withholding to
any relevant taxing or other authority, the Company shall deliver to the
Agent for delivery to such non-U.S. Person evidence satisfactory to such
Person of such deduction, withholding or payment (as the case may be).
5.07 REPLACEMENT OF LENDERS. If any Lender requests compensation
pursuant to Section 5.01 or 5.06 hereof, or any Lender's obligation to make
or Continue, or to Convert Loans of
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any Type into, any other Type of Loan shall be suspended pursuant to Section
5.01 or 5.03 hereof (any such Lender so requesting compensation, or whose
obligations are so suspended being herein called a "RELEVANT LENDER"), the
Company upon three Business Days notice may require that such Relevant Lender
transfer all of its right, title and interest under this Agreement and such
Relevant Lender's Notes to any bank or other financial institution identified
by the Company that is reasonably satisfactory to the Agent (i) if such bank
or other financial institution (a "PROPOSED LENDER") agrees to assume all of
the obligations of such Relevant Lender hereunder, and to purchase all of
such Relevant Lender's Loans hereunder for consideration equal to the
aggregate outstanding principal amount of such Relevant Lender's Loans,
together with accrued, but unpaid interest thereon to the date of such
purchase, and satisfactory arrangements are made for payment to such Relevant
Lender of all other amounts payable hereunder to such Relevant Lender on or
prior to the date of such transfer (including any fees accrued hereunder and
any amounts that would be payable under Section 5.05 hereof as if all of such
Relevant Lender's Loans were being prepaid in full on such date) and (ii) if
such Relevant Lender has requested compensation pursuant to Section 5.01 or
5.06 hereof, such Proposed Lender's aggregate requested compensation, if any,
pursuant to said Section 5.01 or 5.06 with respect to such Relevant Lender's
Loans is lower than that of the Relevant Lender. Subject to compliance with
the provisions of Section 11.06(b) hereof, such Proposed Lender shall be a
"Lender" for all purposes hereunder. Without prejudice to the survival of
any other agreement of the Company hereunder, the agreements of the Company
contained in Sections 5.01, 5.06 and 11.03 hereof (without duplication of any
payments made to such Relevant Lender by the Company or the Proposed Lender)
shall survive for the benefit of such Relevant Lender under this Section 5.07
with respect to the time prior to such replacement.
5.08 ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT. Without limiting
the obligations of the Company under Section 5.01 hereof (but without
duplication), if as a result of any Regulatory Change or any risk-based
capital guideline or other requirement heretofore or hereafter issued by any
government or governmental or supervisory authority implementing at the
national level the Basle Accord there shall be hereafter imposed, modified or
deemed applicable any tax, reserve, special deposit, capital adequacy or
similar requirement against or with respect to or measured by reference to
Letters of Credit issued
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or to be issued hereunder and the result shall be to increase the cost to any
Lender or Lenders of issuing (or purchasing participations in) or maintaining
its obligation hereunder to issue (or purchase participations in) any Letter
of Credit hereunder or reduce any amount receivable by any Lender hereunder
in respect of any Letter of Credit (which increases in cost, or reductions in
amount receivable, shall be the result of such Lender's or Lenders'
reasonable allocation of the aggregate of such increases or reductions
resulting from such event), then, upon demand by such Lender or Lenders
(through the Agent), the Company shall pay immediately to the Agent for
account of such Lender or Lenders, from time to time as specified by such
Lender or Lenders (through the Agent), such additional amounts as shall be
sufficient to compensate such Lender or Lenders (through the Agent) for such
increased costs or reductions in amount. A statement as to such increased
costs or reductions in amount incurred by any such Lender or Lenders,
submitted by such Lender or Lenders to the Company shall be conclusive in the
absence of manifest error as to the amount thereof.
Section 6. CONDITIONS PRECEDENT.
6.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Agreement
(and the Amendment and restatement of the Existing Credit Agreement to be
effected hereby), and the obligation of any Lender to extend or continue
credit hereunder on the Effective Date, are subject to (i) the condition
precedent that the Effective Date shall occur on or before September 22, 1997
and (ii) the receipt by the Agent of the following documents, each of which
shall be satisfactory to the Agent (and to the extent specified below, to
each Lender or the Majority Lenders, as the case may be) in form and
substance:
(a) CORPORATE DOCUMENTS. Certified copies of the charter and
by-laws (or equivalent documents) of each Obligor and of all corporate
authority for each Obligor (including, without limitation, board of
director resolutions and evidence of the incumbency of officers,
together with specimen signatures of each such officer) with respect to
the execution, delivery and performance of such of the Basic Documents
to which such Obligor is intended to be a party and each other document
to be delivered by such Obligor from time to time in connection herewith
and the extensions of credit hereunder (and the Agent and each Lender
may conclusively rely on such certificate until it
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receives notice in writing from such Obligor to the contrary).
(b) OFFICER'S CERTIFICATE. A certificate of a Responsible
Financial Officer of the Company, dated the Effective Date, to the
effect set forth in the first sentence of Section 6.02(a) hereof.
(c) OPINION OF COUNSEL TO THE OBLIGORS. Opinions, each dated the
Effective Date, of Hughes & Luce, counsel to the Obligors, substantially
in the form of Exhibit D-1 hereto, and of Axtmayer Adsuar Muniz & Goyco,
special Puerto Rico counsel to the Subsidiary Guarantors operating in
the Commonwealth, substantially in the form of Exhibit D-2 hereto and,
in each case, covering such other matters as the Agent or any Lender may
reasonably request (and each Obligor hereby instructs such counsel to
deliver such opinion to the Lenders and the Agent).
(d) OPINION OF COUNSEL TO FIRST UNION. An opinion, dated the
Effective Date, of Milbank, Tweed, Hadley & McCloy, special New York
counsel to First Union, substantially in the form of Exhibit F hereto
(and First Union hereby instructs such counsel to deliver such opinion
to the Lenders).
(e) NOTES. The Notes, duly completed and executed.
(f) INSURANCE. Certificates of insurance evidencing the existence
of all insurance required to be maintained by the Company and its
Subsidiaries pursuant to Section 8.04 hereof and the designation of the
Agent as the loss payee or additional named insured, as the case may be,
thereunder. In addition, the Company shall have delivered a certificate
of a Responsible Financial Officer of the Company setting forth the
insurance obtained by it in accordance with the requirements of Section
8.04 and stating that such insurance is in full force and effect and
that all premiums then due and payable thereon have been paid.
(g) PUERTO RICO TAX EXEMPTION AND TAX RULING. Evidence that each
tax exemption grant heretofore issued to Suiza Fruit and Neva Plastics
by the Commonwealth in respect of manufacturing income from its
respective operations in the Commonwealth shall be in full force and
effect, and the
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Agent shall have received true and complete copies thereof, certified by
a Responsible Financial Officer of the relevant Subsidiary Guarantor.
(h) SOLVENCY ANALYSIS. A certificate from a Responsible Financial
Officer of the Company to the effect that, as of the Effective Date and
after giving effect to the initial extension of credit hereunder and to
the other transactions contemplated hereby, (i) the aggregate value of
all Properties of the Company and its Subsidiaries, at their present
fair saleable value (i.e., the amount that may be realized within a
reasonable time, considered to be six months to one year, either through
collection or sale at the regular market value, conceiving the latter as
the amount that could be obtained for the Property in question within
such period by a capable and diligent businessman from an interested
buyer who is willing to purchase under ordinary selling conditions),
exceeds the amount of all the debts and liabilities (including
contingent, subordinated, unmatured and unliquidated liabilities) of the
Company and its Subsidiaries, (ii) the Company and its Subsidiaries will
not have, on a consolidated basis, unreasonably small capital with which
to conduct their business operations as heretofore conducted and (iii)
the Company and its Subsidiaries will have, on a consolidated basis,
sufficient cash flow to enable them to pay their debts as they mature.
The Agent shall have also received (x) a certificate from a Responsible
Financial Officer of the Company certifying that the financial
projections and underlying assumptions contained in such analyses were
at the time made, and on the Effective Date are, fair and reasonable and
accurately computed and (y) appropriate factual information supporting
the conclusions of the solvency analyses and the financial condition
certificate required to be delivered as provided above.
(i) FINANCIAL INFORMATION. (i) Copies of the pro forma
projections of the Company and its Subsidiaries for the period from the
Effective Date through December 31, 1997 and (ii) unaudited
consolidating financial statements of the Company and its Subsidiaries
for the twelve-month period ended on December 31, 1996.
(j) PROCESS AGENT ACCEPTANCE. A letter from the Process Agent to
the Agent, in form and substance
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satisfactory to the Agent, accepting the appointment of the Process
Agent by the Obligors operating in the Commonwealth (other than Garrido)
as provided in Section 11.10(c) hereof.
(k) 1997 BUDGET. A budget for the fiscal year ending December 31,
1997 setting forth for each Subsidiary of the Company and for the
Company and its Subsidiaries as a whole, anticipated income, expense and
capital expenditure items for each quarter during such fiscal year.
(l) PAYMENT OF FEES AND EXPENSES, ETC. Evidence that the Company
shall have paid such fees and expenses as the Company shall have agreed
to pay to the Agent in connection herewith, including, without
limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley &
McCloy, special New York counsel to First Union, and Fiddler Gonzalez &
Rodriguez, special Puerto Rico counsel to First Union, in connection
with the negotiation, preparation, execution and delivery of this
Agreement and the Notes and the other Loan Documents and the making of
the Loans hereunder (to the extent that statements for such fees and
expenses have been delivered to the Company).
(m) SECOND RESTATED SUPPLEMENTAL CREDIT AGREEMENT. The Second
Restated Supplemental Credit Agreement, duly executed and delivered by
each of the parties thereto, together with evidence that all of the
conditions precedent to the effectiveness thereof have been satisfied or
waived.
(n) ACCRUED INTEREST. Evidence that (i) all interest accrued on
the outstanding "Facility A Loans" and "Facility B Loans" under the
Existing Credit Agreement and all accrued commitment and other fees
thereunder to the Effective Date, (ii) all interest accrued on the
outstanding "Facility C Loans" under the Supplemental Credit Agreement
and all accrued commitment and other fees thereunder to the Effective
Date, and (iii) all amounts payable by the Company (if any) under
Sections 2.01(a)(i), 2.01(b)(i) and 2.01(c) hereof have been paid in
full.
(o) OTHER DOCUMENTS. Such other documents as the Agent or any
Lender or special New York counsel to First Union may reasonably request.
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6.02 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
(a) The effectiveness of this Agreement (and the Amendment and
restatement of the Existing Credit Agreement to be effected thereby) and the
obligation of the Lenders to make any Loan or otherwise extend any credit to
the Company upon the occasion of each borrowing hereunder (including the
borrowing on the Effective Date) are subject to the further conditions
precedent that, both immediately prior to such effectiveness and to the
making of such Loan or other extension of credit and also after giving effect
thereto and to the intended use thereof:
(i) no Default shall have occurred and be continuing; and
(ii) the representations and warranties made by the Company in
Section 7 hereof, and by each Obligor in each of the other Loan
Documents to which it is a party, shall be true and complete on and as
of the date of such effectiveness or the date of the making of such Loan
or other extension of credit, as the case may be, with the same force
and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date).
Each notice of borrowing or request for the issuance of a Letter of Credit by
the Company hereunder shall constitute a certification by the Company to the
effect set forth in the first sentence of this Section 6.02(a) (both as of
the date of such notice and, unless the Company otherwise notifies the Agent
prior to the date of such borrowing or issuance, as of the date of such
borrowing or issuance).
(b) The Agent shall have received (i) such Additional Puerto Rico
Security Documents as shall be reasonably requested by the Agent in proper form
for filing in the corresponding Section of the Registry of Property of the
Commonwealth as are required from time to time pursuant to this Agreement and
payment of all required filing fees, taxes and all other expenses related to
such filings and (ii) an opinion of counsel for the Obligors in form and
substance reasonably satisfactory to the Agent in connection with such
Additional Puerto Rico Security Documents.
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Section 7. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Agent and the Lenders that (with respect to matters
pertaining to itself and each of its Subsidiaries):
7.01 CORPORATE EXISTENCE. Each of the Company and its Subsidiaries: (a)
is a corporation, partnership or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals
necessary 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 and is in good
standing in all jurisdictions in which the nature of the business conducted
by it makes such qualification necessary and where failure so to qualify
could (either individually or in the aggregate) have a Material Adverse
Effect.
7.02 FINANCIAL CONDITION. The Company has heretofore furnished to each
of the Lenders the following:
(a) unaudited consolidating balance sheets of the Company and its
Subsidiaries as at December 31, 1996, and the related consolidating
statements of income and operating cash flow for the twelve-month period
ended on said date; and
(b) an audited consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 1996 and the related consolidated
statements of income, retained earnings and cash flow of the Company and
its Subsidiaries for the fiscal period ended on said date, with the
opinion thereon of Deloitte & Touche LLP.
All such financial statements fairly present the financial condition of the
respective entities as at the respective dates, and the respective results of
operations for the respective periods ended on said respective dates, all in
accordance with generally accepted accounting principles and practices
applied on a consistent basis. None of such respective entities has on the
date hereof 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 or
provided for in the respective
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balance sheets referred to above. Since December 31, 1996 (with respect to
the Company and each of its Subsidiaries), there has been no material adverse
change in the respective financial condition, operations, business or
prospects of each such entity from that set forth in the respective financial
statements as at such date.
7.03 LITIGATION. Except as disclosed in Schedule V hereto, there are no
legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the
knowledge of the Company) threatened against the Company or any of its
Subsidiaries that, if adversely determined could (either individually or in
the aggregate) have a Material Adverse Effect.
7.04 NO BREACH. None of the execution and delivery of this Agreement
and the Notes and the other Basic Documents, the consummation of the
transactions herein and therein contemplated or compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the charter or by-laws of any Obligor, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their Property is bound or to which any of them
is subject, or constitute a default under any such agreement or instrument,
or (except for the Liens created pursuant to the Security Documents) result
in the creation or imposition of any Lien upon any Property of the Company or
any of its Subsidiaries pursuant to the terms of any such agreement or
instrument.
7.05 ACTION. Each Obligor has all necessary corporate power, authority
and legal right to execute, deliver and perform its obligations under each of
the Basic Documents to which it is a party; the execution, delivery and
performance by each Obligor of each of the Basic Documents to which it is a
party have been duly authorized by all necessary corporate action on its part
(including, without limitation, any required shareholder approvals); and this
Agreement has been duly and validly executed and delivered by each Obligor
and constitutes, and each of the Notes and the other Basic Documents to which
it is a party when executed and delivered by such Obligor (in the case of the
Notes, for value) will constitute, its legal, valid and binding obligation,
enforceable against each Obligor in accordance with
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its terms, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each
Security Document is effective to create in favor of the Agent for the
benefit of the Lenders a legal, valid and enforceable first priority Lien
upon all right, title and interest of the Obligor or Obligors party thereto
in the Property described therein and such Lien has been perfected, except as
otherwise permitted under Section 8.06 hereof or in such Security Document.
7.06 APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, or any securities exchange, are necessary for the execution, delivery
or performance by any Obligor of the Basic Documents to which it is a party
or for the legality, validity or enforceability hereof or thereof, except for
filings and recordings in respect of the Liens created pursuant to the
Security Documents.
7.07 USE OF CREDIT. None of the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business
of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying Margin Stock, and no part of the proceeds of
the Loans hereunder will be used to buy or carry any Margin Stock.
7.08 ERISA. Each Plan, and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no
event or condition has occurred and is continuing as to which the Company
would be under an obligation to furnish a report to the Lenders under Section
8.01(e) hereof.
7.09 TAXES. The Company and its Subsidiaries (other than the Obligors
operating in the Commonwealth and Garrido) are members of an affiliated group
of corporations filing consolidated returns for Federal income tax purposes,
of which the Company is the "common parent" (within the meaning of Section
1504 of the Code) of such group. The Company and its Subsidiaries have filed
all Federal income tax returns and all
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other material tax returns that are required to be filed by them and have
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company or any of its Subsidiaries. The charges, accruals and
reserves on the books of the Company and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Company, adequate.
The Company has not given or been requested to give a waiver of the statute
of limitations relating to the payment of Federal, state, local and foreign
taxes or other impositions. Neva Plastics and Suiza Fruit each hold
industrial tax exemption grants entitling each of them to a 90% exemption
from income and property taxes and a 60% exemption from municipal license
taxes. The grant held by Neva Plastics will expire on August 31, 2000 for
income tax purposes, on June 30, 2001 for municipal tax purposes and on
January 1, 2000 for property tax purposes. The grant held by Suiza Fruit
will expire on October 12, 2002 for income and property tax purposes and on
June 30, 2003 for municipal license tax purposes.
7.10 INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended.
7.11 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any of
its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
7.12 MATERIAL AGREEMENTS AND LIENS.
(a) Part A of Schedule I hereto is a complete and correct list, as of
the Effective Date, and after giving effect to the transactions contemplated
hereunder to occur on such date, of each credit agreement, loan agreement,
indenture, purchase agreement, guarantee, letter of credit or other
arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or
guarantee by, the Company or any of its Subsidiaries, and the aggregate
principal or face amount outstanding or that may become outstanding under
each such arrangement is correctly described in Part A of said Schedule I.
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(b) Part B of Schedule I hereto is a complete and correct list, as of
the Effective Date (and after giving effect to the transactions contemplated
hereunder to occur on such date), of each Lien securing Indebtedness of any
Person and covering any Property of the Company or any of its Subsidiaries
that will continue after the Effective Date, and the aggregate Indebtedness
secured (or that may be secured) by each such Lien and the Property covered
by each such Lien is correctly described in Part B of said Schedule I.
7.13 ENVIRONMENTAL MATTERS. Each of the Company and its Subsidiaries
has obtained all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its business
as now being or as proposed to be conducted, except to the extent failure to
have any such permit, license or authorization would not (either individually
or in the aggregate) have a Material Adverse Effect. Each of such permits,
licenses and authorizations is in full force and effect and each of the
Company and its Subsidiaries is in compliance with the terms and conditions
thereof, and is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder, except to the
extent failure to comply therewith would not (either individually or in the
aggregate) have a Material Adverse Effect.
In addition, except as to matters with respect to which the Company and
its Subsidiaries could not reasonably be expected to incur liabilities in
excess of $1,000,000 in the aggregate:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed,
no penalty has been assessed and no investigation or review is pending
or threatened by any governmental or other entity with respect to any
alleged failure by the Company or any of its Subsidiaries to have any
environmental, health or safety permit, license or other authorization
required under any Environmental Law in connection with the conduct of
the business of the Company or any of its Subsidiaries or with respect
to any generation, treatment, storage, recycling, transportation,
discharge or disposal, or any Release of any Hazardous
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Materials generated by the Company or any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries owns, operates
or leases a treatment, storage or disposal Facility requiring a permit
under the Resource Conservation and Recovery Act of 1976, as amended, or
under any comparable state or local statute; and
(i) no polychlorinated biphenyls (PCB's) is or has been
present at any site or Facility now or previously owned, operated
or leased by the Company or any of its Subsidiaries;
(ii) no asbestos or asbestos-containing materials is or has
been present at any site or Facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries;
(iii) there are no underground storage tanks, other than
those disclosed in consultant reports provided to the Agent by the
Company or its Subsidiaries, or surface impoundments for Hazardous
Materials, active or abandoned, at any site or Facility now or
previously owned, operated or leased by the Company or any of its
Subsidiaries;
(iv) no Hazardous Materials have been Released at, on or under
any site or Facility now or previously owned, operated or leased by
the Company or any of its Subsidiaries in a reportable quantity
established by statute, ordinance, rule, regulation or order; and
(v) no Hazardous Materials have been otherwise Released at,
on or under any site or Facility now or previously owned, operated
or leased by the Company or any of its Subsidiaries that would
(either individually or in the aggregate) have a Material Adverse
Effect.
(c) Neither the Company nor any of its Subsidiaries has
transported or arranged for the transportation of any Hazardous Material
to any location that is listed on the National Priorities List ("NPL")
under the Comprehensive
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Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), listed for possible inclusion on the NPL by the
Environmental Protection Agency in the Comprehensive Environmental
Response and Liability Information System, as provided for by 40 C.F.R.
Section 300.5 ("CERCLIS"), or on any similar state or local list or
that is the subject of Federal, state or local enforcement actions or
other investigations that may lead to Environmental Claims against the
Company or any of its Subsidiaries.
(d) No Hazardous Material generated by the Company or any of its
Subsidiaries has been recycled, treated, stored, disposed of or Released
by the Company or any of its Subsidiaries at any location other than
those listed in Schedule II hereto.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any of its
Subsidiaries and no site or Facility now or previously owned, operated
or leased by the Company or any of its Subsidiaries is listed or
proposed for listing on the NPL, CERCLIS or any similar state list of
sites requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental
Laws on any site or Facility owned, operated or leased by the Company or
any of its Subsidiaries, and no government action has been taken or is
in process that could subject any such site or Facility to such Liens
and neither the Company nor any of its Subsidiaries would be required to
place any notice or restriction relating to the presence of Hazardous
Materials at any site or Facility owned by it in any deed to the real
property on which such site or Facility is located.
(g) All environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or that are in the possession of
the Company or any of its Subsidiaries in relation to facts,
circumstances or conditions at or affecting any site or Facility now or
previously owned, operated or leased by the Company or any of its
Subsidiaries and that could result in a Material Adverse Effect have
been made available to the Lenders.
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7.14 CAPITALIZATION.
(a) As of the Effective Date, the authorized capital stock of the
Company consists of 101,000,000 shares, consisting of 100,000,000 shares
of common stock, par value $0.01 per share, and 1,000,000 shares of
preferred stock, par value $0.01 per share;
(b) As of July 15, 1997, the Company has 15,298,718 shares of
issued and outstanding common stock, and all of such issued shares are
duly and validly issued and outstanding and are not held in treasury;
(c) As of the Effective Date, the Company has no issued or
outstanding preferred stock;
(d) As of July 15, 1997, except for (i) options to purchase
369,838 shares of common stock granted under the Company's Exchange
Stock Option and Restricted Stock Plan, (ii) options to purchase up to
1,021,748 shares of common stock granted (1,020,708) or available
(1,040) for future grants under the Company's 1995 Stock Option and
Restricted Stock Plan, (iii) options to purchase up to 1,150,000 shares
of common stock granted (913,200) or available (236,800) for future
grants under the Company's 1997 Stock Option and Restricted Stock Plan,
and (iv) up to 250,000 shares of common stock available for future
purchase under the Company's 1997 Employee Stock Purchase Plan, there
are no outstanding Equity Rights with respect to the Company; and
(e) As of the Effective Date, there are no outstanding obligations
of the Company or any of its Subsidiaries to repurchase, redeem, or
otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or to make payments to any Person, such as "phantom
stock" payments, where the amount thereof is calculated with reference
to the fair market value or equity value of the Company or any of its
Subsidiaries, except for the right of the holders of certain warrants
for the purchase of stock of Franklin Plastics, Inc., a Delaware
corporation and a Subsidiary of the Company, to put such stock or
warrants to the issuer thereof or the Company.
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7.15 SUBSIDIARIES, ETC.
(a) Set forth in Part A of Schedule III hereto is a complete and
correct list, as of the date hereof, of all of the Subsidiaries of the
Company, together with, for each such Subsidiary, (i) the jurisdiction of
organization of such Subsidiary, (ii) each Person holding ownership interests
in such Subsidiary and (iii) the nature of the ownership interests held by
each such Person and the percentage of ownership of such Subsidiary
represented by such ownership interests. Except as disclosed in Part A of
Schedule III hereto, (x) each of the Company and its Subsidiaries owns, free
and clear of Liens (other than Liens created pursuant to the Security
Documents), and has the unencumbered right to vote, all outstanding ownership
interests in each Person shown to be held by it in Part A of Schedule III
hereto, (y) all of the issued and outstanding capital stock of each such
Person organized as a corporation is validly issued, fully paid and
nonassessable and (z) there are no outstanding Equity Rights with respect to
such Person.
(b) Set forth in Part B of Schedule III hereto is a complete and
correct list, as of the date of this Agreement, of all Investments (other
than Investments disclosed in Part A of said Schedule III hereto) held by the
Company or any of its Subsidiaries in any Person and, for each such
Investment, (x) the identity of the Person or Persons holding such Investment
and (y) the nature of such Investment. Except as disclosed in Part B of
Schedule III hereto, each of the Company and its Subsidiaries owns, free and
clear of all Liens (other than Liens created pursuant to the Security
Documents), all such Investments.
(c) None of the Subsidiaries of the Company is, on the Effective Date,
subject to any indenture, agreement, instrument or other arrangement of the
type described in Section 8.19(b) hereof.
7.16 TITLE TO ASSETS. The Company owns and has on the date hereof, and
will own and have on the Effective Date, good and marketable title (subject
only to Liens permitted by Section 8.06 hereof) to the Properties shown to be
owned in the most recent financial statements referred to in Section 7.02
hereof (other than Properties disposed of in the ordinary course of business
or otherwise permitted to be disposed of pursuant to Section 8.05 hereof).
The Company owns and has on the date hereof, and will own and have on the
Effective Date, good and
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marketable title to, and enjoys on the date hereof, and will enjoy on the
Effective Date, peaceful and undisturbed possession of, all Properties
(subject only to Liens permitted by Section 8.06 hereof) that are necessary
for the operation and conduct of its businesses.
7.17 TRUE AND COMPLETE DISCLOSURE. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of
the Obligors to the Agent or any Lender in connection with the negotiation,
preparation or delivery of this Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when
taken as a whole do not contain any untrue statement of material fact or omit
to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by the
Company and its Subsidiaries to the Agent and the Lenders in connection with
this Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable estimates, on
the date as of which such information is stated or certified. There is no
fact known to the Company that could have a Material Adverse Effect that has
not been disclosed herein, in the other Loan Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Lenders for use in connection with the transactions
contemplated hereby or thereby.
7.18 REAL PROPERTY. Set forth on Schedule IV attached hereto is a list,
as of the Effective Date, of all of the real property interests held by the
Company and its Subsidiaries, indicating in each case whether the respective
Property is owned or leased, the identity of the owner or lessee and the
location of the respective Property.
7.19 SOLVENCY. As of the Effective Date and after giving effect to the
initial extension of credit hereunder and the other transactions contemplated
hereby, (a) the aggregate value of all Properties of the Company and its
Subsidiaries at their present fair saleable value (i.e., the amount that may
be realized within a reasonable time, considered to be six months to one
year, either through collection or sale at the regular market value,
conceiving the latter as the amount that could be obtained
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for the Property in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under
ordinary selling conditions), exceeds the amount of all the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of the Company and its Subsidiaries, (b) the Company and its
Subsidiaries will not, on a consolidated basis, have unreasonably small
capital with which to conduct their business operations as heretofore
conducted and (c) the Company and its Subsidiaries will have, on a
consolidated basis, sufficient cash flow to enable them to pay their debts as
they mature.
Section 8. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Lenders and the Agent that, so long as any Commitment or Loan or
Letter of Credit Liability is outstanding and until payment in full of all
amounts payable by the Company hereunder:
8.01 FINANCIAL STATEMENTS, ETC. The Company shall deliver, or shall
cause to be delivered, to each of the Lenders:
(a) as soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of the Company,
consolidated statements of income, retained earnings and cash flow of
the Company and its Subsidiaries for such period and for the period from
the beginning of the respective fiscal year to the end of such period,
and the related consolidated balance sheet of the Company and its
Subsidiaries as at the end of such period, setting forth in each case in
comparative form the corresponding consolidated figures for the
corresponding periods in the preceding fiscal year, accompanied by a
certificate of a Responsible Financial Officer of the Company, which
certificate shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of the Company and its Subsidiaries, in accordance with
generally accepted accounting principles, consistently applied, as at
the end of, and for, such period (subject to normal year-end audit
adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, consolidated statements of
income, retained earnings and cash flow of the Company and its
Subsidiaries for such
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fiscal year and the related consolidated balance sheet of the Company
and its Subsidiaries as at the end of such fiscal year, setting forth in
each case in comparative form the corresponding consolidated figures for
the preceding fiscal year, and accompanied by an opinion thereon of
independent certified public accountants of recognized national
standing, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial condition and
results of operations of the Company and its Subsidiaries as at the end
of, and for, such fiscal year in accordance with generally accepted
accounting principles, and a certificate of such accountants stating
that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, that the
Company shall have filed with the Commission or any national securities
exchange;
(d) promptly upon mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(e) as soon as possible, and in any event within ten days after
the Company knows or has reason to believe that any of the events or
conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by a Responsible
Financial Officer of the Company setting forth details respecting such
event or condition and the action, if any, that the Company or its ERISA
Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by the
Company or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a
Plan, as to which PBGC has not by regulation waived the requirement
of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (PROVIDED that a failure to meet the
minimum funding standard of Section 412 of the Code or Section 302
of ERISA,
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including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with Section
412(d) of the Code); and any request for a waiver under Section 412(d)
of the Code for any Plan;
(ii) the distribution under Section 4041 of ERISA of a notice
of intent to terminate any Plan or any action taken by the Company
or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by the Company or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 30 days; and
(vi) the adoption of an Amendment to any Plan that, pursuant
to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Company or an ERISA Affiliate fails to timely
provide security to the Plan in accordance with the provisions of
said Sections;
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(f) promptly after the Company knows or has reason to believe that
any Default has occurred, a notice of such Default describing the same
in reasonable detail and, together with such notice or as soon
thereafter as possible, a description of the action that the Company has
taken or proposes to take with respect thereto;
(g) promptly upon receipt thereof, copies of all management
letters and other material reports which are submitted to the Board of
Directors of the Company or any of its Subsidiaries by their independent
certified public accountants in connection with any annual audit of the
Company and/or any such Subsidiary by such accountants;
(h) as soon as available and in any event on or before December 31
of each fiscal year, a budget for the next following fiscal year setting
forth for each Subsidiary of the Company and for the Company and its
Subsidiaries as a whole, anticipated income, expense and capital
expenditure items for each quarter during such fiscal year, together
with pro forma unaudited balance sheets of the Company and its
Subsidiaries and the related pro forma statements of retained earnings,
and quarterly, concurrently with the delivery of the financial
statements for such fiscal year pursuant to clause (a) above, a report
setting forth a detailed comparison of actual performance to the budget
referred to above; and
(i) from time to time such other information regarding the
financial condition, operations, business or prospects of the Company or
any of its Subsidiaries (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Lender or the Agent may reasonably request.
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to clause (a) above, a certificate of a
Responsible Financial Officer of the Company (i) to the effect that no
Default has occurred and is continuing (or, if any Default has occurred and
is continuing, describing the same in reasonable detail and describing the
action that the Company has taken or proposes to take with respect thereto)
and (ii) setting forth in reasonable detail the computations necessary to
determine whether the Company is in compliance with
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Sections 8.10, 8.11, 8.12 and 8.13 hereof as of the end of the respective
quarterly fiscal period or fiscal year.
8.02 LITIGATION. The Company will promptly give to each Lender notice
of all legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting the Company or any
of its Subsidiaries, except proceedings that, if adversely determined, would
not (either individually or in the aggregate) have a Material Adverse Effect.
Without limiting the generality of the foregoing, the Company will give to
each Lender notice of the assertion of any Environmental Claim by any Person
against, or with respect to the activities of, the Company or any of its
Subsidiaries and notice of any alleged violation of or non-compliance with
any Environmental Laws or any permits, licenses or authorizations, other than
any Environmental Claim or alleged violation that, if adversely determined,
would not (either individually or in the aggregate) have a Material Adverse
Effect.
8.03 EXISTENCE, ETC. The Company will, and will cause each of its
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (PROVIDED that
nothing in this Section 8.03 shall prohibit any transaction expressly
permitted under Section 8.05 hereof);
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements could (either individually or
in the aggregate) have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained;
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(d) maintain all of its Properties used or useful in its business
in good working order and condition, ordinary wear and tear excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Lender or the Agent, during
normal business hours, to examine, copy and make extracts from its books
and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably
requested by such Lender or the Agent (as the case may be).
8.04 INSURANCE. The Company will, and will cause each of its
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in
the amounts customarily maintained by such corporations. The Company will in
any event maintain (with respect to itself and each of its Subsidiaries):
(1) Casualty Insurance - insurance against loss or damage covering
all of the tangible real and personal Property and improvements of the
Company and each of its Subsidiaries by reason of any Peril (as defined
below) in such amounts (subject to such deductibles as shall be
satisfactory to the Majority Lenders) as shall be reasonable and
customary and sufficient to avoid the insured named therein from
becoming a co-insurer of any loss under such policy but in any event in
an amount (i) in the case of fixed assets and equipment (including,
without limitation, vehicles), at least equal to 100% of the actual
replacement cost of such assets (including, without limitation,
foundation, footings and excavation costs), subject to deductibles as
aforesaid (PROVIDED that recovery limits may be applicable to losses
caused by flood or earthquake) and (ii) in the case of inventory, not
less than the fair market value thereof, subject to deductibles as
aforesaid.
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(2) Automobile Liability Insurance for Bodily Injury and Property
Damage - insurance against liability for bodily injury and property
damage in respect of all vehicles (whether owned, hired or rented by the
Company or any of its Subsidiaries) at any time located at, or used in
connection with, its Properties or operations in such amounts as are
then customary for vehicles used in connection with similar Properties
and businesses, but in any event to the extent required by applicable
law.
(3) Comprehensive General Liability Insurance - insurance against
claims for bodily injury, death or Property damage occurring on, in or
about the Properties (and adjoining streets, sidewalks and waterways) of
the Company and its Subsidiaries, in such amounts as are then customary
for Property similar in use in the jurisdictions where such Properties
are located.
(4) Workers' Compensation Insurance -- workers' compensation
insurance (including, without limitation, Employers' Liability
Insurance) to the extent required by applicable law.
(5) Product Liability Insurance -- insurance against claims for
bodily injury, death or Property damage resulting from the use of
products sold by the Company or any of its Subsidiaries in such amounts
as are then customarily maintained by responsible persons engaged in
businesses similar to that of the Company and its Subsidiaries.
(6) Business Interruption Insurance -- insurance against loss of
operating income (up to an aggregate amount equal to $15,000,000 and
subject to a deductible, or self-insured amount, not in excess of
$500,000) by reason of any Peril.
(7) Other Insurance -- such other insurance, including, without
limitation, War-Risk Insurance when and to the extent obtainable from
the United States Government, in each case as generally carried by
owners of similar Properties in the jurisdictions where such Properties
are located, in such amounts and against such risks as are then
customary for Property similar in use.
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Such insurance shall be written by financially responsible companies selected by
the Company and having an A. M. Best rating of "A-" or better and being in a
financial size category of VIII or larger, or by other companies acceptable to
the Majority Lenders, and (other than workers' compensation) shall name the
Agent as loss payee (to the extent covering risk of loss or damage to tangible
property) and as an additional named insured as its interests may appear (to the
extent covering any other risk). Each policy referred to in this Section 8.04
shall provide that it will not be canceled or reduced, or allowed to lapse
without renewal, except after not less than 30 days' notice to the Agent and
shall also provide that the interests of the Agent and the Lenders shall not be
invalidated by any act or negligence of the Company or any Person having an
interest in any Property covered by the Mortgages nor by occupancy or use of any
such Property for purposes more hazardous than permitted by such policy nor by
any foreclosure or other proceedings relating to such Property. The Company
will advise the Agent promptly of any policy cancellation, reduction or
amendment.
On or before the Effective Date, the Company will deliver to the
Agent certificates of insurance satisfactory to the Agent evidencing the
existence of all insurance required to be maintained by the Company hereunder
setting forth the respective coverages, limits of liability, carrier, policy
number and period of coverage (and attaching original copies of any policies
with respect to casualty insurance). Thereafter, each year the Company will
deliver to the Agent certificates of insurance evidencing that all insurance
required to be maintained by the Company hereunder will be in effect through
the calendar year following the date of such certificates, subject only to
the payment of premiums as they become due. In addition, the Company will
not modify any of the provisions of any policy with respect to casualty
insurance without delivering the original copy of the endorsement reflecting
such modification to the Agent accompanied by (if requested by the Agent) a
written report of a firm of independent insurance brokers of nationally
recognized standing, stating that, in their opinion, such policy (as so
modified) adequately protects the interests of the Lenders and the Agent, is
in compliance with the provisions of this Section 8.04, and is comparable in
all respects with insurance carried by responsible owners and operators of
Properties similar to those covered by the Mortgages. The Company will not
obtain or carry separate insurance concurrent in form or contributing in the
event of loss with that required by this Section 8.04 unless
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the Agent is the named insured thereunder, with loss payable as provided
herein. The Company will immediately notify the Agent whenever any such
separate insurance is obtained and shall deliver to the Agent the
certificates evidencing the same.
Without limiting the obligations of the Company under the foregoing
provisions of this Section 8.04, in the event the Company shall fail to
maintain in full force and effect insurance as required by the foregoing
provisions of this Section 8.04, then the Agent may, but shall have no
obligation so to do, procure insurance covering the interests of the Lenders
and the Agent in such amounts and against such risks as the Agent (or the
Majority Lenders) shall deem appropriate, and the Company shall reimburse the
Agent in respect of any premiums paid by the Agent in respect thereof.
For purposes hereof, the term "PERIL" shall mean, collectively,
fire, lightning, flood, windstorm, hail, earthquake, explosion, riot and
civil commotion, vandalism and malicious mischief, damage from aircraft,
vehicles and smoke and all other perils covered by the "all-risk" endorsement
then in use in the jurisdictions where the Properties of the Company and its
Subsidiaries are located.
8.05 PROHIBITION OF FUNDAMENTAL CHANGES. (a) The Company will
not, nor will it permit any of its Subsidiaries to, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution).
(b) The Company will not, nor will it permit any of its
Subsidiaries to, acquire any business or Property from, or capital stock of,
or be a party to any acquisition of, any Person except:
(i) for purchases of inventory and other Property to be sold or used
in the ordinary course of business;
(ii) Investments permitted under Section 8.08 hereof;
(iii) [Intentionally left blank]
(iv) Permitted Acquisitions and the acquisition of any capital stock,
business or Property of any Person with the proceeds of Facility A Loans
PROVIDED that unless otherwise
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consented to by the Majority Lenders (w) no more than $5,000,000 of the
proceeds of Facility A Loans may be used, directly or indirectly, to
finance any single acquisition and no more than $25,000,000 in the
aggregate of the proceeds of Facility A Loans at any one time outstanding
may be used, directly or indirectly, to finance acquisitions, (x) the Net
Purchase Price of any such acquisition financed with the proceeds of
Facility A Loans shall not exceed $5,000,000 in a single transaction (or
series of related transactions), (y) at the time of such acquisition no
Default shall have occurred and be continuing and (z) any future earn-out
payments in connection with any such acquisition shall be counted at the
time such earn-out payment is made in determining whether the dollar
limitations contained in this clause (iv) have been exceeded.
(c) The Company will not, nor will it permit any of its
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in
one transaction or a series of transactions, any part of its business or
Property, whether now owned or hereafter acquired (including, without
limitation, receivables and leasehold interests), but excluding:
(i) any Excluded Disposition;
(ii) obsolete or worn-out Property, tools or equipment no longer used
or useful in its business (other than any Excluded Disposition) or real
Property no longer used or useful in its business so long as the aggregate
amount thereof sold in any single fiscal year by the Company and its
Subsidiaries shall not have a fair market value in excess of $1,000,000;
(iii) any inventory or other Property sold or disposed of in the
ordinary course of business and on ordinary business terms; and
(iv) other Property so long as the aggregate amount thereof sold or
otherwise disposed of in any single fiscal year by the Company and its
Subsidiaries shall not have a fair market value in excess of $10,000,000.
(d) Notwithstanding the foregoing provisions of this Section 8.05,
so long as no Default shall have occurred and be
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continuing, and after giving effect to any of the succeeding transactions, no
Default would exist hereunder and so long as the Liens created under the
Security Documents continue to be in effect:
(i) any Subsidiary of the Company may be merged or consolidated with
or into: (x) the Company if the Company shall be the continuing or
surviving corporation or (y) any other such Subsidiary; and
(ii) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary liquidation
or otherwise) to the Company or a Subsidiary of the Company.
