<PAGE> 1
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, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 001-12755
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) 528-9922
(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 reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
As of July 31, 1998 the number of shares outstanding of each class of common
stock was:
Common Stock, $.01 par value: 34,736,364
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 45,103 $ 24,388
Temporary investments 17,009 --
Receivables, net of allowance for doubtful accounts
of $12,393 and $3,589, respectively 333,711 164,284
Inventories 217,838 76,087
Prepaid expenses and other current assets 18,648 7,978
Refundable income taxes 19,553 19,836
Deferred income taxes 8,401 2,718
Net assets of discontinued operations -- 100,785
---------- ----------
Total current assets 660,263 396,076
PROPERTY, PLANT AND EQUIPMENT 676,939 363,649
DEFERRED INCOME TAXES 3,179 4,484
INTANGIBLE AND OTHER ASSETS 1,225,087 639,253
---------- ----------
TOTAL $2,565,468 $1,403,462
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 405,721 $ 178,021
Income taxes payable 4,825 4,006
Lines of credit and current portion of long-term debt 52,678 50,846
---------- ----------
Total current liabilities 463,224 232,873
LONG-TERM DEBT 654,880 777,813
OTHER LONG-TERM LIABILITIES 77,987 13,230
DEFERRED INCOME TAXES 35,265 20,236
MANDATORILY REDEEMABLE CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES 682,646 --
MINORITY INTEREST IN SUBSIDIARIES 25,490 --
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, 11,691 shares of Series A preferred stock issued and outstanding,
with stated value of $320 per share 3,741 3,741
Common stock, 34,457,891 and 30,463,312 shares issued and outstanding 345 305
Additional paid-in capital 473,613 281,774
Retained earnings 148,277 73,490
---------- ----------
Total stockholders' equity 625,976 359,310
---------- ----------
TOTAL $2,565,468 $1,403,462
========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 3
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
NET SALES $ 768,120 $ 381,689 $ 1,361,241 $ 747,367
COST OF SALES 582,213 291,609 1,038,361 574,967
------------ ------------ ------------ ------------
GROSS PROFIT 185,907 90,080 322,880 172,400
OPERATING COSTS AND EXPENSES:
Selling and distribution 89,127 45,662 159,328 89,740
General and administrative 24,676 13,121 44,121 27,233
Amortization of intangibles 7,248 2,634 12,986 5,358
------------ ------------ ------------ ------------
Total operating costs and expenses 121,051 61,417 216,435 122,331
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 64,856 28,663 106,445 50,069
OTHER (INCOME) EXPENSE:
Interest expense, net 8,445 4,935 21,847 10,623
Financing charges on preferred securities 9,646 -- 10,895 --
Other income, net (739) (580) (1,441) (19,135)
------------ ------------ ------------ ------------
Total other (income) expense 17,352 4,355 31,301 (8,512)
------------ ------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES AND MINORITY INTERESTS 47,504 24,308 75,144 58,581
INCOME TAXES 17,325 8,045 26,912 19,913
MINORITY INTEREST 549 -- 549 --
------------ ------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS 29,630 16,263 47,683 38,668
INCOME (LOSS) FROM DISCONTINUED OPERATIONS -- 1,313 (3,161) (353)
------------ ------------ ------------ ------------
INCOME BEFORE EXTRAORDINARY ITEMS 29,630 17,576 44,522 38,315
EXTRAORDINARY GAIN (LOSS) 31,698 -- 31,698 (3,270)
------------ ------------ ------------ ------------
NET INCOME $ 61,328 $ 17,576 $ 76,220 $ 35,045
============ ============ ============ ============
NET INCOME APPLICABLE TO COMMON STOCK $ 61,253 $ 17,501 $ 76,058 $ 34,895
============ ============ ============ ============
WEIGHTED AVERAGE COMMON SHARES: Basic 32,516,846 29,545,871 31,645,463 28,789,948
Diluted 43,582,369 31,342,063 39,030,791 30,418,402
BASIC EARNINGS PER SHARE:
Income from continuing operations $ 0.91 $ 0.55 $ 1.50 $ 1.34
Income (loss) from discontinued operations -- 0.04 (0.10) (0.01)
Extraordinary gain (loss) 0.97 -- 1.00 (0.12)
------------ ------------ ------------ ------------
Net income $ 1.88 $ 0.59 $ 2.40 $ 1.21
============ ============ ============ ============
DILUTED EARNINGS PER SHARE:
Income from continuing operations $ 0.82 $ 0.52 $ 1.39 $ 1.27
Income (loss) from discontinued operations -- 0.04 (0.08) (0.01)
Extraordinary gain (loss) 0.72 -- 0.81 (0.11)
------------ ------------ ------------ ------------
Net income $ 1.54 $ 0.56 $ 2.12 $ 1.15
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
SUIZA FOODS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1998 1997
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 76,220 $ 35,045
Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations 3,161 353
Depreciation and amortization 36,807 19,630
Minority interest 549 --
Extraordinary (gain) loss (31,698) 3,270
Other (768) 192
Deferred income taxes 5,340 1,513
Changes in operating assets and liabilities, net of acquisitions:
Receivables (21,594) 12,368
Inventories (13,300) (5,745)
Prepaid expenses and other assets 4,857 (262)
Accounts payable and other accrued expenses 22,325 (15,063)
Income taxes 8,218 4,977
------------- -------------
Net cash provided by continuing operations 90,117 56,278
Net cash used by discontinued operations (2,068) (487)
------------- -------------
Net cash provided by operating activities 88,049 55,791
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (64,714) (20,507)
Cash outflows for acquisitions (446,184) (7,321)
Net proceeds from the sale of discontinued operations 172,732 --
Purchases of temporary investments 5,157 --
Other 1,289 (1,203)
------------- -------------
Net cash used by continuing operations (331,720) (29,031)
Net cash used by discontinued operations (14,022) (19,377)
------------- -------------
Net cash used by investing activities (345,742) (48,408)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of debt 722,445 28,100
Repayment of debt (1,052,648) (127,962)
Payment of deferred financing, debt restructuring and merger costs (1,256) (4,970)
Issuance of common stock, net of expenses 27,517 89,748
Issuance of trust issued preferred securities, net of expenses 582,500 --
Other (150) (150)
------------- -------------
Net cash provided by (used by) financing activities 278,408 (15,234)
------------- -------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20,715 (7,851)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 24,388 23,823
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 45,103 $ 15,972
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
SUIZA FOODS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements as of June 30, 1998 and for
the three and six month periods ended June 30, 1998 and 1997 have been
prepared by Suiza Foods Corporation (the "Company" or "Suiza") without audit
and have been prepared to give retroactive effect to the November 1997
mergers with Country Fresh, Inc. and The Morningstar Group Inc. which have
been accounted for as poolings of interests. The consolidated financial
statements of the Company as of and for the periods ended June 30, 1998,
also reflect the acquisitions of a number of businesses during 1998, which
have been accounted for as purchase business combinations as of their
respective acquisition dates, as discussed in Note 6. As a result of these
1998 purchase acquisitions, the assets acquired and liabilities assumed and
the post-acquisition results of operations have resulted in significant
increases in the Company's assets and liabilities and operating results
during 1998 as compared to 1997 levels.
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, 1998 and for the three month and six month
periods ended June 30, 1998 and 1997 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
1997 financial statements contained in its Annual Report on Form 10-K as
filed with the Securities and Exchange Commission on March 31, 1998. Certain
reclassifications have been made to conform the prior year condensed
consolidated statements of income to the current year classifications.
2. TEMPORARY INVESTMENTS
Temporary investments at June 30, 1998 consist of U.S. Government
obligations due within one year, certificates of deposit or Eurodollar
deposits due within one year and highly rated commercial paper. At June 30,
1998, the carrying value of temporary investments approximates market
value.
3. INVENTORIES
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
1998 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Raw materials and supplies $ 126,304 $ 43,764
Finished goods 91,534 32,323
---------- ----------
$ 217,838 $ 76,087
========== ==========
</TABLE>
4. DEBT
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
1998 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Subsidiary lines of credit $ 33,506 $ --
========== ==========
Senior credit facility:
Revolving loan facility $ 480,000 $ 265,500
Term loan facility -- 550,000
Subsidiary debt obligations 194,052 13,159
---------- ----------
674,052 828,659
Less: current portion (19,172) (50,846)
---------- ----------
$ 654,880 $ 777,813
========== ==========
</TABLE>
Subsidiary Lines of Credit - In connection with the acquisition of
Continental Can Company, Inc. ("Continental Can"), the Company has assumed
existing subsidiary lines of credit of certain of Continental Can's domestic
and foreign subsidiaries. Borrowings under these subsidiary lines of credit
are generally subject to limitations based on a borrowing base, as defined
in the respective agreements, and bear interest generally at floating
interest rates determined for each subsidiary. Outstanding borrowings under
these subsidiary lines of credit, which at June 30, 1998, represented
foreign subsidiary borrowings, have been classified as a current liability
since such borrowings are expected to be repaid within one year.
Senior Credit Facilities - Effective as of May 29, 1998, the Company amended
and restated its existing credit facility with a group of lenders, including
First Union National Bank, as administrative agent, and The First National
Bank of Chicago, as syndication agent (the "Senior Credit Facility"), which
terminated the term loan facility of the prior agreement and expanded the
revolving loan facility. The new Senior Loan Facility provides the Company
with a line of credit of up to
5
<PAGE> 6
$1 billion to be used for general corporate and working capital purposes,
including the financing of acquisitions by the Company. The Senior Credit
Facility expires March 31, 2003, unless extended in accordance with its
terms.
Amounts outstanding under the Senior Credit Facility bear interest at a rate
per annum equal to one of the following rates, at the Company's option: (i)
a base rate equal to the higher of the Federal Funds rate plus 50 basis
points or the prime rate or (ii) The London Interbank Offering Rate
("LIBOR") plus a margin that varies from 50 to 75 basis points depending on
the Company's ratio of defined indebtedness to EBITDA (as defined in the
Senior Credit Facility). The Company pays a commitment fee on unused amounts
of the Senior Credit Facility that ranges from 15 to 23 basis points, based
on the Company's ratio of defined indebtedness to EBITDA. Interest is
payable quarterly or at the end of the applicable interest period. The
interest rate, including the LIBOR margin, in effect on the Senior Credit
Facility, including the applicable interest rate margin, was 6.82% at June
30, 1998.
The Senior Credit Facility is secured by capital stock of the Company's
subsidiaries other than Continental Can Company, Inc. and its subsidiaries
and certain other subsidiaries.
The Company's Senior Credit Facility contains various financial and other
restrictive covenants and requirements that the Company maintain certain
financial ratios, including a leverage ratio (computed as the ratio of the
aggregate outstanding principal amount of defined indebtedness to EBITDA, as
defined) and an interest coverage ratio (computed as the ratio of EBITDA to
interest expense). In addition, the Senior Credit Facility requires that the
Company maintain a minimum level of net worth. The Senior Credit Facility
also contains limitations on liens, investments, the incurrence of
additional indebtedness and acquisitions, and prohibits certain dispositions
of property.
Subsidiary Debt Obligations - Subsidiary debt obligations includes senior
secured notes of one of Continental Can's subsidiaries, industrial
development revenue bond obligations of certain subsidiaries and other debt
obligations of certain subsidiaries.
The senior secured notes were issued in December 1996 by one of Continental
Can's subsidiaries, Plastic Containers, Inc. ("PCI"), and have an original
face value of $125 million. These notes, which are due in 2006, bear
interest at a fixed interest rate of 10%, payable semi-annually in July and
December of each year, and are secured by substantially all assets other
than inventory, receivables and certain equipment of PCI, along with the
stock of certain of PCI's subsidiaries. These notes are redeemable, in whole
or in part, at the option of PCI, beginning on December 16, 2001, at an
initial price of 105% of par value, declining ratably each year to par value
on December 15, 2004. In addition, the indenture requires PCI to offer to
redeem the notes at a redemption price of 101% of par value in the event of
a change in control, and at 100% of par value upon the occurrence of certain
other events. The indenture places certain restrictions on the payment of
dividends, additional liens, disposition of the proceeds of asset sales,
sale and leaseback transactions and additional borrowings.
Certain of the Company's subsidiaries have revenue bonds outstanding,
certain of which require aggregate annual sinking fund redemptions
aggregating $0.7 million and are secured by irrevocable letters of credit
issued by financial institutions, along with first mortgages on certain real
property and equipment. Interest on these bonds is due semiannually at
interest rates that vary based on market conditions which, at June 30, 1998,
ranged from 3.7% to 3.9%.
Other debt includes various promissory notes for the purchase of property,
plant and equipment and capital lease obligations. The various promissory
notes payable provide for interest at varying rates and are payable in
monthly installments of principal and interest until maturity, when the
remaining principal balances are due. Capital lease obligations represent
machinery and equipment financing obligations which are payable in monthly
installments of principal and interest and are collateralized by the related
assets financed.
Interest Rate Agreements - The Company has interest rate derivative
agreements in place, including interest rate caps and interest rate swaps,
that have been designated as hedges, to the extent of outstanding
borrowings, against the Company's variable interest rate exposure on its
loans under the Senior Credit Facility. The portion of these interest rate
contracts which are not hedged against existing variable rate borrowings
under the Senior Credit Facility are accounted for at market value, with any
resulting changes in market value recognized as an adjustment to interest
expense.
At June 30, 1998, the interest rate caps have aggregate notional amounts of
$60 million, which mature in March 2000, and caps interest on LIBOR loans at
8.0%, plus the applicable LIBOR margin. The interest rate swaps have
aggregate notional amounts of $435 million at interest rates ranging from
6.03% to 6.14%, plus the applicable LIBOR margin and include $110 million of
swaps that mature in December 2000; $50 million of Swaps that mature in
March 2001; $225 million of swaps that mature in December 2002; and $50
million of swaps that mature in December 2003. In addition, the Company has
entered into $100 million of interest rate collars, which mature from
December 2002 to June 2003, and provide for an interest rate floor and limit
of approximately 6.11% and 7.5%, respectively, plus the applicable LIBOR
margin. These derivative agreements provide hedges for Senior Credit
Facility loans by limiting or fixing the LIBOR interest rates specified in
the senior credit facilities at the above rates until the indicated
expiration dates of these interest-rate-derivative agreements. The original
costs and premiums of these derivative agreements are being amortized on a
straight-line basis as a component of interest expense.
6
<PAGE> 7
The Company is exposed to market risk under these arrangements due to the
possibility of exchanging a lower interest rate for a higher interest rate.
The counterparties are major financial institutions and the risk of
incurring losses related to credit risk is considered by the Company to be
remote.
5. 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 in Puerto Rico from 39% to
3.9% and provided for a 50% tax credit for certain "eligible investments" in
qualified agricultural businesses in Puerto Rico.
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) from the sale of earned tax credits to third parties. In
addition, in April 1998, the Company sold additional tax credits for net
proceeds of $7.6 million related to its 1996 investment in its Puerto Rico
coffee business subject to indemnification provisions. The sale of these tax
credits will be recognized as an adjustment to the original purchase price
of the coffee business, once the uncertainties related to these
indemnification provisions are resolved, which will result in a reduction of
goodwill.
6. ACQUISITIONS
On February 20, 1998, Suiza completed the acquisition of Land-O-Sun Dairies,
L.L.C., ("Land-O-Sun") for a purchase price of approximately $248 million,
including approximately $128 million in cash. The non-cash portion of the
purchase price was funded through the issuance of $100 million of
company-obligated 5% mandatorily redeemable convertible preferred securities
of a Delaware business trust formed by Suiza, and the issuance of $20
million of preferred interests of Land-O-Sun. In addition, Suiza refinanced
Land-O-Sun's existing outstanding long-term indebtedness, which totaled
approximately $52 million as of the closing date. Suiza financed the cash
portion of the purchase price and refinanced the existing long-term
indebtedness with borrowings of $180 million under its Senior Credit
Facility. Land-O-Sun is based in Johnson City, Tennessee and operates 13
fluid dairy and ice cream processing facilities in Tennessee, North
Carolina, South Carolina, Georgia, Illinois, Kentucky and Virginia.
Land-O-Sun reported net sales of approximately $464 million for its fiscal
year ended December 31, 1997. The Land-O-Sun acquisition was accounted for
using the purchase method of accounting.
On May 29, 1998 the Company completed the acquisition of Continental Can for
a purchase price of approximately $181 million, which was funded through the
issuance of 2,050,635 shares of Suiza common stock and Suiza stock options
to replace outstanding stock options of Continental Can, along with cash of
$41 million. Suiza also assumed Continental Can's long-term indebtedness of
approximately $200 million at acquisition date. Continental Can is primarily
engaged in the packaging business through a number of operating subsidiaries
in the United States and in Europe, and reported net sales of approximately
$546 million for the fiscal year ended December 31, 1997. The Continental
Can acquisition was accounted for using the purchase method of accounting.
7
<PAGE> 8
Following is a summary of unaudited pro forma results of operations of Suiza
Foods which gives effect to the acquisitions of Dairy Fresh, Garelick Farms,
and Franklin Plastics in 1997 and the acquisitions of Continental Can and
Land-O-Sun in 1998 as if these acquisitions had occurred at the beginning of
1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------------- -----------------------------------
1998 1997 1998 1997
--------------- ----------------- -------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues $855,017 $763,156 $1,636,988 $1,487,830
Income from continuing operations 31,826 29,883 52,004 57,522
Net income 63,524 31,196 80,541 53,899
Income from continuing operations per share:
Basic 33,846,379 31,596,506 33,333,555 30,840,583
Diluted 45,203,290 35,165,424 45,990,946 34,271,763
Net income per share:
Basic $1.87 $0.98 $2.42 $1.74
Diluted 1.40 0.88 1.75 1.57
</TABLE>
On June 30, 1998 the Company acquired the operations of West Lynn Creamery,
Inc. ("West Lynn") for a cash purchase price of approximately $89 million,
which the Company financed with borrowings under its Senior Credit Facility.
In connection with this acquisition, Suiza also repaid approximately $44
million of outstanding West Lynn debt. West Lynn is a leading manufacturer
and distributor of milk, cultured products, extended shelf-life products,
juice and ice cream throughout the northeast United States and reported net
sales of $214 million for its fiscal year ended December 31, 1997. The West
Lynn acquisition has been accounted for using the purchase method of
accounting.
During the first six months of 1998, the Company also acquired a number of
smaller dairy and plastic packaging businesses, including the completed
acquisitions of Louis Trauth Dairy, Inc. ("Trauth"), a Newport,
Kentucky-based manufacturer and distributor of fresh milk, ice cream and
related dairy products and Oberlin Farms Dairy, Inc. ("Oberlin"), a
Cleveland, Ohio-based processor of milk and cultured dairy products. Trauth
and Oberlin recorded net sales of approximately $67 million and $76 million,
respectively, for their most recent fiscal years. These acquisitions were
accounted for using the purchase method of accounting.
The purchase price of each of the above acquisitions was allocated to assets
acquired, including identifiable intangibles, and liabilities assumed based
on their estimated fair market values. The excess of the total purchase
prices over the estimated fair values of the net assets represented
goodwill. These allocations are tentative and subject to change.
7. DISCONTINUED OPERATIONS AND EXTRAORDINARY ITEMS
On April 30, 1998, Suiza consummated its previously announced sale of Reddy
Ice Corporation ("Reddy Ice") to Packaged Ice, Inc. ("Packaged Ice") for net
cash proceeds of approximately $172.7 million. The Company reported an
extraordinary gain of $35.5 million from the sale of Reddy Ice, net of $22
million of income taxes. Reddy Ice had revenues during 1997 of approximately
$66.3 million.
Income (loss) from discontinued operations includes interest expense of $1.8
million during the second quarter of 1997 and interest expense of $2.4
million and $3.6 million during the first six months of 1998 and 1997,
respectively. Interest charges allocated to discontinued operations are
based on debt specifically attributed to Reddy Ice. The income (loss) from
discontinued operations as reported in the condensed consolidated statements
of income is presented net of the related income tax expense of $0.8 million
in the second quarter of 1997, and income tax benefits of $2.1 million and
$0.2 million in the first six months of 1998 and 1997, respectively.
During the second quarter of 1998, the Company recognized a $3.8 million
extraordinary loss from the early extinguishment of debt, net of income tax
benefit of $2.3 million, which included the write-off of deferred financing
costs and the recognition of market losses on interest rate contracts, from
the termination of the term loan facility under the Senior Credit Facility
and the repayment of all amounts outstanding under the term loan facility.
In addition, during the six months ended June 30, 1997, the Company
recognized a $3.3 million extraordinary loss from the early extinguishment
of subordinated debt, net of income tax benefit of $2.0 million, which
included the write-off of deferred financing costs and certain prepayment
penalties.
8
<PAGE> 9
8. TRUST ISSUED PREFERRED SECURITIES
In connection with the Land-O-Sun acquisition, Suiza issued $100 million of
company-obligated 5% mandatorily redeemable convertible preferred securities
of a Delaware business trust. On March 24, 1998, the Company also completed
the sale of $600 million of company-obligated 5.5% mandatorily redeemable
convertible preferred securities of a Delaware business trust in a private
placement to "qualified institutional buyers" under Rule 144A under the
Securities Act of 1933, as amended. These trust issued preferred securities,
which are recorded net of related fees and expenses, are convertible at the
option of the holders into an aggregate of approximately 9.1 million shares
of the Company's common stock, subject to adjustment in certain
circumstances. These preferred securities are also redeemable, at the
Company's option, at any time after three years from their respective issue
dates at specified amounts and are mandatorily redeemable at their
liquidation preference amount of $50 per share after 30 years from their
respective issue dates or upon occurrence of certain specified events, as
defined.
9. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS 130), "Reporting Comprehensive Income," issued in
June 1997. For interim periods, SFAS 130 requires disclosure of
comprehensive income, which is composed of net income and other
comprehensive income items. Other comprehensive income items are revenues,
expenses, gains and losses that under generally accepted accounting
principles are excluded from net income and reflected as a component of
equity. Consolidated comprehensive income was $60.1 million and $75.0
million for the three and six month periods ended June 30, 1998,
respectively, which includes foreign currency losses of $1.2 million for
both periods. Consolidated comprehensive income was equal to consolidated
net income for the three and six month periods ended June 30, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Suiza Foods Corporation (the "Company" or "Suiza") is a leading manufacturer
and distributor of fresh milk and related dairy products and plastic packaging
in the United States. Suiza also manufactures, distributes and markets
refrigerated, shelf-stable and frozen food products. Suiza has grown primarily
through a successful acquisition strategy, having consummated more than 20
dairy and packaging acquisitions since its initial public offering in April
1996. Through these acquisitions, Suiza has realized and continues to realize
economies of scale, operating efficiencies and added complimentary product
lines. The Company conducts its dairy operations primarily through its 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"), Country Delite Farms Inc. ("Country
Delite"), Country Fresh, Inc. ("Country Fresh"), The Morningstar Group Inc.
("Morningstar"), LOS Holdings, Inc. ("Land-O-Sun"), Louis Trauth Dairy Inc.
("Trauth") and Oberlin Farms Dairies ("Oberlin"), and effective June 30, 1998,
West Lynn Creamery ("West Lynn"). The Company conducts its plastics operations
through Franklin Plastics, Inc. and subsidiaries ("Franklin Plastics" or
"Plastics") and through Continental Can Company, Inc. ("Continental Can"). Each
of the Company's dairy and plastic packaging operating subsidiaries is a
leading competitor in its market, with an established reputation for customer
service and product quality. The Company's dairy subsidiaries market their
products through extensive distribution networks to a diverse group of
customers, including convenience stores, grocery stores, schools and
institutional food service customers. The Company's customers in the plastic
packaging business include regional dairy manufacturers, bottled water
processors, beverage manufacturers, and consumer and industrial products
companies.