8.06 LIMITATION ON LIENS. The Company will not, nor will it permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the date hereof and listed in Part B of
Schedule I hereto;
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet delinquent or that are being contested in
good faith and by appropriate proceedings if, unless the amount thereof is
not material with respect to it or its financial condition, adequate
reserves with respect thereto are maintained on the books of the Company or
the affected Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's, landlord's,
repairmen's or other like Liens arising in the ordinary course of business
that are not overdue for a period of more than 30 days or that are being
contested in good faith and by appropriate proceedings;
(e) Liens securing judgments but only to the extent for an amount and
for a period not resulting in an Event of Default under Section 9(i)
hereof;
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(f) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(g) deposits or pledges to secure the performance of bids, trade
contracts (other than for Indebtedness), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property or minor imperfections in title thereto that, in the
aggregate, are not material in amount, and that do not in any case
materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(i) Liens upon tangible personal Property acquired after the date
hereof (by purchase, construction or otherwise), or upon other property
acquired after the date hereof as a Capital Expenditure, by the Company or
any of its Subsidiaries, each of which Liens either (A) existed on such
Property before the time of its acquisition and was not created in
anticipation thereof or (B) was created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost of such Property; PROVIDED that (i) no such Lien shall extend to or
cover any Property of the Company or such Subsidiary other than the
Property so acquired, (ii) the principal amount of Indebtedness secured by
any such Lien shall at no time exceed the fair market value (as determined
in good faith by a Responsible Financial Officer of the Company) of such
Property at the time it was acquired, and (iii) the principal amount of all
Indebtedness (other than Indebtedness permitted by Section 8.07(d) hereof)
secured by such Liens shall not exceed $1,000,000 in the aggregate;
(j) Liens upon real Property heretofore leased or leased after the
date hereof (under operating or capital leases) in the ordinary course of
business by the Company or any of its Subsidiaries in favor of the lessor
created at the inception of the lease transaction, securing obligations
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of the Company or any of its Subsidiaries under or in respect of such lease
and extending to or covering only the Property subject to such lease and
improvements thereon;
(k) Liens of sellers or creditors of sellers of farm products
encumbering such farm products when sold to any of the Obligors pursuant to
the Food Security Act of 1985 or pursuant to similar state laws to the
extent such Liens may be deemed to extend to the assets of such Obligors;
(l) protective Uniform Commercial Code filings with respect to
personal Property leased by any Obligor; and
(m) any extension, renewal or replacement of the foregoing, PROVIDED,
however, that the Liens permitted hereunder shall not be spread to cover
any additional Indebtedness or Property.
8.07 INDEBTEDNESS. The Company will not, nor will it permit any of
its Subsidiaries to, create, incur or suffer to exist any Indebtedness except:
(a) Indebtedness to the Lenders hereunder, under the other Loan
Documents and under the Second Restated Supplemental Credit Agreement;
(b) Indebtedness outstanding on the date hereof and listed in Part A
of Schedule I hereto;
(c) Indebtedness of Subsidiaries of the Company to the Company or to
other Subsidiaries of the Company or of the Company to any of its
Subsidiaries to the extent permitted under Section 8.08(e) or (g) hereof;
(d) Indebtedness (including Capital Lease Obligations) incurred to
finance the purchase of equipment, and other Capital Lease Obligations, not
to exceed $20,000,000 in the aggregate outstanding at any time;
(e) Indebtedness in respect of an irrevocable letter of credit issued
by a financial institution located in the State of Nevada in favor of the
State of Nevada Department of Insurance for account of the Company or any
of its Subsidiaries, and any extensions or renewals thereof, in an
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aggregate amount not exceeding $5,000,000 at any one time outstanding;
(f) Indebtedness in respect of certain irrevocable letters of credit
outstanding on the date hereof issued by Fleet National Bank or Bank
Boston, N.A. and described in Part C of Schedule I hereto; and
(g) additional Indebtedness of the Company and its Subsidiaries up to
but not exceeding $5,000,000 at any one time outstanding.
8.08 INVESTMENTS. The Company will not, nor will it permit any of its
Subsidiaries to, make or permit to remain outstanding any Investments except:
(a) Investments outstanding as of the Effective Date and identified
in Part B of Schedule III hereto (including, without limitation,
Indebtedness of any Subsidiary of the Company to the Company or any other
Subsidiary of the Company);
(b) operating deposit accounts with depository institutions;
(c) Permitted Investments;
(d) Interest Rate Protection Agreements entered into pursuant to
Section 8.15 hereof;
(e) (i) Investments permitted under Section 8.05(b) hereof and
(ii) indemnities executed in connection with the sale of Investment Tax
Credits;
(f) Investments by the Company in the capital stock of its
Subsidiaries to the extent outstanding as of the Effective Date;
(g) Investments (other than of a type specified in clause (f) above
and other than the Investments permitted under clause (a) above and
Investments in Subsidiaries made in connection with Investments pursuant to
clause (e)(i) above) by the Company in its Subsidiaries or by any
Subsidiary of the Company in the Company or any other Subsidiary of the
Company;
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(h) loans and advances to employees;
(i) deposits to secure bids, tenders, utilities, vendors, leases,
statutory obligations, surety and appeal bonds and other deposits of like
nature arising in the ordinary course of business not exceeding $2,000,000
in the aggregate;
(j) additional Investments up to but not exceeding $2,000,000 in the
aggregate; and
(k) any guarantees permitted under Section 8.07 hereof.
8.09 RESTRICTED PAYMENTS.
(a) DIVIDEND PAYMENTS. The Company will not, nor will it permit
any of its Subsidiaries to, declare or make any Dividend Payment at any time,
PROVIDED that the Company may redeem or retire shares of its common stock
from any of its officers in connection with his or her voluntary departure,
dismissal, retirement or death, PROVIDED that (i) at the time of such
redemption or retirement no Default shall have occurred and be continuing and
(ii) the aggregate amount of all cash paid in respect of all such shares so
redeemed or repurchased does not exceed $2,000,000 in any fiscal year.
Nothing herein shall be deemed to prohibit the payment of dividends by any
Subsidiary of the Company to the Company or any other Subsidiary of the
Company.
(b) MANAGEMENT FEES. The Company will not, nor will it permit any
of its Subsidiaries to, accrue or pay any Management Fees to any Person
(including, without limitation, any Affiliates), other than the Company or
any of its Subsidiaries.
8.10 LEVERAGE RATIO. The Company will not permit the Leverage Ratio
to exceed the following ratios for the following respective periods:
8.11 MINIMUM NET WORTH. The Company will not permit its Net Worth at
any time to be less than $140,000,000 plus 50% of net income for all preceding
fiscal quarters (without including the results of any fiscal quarter in respect
of which there was a net loss) commencing with the fiscal quarter
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beginning July 1, 1997. The amount of Net Worth set forth above shall be
increased by 75% of the amount by which the "total stockholders equity" of
the Company is increased as a result of any public or private offering of
common stock of the Company after July 1, 1997. Promptly upon consummation
of each such public or private offering, the Company shall notify the Agent
in writing of the amount of such increase in total stockholders equity.
8.12 FIXED CHARGES RATIO. The Company will not permit the Fixed
Charges Ratio to be less than 1.10 to 1 at any time.
8.13 INTEREST COVERAGE RATIO. The Company will not permit the
Interest Coverage Ratio to be less than 3.0 to 1 at any time.
8.14 [Intentionally left blank]
8.15 INTEREST RATE PROTECTION AGREEMENTS. The Company agrees to
provide to the Agent on or before January 31, 1998 evidence that it has in
full force and effect Interest Rate Protection Agreements in form and
substance satisfactory to the Agent that enable the Company to protect
against floating interest rates as to a notional principal amount at least
equal to 50% of the maximum aggregate principal amount of the Facility B
Loans and the Facility D Loans outstanding from time to time during the
period from January 31, 1998 to and including the date three years after the
Effective Date.
8.16 LINES OF BUSINESS. Neither the Company nor any of its
Subsidiaries will engage to any substantial extent in any line or lines of
business activity other than operations involved in the manufacture,
processing or distribution of ice, ice-related products, coffee, dairy
products or bottled water which is similar to the water products that are
currently processed, bottled and distributed from the dairy facilities of the
Company and/or its Subsidiaries, or from and after the Bernon Acquisition,
the manufacture of blow molded plastic bottles, or the lines of business
conducted by the Company or any of its Subsidiaries as of the Effective Date.
8.17 TRANSACTIONS WITH AFFILIATES. Except as expressly permitted
by this Agreement, the Company will not, nor will it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell,
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lease, assign or otherwise dispose of any Property to an Affiliate; (c) merge
into or consolidate with or purchase or acquire Property from an Affiliate;
or (d) enter into any other transaction directly or indirectly with or for
the benefit of an Affiliate (including, without limitation, Guarantees and
assumptions of obligations of an Affiliate); PROVIDED that (i) any Affiliate
who is an individual may serve as a director, officer or employee of the
Company or any of its Subsidiaries and receive reasonable compensation for
his or her services in such capacity and (ii) the Company and its
Subsidiaries may enter into transactions (other than extensions of credit by
the Company or any of its Subsidiaries to an Affiliate) if the monetary or
business consideration arising therefrom would be substantially as
advantageous to the Company and its Subsidiaries as the monetary or business
consideration that would obtain in a comparable transaction with a Person not
an Affiliate.
8.18 USE OF PROCEEDS. The Company will use the proceeds of the
Facility A Loans and the Facility B Loans to be made at any time hereunder
solely for working capital or other general corporate purposes (including,
without limitation, to finance acquisitions permitted under Section 8.05(b)(iv)
hereof). The Company will use the proceeds of all Loans hereunder in
compliance with all applicable legal and regulatory requirements. Neither the
Agent nor any Lender shall have any responsibility as to the use of any of
such proceeds.
8.19 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES; ADDITIONAL MORTGAGED
PROPERTIES.
(a) The Company will, and will cause each of its Subsidiaries to,
take such action from time to time as shall be necessary to ensure that each
of its Subsidiaries is a Wholly Owned Subsidiary unless otherwise permitted
or agreed in connection with a Permitted Acquisition. In the event that any
additional shares of stock shall be issued by any Subsidiary, the respective
Obligor agrees forthwith to deliver to the Agent pursuant to the relevant
Security Document the certificates evidencing such shares of stock,
accompanied by undated stock powers executed in blank and to take such other
action as the Agent shall request to perfect the security interest created
therein pursuant to such Security Document.
(b) The Company will not permit any of its Subsidiaries to enter
into, after the date of this Agreement, any
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indenture, agreement, instrument or other arrangement (other than the Garrido
Negative Pledge Agreement) that, directly or indirectly, prohibits or
restrains, or has the effect of prohibiting or restraining, or imposes
materially adverse conditions upon, the incurrence or payment of
Indebtedness, the granting of Liens, the declaration or payment of dividends,
the making of loans, advances or Investments or the sale, assignment,
transfer or other disposition of Property.
(c) The Company will take such action, and will cause each of its
Subsidiaries (other than Garrido) to take such action, from time to time as
shall be necessary to ensure that all Subsidiaries of the Company (other than
Garrido) are party to, as obligors, the Existing Subsidiary Guarantee and
Security Agreement or a Supplemental Subsidiary Guarantee and Security
Agreement. Without limiting the generality of the foregoing, in the event that
the Company or any of its Subsidiaries shall form or acquire any new Subsidiary,
the Company or the respective Subsidiary will cause such new Subsidiary to
(i) become a party to the Existing Subsidiary Guarantee and Security Agreement
or a Supplemental Subsidiary Guarantee and Security Agreement pursuant to a
written instrument in form and substance satisfactory to the Agent, (ii) if
requested by the Majority Lenders, cause such new Subsidiary to execute and
deliver one or more Mortgages, in substantially the form of Exhibits B or C
hereto or Exhibits C or D of the Second Restated Supplemental Credit Agreement
(with such changes thereto as the Agent may reasonably request), covering the
real Property and/or fixtures of such Subsidiary, and (iii) to deliver such
proof of corporate action, incumbency of officers, opinions of counsel and other
documents relating to the foregoing as is consistent with those delivered by
each Obligor pursuant to Section 6.02 of the Second Restated Supplemental Credit
Agreement, or as any Lender or the Agent shall have reasonably requested.
(d) Without affecting the obligations of the Company under any
provision prohibiting such action hereunder, in the event that the Company or
any of its Subsidiaries (other than Garrido) shall acquire any business or
Property after the Effective Date, the Company shall, or shall cause such
Subsidiary to (i) if requested by the Majority Lenders, execute and deliver one
or more Mortgages, substantially in the form of Exhibits B or C hereto or
Exhibit C or D of the Second Restated Supplemental Credit Agreement (with such
changes as the Agent may reasonably request), covering the real property and/or
fixtures so acquired,
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(ii) execute and deliver to the Agent for filing, appropriately completed
Uniform Commercial Code financing statements or other filings or instruments
as the Agent shall request in order to perfect the security interest in favor
of the Agent for the benefit of the Lenders in such Property so acquired and
(iii) deliver such proof of corporate action, incumbency of officers,
opinions of counsel and other documents relating to the foregoing as is
consistent with those delivered by each Obligor pursuant to Section 6.02 of
the Second Restated Supplemental Credit Agreement, or as any Lender or the
Agent shall have reasonably requested.
8.20 MODIFICATIONS OF CERTAIN DOCUMENTS. Except in connection with
any transaction expressly permitted hereunder, the Company will not, nor will it
permit any of its Subsidiaries to, consent to any modification, supplement or
waiver of any of the provisions of any agreement, instrument or other document
evidencing or relating to the charter or by-laws of the Company or any of its
Subsidiaries, in each case, without the prior consent of the Agent (with the
approval of the Majority Lenders). Without limiting the requirement for consent
as provided in the immediately preceding sentence, the Company will furnish to
the Agent a copy of each such modification, supplement or waiver promptly upon
the effectiveness thereof (and the Agent will promptly furnish a copy thereof to
each Lender).
8.21 FURTHER ASSURANCES. As and to the extent requested from time to
time by the Agent or the Majority Lenders, each Obligor operating in the
Commonwealth will grant to the Agent, for the benefit of the Lenders, a Lien in
respect of any Property acquired by such Obligor operating in the Commonwealth
after the Effective Date and not otherwise covered by the Puerto Rico Security
Documents (collectively, the "ADDITIONAL PUERTO RICO SECURITY DOCUMENTS"). Such
Lien shall be granted pursuant to documentation reasonably satisfactory in form
and substance to the Agent and shall constitute valid and enforceable perfected
liens superior to and prior to the rights of all other Persons and subject to no
other Liens except for the Liens permitted pursuant to Section 8.06 hereof. The
Additional Puerto Rico Security Documents or other instruments related thereto
shall be duly recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect the Liens in favor
of the Agent for the benefit of the Lenders required to be granted pursuant to
the Additional Puerto Rico
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Security Documents and all taxes, fees and other charges payable in connection
therewith shall be paid in full.
8.22 PUERTO RICO SECURITY DOCUMENTS. The Company shall, within 15
days of the Effective Date, (i) execute such amendments to the Puerto Rico
Security Documents as reasonably requested by the Agent, (ii) duly file such
amendments with the appropriate filing offices in Puerto Rico and (iii) pay all
filing fees in connection therewith.
Section 9. EVENTS OF DEFAULT. If one or more of the following
events (herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) The Company shall: (i) default in the payment of any principal
of any Loan when due (whether at stated maturity or at mandatory
prepayment); or (ii) default in the payment of any interest on any Loan or
Reimbursement Obligation, any fee or any other amount payable by it
hereunder or under any other Loan Document or under the Second Restated
Supplemental Credit Agreement when due and such default shall have
continued unremedied for three or more Business Days; or
(b) The Company or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any of its other
Indebtedness aggregating $500,000 or more, or in the payment when due of
any amount under any Interest Rate Protection Agreement; or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness or any event specified in any Interest
Rate Protection Agreement shall occur if the effect of such event is to
cause, or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase, offer to
purchase or otherwise), prior to its stated maturity or to have the
interest rate thereon reset to a level so that securities evidencing such
Indebtedness trade at a level specified in relation to the par value
thereof or, in the case of an Interest Rate Protection Agreement, to permit
the payments owing under such Interest Rate Protection Agreement to be
liquidated or any Event of Default (as defined in the
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Second Restated Supplemental Credit Agreement) shall occur and be
continuing; or
(c) Any representation, warranty or certification made or deemed made
herein or in any other Loan Document (or in any modification or supplement
hereto or thereto) by any Obligor, or any certificate furnished to any
Lender or the Agent pursuant to the provisions hereof or thereof, shall
prove to have been false or misleading as of the time made or furnished in
any material respect; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 8.01(f), 8.05, 8.06, 8.07, 8.08, 8.09,
8.10, 8.11, 8.12, 8.13, 8.15, 8.16, 8.17, 8.19, 8.21 or 8.22 hereof; or the
Company shall default in the performance of any of its other obligations in
this Agreement and such default shall continue unremedied for a period of
30 or more days after notice thereof to the Company by the Agent or any
Lender (through the Agent); or
(e) The Company shall default in the performance of any of its
obligations under Section 4.02 of the Security Agreement; any Obligor party
to the Existing Subsidiary Guarantee and Security Agreement or any
Supplemental Subsidiary Guarantee and Security Agreement shall default in
the performance of any of its obligations under Section 2 or 5.02 thereof;
or any Obligor shall default in the performance of any of its other
obligations in any Loan Document (other than this Agreement) to which it is
party and such default shall continue unremedied for a period of 30 or more
days after notice thereof to the Company by the Agent or any Lender
(through the Agent); or
(f) The Company or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become
due; or
(g) The Company or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator 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
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy,
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insolvency, reorganization, liquidation, dissolution, arrangement or
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
(or such similar laws) or (vi) take any corporate action for the purpose
of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced, without the application
or consent of the Company or the relevant Subsidiary affected thereby, 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 Company or such
Subsidiary, as the case may be, or of all or any substantial part of its
Property, or (iii) similar relief in respect of such Company or such
Subsidiary, as the case may be, 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 60 or more
days; or an order for relief against the Company or any of its Subsidiaries
shall be entered in an involuntary case under the Bankruptcy Code; or
(i) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate (exclusive of judgment amounts fully bonded
or covered by insurance where the surety or the insurer, as the case may
be, has admitted liability in respect of such judgment) shall be rendered
by one or more courts, administrative tribunals or other bodies having
jurisdiction against the Company or any of its Subsidiaries 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 30
days from the date of entry thereof and the Company or any such Subsidiary,
as the case may be, shall not, within said period of 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; or
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(j) An event or condition specified in Section 8.01(e) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or shall be
reasonably likely to incur a liability to a Plan, a Multiemployer Plan or
PBGC (or any combination of the foregoing) that, in the determination of
the Majority Lenders, would (either individually or in the aggregate) have
a Material Adverse Effect; or
(k) A reasonable basis shall exist for the assertion against the
Company or any of its Subsidiaries, or any predecessor in interest of the
Company or any of its Subsidiaries, of (or there shall have been asserted
against the Company or any of its Subsidiaries) an Environmental Claim
that, in the judgment of the Majority Lenders, is reasonably likely to be
determined adversely to the Company or any of its Subsidiaries, and the
amount thereof (either individually or in the aggregate) is reasonably
likely to have a Material Adverse Effect (insofar as such amount is payable
by the Company or any of its Subsidiaries but after deducting any portion
thereof that is reasonably expected to be paid by other creditworthy
Persons jointly and severally liable therefor); or
(l) Any of the Subsidiaries of the Company shall cease to be a Wholly
Owned Subsidiary of the Company; or during any period of 25 consecutive
calendar months, a majority of the Board of Directors of the Company shall
no longer be composed of individuals (i) who were members of said Board on
the first day of such period or (ii) whose election or nomination to said
Board was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority
of said Board; or any Person or group of Persons acting in concert, other
than Mr. Gregg L. Engles or any other shareholder of the Company as of the
Effective Date, shall at any time own or control, directly or indirectly,
20% or more of the Company's voting capital stock; or
(m) The Liens created by the Security Documents shall at any time not
constitute a valid and perfected Lien on any material portion of the
collateral intended to be covered thereby (to the extent perfection by
filing, registration,
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recordation or possession is required herein or therein) in favor of the
Agent, free and clear of all other Liens (other than Liens permitted under
Section 8.06 hereof or under the respective Security Documents), or, except
for expiration in accordance with its terms, any of the Security Documents
shall for whatever reason be terminated or cease to be in full force and
effect, or the enforceability thereof shall be contested by any Obligor.
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (g) or (h) of this Section 9 with respect to any Obligor, the Agent may
(and, if requested by the Majority Lenders shall), by notice to the Company,
terminate the Commitments and/or declare the principal amount then outstanding
of, and the accrued interest on, the Loans, the Reimbursement Obligations and
all other amounts payable by the Obligors hereunder, under the other Loan
Documents and under the Notes (including, without limitation, any amounts
payable under Section 5.05 or 5.08 hereof) to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by each Obligor; and (2) in the case of the occurrence of an
Event of Default referred to in clause (g) or (h) of this Section 9 with respect
to any Obligor, the Commitments shall automatically be terminated and the
principal amount then outstanding of, and the accrued interest on, the Loans,
the Reimbursement Obligations and all other amounts payable by the Company
hereunder and under the Notes (including, without limitation, any amounts
payable under Section 5.05 or 5.08 hereof) shall automatically become
immediately due and payable without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by each
Obligor.
In addition, upon the occurrence and during the continuance of any
Event of Default (if the Agent has declared the principal amount then
outstanding of, and accrued interest on, the Loans, the Reimbursement
Obligations and all other amounts payable by the Company hereunder and under the
Notes to be due and payable), the Company agrees that it shall, if requested by
the Agent or the Majority Lenders through the Agent (and, in the case of any
Event of Default referred to in clause (g) or (h) of this Section 9 with respect
to the Company, forthwith, without any demand or the taking of any other action
by the Agent or such Lenders) provide cover for the Letter of
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Credit Liabilities by paying to the Agent immediately available funds in an
amount equal to the then aggregate undrawn face amount of all Letters of
Credit, which funds shall be held by the Agent in the Collateral Account as
collateral security in the first instance for the Letter of Credit Liabilities
and be subject to withdrawal only as therein provided.
Section 10. THE AGENT.
10.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent 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 this Agreement and of the other Loan Documents,
together with such other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 10.05 and the first sentence
of Section 10.06 hereof shall include reference to its affiliates and its own
and its affiliates' officers, directors, employees and agents): (a) shall have
no duties or responsibilities except those expressly set forth in this Agreement
and in the other Loan Documents, and shall not by reason of this Agreement or
any other Loan Document be a trustee for any Lender; (b) shall not be
responsible to the Lenders for any recitals, statements, representations or
warranties contained in this Agreement or in any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any other Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Note or any other Loan Document or any other document referred to
or provided for herein or therein or for any failure by the Company or any other
Person to perform any of its obligations hereunder or thereunder; (c) shall not
be required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document; and (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under any other Loan
Document or under any other document or instrument referred to or provided for
herein or therein or in connection herewith or therewith, except for its own
gross negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it in good faith. The Agent
may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a notice
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of the assignment or transfer thereof shall have been filed with the Agent.
10.02 RELIANCE BY AGENT. The Agent shall be entitled to rely upon
any certification, notice or other communication (including, without limitation,
any thereof by telephone, telecopy, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement or any other Loan Document,
the Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or thereunder in accordance with instructions given by the
Majority Lenders or, if provided herein, in accordance with the instructions
given by all of the Lenders as is required in such circumstance, and such
instructions of such Lenders and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders.
10.03 DEFAULTS. The Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default unless the Agent has received notice
from a Lender or any Obligor 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 Lenders. The Agent shall (subject to Section 10.07 hereof) take
such action with respect to such Default as shall be directed by the Majority
Lenders, PROVIDED that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem
advisable in the best interest of the Lenders except to the extent that this
Agreement expressly requires that such action be taken, or not be taken, only
with the consent or upon the authorization of the Majority Lenders, or all of
the Lenders.
10.04 RIGHTS AS A LENDER. With respect to its Commitments and the
Loans made by it, First Union (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual
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capacity. First Union (and any successor acting as Agent) and its affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, make investments in and generally engage in any kind of
banking, trust or other business with the Obligors (and any of their
Subsidiaries or Affiliates) as if it were not acting as the Agent, and First
Union and its affiliates may accept fees and other consideration from the
Obligors for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
10.05 INDEMNIFICATION. The Lenders agree to indemnify the Agent
(to the extent not reimbursed under Section 11.03 hereof, but without limiting
the obligations of the Company under said Section 11.03, and including in any
event any payments under any indemnity that the Agent is required to issue to
any bank referred to in Section 4.02 of the Security Agreement and Section 5.02
of each of the Existing Subsidiary Guarantee and Security Agreement and each
Supplemental Subsidiary Guarantee and Security Agreement to which remittances in
respect of Accounts, as defined in each such agreement, are to be made) ratably
in accordance with the aggregate principal amount of the Loans and Reimbursement
Obligations held by the Lenders (or, if no Loans or Reimbursement Obligations
are at the time outstanding, ratably in accordance with their respective
Commitments), for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Agent (including by any Lender) arising out of or by reason of any
investigation in or in any way relating to or arising out of this Agreement or
any other Loan Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby (including,
without limitation, the costs and expenses that the Company is obligated to pay
under Section 11.03 hereof, and including also any payments under any indemnity
that the Agent is required to issue to any bank referred to in Section 4.02 of
the Security Agreement and Section 5.02 of each of the Existing Subsidiary
Guarantee and Security Agreement and each Supplemental Subsidiary Guarantee and
Security Agreement to which remittances in respect of Accounts, as defined in
each such agreement, are to be made, but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such
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other documents, PROVIDED that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.
10.06 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or under any other Loan Document. The Agent shall not be required to keep
itself informed as to the performance or observance by any Obligor of this
Agreement or any of the other Loan Documents or any other document referred to
or provided for herein or therein or to inspect the Properties or books of the
Company or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder or under the Security Documents, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Company or any of its Subsidiaries (or any of their affiliates) that may come
into the possession of the Agent or any of its affiliates.
10.07 FAILURE TO ACT. Except for action expressly required of the
Agent hereunder and under the other Loan Documents, the Agent shall in all cases
be fully justified in failing or refusing to act hereunder and thereunder unless
it shall receive further assurances to its satisfaction from the Lenders of
their indemnification obligations under Section 10.05 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
10.08 RESIGNATION OR REMOVAL OF 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 Lenders and the Company, and the Agent
may be removed at any time with or without cause by the Majority Lenders. Upon
any such resignation or removal, the Majority Lenders shall have the
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right to appoint a successor Agent with the prior consent of the Company
(which consent shall not be unreasonably withheld); PROVIDED that no such
consent of the Company shall be required if an Event of Default has occurred
and is continuing and the Commitments have been terminated and/or the Loans
and other amounts payable by the Obligors hereunder have been declared
forthwith due and payable. If no successor Agent shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30
days after the retiring Agent's giving of notice of resignation or the
Majority Lenders' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Lenders, appoint a successor Agent, that shall be a bank with
a combined capital and surplus of at least $500,000,000. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Section 10 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent.
10.09 AGENCY FEE. So long as the Commitments are in effect and
until payment in full of the principal of and interest on the Loans and all
other amounts payable by the Company hereunder, the Company will pay to the
Agent an agency fee in the amount agreed in writing between the Company and the
Agent, payable quarterly in arrears commencing on September 30, 1997 and on the
last day of each calendar quarter thereafter; PROVIDED that if the Commitments
shall have been terminated prior to such date, the agency fee shall be payable
on the date of such termination. Such fee, once paid, shall be non-refundable.
10.10 CONSENTS UNDER OTHER LOAN DOCUMENTS. Except as otherwise
provided in Section 11.04 hereof with respect to this Agreement, the Agent may,
with the prior consent of the Majority Lenders (but not otherwise), consent to
any modification, supplement or waiver under any of the Loan Documents, PROVIDED
that, without the prior consent of each Lender, the Agent shall not (except as
provided herein or in the Security Documents) release any guarantee or
collateral or otherwise terminate any Lien under any Loan Document providing for
collateral security, or agree to additional obligations being secured by such
collateral security, except that no such consent
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shall be required, and the Agent is hereby authorized, to release any Lien
covering Property that is the subject of a disposition of Property permitted
hereunder or to which the Majority Lenders have consented or to release any
guarantee of any Obligor that is the subject of a disposition to which the
Majority Lenders have consented.
10.11 SYNDICATION AGENT AND CO-AGENTS. The Syndication Agent and
Co-Agents named on the cover page of this Agreement shall have no duties,
obligations or responsibilities hereunder except in their capacities as Lenders.
Section 11. MISCELLANEOUS.
11.01 WAIVER. No failure on the part of the Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under this Agreement or any Note shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
11.02 NOTICES. All notices, requests and other communications
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including, without limitation, by
telex or telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by telex
or telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
11.03 EXPENSES, ETC. The Company agrees to pay or reimburse each
of the Lenders and the Agent for: (a) all reasonable out-of-pocket costs and
expenses of the Agent (including, without limitation, the reasonable fees and
expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel to First
Union, and Fiddler Gonzalez & Rodriguez, special Puerto
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Rico counsel to First Union) in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement and the other Loan
Documents and the extensions of credit hereunder and (ii) the negotiation or
preparation of any modification, supplement or waiver of any of the terms of
this Agreement or any of the other Loan Documents (whether or not
consummated); (b) all reasonable out-of-pocket costs or allocated costs and
expenses of the Lenders and the Agent (including, without limitation, the
reasonable fees, allocated costs and expenses of legal counsel, which may be
employees of the Lenders or the Agent) in connection with (i) any Default and
any enforcement or collection proceedings resulting therefrom, including,
without limitation, all manner of participation in or other involvement with
(x) bankruptcy, insolvency, receivership, foreclosure, winding up or
liquidation proceedings, (y) judicial or regulatory proceedings and (z)
workout, restructuring or other negotiations or proceedings (whether or not
the workout, restructuring or transaction contemplated thereby is consummated)
and (ii) the enforcement of this Section 11.03; (c) all transfer, stamp,
documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any of the
other Loan Documents or any other document referred to herein or therein and
all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated by any Loan Document or any other document
referred to therein; and (d) all costs, expenses and other charges in respect
of title insurance procured with respect to the Liens created pursuant to the
Mortgages.
The Company hereby agrees to indemnify the Agent and each Lender and
their respective directors, officers, employees, attorneys and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them (including, without limitation, any
and all losses, liabilities, claims, damages or expenses incurred by the Agent
to any Lender, whether or not the Agent or any Lender is a party thereto)
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to the extensions of credit hereunder or any actual or
proposed use by the Company or any of its Subsidiaries of the proceeds of any of
the extensions of credit hereunder, including, without limitation, the
reasonable fees and disbursements of
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counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims, damages
or expenses incurred by reason of the gross negligence or willful misconduct
of the Person to be indemnified). Without limiting the generality of the
foregoing, the Company will (x) indemnify the Agent for any payments that the
Agent is required to make under any indemnity issued to any bank referred to
in Section 4.02 of the Security Agreement and Section 5.02 of each of the
Existing Subsidiary Guarantee and Security Agreement and each Supplemental
Subsidiary Guarantee and Security Agreement to which remittances in respect to
Accounts, as defined in each such agreement, are to be made and (y) indemnify
the Agent and each Lender from, and hold the Agent and each Lender harmless
against, any losses, liabilities, claims, damages or expenses described in the
preceding sentence (including any Lien filed against all or any part of the
Property covered by the Mortgages in favor of any governmental entity, but
excluding, as provided in the preceding sentence, any loss, liability, claim,
damage or expense incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified) arising under any Environmental
Law as a result of the past, present or future operations of the Company or
any of its Subsidiaries (or any predecessor in interest to the Company or any
of its Subsidiaries), or the past, present or future condition of any site or
Facility owned, operated or leased at any time by the Company or any of its
Subsidiaries (or any such predecessor in interest), or any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, including any such Release or threatened Release that shall occur
during any period prior to the termination of the Commitments and the payment
in full of the Loans and other amounts owing hereunder and under the other
Loan Documents when the Agent or any Lender shall be in possession of any such
site or Facility following the exercise by the Agent or any Lender of any of
its rights and remedies hereunder or under any of the Security Documents to
the extent such Release results from a continuation of conditions previously
in existence at, or practices theretofore employed in connection with the
operation of, such site or facility.
11.04 AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Company, the Agent and the
Majority Lenders, or by the Company and the Agent acting with the consent
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of the Majority Lenders, and any provision of this Agreement may be waived by
the Majority Lenders or by the Agent acting with the consent of the Majority
Lenders; PROVIDED that: (a) no modification, supplement or waiver shall,
unless by an instrument signed by all of the Lenders or by the Agent acting
with the consent of all of the Lenders: (i) increase, or extend the term of
any of the Commitments, or extend the time or waive any requirement for the
reduction or termination of any of the Commitments, (ii) extend the date fixed
for the payment of principal of or interest on any Loan, the Reimbursement
Obligations or any fee hereunder, (iii) reduce the amount of any such payment
of principal, (iv) reduce the rate at which interest is payable thereon or any
fee is payable hereunder, (v) alter the rights or obligations of the Company
to prepay Loans, (vi) alter the terms of this Section 11.04, (vii) modify the
definition of the term "Majority Lenders", or modify in any other manner the
number or percentage of the Lenders required to make any determinations or
waive any rights hereunder or to modify any provision hereof or modify Section
4.07(b) or Section 11.06(b)(ii) or (iii) hereof, (viii) release any Subsidiary
Guarantor or Supplemental Guarantor from any of its guarantee obligations
under the Existing Subsidiary Guarantee and Security Agreement or any
Supplemental Subsidiary Guarantee and Security Agreement or release (or
terminate any Lien on) all or substantially all of the Collateral except as
provided in the Security Documents with respect to such Collateral in any of
the Security Documents or (ix) waive any of the conditions precedent set forth
in Section 6.01 or 6.02 hereof; and (b) any modification of any of the rights
or obligations of the Agent or any Issuing Bank shall require the consent of
the Agent or the Issuing Bank, as the case may be.
11.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) The Company may not assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders and
the Agent.
(b) Each Lender may assign any of its Loans, its Notes, its
Commitments, and, if such Lender is a Facility A Lender, its Letter of Credit
Interest with the consent of the
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Company and the Agent, and in the case of the Facility A Commitment or Letter
of Credit Interest, the Issuing Bank (which consents shall not be unreasonably
withheld) pursuant to an Assignment and Acceptance substantially in the form
of Exhibit H hereto; PROVIDED that:
(i) no such consent by the Company shall be required in the case of
any assignment to another Lender or in any case if an Event of Default has
occurred and is continuing;
(ii) each assignment by a Lender of its Loans, Note or Commitment of
any Class or Letter of Credit Interest shall be made in such a manner so
that the same portion of such Loans, Note, Commitment and (if
applicable) Letter of Credit Interest is assigned to the respective
assignee;
(iii) each assignment by any Facility A Lender or Facility B
Lender of any of its Loans (and related Note and Commitment) of a
particular Class and (in the case of a Facility A Lender) its Letter of
Credit Interest shall be made in such a manner so that (x) the same ratable
portion of all of its Loans to the Company under this Agreement of the
other Class (and related Notes and Commitments) and (if applicable) its
Letter of Credit Interest is assigned to the respective assignee and
(y) the same ratable portion of all of its Facility C Loans and Facility D
Loans (and related Facility C Note and Facility D Note and Facility C
Commitment and Facility D Commitment) under and as defined in the Second
Restated Supplemental Credit Agreement is assigned to the respective
assignee; and
(iv) any such assignment of less than all of such Lender's interests
in the Facility A Loans, Facility B Loans, Facility C Loans and Facility D
Loans, Facility A Notes, Facility B Notes, Facility C Notes and Facility D
Notes, and Facility A Commitments, Facility B Commitments, Facility C
Commitments and Facility D Commitments, as the case may be, shall be in an
aggregate amount at least equal to $10,000,000 ($5,000,000 if the assignee
is already a Lender).
Upon execution and delivery by the assignor and assignee to the Company, the
Agent and, if applicable, the Issuing Bank of such Assignment and Acceptance,
and upon consent thereto by the Company, the Agent and Issuing Bank, to the
extent required
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above, the assignee shall have, to the extent of such assignment, the
obligations, rights and benefits of a Lender hereunder holding the
Commitment(s) and Loans and, if applicable, Letter of Credit Interests (or
portions thereof) assigned to it as specified in such Assignment and
Acceptance (in addition to the Commitment(s), Loans and/or Letter of Credit
Interests, if any, theretofore held by such assignee) and the assigning Lender
shall, to the extent of such assignment, be released from the Commitment(s)
(or portion(s) thereof) so assigned. Upon each such assignment the assigning
Lender shall pay the Agent an assignment fee of $3,000.
(c) A Lender may sell or agree to sell to one or more other Persons a
participation in all or any part (in a minimum amount of $5,000,000) of any
Loans or Letter of Credit Interests held by it, or in its Commitments, in which
event each purchaser of a participation (a "PARTICIPANT") shall be entitled to
the rights and benefits of the provisions of Section 8.01(i) hereof with respect
to its participation in such Loans, Letter of Credit Interests and Commitments
as if (and the Company shall be directly obligated to such Participant under
such provisions as if) such Participant were a "Lender" for purposes of said
Section, but, except as otherwise provided in Section 4.07(c) hereof, shall not
have any other rights or benefits under this Agreement or any Note or any other
Loan Document (the Participant's rights against such Lender in respect of such
participation to be those set forth in the agreements executed by such Lender in
favor of the Participant). All amounts payable by the Company to any Lender
under Section 5 hereof in respect of Loans or Letter of Credit Interests held by
it, and its Commitments, shall be determined as if such Lender had not sold or
agreed to sell any participations in such Loans, Letter of Credit Interests and
Commitments, and as if such Lender were funding each of such Loans, Letter of
Credit Interests and Commitments in the same way that it is funding the portion
of such Loans, Letter of Credit Interests and Commitments in which no
participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Loan Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of such Lender's related
Commitment, (ii) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans,
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Reimbursement Obligations or any portion of any fee hereunder payable to the
Participant, (iii) reduce the amount of any such payment of principal, (iv)
reduce the rate at which interest is payable thereon, or any fee hereunder
payable to the Participant, to a level below the rate at which the Participant
is entitled to receive such interest or fee, (v) alter the rights or
obligations of the Company to prepay the related Loans, (vi) consent to any
modification, supplement or waiver hereof or of any of the other Loan
Documents to the extent that the same, under Section 10.10 or 11.04 hereof,
requires the consent of each Lender or (vii) release any Subsidiary Guarantor
or Supplemental Guarantor from any of its guarantee obligations under the
Existing Subsidiary Guarantee and Security Agreement or any Supplemental
Subsidiary Guarantee and Security Agreement or release (or terminate any Lien
on) all or substantially all of the Collateral except as provided in the
Security Documents with respect to such Collateral in any of the Security
Documents.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 11.06, any Lender may (without notice
to the Company, the Agent or any other Lender and without payment of any
fee) (i) assign and pledge all or any portion of its Loans, Notes and/or Letter
of Credit Interests to any Federal Reserve Bank as collateral security pursuant
to Regulation A and any Operating Circular issued by such Federal Reserve Bank
and (ii) assign all or any portion of its rights under this Agreement and its
Loans, Notes and Letter of Credit Interests to an affiliate. No such assignment
shall release the assigning Lender from its obligations hereunder.
(e) A Lender may furnish any information concerning the Company or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 11.12(b) hereof.
(f) Anything in this Section 11.06 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Loan or Reimbursement
Obligation held by it hereunder to the Company or any of its Subsidiaries or
Affiliates without the prior consent of each Lender.
(g) At the request of any Lender that is not a U.S. Person and is not
a "bank" within the meaning of
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Section 881(c)(3)(A) of the Code, the Company shall maintain, or cause to be
maintained, a register (the "Register") that, at the request of the Company,
shall be kept by the Agent on behalf of the Company at no charge to the
Company at the address to which notices to the Agent are to be sent hereunder,
on which it enters the name of such Lender as the registered owner of each
Registered Loan held by such Lender. A Registered Loan (and the Registered
Note, if any, evidencing the same) may be assigned or otherwise transferred in
whole or in part by registration of such assignment or transfer on the
Register (and each Registered Note shall expressly so provide). Any
assignment or transfer of all or part of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected by registration
of such assignment or transfer on the Register, together with the surrender of
the Registered Note, if any, evidencing the same duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed
by) the holder of such Registered Note, whereupon, at the request of the
designated assignee(s) or transferee(s), one or more new Registered Notes in
the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or
transfer of any Registered Loan (and the Registered Note, if any, evidencing
the same), the Company shall treat the Person in whose name such Registered
Loan (and the Registered Note, if any, evidencing the same) is registered as
the owner thereof for the purpose of receiving all payments thereon and for
all other purposes, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Company and any Lender that is a
Registered Holder at any reasonable time upon reasonable prior notice.
11.07 SURVIVAL. The obligations of the Company under Sections
5.01, 5.05, 5.06, 5.08 and 11.03 hereof, and the obligations of the Lenders
under Section 10.05 hereof, shall survive the repayment of the Loans and
Reimbursement Obligations and the termination of the Commitments. In addition,
each representation and warranty made, or deemed to be made by a notice of any
extension of credit (whether by means of a Loan or the issuance of a Letter of
Credit), herein or pursuant hereto shall survive the making of such
representation and warranty, and no Lender shall be deemed to have waived, by
reason of making any extension of credit hereunder (whether by means of a Loan
or the issuance of a Letter of Credit), any Default that may arise by reason of
such representation or warranty proving to have been false or misleading,
notwithstanding that such Lender or the
CREDIT AGEEMENT
<PAGE>
-119-
Agent may have had notice or knowledge or reason to believe that such
representation or warranty was false or misleading at the time such extension
of credit was made.
11.08 CAPTIONS. The table of contents and captions and Section
headings appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any provision of this
Agreement.
11.09 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
PROCESS AND VENUE.
(a) This Agreement and the Notes shall be governed by, and construed
in accordance with, the law of the State of New York.