Year 2000 Compliance
As discussed in the Company's Annual Report on Form 10-K, the Company is
currently engaged in a comprehensive project to upgrade its information,
technology, manufacturing and facilities computer software to programs that will
9
<PAGE> 10
consistently and properly recognize the Year 2000 and is in the process of
installing new Year 2000 compliant hardware and packaged software at certain of
its locations.
Suiza Foods will utilize both internal and external resources to reprogram or
replace and test all of its software for Year 2000 Compliance, and the Company
expects to complete the project in mid-1999. The total cost to the Company of
these Year 2000 Compliance activities has not been and is not anticipated to be
material to its financial position or results of operations in any given period,
excluding the cost of new systems, which will be capitalized. These costs, which
are being funded through operating cash flows, and the date on which the Company
plans to complete the Year 2000 modification and testing processes are based on
management's best estimates, which were derived utilizing numerous assumptions
regarding future events, including the continued availability of certain
resources, third-party modification plans and other factors. However, there can
be no guarantee that these estimates will be achieved, and actual results could
differ from those plans.
Outlook and Uncertainties
Certain statements and information in this Quarterly Report constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be indicated by
phrases such as "believes," "anticipates," "expects," "intends," "foresees,"
"projects," "forecasts" or words of similar meaning or import. Such statements
are subject to certain risks, uncertainties, or assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those set forth in
applicable forward-looking statements. Among the key factors that may have a
direct bearing on the Company's results and financial condition are (i) risks
associated with the Company's acquisition strategy, including its ability to
integrate the operations of its acquired businesses and realize operating
efficiencies (ii) risks relating to the Company's leverage position, (iii)
risks associated with intense competition in the Company's industries and (iv)
the impact of governmental regulations affecting the dairy industry. Any
forward-looking statements made or incorporated by reference herein speak only
as of the date of this Quarterly Report. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
such statements, to reflect any change in its expectations with regard thereto
or any change in events, conditions, or circumstances on which any such
statement is based. 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, 1997, a copy of which may be obtained from the Company
upon request.
10
<PAGE> 11
Results of Operations
The Company currently operates in two distinct businesses as shown below
(dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------------------- ---------------------------------------------
1998 1997 1998 1997
---------------------------------------------- ---------------------------------------------
PERCENT PERCENT PERCENT PERCENT
OF OF OF OF
DOLLARS NET SALES DOLLARS NET SALES DOLLARS NET SALES DOLLARS NET SALES
----------- --------- ----------- -------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales:
Dairy $ 674,499 87.8% $ 381,689 100.0% $ 1,230,472 90.4% $ 747,367 100.0%
Plastics 93,621 12.2 -- -- 130,769 9.6 -- --
----------- --------- ----------- -------- ----------- -------- ----------- --------
Net sales 768,120 100.0% 381,689 100.0% 1,361,241 100.0% 747,367 100.0%
Cost of sales 582,213 75.8 291,609 76.4 1,038,361 76.3 574,967 76.9
----------- --------- ----------- -------- ----------- -------- ----------- --------
Gross profit 185,907 24.2 90,080 23.6 322,880 23.7 172,400 23.1
Operating expenses:
Selling and distribution 89,127 11.6 45,662 12.0 159,328 11.7 89,740 12.0
General and administrative 24,676 3.2 13,121 3.4 44,121 3.2 27,233 3.7
Amortization of intangibles 7,248 1.0 2,634 0.7 12,986 1.0 5,358 0.7
----------- --------- ----------- -------- ----------- -------- ----------- --------
Total operating expenses 121,051 15.8 61,417 16.1 216,435 15.9 122,331 16.4
----------- --------- ----------- -------- ----------- -------- ----------- --------
Operating income (loss):
Dairy 57,727 7.5 29,949 7.8 99,057 7.3 53,323 7.1
Plastics 10,114 1.3 -- -- 14,424 1.0 -- --
Corporate office (2,985) (0.4) (1,286) (0.3) (7,036) (0.5) (3,254) (0.4)
----------- --------- ----------- -------- ----------- -------- ----------- --------
Total operating income $ 64,856 8.4% $ 28,663 7.5% $ 106,445 7.8% $ 50,069 6.7%
=========== ========= =========== ======== =========== ======== =========== ========
</TABLE>
Second Quarter and Year-to-date 1998 Compared to Second Quarter and Year-to-date
1997
Net Sales. The Company's net sales increased by 101.2% and 82.1% for the second
quarter and first six months of 1998, respectively, when compared to like
periods of 1997. Dairy net sales increased by 76.7% and 64.6% for the second
quarter and first six months of 1998, respectively, compared to like periods of
1997 primarily due to (i) the acquisitions of Garelick Farms, Dairy Fresh and
Country Delite in the last half of 1997, (ii) the acquisitions of Land-O-Sun,
Trauth, and Oberlin in the first half of 1998 and (iii) strong sales of branded
products and higher overall pricing at Morningstar. The Company began operating
in the plastics business with the acquisition of Franklin Plastics in July, 1997
and acquired Continental Can in May, 1998.
Cost of Sales. The Company's cost of sales margins were 75.8% and 76.3% for the
second quarter and first six months of 1998, respectively, compared to 76.4% and
76.9% for the same periods in 1997. Dairy cost of sales margins improved from
the prior year due to (i) operating synergies in the Company's fluid dairy
operations and (ii) increased branded sales at Morningstar.
Operating Expenses. The Company's operating expense ratios were 15.8% and 15.9%
for the second quarter and first six months of 1998 compared to 16.1% and 16.4%
for the same periods in 1997. Dairy operating expense margins decreased slightly
in the quarter and year-to-date periods as a result of more efficient operations
from purchasing and administrative synergies. Also, the addition of Plastics
has lowered the Company's overall operating expense ratios.
Operating Income. The Company's operating income increased 126.3% to $64.9
million in the second quarter of 1998 from $28.7 million in the second quarter
of 1997 primarily as a result of (i) the aforementioned acquisitions, (ii)
operating efficiencies and synergies and (iii) the increased sales at
Morningstar. For the first six months of 1998, operating income was $106.5
million, an increase of 112.6% from 1997 operating income of $50.1 million. The
Company's operating income margin increased to 8.4% in the second quarter of
1998 from 7.5% in the second quarter of
11
<PAGE> 12
1997 and increased to 7.8% in the first six months of 1998 from 6.7% in the
first six months of 1997 for the same reasons.
Other (Income) Expense. Interest expense increased to $8.4 million in the second
quarter of 1998 from $4.9 million in the second quarter of 1997 primarily due to
the increased level of debt used to finance the aforementioned acquisitions. For
the same reasons, interest expense increased to $21.8 million during the first
six months of 1998 from $10.6 million in the first six months of 1997. Financing
charges on preferred securities amounted to $9.6 million and $10.9 million in
the second quarter and first six months of 1998, respectively, reflecting (i)
the issuance on February 20, 1998 of $100 million of company-obligated
mandatorily redeemable preferred securities related to the acquisition of
Land-O-Sun and (ii) the issuance on March 24, 1998 of $600 million of
company-obligated mandatorily redeemable preferred securities. Other income
decreased to $1.4 million in the first six months of 1998 from $19.1 million in
the first six months of 1997 due to the recognition in the 1997 period of a
$18.1 million gain from the sale of Puerto Rico tax credits as discussed in Note
5 to the condensed consolidated financial statements.
Extraordinary Items. In the second quarter of 1998, the Company reported a $35.5
million extraordinary gain (net of $22.0 million of income taxes) from the sale
of Reddy Ice Corporation ("Reddy Ice") and a $3.8 million extraordinary loss
from the early extinguishment of the term loan facility of the Senior Credit
Facility (net of $2.3 million of income tax benefit) related to the write-off of
deferred financing costs and the recognition of interest rate swap losses. The
Company incurred a $3.3 million extraordinary loss (net of a $2.0 million tax
benefit) in the first six months of 1997 related to the early extinguishment of
subordinated debt, which included the write-off of deferred financing costs and
certain prepayment penalties.
Net Income. The Company reported net income of $61.3 million in the second
quarter of 1998 ($29.6 million excluding the net extraordinary gain of $31.7
million) compared to net income of $17.6 million in the second quarter of 1997.
The Company reported net income of $76.2 million in the first six months of 1998
($44.5 million excluding the net extraordinary gain of $31.7 million) compared
to $35.0 million in the first six months of 1997 ($26.8 million excluding the
after-tax gain on the sale of tax credits of $11.5 million and the extraordinary
loss of $3.3 million).
Liquidity and Capital Resources
As of June 30, 1998, the Company had total stockholders' equity of $626.0
million, total indebtedness of $707.6 million (including long-term debt and the
current portion of long-term debt) and $682.6 million of mandatorily redeemable
convertible trust issued preferred securities. 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 the Senior Credit
Facility. Net cash provided by continuing operations was $90.1 million for the
first six months of 1998 as contrasted to $56.3 million for the first six months
of 1997. Investing activities in the first six months of 1998 included
approximately $64.7 million in capital expenditures of which $45.2 million was
spent at Dairy and $19.5 million was spent at Plastics. Investing activities
also included $446.2 million of cash paid for acquisitions, along with net
proceeds of $172.7 million for the sale of Reddy Ice.
On February 20, 1998, Suiza completed the acquisition of Land-O-Sun for a
purchase price of approximately $248 million, including approximately $128
million in cash. The non-cash portion of the purchase price was funded through
the issuance of $100 million of company-obligated 5% mandatorily redeemable
convertible preferred securities of a Delaware business trust formed by Suiza,
and the issuance of $20 million of preferred interests of Land-O-Sun. In
addition, Suiza refinanced Land-O-Sun's existing outstanding long-term
indebtedness, which totaled approximately $52 million as of the closing date.
Suiza financed the cash portion of the purchase price and refinanced the
existing long-term indebtedness with borrowings of $180 million under its Senior
Credit Facility.
12
<PAGE> 13
On May 29, 1998 the Company completed the acquisition of Continental Can for a
purchase price of approximately $181 million, which was funded through the
issuance of 2,050,635 shares of Suiza common stock and Suiza stock options to
replace outstanding stock options of Continental Can, along with cash of $41
million. Suiza also assumed Continental Can's long-term indebtedness of
approximately $200 million at acquisition date.
On June 30, 1998 the Company acquired West Lynn for a cash purchase price of
approximately $89 million and also repaid approximately $44 million of
outstanding debt. During the first six months of 1998 the Company also acquired
Trauth, Oberlin and three small plastic packaging businesses. Suiza financed
these acquisitions with borrowings under its Senior Credit Facility.
On March 24, 1998, the Company completed the sale of $600 million of
company-obligated 5.5% mandatorily redeemable convertible preferred securities
of a Delaware business trust in a private placement, resulting in net proceeds
after expenses of approximately $582.5 million. The net proceeds were used to
repay amounts outstanding under the revolving loan facility of the Company's
Senior Credit Facility.
Future Capital Requirements. During 1998, the Company intends to invest a total
of approximately $132 million in its manufacturing facilities and distribution
capabilities. Of this amount, Dairy intends to spend approximately $86 million
for the year to expand and maintain its manufacturing facilities and for fleet
replacement and Plastics intends to spend approximately $46 million. The Company
plans to substantially expand its Plastics operations by opening new locations
and approximately $15 million of Plastics' capital spending will be for this
purpose.
Current Debt Obligations. On May 29, 1998 the Company amended its Senior Credit
Facility. Pursuant to this amendment, the Company terminated and repaid the term
loan facility and expanded the revolving loan facility to $1 billion. At June
30, 1998, $491.9 million was available under the revolving loan facilities.
The Company expects that cash flow from operations will be sufficient to meet
the Company's requirements for its existing businesses for the remainder of 1998
and for the foreseeable future. During the remainder of 1998 and in the future,
the Company intends to pursue additional acquisitions in its existing regional
markets as well as new 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.
13
<PAGE> 14
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 14, 1998, 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 Alan J. Bernon, Gregg
L. Engles, P. Eugene Pender and Joseph S. Hardin, Jr. as Class III 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 ("Common Stock"), from 100,000,000 shares to 500,000,000
shares (the "Charter Amendment"); (iii) the approval of an amendment to the
Suiza Foods Corporation 1997 Stock Option and Restricted Stock Plan (the "1997
Stock Option Plan") to increase the number of shares of Common Stock authorized
for issuance thereunder from 3,000,000 shares to 4,000,000 shares (the "Plan
Amendment"); and (iv) the ratification of the selection of Deloitte & Touche LLP
as the Company's independent auditors for fiscal year 1998. At the Annual
Meeting, the stockholders elected the Class III directors noted above, approved
the Charter Amendment, approved the Plan Amendment and ratified the selection of
Deloitte & Touche LLP as the Company's independent auditors. The vote of the
stockholders with respect to each such matter was as follows:
(i) Election of Class III directors:
Alan J. Bernon - 26,544,845 votes for; 87,173 votes
withheld.
Gregg L. Engles - 26,545,615 votes for; 86,403 votes
withheld.
P. Eugene Pender - 26,561,606 votes for; 70,412 votes
withheld.
Joseph S. Hardin Jr. - 26,544,484 votes for; 87,534 votes
withheld.
(ii) Approval of the Charter Amendment:
18,744,473 votes for; 7,635,862 against; 115,375 abstentions;
136,308 broker non-votes.
(iii) Approval of the Plan Amendment:
18,616,401 votes for; 7,762,754 against; 116,555 abstentions;
136,308 broker non-votes.
(iv) Ratification of selection of independent auditors:
26,586,012 votes for; 37,042 against; 8,964 abstentions.
A proper proposal submitted by a stockholder of the Company in
accordance with applicable rules and regulations for presentation at
the Company's 1999 annual meeting that is received at the Company's
principal executive office by December 5, 1998 will be included in the
Company's proxy statement and form of proxy for such meeting. Proxies
solicited by the Company with respect to such meeting will confer
discretionary authority to vote on any matter as to which the Company
has not received notice by March 2, 1999.
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Certificate of Amendment of Certificate of Incorporation of
Suiza Foods Corporation.
10.1 Agreement and Plan of Merger dated as of January 14, 1998 by
and among Suiza Foods Corporation, CC Acquisition
Corporation, and Continental Can Company, Inc. (filed as
Exhibit 2.1 to the Registration Statement on Form S-4,
Commission File No. 333-46519, and incorporated herein by
reference).
10.2 Suiza Foods Corporation Amended and Restated 1997 Stock
Option and Restricted Stock Plan.
10.3 Amended and Restated Credit Agreement dated as of May 22,
1998 between Suiza Foods Corporation, each of the Lenders
identified therein; and First Union National Bank, as
administrative agent for the Lenders.
11 Statement re computation of per share earnings.
27 Financial Data Schedules
(b) Reports on Form 8-K
(1) On April 7, 1998, the Company filed a Form 8-K/A, amending a
previously filed Form 8-K to provide certain pro forma
financial information in connection with the acquisition of
Land-O-Sun Dairies, L.L.C.
(2) On June 2, 1998, the Company filed a Form 8-K in connection
with the acquisition of Continental Can. Pursuant to General
Instruction B.3. of Form 8-K, no financial statements were
included in this filing because substantially the same
information as that required was previously reported by the
Company in Form S-4 registration statements related to the
Continental Can merger.
15
<PAGE> 16
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/ Barry A. Fromberg
-------------------------------------
Barry A. Fromberg
Executive Vice President,
Chief Financial Officer
(Principal Accounting Officer)
Date: August 14, 1998
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits No. Description
------------ -----------
<S> <C>
4.1 Certificate of Amendment of Certificate of Incorporation of
Suiza Foods Corporation.
10.1 Agreement and Plan of Merger dated as of January 14, 1998 by
and among Suiza Foods Corporation, CC Acquisition
Corporation, and Continental Can Company, Inc. (filed as
Exhibit 2.1 to the Registration Statement on Form S-4,
Commission File No. 333-46519, and incorporated herein by
reference).
10.2 Suiza Foods Corporation Amended and Restated 1997 Stock
Option and Restricted Stock Plan.
10.3 Amended and Restated Credit Agreement dated as of May 22,
1998 between Suiza Foods Corporation, each of the Lenders
identified therein; and First Union National Bank, as
administrative agent for the Lenders.
11 Statement re computation of per share earnings.
27 Financial Data Schedules
</TABLE>
<PAGE> 1
EXHIBIT 4.1
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 501,000,000, consisting of (a) 1,000,000
shares of Preferred Stock, $.01 par value per share, and (b)
500,000,000 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 14, 1998.
SUIZA FOODS CORPORATION,
a Delaware corporation
By: /s/ Gregg L. Engles
------------------------------------
Gregg L. Engles
Chairman of the Board and
Chief Executive Officer
<PAGE> 1
EXHIBIT 10.2
SUIZA FOODS CORPORATION
AMENDED AND RESTATED
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> 2
"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> 3
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 4,000,000 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> 4
approved by the Board or the Committee and executed on behalf of the Corporation
by an appropriate officer. The aggregate number of shares of Common Stock with
respect to which Options may be granted to any single Participant during a
calendar year shall not exceed the number of shares subject to the Plan referred
to in Section 4. Any Options that are granted and subsequently lapse or are
cancelled or forfeited will nonetheless count against this limit. For this
purpose, repricing of an Option shall be considered as the cancellation of the
Option and the grant of a new Option.
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
4
<PAGE> 5
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 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
5
<PAGE> 6
purchase of shares of Common Stock pursuant to such Option on such terms as the
Board or the Committee may specify.
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
6
<PAGE> 7
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.
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
7
<PAGE> 8
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.
(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, and subject to the stockholder approval requirements of sections 422 and
162(m)(4)(C) of the Code, 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> 1
EXHIBIT 10.3
EXECUTION COUNTERPART
**********************************************************
SUIZA FOODS CORPORATION
_____________________________
AMENDED AND RESTATED
CREDIT AGREEMENT
$1,000,000,000 Credit Facility
Dated as of May 22, 1998
______________________________
FIRST UNION NATIONAL BANK,
as Administrative Agent
THE FIRST NATIONAL BANK OF CHICAGO,
as Syndication Agent
**********************************************************
<PAGE> 2
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>
<CAPTION>
Page
<S> <C>
Section 1. Definitions and Accounting Matters...................................
1.01 Certain Defined Terms................................................
1.02 Accounting Terms and Determinations..................................
1.03 Types of Loans.......................................................
Section 2. Commitments, Loans, Notes and Prepayments............................
2.01 Loans................................................................
2.02 Borrowings...........................................................
2.03 Changes of Commitments...............................................
2.04 Commitment Fee.......................................................
2.05 Lending Offices......................................................
2.06 Several Obligations; Remedies Independent............................
2.07 Notes................................................................
2.08 Optional Prepayments and Conversions or Continuations of Loans.......
2.09 Letters of Credit....................................................
2.10 Optional Extension of Commitment Termination Date....................
Section 3. Payments of Principal and Interest...................................
3.01 Repayment of Loans...................................................
3.02 Interest.............................................................
Section 4. Payments; Pro Rata Treatment; Computations; Etc......................
4.01 Payments.............................................................
4.02 Pro Rata Treatment...................................................
4.03 Computations.........................................................
4.04 Minimum Amounts......................................................
4.05 Certain Notices......................................................
4.06 Non-Receipt of Funds by the Agent....................................
4.07 Sharing of Payments, Etc.............................................
Section 5. Yield Protection, Etc................................................
5.01 Additional Costs.....................................................
5.02 Limitation on Types of Loans.........................................
5.03 Illegality...........................................................
5.04 Treatment of Affected Loans..........................................
5.05 Compensation.........................................................
5.06 Net Payments; Taxes..................................................
5.07 Replacement of Lenders...............................................
5.08 Additional Costs in Respect of Letters of Credit.....................
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 6. Conditions Precedent.................................................
6.01 Conditions to Effectiveness..........................................
6.02 Conditions Precedent to Lending for Permitted Acquisitions...........
6.03 Conditions to all Extensions of Credit...............................
Section 7. Representations and Warranties.......................................
7.01 Corporate Existence..................................................
7.02 Financial Condition..................................................
7.03 Litigation...........................................................
7.04 No Breach............................................................
7.05 Action...............................................................
7.06 Approvals............................................................
7.07 Use of Credit........................................................
7.08 ERISA................................................................
7.09 Taxes................................................................
7.10 Investment Company Act...............................................
7.11 Public Utility Holding Company Act...................................
7.12 Material Agreements and Liens........................................
7.13 Environmental Matters................................................
7.14 Capitalization.......................................................
7.15 Subsidiaries, Etc....................................................
7.16 Title to Assets......................................................
7.17 True and Complete Disclosure.........................................
7.18 Solvency.............................................................
7.19 Year 2000 Problem....................................................
Section 8. Covenants of the Company.............................................
8.01 Financial Statements, Etc............................................
8.02 Litigation...........................................................
8.03 Existence, Etc.......................................................
8.04 Insurance............................................................
8.05 Prohibition of Fundamental Changes...................................
8.06 Limitation on Liens..................................................
8.07 Indebtedness.........................................................
8.08 Investments..........................................................
8.09 [Intentionally left blank]...........................................
8.10 Leverage Ratio.......................................................
8.11 Minimum Net Worth....................................................
8.12 [Intentionally left blank]...........................................
8.13 Interest Coverage Ratio..............................................
8.14 Lines of Business....................................................
8.15 Transactions with Affiliates.........................................
8.16 Use of Proceeds......................................................
8.17 Certain Obligations Respecting Subsidiaries..........................
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
8.18 Modifications of Certain Documents...................................
Section 9. Events of Default....................................................
Section 10. The Agent............................................................
10.01 Appointment, Powers and Immunities...................................
10.02 Reliance by Agent....................................................
10.03 Defaults.............................................................
10.04 Rights as a Lender...................................................
10.05 Indemnification......................................................
10.06 Non-Reliance on Agent and Other Lenders..............................
10.07 Failure to Act.......................................................
10.08 Resignation or Removal of Agent......................................
10.09 Agency Fee...........................................................
10.10 Consents under Other Loan Documents..................................
10.11 Syndication Agent....................................................
Section 11. Miscellaneous........................................................
11.01 Waiver...............................................................
11.02 Notices..............................................................
11.03 Expenses, Etc........................................................
11.04 Amendments, Etc......................................................
11.05 Successors and Assigns...............................................
11.06 Assignments and Participations.......................................
11.07 Survival.............................................................
11.08 Captions.............................................................
11.09 Counterparts.........................................................
11.10 Governing Law; Submission to Jurisdiction;
Service of Process and Venue.........................................