(b) The Company hereby agrees that any suit, action or proceeding
with respect to this Agreement, any Note or any other Loan Document to which it
is a party or any judgment entered by any court in respect thereof may be
brought in the United States District Court for the Southern District of New
York, in the Supreme Court of the State of New York sitting in New York County
(including its Appellate Division), or in any other appellate court in the State
of New York, as the party commencing such suit, action or proceeding may elect
in its sole discretion; and each party hereto hereby irrevocably submits to the
non-exclusive jurisdiction of such court for the purpose of any such suit,
action, proceeding or judgment. Each party hereto further submits, for the
purpose of any such suit, action, proceeding or judgment brought or rendered
against it, to the appropriate courts of the jurisdiction of its domicile.
(c) The Company hereby agrees that service of all writs, process and
summonses in any suit, action or proceeding brought hereunder or under any of
the other Loan Documents to which the Company is a party may be made upon The
Prentice Hall Corporation System, Inc. presently located at 15 Columbus Circle,
New York, New York 10023, U.S.A. (the "Process Agent"), and the Company hereby
confirms and agrees that the Process Agent has
CREDIT AGEEMENT
<PAGE>
-120-
been duly and irrevocably appointed as its agent and true and lawful attorney
in fact in its name, place and stead to accept such service of any and all
such writs, process and summonses, and agrees that the failure of the Process
Agent to give any notice of any such service of process to the Company shall
not impair or affect the validity of such service or of any judgment based
thereon. Without limiting the foregoing, the Company hereby irrevocably
consents to the service of process in any suit, action or proceeding in such
courts by the mailing thereof by the Agent or any Lender by registered or
certified mail, postage prepaid, at its address set forth beneath its
signature hereto. Nothing herein shall in any way be deemed to limit the
ability of the Agent or any Lender to serve any such writs, process or
summonses in any other manner permitted by applicable law or to obtain
jurisdiction over the Company in such other jurisdictions, and in such manner,
as may be permitted by applicable law.
(d) The Company hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement, the Notes or the other
Loan Documents brought in any such court and hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
11.11 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
11.12 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and the Company hereby authorizes each Lender to share
any information delivered to such Lender by the Company and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such subsidiary or affiliate, it being
understood that any such
CREDIT AGEEMENT
<PAGE>
-121-
subsidiary or affiliate receiving such information shall be bound by the
provisions of clause (b) below as if it were a Lender hereunder. Such
authorization shall survive the repayment of the Loans and Reimbursement
Obligations and the termination of the Commitments.
(b) Each Lender and the Agent agree (on behalf of itself and each of
its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of the same nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by any Obligor pursuant to this Agreement that is identified by
such Person as being confidential at the time the same is delivered to the
Lenders or the Agent, PROVIDED that nothing herein shall limit the disclosure of
any such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the Lenders or the Agent, (iii) to
any Lender's examiners, auditors or accountants, (iv) to the Agent, the
Syndication Agent named on the cover page of this Agreement or any other Lender,
(v) in connection with any litigation to which any one or more of the Lenders or
the Agent is a party, (vi) to a subsidiary or affiliate of such Lender as
provided in clause (a) above or (vii) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first executes and delivers to the
respective Lender a Confidentiality Agreement substantially in the form of
Exhibit G hereto; PROVIDED, further, that in no event shall any Lender or the
Agent be obligated or required to return any materials furnished by any Obligor.
The obligations of any assignee that has executed a Confidentiality Agreement in
the form of Exhibit G hereto shall be superseded by this Section 11.12 upon the
date upon which such assignee becomes a Lender hereunder pursuant to
Section 11.06 hereof.
11.13 INTENTION OF PARTIES. Notwithstanding anything contained
herein to the contrary, it is the intention of the parties hereto that this
Agreement and the Commitments and extensions of credit provided hereunder
represent a continuation, renewal and extension of, but not a novation or
discharge of, the credit facilities provided by the Existing Credit
Agreement; and the Company hereby represents and warrants to the Agent and
each Lender that after giving effect to the transactions contemplated hereby,
the security interests created by the Security Documents
CREDIT AGEEMENT
<PAGE>
-122-
continue to constitute valid, perfected and first priority security interests
(subject only to Liens permitted by Section 8.06 hereof) securing all
obligations purported to be secured thereby, and each of the Security
Documents and the security interests provided for therein continue in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amended
and Restated Credit Agreement to be duly executed and delivered as of the day
and year first above written.
CREDIT AGEEMENT
<PAGE>
-123-
COMPANY
SUIZA FOODS CORPORATION
By
--------------------------------
Title: Vice President
Address for Notices:
3811 Turtle Creek Boulevard
Suite 1300
Dallas, Texas 75219
Attention: Greg L. Engles
Telecopier No.: (214) 528-9929
Telephone No.: (214) 528-9922
CREDIT AGEEMENT
<PAGE>
-124-
LENDERS
FACILITY A LENDERS AND FACILITY B
LENDERS
FACILITY A. COMMITMENT THE FIRST NATIONAL BANK OF CHICAGO
$2,857,142.86
FACILITY B COMMITMENT
$8,571,428.57 By
--------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
The First National Bank of Chicago
1 First National Plaza
Suite 0088, 14th Floor
Chicago, IL 60670
Address for Notices:
The First National Bank of Chicago
1 First National Plaza
Suite 0088, 14th Floor
Chicago, IL 60670
Attention: April Yebd
Telecopier No.: (312) 732-2715
(312) 732-6276
Telephone No.: (312) 732-4823
CREDIT AGEEMENT
<PAGE>
-125-
FACILITY A COMMITMENT FIRST UNION NATIONAL BANK
$2,857,142.86
Facility B Commitment
$8,571,428.57 By
--------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
First Union National Bank
301 S. College Street
Charlotte, NC 28288-0737
Address for Notices:
First Union National Bank
301 S. College Street
Charlotte, NC 28288-0737
Attention: Sana Alkoor - Suiza
Telecopier No.: (704) 383-6537
Telephone No.: (704) 374-9831
CREDIT AGEEMENT
<PAGE>
-126-
FACILITY A COMMITMENT BANKBOSTON, N.A.
$2,214,285.71
FACILITY B COMMITMENT By
$6,642,857.14 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Bank of Boston, N.A.
100 Federal Street
Mail Code 01-09-04
Boston, MA 02110
Address for Notices:
Bank of Boston, N.A.
100 Federal Street
Mail Code 01-09-04
Boston, MA 02110
Attention: Lisa Marshall
Telecopier No.: 617-434-6685
Telephone No.: 617-434-4117
CREDIT AGREEMENT
<PAGE>
-127-
FACILITY A COMMITMENT BHF BANK, AKTIENGESELLSCHAFT
$2,214,285.71
Facility B Commitment By
$6,642,857.14 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
BHF Bank, A.G.
590 Madison Avenue
New York, NY 10022-2540
Address for Notices:
BHF Bank, A.G.
590 Madison Avenue
New York, NY 10022-2540
Attention: John Sykes
Telecopier No.: 212-756-5536
Telephone No.: 212-756-5939
CREDIT AGREEMENT
<PAGE>
-128-
FACILITY A COMMITMENT COOPERATIEVE CENTRALE
$2,214,285.71 RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
FACILITY B COMMITMENT By
$6,642,857.14 ---------------------------------
Title:
By
---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland",
New York Branch
245 Park Avenue
New York, NY 10167
Address for Notices:
Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland",
New York Branch
245 Park Avenue
New York, NY 10167
Attention: Corporate Services
Department
Telecopier No.: 212-818-0233
Telephone No.: 212-916-7800
CREDIT AGREEMENT
<PAGE>
-129-
With a copy to:
Rabobank Nederland
One Galleria Tower
13355 Noel Road, Suite 1000
Lock Box 69
Dallas, TX 75240
Attention: David Streeter
Telecopier No.: 214-419-6315
Telephone No.: 214-419-6300
CREDIT AGREEMENT
<PAGE>
-130-
FACILITY A COMMITMENT CREDIT LYONNAIS NEW YORK BRANCH
$2,214,285.71
FACILITY B COMMITMENT
$6,642,857.14 By
---------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
Credit Lyonnais New York Branch
c/o Credit Lyonnais Dallas
2200 Ross Avenue
Suite 4400 West
Dallas, Texas 75201
Address for Notices:
Credit Lyonnais New York Branch
c/o Credit Lyonnais Dallas
2200 Ross Avenue
Suite 4400 West
Dallas, Texas 75201
Attention: Tim O'Connor
Telecopier No.: (214) 220-2323
Telephone No.: (214) 220-2300
CREDIT AGREEMENT
<PAGE>
-131-
FACILITY A COMMITMENT FLEET NATIONAL BANK
$2,214,285.71
FACILITY B COMMITMENT By
$6,642,857.14 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Fleet National Bank
1 Landmark Square
Mailstop CTFD 0752
Stamford, CT 06904
Address for Notices:
Fleet National Bank
1 Landmark Square
Mailstop CTFD 0752
Stamford, CT 06904
Attention: Steve Kalin
Telecopier No.: 203-358-6111
Telephone No.: 203-358-2013
CREDIT AGREEMENT
<PAGE>
-132-
FACILITY A COMMITMENT MERRILL LYNCH SENIOR FLOATING
$2,214,285.71 RATE FUND, INC.
FACILITY B COMMITMENT By
$6,642,857.14 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Merrill Lynch Senior Floating
Rate Fund, Inc.
c/o Merrill Lynch Asset
Management
800 Scudders Mill Road - Area 1B
Plainsboro, NJ 08536
Address for Notices:
Merrill Lynch Senior Floating
Rate Fund, Inc.
800 Scudders Mill Road - Area 1B
Plainsboro, NJ 08536
Attention: Jill Montange
Telecopier No.: 609-282-3542
Telephone No.: 609-282-3102
With a copy to:
MLAM Accounting
500 College Road - 4E
Plainsboro, NJ 08536
Attention: John Geijer
Telecopier No.: 609-282-7616
Telephone No.: 609-282-7705
CREDIT AGREEMENT
<PAGE>
-133-
FACILITY A COMMITMENT AMSOUTH BANK
$1,857,142.86
FACILITY B COMMITMENT By
$5,571,428.57 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
AmSouth Bank
1900 5th Avenue, North
Sonat Tower - 7th
Birmingham, AL 35203
Address for Notices:
AmSouth Bank
1900 5th Avenue, North
Sonat Tower - 7th
Birmingham, AL 35203
Attention: Joseph Maxwell
Telecopier No.: 205-326-5601
Telephone No.: 205-801-0167
CREDIT AGREEMENT
<PAGE>
-134-
FACILITY A COMMITMENT BANCO POPULAR DE PUERTO RICO
$1,857,142.86
FACILITY B COMMITMENT
$5,571,428.57 By
---------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
Banco Popular de Puerto Rico
7 West 51st Street
New York, New York 10019
Address for Notices:
Banco Popular de Puerto Rico
7 West 51st Street
New York, New York 10019
Attention: John Cuneo
Telecopier No.: (212) 586-3537
Telephone No.: (212) 315-2800
CREDIT AGREEMENT
<PAGE>
-135-
FACILITY A COMMITMENT BANK OF AMERICA ILLINOIS
$1,857,142.86
FACILITY B COMMITMENT
$5,571,428.57 By
---------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
Bank of America Illinois
231 S. LaSalle
Chicago, Illinois 60697
Address for Notices:
Bank of America Illinois
231 S. LaSalle
Chicago, Illinois 60697
Attention: Paul Youmaura
Telecopier No.: (312) 974-9626
Telephone No.: (312) 828-6574
CREDIT AGREEMENT
<PAGE>
-136-
FACILITY A COMMITMENT THE BANK OF NOVA SCOTIA
$1,857,142.86
FACILITY B COMMITMENT
$5,571,428.57 By
---------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E.,
Suite 2700
Atlanta, Georgia 30308
Address for Notices:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Senior Assistant Agent
Telecopier No.: (404) 888-8998
Telephone No.: (404) 877-1500
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana
Suite 3000
Houston, Texas 77002
Attention: Rosine Matthews
Relationship Manager
Telecopier No.: (713) 752-2425
Telephone No.: (713) 759-3432
CREDIT AGREEMENT
<PAGE>
-137-
FACILITY A COMMITMENT CAISSE NATIONALE DE CREDIT AGRICOLE
$1,857,142.86
FACILITY B COMMITMENT
$5,571,428.57 By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
Caisse Nationale de Credit Agricole
55 E. Monroe
Suite 4700
Chicago, IL 60603
Address for Notices:
Caisse Nationale de Credit Agricole
55 E. Monroe
Suite 4700
Chicago, IL 60603
Attention: Laura Schmuck
Telecopier No.: (312) 372-4421
Telephone No.: (312) 917-7428
CREDIT AGREEMENT
<PAGE>
-138-
FACILITY A COMMITMENT HARRIS TRUST AND SAVINGS BANK
$1,857,142.86
FACILITY B COMMITMENT
$5,571,428.57 By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60690
Address for Notices:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60690
Chicago, IL 60603
Attention: Jerry Karl/
Marieky Estrada
Telecopier No.: (312) 765-8095
Telephone No.: (312) 461-3776/7664
CREDIT AGREEMENT
<PAGE>
-139-
FACILITY A COMMITMENT THE LONG-TERM CREDIT BANK OF JAPAN,
$1,857,142.86 LIMITED, NEW YORK BRANCH
FACILITY B COMMITMENT
$5,571,428.57 By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
The Long-Term Credit Bank of Japan,
Limited, New York Branch
165 Broadway
New York, NY 10006
Address for Notices:
The Long-Term Credit Bank of Japan,
Limited, New York Branch
Dallas Representative Office
2200 Ross Avenue, Suite 4700 West
Dallas, TX 75201
Attention: Robert L. Nelson
Telecopier No.: (214) 969-5357
Telephone No.: (214) 969-5352
CREDIT AGREEMENT
<PAGE>
-140-
FACILITY A COMMITMENT MARINE MIDLAND BANK
$1,857,142.86
FACILITY B COMMITMENT
$5,571,428.57 By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
Marine Midland Bank
140 Broadway, 5th Floor
New York, NY 10005
Address for Notices:
Marine Midland Bank
140 Broadway, 5th Floor
New York, NY 10005
Attention: Christopher French
Telecopier No.: (212) 658-2586
Telephone No.: (212) 658-2742
CREDIT AGREEMENT
<PAGE>
-141-
FACILITY A COMMITMENT BANQUE PARIBAS
$1,042,857.15
FACILITY B COMMITMENT
$4,928,571.47 By
----------------------------------------------
Title:
By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
Banque Paribas
1200 Smith Street
Suite 3100
Houston, Texas 77002
Address for Notices:
Banque Paribas
1200 Smith Street
Suite 3100
Houston, Texas 77002
Attention: Chuck E. Irwin
Telecopier No.: (713) 659-4234
Telephone No.: (713) 659-4811
CREDIT AGREEMENT
<PAGE>
-142-
FACILITY A COMMITMENT THE FUJI BANK, LIMITED,
$1,642,857.15 HOUSTON AGENCY
FACILITY B COMMITMENT
$4,928,571.47 By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
The Fuji Bank, Limited,
Houston Agency
One Houston Center
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Telecopier No.: (713) 759-0048
Address for Notices:
The Fuji Bank, Limited,
Houston Agency
One Houston Center
1221 McKinney Street, Suite 4100
Houston, TX 77010
Attention: Philip C. Lauinger III
Vice President and Joint
Manager or
David L. Kelley
Senior Vice President
(713) 650-7850
Telecopier No.: (713) 759-0048
Telephone No.: (713) 650-7852
CREDIT AGREEMENT
<PAGE>
-143-
FACILITY A COMMITMENT THE BANK OF TOKYO -
$1,071,428.57 MITSUBISHI, LTD.
FACILITY B COMMITMENT
$3,214,285.71 By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
The Bank of Tokyo -
Mitsubishi, Ltd.
2001 Ross Ave.
3150 Trammel Crow
Dallas, TX 75201
Address for Notices:
The Bank of Tokyo -
Mitsubishi, Ltd.
2001 Ross Ave.
3150 Trammel Crow
Dallas, TX 75201
Attention: John Mearns
Telecopier No.: (214) 954-1007
Telephone No.: (214) 954-1200
CREDIT AGREEMENT
<PAGE>
-144-
FACILITY A COMMITMENT CIBC, INC.
$1,071,428.57
FACILITY B COMMITMENT
$3,214,285.71 By
----------------------------------------------
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
CIBC, Inc.
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Address for Notices:
CIBC Wood Gundy Securities Corp.
Two Houston Center, Suite 1200
909 Fannin Street
Houston, TX 77010
Attention: Bill Schrauff
Telecopier No.: (713) 650-3727
Telephone No.: (713) 655-5291
With a copy to:
CIBC Wood Gundy Securities Corp.
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Attention: Vickie Summey (Borrowings)
Ken Auchter
(Other Notices)
Telecopier No.: 770-319-4950
Telephone No.: 770-319-4841
(Auchter)
770-319-4852 (Summey)
CREDIT AGREEMENT
<PAGE>
-145-
FACILITY A COMMITMENT COMMERZBANK AG,
$1,071,428.57 NEW YORK BRANCH
FACILITY B COMMITMENT By
$3,214,285.71 -----------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Commerzbank AG,
New York Branch
2 World Financial Center
New York, NY 10281
Address for Notices:
Commerzbank AG,
New York Branch
2 World Financial Center
New York, NY 10281
Attention: Mary Harold
Telecopier No.: 212-266-7374
Telephone No.: 212-266-7509
CREDIT AGREEMENT
<PAGE>
-146-
FACILITY A COMMITMENT COMPAGNIE FINANCIERE DE
$1,071,428.57 CIC ET DE L'UNION EUROPEENNE
FACILITY B COMMITMENT By
$3,214,285.71 -----------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Compagnie Financiere de
CIC et de l'Union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Address for Notices:
Compagnie Financiere de
CIC et de l'Union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Attention: Brian O'Leary
Telecopier No.: 212-715-4535
Telephone No.: 212-715-4422
CREDIT AGREEMENT
<PAGE>
-147-
FACILITY A COMMITMENT CREDITANSTALT - BANKVEREIN
$1,071,428.57
FACILITY B COMMITMENT
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Creditanstalt - Bankverein
Two Ravinia Drive, Ste. 1680
Atlanta, GA 30346
Address for Notices:
Creditanstalt - Bankverein
Two Ravinia Drive, Ste. 1680
Atlanta, GA 30346
Attention: Scott Kray
Telecopier No.: 770-390-1851
Telephone No.: 770-390-1858
CREDIT AGREEMENT
<PAGE>
-148-
FACILITY A COMMITMENT HIBERNIA NATIONAL BANK
$1,071,428.57
FACILITY B COMMITMENT
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Hibernia National Bank
313 Carondelet Street
New Orleans, LA 70130
Address for Notices:
Hibernia National Bank
313 Carondelet Street
New Orleans, LA 70130
Attention: Stephanie Freeman
Telecopier No.: 504-533-5344
Telephone No.: 504-533-3345
CREDIT AGREEMENT
<PAGE>
-149-
FACILITY A COMMITMENT MELLON BANK, N.A.
$1,071,428.57
Facility B Commitment
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Mellon Bank, N.A.
Three Mellon Bank Center
Room 152-2300
Pittsburgh, PA 15259
Attention: Loan Administrator
Telecopier No: 412-236-2027
Telephone No: 412-234-3699
Address for Notices:
Mellon Bank, N.A.
Three Mellon Bank Center
Room 152-2300
Pittsburgh, PA 15259
Attention: Loan Administrator
Telecopier No: 412-236-2027
Telephone No: 412-234-3699
With a copy to:
Mellon Bank, N.A.
One Boston Place
Room 024-006A
Boston, MA 02108
Attention: R. Jane Westrich
Telecopier No.: 617-722-3516
Telephone No.: 617-722-7969
CREDIT AGREEMENT
<PAGE>
-150-
FACILITY A COMMITMENT THE MITSUBISHI TRUST AND BANKING
$1,071,428.57 CORPORATION, CHICAGO BRANCH
FACILITY B COMMITMENT
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
The Mitsubishi Trust and Banking
Corporation, Chicago Branch
311 S. Wacker Dr.
Suite 6300
Chicago, IL 60606
Address for Notices:
The Mitsubishi Trust and Banking
Corporation, Chicago Branch
311 S. Wacker Dr.
Suite 6300
Chicago, IL 60606
Attention: Vicki L. Kamm
Telecopier No.: 312-663-0863
Telephone No.: 312-408-6014
CREDIT AGREEMENT
<PAGE>
-151-
FACILITY A COMMITMENT NATEXIS BANQUE
$1,071,428.57 (Previously Banque Francaise du
Commerce Exterieur)
FACILITY B COMMITMENT
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
NATEXIS Banque
New York Branch
645 Fifth Avenue
20th Floor
New York, New York 10022
Address for Notices:
NATEXIS Banque
Southwest Representative Office
333 Clay Street, Suite 4340
Houston, TX 77002
Attention: Tanya McAllister
Telecopier No.: 713-759-9908
Telephone No.: 713-759-9401
With a copy to:
NATEXIS Banque
New York Branch
645 Fifth Avenue
20th Floor
New York, New York 10022
Attention: Joan Rankine
Telecopier No.: 212-872-5045
CREDIT AGREEMENT
<PAGE>
-152-
FACILITY A COMMITMENT NATIONAL CITY BANK OF KENTUCKY
$1,071,428.57
FACILITY B COMMITMENT
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
National City Bank
101 S. Fifth Street
Louisville, KY 40202
Address for Notices:
National City Bank
101 S. Fifth Street
Louisville, KY 40202
Attention: Don Pullen
Telecopier No.: 502-581-5122
Telephone No.: 502-581-6352
CREDIT AGREEMENT
<PAGE>
-153-
FACILITY A COMMITMENT THE SUMITOMO TRUST & BANKING
$1,071,428.57 CO. LTD., NEW YORK BRANCH
FACILITY B COMMITMENT
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
The Sumitomo Trust & Banking
Co. Ltd., New York Branch
527 Madison Avenue
New York, NY 10022
Address for Notices:
The Sumitomo Trust & Banking
Co. Ltd., New York Branch
527 Madison Avenue
New York, NY 10022
Attention: Kristin Condon
Telecopier No.: 212-418-4848
Telephone No.: 212-326-0751
CREDIT AGREEMENT
<PAGE>
-154-
FACILITY A COMMITMENT WELLS FARGO BANK (TEXAS), N.A.
$1,071,428.57
FACILITY B COMMITMENT
$3,214,285.71 By
------------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Wells Fargo Bank (Texas), N.A.
1445 Ross Ave., Suite 300
Dallas, TX 75202
Address for Notices:
Wells Fargo Bank (Texas), N.A.
1445 Ross Ave., Suite 300
Dallas, TX 75202
Attention: Jeffrey Cook
Telecopier No.: 214-740=1543
Telephone No.: 214-740-1539
CREDIT AGREEMENT
<PAGE>
-155-
AGENT
FIRST UNION NATIONAL BANK,
as Agent
By
----------------------------------
Title:
Address for Notices to
the Agent:
First Union National Bank
301 S. College Street TW-10
Charlotte, NC 28288-0608
Attention: Syndication Agency
Services
Telecopier No.: (704) 383-0288
Telephone No.: (704) 383-0281
CREDIT AGREEMENT
<PAGE>
-156-
CONSENT AND AGREEMENT
Each of the undersigned Subsidiary Guarantors hereby (1) consents to the terms
of the Second Restated Supplemental Credit Agreement and this Agreement,
(2) agrees that each reference to the "Credit Agreement" or the "Supplemental
Credit Agreement" (if any) in each Security Document to which such Subsidiary
Guarantor is a party shall be a reference to this Agreement and the Second
Restated Supplemental Credit Agreement, respectively, and (3) confirms its
obligations under each Security Document to which it is a party after the Second
Restated Supplemental Credit Agreement and this Agreement become effective on
the Effective Date.
REDDY ICE CORPORATION SUIZA FRUIT CORPORATION
By By
---------------------------- ----------------------------
Title: Title:
VELDA FARMS, INC. NEVA PLASTICS MANUFACTURING
CORP.
By By
---------------------------- ----------------------------
Title: Title:
SUIZA MANAGEMENT CORPORATION MODEL DAIRY, INC.
By By
---------------------------- ----------------------------
Title: Title:
SUIZA DAIRY CORPORATION SWISS DAIRY CORPORATION
By By
---------------------------- ----------------------------
Title: Title:
DAIRY FRESH, INC.
By
----------------------------
Title:
CREDIT AGREEMENT
<PAGE>
EXECUTION COPY
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SUIZA FOODS CORPORATION
_____________________________
SECOND AMENDED AND RESTATED
SUPPLEMENTAL CREDIT AGREEMENT
$500,000,000 of $700,000,000 Aggregate Credit Facility
Dated as of July 31, 1997
------------------------------
FIRST UNION NATIONAL BANK,
as Administrative Agent
BHF-BANK AKTIENGESELLSCHAFT (NEW YORK)
BANK BOSTON, N.A.
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEEN BANK B.A.,
"RABOBANK NEDERLAND"
CREDIT LYONNAIS
FLEET NATIONAL BANK
MERRILL LYNCH ASSET MANAGEMENT, INC.,
as Co-Agents
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
Page
Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . . . .2
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . .2
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . 27
1.03 Classes and Types of Loans. . . . . . . . . . . . . . . . . . . . 28
Section 2. Commitments, Loans, Notes and Prepayments. . . . . . . . . . . . 28
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.02 Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.03 Changes of Commitments. . . . . . . . . . . . . . . . . . . . . . 30
2.04 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.05 Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.06 Several Obligations; Remedies Independent . . . . . . . . . . . . 32
2.07 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.08 Optional Prepayments and Conversions or Continuations of Loans. . 34
2.09 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . 34
Section 3. Payments of Principal and Interest . . . . . . . . . . . . . . . 37
3.01 Repayment of Loans. . . . . . . . . . . . . . . . . . . . . . . . 37
3.02 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . 39
4.01 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.02 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . . 40
4.03 Computations. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.04 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.05 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.06 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . 42
4.07 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . 43
Section 5. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . . . 45
5.01 Additional Costs. . . . . . . . . . . . . . . . . . . . . . . . . 45
5.02 Limitation on Types of Loans. . . . . . . . . . . . . . . . . . . 48
5.03 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.04 Treatment of Affected Loans . . . . . . . . . . . . . . . . . . . 49
5.05 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.06 Net Payments; Taxes . . . . . . . . . . . . . . . . . . . . . . . 51
5.07 Replacement of Lenders. . . . . . . . . . . . . . . . . . . . . . 53
Section 6. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 54
6.01 Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . 54
(i)
<PAGE>
Page
6.02 Conditions Precedent to Lending for Permitted Acquisitions. . . . 57
6.03 Conditions to all . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7. Representations and Warranties . . . . . . . . . . . . . . . . . 64
7.01 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . 64
7.02 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 64
7.03 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.04 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.05 Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.06 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.07 Use of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.10 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . 67
7.11 Public Utility Holding Company Act. . . . . . . . . . . . . . . . 67
7.12 Material Agreements and Liens . . . . . . . . . . . . . . . . . . 67
7.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 68
7.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 70
7.15 Subsidiaries, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 71
7.16 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . 72
7.17 True and Complete Disclosure. . . . . . . . . . . . . . . . . . . 72
7.18 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 73
7.19 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8. Covenants of the Company . . . . . . . . . . . . . . . . . . . . 73
8.01 Financial Statements, Etc.. . . . . . . . . . . . . . . . . . . . 74
8.02 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.03 Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 77
8.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
8.05 Prohibition of Fundamental Changes. . . . . . . . . . . . . . . . 81
8.06 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . 83
8.07 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.08 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.09 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 86
8.10 Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . 87
8.11 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . 87
8.12 Fixed Charges Ratio . . . . . . . . . . . . . . . . . . . . . . . 87
8.13 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . 88
8.14 [Intentionally left blank]. . . . . . . . . . . . . . . . . . . . 88
8.15 Interest Rate Protection Agreements . . . . . . . . . . . . . . . 88
8.16 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . 88
8.17 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 88
8.18 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 89
8.19 Certain Obligations Respecting Subsidiaries; Additional
Mortgaged Properties . . . . . . . . . . . . . . . . . . . . . . 89
8.20 Modifications of Certain Documents. . . . . . . . . . . . . . . . 90
8.21 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 91
8.22 Puerto Rico Security Documents. . . . . . . . . . . . . . . . . . 91
(ii)
<PAGE>
Page
Section 9. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 91
Section 10. The Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.01 Appointment, Powers and Immunities. . . . . . . . . . . . . . . . 95
10.02 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . 96
10.03 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.04 Rights as a Lender. . . . . . . . . . . . . . . . . . . . . . . . 97
10.05 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 97
10.06 Non-Reliance on Agent and Other Lenders . . . . . . . . . . . . . 98
10.07 Failure to Act. . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.08 Resignation or Removal of Agent . . . . . . . . . . . . . . . . . 99
10.09 Agency Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.10 Consents under Other Loan Documents . . . . . . . . . . . . . . .100
10.11 Syndication Agent . . . . . . . . . . . . . . . . . . . . . . . .100
Section 11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . .100
11.01 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
11.03 Expenses, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . .101
11.04 Amendments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . .103
11.05 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . .103
11.06 Assignments and Participations. . . . . . . . . . . . . . . . . .104
11.07 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
11.08 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .107
11.09 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . .107
11.10 Governing Law; Submission to Jurisdiction; Service of Process
and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . .108
11.11 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . .109
11.12 Treatment of Certain Information; Confidentiality . . . . . . . .109
11.13 Intention of Parties. . . . . . . . . . . . . . . . . . . . . . .110
(iii)
<PAGE>
SCHEDULE I - Existing Material Agreements and Liens
SCHEDULE II - Environmental Matters
SCHEDULE III - Subsidiaries and Investments
SCHEDULE IV - Real Property
SCHEDULE V - Litigation
SCHEDULE VI - Existing Puerto Rico Security Documents
SCHEDULE VII - Existing Mortgages
EXHIBIT A-1 - Form of Facility C Note
EXHIBIT A-2 - Form of Facility D Note
EXHIBIT B - Form of Supplemental Subsidiary Guarantee
and Security Agreement
EXHIBIT C - Form of Mortgage
EXHIBIT D - Form of Deed of Trust
EXHIBIT E-1 - Form of Opinion of Counsel to the Obligors
EXHIBIT E-2 - Form of Opinion of Puerto Rico Counsel to the
Obligors
EXHIBIT F - Form of Opinion of Local Counsel
EXHIBIT G - Form of Opinion of Special New York Counsel
to First Union
EXHIBIT H - Form of Confidentiality Agreement
EXHIBIT I - Form of Assignment and Acceptance
EXHIBIT J-1 - Form of Notice of Borrowing
EXHIBIT J-2 - Form of Notice of Prepayment
EXHIBIT J-3 - Form of Notice of Conversion/Continuation
EXHIBIT J-4 - Form of Notice of Account Designation
(iv)
<PAGE>
SECOND AMENDED AND RESTATED SUPPLEMENTAL CREDIT AGREEMENT dated as of
July 31, 1997 between: SUIZA FOODS CORPORATION, a corporation duly organized
and validly existing under the laws of the State of Delaware (the "COMPANY");
each of the lenders that is a signatory hereto identified under the caption
"LENDERS" on the signature pages hereto or that, pursuant to Section 11.06(b)
hereof, shall become a "Lender" hereunder (individually, a "LENDER" and
collectively, the "LENDERS"); and First Union National Bank (formerly First
Union National Bank of North Carolina), a national banking association, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the "AGENT").
WHEREAS, the Company, certain of the Lenders and the Agent are party
to a Third Amended and Restated Credit Agreement dated of even date herewith (as
modified and supplemented and in effect from time to time, the "EXISTING CREDIT
AGREEMENT"), providing, subject to the terms thereof, for extensions of credit
(by making of loans and issuing letters of credit) to be made by the Lenders
party thereto, to the Company in an aggregate principal or face amount not
exceeding $200,000,000.
WHEREAS, the Company, certain Lenders and the Agent are party to an
Amended and Restated Supplemental Credit Agreement, dated as of March 5, 1997
(as heretofore modified and supplemented and in effect immediately prior to the
Effective Date referred to below, the "EXISTING SUPPLEMENTAL CREDIT AGREEMENT")
(which Existing Supplemental Credit Agreement in turn amended and restated a
Supplemental Credit Agreement, dated as of September 6, 1996, as amended by
Amendment No. 1 dated as of December 2, 1996), providing, subject to the terms
and conditions thereof, for a $100,000,000 revolving credit facility for the
purpose of providing financing for the acquisition by the Company or its
Subsidiaries from time to time of assets, business or capital stock of certain
Persons and related fees, commissions and expenses.
WHEREAS, the parties hereto now wish to amend and restate the Existing
Supplemental Credit Agreement by, among other things, increasing the aggregate
amount of the Facility C Commitments thereunder from $100,000,000 to
$325,000,000 and extending the maturity thereof, adding a new facility thereto
providing for term loans in an aggregate principal amount not to exceed
$175,000,000 and amending certain of the other provisions thereof, and in that
connection, wish to amend and restate the Existing Supplemental Credit Agreement
in its entirety.
WHEREAS, each of the Obligors (as hereinafter defined) expects to
derive benefit, directly or indirectly, from the loans so made to the Company,
both in its separate capacity and as a member of the integrated group, since the
successful operation of
CREDIT AGREEMENT
<PAGE>
-2-
each of the Company and its Subsidiaries is dependent on the continued
successful performance of the functions of the integrated group as a whole.
Accordingly, the parties hereto hereby agree that the Existing
Supplemental Credit Agreement shall, as of the Effective Date (the occurrence of
which is subject to the satisfaction of the conditions precedent specified in
Section 6.01 hereof), be amended and restated in its entirety as follows:
Section 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"ADDITIONAL PUERTO RICO SECURITY DOCUMENTS" shall have the meaning
assigned to such term in Section 8.21 hereof.
"AFFILIATE" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, the Company
and, if such Person is an individual, any member of the immediate family
(including parents, spouse, children and siblings) of such individual and any
trust whose principal beneficiary is such individual or one or more members
of such immediate family and any Person who is controlled by any such member
or trust. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with") shall
mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities
or partnership or other ownership interests, by contract or otherwise),
PROVIDED that, in any event, any Person that owns directly or indirectly
securities having 10% or more of the voting power for the election of
directors or other governing body of a corporation or 10% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (a) no
individual shall be an Affiliate solely by reason of his or her being a
director, officer or employee of the Company or any of its Subsidiaries and
(b) none of the Wholly Owned Subsidiaries of the Company shall be Affiliates.
"APPLICABLE COMMITMENT FEE RATE" shall mean 0.25% per annum; PROVIDED
that if the Leverage Ratio as at the last day of
CREDIT AGREEMENT
<PAGE>
-3-
any fiscal quarter of the Company ending on or after the Effective Date shall
fall within any of the ranges set forth below then, upon the delivery to the
Agent of a certificate of a Responsible Financial Officer of the Company
(which shall accompany the financial statements for such fiscal quarter
delivered under Section 8.01(a) hereof on which the calculation of such
Leverage Ratio is based) demonstrating such fact prior to the end of the next
succeeding fiscal quarter, the "Applicable Commitment Fee Rate" shall be
adjusted upwards or downwards, as the case may be, to the rate per annum set
forth below opposite such range during the period commencing on the third
Business Day following the date of receipt of such certificate to but not
including the date the next such certificate to be delivered under this
definition is delivered or due, whichever is earlier (except that,
notwithstanding the foregoing, the Applicable Commitment Fee Rate shall not
as a consequence of this proviso be so reduced for any period during which an
Event of Default shall have occurred and be continuing):
Range
of
Leverage Ratio Applicable Commitment Fee Rate
-------------- ------------------------------
Less than 2.0:1 0.20%
Equal to or greater than
2.0:1 but
less than 2.50:1 0.25%
Equal to or greater
than 2.50:1 0.375%
; PROVIDED that in the event that there is an Equity Issuance by the Company
resulting in Net Available Proceeds to the Company of at least $50,000,000,
and the Company provides the Agent with the written advice required by
Section 2.09(c) hereof with respect to such Equity Issuance and makes the
application of Net Available Proceeds provided therein, the Applicable
Commitment Fee Rate shall upon such application be immediately adjusted to
give effect to the change in the Leverage Ratio resulting from such
application.
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or of an affiliate of
such Lender) designated for such Type of Loan on the signature pages hereof
or such other office of such Lender (or of an affiliate of such Lender) as
such Lender may from time to time specify to the Agent and the Company as the
CREDIT AGREEMENT
<PAGE>
-4-
office by which its Loans of such Type are to be made and maintained.
"APPLICABLE MARGIN" shall mean: with respect to Loans that are
Base Rate Loans, 0.50% and/or Eurodollar Loans, 1.75% per annum; PROVIDED
that if the Leverage Ratio as at the last day of any fiscal quarter of the
Company ending on or after the Effective Date shall fall within any of the
ranges set forth below then, upon the delivery to the Agent of a certificate
of a Responsible Financial Officer of the Company (which shall accompany the
financial statements for such fiscal quarter delivered under Section 8.01(a)
hereof on which the calculation of such Leverage Ratio is based)
demonstrating such fact prior to the end of the next succeeding fiscal
quarter, the "Applicable Margin" for each Loan shall be adjusted upwards or
downwards, as the case may be, to the rate per annum for the respective Type
and Class of Loan set forth below opposite such range during the period
commencing on the third Business Day following the date of receipt of such
certificate to but not including the date the next succeeding such
certificate to be delivered hereunder is delivered or due, whichever is
earlier (except that, notwithstanding the foregoing, the Applicable Margin
for any such Loan shall not as a consequence of this proviso be so reduced
for any period during which an Event of Default shall have occurred and be
continuing):
Range Applicable Margin (% p.a.)
of --------------------------
Leverage Ratio Base Rate Loans Eurodollar Loans
-------------- --------------- ----------------
Less than 2.0:1 0% 0.75%
Equal to or greater than
2.0:1 but less than 2.50:1 0% 1.0%
Equal to or greater than
2.50:1 but less
than 3.25:1 0% 1.25%
Equal to or greater than 3.25:1
but less
than 3.75:1 0.25% 1.50%
Equal to or greater than
3.75:1 0.50% 1.75%
CREDIT AGREEMENT
<PAGE>
-5-
; PROVIDED that in the event that there is an Equity Issuance by the Company
resulting in Net Available Proceeds to the Company of at least $50,000,000, and
the Company provides the Agent with the written advice required by Section
2.09(c) hereof with respect to such Equity Issuance and makes the application of
Net Available Proceeds provided therein, the Applicable Margin shall upon such
application be immediately adjusted to give effect to the change in the Leverage
Ratio resulting from such application.
"BANKRUPTCY CODE" shall mean the Federal Bankruptcy Code of 1978, as
amended from time to time.
"BASE RATE" shall mean, for any day, a rate per annum equal to the
higher of (a) the Federal Funds Rate for such day PLUS 1/2 of 1% and (b) the
Prime Rate for such day. 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 at the time of such change in the Base Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates based
upon the Base Rate.
"BASIC DOCUMENTS" shall mean, collectively, the Loan Documents and,
except for purposes of the definitions of "Secured Obligations" and "Guaranteed
Obligations" in any of the Security Documents, the Purchase Agreements.
"BERNON ACQUISITION" shall mean the acquisition by the Company or its
Subsidiaries of the fluid milk and plastics businesses owned by the Bernon
family interests for a total cash purchase price not to exceed $305,000,000.
"BUSINESS DAY" shall mean any day on which (a) commercial banks are
not authorized or required to close in North Carolina and (b) if such day
relates to a borrowing of, a payment or prepayment of principal of or interest
on, a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a
notice by the Company with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, any day on which dealings in Dollar deposits are
carried out in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, for any period, expenditures
(including, without limitation, the aggregate amount of Capital Lease
Obligations incurred during such period) made by the Company or any of its
Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals,
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improvements and replacements, but excluding repairs) during such period
computed in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CASUALTY EVENT" shall mean, with respect to any Property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
Property for which such Person or any of its Subsidiaries receives insurance
proceeds, proceeds of a condemnation award or other compensation.
"CLASS" shall have the meaning assigned to such term in Section 1.03
hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL ACCOUNT" shall mean with respect to the Company and any of
its Subsidiaries, the Collateral Account as defined in the Security Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission or any
governmental agency substituted therefor.
"COMMITMENTS" shall mean the Facility C Commitments and the Facility D
Commitments.
"COMMONWEALTH" shall mean the Commonwealth of Puerto Rico and its
political subdivisions, municipalities, agencies and instrumentalities.
"COMPANY" shall have the meaning assigned to such term in the preamble
of this Agreement.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation pursuant to Section 2.08 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion
pursuant to Section 2.08 hereof of one Type of Loan
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into another Type of Loan, which may be accompanied by the transfer by a
Lender (at its sole discretion) of a Loan from one Applicable Lending Office
to another.
"DAIRY FRESH" shall mean Dairy Fresh, Inc., a Delaware corporation and
a Wholly Owned Subsidiary of the Company.
"DEBT SERVICE" shall mean, for any period, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) all payments of principal of
Indebtedness (including, without limitation, the principal component of any
payments in respect of Capital Lease Obligations) scheduled to be made during
such period PLUS (b) all Interest Expense for such period, it being understood
that, if any installment of principal of the Facility D Loans or the Facility B
Loans shall have been prepaid during or prior to such period, the amount of
principal of the Facility D Loans and the Facility B Loans included in Debt
Service for such period shall be equal to the aggregate amount of principal of
the Facility D Loans and the Facility B Loans originally scheduled to be paid
hereunder and under the Existing Credit Agreement during such period.
"DEFAULT" shall mean an Event of Default or an event that with notice
or lapse of time or both would become an Event of Default.
"DISPOSITION" shall mean any sale, assignment, transfer or other
disposition of any Property (whether now owned or hereafter acquired) by the
Company or any of its Subsidiaries to any other Person, excluding any sale,
assignment, transfer or other disposition of any Property sold or disposed of in
the ordinary course of business and on ordinary business terms.
"DIVIDEND PAYMENT" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Company or of any warrants, options or other rights to
acquire the same (or to make any payments to any Person, such as "phantom
stock" payments, where the amount thereof is calculated with reference to the
fair market or equity value of the Company or any of its Subsidiaries), but
excluding dividends payable solely in shares of common stock of the Company.
"DOLLARS" and "$" shall mean lawful money of the United States.
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"EBITDA" shall mean, for any period, the sum, for the Company and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) operating income (calculated
before income taxes, Interest Expense, extraordinary and unusual items and
income or loss attributable to equity in Affiliates) for such period PLUS
(b) depreciation and amortization (to the extent deducted in determining
operating income) for such period PLUS (c) other income not exceeding $2,000,000
for such period.
"EFFECTIVE DATE" shall mean the date on which all of the conditions to
effectiveness of this Agreement set forth in Section 6.01 hereof shall have been
satisfied or waived.
"ENVIRONMENTAL CLAIM" shall mean, with respect to any Person, any
written or oral notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability
for investigatory costs, cleanup costs, governmental response costs, damages
to natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (a) the presence, or Release into
the environment, of any Hazardous Material at any location, whether or not
owned by such Person, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
governmental authority for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
any claim by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from the presence
of Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"ENVIRONMENTAL LAWS" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations, and any orders
or decrees, in each case as now or hereafter in effect, relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes into the
indoor or outdoor environment, including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or toxic or hazardous substances or wastes.
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"EQUITY ISSUANCE" shall mean (a) any issuance or sale by the Company
or any of its Subsidiaries after the Effective Date of (i) any capital stock,
(ii) any warrants or options exercisable in respect of capital stock (other than
any warrants or options issued to directors, officers or employees of the
Company or any of its Subsidiaries, pursuant to employee benefit plans
established in the ordinary course of business and any capital stock of the
Company or any of its Subsidiaries issued upon the exercise of such warrants or
options) or (iii) any other security or instrument representing an equity
interest (or the right to obtain any equity interest) in the Company or any of
its Subsidiaries or (b) the receipt by the Company or any of its Subsidiaries
whether directly (or indirectly through one or more of its Subsidiaries) after
the Effective Date of any capital contribution (whether or not evidenced by any
equity security issued by the recipient of such contribution); PROVIDED that
Equity Issuance shall not include (x) any such issuance or sale by any
Subsidiary of the Company to the Company or any Wholly Owned Subsidiary of the
Company or (y) any capital contribution by the Company or any Wholly Owned
Subsidiary of the Company to any Subsidiary of the Company.
"EQUITY RIGHTS" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or
agreements of any kind (including, without limitation, any stockholders' or
voting trust agreements) for the issuance, sale, registration or voting of,
or securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such
Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" shall mean any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which the Company is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the Company
is a member.
"EURODOLLAR BASE RATE" shall mean, with respect to any Eurodollar Loan
for any Interest Period therefor, the rate per annum for deposits in Dollars for
a period comparable to such Interest Period which appears on display page 3750
(British
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Bankers Association - LIBOR) of the Dow Jones Markets Service as of 11:00
a.m. London time two Business Days preceding the first day of such Interest
Period or, if such display page 3750 is unavailable at such time, the rate
which appears on the Reuters Screen ISDA Page as of such date and time;
PROVIDED, however, that if the Agent determines that the relevant foregoing
source is unavailable for the relevant Interest Period, Eurodollar Base Rate
shall mean the rate of interest determined by the Agent to be the average
(rounded upward, if necessary, to the nearest 1/100th of 1%) of the rates per
annum at which deposits in Dollars in immediately available funds are offered
to the Agent or other money center banks two Business Days preceding the
first day of such Interest Period by leading banks in the London interbank
market as of 11:00 a.m. London time for delivery on the first day of such
Interest Period, for the number of days comprised therein and in an amount
comparable to the amount of the relevant Eurodollar Loan.
"EURODOLLAR LOANS" shall mean Loans that bear interest at rates based
on rates referred to in the definition of "Eurodollar Base Rate" in this
Section 1.01.
"EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any Interest
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the Eurodollar Base Rate for
such Eurodollar Loan for such Interest Period divided by 1 MINUS the Reserve
Requirement (if any) for such Eurodollar Loan for such Interest Period.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Section 9 hereof.
"EXCESS CASH FLOW" shall mean, for any period, the sum, determined
without duplication, for the Company and its Subsidiaries, of (a) EBITDA for
such period MINUS (b) Capital Expenditures made during such period (other than
Capital Expenditures made from the proceeds of Indebtedness permitted under
Section 8.07 hereof) MINUS (c) the aggregate amount of Debt Service for such
period PLUS (d) decreases (if any) (or MINUS increases (if any)) in Working
Capital for such period, MINUS (e) income taxes paid in cash for such period.
"EXCLUDED DISPOSITION" shall mean the Disposition of (i) an Investment
Tax Credit or (ii) any motor vehicles or other equipment no longer used or
useful in the business of the Company or any of its Subsidiaries to the extent
the proceeds thereof are used to acquire similar replacement Property within a
period of
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30 days after the end of the fiscal quarter in which such Disposition was made.
"EXISTING LENDER" shall mean each Lender under the Existing
Supplemental Credit Agreement.
"EXISTING SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT" shall mean the
Subsidiary Guarantee and Security Agreement dated as of March 31, 1995 between
each Subsidiary of the Company party thereto and the Agent, as the same shall be
modified and supplemented and in effect from time to time.
"FACILITY A COMMITMENT" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY A COMMITMENT PERCENTAGE" shall have the meaning assigned
thereto in the Existing Credit Agreement.
"FACILITY A LENDER" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY A LOAN" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY A NOTE" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY B COMMITMENT" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY B COMMITMENT PERCENTAGE" shall have the meaning assigned
thereto in the Existing Credit Agreement.
"FACILITY B LENDER" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY B LOAN" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY B NOTE" shall have the meaning assigned thereto in the
Existing Credit Agreement.
"FACILITY C COMMITMENT" shall mean, for each Facility C Lender, the
obligation of such Lender to make Facility C Loans to the Company in an
aggregate amount at any one time outstanding up to but not exceeding the amount
set forth opposite the name of such Lender on the signature pages hereof under
the caption "Facility C Commitment" (as the same may be reduced from time to
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time pursuant to Section 2.03 hereof). The original aggregate principal amount
of the Facility C Commitments is $325,000,000.
"FACILITY C COMMITMENT PERCENTAGE" shall mean, with respect to any
Facility C Lender, the ratio of (a) the amount of the Facility C Commitment of
such Lender to (b) the aggregate amount of the Facility C Commitments of all of
the Facility C Lenders.
"FACILITY C COMMITMENT REDUCTION DATES" shall mean, with respect to
the Facility C Loans, each Quarterly Date during the period commencing on
December 31, 2000, through and including the Facility C Commitment Termination
Date.
"FACILITY C COMMITMENT TERMINATION DATE" shall mean the Quarterly
Date falling on or nearest to September 30, 2003.
"FACILITY C LENDERS" shall mean the Lenders having Facility C
Commitments and/or holding Facility C Loans from time to time.
"FACILITY C LOANS" shall mean the loans provided for by Section
2.01(a) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"FACILITY C NOTES" shall mean the promissory notes provided for by
Section 2.07(a) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"FACILITY D COMMITMENT" shall mean, for each Facility D Lender, the
obligation of such Lender to make a Facility D Loan to the Company in a
principal amount up to but not exceeding the amount set opposite the name of
such Lender on the signature pages hereof under the caption "Facility D
Commitment" (as the same may be reduced from time to time pursuant to Section
2.03 hereof). The aggregate principal amount of the Facility D Commitments as
of the Effective Date is $175,000,000.
"FACILITY D LENDERS" shall mean the Lenders having Facility D
Commitments and/or holding Facility D Loans from time to time.
"FACILITY D LOANS" shall mean the Loans provided for by Section
2.01(b) hereof, which may be Base Rate Loans and/or Eurodollar Loans.
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"FACILITY D NOTES" shall mean the promissory notes provided for by
Section 2.07(b) hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"FACILITY D LOAN COMMITMENT TERMINATION DATE" shall mean September 22,
1997.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 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 for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to First Union on such Business Day on such
transactions as determined by the Agent.
"FIRST UNION" shall mean First Union National Bank (formerly First
Union National Bank of North Carolina).
"FIXED CHARGES" shall mean, for any period, the sum, for the Company
and its Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) the aggregate amount of Debt
Service for such period, PLUS (b) the aggregate amount of taxes paid in respect
of the income or profit of the Company and its Subsidiaries for such period,
PLUS (c) Capital Expenditures made during such period, PLUS (d) any Dividend
Payments made for such period, PLUS (e) Management Fees for such period (but
only to the extent such Management Fees are not included in the calculation of
EBITDA); provided that Capital Expenditures shall not include the following: (i)
the acquisition of replacement Property in respect of an Excluded Disposition,
(ii) the purchase price paid by the Company or any of its Subsidiaries in
respect of any acquisition permitted under Section 8.05(b)(iv) hereof, and (iii)
Capital Expenditures made with the proceeds of property or casualty insurance
for the purposes of repairing or replacing damaged or destroyed fixed or capital
assets.
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"FIXED CHARGES RATIO" shall mean, as at any date, the ratio of (a)
EBITDA for the period of four consecutive fiscal quarters ending on or most
recently ended prior to such date to (b) Fixed Charges for such period.
"GAAP" shall mean generally accepted accounting principles applied on
a basis consistent with those that, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement.
"GARRIDO" shall mean Garrido y Compania, Inc., a Puerto Rico
corporation.
"GARRIDO NEGATIVE PLEDGE AGREEMENT" shall have the meaning assigned to
such term in the Existing Credit Agreement.
"GUARANTEE" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "GUARANTEE" and "GUARANTEED" used as a verb shall
have a correlative meaning.
"GUARANTEE AGREEMENT" shall mean the Guarantee Agreement dated as of
September 6, 1996 between Suiza Dairy, Suiza Fruit, Neva Plastics, Reddy Ice
Corporation, Velda Farms, Inc., Suiza Management Corporation and the Agent, as
the same shall be modified and supplemented and in effect from time to time.
"HAZARDOUS MATERIAL" shall mean, collectively, (a) any petroleum or
petroleum products, flammable materials, explosives, radioactive materials,
asbestos, urea formaldehyde foam insulation, and transformers or other equipment
that contain polychlorinated biphenyls ("PCB'S"), (b) any chemicals or other
materials or substances that are now or hereafter become defined
CREDIT AGREEMENT
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as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import under any Environmental Law and (c)
any other chemical or other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated under any Environmental Law.
"INDEBTEDNESS" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 120 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations of such Person; and (f) Indebtedness of others
Guaranteed by such Person.
"INTEREST COVERAGE RATIO" shall mean, as at any date, the ratio of
(a) EBITDA for a period of four consecutive fiscal quarters ending on, or most
recently ended prior to, such date to (b) Interest Expense for such period.
"INTEREST EXPENSE" shall mean, for any period, the sum, for the
Company and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of the following: (a) all interest in
respect of Indebtedness (including, without limitation, the interest component
of any payments in respect of Capital Lease Obligations, but excluding
amortization of any deferred loan costs incurred in connection with the
transactions contemplated hereby or by the Existing Credit Agreement)
capitalized or expensed during such period (whether or not actually paid during
such period), but excluding any non-cash interest, PLUS (b) the net amount
payable (or MINUS the net amount receivable) under Interest Rate Protection
Agreements during such period (whether or not actually paid or
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received during such period) MINUS (c) all interest income for such period.
"INTEREST PERIOD" shall mean with respect to any Eurodollar Loan, each
period commencing on the date such Eurodollar Loan is made or Converted from a
Base Rate Loan or the last day of the next preceding Interest Period for such
Eurodollar Loan and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Company may select as
provided in Section 4.05 hereof, except that each Interest Period for a
Eurodollar Loan that 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: (i) if
any Interest Period for any Facility C Loan would otherwise end after the
Facility C Commitment Termination Date, such Interest Period shall end on the
Facility C Commitment Termination Date; (ii) no Interest Period for any Facility
C Loan may commence before and end after any Facility C Commitment Reduction
Date unless, after giving effect to the reduction of the Facility C Commitments
to occur on such Facility C Commitment Reduction Date, the aggregate principal
amount of the Facility C Loans having Interest Periods that end after such
Facility C Commitment Reduction Date shall be equal to or less than the
aggregate amount of Facility C Commitments scheduled to be outstanding from and
after such Facility C Commitment Reduction Date; (iii) no Interest Period for
any Facility D Loan may commence before and end after any Principal Payment Date
for the Facility D Loans unless, after giving effect thereto, the aggregate
principal amount of the Facility D Loans having Interest Periods that end after
such Principal Payment Date shall be equal to or less than the aggregate
principal amount of the Facility D Loans scheduled to be outstanding after
giving effect to the payments of principal required to be made on such Principal
Payment Date; (iv) each Interest Period that would otherwise end on a day that
is not a Business Day shall end on the next succeeding Business Day (or, if such
next succeeding Business Day falls in the next succeeding calendar month, on the
next preceding Business Day); and (v) notwithstanding clauses (i) through (iv)
above, no Interest Period shall have a duration of less than one month for any
Eurodollar Loan and, if the Interest Period for any such Loan would otherwise be
a shorter period, such Loan shall not be available as a Eurodollar Loan
hereunder for such period.
"INTEREST RATE PROTECTION AGREEMENT" shall mean, for any Person, an
interest rate swap, cap or collar agreement or
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similar arrangement between such Person and one or more financial
institutions providing for the transfer or mitigation of interest risks
either generally or under specific contingencies.
"INTEREST RATE PROTECTION OBLIGATIONS" shall mean the obligations of
any Obligor in respect of Interest Rate Protection Agreements permitted under
Section 8.08(d) hereof.
"INVESTMENT" shall mean, for any Person: (a) the acquisition (whether
for cash, Property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
sale); (b) the making of any deposit with, or advance, loan or other extension
of credit to, any other Person (including the purchase of Property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such Property to such Person), but excluding any such advance, loan or
extension of credit having a term not exceeding 90 days representing the
purchase price of inventory or supplies sold by such Person in the ordinary
course of business); (c) the entering into of any Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of any
other Person and (without duplication) any amount committed to be advanced, lent
or extended to such Person; or (d) the entering into of any Interest Rate
Protection Agreement.
"INVESTMENT TAX CREDIT" shall mean an investment tax credit to which
the Company or any of its Subsidiaries may be entitled pursuant to the Puerto
Rico Agricultural Tax Incentives Act of 1995.
"LEVERAGE RATIO" shall mean, as at any date, the ratio of (a) the
aggregate outstanding principal amount of Indebtedness at such date to (b)
EBITDA for the period of four consecutive fiscal quarters ending on, or most
recently ended prior to, such date; provided that if the Company or any of its
Subsidiaries shall have acquired any business, Property or Person during such
period (whether before, on or after the Effective Date), EBITDA shall, to the
extent the Company shall have delivered audited financial statements (or, if
audited financial statements are not available to the Company, unaudited
financial statements (i) reviewed by independent certified accountants of
recognized national standing and acceptable to the Agent and (ii) in form
satisfactory to the Agent) for the acquired business, Property or Person for
such period, be adjusted to reflect on a pro forma
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basis EBITDA for such business, Property or Person as if such business,
Property or Person had been acquired at the beginning of such period.
"LIEN" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Loan Documents, a Person
shall be deemed to own, subject to a Lien, any Property that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement (other than an
operating lease) relating to such Property.
"LOANS" shall mean the Facility C Loans and the Facility D Loans.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Existing Credit Agreement, the Notes, the Facility A Notes, the Facility B Notes
and the Security Documents.
"MAJORITY LENDERS" shall mean, as at any time, Facility C Lenders and
Facility D Lenders having at least a majority of the sum of (a) the aggregate
unused amount, if any, of the Facility C Commitments and Facility D Commitments
as at such time PLUS (b) the aggregate outstanding principal amount of the
Facility C Loans and Facility D Loans at such time.
"MANAGEMENT FEES" shall mean, for any period, any amounts paid or
incurred by the Company or any of its Subsidiaries to any Person on account of
fees, salaries and other compensation in respect of services rendered in
connection with the management or supervision of the Company and/or any of its
Subsidiaries (but excluding customary and reasonable compensation and other
benefits paid or provided to officers, employees and directors for services
rendered to the Company or any of its Subsidiaries in such capacities or any
such amounts by any Subsidiary of the Company to the Company or any other
Subsidiary of the Company).
"MARGIN STOCK" shall mean "margin stock" within the meaning of
Regulations U and X.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Subsidiaries taken as a
whole, (b) the ability of any Obligor to perform its obligations under any of
the Loan
CREDIT AGREEMENT
<PAGE>
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Documents to which it is a party, (c) the validity or enforceability of any
of the Loan Documents, (d) the rights and remedies of the Lenders and the
Agent under any of the Loan Documents or (e) the timely payment of the
principal of or interest on the Loans or other amounts payable in connection
therewith or under the Loan Documents.
"MODEL DAIRY" shall mean Model Dairy, Inc., a Delaware corporation.
"MORTGAGES" shall mean, collectively, (a) the mortgages or deeds of
trust identified in Schedule VII hereto and (b) one or more mortgages or deeds
of trust, in the respective forms of Exhibits C and D hereto or of Exhibits B
and C to the Existing Credit Agreement (with such modifications thereto
requested by the Agent as may be appropriate to effect a lien on real property
in the state where the respective property to be covered by such instrument is
located), executed by the respective Obligors who own or lease such property in
favor of the Agent (or, in the case of a deed of trust, in favor of the trustee
for the benefit of the Agent and the Lenders and/or the lenders under the
Existing Credit Agreement, as the case may be) pursuant to Sections 8.19(c) or
8.19(d) hereof or of the Existing Credit Agreement covering the respective
Properties and/or leasehold interests identified in Schedule IV hereto or
subject to the requirements of said Sections 8.19(c) or 8.19(d), in each case as
the same shall be modified and supplemented and in effect from time to time.
"MULTIEMPLOYER PLAN" shall mean a multiemployer plan defined as such
in Section 3(37) of ERISA to which contributions have been made by the Company
or any ERISA Affiliate and that is covered by Title IV of ERISA.
"NET AVAILABLE PROCEEDS" shall mean:
(a) in the case of any Disposition, the amount of Net Cash Payments
received in connection with such Disposition;
(b) in the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation awards and other compensation received
by the Company and its Subsidiaries in respect of such Casualty Event net
of (i) reasonable expenses incurred by the Company and its Subsidiaries in
connection therewith and (ii) contractually required repayments of
Indebtedness to the extent secured by a Lien on such Property and any
income and transfer taxes
CREDIT AGREEMENT
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payable by the Company or any of its Subsidiaries in respect of such
Casualty Event; and
(c) in the case of any Equity Issuance, the aggregate amount of all
cash received by the Company and its Subsidiaries in respect of such Equity
Issuance net of reasonable expenses incurred by the Company and its
Subsidiaries in connection therewith.
"NET CASH PAYMENTS" shall mean, with respect to any Disposition, the
aggregate amount of all cash payments, and the fair market value of any non-cash
consideration, received by the Company and its Subsidiaries directly or
indirectly in connection with such Disposition; PROVIDED that (a) Net Cash
Payments shall be net of (i) the amount of any legal, title and recording tax
expenses, commissions and other fees and expenses paid by the Company and its
Subsidiaries in connection with such Disposition and (ii) any Federal, state and
local income or other taxes estimated to be payable by the Company and its
Subsidiaries as a result of such Disposition (but only to the extent that such
estimated taxes are in fact paid to the relevant Federal, state or local
governmental authority within six months of the date of such Disposition) and
(b) Net Cash Payments shall be net of any repayments by the Company or any of
its Subsidiaries of Indebtedness to the extent that (i) such Indebtedness is
secured by a Lien on the Property that is the subject of such Disposition and
(ii) the transferee of (or holder of a Lien on) such Property requires that such
Indebtedness be repaid as a condition to the Disposition thereof.
"NET PURCHASE PRICE" shall mean 100% of the purchase price (including
noncash compensation) paid by the Company or any of its Subsidiaries for any
business, Property or Person in connection with a Permitted Acquisition MINUS
any cash on the balance sheet of the Person or included in the business or
Property being acquired pursuant to such Permitted Acquisition.
"NET WORTH" shall mean, as at any date, the sum for the Company and
its Subsidiaries (determined on a consolidated basis without duplication) of (a)
the amount of capital stock PLUS (b) the amount of additional paid-in capital
PLUS (c) the amount of retained earnings (or, in the case of any retained
earnings deficit, MINUS the amount of such deficit).
"NEVA PLASTICS" shall mean Neva Plastics Manufacturing Corp., a
Delaware corporation.
CREDIT AGREEMENT
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"NEW LENDER" shall mean each Lender party to this Agreement on the
Effective Date which is not a party to the Existing Supplemental Credit
Agreement.
"NOTES" shall mean the Facility C Notes and the Facility D Notes.
"OBLIGOR" shall mean the Company and each Subsidiary of the Company
party to any Security Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PERMITTED ACQUISITION" shall mean any acquisition by the Company or
any of its Subsidiaries of any business or Property from, or capital stock of,
any Person, PROVIDED that, (i) unless otherwise consented to in writing (a) by
the Majority Lenders, the Net Purchase Price of such acquisition shall not equal
or exceed $30,000,000, and (b) by the Supermajority Lenders, the Net Purchase
Price of such acquisition shall not equal or exceed $150,000,000 (except that
the Bernon Acquisition shall not require the consents set forth in sub-clauses
(a) and (b) of this clause (i); (ii) if the subject of such acquisition is a
Person, the Company and/or its Subsidiaries shall not acquire less than 90% of
the issued and outstanding ownership interests (including, without limitation,
warrants, options or other securities convertible into ownership interests) in
such Person (except that warrants may be issued by Franklin Plastics,Inc., a
Delaware corporation and Subsidiary of the Company, to purchase shares of its
common stock up to 17.5% of outstanding common stock thereof on a fully diluted
basis in connection with the Bernon Acquisition, to Persons other than the
Company or its Subsidiaries), (iii) prior to such acquisition, the Company shall
have delivered to the Agent for further distribution to the Lenders copies of
the proposed acquisition agreement relating to such acquisition, all material
documents related thereto and at the reasonable request of the Agent, such other
material information respecting such business, Property or Person, as the case
may be, obtained by the Company in the exercise of its due diligence, (iv) at
the time of such acquisition, the Company or its Subsidiary, as the case may be,
shall grant a security interest in such business or Property or pledge such
ownership interests to the Agent for the benefit of the Lenders, except that no
such security interest shall be required in any parcel of real property or
leasehold interest having a current market value of less than $1,500,000, as
demonstrated in a manner reasonably satisfactory to the Agent, at
CREDIT AGREEMENT
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the time of acquisition thereof, (v) such business, Property or Persons shall
be in the same line or lines of business currently engaged in by the Company
or any of its Subsidiaries, or as permitted by Section 8.16 hereof, and (vi)
on a pro forma basis, after giving effect to such acquisition, the Company
shall be in compliance with Sections 8.10, 8.11, 8.12 and 8.13 hereof.
"PERMITTED INVESTMENTS" shall mean: (a) direct obligations of the
United States, or of any agency thereof, or obligations guaranteed as to
principal and interest by the United States, or of any agency thereof, in either
case maturing not more than one year from the date of acquisition thereof;
(b) direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition thereof and, at the time of such
acquisition, having the highest rating obtainable from either Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc. ("S&P") or Moody's Investors
Services, Inc. ("MOODY'S"); (c) certificates of deposit issued by any bank or
trust company organized under the laws of the United States or any state thereof
or the Commonwealth and having capital, surplus and undivided profits of at
least $500,000,000, maturing not more than six months from the date of
acquisition thereof; (d) commercial paper rated A-1 or better or P-1 by S&P or
Moody's, respectively, maturing not more than six months from the date of
acquisition thereof; and (e) Eurodollar time deposits having a maturity of less
than six months purchased directly from any bank meeting the criteria set forth
in clause (c) above (whether such deposit is with such bank or any other such
bank).
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"PLAN" shall mean an employee benefit or other plan established or
maintained by the Company or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"POST-DEFAULT RATE" shall mean, in respect of any principal of any
Loan or any other amount under this Agreement, any Note or any other Loan
Document that is not paid when due (whether at stated maturity, by acceleration,
by mandatory prepayment or otherwise), and in respect of any principal of any
Loan during any period commencing upon the occurrence of any Event of Default
and thereafter for so long as any Event of
CREDIT AGREEMENT
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Default shall be continuing, a rate per annum during the period from and
including the due date to but excluding the earlier of the date on which such
amount is paid in full or such Event of Default ceases to be continuing equal
to 2% PLUS the Base Rate as in effect from time to time PLUS the Applicable
Margin for Base Rate Loans (PROVIDED that, if the amount so in default is
principal of a Eurodollar Loan and the due date thereof is a day other than
the last day of the Interest Period therefor, the "Post-Default Rate" for
such principal shall be, for the period from and including such due date to
but excluding the last day of such Interest Period, 2% PLUS the interest rate
for such Eurodollar Loan as provided in Section 3.02(b) hereof and,
thereafter, the rate provided for above in this definition).
"PRIME RATE" shall mean the rate of interest from time to time
announced by First Union at its principal office as its prime commercial lending
rate.
"PRINCIPAL PAYMENT DATES" shall mean the Quarterly Dates falling on or
nearest to March 31, June 30, September 30 and December 31 of each year,
commencing with December 31, 1999, through and including September 30, 2003.
"PROCESS AGENT" shall have the meaning assigned to such term in
Section 11.10(c) hereof.
"PROPERTY" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal (including, without limitation, cash) or
mixed and whether tangible or intangible.
"PUERTO RICO SECURITY DOCUMENTS" shall mean each of the agreements
listed in Schedule VI hereto, and each of the Additional Puerto Rico Security
Documents, in each case as any such agreement shall be modified and supplemented
and in effect from time to time.
"PURCHASE AGREEMENTS" shall mean, collectively, each Purchase
Agreement between the Company or any of its Subsidiaries and the seller of the
business, Property or Person purchased by the Company or such Subsidiary
pursuant to a Permitted Acquisition financed under this Agreement.
"QUARTERLY DATES" shall mean the last Business Day of March, June,
September and December in each year, the first of which shall be September 30,
1997.
CREDIT AGREEMENT
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"REGISTER" shall have the meaning assigned to such term in Section
11.06(g) hereof.
"REGISTERED HOLDER" shall have the meaning assigned to such term in
Section 5.06(b) (ii) hereof.
"REGISTERED LOANS" shall have the meaning assigned to such term in
Section 2.07(e) hereof.
"REGISTERED NOTE" shall have the meaning assigned to such term in
Section 2.07(e) hereof.
"REGULATIONS A, D, U AND X" shall mean, respectively, Regulations A,
D, U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any change
after the date of this Agreement in United States, Federal, state or foreign law
or regulations or in the law or regulations of the Commonwealth (including,
without limitation, Regulation D) or the adoption or making after such date of
any interpretation, directive or request applying to a class of banks including
such Lender of or under any Federal, state or foreign law or regulations or in
the law or regulations of the Commonwealth (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
"RESERVE REQUIREMENT" shall mean, for any Interest Period for any
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, 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
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change with respect to (i) any category of liabilities
that includes deposits by reference to
CREDIT AGREEMENT
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which the Eurodollar Base Rate is to be determined as provided in the
definition of "Eurodollar Base Rate" in this Section 1.01 or (ii) any
category of extensions of credit or other assets that includes Eurodollar
Loans.
"RESPONSIBLE FINANCIAL OFFICER" shall mean, with respect to any
Person, the Chairman of the Board of Directors, the President, the Chief
Executive Officer, the Chief Financial Officer or the Treasurer of such Person.
"SECURITY AGREEMENT" shall mean the Security Agreement dated as of
March 31, 1995 between the Company and the Agent, as amended by the Amendment to
Security Agreement dated as of July 17, 1996 between the Company and the Agent,
by Amendment No. 2 to Security Agreement between the Company and the Agent dated
as of September 6, 1996, by Amendment No. 3 to Security Agreement, dated as of
December 2, 1996 between the Company and the Agent, and by Amendment No. 4 to
Security Agreement, dated as of June 10, 1997 between the Company and the Agent,
and as further modified and supplemented and in effect from time to time.
"SECURITY DOCUMENTS" shall mean, collectively, the Security Agreement,
the Mortgages, each Supplemental Subsidiary Guarantee and Security Agreement,
the Existing Subsidiary Guarantee and Security Agreement, the Guarantee
Agreement, the Puerto Rico Security Documents and all Uniform Commercial Code
financing statements and/or other filings required hereby or thereby to be filed
with respect to the security interests in personal Property and fixtures created
pursuant hereto or thereto.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership 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 such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"SUBSIDIARY GUARANTORS" shall mean Suiza Dairy, Suiza Fruit, Model
Dairy, Neva Plastics, Reddy Ice Corporation, Swiss Dairy, Velda Farms, Inc.,
Dairy Fresh and Suiza Management
CREDIT AGREEMENT
<PAGE>
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Corporation, each a Delaware corporation, and each Supplemental Guarantor.
"SUIZA DAIRY" shall mean Suiza Dairy Corporation, a Delaware
corporation.
"SUIZA FRUIT" shall mean Suiza Fruit Corporation, a Delaware
corporation.
"SUPERMAJORITY LENDERS" shall mean, as at any time, Facility C Lenders
and Facility D Lenders having at least 66 2/3% of the sum of (a) the aggregate
unused amount, if any, of the Facility C Commitments and the Facility D
Commitments as at such time PLUS (b) the aggregate outstanding principal amount
of the Facility C Loans and Facility D Loans at such time.
"SUPPLEMENTAL GUARANTOR" shall mean each Subsidiary of the Company
party to a Supplemental Subsidiary Guarantee and Security Agreement.
"SUPPLEMENTAL SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT" shall mean,
collectively, (i) the Supplemental Subsidiary Guarantee and Security Agreement
dated as of September 6, 1996 between the Agent and Swiss Dairy, (ii) the
Supplemental Guarantee and Security Agreement dated as of December 2, 1996
between the Agent and Model Dairy, (iii) the Supplemental Subsidiary Guarantee
and Security Agreement dated as of June 10, 1997 between the Agent and Dairy
Fresh (formerly known as DF Acquisition Corp.), and (iv) each Supplemental
Subsidiary Guarantee and Security Agreement substantially in the form of Exhibit
B hereto, as the same shall be modified and supplemented and in effect from time
to time.
"SWISS DAIRY" shall mean Swiss Dairy Corporation, a Delaware
corporation and a Wholly Owned Subsidiary of the Company.
"TAXES" shall have the meaning assigned to such term in Section
5.06(a) hereof.
"TYPE" shall have the meaning assigned to such term in Section 1.03
hereof.
"UNITED STATES" shall mean the United States of America.
"U.S. TAXES" shall have the meaning assigned to such term in Section
5.06(b) hereof.
CREDIT AGREEMENT
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"WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
"WORKING CAPITAL" shall mean, for any period, the excess of (a) the
aggregate amount of inventory, accounts receivable and prepaid expenses of the
Company and its Subsidiaries over (b) the aggregate amount of accounts payable
and current accrued expenses of the Company and its Subsidiaries.
1.02 ACCOUNTING TERMS AND DETERMINATIONS.
(a) 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
Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with those used in the preparation of the latest financial
statements furnished to the Lenders hereunder. All calculations made for the
purposes of determining compliance with this Agreement shall (except as
otherwise expressly provided herein) be made by application of generally
accepted accounting principles applied on a basis consistent with those used in
the preparation of the latest annual or quarterly financial statements furnished
to the Lenders pursuant to Section 8.01 hereof unless (i) the Company shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements or (ii) the Majority Lenders shall so object in
writing within 30 days after delivery of such financial statements, in either of
which events such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made.
(b) The Company shall deliver to the Lenders at the same time as the
delivery of any annual or quarterly financial statement under Section 8.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles employed in the preparation of such
statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as to
which no objection has been made in accordance
CREDIT AGREEMENT
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with the last sentence of subsection (a) above and (ii) reasonable estimates
of the difference between such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in Section 8 hereof, the Company will not, without
the prior consent of the Majority Lenders, change the last day of its fiscal
year from December 31 of each year, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 30 of
each year, respectively.
1.03 CLASSES AND TYPES OF LOANS. Loans hereunder are distinguished
by "Class" and "Type". The "Class" of a Loan (or of a Commitment to make a Loan
or the related Note) refers to whether such Loan is a Facility C Loan or a
Facility D Loan, each of which constitutes a Class. The "Type" of a Loan refers
to whether such Loan is a Base Rate Loan or a Eurodollar Loan, each of which
constitutes a Type. Loans may be identified by both Class and Type.
Section 2. COMMITMENTS, LOANS, NOTES AND PREPAYMENTS.
2.01 LOANS.
(a) FACILITY C LOANS. On the Effective Date, (i) the "Facility C
Loans" (as defined in the Existing Supplemental Credit Agreement) held by the
Existing Lenders under the Existing Supplemental Credit Agreement shall
automatically, and without any action on the part of any Person, be deemed to be
Facility C Loans hereunder, (ii) the New Lenders shall be Facility C Lenders and
parties hereto, and (iii) the Facility C Lenders shall take such steps, which
may include the making of assignments and Facility C Loans and other adjustments
among the Facility C Lenders, as shall be necessary so that after giving effect
to such assignments and adjustments, the Facility C Lenders shall hold Facility
C Loans hereunder ratably in accordance with their respective Facility C
Commitments. On the Effective Date all Interest Periods under the Existing
Supplemental Credit Agreement in respect of the "Facility C Loans" under and as
defined in the Existing Supplemental Credit Agreement shall automatically be
terminated (and the Company shall on the Effective Date make payments to the
Existing Lenders that held such "Facility C Loans" under Section 5.05 thereof to
compensate for such termination as if such termination were a payment or
prepayment referred to in said Section 5.05), and the Company shall be permitted
to continue such "Facility C Loans" as Eurodollar Loans
CREDIT AGREEMENT
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hereunder, or to convert such "Facility C Loans" into Base Rate Loans
hereunder.
(ii) Each Facility C Lender severally agrees, on the terms and
conditions of this Agreement, to make loans to the Company in Dollars during the
period from and including the Effective Date to but not including the Facility C
Commitment Termination Date in an aggregate principal amount (including any
Loans outstanding to it by reason of the assignments and other adjustments under
the immediately preceding paragraph) at any one time outstanding up to but not
exceeding the amount of the Facility C Commitment of such Lender as in effect
from time to time. Subject to the terms and conditions of this Agreement,
during such period the Company may borrow, repay and reborrow the amount of the
Facility C Commitments by means of Base Rate Loans and/or Eurodollar Loans and
prior to the final maturity date of the Facility C Loans may Convert Facility C
Loans of one Type into Facility C Loans of another Type (as provided in
Section 2.08 hereof) or Continue Facility C Loans of one Type as Facility C
Loans of the same Type (as provided in Section 2.08 hereof).
(b) FACILITY D LOANS. Each Facility D Lender severally agrees, on
the terms and conditions of this Agreement, to make a single term loan to the
Company in Dollars on the Effective Date (provided that the same shall occur no
later than the Facility D Loan Commitment Termination Date) in a principal
amount up to but not exceeding the amount of the Facility D Commitment of such
Facility D Lender. On the Effective Date certain outstanding Facility A Loans
under the Existing Credit Agreement shall be deemed converted into Facility D
Loans hereunder in accordance with Section 2.01(c) of the Existing Credit
Agreement; provided that the aggregate principal amount of Facility D Loans made
hereunder and Facility D Loans resulting from such conversion shall not exceed
the Facility D Commitments. Subject to the terms and conditions of this
Agreement, the Company may borrow the amount of the Facility D Commitments by
means of Base Rate Loans and/or Eurodollar Loans and thereafter may Convert
Facility D Loans of one Type into Facility D Loans of another Type (as provided
in Section 2.08 hereof) or Continue Facility D Loans of one Type as Facility D
Loans of the same Type (as provided in Section 2.08 hereof).
(c) ADJUSTMENTS GENERALLY. On the date three Business Days prior to
the Effective Date, the Agent shall notify each Lender of the amount of Loans
required to be made by such Lender (if any) to the Company on the Effective
Date, the amount of increase or decrease in each Commitment of such Lender and
of any
CREDIT AGREEMENT
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other assignments or adjustments that the Agent deems necessary and advisable
such that after giving effect to the transactions contemplated in this Section
to occur on the Effective Date, each Lender's Commitments shall be in
accordance with the Commitments set forth opposite its name on the signature
pages hereof, each Lender's Loans of any Class to the Company shall not exceed
its pro rata portion of all Loans of any such Class then outstanding to the
Company hereunder and the unused Commitments of all the Lenders plus all
outstanding Loans under this Agreement shall not exceed $500,000,000 in
aggregate principal amount. Any such assignments shall be deemed to occur
hereunder automatically on the Effective Date and without any requirement for
additional documentation and in the case of any such assignment, the assigning
party shall be deemed to represent and warrant to each assignee that it has
not created any adverse claim upon the interest being assigned and that such
interest is free and clear of any adverse claim. Each Lender hereby agrees to
give effect to the instructions of the Agent to such Lender contained in the
notice described above.
(d) LIMIT ON CERTAIN LOANS. No more than six separate Interest
Periods in respect of Eurodollar Loans of any Class from each Lender may be
outstanding at any one time.
2.02 BORROWINGS.
(a) The Company shall give the Agent notice of each borrowing
hereunder as provided in Section 4.05 hereof.
(b) With respect to each borrowing, not later than 3:30 p.m.
Charlotte, North Carolina time on the date specified for such borrowing, each
Lender shall make available the amount of the Loan or Loans to be made by it to
the Company on such date to the Agent at any account designated by the Agent, in
immediately available funds, for account of the Company. The amount so received
by the Agent shall, subject to the terms and conditions of this Agreement, be
made available to the Company by depositing the same, in immediately available
funds, in the deposit account of the Company identified in the most recent
Notice of Account Designation substantially in the form of Exhibit J-4 hereto
delivered by the Company to the Agent or as may be otherwise agreed by the
Company and the Agent from time to time.
2.03 CHANGES OF COMMITMENTS. (a) The aggregate amount of the
Facility C Commitments will be automatically reduced to zero on the Facility C
Commitment Termination Date. In addition, the aggregate amount of the Facility
C Commitments shall be
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automatically reduced at the close of business on each Facility C Commitment
Reduction Date set forth in column (A) below by an amount (subject to
reduction pursuant to paragraph (d) below) equal to the percentage of the
original aggregate principal amount of the Facility C Commitments set forth in
column (B) below opposite such Facility C Commitment Reduction Date:
(A) (B)
Facility C Facility C
Commitment Reduction Commitments Reduced by the
Date Falling on or Percentage of Original
Nearest To: Facility C Commitments (%)
----------- --------------------------
December 31, 2000 6.25%
March 31, 2001 6.25%
June 30, 2001 6.25%
September 30, 2001 6.25%
December 31, 2001 6.25%
March 31, 2002 6.25%
June 30, 2002 6.25%
September 30, 2002 6.25%
December 31, 2002 12.50%
March 31, 2003 12.50%
June 30, 2003 12.50%
September 30, 2003 12.50%
(b) The Company shall have the right at any time or from time to time
(i) to terminate or reduce the aggregate unused amount of the Facility D
Commitments, (ii) so long as no Facility C Loans are outstanding, to terminate
the Facility C Commitments, and (iii) to reduce the aggregate unused amount of
any of the Facility C Commitments; PROVIDED that (x) the Company shall give
notice of each such termination or reduction as provided in Section 4.05 hereof
and (y) each such partial reduction shall be in an aggregate amount at least
equal to $2,000,000 (or a larger multiple of $1,000,000).
(c) Each reduction in the aggregate amount of the Facility C
Commitments pursuant to paragraph (b) above on any date shall result in an
automatic and simultaneous reduction of the percentages set forth in column (B)
at the end of paragraph (a) above for each Facility C Commitment Reduction Date
after the date of such reduction (ratably in accordance with the respective
remaining amounts thereof, after giving effect to any prior reductions pursuant
to this paragraph (c)).
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(d) Any portion of the Facility D Commitments not used on the
Facility D Loan Commitment Termination Date shall be automatically terminated.
(e) The Commitments once terminated or reduced may not be reinstated.