11.11 Waiver of Jury Trial.................................................
11.12 Treatment of Certain Information; Confidentiality....................
SCHEDULE I Existing Material Agreements and Liens
SCHEDULE II Environmental Matters
SCHEDULE III Subsidiaries and Investments
SCHEDULE IV Litigation
SCHEDULE V Existing Letters of Credit
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
EXHIBIT A Form of Note
EXHIBIT B Form of Security Agreement
EXHIBIT C Form of Subsidiary Guarantee and Security Agreement
EXHIBIT C-1 Form of Joinder Agreement
EXHIBIT D Form of Opinion of Counsel to the Obligors
EXHIBIT E Form of Opinion of Special New York Counsel to First Union
EXHIBIT F Form of Confidentiality Agreement
EXHIBIT G Form of Assignment and Acceptance
EXHIBIT H-1 Form of Notice of Borrowing
EXHIBIT H-2 Form of Notice of Prepayment
EXHIBIT H-3 Form of Notice of Conversion/Continuation
EXHIBIT H-4 Form of Notice of Account Designation
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 22, 1998
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 Sections 2.03(c), 2.10 or
11.06(b) hereof, shall become a "Lender" hereunder (individually, a "Lender"
and, collectively, the "Lenders"); and FIRST UNION NATIONAL BANK, 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 Credit Agreement dated as of November 26, 1997 (as modified and
supplemented and in effect on the date hereof, 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 $1,250,000,000.
WHEREAS, the parties hereto now wish to amend and restate the
Existing Credit Agreement by, among other things, increasing the aggregate
amount of the revolving credit facility available to the Company from
$700,000,000 to $1,000,000,000 (as the same may be increased pursuant to
Section 2.03(c) hereof), by repaying in full the term loans extended to the
Company under the Existing Credit Agreement, and 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 revolving credit 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, but shall be
assigned and reallocated among the Lenders as provided in Section 2 hereof and
accordingly the Loans and Commitments (as hereinafter defined) are not in
novation or discharge thereof.
WHEREAS, each of the Obligors (as hereinafter defined) expects to
derive benefit, directly or indirectly, from the credit facilities so made
available 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 (as hereinafter defined), be
amended and restated in its entirety as follows:
I. SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS
A. 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):
<PAGE> 7
-2-
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form supplied by the Agent.
"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, nor Franklin Plastics, Inc., a Delaware corporation, nor any of its
Wholly-Owned Subsidiaries shall be Affiliates; provided that Unrestricted
Subsidiaries shall be Affiliates.
"Applicable Commitment Fee Rate" shall mean 0.225% 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 Quarterly Date falling on or nearest to
September 30, 1998 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):
<TABLE>
<CAPTION>
Range of Leverage Ratio Applicable Commitment Fee Rate
----------------------- ------------------------------
<S> <C>
Less than or equal to 1.75:1 0.15%
Greater than 1.75:1 but less 0.20%
than or equal to 2.75:1
Greater than 2.76:1 0.225%
</TABLE>
NOTE
<PAGE> 8
-3-
"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 in the Administrative Questionnaire
submitted by such Lender 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% and/or Eurodollar Loans, 0.75% 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 Quarterly Date falling on or nearest to September 30, 1998
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 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):
<TABLE>
<CAPTION> Applicable Margin (% p.a.)
Range of Leverage Ratio Base Rate Loans Eurodollar Loans
----------------------- --------------- ----------------
<S> <C> <C>
Less than or equal to 1.75:1 0% 0.50%
Greater than 1.75:1 but less 0% 0.625%
than or equal to 2.75:1
Greater than 2.75:1 0% 0.75%
</TABLE>
"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.
NOTE
<PAGE> 9
-4-
"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.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral Account" shall mean with respect to the Company, the
Collateral Account as defined in the Security Agreement, and with respect to
any Subsidiary of the Company party to the Subsidiary Guarantee and Security
Agreement, the Collateral Account as defined therein.
"Commission" shall mean the Securities and Exchange Commission or
any governmental agency substituted therefor.
"Commitment" shall mean, for each Lender, the obligation of such
Lender to make 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 "Commitment" or, in
the case of a Person that becomes a Lender pursuant to Sections 2.03(c), 2.10
or 11.06 hereof, as specified in the respective instrument pursuant to which
such Person agrees to become a Lender hereunder (as the same may be reduced or
increased from time to time pursuant to Sections 2.03(c), 2.10 and 11.06
hereof). The original aggregate principal amount of the Commitments is
$1,000,000,000.
"Commitment Percentage" shall mean, with respect to any Lender, the
ratio of (a) the amount of the Commitment of such Lender to (b) the aggregate
amount of the Commitments of all of the Lenders.
NOTE
<PAGE> 10
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"Commitment Termination Date" shall mean the Quarterly Date falling
on or nearest to March 31, 2003, or as the same may be extended pursuant to
Section 2.10 hereof.
"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.
"Consent Date" shall have the meaning assigned to such term in
Section 2.10 hereof.
"Continental Can" shall mean Continental Can Company, Inc., a
Delaware corporation.
"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.
"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 but excluding Unrestricted Subsidiaries), 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.
"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
NOTE
<PAGE> 11
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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, but excluding Unrestricted Subsidiaries), 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 $10,000,000 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.
"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
NOTE
<PAGE> 12
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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 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 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.
NOTE
<PAGE> 13
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"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.
"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.
"Existing Credit Agreement" shall have the meaning assigned to such
term in the recitals of this Agreement.
"Existing Lender" shall mean any "Facility A Lender" or any
"Facility B Lender" party to the Existing Credit Agreement.
"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.
"Foreign Subsidiary" shall mean a Subsidiary of the Company or any
of its Subsidiaries that is not created or organized in the United States of
America or under the laws of the United States of America or of any state of
the United States of America or the District of Columbia.
"Franklin Plastics Stockholders Agreement" shall mean the
Stockholders Agreement, dated July 31, 1997, by and among the Company, Franklin
Plastics, Inc., a Delaware corporation, Peter M. Bernon and Alan J. Bernon.
"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.
NOTE
<PAGE> 14
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"Garrido" shall mean Garrido y Compania, Inc., a Puerto Rico
corporation.
"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.
"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.
"Included Trust Issued Securities" shall mean each series of Trust
Issued Securities, provided that (i) GAAP does not require such Trust Issued
Securities to be treated as debt on the Company's financial statements (and, if
GAAP subsequently does require such Trust Issued Securities to be treated as
debt on the Company's financial statements, such Trust Issued Securities shall
continue to be Included Trust Issued Securities for ninety days after such
requirement becomes effective, provided that clauses (ii), (iii) and (iv) below
continue to apply); (ii) at least five quarters remain during which the Company
may defer interest payments on the subordinated debentures related to such
Trust Issued Securities, (iii) if a Default shall have occurred and be
continuing, no interest or principal is paid on the subordinated debentures
related to such Trust Issued Securities; and (iv) the then existing Commitment
Termination Date is earlier than the date on which the Company may no longer
defer interest payments on the subordinated debentures related to such Trust
Issued Securities.
"Increased Commitment Date" shall have the meaning assigned to such
term in Section 2.03(c) hereof.
"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 and including any
NOTE
<PAGE> 15
-10-
debentures sold by the Company or its Subsidiaries in connection with the Trust
Issued Securities from the date which is ninety days after the date such
debentures are distributed to the holders of the Trust Issued Securities); (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, but excluding Unrestricted Subsidiaries),
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 in
connection with Indebtedness permitted under Section 8.07 hereof) 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 Loan would otherwise end after the Commitment Termination Date,
such Interest Period shall end on the Commitment Termination Date; (ii) 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 (iii) notwithstanding clauses (i) and (ii) 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.
NOTE
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"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, but excluding any notes or other securities taken in
satisfaction of or in compromise of delinquent accounts or loans or advances);
(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.
"Issuing Bank" shall mean any of First Union, Bank of America,
Nevada (solely for the purpose of the Letter of Credit issued for the account
of Model Dairy, Inc. as permitted by Section 8.07(e) hereof and provided that
Bank of America, Nevada enters into an agreement in form and substance
satisfactory to the Agent pursuant to which Bank of America, Nevada assumes all
of the rights and obligations of an Issuing Bank hereunder) and any Lender,
each in its capacity as an issuer of a Letter of Credit under Section 2.09
hereof, together with its successors and assigns in such capacity.
"Joinder Agreement" shall mean a Joinder Agreement, substantially in
the form of Exhibit C-1 to this Agreement.
"Letter of Credit" shall have the meaning assigned to such term in
the first sentence of Section 2.09 hereof.
"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
NOTE
<PAGE> 17
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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 Lender, such
Lender's participation interest in an Issuing Bank's liability under Letters of
Credit (or, in the case of an Issuing Bank, such Issuing Bank's retained
interest therein) and such 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 Lender (other than an 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 2.09 hereof, and such 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 Lenders other than such Issuing Bank of their participation
interests under said Section 2.09, 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 of the Company and its
Subsidiaries, on a consolidated basis, but excluding Unrestricted Subsidiaries,
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 such 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 basis EBITDA for
such business, Property or Person as if such business, Property or Person had
been acquired at the beginning of such period; provided further that the
aggregate outstanding principal amount of Indebtedness of the Company and its
Subsidiaries shall not include the aggregate face amount of Included Trust
Issued Securities or the principal amount of any debentures sold by the Company
or its Subsidiaries in connection therewith (x) so long as such debentures are
not distributed to the holders of the Trust Issued Securities or (y) if such
debentures are distributed to the holders of the Trust Issued Securities, from
the date which is ninety days after the date such debentures are distributed to
the holders of the Trust Issued Securities.
"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
NOTE
<PAGE> 18
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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 loans provided for by Section 2.01(a) and (b)
hereof, which may be Base Rate Loans and/or Eurodollar Loans.
"Loan Documents" shall mean, collectively, this Agreement, the
Notes, the Letter of Credit Documents and the Security Documents.
"LOS Preferred Member Interests" shall mean the preferred member
interests issued by Land-O-Sun Dairies, L.L.C., pursuant to, and in accordance
with, the Amended and Restated Operating Agreement of Land-O-Sun Dairies,
L.L.C., in effect on the Effective Date.
"Majority Lenders" shall mean, as at any time, Lenders having at
least 51% of the sum of (a) the aggregate unused amount, if any, of the
Commitments as at such time plus (b) the aggregate outstanding principal amount
of the Loans at such time plus (c) the aggregate amount of all Letter of Credit
Liabilities at such time.
"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.
"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, 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 Purchase Price" shall mean 100% of the purchase price
(including all cash payments, and Indebtedness assumed, but excluding any
Equity Issuance) 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.
NOTE
<PAGE> 19
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"Net Worth" shall mean, as at any date, the sum for the Company and
its Subsidiaries (determined on a consolidated basis without duplication, but
excluding Unrestricted Subsidiaries) 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) plus (d) the aggregate outstanding face amount of Included Trust
Issued Securities.
"New Lender" shall mean any Lender that is not an Existing Lender.
"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.
"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 by the
Majority Lenders, the Net Purchase Price of such acquisition shall not equal or
exceed $300,000,000; (ii) if the subject of such acquisition is a Person, the
Company and/or its Subsidiaries shall not acquire less than 80% of the issued
and outstanding ownership interests (including, without limitation, warrants,
options or other securities convertible into ownership interests) in such
Person; (iii) 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 8.14 hereof and, in the case of an
acquisition the Net Purchase Price of which exceeds $100 million, the Company
shall have so certified to the Agent; (iv) on a pro forma basis, after giving
effect to such acquisition, the Company shall be in compliance with Sections
8.10, 8.11 and 8.13 hereof and, in the case of an acquisition the Net Purchase
Price of which exceeds $100 million, the Company shall have so certified to the
Agent; (v) the Company and such Person shall have complied with the applicable
requirements of Section 8.17 hereof, and (vi) such Person (if publicly held)
shall be aware of and shall not have objected to such acquisition.
"Permitted Equity Rights" shall mean, as of the Effective Date, (i)
the Equity Rights established pursuant to the items disclosed in Part A of
Schedule III attached hereto, (ii) the warrants for the purchase of capital
stock of Franklin Plastics, Inc., a Delaware corporation, (iii) the Equity
Rights set forth in the Franklin Plastics Stockholders Agreement, (iv) the
Equity Rights of the holders of the LOS Preferred Member Interests, (v) the
Equity Rights held by the holders of the Trust Issued Securities, in accordance
with the terms thereof and (vi) the Equity Rights held by certain investors in
Suiza Capital Trust and Suiza Capital
NOTE
<PAGE> 20
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Trust II; as each of the above may be amended, modified and supplemented from
time to time (subject to restriction on such amendments, modifications and
supplements set forth herein).