2.04 COMMITMENT FEE. The Company shall pay to the Agent for account
of each Lender a commitment fee on the daily average unused amount of such
Lender's Facility C Commitment, for the period from and including the Effective
Date to but not including the earlier of the date such Facility C Commitment is
terminated and the Facility C Commitment Termination Date, at a rate per annum
equal to the Applicable Commitment Fee Rate. Accrued commitment fees shall be
payable in arrears on each Quarterly Date and on the earlier of (i) the date the
Facility C Commitments are terminated and (ii) the Facility C Commitment
Termination Date.
2.05 LENDING OFFICES. The Loans of each Type made by each Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type.
2.06 SEVERAL OBLIGATIONS; REMEDIES INDEPENDENT. The failure of any
Lender to make any Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loans on such date,
but neither any Lender nor the Agent shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender, and no Lender shall
have any obligation to the Agent or any other Lender for the failure by such
Lender to make any Loans required to be made by such Lender. The amounts
payable by the Company at any time hereunder and under the Notes to each Lender
shall be a separate and independent debt and each Lender shall be entitled,
subject to the prior written consent of the Majority Lenders, to protect and
enforce its rights arising out of this Agreement and the Notes, and it shall not
be necessary for any other Lender or the Agent to be joined as an additional
party in any proceedings for such purposes.
2.07 NOTES.
(a) The Facility C Loans made by each Lender shall be evidenced by a
single promissory note of the Company substantially in the form of Exhibit A-1
hereto, dated the Effective Date, payable to such Lender in a principal amount
equal to the amount of its Facility C Commitment as originally in effect and
otherwise duly completed.
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(b) The Facility D Loans made by each Lender shall be evidenced by a
single promissory note of the Company substantially in the form of Exhibit A-2
hereto, dated the Effective Date, payable to such Lender in a principal amount
equal to the amount of its Facility D Commitment as originally in effect and
otherwise duly completed.
(c) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Loan of each Class made by each Lender, and each
payment made on account of the principal thereof, shall be recorded by such
Lender on its books and, prior to any transfer of the Note evidencing the Loans
of such Class held by it, endorsed by such Lender on the schedule attached to
such Note or any continuation thereof; PROVIDED that the failure of such Lender
to make any such recordation or endorsement or an error therein shall not affect
the obligations of the Company to make a payment when due of any amount owing
hereunder or under such Note in respect of the Loans to be evidenced by such
Note.
(d) No Lender shall be entitled to have its Notes subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Lender's
relevant Commitments, Loans and Notes pursuant to Section 11.06(b) hereof.
(e) Notwithstanding the foregoing, any Lender that is not a U.S.
Person and is not a "bank" within the meaning of Section 881(c)(3)(A) of the
Code may request the Company (through the Agent), and the Company agrees
thereupon, to record on the Register referred to in Section 11.06(g) hereof any
Facility D Loans held by such Lender under this Agreement. Loans recorded on
the Register ("REGISTERED LOANS") may not be evidenced by promissory notes other
than Registered Notes as defined below and, upon the registration of any
Facility D Loan, any promissory note (other than a Registered Note) evidencing
the same shall be null and void and shall be returned to the Company. The
Company agrees, at the request of any Lender that is the holder of Registered
Loans, to execute and deliver to such Lender a promissory note in registered
form to evidence such Registered Loans and registered as provided in Section
11.06(g) hereof (herein, a "REGISTERED NOTE"), dated the Effective Date, payable
to such Lender and otherwise duly completed. A Facility D Loan once recorded on
the Register may not be removed from the Register so long as it remains
outstanding and a Registered Note may not be exchanged for a promissory note
that is not a Registered Note.
CREDIT AGREEMENT
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2.08 OPTIONAL PREPAYMENTS AND CONVERSIONS OR CONTINUATIONS OF LOANS.
Subject to Section 4.04 hereof, the Company shall have the right to prepay
Loans, or to Convert Loans of one Type into Loans of another Type or Continue
Loans of one Type as Loans of the same Type, at any time or from time to time,
PROVIDED that:
(a) the Company shall give the Agent notice of each such prepayment,
Conversion or Continuation as provided in Section 4.05 hereof (and, upon the
date specified in any such notice of prepayment, the amount to be prepaid shall
become due and payable hereunder);
(b) Eurodollar Loans may be prepaid or Converted on any day, PROVIDED
that, if such prepayment or Conversion falls on a day other than the last day of
an Interest Period for such Loans, the Company shall pay any and all amounts
required by Section 5.05 hereof as a result thereof;
(c) prepayments of the Facility C Loans under this Section 2.08 shall
be applied first to the Facility C Loans then outstanding which are Base Rate
Loans and then to those which are Eurodollar Loans; and
(d) prepayments of the Facility D Loans under this Section 2.08 shall
be applied ratably as among the remaining installments of the Facility D Loans.
Notwithstanding the foregoing, and without limiting the rights and remedies of
the Lenders under Section 9 hereof, in the event that any Event of Default shall
have occurred and be continuing, the Agent may (and at the request of the
Majority Lenders shall) suspend the right of the Company to borrow any Loan as a
Eurodollar Loan or to Convert any Loan into a Eurodollar Loan, or to Continue
any Loan as a Eurodollar Loan, in which event all Eurodollar Loans outstanding
shall be automatically Converted (on the last day(s) of the respective Interest
Periods therefor) to or all Base Rate Loans shall be Continued, as the case may
be, as Base Rate Loans.
2.09 MANDATORY PREPAYMENTS.
(a) CASUALTY EVENTS. Not later than 60 days following the receipt by
the Company or any of its Subsidiaries of the proceeds of insurance,
condemnation award or other compensation in respect of any Casualty Event
affecting any Property of any Supplemental Guarantor or acquired with the
proceeds of
CREDIT AGREEMENT
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Facility C Loans or Facility D Loans hereunder (or upon such earlier date as
the Person owning such Property shall have determined not to repair or replace
the Property affected by such Casualty Event), the Company shall prepay the
Facility C Loans or Facility D Loans, as the case may be, in an aggregate
amount, if any, equal to 100% of the Net Available Proceeds of such Casualty
Event not theretofore applied to the repair or replacement of such Property,
such prepayments to be effected in each such case in the manner and to the
extent specified in paragraph (e). In the event that such Net Available
Proceeds exceed the outstanding amount of the Facility C Loans or Facility D
Loans, such excess shall be applied to the prepayment of the Facility B Loans
in accordance with the terms of the Existing Credit Agreement. Nothing in
this paragraph (a) shall be deemed to limit any obligation of the Company or
any of its Subsidiaries pursuant to any of the Security Documents to remit to
a collateral or similar account (including, without limitation, the Collateral
Account) maintained by the Agent pursuant to any of the Security Documents the
proceeds of insurance, condemnation award or other compensation received in
respect of any Casualty Event. Notwithstanding the foregoing, in the event
that a Casualty Event shall occur with respect to Property of a Supplemental
Guarantor or acquired with the proceeds of Facility C Loans or Facility D
Loans hereunder and covered by any Mortgage, the Company shall prepay the
Facility C Loans or the Facility D Loans on the dates and in the amounts
specified in such Mortgage. In the event of a Casualty Event involving
Property not covered by this Section 2.09(a), the Net Available Proceeds of
such Casualty Event shall be applied in accordance with the terms of the
Existing Credit Agreement.
(b) SALE OF ASSETS. Without limiting the obligation of the Company
to obtain the consent of the Majority Lenders pursuant to Section 8.05(c) hereof
to any Disposition not otherwise permitted hereunder, in the event that the Net
Available Proceeds of any Disposition of Property of any Supplemental Guarantor
or Property acquired with the proceeds of Facility C Loans or Facility D Loans
hereunder other than an Excluded Disposition (herein, the "CURRENT
DISPOSITION"), and of all prior Dispositions of Property of any Supplemental
Guarantor or Property acquired with the proceeds of Facility C Loans or Facility
D Loans hereunder as to which a prepayment has not yet been made under this
Section 2.09(b), shall exceed $1,000,000 then, no later than 5 Business Days
prior to the occurrence of the Current Disposition, the Company will deliver to
the Lenders a statement, certified by a Responsible Financial Officer of the
Company, in form and detail satisfactory to the Agent, of the amount of the Net
Available Proceeds of the Current Disposition
CREDIT AGREEMENT
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and of all such prior Dispositions and the Company will prepay the Facility C
Loans or Facility D Loans (or cause the Facility C Loans or Facility D Loans
to be prepaid), in an aggregate amount equal to 100% of the Net Available
Proceeds of the Current Disposition and such prior Dispositions, such
prepayment to be effected in each case in the manner and to the extent
specified in paragraph (e) below. In the event that such Net Available
Proceeds exceed the outstanding amount of the Facility C Loans and Facility D
Loans, such excess shall be applied to the prepayment of the Facility B Loans
in accordance with the terms of the Existing Credit Agreement. In the case of
all Dispositions of Property other than those referred to in this paragraph
(b), the Company will make (or cause to be made) prepayments of the Facility A
Loans and the Facility B Loans as required by the Existing Credit Agreement.
(c) EQUITY ISSUANCE; INVESTMENT TAX CREDITS. Upon any Equity
Issuance or the issuance of any Indebtedness (other than Indebtedness permitted
under Section 8.07 hereof) or the Disposition of any Investment Tax Credit after
the Effective Date, the Company shall (i) prepay the Facility C Loans, the
Facility D Loans or the Facility B Loans in an aggregate amount equal to 100% of
the Net Available Proceeds thereof or (ii) in connection with a Disposition of
any Investment Tax Credit, apply any part of the Net Available Proceeds thereof,
within six months of receipt, to the purchase price of a Permitted Acquisition,
if any, and use the balance of such Net Available Proceeds to prepay the
Facility C Loans, the Facility D Loans or the Facility B Loans as contemplated
in clause (i) above. Promptly after each such Equity Issuance the Company shall
advise the Agent in writing of its designated application of such Net Available
Proceeds thereof. Any such prepayments of the Facility C Loans or Facility D
Loans shall be effected in the manner specified in paragraph (e) below.
(d) EXCESS CASH FLOW. Not later than 90 days after the end of each
fiscal year of the Company, commencing with the fiscal year ending December 31,
1997, the Company shall prepay the Facility B Loans, the Facility C Loans and
the Facility D Loans in an aggregate amount equal to the excess of (A) 50% of
Excess Cash Flow for such fiscal year (or, if the Leverage Ratio is less than
3.25 to 1, 0% of such Excess Cash Flow) over (B) the aggregate amount of
prepayments of Facility B Loans, Facility C Loans and Facility D Loans made
during such fiscal year pursuant to Section 2.08 hereof and Section 2.08 of the
Existing Credit Agreement. Mandatory prepayments arising from Excess Cash Flow
shall be applied to the Facility B Loans, the Facility C Loans and the Facility
D Loans pro rata based on the aggregate
CREDIT AGREEMENT
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principal amounts thereof then outstanding. Prepayments of Facility D Loans
under this paragraph (d) shall be effected in each case in the manner and to
the extent specified in paragraph (e) below.
(e) APPLICATION. Prepayments of Loans described in paragraphs (a)
through (d) above shall be effected as follows:
(i) first, in the case of the amount of any prepayment specified in
the respective paragraph to be applied to the Facility D Loans then
outstanding, 50% of such amount shall be applied to the Facility D Loans in
the inverse order of the maturities of the installments thereof and (after
taking into account such application) the remainder of such amount shall be
applied ratably to then remaining installments of principal of the Facility
D Loans; and
(ii) second, in the case of the amount of any prepayment specified
in the respective paragraph to be applied to the Facility C Loans then
outstanding, such amount shall be applied ratably to the Facility C Loans
then outstanding.
(f) REDUCED COMMITMENT. In the event that at any time the aggregate
principal amount of Facility C Loans then outstanding shall exceed the Facility
C Commitments then in effect, the Company shall thereupon prepay Facility C
Loans in an aggregate amount equal to such excess.
Section 3. PAYMENTS OF PRINCIPAL AND INTEREST.
3.01 REPAYMENT OF LOANS.
(a) FACILITY C LOANS. The Company hereby promises to pay to the
Agent for account of each Facility C Lender the entire outstanding principal
amount of each Facility C Loan made by such Lender, and each Facility C Loan
shall mature, on the Facility C Commitment Termination Date. In addition, if
following any Facility C Commitment Reduction Date the aggregate principal
amount of the Facility C Loans then outstanding shall exceed the Facility C
Commitments in effect after the applicable reduction, the Company shall pay
Facility C Loans in an aggregate amount equal to such excess.
(b) FACILITY D LOANS. The Company hereby promises to pay to the
Agent for account of each Facility D Lender the principal of such Lender's
Facility D Loan in sixteen installments payable on the Principal Payment Dates
as follows,
CREDIT AGREEMENT
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each in an amount equal to such Lender's ratable share of the aggregate amount
set forth opposite such date:
Principal Payment Date
Falling on or Nearest To: Amount of Installment ($)
------------------------- -------------------------
December 31, 1999 2,500,000.00
March 31, 2000 2,500,000.00
June 30, 2000 2,500,000.00
September 30, 2000 2,500,000.00
December 31, 2000 2,500,000.00
March 31, 2001 2,500,000.00
June 30, 2001 2,500,000.00
September 30, 2001 2,500,000.00
December 31, 2001 3,750,000.00
March 31, 2002 3,750,000.00
June 30, 2002 3,750,000.00
September 30, 2002 3,750,000.00
December 31, 2002 3,750,000.00
March 31, 2003 3,750,000.00
June 30, 2003 3,750,000.00
September 30, 2003 128,750,000.00
3.02 INTEREST. The Company hereby promises to pay to the Agent for
account of each Lender interest on the unpaid principal amount of each Loan for
the period from and including the date of such Loan to but excluding the date
such Loan shall be paid in full, at the following rates per annum:
(a) during such periods as such Loan is a Base Rate Loan, the Base
Rate (as in effect from time to time) PLUS the Applicable Margin, and
(b) during such periods as such Loan is a Eurodollar Loan, for each
Interest Period relating thereto, the Eurodollar Rate for such Loan for
such Interest Period PLUS the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the Agent
for account of each Lender interest at the applicable Post-Default Rate as
follows:
(i) on any principal of any Loan made by such Lender and on any other
amount payable by the Company hereunder or
CREDIT AGREEMENT
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under the Notes held by such Lender to or for account of such Lender that
shall not be paid in full when due (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise), for the period from
and including the due date thereof to but excluding the date the same is
paid in full; and
(ii) on the principal of all Loans made by such Lender commencing
upon the occurrence of any Event of Default, and thereafter for so long as
any Event of Default shall be continuing.
Accrued interest on each Loan shall be payable (i) in the case of a Base Rate
Loan, quarterly on the Quarterly Dates, (ii) in the case of a Eurodollar Loan,
on the last day of each Interest Period therefor and, if such Interest Period is
longer than three months, at three-month intervals following the first day of
such Interest Period, and (iii) at the option of the Agent, in the case of any
Loan, upon the payment or prepayment thereof or the Conversion of such Loan to a
Loan of another Type (but only on the principal amount so paid, prepaid or
Converted) except that interest payable at the Post-Default Rate shall be
payable from time to time on demand. Promptly after the determination of any
interest rate provided for herein or any change therein, the Agent shall give
notice thereof to the Lenders to which such interest is payable and to the
Company.
Section 4. PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
4.01 PAYMENTS.
(a) Except to the extent otherwise provided herein, all payments of
principal, interest, commitment fee and other amounts to be made by the Company
under this Agreement and the Notes of the Company, and, except to the extent
otherwise provided therein, all payments to be made by the Obligors under any
other Loan Document, shall be made in Dollars, in immediately available funds,
to the Agent at any account designated by the Agent not later than 2:00 p.m.
Charlotte, North Carolina time 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).
(b) Any Lender for whose account any such payment is to be made may
(but shall not be obligated to) debit the amount of any such payment that is not
made by such time to any ordinary
CREDIT AGREEMENT
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deposit account of the Company with such Lender (with notice to the Company
and the Agent).
(c) The Company shall, at the time of making each payment under this
Agreement or any Note for account of any Lender, specify to the Agent (which
shall so notify the intended recipient(s) thereof) the Loans or other amounts
payable hereunder to which such payment is to be applied (and in the event
that the Company fails to so specify, or if an Event of Default has occurred
and is continuing, the Agent may distribute such payment to the Lenders for
application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).
(d) Each payment received by the Agent under this Agreement or any Note
for account of any Lender shall be paid by the Agent promptly to such Lender,
in immediately available funds, for account of such Lender's Applicable
Lending Office for the Loans or other obligation in respect of which such
payment is made.
(e) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable
for any principal so extended for the period of such extension.
4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (a) each borrowing of Loans of a particular Class from the Lenders
under Section 2.01 hereof shall be made from the relevant Lenders, each
payment of commitment fee under Section 2.04 hereof in respect of Commitments
of a particular Class shall be made for account of the relevant Lenders, and
each termination or reduction of the amount of the Commitments of a
particular Class under Section 2.03 hereof shall be applied to the respective
Commitments of such Class of the relevant Lenders, pro rata according to the
amounts of their respective Commitments of such Class; (b) the making,
Conversion and Continuation of Loans of a particular Type and Class (other
than Conversions provided for by Section 5.04 hereof) shall be made pro rata
among the relevant Lenders according to the amounts of their respective
Commitments (in the case of making of Loans) or their respective Loans (in
the case of Conversions and Continuations of Loans); (c) each payment or
prepayment of principal of Loans of any Class by the Company shall be made
for account of the relevant Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loans of such Class held by them;
and (d) each payment of interest on any Loans of
CREDIT AGREEMENT
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any Class by the Company shall be made for account of the relevant Lenders
pro rata in accordance with the amounts of interest on such Loans then due
and payable to the respective Lenders.
4.03 COMPUTATIONS. Interest on Eurodollar Loans and commitment fees
shall be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period
for which payable and interest on Base Rate Loans shall be computed on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable.
4.04 MINIMUM AMOUNTS. Except for mandatory prepayments made pursuant
to Section 2.09 hereof and Conversions or prepayments made pursuant to
Section 5.04 hereof, (a) each borrowing and Conversion of principal of Base
Rate Loans shall be in an aggregate amount at least equal to $1,000,000 or a
larger multiple of $500,000, (b) each borrowing and Conversion of Eurodollar
Loans shall be in an aggregate amount at least equal to $5,000,000 or a
larger multiple of $1,000,000, (c) each partial prepayment of principal of
Eurodollar Loans shall be in an aggregate amount at least equal to $5,000,000
or a larger multiple of $1,000,000 and each partial prepayment of principal
of Base Rate Loans shall be in an aggregate amount at least equal to
$1,000,000 or a larger multiple of $500,000 (borrowings, Conversions or
prepayments of or into Loans of different Types or, in the case of Eurodollar
Loans, having different Interest Periods at the same time hereunder to be
deemed separate borrowings, Conversions and prepayments for purposes of the
foregoing, one for each Type or Interest Period).
4.05 CERTAIN NOTICES. Notices by the Company to the Agent of
terminations or reductions of the Commitments, of Borrowings, Conversions,
Continuations and optional prepayments of Loans, of Classes of Loans, of
Types of Loans and of the duration of Interest Periods shall be irrevocable
(other than with respect to notices of optional prepayments, which shall be
revocable, PROVIDED that upon any such revocation the Company shall be
obligated to pay the Lenders any amounts payable under Section 5.05 hereof as
a consequence of such revocation) and shall be effective only if received by
the Agent not later than 1:30 p.m. Charlotte, North Carolina time on the
number of Business Days prior to the date of the relevant termination,
reduction, borrowing, Conversion, Continuation or prepayment or the first day
of such Interest Period specified below:
CREDIT AGREEMENT
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Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of Commitments 3
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans Same Day
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or optional prepayment shall specify the Class of
Loans to be borrowed, Converted, Continued or prepaid and the amounts
(subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each
such notice of the duration of an Interest Period shall specify the Loans to
which such Interest Period is to relate. The Agent shall promptly notify the
Lenders of the contents of each such notice. In the event that the Company
fails to select the Type of Loan, or the duration of any Interest Period for
any Eurodollar Loan, within the time period and otherwise as provided in this
Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Base Rate Loan)
will remain as, or (if not then outstanding) will be made as, a Base Rate
Loan. The Company agrees that each notice of borrowing, each notice of
prepayment and each notice of Conversion or Continuation hereunder shall be
substantially in the form of Exhibit J-1, Exhibit J-2 and Exhibit J-3 hereto,
respectively.
4.06 NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Agent shall have
been notified by a Lender or the Company (the "PAYOR") prior to the date on
which the Payor is to make payment to the Agent of (in the case of a Lender)
the proceeds of a Loan to be made by such Lender hereunder or (in the case of
the Company) a payment to the Agent for account of one or more of the Lenders
hereunder (such payment being herein called the "REQUIRED
CREDIT AGREEMENT
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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(s) on such date; and, if the Payor has not in fact
made the Required Payment to the Agent, the recipient(s) of such payment
shall, on demand, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date (the "ADVANCE 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 day and, if such recipient(s) shall fail
promptly to make such payment, the Agent shall be entitled to recover such
amount, on demand, from the Payor, together with interest as aforesaid,
PROVIDED that if neither the recipient(s) nor the Payor shall return the
Required Payment to the Agent within three Business Days of the Advance Date,
then, retroactively to the Advance Date, the Payor and the recipient(s) shall
each be obligated to pay interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be made
by the Company to the Lenders, the Company and the recipient(s) shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the Post-Default Rate (and, in case
the recipient(s) shall return the Required Payment to the Agent, without
limiting the obligation of the Company under Section 3.02 hereof to pay
interest to such recipient(s) at the Post-Default Rate in respect of the
Required Payment) and
(ii) if the Required Payment shall represent proceeds of a Loan to
be made by the Lenders to the Company, the Payor and the Company shall
each be obligated retroactively to the Advance Date to pay interest in
respect of the Required Payment at the rate of interest provided for
such Required Payment pursuant to Section 3.02 hereof (and, in case the
Company shall return the Required Payment to the Agent, without limiting
any claim the Company may have against the Payor in respect of the
Required Payment).
4.07 SHARING OF PAYMENTS, ETC.
(a) The Company agrees that, in addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim a Lender may otherwise
have, each Lender shall be
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entitled, at its option but with the prior written consent of the Majority
Lenders, to offset balances held by it for account of the Company at any of
its offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such
balances are then due to the Company), in which case it shall promptly notify
the Company and the Agent thereof, PROVIDED that such Lender's failure to
give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from any Obligor payment of any
principal of or interest on any Loan of any Class owing to it or payment of
any other amount under this Agreement or any other Loan Document through the
exercise of any right of set-off, Lender's lien or counterclaim or similar
right or otherwise (other than from the Agent as provided herein), and, as a
result of such payment, such Lender shall have received a greater percentage
of the principal of or interest on the Loans of such Class or such other
amounts then due hereunder or thereunder by such Obligor to such Lender than
the percentage received by any other Lender, it shall promptly purchase from
such other Lenders participations in (or, if and to the extent specified by
such Lender, direct interests in) the Loans of such Class or such other
amounts, respectively, owing to such other Lenders (or in interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Lenders
shall share the benefit of such excess payment (net of any expenses that may
be incurred by such Lender in obtaining or preserving such excess payment)
pro rata in accordance with the unpaid principal of and/or interest on the
Loans of such Class or such other amounts, respectively, owing to each of the
Lenders. To such end all the Lenders shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off,
banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Loans or
other amounts (as the case may be) owing to such Lender in the amount of such
participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
indebtedness or obligation
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of any Obligor. If, under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.07 to
share in the benefits of any recovery on such secured claim.
Section 5. YIELD PROTECTION, ETC.
5.01 ADDITIONAL COSTS.
(a) The Company shall pay directly to each Lender from time to time
such amounts as such Lender may determine to be necessary to compensate such
Lender for any costs that such Lender determines are attributable to its making
or maintaining of any Eurodollar Loans or its obligation to make any Eurodollar
Loans hereunder or any reduction in any amount receivable by such Lender
hereunder in respect of any of such Eurodollar Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"ADDITIONAL COSTS"), resulting from any Regulatory Change that:
(i) shall subject any Lender (or its Applicable Lending Office for
any of such Eurodollar Loans) to any tax, duty or other charge in
respect of such Eurodollar Loans or its Notes or changes the basis of
taxation of any amounts payable to such Lender under this Agreement or
its Notes in respect of any of such Eurodollar Loans (excluding changes
in the rate of tax on the overall net income of such Lender or of its
Applicable Lending Office by the jurisdiction in which such Lender is
organized or has its principal office or in which its Applicable Lending
Office is organized or located or, in each case, any political
subdivision or taxing authority thereof or therein); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Eurodollar Loan) relating
to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Lender (including, without limitation, any of
such Eurodollar Loans or any deposits referred to in the definitions of
"Eurodollar Base Rate" in Section 1.01 hereof), or any commitment of
such Lender (including, without limitation, the Commitments of such
Lender hereunder); or
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(iii) imposes any other condition affecting this Agreement or its
Notes (or any of such extensions of credit or liabilities) or its
Commitments.
If any Lender requests compensation from the Company under this Section
5.01(a), the Company may, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender thereafter to make or Continue
Eurodollar Loans, to Convert Loans of another Type into Eurodollar Loans or
to Convert Eurodollar Loans into Loans of another Type until the Regulatory
Change giving rise to such request ceases to be in effect (in which case the
provisions of Section 5.04 hereof shall be applicable), PROVIDED that such
suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) Without limiting the effect of the provisions of paragraph (a) of
this Section 5.01, in the event that, by reason of any Regulatory Change, any
Lender (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 Lender that includes deposits by reference to which the interest rate
on Eurodollar Loans is determined as provided in this Agreement or a category
of extensions of credit or other assets of such Lender that includes
Eurodollar Loans or (ii) becomes subject to restrictions on the amount of
such a category of liabilities or assets that it may hold then, if such
Lender so elects by notice to the Company (with a copy to the Agent), the
obligation of such Lender to make or Continue, or to Convert Loans of another
type into, Eurodollar Loans, hereunder (as the case may be) shall be
suspended until any such Regulatory Change ceases to be in effect (in which
case the provisions of Section 5.04 hereof shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to
each Lender from time to time on request such amounts as such Lender may
determine to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any costs
that it determines are attributable to the maintenance by such Lender (or any
Applicable Lending Office or such bank holding company), pursuant to any law
or regulation or any interpretation, directive or request (whether or not
having the force of law and whether or not failure to comply therewith would
be unlawful) of any court or governmental or monetary authority (i) following
any Regulatory Change or (ii) hereafter implementing any risk-based capital
guideline or other requirement (whether or not having the force of law and
whether
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or not the failure to comply therewith would be unlawful) heretofore or
hereafter issued by any government or governmental or supervisory authority
implementing at the national level the Basle Accord (including, without
limitation, the Final Risk-Based Capital Guidelines of the Board of Governors
of the Federal Reserve System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part
225, Appendix A) and the Final Risk-Based Capital Guidelines of the Office of
the Comptroller of the Currency (12 C.F.R. Part 3, Appendix A)), of capital
in respect of its Commitments or Loans (such compensation to include, without
limitation, an amount equal to any reduction of the rate of return on assets
or equity of such Lender (or any Applicable Lending Office or such bank
holding company) to a level below that which such Lender (or any Applicable
Lending Office or such bank holding company) could have achieved but for such
law, regulation, interpretation, directive or request). For purposes of this
Section 5.01(c) and Section 5.08 hereof, "BASLE ACCORD" shall mean the
proposals for risk-based capital framework described by the Basle Committee
on Banking Regulations and Supervisory Practices in its paper entitled
"International Convergence of Capital Measurement and Capital Standards"
dated July 1988, as amended, modified and supplemented and in effect from
time to time or any replacement thereof.
(d) Each Lender shall notify the Company of any event occurring after
the date of this Agreement entitling such Lender to compensation under
paragraph (a) or (c) of this Section 5.01 as promptly as practicable, but in
any event within 45 days, after such Lender obtains actual knowledge thereof;
PROVIDED that (i) if any Lender fails to give such notice within 45 days
after it obtains actual knowledge of such an event, such Lender shall, with
respect to compensation payable pursuant to this Section 5.01 in respect of
any costs resulting from such event, only be entitled to payment under this
Section 5.01 for costs incurred from and after the date 45 days prior to the
date that such Lender does give such notice and (ii) each Lender will
designate a different Applicable Lending Office for the Loans of such Lender
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
Lender, be disadvantageous to such Lender, except that such Lender shall have
no obligation to designate an Applicable Lending Office located in the United
States. Each Lender will furnish to the Company a certificate setting forth
the basis and amount of each request by such Lender for compensation under
paragraph (a) or (c) of this Section 5.01. Determinations and allocations by
any Lender for purposes of this Section 5.01 of the effect of any Regulatory
Change pursuant to paragraph (a) or (b) of this Section 5.01, or of the
effect of
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capital maintained pursuant to paragraph (c) of this Section 5.01, on its
costs or rate of return of maintaining Loans or its obligation to make Loans,
or on amounts receivable by it in respect of Loans, and of the amounts
required to compensate such Lender under this Section 5.01, shall be
conclusive in the absence of manifest error, PROVIDED that such
determinations and allocations are made on a reasonable basis.
5.02 LIMITATION ON TYPES OF LOANS. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any Eurodollar Base
Rate for any Interest Period:
(a) the Agent determines, which determination shall be conclusive,
that quotations of interest rates for the relevant deposits referred to
in the definition of "Eurodollar Base Rate" in Section 1.01 hereof are
not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Eurodollar
Loans as provided herein; or
(b) The Majority Lenders determine, which determination shall be
conclusive, and notify the Agent that the relevant rates of interest
referred to in the definitions of "Eurodollar Base Rate" in Section 1.01
hereof upon the basis of which the rate of interest for Eurodollar Loans
for such Interest Period is to be determined are not likely adequately
to cover the cost to such Lenders of making or maintaining Eurodollar
Loans for such Interest Period;
then the Agent shall give the Company and each Lender prompt notice thereof
(describing the circumstances giving rise to such event) and, so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Eurodollar Loans, to Continue Eurodollar Loans, to Convert Loans
of another Type into Eurodollar Loans and the Company shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Eurodollar
Loans either prepay such Eurodollar Loans or Convert such Eurodollar Loans
into Loans of another Type in accordance with Section 2.08 hereof.
5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain
Eurodollar Loans hereunder, then such Lender shall promptly notify the
Company thereof (with a copy to the Agent) and such Lender's obligation to
make or Continue, or to
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Convert Loans of any other Type into, Eurodollar Loans shall be suspended
until such time as such Lender may again make and maintain Eurodollar Loans
(in which case the provisions of Section 5.04 hereof shall be applicable).
5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to
make Eurodollar Loans ("AFFECTED LOANS"), or to Continue, or to Convert Loans
of another Type into Affected Loans shall be suspended pursuant to Section
5.01 or 5.03 hereof, such Lender's Affected Loans shall be automatically
Converted into Base Rate Loans on the last day(s) of the then current
Interest Period(s) therefor (or, in the case of a Conversion required by
Section 5.01(b), 5.01(c) or 5.03 hereof, on such earlier date as such Lender
may specify to the Company with a copy to the Agent) and, unless and until
such Lender gives notice as provided below that the circumstances specified
in Section 5.01 or 5.03 hereof that gave rise to such Conversion no longer
exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Affected Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Affected Loans (as the case may be) shall remain as Base
Rate Loans.
If such Lender gives notice to the Company with a copy to the Agent that the
circumstances specified in Section 5.01 or 5.03 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 5.04 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Affected Loans made by other Lenders and of
the same Class as such Lender's Loans are outstanding, such Lender's Base
Rate Loans of such Class shall be automatically Converted, on the first
day(s) of the next succeeding Interest Period(s) for such outstanding
Affected Loans of such Class, to the extent necessary so that, after giving
effect thereto, all Loans of such Class held by the Lenders holding Affected
Loans and by such Lender are held pro rata (as to principal amounts, Types
and Interest Periods) in accordance with their respective Commitments.
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5.05 COMPENSATION. The Company shall pay to the Agent for
account of each Lender, upon the request of such Lender through the Agent,
such amount or amounts as shall be sufficient (in the reasonable opinion of
such Lender) to compensate it for any loss, cost or expense that such Lender
determines is attributable to:
(a) any payment, mandatory or optional prepayment or Conversion
of a Eurodollar Loan made by the Company for any reason (including,
without limitation, the acceleration of the Loans pursuant to Section 9
hereof) on a date other than the last day of the Interest Period for such
Eurodollar Loan; or
(b) any failure by the Company for any reason (including, without
limitation, the failure of any of the conditions precedent specified in
Section 6 hereof to be satisfied) to borrow a Eurodollar Loan from such
Lender on the date for such borrowing specified in the relevant notice of
borrowing given pursuant to Section 2.02 hereof or in the notice from the
Agent given pursuant to Section 2.01(c);
(c) any failure for any reason (including, without limitation, as
provided in Section 5.02 or 5.03 hereof) of a Loan of such Lender to be
Continued as or Converted into a Eurodollar Loan on the date for such
Continuation or Conversion specified in the relevant notice given under
Section 4.05 hereof; or
(d) the revocation of any notice of optional prepayment or any
failure for any reason to make any optional prepayment on the date
specified therefor in the relevant notice of prepayment given pursuant
to Section 4.05 hereof.
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
that otherwise would have accrued on the principal amount so paid, prepaid,
Converted or not borrowed or prepaid for the period from the date of such
payment, prepayment, Conversion or failure to borrow or prepay to the last day
of the then current Interest Period for such Eurodollar Loan (or, in the case of
a failure to borrow, the Interest Period for such Eurodollar Loan that would
have commenced on the date specified for such borrowing) at the applicable rate
of interest for such Eurodollar Loan (MINUS the Applicable Margin) provided for
herein over (ii) the amount of interest that otherwise would have accrued on
such principal amount at a rate per annum equal to the interest component of the
amount such Lender would have
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bid on the date of such payment, prepayment, Conversion or failure to borrow
or prepay in the London interbank market for Dollar deposits of leading banks
in amounts comparable to such principal amount and with maturities comparable
to such period (as reasonably determined by such Lender).
5.06 NET PAYMENTS; TAXES.
(a) All payments to be made hereunder and under the Notes and any
other Loan Documents by the Company shall be made without setoff, counterclaim
or other defense. Subject to Section 5.06(b) hereof with respect to U.S. Taxes,
all such payments shall be made free and clear of and without deduction for or
on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any governmental authority
(other than taxes imposed on the Agent, any Lender or its Applicable Lending
Office by the jurisdiction in which the Agent or such Lender is organized or has
its principal office or in which its Applicable Lending Office is organized or
located or, in each case, any political subdivision or taxing authority thereof
or therein) (collectively, "TAXES"). If any Taxes are imposed and required to
be withheld from any amount payable by the Company hereunder or under the Notes,
the Company shall be obligated to (i) pay such additional amount so that the
Agent and the Lenders will receive a net amount (after giving effect to the
payment of such additional amount and to the deduction of all Taxes) equal to
the amount due hereunder, (ii) pay such Taxes to the appropriate taxing
authority for the account of the Agent, for the benefit of the Lenders and (iii)
as promptly as possible thereafter, sending the Agent a certified copy of any
original official receipt showing payment thereof, together with such additional
documentary evidence as the Agent may from time to time reasonably require. If
the Company fails to pay any Taxes when due to the appropriate taxing authority
or fails to remit to the Agent the required receipts or other required
documentary evidence, the Company shall be obligated to indemnify the Agent and
each Lender for any incremental taxes, interest or penalties that may become
payable by the Agent or such Lender as a result of such failure. The
obligations of the Company under this Section 5.06(a) shall survive the
repayment of the Loans and the termination of the Commitments.
(b) The Company agrees to pay to each Lender that is not a U.S.
Person such additional amounts as are necessary in order that the net payment
of any amount due to and received by such non-U.S. Person hereunder after
deduction for or withholding
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in respect of any U.S. Taxes imposed with respect to such payment (or in lieu
thereof, payment of such U.S. Taxes by such non-U.S. Person), will not be
less than the amount stated herein to be then due and payable, PROVIDED that
the foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to a Lender (other than in respect of a
Registered Loan) hereunder unless such Lender is, on the date hereof (or on
the date it becomes a Lender as provided in Section 11.06(b) hereof) and on
the date of any change in the Applicable Lending Office of such Lender,
either entitled to submit a Form 1001 (relating to such Lender and
entitling it to a complete exemption from withholding on all interest to be
received by it hereunder in respect of the Loans) or Form 4224 (relating to
all interest to be received by such Lender hereunder in respect of the
Loans), or
(ii) to any payment to any Lender hereunder in respect of a
Registered Loan (a "REGISTERED HOLDER"), unless such Registered Holder (or,
if such Registered Holder is not the beneficial owner of such Registered
Loan, the beneficial owner thereof) is, on the date hereof (or on the date
such Registered Holder becomes a Lender as provided in Section 11.06(b)
hereof) and on the date of any change in the Applicable Lending Office of
such Lender, entitled to submit a Form W-8, together with an annual
certificate stating that (x) such Registered Holder (or beneficial owner,
as the case may be) is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code, and (y) such Registered Holder (or beneficial
owner, as the case may be) shall promptly notify the Company if at any
time, such Registered Holder (or beneficial owner, as the case may be)
determines that it is no longer in a position to provide such certificate
to the Company (or any other form of certification adopted by the relevant
taxing authorities of the United States for such purposes), or
(iii) to any U.S. Taxes imposed solely by reason of the failure by
such non-U.S. Person (or, if such non-U.S. Person is not the beneficial
owner of the relevant Loan, such beneficial owner) to comply with
applicable certification, information, documentation or other reporting
requirements concerning the nationality, residence, identity or connections
with the United States of such non-U.S. Person (or such beneficial owner,
as the case may be) if such compliance is required by statute or regulation
of the
CREDIT AGREEMENT
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United States as a precondition to relief or exemption from such U.S.
Taxes.
For the purposes of this Section 5.06(b), (v) "FORM 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States, (w) "FORM 4224" shall mean Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States) of the Department of the Treasury of the
United States, (x) "FORM W-8" shall mean Form W-8 (Certificate of Foreign Status
of the Department of Treasury of the United States of America) (or in relation
to any of such Forms such successor and related forms as may from time to time
be adopted by the relevant taxing authorities of the United States to document a
claim to which such Form relates), (y) "U.S. PERSON" shall mean a citizen,
national or resident of the United States, a corporation, partnership or other
entity created or organized in or under any laws of the United States, or any
estate or trust that is subject to Federal income taxation regardless of the
source of its income and (z) "U.S. TAXES" shall mean any present or future tax,
assessment or other charge or levy imposed by or on behalf of the United States
or any taxing authority thereof or therein.
Within 30 days after paying any amount to the Agent or any Lender from
which it is required by law to make any deduction or withholding, and within 30
days after it is required by law to remit such deduction or withholding to any
relevant taxing or other authority, the Company shall deliver to the Agent for
delivery to such non-U.S. Person evidence satisfactory to such Person of such
deduction, withholding or payment (as the case may be).
5.07 REPLACEMENT OF LENDERS. If any Lender requests compensation
pursuant to Section 5.01 or 5.06 hereof, or any Lender's obligation to make or
Continue, or to Convert Loans of any Type into, any other Type of Loan shall be
suspended pursuant to Section 5.01 or 5.03 hereof (any such Lender so requesting
compensation, or whose obligations are so suspended being herein called a
"RELEVANT LENDER"), the Company upon three Business Days notice may require that
such Relevant Lender transfer all of its right, title and interest under this
Agreement and such Relevant Lender's Notes to any bank or other financial
institution identified by the Company that is reasonably satisfactory to the
Agent (i) if such bank or other financial institution (a "PROPOSED LENDER")
agrees to assume all of the obligations of such Relevant Lender hereunder, and
to purchase all of such Relevant Lender's Loans hereunder for consideration
equal to the
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aggregate outstanding principal amount of such Relevant Lender's Loans,
together with accrued, but unpaid interest thereon to the date of such
purchase, and satisfactory arrangements are made for payment to such Relevant
Lender of all other amounts payable hereunder to such Relevant Lender on or
prior to the date of such transfer (including any fees accrued hereunder and
any amounts that would be payable under Section 5.05 hereof as if all of such
Relevant Lender's Loans were being prepaid in full on such date) and (ii) if
such Relevant Lender has requested compensation pursuant to Section 5.01 or
5.06 hereof, such Proposed Lender's aggregate requested compensation, if any,
pursuant to said Section 5.01 or 5.06 with respect to such Relevant Lender's
Loans is lower than that of the Relevant Lender. Subject to compliance with
the provisions of Section 11.06(b) hereof, such Proposed Lender shall be a
"Lender" for all purposes hereunder. Without prejudice to the survival of
any other agreement of the Company hereunder, the agreements of the Company
contained in Sections 5.01, 5.06 and 11.03 hereof (without duplication of any
payments made to such Relevant Lender by the Company or the Proposed Lender)
shall survive for the benefit of such Relevant Lender under this Section 5.07
with respect to the time prior to such replacement.
Section 6. CONDITIONS PRECEDENT.
6.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Agreement
(and the amendment and restatement of the Existing Supplemental Credit Agreement
to be effected hereby) and the obligation of any Lender to extend credit
hereunder, are subject to (i) the condition precedent that the Effective Date
shall occur on or before September 22, 1997 and (ii) the receipt by the Agent of
the following documents, each of which shall be satisfactory to the Agent (and
to the extent specified below, to each Lender or the Majority Lenders, as the
case may be) in form and substance:
(a) CORPORATE DOCUMENTS. Certified copies of the charter and by-laws
(or equivalent documents) of each Obligor and of all corporate authority
for each Obligor (including, without limitation, board of director
resolutions and evidence of the incumbency of officers, together with
specimen signatures of each such officer) with respect to the execution,
delivery and performance of such of the Basic Documents to which such
Obligor is intended to be a party and each other document to be delivered
by such Obligor from time to time in connection herewith and the extensions
of credit hereunder (and the Agent and each Lender may conclusively rely on
such certificate until it
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receives notice in writing from such Obligor to the contrary).
(b) OFFICER'S CERTIFICATE. A certificate of a Responsible Financial
Officer of the Company, dated the date hereof, to the effect set forth in
the first sentence of Section 6.03 hereof.
(c) OPINION OF COUNSEL TO THE OBLIGORS. Opinions, each dated the
date hereof, of Hughes & Luce, counsel to the Obligors, substantially in
the form of Exhibit E-1 hereto, and of Axtmayer Adsuar Muniz & Goyco,
special Puerto Rico counsel to the Subsidiary Guarantors operating in the
Commonwealth, substantially in the form of Exhibit E-2 hereto and, in each
case, covering such other matters as the Agent or any Lender may reasonably
request (and each Obligor hereby instructs such counsel to deliver such
opinion to the Lenders and the Agent).
(d) OPINION OF COUNSEL TO FIRST UNION. An opinion, dated the date
hereof, of Milbank, Tweed, Hadley & McCloy, special New York counsel to
First Union, substantially in the form of Exhibit G hereto (and First Union
hereby instructs such counsel to deliver such opinion to the Lenders).
(e) NOTES. The Facility C Notes and Facility D Notes, duly completed
and executed.
(f) INSURANCE. Certificates of insurance evidencing the existence of
all insurance required to be maintained by the Company and its Subsidiaries
pursuant to Section 8.04 hereof and the designation of the Agent as the
loss payee or additional named insured, as the case may be, thereunder. In
addition, the Company shall have delivered a certificate of a Responsible
Financial Officer of the Company setting forth the insurance obtained by it
in accordance with the requirements of Section 8.04 and stating that such
insurance is in full force and effect and that all premiums then due and
payable thereon have been paid.
(g) FINANCIAL INFORMATION. (i) Copies of the pro forma projections
of the Company and its Subsidiaries for the period ended December 31, 1997
and (ii) unaudited consolidating financial statements of the Company and
its Subsidiaries for the twelve-month period ended on December 31, 1996.
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(h) PAYMENT OF FEES AND EXPENSES, ETC. Evidence that the Company
shall have paid such fees and expenses as the Company shall have agreed to
pay to the Agent in connection herewith, including, without limitation, the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special
New York counsel to First Union, and Fiddler Gonzalez & Rodriguez, special
Puerto Rico counsel to First Union, in connection with the negotiation,
preparation, execution and delivery of this Agreement and the Notes and the
other Loan Documents and the making of the Loans hereunder (to the extent
that statements for such fees and expenses have been delivered to the
Company three days prior to the Closing Date).
(i) EXISTING CREDIT AGREEMENT. Existing Credit Agreement, duly
executed by each of the parties thereto, together with evidence that all
conditions precedent set forth in Section 6 of the Existing Credit
Agreement shall have been satisfied or waived.
(j) PROCESS AGENT ACCEPTANCE. A letter from the Process Agent, in
form and substance satisfactory to the Agent, accepting the appointment of
the Process Agent by the Company.
(k) EVIDENCE OF LENDER ALLOCATIONS. Evidence from the Agent that on
the date of this Agreement (after giving effect to the transactions
contemplated hereby) the Lenders under this Agreement shall hold the same
pro rata portion of Facility C Loans and Facility D Loans (and if no
Facility C Loans or Facility D Loans are outstanding, Facility C
Commitments and Facility D Commitments) under this Agreement, as they hold
of Facility A Loans and Facility B Loans (or Facility A Commitments and
Facility B Commitments) under the Existing Credit Agreement and as to the
total amount of Loans of each Class outstanding on the Effective Date
hereunder and under the Existing Credit Agreement.
(l) ACCRUED INTEREST. Evidence that (i) all interest accrued on the
outstanding "Facility A Loans" and "Facility B Loans" under the predecessor
to the Existing Credit Agreement and all accrued commitment and other fees
thereunder to the Effective Date, (ii) all interest accrued on the
outstanding "Facility C Loans" under Existing Supplemental Credit Agreement
and all accrued commitment and other fees thereunder to the Effective Date,
and (iii) all amounts payable by the Company (if any) under Sections
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2.01(a)(i), 2.01(b)(i) and 2.01(c) of the Existing Credit Agreement have
been paid in full.
(m) OTHER DOCUMENTS. Such other documents as the Agent or any Lender
or special New York counsel to First Union may reasonably request.
6.02 CONDITIONS PRECEDENT TO LENDING FOR PERMITTED ACQUISITIONS. The
obligation of any Lender to make Loans hereunder to finance any Permitted
Acquisition (including the Bernon Acquisition) is subject to the receipt by the
Agent of the following documents, each of which shall be satisfactory to the
Agent (and to the extent specified below, to each Lender, Majority Lenders, or
Supermajority Lenders as the case may be) in form and substance:
(a) In connection with each Permitted Acquisition involving the
purchase of the capital stock or other ownership interests of a Person
(unless such Person is merged contemporaneously into the Company or an
existing Subsidiary of the Company) or the formation of a corporation or
other entity for the purpose of such Permitted Acquisition:
(i) CORPORATE DOCUMENTS. Certified copies of the charter and
by-laws (or equivalent documents) of the relevant Person and of all
corporate authority for such Person (including, without limitation,
board of director resolutions and evidence of the incumbency of
officers, together with specimen signatures of each such officer) with
respect to the execution, delivery and performance of such of the
Basic Documents to which such Person is intended to be a party and
each other document to be delivered by such Person from time to time
in connection herewith and therewith (and the Agent and each Lender
may conclusively rely on such certificate until it receives notice in
writing from such Person to the contrary).
(ii) SUPPLEMENTAL SUBSIDIARY GUARANTEE AND SECURITY AGREEMENT.
A Supplemental Subsidiary Guarantee and Security Agreement,
substantially in the form of Exhibit B hereto and duly executed by the
Agent and the relevant Supplemental Guarantor, pursuant to which such
Supplemental Guarantor shall create a first priority security interest
in all of its personal Property in favor of the Agent for the benefit
of the Lenders and the Facility A Lenders and the Facility B
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Lenders, except as otherwise provided herein or therein. In addition,
the Company shall have taken such other action (including, without
limitation, delivering to the Agent, (i) Uniform Commercial Code
searches for such Supplemental Guarantor for each jurisdiction in
which such Supplemental Guarantor conducts its business or in which
any of its Properties are located (or otherwise as the Agent may
reasonably request) and (ii) for filing, appropriately completed and
duly executed copies of Uniform Commercial Code financing statements),
as the Agent shall have requested in order to perfect the security
interest created pursuant to such Supplemental Subsidiary Guarantee
and Security Agreement.
(iii) OPINION OF COUNSEL TO THE SUPPLEMENTAL GUARANTOR.
Opinions, appropriately dated, of counsel to the relevant Supplemental
Guarantor covering such matters as the Agent or any Lender may
reasonably request.
(iv) OPINION OF COUNSEL TO FIRST UNION. An opinion,
appropriately dated, of Milbank, Tweed, Hadley & McCloy, special New
York counsel to First Union, substantially in the form of Exhibit G
hereto but as to the relevant Supplemental Guarantee and Security
Agreement (and First Union hereby instructs such counsel to deliver
such opinion to the Lenders).
(v) AMENDMENT TO SECURITY AGREEMENT; FILINGS. An amendment to
the Security Agreement (or, if applicable, the Existing Subsidiary
Guaranty and Security Agreement), duly executed and delivered by the
Company (or the appropriate Subsidiary) and the Agent and the
certificates identified in Annex 1 thereto, accompanied by undated
stock powers executed in blank. In addition, the Company shall have
taken such other action (including, without limitation, delivering to
the Agent, (i) Uniform Commercial Code searches for each Supplemental
Guarantor for each jurisdiction in which such Supplemental Guarantor
conducts its respective business or in which any of its respective
Properties are located (or otherwise as the Agent may reasonably
request) and (ii) for filing, appropriately completed and duly
executed copies of Uniform Commercial Code financing statements) as
the Agent shall have requested in order to perfect the security
interests created pursuant to such amendment to the
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Security Agreement and/or the relevant Supplemental Subsidiary
Guarantee and Security Agreement.
(vi) INSURANCE. Certificates of insurance evidencing the
existence of all insurance required to be maintained by the relevant
Supplemental Guarantor pursuant to Section 8.04 hereof and the
designation of the Agent as the loss payee or additional named
insured, as the case may be, thereunder. In addition, the Company or
the relevant Supplemental Guarantor shall have delivered a certificate
of a Responsible Financial Officer of the Company or such Supplemental
Guarantor setting forth the insurance obtained by the Company or such
Supplemental Guarantor in accordance with the requirements of
Section 8.04 and stating that such insurance is in full force and
effect and that all premiums then due and payable thereon have been
paid.
(b) In connection with all Permitted Acquisitions (including the
Bernon Acquisition) (as appropriate):
(i) CONSUMMATION OF PERMITTED ACQUISITION. Evidence that the
relevant Permitted Acquisition shall have been consummated in all
material respects in accordance with the terms of the relevant
Purchase Agreement, and the Agent shall have received a certificate
of a Responsible Financial Officer of the Company to that effect (and
attaching thereto a true and complete copy of the relevant Purchase
Agreement).
(ii) ENVIRONMENTAL MATTERS. To the extent that a Permitted
Acquisition involves the direct or indirect acquisition of real
Property, upon the request of the Agent, environmental surveys and
assessments prepared by one or more firms of licensed engineers
(familiar with the identification of toxic and hazardous substances)
in form and substance satisfactory to each Lender, such environmental
survey and assessment to be based upon physical on-site inspections by
such firm of each of the existing sites and facilities to be owned,
operated or leased by the Company or the relevant Supplemental
Guarantor or any of its Subsidiaries pursuant to such Permitted
Acquisition as well as an historical review of the uses of such sites
and facilities and of the business and operations of such Supplemental
Guarantor or any of its Subsidiaries (including any former
Subsidiaries or divisions thereof or any of its Subsidiaries that have
been disposed of
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prior to the date of such survey and assessment and with respect to
which such Supplemental Guarantor or any of its Subsidiaries may
have retained liability for Environmental Claims), and if requested
by the Agent, the Company shall have agreed to take other reasonable
steps after the date of such Permitted Acquisition with respect to
such matters as shall be agreed in writing with the Agent.
(iii) SOLVENCY ANALYSIS. A certificate from a Responsible
Financial Officer of the Company to the effect that, as of the date of
the respective Permitted Acquisition and after giving effect to the
Loans in connection with the relevant Permitted Acquisition hereunder
and to the other transactions contemplated hereby in connection with
such Permitted Acquisition, (i) the aggregate value of all Properties
of the Company and its Subsidiaries at their present fair saleable
value (i.e., the amount that may be realized within a reasonable time,
considered to be six months to one year, either through collection or
sale at the regular market value, conceiving the latter as the amount
that could be obtained for the Property in question within such period
by a capable and diligent businessman from an interested buyer who is
willing to purchase under ordinary selling conditions), exceeds the
amount of all the debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of the Company
and its Subsidiaries, (ii) the Company and its Subsidiaries will not,
on a consolidated basis, have unreasonably small capital with which to
conduct their business operations as theretofore conducted and (iii)
the Company and its Subsidiaries will have, on a consolidated basis,
sufficient cash flow to enable them to pay their debts as they mature.
The Agent shall have also received (x) a certificate from a
Responsible Financial Officer of the Company certifying that the
financial projections and underlying assumptions contained in such
analyses were at the time made, and on the date thereof are, fair and
reasonable and accurately computed and (y) appropriate factual
information supporting the conclusions of the solvency analyses and
the financial condition certificate required to be delivered as
provided above.
(iv) MORTGAGES. With respect to each parcel of real property or
leasehold interest with a current fair
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market value in excess of $1,500,000, as demonstrated in a manner
reasonably satisfactory to the Agent, at the time of acquisition
thereof, the following documents each of which shall be executed
(and, where appropriate, acknowledged) by Persons satisfactory to
the Agent:
(A) one or more Mortgages covering the parcels of real
Property of the relevant Supplemental Guarantor or acquired by
the Company or any Subsidiary thereof pursuant to a Permitted
Acquisition financed hereunder (collectively, the "SUPPLEMENTAL
MORTGAGES"), in each case duly executed and delivered by the
Company or the relevant Subsidiary or Supplemental Guarantor, as
applicable, in recordable form and, to the extent necessary under
applicable law, for filing in the appropriate county land
offices, Uniform Commercial Code financing statements covering
fixtures, in each case appropriately completed and duly executed;
(B) one or more commitments for or mortgagee policies of
title insurance on forms of and issued by one or more title
companies satisfactory to the Agent ("TITLE COMPANIES"), insuring
the validity and priority of the Liens created under the
Supplemental Mortgages for and in amounts satisfactory to the
Agent, subject only to such exceptions as are satisfactory to the
Majority Lenders;
(C) current as-built surveys of each of the parcels to be
covered by the Supplemental Mortgages and, in the case of certain
surveys (as agreed by the Company and the Agent), accompanied by
a certificate of an appropriate officer or employee of the
Company, which surveys shall be in form and content acceptable to
the Agent and shall have been prepared by a registered surveyor
acceptable to the Agent;
(D) upon request of the Agent, certified copies of
permanent and unconditional certificates of occupancy (or, if it
is not the practice to issue certificates of occupancy in the
jurisdiction in which the parcels to be covered by the
Supplemental Mortgages are located, then such
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other evidence reasonably satisfactory to each Lender) permitting
the fully functioning operation and occupancy of each such
facility and of such other permits necessary for the use and
operation of each such facility issued by the respective
governmental authorities having jurisdiction over each such
facility;
(E) upon request of the Agent, in the case of Supplemental
Mortgages covering leasehold interests, such estoppel, consents
and other agreements from the lessor, the holder of a fee
mortgage or a sublessee, as the Agent may reasonably request;
(F) upon request of the Agent, appraisals of each of the
facilities located on the Properties covered by the Supplemental
Mortgages prepared by a Person, and using a methodology,
satisfactory to the Agent; and
(G) contemporaneously dated opinions of local counsel in
the respective jurisdictions in which the properties covered by
the Supplemental Mortgages are located, substantially in the form
of Exhibit F hereto (with such changes thereto as the Agent shall
approve), and in each case, covering such other matters as the
Agent may reasonably request (and the Company, each relevant
Subsidiary of the Company and each Supplemental Guarantor hereby
instructs such counsel to deliver such opinion to the Lenders and
the Agent).
In addition, the Company shall have paid to the Title Companies
all expenses and premiums of the Title Companies in connection with
the issuance of such policies and in addition shall have paid to the
Title Companies an amount equal to the recording and stamp taxes
payable in connection with recording the Supplemental Mortgages in
the appropriate jurisdictions.
(v) FINANCIAL INFORMATION. (A) a certificate of a Responsible
Financial Officer of the Company to the effect that on a pro forma
basis after giving effect to the relevant Permitted Acquisition, the
Company shall remain in compliance with Sections 8.10, 8.11, 8.12 and
8.13 hereof and (B) the most recent audited
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consolidated balance sheet of the Person (if any) to be acquired and
its Subsidiaries and the related statement of income, retained
earnings and cash flow for the fiscal year ended on said date, with
opinions thereon of the auditors of such Person(or, if audited
financial statements are not available to the Company, unaudited
financial statements (i) reviewed by independent certified accountants
of recognized national standing and acceptable to the Agent and (ii)
in form satisfactory to the Agent), and the most recent unaudited
consolidated balance sheet of such Person and its Subsidiaries and the
related statements of income and retained earnings for the period
ended on the date of such unaudited statements.
(vi) PAYMENT OF FEES AND EXPENSES, ETC. Evidence that the
Company shall have paid such fees and expenses as the Company shall
have agreed to pay to the Agent in connection herewith, including,
without limitation, the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to First Union, and
Fiddler Gonzalez & Rodriguez, special Puerto Rico counsel to First
Union, in connection with the satisfaction of the conditions in this
Section 6.02 and the making of the Loans hereunder in connection with
the relevant Permitted Acquisition (to the extent that statements for
such fees and expenses have been delivered to the Company).
(vii) OTHER DOCUMENTS. Such other documents as the Agent or any
Lender or special New York counsel to First Union may reasonably
request.
6.03 CONDITIONS TO ALL EXTENSIONS OF CREDIT. The effectiveness of
this Agreement (and the amendment and restatement of the Existing Supplemental
Credit Agreement to be effected thereby) and the obligation of the Lenders to
make any Loan or otherwise extend any credit to the Company upon the occasion of
each borrowing hereunder (including any borrowing on the Effective Date) are
subject to the further conditions precedent that, both immediately prior to such
effectiveness and to the making of such Loan and also after giving effect
thereto and to the intended use thereof:
(i) no Default shall have occurred and be continuing; and
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(ii) the representations and warranties made by the Company in
Section 7 hereof, and by each Obligor in each of the other Loan Documents
to which it is a party, shall be true and complete on and as of the date of
the making of such Loan with the same force and effect as if made on and as
of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date).
Each notice of borrowing by the Company hereunder shall constitute a
certification by the Company to the effect set forth in the first sentence of
this Section 6.03 (both as of the date of such notice and, unless the Company
otherwise notifies the Agent prior to the date of such borrowing, as of the date
of such borrowing).
Section 7. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to the Agent and the Lenders that (with respect to matters
pertaining to itself and each of its Subsidiaries):
7.01 CORPORATE EXISTENCE. Each of the Company and its Subsidiaries:
(a) is a corporation, partnership or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals necessary
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 and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could (either
individually or in the aggregate) have a Material Adverse Effect.
7.02 FINANCIAL CONDITION. The Company has heretofore furnished to
each of the Lenders the following:
(a) unaudited consolidating balance sheets of the Company and its
Subsidiaries as at December 31, 1996 and the related consolidating
statements of income and operating cash flow for the twelve-month period
ended on said date; and
(b) an audited consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 1996 and the related consolidated
statements of income, retained earnings and cash flow of the Company and
its Subsidiaries for the
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fiscal period ended on said date, with the opinion thereon of Deloitte &
Touche LLP.
All such financial statements fairly present the respective financial condition
of the respective entities as at the respective dates, and the respective
results of operations for the respective periods ended on said respective dates,
all in accordance with generally accepted accounting principles and practices
applied on a consistent basis. None of such respective entities has on the date
hereof 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 or provided for in
the respective balance sheets referred to above. Since December 31, 1996 (with
respect to the Company and each of its Subsidiaries), there has been no material
adverse change in the respective financial condition, operations, business or
prospects of each such entity from that set forth in the respective financial
statements as at such date.
7.03 LITIGATION. Except as disclosed in Schedule V hereto, there are
no legal or arbitral proceedings, or any proceedings by or before any
governmental or regulatory authority or agency, now pending or (to the knowledge
of the Company) threatened against the Company or any of its Subsidiaries that,
if adversely determined could (either individually or in the aggregate) have a
Material Adverse Effect.
7.04 NO BREACH. None of the execution and delivery of this Agreement
and the Notes and the other Basic Documents, the consummation of the
transactions herein and therein contemplated or compliance with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the charter or by-laws of any Obligor, or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or governmental authority or agency, or any material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their Property is bound or to which any of them is
subject, or constitute a default under any such agreement or instrument, or
(except for the Liens created pursuant to the Security Documents) result in the
creation or imposition of any Lien upon any Property of the Company or any of
its Subsidiaries pursuant to the terms of any such agreement or instrument.
7.05 ACTION. Each Obligor has all necessary corporate power,
authority and legal right to execute, deliver and perform its obligations under
each of the Basic Documents to which it is
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a party; the execution, delivery and performance by each Obligor of each of
the Basic Documents to which it is a party have been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required shareholder approvals); and this Agreement has been duly and validly
executed and delivered by the Company and constitutes, and each of the Notes
and the other Basic Documents to which it is a party when executed and
delivered by the respective Obligor (in the case of the Notes, for value)
will constitute, its legal, valid and binding obligation, enforceable against
such Obligor in accordance with its terms, except as such enforceability may
be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the enforcement of creditors'
rights and (b) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law). Each Security Document providing collateral security, directly or
indirectly, for the Loans is effective to create in favor of the Agent for
the benefit of the Lenders a legal, valid and enforceable first priority Lien
upon all right, title and interest of the Obligor or Obligors party thereto
in the Property described therein and such Lien has been perfected, except as
otherwise permitted under Section 8.06 hereof or in such Security Document.
7.06 APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or
agency, or any securities exchange, are necessary for the execution, delivery or
performance by any Obligor of the Basic Documents to which it is a party or for
the legality, validity or enforceability hereof or thereof, except for filings
and recordings in respect of the Liens created pursuant to the Security
Documents.
7.07 USE OF CREDIT. None of the Company nor any of its Subsidiaries
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose, whether immediate, incidental or ultimate,
of buying or carrying Margin Stock, and no part of the proceeds of the Loans
hereunder will be used to buy or carry any Margin Stock.
7.08 ERISA. Each Plan, and, to the knowledge of the Company, each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law, and no event
or condition has occurred and is continuing as to which the Company
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would be under an obligation to furnish a report to the Lenders under Section
8.01(e) hereof.
7.09 TAXES. The Company and its Subsidiaries (other than the
Obligors operating in the Commonwealth and Garrido) are members of an affiliated
group of corporations filing consolidated returns for Federal income tax
purposes, of which the Company is the "common parent" (within the meaning of
Section 1504 of the Code) of such group. The Company and its Subsidiaries have
filed all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Company or any of its
Subsidiaries. The charges, accruals and reserves on the books of the Company
and its Subsidiaries in respect of taxes and other governmental charges are, in
the opinion of the Company, adequate. The Company has not given or been
requested to give a waiver of the statute of limitations relating to the payment
of Federal, state, local and foreign taxes or other impositions. Neva Plastics
and Suiza Fruit each hold industrial tax exemption grants entitling each of them
to a 90% exemption from income and property taxes and a 60% exemption from
municipal license taxes. The grant held by Neva Plastics will expire on August
31, 2000 for income tax purposes, on June 30, 2001 for municipal tax purposes
and on January 1, 2000 for property tax purposes. The grant held by Suiza Fruit
will expire on October 12, 2002 for income and property tax purposes and on June
30, 2003 for municipal license tax purposes.
7.10 INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
7.11 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any
of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
7.12 MATERIAL AGREEMENTS AND LIENS.
(a) Part A of Schedule I hereto is a complete and correct list, as of
the Effective Date, and after giving effect to the transactions contemplated
hereunder to occur on such date, of each credit agreement, loan agreement,
indenture, purchase agreement, guarantee, letter of credit or other arrangement
providing for or otherwise relating to any Indebtedness or any
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extension of credit (or commitment for any extension of credit) to, or
guarantee by, the Company or any of its Subsidiaries, and the aggregate
principal or face amount outstanding or that may become outstanding under
each such arrangement is correctly described in Part A of said Schedule I.
(b) Part B of Schedule I hereto is a complete and correct list, as of
the Effective Date (and after giving effect to the transactions contemplated
hereunder to occur on such date), of each Lien securing Indebtedness of any
Person and covering any Property of the Company or any of its Subsidiaries that
will continue after the Effective Date, and the aggregate Indebtedness secured
(or that may be secured) by each such Lien and the Property covered by each such
Lien is correctly described in Part B of said Schedule I.
7.13 ENVIRONMENTAL MATTERS. Each of the Company and its Subsidiaries
has obtained all environmental, health and safety permits, licenses and other
authorizations required under all Environmental Laws to carry on its business as
now being or as proposed to be conducted, except to the extent failure to have
any such permit, license or authorization would not (either individually or in
the aggregate) have a Material Adverse Effect. Each of such permits, licenses
and authorizations is in full force and effect and each of the Company and its
Subsidiaries is in compliance with the terms and conditions thereof, and is also
in compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply
therewith would not (either individually or in the aggregate) have a Material
Adverse Effect.
In addition, except as to matters with respect to which the Company
and its Subsidiaries could not reasonably be expected to incur liabilities in
excess of $1,000,000 in the aggregate:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Company or any of its Subsidiaries to have any
environmental, health or safety permit, license or other authorization
required under any Environmental Law in connection with the conduct of the
business of the Company
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or any of its Subsidiaries or with respect to any generation, treatment,
storage, recycling, transportation, discharge or disposal, or any Release
of any Hazardous Materials generated by the Company or any of its
Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries owns, operates or
leases a treatment, storage or disposal facility requiring a permit under
the Resource Conservation and Recovery Act of 1976, as amended, or under
any comparable state or local statute; and
(i) no polychlorinated biphenyls (PCB's) is or has been
present at any site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries;
(ii) no asbestos or asbestos-containing materials is or has
been present at any site or facility now or previously owned, operated
or leased by the Company or any of its Subsidiaries;
(iii) there are no underground storage tanks, other than
those disclosed in consultant reports provided to the Agent by the
Company or its Subsidiaries, or surface impoundments for Hazardous
Materials, active or abandoned, at any site or facility now or
previously owned, operated or leased by the Company or any of its
Subsidiaries;
(iv) no Hazardous Materials have been Released at, on or
under any site or facility now or previously owned, operated or leased
by the Company or any of its Subsidiaries in a reportable quantity
established by statute, ordinance, rule, regulation or order; and
(v) no Hazardous Materials have been otherwise Released at,
on or under any site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries that would (either
individually or in the aggregate) have a Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries has transported
or arranged for the transportation of any Hazardous Material to any
location that is listed on the National Priorities List ("NPL") under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), listed for possible inclusion
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on the NPL by the Environmental Protection Agency in the Comprehensive
Environmental Response and Liability Information System, as provided for
by 40 C.F.R. Section 300.5 ("CERCLIS"), or on any similar state or local
list or that is the subject of Federal, state or local enforcement actions
or other investigations that may lead to Environmental Claims against the
Company or any of its Subsidiaries.
(d) No Hazardous Material generated by the Company or any of its
Subsidiaries has been recycled, treated, stored, disposed of or Released by
the Company or any of its Subsidiaries at any location other than those
listed in Schedule II hereto.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any of its
Subsidiaries and no site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries is listed or proposed for
listing on the NPL, CERCLIS or any similar state list of sites requiring
investigation or clean-up.
(f) No Liens have arisen under or pursuant to any Environmental Laws
on any site or facility owned, operated or leased by the Company or any of
its Subsidiaries, and no government action has been taken or is in process
that could subject any such site or facility to such Liens and neither the
Company nor any of its Subsidiaries would be required to place any notice
or restriction relating to the presence of Hazardous Materials at any site
or facility owned by it in any deed to the real property on which such site
or facility is located.
(g) All environmental investigations, studies, audits, tests, reviews
or other analyses conducted by or that are in the possession of the Company
or any of its Subsidiaries in relation to facts, circumstances or
conditions at or affecting any site or facility now or previously owned,
operated or leased by the Company or any of its Subsidiaries and that could
result in a Material Adverse Effect have been made available to the
Lenders.
7.14 CAPITALIZATION.
(a) As of the Effective Date, the authorized capital stock of the
Company consists of 101,000,000 shares, consisting of 100,000,000 shares of
common stock, par value
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$0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01
per share;
(b) As of July 15, 1997, the Company has 15,298,718 shares of issued
and outstanding common stock, and all of such issued shares are duly and
validly issued and outstanding and are not held in treasury;
(c) As of the Effective Date, the Company has no issued or
outstanding preferred stock;
(d) As of July 15, 1997, except for (i) options to purchase 369,838
shares of common stock granted under the Company's Exchange Stock Option
and Restricted Stock Plan, (ii) options to purchase up to 1,021,748 shares
of common stock granted (1,020,708) or available (1,040) for future grants
under the Company's 1995 Stock Option and Restricted Stock Plan, (iii)
options to purchase up to 1,150,000 shares of common stock granted
(913,200) or available (236,800) for future grants under the Company's 1997
Stock Option and Restricted Stock Plan, and (iv) up to 250,000 shares of
common stock available for future purchase under the Company's 1997
Employee Stock Purchase Plan, there are no outstanding Equity Rights with
respect to the Company; and
(e) As of the Effective Date, there are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem, or otherwise
acquire any shares of capital stock of the Company or any of its
Subsidiaries or to make payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market value or equity value of the Company or any of its Subsidiaries,
except for the right of the holders of certain warrants for the purchase of
stock of Franklin Plastics, Inc., a Delaware corporation, to put such stock
or warrants to the issuer thereof or the Company.
7.15 SUBSIDIARIES, ETC.
(a) Set forth in Part A of Schedule III hereto is a complete and
correct list, as of the date hereof, of all of the Subsidiaries of the Company,
together with, for each such Subsidiary, (i) the jurisdiction of organization of
such Subsidiary, (ii) each Person holding ownership interests in such Subsidiary
and (iii) the nature of the ownership interests held by each such Person and the
percentage of ownership of such Subsidiary represented by such ownership
interests. Except as disclosed in Part A of Schedule III hereto, (x) each of
the
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Company and its Subsidiaries owns, free and clear of Liens (other than Liens
created pursuant to the Security Documents), and has the unencumbered right to
vote, all outstanding ownership interests in each Person shown to be held by it
in Part A of Schedule III hereto, (y) all of the issued and outstanding capital
stock of each such Person organized as a corporation is validly issued, fully
paid and nonassessable and (z) there are no outstanding Equity Rights with
respect to such Person.
(b) Set forth in Part B of Schedule III hereto is a complete and
correct list, as of the date hereof, of all Investments (other than Investments
disclosed in Part A of said Schedule III hereto) held by the Company or any of
its Subsidiaries in any Person and, for each such Investment, (x) the identity
of the Person or Persons holding such Investment and (y) the nature of such
Investment. Except as disclosed in Part B of Schedule III hereto, each of the
Company and its Subsidiaries owns, free and clear of all Liens (other than Liens
created pursuant to the Security Documents), all such Investments.
(c) None of the Subsidiaries of the Company is, on the date hereof,
subject to any indenture, agreement, instrument or other arrangement of the type
described in Section 8.19(b) hereof.
7.16 TITLE TO ASSETS. The Company owns and has on the date hereof,
and will own and have on the Effective Date, good and marketable title (subject
only to Liens permitted by Section 8.06 hereof) to the Properties shown to be
owned in the most recent financial statements referred to in Section 7.02 hereof
(other than Properties disposed of in the ordinary course of business or
otherwise permitted to be disposed of pursuant to Section 8.05 hereof). The
Company owns and has on the date hereof, and will own and have on the Effective
Date, good and marketable title to, and enjoys on the date hereof, and will
enjoy on the Effective Date, peaceful and undisturbed possession of, all
Properties (subject only to Liens permitted by Section 8.06 hereof) that are
necessary for the operation and conduct of its businesses.
7.17 TRUE AND COMPLETE DISCLOSURE. The information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of the Obligors to the Agent or any Lender in connection with the
negotiation, preparation or delivery of this Agreement and the other Loan
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole do not contain any untrue statement of material fact or
omit to state any material fact
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necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Company and its
Subsidiaries to the Agent and the Lenders in connection with this Agreement
and the other Loan Documents and the transactions contemplated hereby and
thereby will be true, complete and accurate in every material respect, or (in
the case of projections) based on reasonable estimates, on the date as of
which such information is stated or certified. There is no fact known to the
Company that could have a Material Adverse Effect that has not been disclosed
herein, in the other Loan Documents or in a report, financial statement,
exhibit, schedule, disclosure letter or other writing furnished to the
Lenders for use in connection with the transactions contemplated hereby or
thereby.
7.18 REAL PROPERTY. Set forth on Schedule IV attached hereto is a
list, as of the Effective Date of all of the real property interests held by the
Company and its Subsidiaries, indicating in each case whether the respective
Property is owned or leased, the identity of the owner or lessee and the
location of the respective Property.
7.19 SOLVENCY. As of the Effective Date and after giving effect to
the initial Loans hereunder and the other transactions contemplated hereby,
(a) the aggregate value of all Properties of the Company and its Subsidiaries at
their present fair saleable value (i.e., the amount that may be realized within
a reasonable time, considered to be six months to one year, either through
collection or sale at the regular market value, conceiving the latter as the
amount that could be obtained for the Property in question within such period by
a capable and diligent businessman from an interested buyer who is willing to
purchase under ordinary selling conditions), exceeds the amount of all the debts
and liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of the Company and its Subsidiaries, (b) the Company and its
Subsidiaries will not, on a consolidated basis, have unreasonably small capital
with which to conduct their business operations as heretofore conducted and
(c) the Company and its Subsidiaries will have, on a consolidated basis,
sufficient cash flow to enable them to pay their debts as they mature.
Section 8. COVENANTS OF THE COMPANY. The Company covenants and
agrees with the Lenders and the Agent that, so long as any Commitment or Loan is
outstanding and until payment in full of all amounts payable by the Company
hereunder:
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8.01 FINANCIAL STATEMENTS, ETC. The Company shall deliver, or shall
cause to be delivered, to each of the Lenders:
(a) as soon as available and in any event within 45 days after the
end of each quarterly fiscal period of each fiscal year of the Company,
consolidated statements of income, retained earnings and cash flow of the
Company and its Subsidiaries for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated balance sheet of the Company and its Subsidiaries as
at the end of such period, setting forth in each case in comparative form
the corresponding consolidated figures for the corresponding periods in the
preceding fiscal year, accompanied by a certificate of a Responsible
Financial Officer of the Company, which certificate shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Company and its Subsidiaries, in
accordance with generally accepted accounting principles, consistently
applied, as at the end of, and for, such period (subject to normal year-end
audit adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, consolidated statements of income,
retained earnings and cash flow of the Company and its Subsidiaries for
such fiscal year and the related consolidated balance sheet of the Company
and its Subsidiaries as at the end of such fiscal year, setting forth in
each case in comparative form the corresponding consolidated figures for
the preceding fiscal year, and accompanied by an opinion thereon of
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of the Company and its Subsidiaries as at the end of, and for,
such fiscal year in accordance with generally accepted accounting
principles, and a certificate of such accountants stating that, in making
the examination necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default;
(c) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, that the
Company shall have filed with the Commission or any national securities
exchange;
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(d) promptly upon mailing thereof to the shareholders of the Company
generally, copies of all financial statements, reports and proxy statements
so mailed;
(e) as soon as possible, and in any event within ten days after the
Company knows or has reason to believe that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan has occurred
or exists, a statement signed by a Responsible Financial Officer of the
Company setting forth details respecting such event or condition and the
action, if any, that the Company or its ERISA Affiliate proposes to take
with respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by the Company or an ERISA Affiliate with
respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the
occurrence of such event (PROVIDED that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of ERISA,
including, without limitation, the failure to make on or before its
due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under Section 412(d) of the Code
for any Plan;
(ii) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by the
Company or an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Company or any ERISA Affiliate that results
in liability under Section 4201
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or 4204 of ERISA (including the obligation to satisfy secondary
liability as a result of a purchaser default) or the receipt by the
Company or any ERISA Affiliate of notice from a Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days; and
(vi) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA,
would result in the loss of tax-exempt status of the trust of which
such Plan is a part if the Company or an ERISA Affiliate fails to
timely provide security to the Plan in accordance with the provisions
of said Sections;
(f) [Intentionally left blank];
(g) promptly after the Company knows or has reason to believe that
any Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that the Company has taken or
proposes to take with respect thereto;
(h) promptly upon receipt thereof, copies of all management letters
and other material reports which are submitted to the Board of Directors of
the Company or any of its Subsidiaries by their independent certified
public accountants in connection with any annual audit of the Company
and/or any such Subsidiary by such accountants;
(i) as soon as available and in any event on or before December 31 of
each fiscal year, a budget for the next following fiscal year setting forth
for each Subsidiary of the Company and for the Company and its Subsidiaries
as a whole, anticipated income, expense and capital expenditure items for
each quarter during such fiscal year, together with pro forma unaudited
balance sheets of the Company and its Subsidiaries and the related pro
forma statements of retained earnings, and quarterly, concurrently with the
delivery of the financial statements for such fiscal year pursuant to
clause (a) above, a report setting forth a
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detailed comparison of actual performance to the budget referred to above;
and
(j) from time to time such other information regarding the financial
condition, operations, business or prospects of the Company or any of its
Subsidiaries (including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed under ERISA) as
any Lender or the Agent may reasonably request.
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to clause (a) above, a certificate of a
Responsible Financial Officer of the Company (i) to the effect that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
that the Company has taken or proposes to take with respect thereto) and
(ii) setting forth in reasonable detail the computations necessary to determine
whether the Company is in compliance with Sections 8.10, 8.11, 8.12 and 8.13
hereof as of the end of the respective quarterly fiscal period or fiscal year.
8.02 LITIGATION. The Company will promptly give to each Lender
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting the Company or any of
its Subsidiaries, except proceedings that, if adversely determined, would not
(either individually or in the aggregate) have a Material Adverse Effect.
Without limiting the generality of the foregoing, the Company will give to each
Lender notice of the assertion of any Environmental Claim by any Person against,
or with respect to the activities of, the Company or any of its Subsidiaries and
notice of any alleged violation of or non-compliance with any Environmental Laws
or any permits, licenses or authorizations, other than any Environmental Claim
or alleged violation that, if adversely determined, would not (either
individually or in the aggregate) have a Material Adverse Effect.
8.03 EXISTENCE, ETC. The Company will, and will cause each of its
Subsidiaries to:
(a) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises (PROVIDED that nothing in this
Section 8.03 shall prohibit any transaction expressly permitted under
Section 8.05 hereof);
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(b) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure
to comply with such requirements could (either individually or in the
aggregate) have a Material Adverse Effect;
(c) pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for
any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained;
(d) maintain all of its Properties used or useful in its business in
good working order and condition, ordinary wear and tear excepted;
(e) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles consistently applied; and
(f) permit representatives of any Lender or the Agent, during normal
business hours, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by such
Lender or the Agent (as the case may be).
8.04 INSURANCE. The Company will, and will cause each of its
Subsidiaries to, maintain insurance with financially sound and reputable
insurance companies, and with respect to Property and risks of a character
usually maintained by corporations engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in the
amounts customarily maintained by such corporations. The Company will in any
event maintain (with respect to itself and each of its Subsidiaries):
(1) Casualty Insurance -- insurance against loss or damage covering
all of the tangible real and personal Property and improvements of the
Company and each of its Subsidiaries by reason of any Peril (as defined
below) in such amounts (subject to such deductibles as shall be
satisfactory to the Majority Lenders) as shall be reasonable and customary
and sufficient to avoid the insured named therein from becoming a
co-insurer of any loss under such
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policy but in any event in an amount (i) in the case of fixed assets and
equipment (including, without limitation, vehicles), at least equal to
100% of the actual replacement cost of such assets (including, without
limitation, foundation, footings and excavation costs), subject to
deductibles as aforesaid (PROVIDED that recovery limits may be applicable
to losses caused by flood or earthquake) and (ii) in the case of inventory,
not less than the fair market value thereof, subject to deductibles as
aforesaid.
(2) Automobile Liability Insurance for Bodily Injury and Property
Damage -- insurance against liability for bodily injury and property damage
in respect of all vehicles (whether owned, hired or rented by the Company
or any of its Subsidiaries) at any time located at, or used in connection
with, its Properties or operations in such amounts as are then customary
for vehicles used in connection with similar Properties and businesses, but
in any event to the extent required by applicable law.
(3) Comprehensive General Liability Insurance -- insurance against
claims for bodily injury, death or Property damage occurring on, in or
about the Properties (and adjoining streets, sidewalks and waterways) of
the Company and its Subsidiaries, in such amounts as are then customary for
Property similar in use in the jurisdictions where such Properties are
located.
(4) Workers' Compensation Insurance -- workers' compensation
insurance (including, without limitation, Employers' Liability Insurance)
to the extent required by applicable law.
(5) Product Liability Insurance -- insurance against claims for
bodily injury, death or Property damage resulting from the use of products
sold by the Company or any of its Subsidiaries in such amounts as are then
customarily maintained by responsible persons engaged in businesses similar
to that of the Company and its Subsidiaries.
(6) Business Interruption Insurance -- insurance against loss of
operating income (up to an aggregate amount equal to $15,000,000 and
subject to a deductible, or self-insured amount, not in excess of $500,000)
by reason of any Peril.
(7) Other Insurance -- such other insurance, including, without
limitation, War-Risk Insurance when and
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to the extent obtainable from the United States Government, in each case
as generally carried by owners of similar Properties in the jurisdictions
where such Properties are located, in such amounts and against such risks
as are then customary for Property similar in use.