"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, a division of The McGraw-Hill Companies ("S&P") or Moody's Investors
Services ("Moody's"); (c) certificates of deposit issued by, or repurchase
agreements with, 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
one year 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 nine
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 or the date such Event of Default occurs 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.
NOTE
<PAGE> 21
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"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.
"Quarterly Dates" shall mean the last Business Day of March, June,
September and December in each year, the first of which shall be June 30, 1998.
"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 an 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 (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.
NOTE
<PAGE> 22
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"Security Agreement" shall mean the Amended and Restated Security
Agreement between the Company and the Agent, substantially in the form of
Exhibit B to this Agreement, 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 Subsidiary Guarantee and Security Agreement, any pledge
agreement required pursuant to Section 8.17(a) herein, 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
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 Guarantee and Security Agreement" shall mean the Amended
and Restated Subsidiary Guarantee and Security Agreement between the
Subsidiaries of the Company listed on Schedule III hereto as of the Effective
Date (other than Garrido, Suiza Capital Trust II and Unrestricted Subsidiaries)
and the Agent, substantially in the form of Exhibit C to this Agreement, as the
same may be amended, modified and supplemented and in effect from time to time.
"Subsidiary Guarantors" shall mean each of the Subsidiaries of the
Company listed on Schedule III hereto as of the Effective Date (other than
Garrido, Suiza Capital Trust II and Unrestricted Subsidiaries), and each
Supplemental Guarantor.
"Suiza Capital Trust" shall mean Suiza Capital Trust, a Delaware
statutory business trust and Subsidiary of the Company.
"Suiza Capital Trust II" shall mean Suiza Capital Trust II, a
Delaware statutory business trust and Subsidiary of the Company.
"Supplemental Guarantor" shall mean each Subsidiary of the Company
which becomes a party to the Subsidiary Guarantee and Security Agreement
pursuant to a Joinder Agreement or executes a pledge agreement according to the
requirements of Section 8.17 hereof.
"Taxes" shall have the meaning assigned to such term in Section
5.06(a) hereof.
NOTE
<PAGE> 23
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"TCPS" shall mean the 5 1/2% Trust Convertible Preferred Securities
issued by Suiza Capital Trust II in accordance with the terms and provisions of
the Amended and Restated Declaration of Trust dated as of March 24, 1998 among
the Borrower, as Depositor, Wilmington Trust Company, as Delaware Trustee,
Wilmington Trust Company, as Property Trustee, Tracy L. Noll, J. Michael Lewis
and Joseph B. Armes, each an Administrative Trustee and the Holders (as defined
therein).
"TIPES" shall mean the 5% Preferred Securities issued by Suiza
Capital Trust in accordance with the terms and provisions of the Amended and
Restated Declaration of Trust dated as of February 20, 1998 among the Borrower,
as Sponsor, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Property Trustee, J. Michael Lewis, as Regular Trustee and the
Holders (as defined therein).
"Trust Issued Securities" shall mean, collectively, the TIPES and
the TCPS.
"Type" shall have the meaning assigned to such term in Section 1.03
hereof.
"United States" shall mean the United States of America.
"Unrestricted Subsidiaries" shall mean Continental Can and its
Subsidiaries and any other Subsidiaries of the Company designated as
Unrestricted Subsidiaries with the consent of the Agent and the Majority
Lenders.
"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.
B. 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
NOTE
<PAGE> 24
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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.
C. 1.03 TYPES OF LOANS. Loans hereunder are distinguished by "Type".
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.
II. SECTION 2. COMMITMENTS, LOANS, NOTES AND PREPAYMENTS
A. 2.01 LOANS.
(a) Facility A Loans. On the Effective Date, 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 Loans hereunder and each
of the New Lenders that is a Lender (and each Existing Lender, if any, whose
relative proportion of Commitments hereunder is increasing over the proportion
of "Facility A Loans" held by it under the Existing Credit Agreement) shall by
assignments from the Existing Lenders (which assignments shall be deemed to
occur hereunder automatically, and without any requirement for additional
documentation, on the Effective Date) acquire a portion of the Loans of the
Existing Lenders so designated in such amounts and the Lenders shall, through
the Agent, make such other adjustments among themselves as shall be necessary)
so that after giving effect to such assignments and adjustments, the Lenders
shall hold Loans hereunder ratably in accordance with their respective
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
NOTE
<PAGE> 25
-20-
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.
(b) Loans. Each 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
Commitment Termination Date in an aggregate principal amount (including any
Loans continued or acquired by it under paragraph (a) above) at any one time
outstanding up to but not exceeding the amount of the Commitment of such Lender
as in effect from time to time (such Loans being herein called "Loans");
provided that in no event shall the aggregate principal amount of all Loans,
together with the aggregate amount of all Letter of Credit Liabilities, exceed
the aggregate amount of the 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 Commitments by means
of Base Rate Loans and/or Eurodollar Loans and may Convert Loans of one Type
into Loans of another Type (as provided in Section 2.08 hereof) or Continue
Loans of one Type as 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 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 to the Company shall
not exceed its pro rata portion of all Loans then outstanding to the Company
hereunder and the unused Commitments of all the Lenders plus all outstanding
Loans and Letter of Credit Liabilities under this Agreement shall not exceed
$1,000,000,000 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 from each Lender may be outstanding at
any one time.
B. 2.02 BORROWINGS.
(a) The Company shall give the Agent notice of each borrowing
hereunder as provided in Section 4.05 hereof.
NOTE
<PAGE> 26
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(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 H-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.
C. 2.03 CHANGES OF COMMITMENTS.
(a) The aggregate amount of each of the Commitments shall be
automatically reduced to zero on the Commitment Termination Date.
(b) The Company shall have the right at any time or from time to
time (i) so long as no Loans or Letter of Credit Liabilities in respect of
Letters of Credit are outstanding, to terminate the Commitments, and (ii) to
reduce the aggregate unused amount of any of the Commitments (for which purpose
use of the 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) Increase in Commitments. The Company shall have the right at
any one time to increase the aggregate Commitments in an amount up to but not
exceeding $250,000,000 in the aggregate by adding to this Agreement one or more
other lenders (which may include any Lender (with the consent of such Lender))
(each such lender an "Additional Lender") with the approval of the Agent (not
to be unreasonably withheld), each of which Additional Lenders shall have
entered into an agreement in form and substance satisfactory to the Borrower
and the Agent pursuant to which such Additional Lender shall undertake a
Commitment (and if any such Additional Lender is a Lender, its Commitment shall
be in addition to such Lender's Commitment hereunder) which such Commitment
shall be in an amount at least equal to $10,000,000 or a larger integral
multiple of $1,000,000, and upon the effectiveness of such agreement (the date
of the effectiveness of any such agreement being hereinafter referred to as the
"Increased Commitment Date") such Additional Lender shall thereupon become a
"Lender" for all purposes of this Agreement.
On the Increased Commitment Date, each Additional Lender shall by
assignments from the other Lenders (which assignments shall be deemed to occur
hereunder automatically, and without any requirement for additional
documentation, on the Increased Commitment Date) acquire a portion of the Loans
of the other Lenders (and the Lenders shall, through the Agent, make such other
adjustments among themselves as shall be necessary) so that after giving effect
to such assignments and adjustments the Lenders shall hold Loans hereunder
ratably in accordance with their respective Commitments. The Company shall
compensate each Lender
NOTE
<PAGE> 27
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whose outstanding Loans have decreased as a result of the foregoing assignments
and adjustments as if such decrease were a payment or prepayment referred to in
Section 5.05 hereof.
Notwithstanding the foregoing, the increase in the aggregate Commitments
hereunder pursuant to this Section 2.03(c) shall be effective only if:
(i) the Borrower shall have given the Agent notice of any such
increase at least five Business Days prior to any such Increased
Commitment Date;
(ii) no Default or Event of Default shall have occurred and be
continuing as of the date of the notice referred to in the foregoing
clause (i) or on the Increased Commitment Date; and
(iii) the resulting aggregate amount of the Commitments is no
greater than $1,250,000,000.
(d) The Commitments once terminated or reduced may not be
reinstated.
D. 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 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 Commitments) use of each Lender's 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 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
Commitment Termination Date.
E. 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.
F. 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.
NOTE
<PAGE> 28
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G. 2.07 NOTES.
(a) The Loans made by each Lender shall be evidenced by a single
promissory note of the Company substantially in the form of Exhibit A hereto,
dated the Effective Date, payable to such Lender in a principal amount equal to
the amount of its Commitment as originally in effect and otherwise duly
completed.
(b) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of each Loan 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 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.
(c) No Lender shall be entitled to have its Note 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
Commitment, Loan and Note pursuant to Section 11.06(b) hereof.
H. 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); and
(b) Eurodollar Loans may be prepaid or Converted on any Business
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.
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.
NOTE
<PAGE> 29
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I. 2.09 LETTERS OF CREDIT. Subject to the terms and conditions of
this Agreement, the Commitments may be utilized, upon the request of the
Company, in addition to the Loans provided for by Section 2.01(b) hereof, by
the issuance by an Issuing Bank of letters of credit which shall be in a
minimum amount of $1,000,000 (collectively, "Letters of Credit") including (a)
Letters of Credit issued under the Existing Credit Agreement (other than those
listed on Schedule V hereto and any replacements thereof) 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 Loans, exceed the aggregate amount
of the Commitments as in effect from time to time and (ii) the expiration date
of any Letter of Credit extend beyond the earlier of (A) the Commitment
Termination Date and (B)(1) the date 12 months following the issuance of such
Letter of Credit or (2) such later date as may be requested by a beneficiary
and approved in advance by the Agent and such Issuing Bank, such approval not
to be unreasonably withheld. 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 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
applicable Issuing Bank of the contents thereof.
(b) On each day during the period commencing with the issuance by
an Issuing Bank of any Letter of Credit (or from the Effective Date, the
Increased Commitment Date or the Consent Date, in the case of then outstanding
Letters of Credit) and until such Letter of Credit shall have expired or been
terminated, the Commitment of each Lender shall be deemed to be utilized for
all purposes of this Agreement in an amount equal to such Lender's Commitment
Percentage of the then undrawn face amount of such Letter of Credit. Each
Lender (other than such Issuing Bank) agrees that, upon the issuance of any
Letter of Credit hereunder (or on the Effective Date, the Increased Commitment
Date or the Consent Date, in the case of then outstanding Letters of Credit),
it shall automatically acquire a participation in such Issuing Bank's liability
under such Letter of Credit in an amount equal to such Lender's Commitment
Percentage of such liability, and each Lender (other than such Issuing Bank)
thereby shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and shall be unconditionally obligated to such
Issuing Bank to pay and discharge when due, its Commitment Percentage of such
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 applicable Issuing Bank
shall promptly notify the Company (through the Agent) of the amount to be paid
by such Issuing Bank as a result of such demand and the date on which payment
is to be made by such Issuing Bank to such beneficiary
NOTE
<PAGE> 30
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in respect of such demand (but the failure to give such notice shall not impair
the Company's obligations in respect of such Letter of Credit).
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 such 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
such 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),
such 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 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 2.09, the Company shall advise the Agent whether
or not the Company intends to borrow hereunder to finance its obligation to
reimburse the applicable 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 Lender (other than the applicable Issuing Bank) shall pay
to the Agent for account of such Issuing Bank at its principal office in
Dollars and in immediately available funds, the amount of such Lender's
Commitment Percentage of any payment under a Letter of Credit upon notice by
such Issuing Bank (through the Agent) to such Lender requesting such payment
and specifying such amount. Each such Lender's obligation to make such payment
to the Agent for account of such Issuing Bank under this paragraph (e), and
such 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 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 Lender shall be obligated to make any payment to the Agent for
account of an Issuing Bank in respect of any payment made by such 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
NOTE
<PAGE> 31
-26-
the last paragraph of this Section 2.09. Each such payment to an Issuing Bank
shall be made without any offset, abatement, withholding or reduction
whatsoever. If any Lender shall default in its obligation to make any such
payment to the Agent for account of an Issuing Bank, for so long as such
default shall continue the Agent may at the request of such Issuing Bank
withhold from any payments received by the Agent under this Agreement or any
Note for account of such Lender the amount so in default and, to the extent so
withheld, pay the same to such Issuing Bank in satisfaction of such defaulted
obligation.
(f) Upon the making of each payment by a Lender to an 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,
such Issuing Bank or such Lender, acquire (i) a participation in an amount
equal to such payment in the Reimbursement Obligation owing to such 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 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 an Issuing Bank pursuant to paragraph (g) of this Section
2.09). Upon receipt by an 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), such Issuing Bank shall promptly pay to the Agent for
account of each Lender entitled thereto, such Lender's Commitment Percentage of
such payment, each such payment by such Issuing Bank to be made in the same
money and funds in which received by such Issuing Bank. In the event any
payment received by such Issuing Bank and so paid to the Lenders hereunder is
rescinded or must otherwise be returned by such Issuing Bank, each Lender
shall, upon the request of such Issuing Bank (through the Agent), repay to such
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
2.09.
(g) The Company shall pay to the Agent for account of each 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 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 (or, in the case of
Letters of Credit issued under the Existing Credit Agreement, the Effective
Date) (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
nonrefundable, to be paid in arrears on each Quarterly Date and on the
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 applicable
Issuing Bank a fronting fee in respect of each Letter of Credit in an amount
equal to 0.125% 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 (or, in the case of Letters of Credit issued under the
Existing
NOTE
<PAGE> 32
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Credit Agreement, the Effective Date) (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 nonrefundable, to be paid in arrears on each
Quarterly Date and on the 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 applicable 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, each
Issuing Bank shall deliver (through the Agent) to each 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 Lender from time to time, an
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 an 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 such 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 such
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 2.09 on
the due date therefor, such Lender shall pay interest to the applicable 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 such 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 an Issuing Bank of any modification or
supplement to any Letter of Credit hereunder shall be subject to the same
conditions applicable under this Section 2.09 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 supplemented form or (ii) each Lender shall have consented thereto.
NOTE
<PAGE> 33
-28-
The Company hereby indemnifies and holds harmless each 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 an 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 such
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
such 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 2.09 is intended
to limit the other obligations of the Company, any Lender or the Agent under
this Agreement.
III. 2.10 OPTIONAL EXTENSION OF COMMITMENT TERMINATION DATE
(a) The Company may, by notice to the Agent (which shall promptly
notify the Lenders) not less than 45 days and not more than 90 days prior to
each of the first two anniversaries (each such anniversary, an "Anniversary
Date") of the Effective Date (provided that, if such date is not a Business
Day, the Anniversary Date shall be the next succeeding Business Day), request
that each Lender extend such Lender's Commitment Termination Date to the date
(the "New Termination Date") that is one year after the Commitment Termination
Date in effect at such time. Each Lender, acting in its sole discretion,
shall, by written notice to the Agent given no later than the date (the
"Consent Date") that is the earlier of (i) 15 days after the date of the notice
referred to in the preceding sentence and (ii) 30 days prior to the Anniversary
Date (provided that, if such earlier date is not a Business Day, the Consent
Date shall be the next succeeding Business Day), advise the Agent as to:
(1) whether or not such Lender agrees to such extension of its
Commitment Termination Date (each Lender so agreeing to such extension
being an "Extending Lender"); and
(2) only if such Lender is an Extending Lender, whether or not
such Lender also irrevocably offers to increase the amount of its
Commitment (each Lender so offering to increase its Commitment being an
"Increasing Lender" as well as an Extending Lender) and, if so, the
amount of the additional Commitment such Lender so irrevocably offers to
assume hereunder (such Lender's "Proposed Additional Commitment").
Each Lender that determines not to extend its Commitment Termination Date (a
"Non-Extending Lender") shall notify the Agent (which shall notify the Lenders
and the Company) of such fact promptly after such determination but in any
event no later than the Consent Date, and any Lender that does not advise the
Agent in writing on or before the Consent Date shall be deemed to be a
Non-Extending Lender. The election of any Lender to agree to such extension
shall not obligate any other Lender to so agree. The Agent shall notify the
Company of each Lender's
NOTE
<PAGE> 34
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determination under this Section 2.10(a) no later than the date 25 days prior
to the Anniversary Date (or, if such date is not a Business Day, on the next
preceding Business Day).
(b)(i) If all of the Lenders are Extending Lenders, then,
effective as of the Consent Date, the Commitment Termination Date of each
Lender shall be extended to the New Termination Date, and the respective
Commitments of the Lenders will not be subject to change at such Consent
Date pursuant to this Section 2.10.
(ii) If and only if the sum of (x) the aggregate amount of the
Commitments of the Extending Lenders plus (y) the aggregate amount of the
Proposed Additional Commitments of the Increasing Lenders (such sum, the
"Extending Commitments") shall be equal to at least 80% of the aggregate
amount of Commitments as then in effect, then:
(1) effective as of the Consent Date, the Commitment
Termination Date of each Extending Lender shall be extended to the
New Termination Date; and
(2) the Company shall (so long as no Default shall have
occurred and be continuing) take either of the following actions
with respect to each Non-Extending Lender during the period
commencing on the Consent Date and ending on the immediately
succeeding Anniversary Date:
(X) the Company may elect by notice to the Agent and
such Non-Extending Lender that the Commitment Termination Date
of such Non-Extending Lender be changed to a date (which date
shall be specified in such notice) on or prior to the
Anniversary Date (and, upon the giving of such notice, the
Commitment Termination Date of such Non-Extending Lender shall
be so changed); or
(Y) the Company may replace such Non-Extending Lender
as a party to this Agreement in accordance with Section
2.10(c).
(iii) If neither of the conditions specified in clause (i) or
clause (ii) of this Section 2.10(b) is satisfied, then neither the
Commitment Termination Date nor the Commitment of any Lender will change
pursuant to this Section 2.10 on such Consent Date, and the Company will
not have the right to take any of the actions specified in Section
2.10(b)(ii)(2).
(c) Termination of the Commitment of any Non-Extending Lender
pursuant to Section 2.10(b)(ii)(2)(X) shall be effected as follows (certain
terms being used in this Section 2.10(c) having the meanings assigned to them
in Section 2.10(e)) on the relevant Termination Date:
(1) the Company shall pay to each Terminated Lender an amount
equal to (i) all principal of and interest accrued on the outstanding
Loans of such Terminated Lender
NOTE
<PAGE> 35
-30-
and all accrued commitment and other fees hereunder to Termination Date
plus (ii) the amount necessary pursuant to Section 5.05 hereof to
compensate such Terminated Lender for any such termination as if such
termination were a payment or prepayment referred to in Section 5.05
hereof;
(2) the Company shall make any additional payments as are
necessary, or take such other action as is required, so that the
aggregate amount of the Loans and the Letters of Credit outstanding do
not exceed the aggregate amount of the Commitments as reduced; and
(3) 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 shall survive for the benefit of
each Terminated Lender with respect to the time prior to the relevant
Termination Date.
(d) Replacement by the Company of Non-Extending Lenders pursuant
to Section 2.10(b)(ii)(2)(Y) shall be effected as follows (certain terms being
used in this Section 2.10(d) having the meanings assigned to them in Section
2.10(e)) on the relevant Assignment Date:
(1) the Assignors shall severally assign and transfer to the
Assignees, and the Assignees shall severally purchase and assume from the
Assignors, all of the Assignors' rights and obligations (including,
without limitation, the Assignors' respective Commitments) hereunder and
under the Notes held by such Assignors;
(2) each Assignee shall pay to the Agent, for account of each
Assignor, an amount equal to such Assignee's Share of the aggregate
outstanding principal amount of the Loans then held by such Assignor;
(3) the Company shall pay to the Agent, for account of each
Assignor, (i) all interest, fees and other amounts (other than principal
of outstanding Loans) then due and owing to such Assignor by the Company
hereunder plus (ii) the amount necessary pursuant to Section 5.05 hereof
to compensate such Assignor for any such termination as if such
termination were a payment or prepayment referred to in Section 5.05
hereof.;
(4) the Company shall pay to the Agent for account of the Agent
the $3,000 processing and recordation fee for each assignment effected
pursuant to this Section 2.10(d); and
(5) 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 shall survive for the benefit of
each Assignor with respect to the time prior to the relevant Assignment
Date.
NOTE
<PAGE> 36
-31-
The assignments provided for in this Section 2.10(d) shall be effected on the
relevant Assignment Date in accordance with Section 11.06 and pursuant to one
or more Assignments and Acceptances. After giving effect to such assignments,
each Assignee shall have a Commitment hereunder (which, if such Assignee was a
Lender hereunder immediately prior to giving effect to such assignment, shall
be in addition to such Assignee's existing Commitment) in an amount equal to
the amount of its Assumed Commitment.
(e) For purposes of this Section 2.10 the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Assigned Commitment" means the Commitments of Non-Extending Lenders
to be replaced pursuant to Section 2.10(b)(ii)(2)(Y).
"Assignees" means, at any time, Increasing Lenders and, if the
Assigned Commitments exceed the aggregate amount of the Proposed
Additional Commitments, one or more Purchasing Lenders.
"Assignment Date" means the Anniversary Date or such earlier date as
shall be acceptable to the Company, the relevant Assignors, the relevant
Assignees and the Agent.
"Assignors" means, at any time, the Lenders to be replaced by the
Company pursuant to Section 2.10(b)(ii)(2)(Y).
The "Assumed Commitment" of each Assignee shall be a portion of the
aggregate amount of Assigned Commitments, as allocated among the
Increasing Lenders and (if the Assigned Commitments exceed the aggregate
amount of the Proposed Additional Commitments) the Purchasing Lenders, in
such a manner as the Company and the Agent may agree in their sole
discretion.
"Purchasing Lender" shall mean a Lender approved by the Agent (which
approval shall not be unreasonably withheld).
"Share" means, as to any Assignee, a fraction the numerator of which
is equal to such Assignee's Assumed Commitment and the denominator of
which is the aggregate amount of the Assumed Commitments of all the
Assignees.
"Terminated Lender" means, at any time, any Lender whose Commitment
is terminated by the Company pursuant to Section 2.10(b)(ii)(2)(X).
"Termination Date" means the Anniversary Date or such earlier date
as the Company shall elect as provided in Section 2.10(b)(ii)(2)(X).
NOTE
<PAGE> 37
-32-
IV. SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST
A. 3.01 REPAYMENT OF LOANS. The Company hereby promises to pay to the
Agent for account of each Lender the entire outstanding principal amount of
such Lender's Loans, and each such Loan shall mature, on the Commitment
Termination Date.
B. 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, on any
Reimbursement Obligation held by such Lender and on any other amount
payable by the Company hereunder or under the Note 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, 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.
NOTE
<PAGE> 38
-33-
V. SECTION 4. PAYMENTS; PRO RATA TREATMENT;
COMPUTATIONS; ETC.
A. 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 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 2.09(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.
B. 4.02 PRO RATA TREATMENT. Except to the extent otherwise provided
herein: (a) each borrowing of Loans from the Lenders under Section 2.01 hereof
shall be made from the Lenders, each payment of commitment fee under Section
2.04 hereof in respect of Commitments shall be made for account of the Lenders,
and each termination or reduction of the amount of the Commitments under
Section 2.03 hereof shall be applied to the respective Commitments of the
Lenders, pro rata according to the amounts of their respective Commitments; (b)
the making, Conversion and Continuation of Loans of a particular Type (other
than Conversions provided for
NOTE
<PAGE> 39
-34-
by Section 5.04 hereof) shall be made pro rata among the 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 by the Company shall be
made for account of the Lenders pro rata in accordance with the respective
unpaid principal amounts of the Loans held by them; and (d) each payment of
interest on any Loans by the Company shall be made for account of the Lenders
pro rata in accordance with the amounts of interest on such Loans then due and
payable to the respective Lenders.
C. 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 2.09(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.
D. 4.04 MINIMUM AMOUNTS. Except for 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, and (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 are to be
deemed separate borrowings, Conversions and prepayments for purposes of the
foregoing, one for each Type or Interest Period).
E. 4.05 CERTAIN NOTICES. Notices of terminations or reductions of the
Commitments, of Borrowings, Conversions, Continuations and optional prepayments
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:
<TABLE>
<CAPTION>
Notice Number of Business Days Prior
------ -----------------------------
<S> <C>
Termination or reduction of Commitments 3
Borrowing or prepayment of, or Same Day
Conversions into, Base Rate Loans
Borrowing or prepayment of, Conversions 3
into, Continuations as, or duration of
Interest Period for, Eurodollar Loans
</TABLE>
NOTE
<PAGE> 40
-35-
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 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 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 H-1, Exhibit H-2 and Exhibit H-3 hereto, respectively.
F. 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:
NOTE
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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).
G. 4.07 SHARING OF PAYMENTS, ETC.
(a) The Company agrees that, in addition to (and without
limitation of) any right of setoff, 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 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 setoff, banker'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 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 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 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.
NOTE
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(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of setoff, 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 setoff 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.
VI. SECTION 5. YIELD PROTECTION, ETC.
A. 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 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 Note or changes the basis of taxation of any amounts payable
to such Lender under this Agreement or its Note 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 definition of "Eurodollar Base
Rate" in Section 1.01 hereof), or any commitment of such Lender
(including, without limitation, the Commitment of such Lender hereunder);
or
NOTE
<PAGE> 43
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(iii) imposes any other condition affecting this Agreement or its
Note (or any of such extensions of credit or liabilities) or its
Commitment.
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 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 Commitment 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
NOTE
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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
(unless such Lender decides not to seek compensation hereunder); 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
absence of manifest error, provided that such determinations and allocations
are made on a reasonable basis.
B. 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 definition 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;
NOTE
<PAGE> 45
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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, or 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.
C. 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 maintain Eurodollar
Loans (in which case the provisions of Section 5.04 hereof shall be
applicable).
D. 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 are
outstanding, such Lender's Base Rate Loans (subject to Section 2.09 hereof)
shall be automatically Converted, on the first day(s) of the next succeeding
Interest Period(s) for such outstanding Affected Loans, to the extent necessary
so that, after giving effect thereto, all Loans 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.
NOTE
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E. 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
(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 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).
F. 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
NOTE
<PAGE> 47
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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 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 hereunder unless such Lender is, on
the date hereof (or on the date it becomes a Lender as provided in
Sections 2.03(c), 2.10 or 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 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), (w) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States, (x) "Form 4224" shall mean Form 4224 (Exemption
from Withholding of Tax on Income
NOTE
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Effectively Connected with the Conduct of a Trade or Business in the United
States) of the Department of the Treasury of the United States, (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).
G. 5.07 REPLACEMENT OF LENDERS. In the event that (x) 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 an "Additional Cost Lender") or (y) in connection with any
proposed modification, supplement or waiver pursuant to Section 11.04 hereof to
which the Majority Lenders shall have consented, but to which one or more of
the Lenders shall not have consented (each such Lender a "Non- Consenting
Lender" and, collectively with each "Additional Cost Lender", a "Relevant
Lender"), the Company upon three Business Days notice may require that any such
Relevant Lender transfer all of its right, title and interest under this
Agreement and such Relevant Lender's Note 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.
NOTE
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H. 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
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.
VII. SECTION 6. CONDITIONS PRECEDENT
A. 6.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement, and the obligation of any Lender to extend credit hereunder on the
Effective Date, are subject to (i) the condition precedent that the Effective
Date shall occur on or before May 31, 1998 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
bylaws (or equivalent documents) of each Obligor (or appropriate documents or
certificates bringing down to the Effective Date comparable documents delivered
pursuant to the Existing Credit Agreement) 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 Loan 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 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 6.03 hereof.
NOTE
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(c) Opinion of Counsel to the Obligors. An opinion, dated the
Effective Date, of Hughes & Luce, L.L.P., counsel to the Obligors,
substantially in the form of Exhibit D hereto and 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 E 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. 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) Security Agreement. The Security Agreement, duly executed and
delivered by the Company and the Agent and (to the extent not previously
delivered) the certificates representing 100% of the capital stock owned by the
Company of each of the direct Subsidiaries (other than Unrestricted
Subsidiaries) of the Company on the Effective Date (or 65% of the capital stock
in the case of Garrido and any Foreign Subsidiary), accompanied by undated
stock powers executed in blank. In addition, upon request of the Agent, the
Company shall have taken such other action (including, without limitation,
delivering to the Agent, (i) Uniform Commercial Code searches for each
jurisdiction in which the Company 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 interests created pursuant to the Security
Agreement.
(h) Subsidiary Guarantee and Security Agreement. The Subsidiary
Guarantee and Security Agreement, duly executed and delivered by each
Subsidiary of the Company on the Effective Date (other than Garrido, any
Foreign Subsidiary, Suiza Capital Trust II and any Unrestricted Subsidiary) and
the Agent and (to the extent not previously delivered) the certificates
representing the capital stock owned by such Subsidiary of each of the indirect
Subsidiaries (other than Unrestricted Subsidiaries) of the Company on the
Effective Date, accompanied by appropriate undated stock powers executed in
blank. In addition, upon request of the Agent, the Company shall have taken
such other action (including, without limitation, delivering to the Agent, (i)
Uniform Commercial Code searches for each such Subsidiary Guarantor for each
jurisdiction in which such Subsidiary 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 interests created
pursuant to the Subsidiary Guarantee and Security Agreement.
NOTE
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(i) 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 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).
(j) Existing Credit Agreement. Evidence that (i) all principal of
and interest accrued on the outstanding "Facility B Loans" under the Existing
Credit Agreement and all accrued commitment and other fees thereunder to the
Effective Date have been paid in full, (ii) all principal of and interest
accrued on the outstanding "Facility A Loans" under the Existing Credit
Agreement made by an Existing Lender that is not a Lender hereunder and all
other amounts owing to any Existing Lender that is not a Lender hereunder have
been paid in full, (iii) all other amounts (if any) payable by the Company
under or in respect of the Existing Credit Agreement have been paid in full,
and (iv) the "Commitments" (as defined in the Existing Credit Agreement) have
terminated.
(k) Other Documents. Such other documents as the Agent or any
Lender or special New York counsel to First Union may reasonably request.
B. 6.02 CONDITIONS PRECEDENT TO LENDING FOR PERMITTED ACQUISITIONS.
The obligation of any Lender to make Loans hereunder to finance any Permitted
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 or the Majority 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 is, with the consent of the Agent and the Majority
Lenders, designated as an Unrestricted Subsidiary hereunder) 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
bylaws (or equivalent documents) of the relevant Person and of all
corporate authority for such Person (including, without limitation, board
of directors 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 Loan 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).
NOTE
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(ii) Obligations Respecting Subsidiaries. Such documents as are
required to be delivered pursuant to the requirements of Section 8.17
hereof.
(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 E hereto but as to the
relevant Security Document (and First Union hereby instructs such counsel
to deliver such opinion to the Lenders).
(b) In connection with all Permitted Acquisitions, to the extent
that such 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 the Agent,
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 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.
C. 6.03 CONDITIONS TO ALL EXTENSIONS OF CREDIT. The effectiveness of
this Agreement 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).
NOTE
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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 6.03 (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).
VIII. 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):
A. 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. Except where failure would not cause a
Material Adverse Effect, each of the Company and its Subsidiaries (a) 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 (b) 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.
B. 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, 1997, and the related consolidating statements
of income and operating cash flows 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, 1997 and the related consolidated statements of
income, retained earnings and cash flows 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, in all material respects, 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 balance sheets referred to
above. Since December 31, 1997 (with respect to the Company and its
Subsidiaries), there has been no material adverse change in the financial
condition, operations, business or prospects of the Company and its
Subsidiaries as a whole from that set forth in the financial statements as at
such date.
NOTE
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C. 7.03 LITIGATION. Except as disclosed in Schedule IV 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.
D. 7.04 NO BREACH. None of the execution and delivery of this
Agreement and the Notes and the other Loan 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 bylaws 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 which
conflict, breach, lack of consent or default would have a Material Adverse
Effect, 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.
E. 7.05 ACTION. Each Obligor has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its
obligations under each of the Loan Documents to which it is a party; the
execution, delivery and performance by each Obligor of each of the Loan
Documents to which it is a party have been duly authorized by all necessary
corporate or other action on its part (including, without limitation, any
required shareholder or member 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 Loan 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 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.
F. 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 Loan 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.
NOTE
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G. 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, other than
purchases of the Company's capital stock. After giving effect to the making of
any Loan hereunder, not more than 25% of the value (as determined by any
reasonable method) of the Property subject to (i) Section 8.05 or 8.06 hereof
or (ii) the Security Documents consists of Margin Stock.
H. 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.
I. 7.09 TAXES. The Company and its Subsidiaries (other than the
Obligors operating in the Commonwealth, Garrido and Foreign Subsidiaries) 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, other than returns
for which failure to file would not have a Material Adverse Effect, and have
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Company or any of its Subsidiaries other than taxes for which
nonpayment would not have a Material Adverse Effect and taxes for which the
criteria of Section 8.06(c) have been satisfied. 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 Manufacturing Corp., a Delaware
corporation and a Subsidiary of the Company, and Suiza Fruit Corporation, a
Delaware corporation, and a Subsidiary of the Company, each hold industrial tax
exemption grants entitling them to a 90% exemption from income and property
taxes and a 60% exemption from municipal license taxes. The grant held by Neva
Plastics Manufacturing Corp. 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 Corporation will
expire on October 12, 2002 for income and property tax purposes and on June 30,
2003 for municipal license tax purposes.
J. 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.
K. 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
NOTE
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company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
L. 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 (other than Unrestricted 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
other than Unrestricted 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.
M. 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 $25,000,000 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
NOTE
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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 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.
NOTE
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(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 cleanup.
(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.
N. 7.14 CAPITALIZATION.
(a) As of the Effective Date, the authorized capital stock of the
Company consists of 501,000,000 shares, consisting of 500,000,000 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 April 30, 1998, the Company has 31,664,611 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 11,691 shares of
issued and outstanding Series A preferred stock and all of such issued shares
are duly and validly authorized and outstanding and are not held in treasury;
and
(d) As of the Effective Date, there are no outstanding obligations
of the Company or any of its Subsidiaries other than Unrestricted 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.
NOTE
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O. 7.15 SUBSIDIARIES, ETC.
(a) Set forth in Part A of Schedule III attached hereto is a
complete and correct list, as of the Effective Date, of all of the Subsidiaries
of the Company, together with, for each such Subsidiary (i) the jurisdiction of
organization of such Subsidiary, (ii) the name of the Company or Subsidiary of
the Company 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 for Permitted Equity Rights: (x) each of the Company and its
Subsidiaries (other than Unrestricted Subsidiaries) owns, free and clear of
Liens (other than Liens permitted by Section 8.06(c) hereof, Liens disclosed on
Part B of Schedule I attached hereto, and 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 attached hereto, (y) all of the issued and outstanding capital stock of
each Person organized as a corporation, is validly issued, fully paid and
non-assessable 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 Effective Date, of all Investments (other than
Investments disclosed in