Such insurance shall be written by financially responsible companies selected by
the Company and having an A. M. Best rating of "A-" or better and being in a
financial size category of VIII or larger, or by other companies acceptable to
the Majority Lenders, and (other than workers' compensation) shall name the
Agent as loss payee (to the extent covering risk of loss or damage to tangible
property) and as an additional named insured as its interests may appear (to the
extent covering any other risk). Each policy referred to in this Section 8.04
shall provide that it will not be canceled or reduced, or allowed to lapse
without renewal, except after not less than 30 days' notice to the Agent and
shall also provide that the interests of the Agent and the Lenders shall not be
invalidated by any act or negligence of the Company or any Person having an
interest in any Property covered by the Mortgages which, directly or indirectly,
secure the Loans nor by occupancy or use of any such Property for purposes more
hazardous than permitted by such policy nor by any foreclosure or other
proceedings relating to such Property. The Company will advise the Agent
promptly of any policy cancellation, reduction or amendment.
On or before the Effective Date, the Company will deliver to the Agent
certificates of insurance satisfactory to the Agent evidencing the existence of
all insurance required to be maintained by the Company hereunder setting forth
the respective coverage, limits of liability, carrier, policy number and period
of coverage (and attaching original copies of any policies with respect to
casualty insurance). Thereafter, each year the Company will deliver to the
Agent certificates of insurance evidencing that all insurance required to be
maintained by the Company hereunder will be in effect through the calendar year
following the date of such certificates, subject only to the payment of premiums
as they become due. In addition, the Company will not modify any of the
provisions of any policy with respect to casualty insurance without delivering
the original copy of the endorsement reflecting such modification to the Agent
accompanied by (if requested by the Agent) a written report of a firm of
independent insurance brokers of nationally recognized standing, stating that,
in their opinion, such policy (as so modified) adequately protects the interests
of the Lenders and the Agent, is in compliance with the provisions of this
Section 8.04, and is comparable in all respects with insurance carried by
responsible
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owners and operators of Properties similar to those covered by the
Mortgages which, directly or indirectly, secure the Loans. The Company will not
obtain or carry separate insurance concurrent in form or contributing in the
event of loss with that required by this Section 8.04 unless the Agent is the
named insured thereunder, with loss payable as provided herein. The Company
will immediately notify the Agent whenever any such separate insurance is
obtained and shall deliver to the Agent the certificates evidencing the same.
Without limiting the obligations of the Company under the foregoing
provisions of this Section 8.04, in the event the Company shall fail to maintain
in full force and effect insurance as required by the foregoing provisions of
this Section 8.04, then the Agent may, but shall have no obligation so to do,
procure insurance covering the interests of the Lenders and the Agent in such
amounts and against such risks as the Agent (or the Majority Lenders) shall deem
appropriate, and the Company shall reimburse the Agent in respect of any
premiums paid by the Agent in respect thereof.
For purposes hereof, the term "PERIL" shall mean, collectively, fire,
lightning, flood, windstorm, hail, earthquake, explosion, riot and civil
commotion, vandalism and malicious mischief, damage from aircraft, vehicles and
smoke and all other perils covered by the "all-risk" endorsement then in use in
the jurisdictions where the Properties of the Company and its Subsidiaries are
located.
8.05 PROHIBITION OF FUNDAMENTAL CHANGES. (a) The Company will not,
nor will it permit any of its Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution).
(b) The Company will not, nor will it permit any of its Subsidiaries
to, acquire any business or Property from, or capital stock of, or be a party to
any acquisition of, any Person except:
(i) for purchases of inventory and other Property to be sold or used
in the ordinary course of business;
(ii) Investments permitted under Section 8.08 hereof;
(iii) [Intentionally left blank]; and
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(iv) Permitted Acquisitions and acquisitions permitted under Section
8.05(b)(iv) of the Existing Credit Agreement.
(c) The Company will not, nor will it permit any of its Subsidiaries
to, convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a series of transactions, any part of its business or Property, whether now
owned or hereafter acquired (including, without limitation, receivables and
leasehold interests), but excluding:
(i) any Excluded Disposition;
(ii) obsolete or worn-out Property, tools or equipment no longer used
or useful in its business (other than any Excluded Disposition) or real
Property no longer used or useful in its business so long as the aggregate
amount thereof sold in any single fiscal year by the Company and its
Subsidiaries shall not have a fair market value in excess of $1,000,000;
(iii) any inventory or other Property sold or disposed of in the
ordinary course of business and on ordinary business terms; and
(iv) other Property so long as the aggregate amount thereof sold or
otherwise disposed of in any single fiscal year by the Company and its
Subsidiaries shall not have a fair market value in excess of $10,000,000.
(d) Notwithstanding the foregoing provisions of this Section 8.05, so
long as no Default shall have occurred and be continuing and, after giving
effect to any of the succeeding transactions, no Default would exist hereunder,
and so long as the Liens created under the Security Documents continue to be in
effect:
(i) any Subsidiary of the Company may be merged or consolidated with
or into: (x) the Company if the Company shall be the continuing or
surviving corporation or (y) any other such Subsidiary; and
(ii) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary liquidation
or otherwise) to the Company or a Subsidiary of the Company.
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8.06 LIMITATION ON LIENS. The Company will not, nor will it permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Security Documents;
(b) Liens in existence on the date hereof and listed in Part B of
Schedule I hereto;
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet delinquent or that are being contested in
good faith and by appropriate proceedings if, unless the amount thereof is
not material with respect to it or its financial condition, adequate
reserves with respect thereto are maintained on the books of the Company or
the affected Subsidiaries, as the case may be, in accordance with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's, landlord's,
repairmen's or other like Liens arising in the ordinary course of business
that are not overdue for a period of more than 30 days or that are being
contested in good faith and by appropriate proceedings;
(e) Liens securing judgments but only to the extent for an amount and
for a period not resulting in an Event of Default under Section 9(i)
hereof;
(f) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(g) deposits or pledges to secure the performance of bids, trade
contracts (other than for Indebtedness), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property or minor imperfections in title thereto that, in the
aggregate, are not material in amount, and that do not in any case
materially detract from the value of the Property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
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(i) Liens upon tangible personal Property acquired after the date
hereof (by purchase, construction or otherwise), or upon other property
acquired after the date hereof as a Capital Expenditure, by the Company or
any of its Subsidiaries, each of which Liens either (A) existed on such
Property before the time of its acquisition and was not created in
anticipation thereof or (B) was created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost of such Property; PROVIDED that (i) no such Lien shall extend to or
cover any Property of the Company or such Subsidiary other than the
Property so acquired, (ii) the principal amount of Indebtedness secured by
any such Lien shall at no time exceed the fair market value (as determined
in good faith by a Responsible Financial Officer of the Company) of such
Property at the time it was acquired, and (iii) the principal amount of all
Indebtedness (other than Indebtedness permitted by Section 8.07(d) hereof)
secured by such Liens shall not exceed $1,000,000 in the aggregate;
(j) Liens upon real Property heretofore leased or leased after the
date hereof (under operating or capital leases) in the ordinary course of
business by the Company or any of its Subsidiaries in favor of the lessor
created at the inception of the lease transaction, securing obligations of
the Company or any of its Subsidiaries under or in respect of such lease
and extending to or covering only the Property subject to such lease and
improvements thereon;
(k) Liens of sellers or creditors of sellers of farm products
encumbering such farm products when sold to any of the Obligors pursuant to
the Food Security Act of 1985 or pursuant to similar state laws to the
extent such Liens may be deemed to extend to the assets of such Obligors;
(l) protective Uniform Commercial Code filings with respect to
personal Property leased by any Obligor; and
(m) any extension, renewal or replacement of the foregoing, PROVIDED,
however, that the Liens permitted hereunder shall not be spread to cover
any additional Indebtedness or Property.
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8.07 INDEBTEDNESS. The Company will not, nor will it permit any of
its Subsidiaries to, create, incur or suffer to exist any Indebtedness except:
(a) Indebtedness to the Lenders hereunder, under the other Loan
Documents and under the Existing Credit Agreement;
(b) Indebtedness outstanding on the date hereof and listed in Part A
of Schedule I hereto;
(c) Indebtedness of Subsidiaries of the Company to the Company or to
other Subsidiaries of the Company or of the Company to any of its
Subsidiaries to the extent permitted under Section 8.08(e) or (g) hereof;
(d) Indebtedness (including Capital Lease Obligations) incurred to
finance the purchase of equipment, and other Capital Lease Obligations, not
to exceed $20,000,000 in the aggregate outstanding at any time;
(e) Indebtedness in respect of an irrevocable letter of credit issued
by a financial institution located in the State of Nevada in favor of the
State of Nevada Department of Insurance for the account of the Company or
any of its Subsidiaries, and any extensions or renewals thereof, in an
aggregate amount not exceeding $5,000,000 at any one time outstanding;
(f) Indebtedness in respect of certain irrevocable letters of credit
outstanding on the date hereof issued by Fleet National Bank or Bank
Boston, N.A. and described in Part C of Schedule I hereto; and
(g) additional Indebtedness of the Company and its Subsidiaries up to
but not exceeding $5,000,000 at any one time outstanding.
8.08 INVESTMENTS. The Company will not, nor will it permit any of
its Subsidiaries to, make or permit to remain outstanding any Investments
except:
(a) Investments outstanding as of the Effective Date and identified
in Part B of Schedule III hereto (including, without limitation,
Indebtedness of any Subsidiary of the Company to the Company or any other
Subsidiary of the Company);
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(b) operating deposit accounts with depository institutions;
(c) Permitted Investments;
(d) Interest Rate Protection Agreements entered into pursuant to
Section 8.15 hereof;
(e) (i) Investments permitted under Section 8.05(b) hereof and (ii)
indemnities executed in connection with the sale of Investment Tax Credits;
(f) Investments by the Company in the capital stock of its
Subsidiaries to the extent outstanding as of the Effective Date;
(g) Investments (other than of a type specified in clause (f) above,
other than the Investments permitted under clause (a) above and Investments
in Subsidiaries made in connection with Investments pursuant to clause
(e)(i) above) by the Company in its Subsidiaries or by any Subsidiary of
the Company in the Company or any other Subsidiary of the Company;
(h) loans and advances to employees;
(i) deposits to secure bids, tenders, utilities, vendors, leases,
statutory obligations, surety and appeal bonds and other deposits of like
nature arising in the ordinary course of business not exceeding $2,000,000
in the aggregate;
(j) additional Investments up to but not exceeding $2,000,000 in the
aggregate; and
(k) any guarantees permitted under Section 8.07 hereof.
8.09 RESTRICTED PAYMENTS.
(a) DIVIDEND PAYMENTS. The Company will not, nor will it permit any
of its Subsidiaries to, declare or make any Dividend Payment at any time,
PROVIDED that the Company may redeem or retire shares of its common stock from
any of its officers in connection with his or her voluntary departure,
dismissal, retirement or death, PROVIDED that (i) at the time of such redemption
or retirement no Default shall have occurred and be continuing and (ii) the
aggregate amount of all cash paid in
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respect of all such shares so redeemed or repurchased does not exceed
$2,000,000 in any fiscal year. Nothing herein shall be deemed to prohibit the
payment of dividends by any Subsidiary of the Company to the Company or any
other Subsidiary of the Company.
(b) MANAGEMENT FEES. The Company will not, nor will it permit any of
its Subsidiaries to, accrue or pay any Management Fees to any Person (including,
without limitation, any Affiliates), other than the Company or any of its
Subsidiaries.
8.10 LEVERAGE RATIO. The Company will not permit the Leverage Ratio
to exceed the following ratios for the following respective periods:
Period Ratio
------ -----
From the Effective Date 4.25 to 1
through and including
December 31, 1997
From January 1, 1998 4.00 to 1
through and including
March 31, 1998
From April 1, 1998 3.75 to 1
through and including
June 30, 1998
From and after July 1, 1998 3.50 to 1
8.11 MINIMUM NET WORTH. The Company will not permit its Net Worth at
any time to be less than $140,000,000 plus 50% of net income for all preceding
fiscal quarters (without including the results of any fiscal quarter in respect
of which there was a net loss) commencing with the fiscal quarter beginning July
1, 1997. The amount of Net Worth set forth above shall be increased by 75% of
the amount by which the "total stockholders equity" of the Company is increased
as a result of any public or private offering of common stock of the Company
after July 1, 1997. Promptly upon consummation of each such public or private
offering, the Company shall notify the Agent in writing of the amount of such
increase in total stockholders equity.
8.12 FIXED CHARGES RATIO. The Company will not permit the Fixed
Charges Ratio to be less than 1.10 to 1 at any time.
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8.13 INTEREST COVERAGE RATIO. The Company will not permit the
Interest Coverage Ratio to be less than 3.00 to 1 at any time.
8.14 [Intentionally left blank]
8.15 INTEREST RATE PROTECTION AGREEMENTS. The Company agrees to
provide to the Agent on or before January 31, 1998 evidence that it has in full
force and effect Interest Rate Protection Agreements in form and substance
satisfactory to the Agent that enable the Company to protect against floating
interest rates as to a notional principal amount at least equal to 50% of the
maximum aggregate principal amount of the Facility B Loans and Facility D Loans
outstanding from time to time during the period from January 31, 1998 to and
including the date three years after the Effective Date.
8.16 LINES OF BUSINESS. Neither the Company nor any of its
Subsidiaries will engage to any substantial extent in any line or lines of
business activity other than operations involved in the manufacture, processing
or distribution of ice, ice-related products, coffee, dairy products or bottled
water which is similar to the water products that are currently processed,
bottled and distributed from the dairy facilities of the Company and/or its
Subsidiaries, or from and after the Bernon Acquisition, the manufacture of blow
molded plastic bottles, or the lines of business conducted by the Company or any
of its Subsidiaries as of the Effective Date.
8.17 TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by
this Agreement, the Company will not, nor will it permit any of its Subsidiaries
to, directly or indirectly: (a) make any Investment in an Affiliate;
(b) transfer, sell, lease, assign or otherwise dispose of any Property to an
Affiliate; (c) merge into or consolidate with or purchase or acquire Property
from an Affiliate; or (d) enter into any other transaction directly or
indirectly with or for the benefit of an Affiliate (including, without
limitation, Guarantees and assumptions of obligations of an Affiliate); PROVIDED
that (i) any Affiliate who is an individual may serve as a director, officer or
employee of the Company or any of its Subsidiaries and receive reasonable
compensation for his or her services in such capacity and (ii) the Company and
its Subsidiaries may enter into transactions (other than extensions of credit by
the Company or any of its Subsidiaries to an Affiliate) if the monetary or
business consideration arising therefrom would be substantially as advantageous
to the Company
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and its Subsidiaries as the monetary or business consideration that would
obtain in a comparable transaction with a Person not an Affiliate.
8.18 USE OF PROCEEDS. The Company will use the proceeds of the
Facility C Loans only to make Permitted Acquisitions and to finance a portion of
the Bernon Acquisition. The Company will use the proceeds of the Facility D
Loans to finance a portion of the Bernon Acquisition. The Company will use the
proceeds of all Facility C Loans and Facility D Loans hereunder in compliance
with all applicable legal and regulatory requirements. Neither the Agent nor
any Lender shall have any responsibility as to the use of any of such proceeds.
8.19 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES; ADDITIONAL
MORTGAGED PROPERTIES.
(a) The Company will, and will cause each of its Subsidiaries to,
take such action from time to time as shall be necessary to ensure that each of
its Subsidiaries is a Wholly Owned Subsidiary unless otherwise permitted or
agreed in connection with a Permitted Acquisition. In the event that any
additional shares of stock shall be issued by any Subsidiary, the respective
Obligor agrees forthwith to deliver to the Agent pursuant to the relevant
Security Document the certificates evidencing such shares of stock, accompanied
by undated stock powers executed in blank and to take such other action as the
Agent shall request to perfect the security interest created therein pursuant to
such Security Document.
(b) The Company will not permit any of its Subsidiaries to enter
into, after the date of this Agreement, any indenture, agreement, instrument or
other arrangement (other than the Garrido Negative Pledge Agreement) that,
directly or indirectly, prohibits or restrains, or has the effect of prohibiting
or restraining, or imposes materially adverse conditions upon, the incurrence or
payment of Indebtedness, the granting of Liens, the declaration or payment of
dividends, the making of loans, advances or Investments or the sale, assignment,
transfer or other disposition of Property.
(c) The Company will take such action, and will cause each of its
Subsidiaries (other than Garrido) to take such action, from time to time as
shall be necessary to ensure that all Subsidiaries of the Company (other than
Garrido) are party to, as obligors, the Existing Subsidiary Guarantee and
Security Agreement or a Supplemental Subsidiary Guarantee and Security
Agreement. Without limiting the generality of the foregoing, in
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the event that the Company or any of its Subsidiaries shall form or acquire
any new Subsidiary, the Company or the respective Subsidiary will cause such
new Subsidiary to (i) become a party to the Existing Subsidiary Guarantee and
Security Agreement or a Supplemental Subsidiary Guarantee and Security
Agreement pursuant to a written instrument in form and substance satisfactory
to the Agent, (ii) if requested by the Majority Lenders, cause such new
Subsidiary to execute and deliver one or more Mortgages, in substantially the
form of Exhibits C or D hereto (with such changes thereto as the Agent may
reasonably request), covering the real Property and/or fixtures of such
Subsidiary, and (iii) to deliver such proof of corporate action, incumbency of
officers, opinions of counsel and other documents relating to the foregoing as
is consistent with those to be delivered by each Supplemental Guarantor
pursuant to Section 6.02 hereof, or as any Lender or the Agent shall have
reasonably requested.
(d) Without affecting the obligations of the Company under any
provision prohibiting such action hereunder, in the event that the Company or
any of its Subsidiaries (other than Garrido) shall acquire any business or
Property after the date hereof, the Company shall, or shall cause such
Subsidiary to (i) if requested by the Majority Lenders, execute and deliver one
or more Mortgages, substantially in the form of Exhibits C or D hereto (with
such changes as the Agent may reasonably request), covering the real property
and/or fixtures so acquired, (ii) execute and deliver to the Agent for filing,
appropriately completed Uniform Commercial Code financing statements or other
filings or instruments as the Agent shall request in order to perfect the
security interest in favor of the Agent for the benefit of the Lenders in such
Property so acquired and (iii) deliver such proof of corporate action,
incumbency of officers, opinions of counsel and other documents relating to the
foregoing as is consistent with those to be delivered by each Supplemental
Guarantor pursuant to Section 6.02 hereof, or as any Lender or the Agent shall
have reasonably requested.
8.20 MODIFICATIONS OF CERTAIN DOCUMENTS. Except in connection with
any transaction expressly permitted hereunder, the Company will not, nor will it
permit any of its Subsidiaries to, consent to any modification, supplement or
waiver of any of the provisions of any agreement, instrument or other document
evidencing or relating to the charter or by-laws of the Company or any of its
Subsidiaries, in each case, without the prior consent of the Agent (with the
approval of the Majority Lenders). Without limiting the requirement for consent
as provided in the immediately preceding sentence, the Company will furnish to
the Agent a copy of each such modification, supplement or waiver
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promptly upon the effectiveness thereof (and the Agent will promptly furnish a
copy thereof to each Lender).
8.21 FURTHER ASSURANCES. As and to the extent requested from time to
time by the Agent or the Majority Lenders, each Supplemental Guarantor operating
in the Commonwealth will grant to the Agent, for the benefit of the Lenders, a
Lien in respect of any Property owned by such Supplemental Guarantor operating
in the Commonwealth. Such Lien shall be granted pursuant to documentation
reasonably satisfactory in form and substance to the Agent (collectively, the
"ADDITIONAL PUERTO RICO SECURITY DOCUMENTS") and shall constitute valid and
enforceable perfected liens superior to and prior to the rights of all other
Persons and subject to no other Liens except for the Liens permitted pursuant to
Section 8.06 hereof. The Additional Puerto Rico Security Documents or other
instruments related thereto shall be duly recorded or filed in such manner and
in such places as are required by law to establish, perfect, preserve and
protect the Liens in favor of the Agent for the benefit of the Lenders required
to be granted pursuant to the Additional Puerto Rico Security Documents and all
taxes, fees and other charges payable in connection therewith shall be paid in
full.
8.22 PUERTO RICO SECURITY DOCUMENTS. The Company shall, within 15
days of the Effective Date, (i) execute such amendments to the Puerto Rico
Security Documents as reasonably requested by the Agent, (ii) duly file such
amendments with the appropriate filing offices in Puerto Rico and (iii) pay all
filing fees in connection therewith.
Section 9. EVENTS OF DEFAULT. If one or more of the following events
(herein called "EVENTS OF DEFAULT") shall occur and be continuing:
(a) The Company shall: (i) default in the payment of any principal
of any Loan when due (whether at stated maturity or at mandatory
prepayment); or (ii) default in the payment of any interest on any Loan,
any fee or any other amount payable by it hereunder or under any other Loan
Document or under the Existing Credit Agreement when due and such default
shall have continued unremedied for three or more Business Days; or
(b) The Company or any of its Subsidiaries shall default in the
payment when due of any principal of or interest on any of its other
Indebtedness aggregating $500,000 or more, or in the payment when due of
any amount under any Interest Rate Protection Agreement; or any event
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specified in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness or any event specified in any Interest
Rate Protection Agreement shall occur if the effect of such event is to
cause, or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to become
due, or to be prepaid in full (whether by redemption, purchase, offer to
purchase or otherwise), prior to its stated maturity or to have the
interest rate thereon reset to a level so that securities evidencing such
Indebtedness trade at a level specified in relation to the par value
thereof or, in the case of an Interest Rate Protection Agreement, to permit
the payments owing under such Interest Rate Protection Agreement to be
liquidated or any "Event of Default" (as defined in the Existing Credit
Agreement) shall occur and be continuing; or
(c) Any representation, warranty or certification made or deemed made
herein or in any other Loan Document (or in any modification or supplement
hereto or thereto) by any Obligor, or any certificate furnished to any
Lender or the Agent pursuant to the provisions hereof or thereof, shall
prove to have been false or misleading as of the time made or furnished in
any material respect; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 8.01(g), 8.05, 8.06, 8.07, 8.08, 8.09,
8.10, 8.11, 8.12, 8.13, 8.15, 8.16, 8.17, 8.19, 8.21 or 8.22 hereof; or the
Company shall default in the performance of any of its other obligations in
this Agreement and such default shall continue unremedied for a period of
30 or more days after notice thereof to the Company by the Agent or any
Lender (through the Agent); or
(e) The Company shall default in the performance of any of its
obligations under Section 4.02 of the Security Agreement; any Obligor party
to the Existing Subsidiary Guarantee and Security Agreement or any
Supplemental Subsidiary Guarantee and Security Agreement shall default in
the performance of any of its obligations under Section 2 or 5.02 thereof;
or any Obligor shall default in the performance of any of its other
obligations in any Loan Document (other than this Agreement) to which it is
party and such default shall continue unremedied for a period of 30 or more
days after notice thereof to the Company by the Agent or any Lender
(through the Agent); or
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(f) The Company or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become
due; or
(g) The Company or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator 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
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or 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 (or such similar laws) or (vi) take any
corporate action for the purpose of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced, without the application
or consent of the Company or the relevant Subsidiary affected thereby, 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 Company or such
Subsidiary, as the case may be, or of all or any substantial part of its
Property, or (iii) similar relief in respect of such Company or such
Subsidiary, as the case may be, 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 60 or more
days; or an order for relief against the Company or any of its Subsidiaries
shall be entered in an involuntary case under the Bankruptcy Code; or
(i) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate (exclusive of judgment amounts fully bonded
or covered by insurance where the surety or the insurer, as the case may
be, has admitted liability in respect of such judgment) shall be rendered
by one or more courts, administrative tribunals or other bodies having
jurisdiction against the Company or any of its
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Subsidiaries 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 30 days from the date of entry thereof and the Company
or any such Subsidiary, as the case may be, shall not, within said period
of 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; or
(j) An event or condition specified in Section 8.01(e) hereof shall
occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or shall be
reasonably likely to incur a liability to a Plan, a Multiemployer Plan or
PBGC (or any combination of the foregoing) that, in the determination of
the Majority Lenders, would (either individually or in the aggregate) have
a Material Adverse Effect; or
(k) A reasonable basis shall exist for the assertion against the
Company or any of its Subsidiaries, or any predecessor in interest of the
Company or any of its Subsidiaries, of (or there shall have been asserted
against the Company or any of its Subsidiaries) an Environmental Claim
that, in the judgment of the Majority Lenders, is reasonably likely to be
determined adversely to the Company or any of its Subsidiaries, and the
amount thereof (either individually or in the aggregate) is reasonably
likely to have a Material Adverse Effect (insofar as such amount is payable
by the Company or any of its Subsidiaries but after deducting any portion
thereof that is reasonably expected to be paid by other creditworthy
Persons jointly and severally liable therefor); or
(l) Any of the Subsidiaries of the Company shall cease to be a Wholly
Owned Subsidiary of the Company; or during any period of 25 consecutive
calendar months, a majority of the Board of Directors of the Company shall
no longer be composed of individuals (i) who were members of said Board on
the first day of such period or (ii) whose election or nomination to said
Board was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority
of said Board; or any Person or group of Persons acting in concert, other
than Mr. Gregg L. Engles or any other shareholder of the Company as of the
Effective Date, shall at any time own
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or control, directly or indirectly, 20% or more of the Company's voting
capital stock; or
(m) The Liens created by the Security Documents shall at any time not
constitute a valid and perfected Lien on any material portion of the
collateral intended to be covered thereby (to the extent perfection by
filing, registration, recordation or possession is required herein or
therein) in favor of the Agent, free and clear of all other Liens (other
than Liens permitted under Section 8.06 hereof or under the respective
Security Documents), or, except for expiration in accordance with its
terms, any of the Security Documents shall for whatever reason be
terminated or cease to be in full force and effect, or the enforceability
thereof shall be contested by any Obligor.
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (g) or (h) of this Section 9 with respect to any Obligor, the Agent may
(and, if requested by the Majority Lenders shall), by notice to the Company,
terminate the Commitments and/or declare the principal amount then outstanding
of, and the accrued interest on, the Loans and all other amounts payable by the
Obligors hereunder, under the other Loan Documents and under the Notes
(including, without limitation, any amounts payable under Section 5.05 hereof)
to be forthwith due and payable, whereupon such amounts shall be immediately due
and payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by each Obligor; and (2) in the
case of the occurrence of an Event of Default referred to in clause (g) or (h)
of this Section 9 with respect to any Obligor, the Commitments shall
automatically be terminated and the principal amount then outstanding of, and
the accrued interest on, the Loans and all other amounts payable by the Company
hereunder and under the Notes (including, without limitation, any amounts
payable under Section 5.05 hereof) shall automatically become immediately due
and payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by each Obligor.
Section 10. THE AGENT.
10.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent 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 this Agreement and of the other Loan Documents,
together with such other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 10.05
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and the first sentence of Section 10.06 hereof shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and in the other Loan Documents, and shall not by
reason of this Agreement or any other Loan Document be a trustee for any
Lender; (b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in
any other Loan Document, or in any certificate or other document referred to
or provided for in, or received by any of them under, this Agreement or any
other Loan Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, any Note or any other Loan
Document or any other document referred to or provided for herein or therein
or for any failure by the Company or any other Person to perform any of its
obligations hereunder or thereunder; (c) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or under any other
Loan Document; and (d) shall not be responsible for any action taken or
omitted to be taken by it hereunder or under any other Loan Document or under
any other document or instrument referred to or provided for herein or therein
or in connection herewith or therewith, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it in good faith. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof
unless and until a notice of the assignment or transfer thereof shall have
been filed with the Agent.
10.02 RELIANCE BY AGENT. The Agent shall be entitled to rely upon
any certification, notice or other communication (including, without limitation,
any thereof by telephone, telecopy, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent. As to any
matters not expressly provided for by this Agreement or any other Loan Document,
the Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or thereunder in accordance with instructions given by the
Majority Lenders or, if provided herein, in accordance with the instructions
given by the Supermajority Lenders or by all of the Lenders as is required in
such circumstance, and such instructions of such Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
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10.03 DEFAULTS. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default unless the Agent has received notice from
a Lender or any Obligor 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
Lenders. The Agent shall (subject to Section 10.07 hereof) take such action
with respect to such Default as shall be directed by the Majority Lenders,
PROVIDED that, unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interest of the Lenders except to the extent that this Agreement
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of the Majority Lenders, or all of the
Lenders.
10.04 RIGHTS AS A LENDER. With respect to its Commitment and the
Loans made by it, First Union (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. First Union
(and any successor acting as Agent) and its affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, make
investments in and generally engage in any kind of banking, trust or other
business with the Obligors (and any of their Subsidiaries or Affiliates) as if
it were not acting as the Agent, and First Union and its affiliates may accept
fees and other consideration from the Obligors for services in connection with
this Agreement or otherwise without having to account for the same to the
Lenders.
10.05 INDEMNIFICATION. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 11.03 hereof, but without limiting the
obligations of the Company under said Section 11.03, and including in any event
any payments under any indemnity that the Agent is required to issue to any bank
referred to in Section 4.02 of the Security Agreement and Section 5.02 of each
Supplemental Subsidiary Guarantee and Security Agreement to which remittances in
respect of Accounts, as defined in each such agreement, are to be made) ratably
in accordance with the aggregate principal amount of the Loans held by the
Lenders (or, if no Loans are at the time outstanding, ratably in accordance with
their respective Commitments), for any and all
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liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
that may be imposed on, incurred by or asserted against the Agent (including
by any Lender) arising out of or by reason of any investigation in or in any
way relating to or arising out of this Agreement or any other Loan Document
or any other documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby (including, without
limitation, the costs and expenses that the Company is obligated to pay under
Section 11.03 hereof, and including also any payments under any indemnity
that the Agent is required to issue to any bank referred to in Section 4.02
of the Security Agreement and Section 5.02 of each Supplemental Subsidiary
Guarantee and Security Agreement to which remittances in respect of Accounts,
as defined in each such agreement, are to be made, but excluding, unless a
Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other
documents, PROVIDED that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of
the party to be indemnified.
10.06 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or under any other Loan Document. The Agent shall not be required to keep
itself informed as to the performance or observance by any Obligor of this
Agreement or any of the other Loan Documents or any other document referred to
or provided for herein or therein or to inspect the Properties or books of the
Company or any of its Subsidiaries. Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder or under the Security Documents, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of the
Company or any of its Subsidiaries (or any of their affiliates) that may come
into the possession of the Agent or any of its affiliates.
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10.07 FAILURE TO ACT. Except for action expressly required of the
Agent hereunder and under the other Loan Documents, the Agent shall in all cases
be fully justified in failing or refusing to act hereunder and thereunder unless
it shall receive further assurances to its satisfaction from the Lenders of
their indemnification obligations under Section 10.05 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
10.08 RESIGNATION OR REMOVAL OF 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 Lenders and the Company, and the Agent
may be removed at any time with or without cause by the Majority Lenders. Upon
any such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent with the prior consent of the Company (which consent
shall not be unreasonably withheld); PROVIDED, that no such consent of the
Company shall be required if an Event of Default has occurred and is continuing
and the Commitments have been terminated and/or the Loans and other amounts
payable by the Company hereunder have been declared to be forthwith due and
payable. If no successor Agent shall have been so appointed by the Majority
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, that shall be a bank with a combined capital
and surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Section 10 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent.
10.09 AGENCY FEE. So long as the Commitments are in effect and until
payment in full of the principal of and interest on the Loans and all other
amounts payable by the Company hereunder, the Company will pay to the Agent an
agency fee in the amount agreed in writing between the Company and the Agent,
payable quarterly in arrears commencing on September 30, 1997 and on the last
day of each calendar quarter thereafter; PROVIDED that if the Commitments shall
have been terminated prior to such
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date, the agency fee shall be payable on the date of such termination. Such
fee, once paid, shall be non-refundable.
10.10 CONSENTS UNDER OTHER LOAN DOCUMENTS. Except as otherwise
provided in Section 11.04 hereof with respect to this Agreement, the Agent may,
with the prior consent of the Majority Lenders (or the Supermajority Lenders, as
specified herein) (but not otherwise), consent to any modification, supplement
or waiver under any of the Loan Documents, PROVIDED that, without the prior
consent of each Lender, the Agent shall not (except as provided herein or in the
Security Documents) release any guarantee or collateral or otherwise terminate
any Lien under any Loan Document providing for collateral security, or agree to
additional obligations being secured by such collateral security, except that no
such consent shall be required, and the Agent is hereby authorized, to release
any Lien covering Property that is the subject of a disposition of Property
permitted hereunder or to which the Majority Lenders have consented or to
release any guarantee of any Obligor that is the subject of a disposition to
which the Majority Lenders have consented.
10.11 SYNDICATION AGENT AND CO-AGENTS. The Syndication Agent and the
Co-Agents named on the cover page of this Agreement shall have no duties,
obligations or responsibilities hereunder except in their capacity as Lenders.
Section 11. MISCELLANEOUS.
11.01 WAIVER. No failure on the part of the Agent or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or any Note shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement or any Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
11.02 NOTICES. All notices, requests and other communications
provided for herein and under the Security Documents (including, without
limitation, any modifications of, or waivers, requests or consents under, this
Agreement) shall be given or made in writing (including, without limitation, by
telex or telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement, all such
communications
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shall be deemed to have been duly given when transmitted by telex or telecopier
or personally delivered or, in the case of a mailed notice, upon receipt, in
each case given or addressed as aforesaid.
11.03 EXPENSES, ETC. The Company agrees to pay or reimburse each of
the Lenders and the Agent for: (a) all reasonable out-of-pocket costs and
expenses of the Agent (including, without limitation, the reasonable fees and
expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel to First
Union, and Fiddler Gonzalez & Rodriguez, special Puerto Rico counsel to First
Union) in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the other Loan Documents and the extensions of
credit hereunder and (ii) the negotiation or preparation of any modification,
supplement or waiver of any of the terms of this Agreement or any of the other
Loan Documents (whether or not consummated); (b) all reasonable out-of-pocket
costs or allocated costs and expenses of the Lenders and the Agent (including,
without limitation, the reasonable fees, allocated costs and expenses of legal
counsel, which may be employees of the Lenders or the Agent) in connection with
(i) any Default and any enforcement or collection proceedings resulting
therefrom, including, without limitation, all manner of participation in or
other involvement with (x) bankruptcy, insolvency, receivership, foreclosure,
winding up or liquidation proceedings, (y) judicial or regulatory proceedings
and (z) workout, restructuring or other negotiations or proceedings (whether or
not the workout, restructuring or transaction contemplated thereby is
consummated) and (ii) the enforcement of this Section 11.03; (c) all transfer,
stamp, documentary or other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement or any of the
other Loan Documents or any other document referred to herein or therein and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security interest
contemplated by any Loan Document or any other document referred to therein; and
(d) all costs, expenses and other charges in respect of title insurance procured
with respect to the Liens created pursuant to any Mortgages securing, directly
or indirectly, the Loans.
The Company hereby agrees to indemnify the Agent and each Lender and
their respective directors, officers, employees, attorneys and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses incurred by any of them (including, without limitation, any
and all losses, liabilities, claims, damages or expenses
CREDIT AGREEMENT
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incurred by the Agent to any Lender, whether or not the Agent or any Lender
is a party thereto) arising out of or by reason of any investigation or
litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to the extensions of credit
hereunder or any actual or proposed use by the Company or any of its
Subsidiaries of the proceeds of any of the extensions of credit hereunder,
including, without limitation, the reasonable fees and disbursements of
counsel incurred in connection with any such investigation or litigation or
other proceedings (but excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). Without limiting the generality
of the foregoing, the Company will (x) indemnify the Agent for any payments
that the Agent is required to make under any indemnity issued to any bank
referred to in Section 4.02 of the Security Agreement and Section 5.02 of
each Supplemental Subsidiary Guarantee and Security Agreement to which
remittances in respect to Accounts, as defined in each such agreement, are to
be made and (y) indemnify the Agent and each Lender from, and hold the Agent
and each Lender harmless against, any losses, liabilities, claims, damages or
expenses described in the preceding sentence (including any Lien filed
against all or any part of the Property covered by any Mortgages (securing,
directly or indirectly, the Loans) in favor of any governmental entity, but
excluding, as provided in the preceding sentence, any loss, liability, claim,
damage or expense incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified) arising under any Environmental
Law as a result of the past, present or future operations of the Company or
any of its Subsidiaries (or any predecessor in interest to the Company or any
of its Subsidiaries), or the past, present or future condition of any site or
facility owned, operated or leased at any time by the Company or any of its
Subsidiaries (or any such predecessor in interest), or any Release or
threatened Release of any Hazardous Materials at or from any such site or
facility, including any such Release or threatened Release that shall occur
during any period prior to the termination of the Commitments and the payment
in full of the Loans and other amounts owing hereunder and under the other
Loan Documents when the Agent or any Lender shall be in possession of any
such site or facility following the exercise by the Agent or any Lender of
any of its rights and remedies hereunder or under any of the Security
Documents to the extent such Release results from a continuation of
conditions previously in existence at, or practices theretofore employed in
connection with the operation of, such site or facility.
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11.04 AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Company, the Agent and the
Majority Lenders, or by the Company and the Agent acting with the consent of the
Majority Lenders, and any provision of this Agreement may be waived by the
Majority Lenders or by the Agent acting with the consent of the Majority
Lenders; PROVIDED that: (a) no modification, supplement or waiver shall, unless
by an instrument signed by all of the Lenders or by the Agent acting with the
consent of all of the Lenders: (i) increase, or extend the term of any of the
Commitments, or extend the time or waive any requirement for the reduction or
termination of any of the Commitments, (ii) extend the date fixed for the
payment of principal of or interest on any Loan or any fee hereunder,
(iii) reduce the amount of any such payment of principal, (iv) reduce the rate
at which interest is payable thereon or any fee is payable hereunder, (v) alter
the rights or obligations of the Company to prepay Loans, (vi) alter the terms
of this Section 11.04, (vii) modify the definition of the terms "Majority
Lenders" or "Supermajority Lenders", or modify in any other manner the number or
percentage of the Lenders required to make any determinations or waive any
rights hereunder or to modify any provision hereof, or modify Section 4.07(b) or
Section 11.06(b)(ii) or (iii) hereof, (viii) release any Subsidiary Guarantor
from any of its guarantee obligations under the Existing Subsidiary Guarantee
and Security Agreement or any Supplemental Subsidiary Guarantee and Security
Agreement or release (or terminate any Lien on) all or substantially all of the
Collateral except as provided in the Security Documents with respect to such
Collateral in any of the Security Documents or (ix) waive any of the conditions
precedent set forth in Section 6.01, 6.02 or 6.03 hereof; (b) Sub-clause (i)(b)
of the definition of "Permitted Acquisition" may be modified, supplemented or
waived only by an instrument in writing signed by the Company, the Agent and the
Supermajority Lenders, or by the Company and the Agent acting with the consent
of the Supermajority Lenders; and (c) any modification of any of the rights or
obligations of the Agent shall require the consent of the Agent.
11.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
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11.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) The Company may not assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders and
the Agent.
(b) Each Lender may assign any of its Loans, its Notes and its
Commitments with the consent of the Company and the Agent (which consents shall
not be unreasonably withheld) pursuant to an Assignment and Acceptance
substantially in the form of Exhibit I hereto; PROVIDED that:
(i) no such consent by the Company shall be required in the case
of any assignment to another Lender or in any case if an Event of
Default has occurred and is continuing;
(ii) each assignment by a Lender of its Loans, Notes or
Commitment of any Class shall be made in such a manner so that the
same portion of such Loans, Notes and Commitment is assigned to the
respective assignee;
(iii) each assignment by any Facility C Lender or Facility D
Lender of any Loans (and related Note and Commitment) of a particular
Class shall be made in such a manner so that (x) the same ratable
portion of all of its Loans to the Company under this Agreement of
the other Class is assigned to the respective assignee and (y) the
same ratable portion of all of its Facility A Loans and Facility B
Loans (and related Facility A Note and Facility B Note and Facility
A Commitment and Facility B Commitment) under and as defined in the
Existing Credit Agreement is assigned to the respective assignee; and
(iv) any such assignment of less than all of such Lender's
interests in any of its Facility C Loans, Facility D Loans, Facility A
Loans, Facility B Loans, Facility C Notes, Facility D Notes, Facility
A Notes, Facility B Notes, Facility C Commitments, Facility D
Commitments, Facility A Commitments and Facility B Commitments, as the
case may be, shall be in an aggregate amount at least equal to
$10,000,000 ($5,000,000 if the assignee is already a Lender).
Upon execution and delivery by the assignor and assignee to the Agent of such
Assignment and Acceptance, and upon consent thereto by the Company and the Agent
to the extent required above, the assignee shall have, to the extent of such
assignment, the
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obligations, rights and benefits of a Lender hereunder holding the Commitments
and Loans (or portions thereof) assigned to it as specified in such Assignment
and Acceptance (in addition to the Commitments and Loans theretofore held by
such assignee) and the assigning Lender shall, to the extent of such assignment,
be released from the Commitment(s) (or portion(s) thereof) so assigned. Upon
each such assignment the assigning Lender shall pay the Agent an assignment fee
of $3,000.
(c) A Lender may sell or agree to sell to one or more other Persons a
participation in all or any part (in a minimum amount of $5,000,000) of any
Loans held by it, or in its Commitments, in which event each purchaser of a
participation (a "PARTICIPANT") shall be entitled to the rights and benefits of
the provisions of Section 8.01(j) hereof with respect to its participation in
such Loans and Commitments as if (and the Company shall be directly obligated to
such Participant under such provisions as if) such Participant were a "Lender"
for purposes of said Section, but, except as otherwise provided in
Section 4.07(c) hereof, shall not have any other rights or benefits under this
Agreement or any Note or any other Loan Document (the Participant's rights
against such Lender in respect of such participation to be those set forth in
the agreements executed by such Lender in favor of the Participant). All
amounts payable by the Company to any Lender under Section 5 hereof in respect
of Loans held by it, and its Commitments, shall be determined as if such Lender
had not sold or agreed to sell any participations in such Loans and Commitments,
and as if such Lender were funding each of such Loans and Commitments in the
same way that it is funding the portion of such Loans and Commitments in which
no participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Loan Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase or extend the term, or extend the time or
waive any requirement for the reduction or termination, of such Lender's related
Commitment, (ii) extend the date fixed for the payment of principal of or
interest on the related Loan or Loans or any portion of any fee hereunder
payable to the Participant, (iii) reduce the amount of any such payment of
principal, (iv) reduce the rate at which interest is payable thereon, or any fee
hereunder payable to the Participant, to a level below the rate at which the
Participant is entitled to receive such interest or fee, (v) alter the rights or
obligations of the Company to prepay the related Loans, (vi) consent to any
modification, supplement or waiver hereof or of any of the other Loan Documents
to the extent that the same, under Section 10.10
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or 11.04 hereof, requires the consent of each Lender or (vii) release any
Subsidiary Guarantor from any of its guarantee obligations under the
Guarantee Agreement or any Supplemental Subsidiary Guarantee and Security
Agreement or release (or terminate any Lien on) all or substantially all of
the collateral directly or indirectly securing the Loans except as provided
in the Security Documents with respect to such collateral in any of the
Security Documents.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 11.06, any Lender may (without notice
to the Company, the Agent or any other Lender and without payment of any fee)
(i) assign and pledge all or any portion of its Loans and its Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A and any
Operating Circular issued by such Federal Reserve Bank and (ii) assign all or
any portion of its rights under this Agreement and its Loans and its Notes to an
affiliate. No such assignment shall release the assigning Lender from its
obligations hereunder.
(e) A Lender may furnish any information concerning the Company or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 11.12(b) hereof.
(f) Anything in this Section 11.06 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Loan held by it
hereunder to the Company or any of its Subsidiaries or Affiliates without the
prior consent of each Lender.
(g) At the request of any Lender that is not a U.S. Person and is not
a "bank" within the meaning of Section 881(c)(3)(A) of the Code, the Company
shall maintain, or cause to be maintained, a register (the "REGISTER") that, at
the request of the Company, shall be kept by the Agent on behalf of the Company
at no charge to the Company at the address to which notices to the Agent are to
be sent hereunder, on which it enters the name of such Lender as the registered
owner of each Registered Loan held by such Lender. A Registered Loan (and the
Registered Note, if any, evidencing the same) may be assigned or otherwise
transferred in whole or in part by registration of such assignment or transfer
on the Register (and each Registered Note shall expressly so provide). Any
assignment or transfer of all or part of such Registered Loan (and the
Registered Note, if any, evidencing the same) may be effected by registration of
such assignment or transfer on the Register, together with the
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surrender of the Registered Note, if any, evidencing the same duly endorsed
by (or accompanied by a written instrument of assignment or transfer duly
executed by) the holder of such Registered Note, whereupon, at the request of
the designated assignee(s) or transferee(s), one or more new Registered Notes
in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the registration of assignment or
transfer of any Registered Loan (and the Registered Note, if any, evidencing
the same) the Company shall treat the Person in whose name such Registered
Loan (and the Registered Note, if any, evidencing the same) is registered as
the owner thereof for the purpose of receiving all payments thereon and for
all other purposes, notwithstanding notice to the contrary. The Register
shall be available for inspection by the Company and any Lender that is a
Registered Holder at any reasonable time upon reasonable prior notice.
11.07 SURVIVAL. The obligations of the Company under Sections 5.01,
5.05, 5.06, 5.08 and 11.03 hereof, and the obligations of the Lenders under
Section 10.05 hereof, shall survive the repayment of the Loans and the
termination of the Commitments. In addition, each representation and warranty
made, or deemed to be made by a notice of any extension of credit herein or
pursuant hereto shall survive the making of such representation and warranty,
and no Lender shall be deemed to have waived, by reason of making any extension
of credit hereunder (whether by means of a Loan), any Default that may arise by
reason of such representation or warranty proving to have been false or
misleading, notwithstanding that such Lender or the Agent may have had notice or
knowledge or reason to believe that such representation or warranty was false or
misleading at the time such extension of credit was made.
11.08 CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
11.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
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11.10 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS
AND VENUE.
(a) This Agreement and the Notes shall be governed by, and construed
in accordance with, the law of the State of New York.
(b) The Company hereby agrees that any suit, action or proceeding
with respect to this Agreement, any Note or any other Loan Document to which it
is a party or any judgment entered by any court in respect thereof may be
brought in the United States District Court for the Southern District of
New York, in the Supreme Court of the State of New York sitting in New York
County (including its Appellate Division), or in any other appellate court in
the State of New York, as the party commencing such suit, action or proceeding
may elect in its sole discretion; and each party hereto hereby irrevocably
submits to the non-exclusive jurisdiction of such court for the purpose of any
such suit, action, proceeding or judgment. Each party hereto further submits,
for the purpose of any such suit, action, proceeding or judgment brought or
rendered against it, to the appropriate courts of the jurisdiction of its
domicile.
(c) The Company hereby agrees that service of all writs, process and
summonses in any suit, action or proceeding brought hereunder or under any of
the other Loan Documents to which the Company is a party may be made upon The
Prentice Hall Corporation System, Inc. presently located at 15 Columbus Circle,
New York, New York 10023, U.S.A. (the "PROCESS AGENT"), and the Company hereby
confirms and agrees that the Process Agent has been duly and irrevocably
appointed as its agent and true and lawful attorney in fact in its name, place
and stead to accept such service of any and all such writs, process and
summonses, and agrees that the failure of the Process Agent to give any notice
of any such service of process to the Company shall not impair or affect the
validity of such service or of any judgment based thereon. Without limiting the
foregoing, the Company hereby irrevocably consents to the service of process in
any suit, action or proceeding in such courts by the mailing thereof by the
Agent or any Lender by registered or certified mail, postage prepaid, at its
address set forth beneath its signature hereto. Nothing herein shall in any way
be deemed to limit the ability of the Agent or any Lender to serve any such
writs, process or summonses in any other manner permitted by applicable law or
to obtain jurisdiction over the Company in such other jurisdictions, and in such
manner, as may be permitted by applicable law.
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(d) The Company hereby irrevocably waives any objection that it may
now or hereafter have to the laying of the venue of any suit, action or
proceeding arising out of or relating to this Agreement, the Notes or the other
Loan Documents brought in any such court and hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
11.11 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.12 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and the Company hereby authorizes each Lender to share
any information delivered to such Lender by the Company and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Lender to
enter into this Agreement, to any such subsidiary or affiliate, it being
understood that any such subsidiary or affiliate receiving such information
shall be bound by the provisions of clause (b) below as if it were a Lender
hereunder. Such authorization shall survive the repayment of the Loans and the
termination of the Commitments.
(b) Each Lender and the Agent agree (on behalf of itself and each of
its affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of the same nature and in
accordance with safe and sound banking practices, any non-public information
supplied to it by any Obligor pursuant to this Agreement that is identified by
such Person as being confidential at the time the same is delivered to the
Lenders or the Agent, PROVIDED that nothing herein shall limit the disclosure of
any such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the Lenders or the Agent, (iii) to
any Lender's examiners, auditors or accountants, (iv) to the Agent, the
Syndication Agent named on the cover page of this Agreement or any other Lender,
(v) in connection with any litigation to which any one or more of the
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Lenders or the Agent is a party, (vi) to a subsidiary or affiliate of such
Lender as provided in clause (a) above or (vii) to any assignee or
participant (or prospective assignee or participant) so long as such assignee
or participant (or prospective assignee or participant) first executes and
delivers to the respective Lender a Confidentiality Agreement substantially
in the form of Exhibit H hereto; PROVIDED, further, that in no event shall
any Lender or the Agent be obligated or required to return any materials
furnished by any Obligor. The obligations of any assignee that has executed a
Confidentiality Agreement in the form of Exhibit H hereto shall be superseded
by this Section 11.12 upon the date upon which such assignee becomes a Lender
hereunder pursuant to Section 11.06 hereof.
11.13 INTENTION OF PARTIES. Notwithstanding anything contained
herein to the contrary, it is the intention of the parties hereto that this
Agreement and the Commitments and extensions of credit provided hereunder
represent a supplement to, but not a novation or discharge of, the credit
facilities provided by the Existing Credit Agreement and the Existing
Supplemental Credit Agreement; and the Company hereby represents and warrants to
the Agent and each Lender that after giving effect to the transactions
contemplated hereby, the security interests created by the Security Documents
continue to constitute valid, perfected and first priority (subject only to
Liens permitted by Section 8.06 hereof) security interests securing all
obligations purported to be secured thereby, and each of the Security Documents
and the security interests provided for therein continue in full force and
effect.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amended
and Restated Supplemental Credit Agreement to be duly executed and delivered as
of the day and year first above written.
COMPANY
SUIZA FOODS CORPORATION
By
------------------------------------
Title:
Address for Notices:
3811 Turtle Creek Boulevard
Suite 1300
Dallas, Texas 75219
Attention: Gregg L. Engles
Telecopier No.: (214) 528-9929
Telephone No.: (214) 528-9922
CREDIT AGREEMENT
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LENDERS
FACILITY C COMMITMENT FIRST UNION NATIONAL BANK
$18,571,428.57
FACILITY D COMMITMENT
$10,000,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
First Union National Bank
301 S. College Street
Charlotte, NC 28288-0737
Address for Notices:
First Union National Bank
301 S. College Street
Charlotte, NC 28288-0737
Attention: Sana Alkoor - Suiza
Telecopier No.: (704) 383-6537
Telephone No.: (704) 374-9831
CREDIT AGREEMENT
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FACILITY C COMMITMENT THE FIRST NATIONAL BANK OF CHICAGO
$18,571,428.57
FACILITY D COMMITMENT
$10,000,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
The First National Bank of Chicago
1 First National Plaza
Suite 0088, 14th Floor
Chicago, IL 60670
Address for Notices:
The First National Bank of Chicago
1 First National Plaza
Suite 0088, 14th Floor
Chicago, IL 60670
Attention: April Yebd
Telecopier No.: (312) 732-2715
(312) 732-6276
Telephone No.: (312) 732-4823
CREDIT AGREEMENT
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-114-
FACILITY C COMMITMENT BANKBOSTON, N.A.
$14,392,857.14
Facility D Commitment
$7,750,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Bank of Boston, N.A.
100 Federal Street
Mail Code 01-09-04
Boston, MA 02110
Address for Notices:
Bank of Boston, N.A.
100 Federal Street
Mail Code 01-09-04
Boston, MA 02110
Attention: Lisa Marshall
Telecopier No.: 617-434-6685
Telephone No.: 617-434-4117
CREDIT AGREEMENT
<PAGE>
-115-
FACILITY C COMMITMENT BHF BANK, AKTIENGESELLSCHAFT
$14,392,857.14
FACILITY D COMMITMENT
$7,750,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
BHF Bank, Aktiengesellschaft
590 Madison Avenue
New York, NY 10022-2540
Address for Notices:
BHF Bank, Aktiengesellschaft
590 Madison Avenue
New York, NY 10022-2540
Attention: John Sykes
Telecopier No.: 212-756-5536
Telephone No.: 212-756-5939
CREDIT AGREEMENT
<PAGE>
-116-
FACILITY C COMMITMENT COOPERATIEVE CENTRALE
$14,392,857.14 RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
FACILITY D COMMITMENT
$7,750,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland",
New York Branch
245 Park Avenue
36th Floor
New York, NY 10167
Address for Notices:
Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland",
New York Branch
c/o 13355 Noel Road #1000
Dallas, TX 75240
Attention: Gordon Arnold
Telecopier No.: 972-419-6315
CREDIT AGREEMENT
<PAGE>
-117-
FACILITY C COMMITMENT CREDIT LYONNAIS NEW YORK BRANCH
$14,392,857.14
FACILITY D COMMITMENT
$7,750,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Credit Lyonnais New York Branch
c/o Credit Lyonnais Dallas
2200 Ross Avenue
Suite 4400 West
Dallas, Texas 75201
Address for Notices:
Credit Lyonnais New York Branch
c/o Credit Lyonnais Dallas
2200 Ross Avenue
Suite 4400 West
Dallas, Texas 75201
Attention: Tim O'Connor
Telecopier No.: (214) 220-2323
Telephone No.: (214) 220-2300
CREDIT AGREEMENT
<PAGE>
-118-
FACILITY C COMMITMENT FLEET NATIONAL BANK
$14,392,857.14
FACILITY D COMMITMENT
$7,750,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Fleet National Bank
1 Landmark Square
Mailstop CTFD 0752
Stamford, CT 06904
Address for Notices:
Fleet National Bank
1 Landmark Square
Mailstop CTFD 0752
Stamford, CT 06904
Attention: Steve Kalin
Telecopier No.: 203-358-6111
Telephone No.: 203-358-2013
CREDIT AGREEMENT
<PAGE>
-119-
FACILITY C COMMITMENT MERRILL LYNCH SENIOR FLOATING
$14,392,857.14 RATE FUND, INC.
FACILITY D COMMITMENT
$7,750,000.00 By
------------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Merrill Lynch Senior Floating Rate Fund,
Inc.
c/o Merrill Lynch Asset Management
800 Scudders Mill Road - Area 1B
Plainsboro, NJ 08536
Address for Notices:
Merrill Lynch Senior Floating Rate Fund,
Inc.
800 Scudders Mill Road - Area 1B
Plainsboro, NJ 08536
Attention: Jill Montange
Telecopier No.: 609-282-3542
Telephone No.: 609-282-3102
With a copy to:
MLAM Accounting
500 College Road - 4E
Plainsboro, NJ 08536
Attention: John Geijer
Telecopier No.: 609-282-7616
Telephone No.: 609-282-7705
CREDIT AGREEMENT
<PAGE>
-120-
FACILITY C COMMITMENT AMSOUTH BANK
$12,071,428.57
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
AmSouth Bank
1900 5th Avenue, North
Sonat Tower - 7th
Birmingham, AL 35203
Address for Notices:
AmSouth Bank
1900 5th Avenue, North
Sonat Tower - 7th
Birmingham, AL 35203
Attention: Joseph Maxwell
Telecopier No.: 205-326-5601
Telephone No.: 205-801-0167
CREDIT AGREEMENT
<PAGE>
-121-
FACILITY C COMMITMENT BANCO POPULAR DE PUERTO RICO
$12,071,428.57
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Banco Popular de Puerto Rico
7 West 51st Street
New York, New York 10019
Address for Notices:
Banco Popular de Puerto Rico
7 West 51st Street
New York, New York 10019
Attention: John Cuneo
Telecopier No.: (212) 586-3537
Telephone No.: (212) 315-2800
CREDIT AGREEMENT
<PAGE>
-122-
FACILITY C COMMITMENT BANK OF AMERICA ILLINOIS
$12,071,428.57
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Bank of America Illinois
231 S. LaSalle
Chicago, Illinois 60697
Address for Notices:
Bank of America Illinois
231 S. LaSalle
Chicago, Illinois 60697
Attention: Paul Youmaura
Telecopier No.: (312) 974-9626
Telephone No.: (312) 828-6574
CREDIT AGREEMENT
<PAGE>
-123-
FACILITY C COMMITMENT THE BANK OF NOVA SCOTIA
$12,071,428.57
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Address for Notices:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
SENIOR Assistant Agent
Telecopier No.: (404) 888-8998
Telephone No.: (404) 877-1500
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Rosine Matthews
Relationship Manager
Telecopier No.: (713) 752-2425
Telephone No.: (713) 759-3432
CREDIT AGREEMENT
<PAGE>
-124-
FACILITY C COMMITMENT CAISSE NATIONALE DE CREDIT AGRICOLE
$12,071,428.57
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Caisse Nationale de Credit Agricole
55 E. Monroe
Suite 4700
Chicago, IL 60603
Address for Notices:
Caisse Nationale de Credit Agricole
55 E. Monroe
Suite 4700
Chicago, IL 60603
Attention: Laura Schmuck
Telecopier No.: (312) 372-4421
Telephone No.: (312) 917-7428
CREDIT AGREEMENT
<PAGE>
-125-
FACILITY C COMMITMENT HARRIS TRUST AND SAVINGS BANK
$12,071,428.57
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60690
Address for Notices:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, IL 60690
Attention: Jerry Karl/Marieky Estrada
Telecopier No.: (312) 765-8095
Telephone No.: (312) 461-3776/7664
CREDIT AGREEMENT
<PAGE>
-126-
FACILITY C COMMITMENT THE LONG-TERM CREDIT BANK OF JAPAN,
$12,071,428.57 LIMITED, NEW YORK BRANCH
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
The Long-Term Credit Bank of Japan,
Limited, New York Branch
165 Broadway
New York, NY 10006
Address for Notices:
The Long-Term Credit Bank of Japan,
Limited, New York Branch
Dallas Representative Office
2200 Ross Avenue, Suite 4700 West
Dallas, TX 75201
Attention: Robert L. Nelson
Telecopier No.: (214) 969-5357
Telephone No.: (214) 969-5352
CREDIT AGREEMENT
<PAGE>
-127-
FACILITY C COMMITMENT MARINE MIDLAND BANK
$12,071,428.57
FACILITY D COMMITMENT By
$6,500,000.00 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Marine Midland Bank
140 Broadway, 5th Floor
New York, NY 10005
Address for Notices:
Marine Midland Bank
140 Broadway, 5th Floor
New York, NY 10005
Attention: Christopher French
Telecopier No.: 212-658-2586
Telephone No.: 212-658-2742
CREDIT AGREEMENT
<PAGE>
-128-
FACILITY C COMMITMENT BANQUE PARIBAS
$10,678,571.47
FACILITY D COMMITMENT
$5,750,000.00 By
---------------------------------
Title:
By
---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
Banque Paribas
1200 Smith Street
Suite 3100
Houston, Texas 77002
Address for Notices:
Banque Paribas
1200 Smith Street
Suite 3100
Houston, Texas 77002
Attention: Chuck E. Irwin
Telecopier No.: (713) 659-5234
Telephone No.: (713) 659-4811
CREDIT AGREEMENT
<PAGE>
-129-
FACILITY C COMMITMENT THE FUJI BANK, LIMITED
$10,678,571.47
FACILITY D COMMITMENT
$5,750,000.00 By
---------------------------------
Title:
Lending Office for Base Rate Loans and
Eurodollar Loans:
The Fuji Bank, Limited,
Houston Agency
One Houston Center
1221 McKinney Street, Suite 4100
Houston, TX 77010
Telecopier No.: (713) 759-0048
Address for Notices:
The Fuji Bank, Limited,
Houston Agency
One Houston Center
1221 McKinney Street, Suite 4100
Houston, TX 77010
Attention: Philip C. Lauinger III
Vice President and Joint
Manager or
David L. Kelley
Senior Vice President
(713) 650-7850
Telecopier No.: (713) 759-0048
Telephone No.: (713) 650-7852
CREDIT AGREEMENT
<PAGE>
-130-
FACILITY C COMMITMENT THE BANK OF TOKYO -
$6,964,285.71 MITSUBISHI, LTD.
FACILITY D COMMITMENT By
$3,750,000.00 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
The Bank of Tokyo -
Mitsubishi, Ltd.
2001 Ross Ave.
3150 Trammel Crow
Dallas, TX 75201
Address for Notices:
The Bank of Tokyo -
Mitsubishi, Ltd.
2001 Ross Ave.
3150 Trammel Crow
Dallas, TX 75201
Attention: John Mearns
Telecopier No.: 214-954-1007
Telephone No.: 214-954-1200
CREDIT AGREEMENT
<PAGE>
-131-
FACILITY C COMMITMENT CIBC, INC.
$6,964,285.71
FACILITY D COMMITMENT By
$3,750,000.00 ---------------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
CIBC, Inc.
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Address for Notices:
CIBC Wood Gundy Securities Corp.
Two Houston Center, Suite 1200
909 Fannin Street
Houston, TX 77010
Attention: Bill Schrauff
Telecopier No.: 713-650-3727
Telephone No.: 713-655-5291
With a copy to:
CIBC Wood Gundy Securities Corp.
2727 Paces Ferry Road, Suite 1200
Atlanta, GA 30339
Attention: Vickie Summey (Borrowings)
Ken Auchter (Other
Notices)
Telecopier No.: 770-319-4950
Telephone No.: 770-319-4841
(Auchter)
770-319-4852
(Summey)
CREDIT AGREEMENT
<PAGE>
-132-
FACILITY C COMMITMENT COMMERZBANK AG,
$6,964,285.71 NEW YORK BRANCH
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Commerzbank AG,
New York Branch
2 World Financial Center
New York, NY 10281
Address for Notices:
Commerzbank AG,
New York Branch
2 World Financial Center
New York, NY 10281
Attention: Mary Harold
Telecopier No.: 212-266-7374
Telephone No.: 212-266-7509
CREDIT AGREEMENT
<PAGE>
-133-
FACILITY C COMMITMENT COMPAGNIE FINANCIERE DE
$6,964,285.71 CIC ET DE L'UNION EUROPEENNE
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Compagnie Financiere de
CIC et de l'Union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Address for Notices:
Compagnie Financiere de
CIC et de l'Union Europeenne
520 Madison Avenue
37th Floor
New York, NY 10022
Attention: Brian O'Leary
Telecopier No.: 212-715-4535
Telephone No.: 212-715-4422
CREDIT AGREEMENT
<PAGE>
-134-
FACILITY C COMMITMENT CREDITANSTALT - BANKVEREIN
$6,964,285.71
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Creditanstalt - Bankverein
Two Ravinia Drive, Ste. 1680
Atlanta, GA 30346
Address for Notices:
Creditanstalt - Bankverein
Two Ravinia Drive, Ste. 1680
Atlanta, GA 30346
Attention: Scott Kray
Telecopier No.: 770-390-1851
Telephone No.: 770-390-1858
CREDIT AGREEMENT
<PAGE>
-135-
FACILITY C COMMITMENT HIBERNIA NATIONAL BANK
$6,964,285.71
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Hibernia National Bank
313 Carondelet Street
New Orleans, LA 70130
Address for Notices:
Hibernia National Bank
313 Carondelet Street
New Orleans, LA 70130
Attention: Stephanie Freeman
Telecopier No.: 504-533-5344
Telephone No.: 504-533-3345
CREDIT AGREEMENT
<PAGE>
-136-
FACILITY C COMMITMENT MELLON BANK, N.A.
$6,964,285.71
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Mellon Bank, N.A.
Three Mellon Bank Center
Room 152-2300
Pittsburgh, PA 15259
Attention: Loan Administrator
Telecopier No: 412-236-2027
Telephone No: 412-234-3699
Address for Notices:
Mellon Bank, N.A.
Three Mellon Bank Center
Room 152-2300
Pittsburgh, PA 15259
Attention: Loan Administrator
Telecopier No: 412-236-2027
Telephone No: 412-234-3699
With a copy to:
Mellon Bank, N.A.
One Boston Place
Room 024-006A
Boston, MA 02108
Attention: R. Jane Westrich
Telecopier No.: 617-722-3516
Telephone No.: 617-722-7969
CREDIT AGREEMENT
<PAGE>
-137-
FACILITY C COMMITMENT THE MITSUBISHI TRUST AND BANKING
$6,964,285.71 CORPORATION, CHICAGO BRANCH
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
The Mitsubishi Trust and Banking
Corporation, Chicago Branch
311 S. Wacker Dr.
Suite 6300
Chicago, IL 60606
Address for Notices:
The Mitsubishi Trust and Banking
Corporation, Chicago Branch
311 S. Wacker Dr.
Suite 6300
Chicago, IL 60606
Attention: Vicki L. Kamm
Telecopier No.: 312-663-0863
Telephone No.: 312-408-6014
CREDIT AGREEMENT
<PAGE>
-138-
FACILITY C COMMITMENT NATEXIS BANQUE BFCE
$6,964,285.71
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
NATEXIS Banque BFCE
New York Branch
645 Fifth Avenue
20th Floor
New York, New York 10022
Address for Notices:
NATEXIS Banque BFCE
Southwest Representative Office
333 Clay Street, Suite 4340
Houston, TX 77002
Attention: Tanya McAllister
Telecopier No.: 713-759-9908
Telephone No.: 713-759-9401
With a copy to:
NATEXIS Banque
New York Branch
645 Fifth Avenue
20th Floor
New York, New York 10022
Attention: Joan Rankine
Telecopier No.: 212-872-5045
CREDIT AGREEMENT
<PAGE>
-139-
FACILITY C COMMITMENT NATIONAL CITY BANK OF KENTUCKY
$6,964,285.71
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
National City Bank
101 S. Fifth Street
Louisville, KY 40202
Address for Notices:
National City Bank
101 S. Fifth Street
Louisville, KY 40202
Attention: Don Pullen
Telecopier No.: 502-581-5122
Telephone No.: 502-581-6352
CREDIT AGREEMENT
<PAGE>
-140-
FACILITY C COMMITMENT THE SUMITOMO TRUST & BANKING
$6,964,285.71 CO. LTD., NEW YORK BRANCH
Facility D Commitment
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
The Sumitomo Trust & Banking
Co. Ltd., New York Branch
527 Madison Avenue
New York, NY 10022
Address for Notices:
The Sumitomo Trust & Banking
Co. Ltd., New York Branch
527 Madison Avenue
New York, NY 10022
Attention: Kristin Condon
Telecopier No.: 212-418-4848
Telephone No.: 212-326-0751
CREDIT AGREEMENT
<PAGE>
-141-
FACILITY C COMMITMENT WELLS FARGO BANK (TEXAS), N.A.
$6,964,285.71
FACILITY D COMMITMENT
$3,750,000.00 By
----------------------------
Title:
Lending Office for Base
Rate Loans and
Eurodollar Loans:
Wells Fargo Bank (Texas), N.A.
1445 Ross Ave., Suite 300
Dallas, TX 75202
Address for Notices:
Wells Fargo Bank (Texas), N.A.
1445 Ross Ave., Suite 300
Dallas, TX 75202
Attention: Jeffrey Cook
Telecopier No.: 214-740-1543
Telephone No.: 214-740-1539
CREDIT AGREEMENT
<PAGE>
-142-
AGENT
-----
FIRST UNION NATIONAL BANK,
as Agent
By
----------------------------------
Title:
Address for Notices to
the Agent:
First Union National Bank
301 S. College Street TW-10
Charlotte, NC 28288-0608
Attention: Syndication Agency
Services
Telecopier No.: (704) 383-0288
Telephone No.: (704) 383-0281
CREDIT AGREEMENT
<PAGE>
-143-
CONSENT AND AGREEMENT
Each of the undersigned Subsidiary Guarantors hereby (1) consents to the terms
of the Existing Credit Agreement and this Agreement, (2) agrees that each
reference to the "Credit Agreement" or the "Supplemental Credit Agreement" (if
any) in each Security Document to which such Subsidiary Guarantor is a party
shall be a reference to the Existing Credit Agreement and this Agreement,
respectively, and (3) confirms its obligations under each Security Document to
which it is a party after the Existing Credit Agreement and this Agreement
become effective on the Effective Date.
REDDY ICE CORPORATION SUIZA FRUIT CORPORATION
By By
--------------------------- ---------------------------
Title: Title:
VELDA FARMS, INC. NEVA PLASTICS MANUFACTURING
CORP.
By By
--------------------------- ---------------------------
Title: Title:
SUIZA MANAGEMENT CORPORATION MODEL DAIRY, INC.
By By
--------------------------- ---------------------------
Title: Title:
SUIZA DAIRY CORPORATION SWISS DAIRY CORPORATION
By By
--------------------------- ---------------------------
Title: Title:
DAIRY FRESH, INC.
By
---------------------------
Title:
CREDIT AGREEMENT
<PAGE>
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is made as of July 1, 1997, by
and between Suiza Foods Corporation, a Delaware corporation (the "Company"), and
Cletes O. Beshears ("Consultant").
WHEREAS, Consultant has been serving as President of the Company pursuant
to an employment agreement with the Company, dated as of March 31, 1995 (as
amended on February 29, 1996), which was scheduled to expire on March 31, 1999
(the "Employment Agreement");
WHEREAS, the parties desire to terminate the Employment Agreement and enter
into a consulting relationship, under which Consultant would provide services to
the Company in accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, the Company and Consultant agree as follows.
1. TERMINATION OF EMPLOYMENT AGREEMENT. Consultant hereby resigns as
President of the Company, and the Company hereby accepts such resignation. The
Company and Consultant hereby agree that the existing Employment Agreement is
terminated and that neither party has any further liabilities or obligations to
the other pursuant to the Employment Agreement, except for the payment of
compensation through the date of this Agreement (to the extent not previously
paid).
2. CONSULTING SERVICES. Subject to the terms and conditions of this
Agreement, the Company agrees to engage Consultant as an independent business
consultant for dairy acquisitions, and Consultant agrees to perform such
consulting services for the Company diligently and to the reasonable
satisfaction of the Company's Board of Directors. The Company anticipates that
Consultant will continue to serve as a member of the Board of Directors of the
Company (the "Board") and as a member of the Executive Committee of the Board,
and the Company will use its best efforts to cause Consultant to be elected to
the office of Vice Chairman of the Board of Directors. Consultant will report
to the Chairman of the Board and will comply with the policies and guidelines
established by the Board from time to time.
3. TERM AND TERMINATION. The term of Consultant's engagement under this
Agreement (the "Term") will commence on the date hereof and continue until
December 31, 1998; provided that the Company may end the Term earlier under the
following circumstances:
(a) in the event of Consultant's death;
(b) if Consultant is totally disabled so that he has been unable to
perform his duties and responsibilities hereunder for a period of 180
consecutive days;
(c) if the Board terminates this Agreement with "cause" (as defined
below); or
(d) if Consultant materially breaches the terms of this Agreement and
such breach remains uncured after a reasonable opportunity to cure such breach.
1
<PAGE>
If the Company terminates this Agreement pursuant to this paragraph prior to the
stated end of the Term, Consultant (or his representative in the event of his
death) will be entitled to receive payment of all compensation earned through
the date of termination. If the Term ends pursuant to clause (a) or clause (b)
above, Consultant (or his representative) will not be required to repay any
unearned portion of the retainer previously paid pursuant to SECTION 4. The
provisions of SECTIONS 6, 7 and 8 hereof will survive any termination in
accordance with their terms. As used in this Agreement, termination with
"cause" means any termination for (i) the commission of an act of fraud or
embezzlement against the Company, (ii) conviction of a felony or a crime
involving moral turpitude, (iii) gross negligence or willful misconduct in
performing Consultant's duties hereunder, or (iv) breach of fiduciary duty in
connection with Consultant's engagement by the Company.
4. COMPENSATION. During the Term of this Agreement, Consultant will be
entitled to receive the compensation described in EXHIBIT A. All of
Consultant's compensation under this Agreement will be subject to deduction and
withholding authorized or required by applicable law.
5. BENEFITS. During the term of this Agreement, the Company will
reimburse Consultant for premiums paid by Consultant to continue his existing
health insurance coverage and for the cost of one physical examination per year.
The Company will also reimburse Consultant for reasonable out-of-pocket business
expenses incurred and documented in accordance with the policies of the Company
in effect from time to time.
6. CONFIDENTIAL INFORMATION.
(a) In the course of performing services for the Company under
this Agreement, Consultant may receive or have access to commercially valuable,
confidential or proprietary information. "Confidential Information" means all
confidential information, whether oral or written, now or hereafter developed,
acquired or used by the Company and relating to the business of the Company that
is not generally known to others in the Company's area of business, including
without limitation (to the extent confidential) (i) any trade secrets, work
product, processes, analyses or know-how of the Company; (ii) the Company's
advertising, product development, strategic and business plans and information;
(iii) the prices at which the Company has sold or offered to sell its products
or services; and (iv) the Company's financial statements and other financial
information.
(b) Consultant acknowledges and agrees that the Confidential
Information (to the extent is can be owned) is and will be the sole and
exclusive property of the Company. Consultant will not use any Confidential
Information for his own benefit or disclose any Confidential Information to any
third party (except in the course of performing his authorized duties for the
Company under this Agreement), either during or subsequent to his engagement by
the Company. Upon termination of his engagement by the Company, Consultant will
promptly deliver to the Company all documents, computer disks and other computer
storage devices and other papers and materials (including all copies thereof in
whatever form) containing or incorporating any Confidential Information or
2
<PAGE>
otherwise relating in any way to the Company's business that are in his
possession or under his control.
7. RESTRICTIVE COVENANT. In consideration of the Company's agreement to
engage Consultant, Consultant hereby agrees that, during the period Consultant
is engaged by the Company and for two years thereafter, Consultant will not
(except in the course of performing his authorized duties for the Company under
this Agreement), directly or indirectly, on his own behalf or as an officer,
director, employee, consultant or other agent of, or as a stockholder, partner
or other investor in, any person or entity (other than the Company or its
affiliates):
(a) engage in the business of manufacturing, processing,
distributing, marketing or selling dairy products, packaged ice or plastic
containers (the "Business") within the geographic area currently served by
the Company and its subsidiaries (the "Territory");
(b) directly or indirectly influence or attempt to influence any
customer or potential customer of the Company located within the Territory to
purchase goods or services which are competitive with those presently being
offered by the Company from any person or entity other than the Company; or
(c) employ, attempt to employ or solicit for employment in any
position related to the conduct of the Business in the Territory any individual
who is an employee of the Company at such time or was an employee of the Company
during the year prior to such time;
provided that the foregoing will not apply to any investment in publicly traded
securities constituting less than 5% of the outstanding securities in such
class.
8. ENFORCEMENT.
(a) Consultant represents to the Company that he is willing and
able to engage in businesses other than Businesses within the Territory and that
enforcement of the restrictions set forth in SECTION 7 would not be unduly
burdensome to Consultant. The Company and Consultant acknowledge and agree that
the restrictions set forth in SECTION 7 are reasonable as to time, geographic
area and scope of activity and do not impose a greater restraint than is
necessary to protect the goodwill and other business interests of the Company,
and Consultant agrees that that the Company is justified in believing the
foregoing.
(b) If the provisions of SECTION 7 are found by a court of competent
jurisdiction to contain unreasonable or unnecessary limitations as to time,
geographical area or scope of activity, then such court is hereby directed to
reform such provisions to the minimum extent necessary to cause the limitations
contained therein as to time, geographical area and scope of activity to be
reasonable and enforceable.
3
<PAGE>
(c) Consultant acknowledges and agrees that the Company would be
irreparably harmed by any violation of Consultant's obligations under SECTIONS 6
and 7 hereof and that, in addition to all other rights or remedies available at
law or in equity, the Company will be entitled to injunctive and other equitable
relief to prevent or enjoin any such violation. If Consultant violates
SECTION 7, the period of time during which the provisions thereof are applicable
will automatically be extended for a period of time equal to the time that
Consultant began such violation until such violation permanently ceases.
9. ENTIRE AGREEMENT. This Agreement embodies the complete agreement of
the parties with respect to the subject matter hereof and supersedes any prior
written, or prior or contemporaneous oral, understandings or agreements between
the parties that related in any way to the subject matter hereof. This
Agreement may be amended only in writing executed by the Company and Consultant.
10. NOTICE. Any notice required or permitted under this Agreement must be
in writing and will be deemed to have been given when delivered personally, by
telecopy or by overnight courier service or three days after being sent by mail,
postage prepaid, to (a) if to the Company, to the Company's principal place of
business, or (b) if to Consultant, to his residence or to his latest address
then contained in the Company's records (or to such changed address as such
person may subsequently give notice of in accordance herewith).
IN WITNESS WHEREOF, the Company and Consultant have executed and delivered
this Agreement as of the date first above written.
SUIZA FOODS CORPORATION
By: /s/ GREGG L. ENGLES
-----------------------------------
Gregg L. Engles,
Chairman of the Board
/s/ CLETES O. BESHEARS
--------------------------------------
Cletes O. Beshears
4
<PAGE>
EXHIBIT A
COMPENSATION
1. On the date of this Agreement, the Company will pay Consultant $250,000
as a transaction fee in connection with the Company's acquisition of
the assets of Dairy Fresh L.P.
2. During calendar year 1998, the Company will pay Consultant a retainer of
$250,000, payable bi-weekly or semi-monthly in accordance with the payroll
practices of the Company in effect from time to time. This retainer will
be earned in full upon completion of the first acquisition introduced by
Consultant to the Company during 1998 (but will nevertheless be paid bi-
weekly or semi-monthly in accordance with the preceding sentence).
3. The Company will pay Consultant a transaction fee equal to one percent
of the purchase price of each successful acquisition introduced to the
Company by Consultant and completed during the Term. Prior to the end
of the Term, the Company and Consultant will negotiate in good faith to
agree on a list of pending or contemplated acquisitions introduced by
Consultant for which Consultant would be entitled to receive a transaction
fee following the Term, if such acquisitions are completed. Each
transaction fee under this paragraph will be paid at the closing of the
acquisition giving rise to such fee, except that the first $250,000 of fees
earned during calendar year 1998 will be paid as provided in the preceding
paragraph.
5
<PAGE>
EXHIBIT 11 - STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1997 1996 1997
----------- ------------ ------------- ------------
(IN THOUSANDS, EXCEPT SHARE AND PER-SHARE AMOUNTS)
<S> <C> <C> <C> <C>
INCOME(LOSS) BEFORE EXTRAORDINARY ITEMS $ 4,553 $ 8,957 $ 4,936 $ 24,399
EXTRAORDINARY LOSS (2,215) 0 (2,215) (3,270)
----------- ---------- ---------- ---------
NET INCOME (LOSS) $ 2,338 $ 8,957 $ 2,721 $ 21,129
----------- ---------- ---------- ---------
----------- ---------- ---------- ---------
CALCULATION OF PRIMARY EARNINGS (LOSS) PER SHARE:
WEIGHTED AVERAGE SHARES OUTSTANDING 9,191,006 15,238,652 7,752,243 14,505,260
COMMON STOCK EQUIVALENTS (OPTIONS & WARRANTS) 730,709 1,103,598 703,089 1,004,128
----------- ---------- ---------- ----------
TOTAL WEIGHTED AVERAGE SHARES OUTSTANDING 9,921,715 16,342,250 8,455,332 15,509,388
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS $ 0.46 $ 0.55 $ 0.58 $ 1.57
EXTRAORDINARY LOSS (0.22) 0.00 (0.26) (0.21)
----------- ---------- ---------- ----------
NET INCOME (LOSS) $ 0.24 $ 0.55 $ 0.32 $ 1.36
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
CALCULATION OF FULLY DILUTED EARNINGS (LOSS) PER SHARE:
WEIGHTED AVERAGE SHARES OUTSTANDING 9,191,006 15,238,652 7,752,243 14,505,260
COMMON STOCK EQUIVALENTS (OPTIONS & WARRANTS) 776,503 1,379,320 776,503 1,379,319
----------- ---------- ---------- ----------
TOTAL WEIGHTED AVERAGE SHARES OUTSTANDING 9,967,509 16,617,972 8,528,746 15,884,579
----------- ---------- ---------- ----------
----------- ---------- ---------- ----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS $ 0.46 $ 0.54 $ 0.58 $ 1.54
EXTRAORDINARY LOSS (0.22) 0.00 (0.26) (0.21)
----------- ---------- ---------- ---------
NET INCOME (LOSS) $ 0.23 $ 0.54 $ 0.32 $ 1.33
----------- ---------- ---------- ---------
----------- ---------- ---------- ---------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
FINANCIAL STATEMENTS FOR THE 6-MONTH PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,130
<SECURITIES> 0
<RECEIVABLES> 50,784
<ALLOWANCES> 0
<INVENTORY> 21,536
<CURRENT-ASSETS> 86,615
<PP&E> 136,281
<DEPRECIATION> 0
<TOTAL-ASSETS> 402,306
<CURRENT-LIABILITIES> 60,595
<BONDS> 128,150
0
0
<COMMON> 153
<OTHER-SE> 208,480
<TOTAL-LIABILITY-AND-EQUITY> 402,306
<SALES> 336,819
<TOTAL-REVENUES> 336,819
<CGS> 252,047
<TOTAL-COSTS> 61,623
<OTHER-EXPENSES> (18,575)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,580
<INCOME-PRETAX> 35,144
<INCOME-TAX> 10,745
<INCOME-CONTINUING> 24,399
<DISCONTINUED> 0
<EXTRAORDINARY> 3,270
<CHANGES> 0
<NET-INCOME> 21,129
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.33
</TABLE>
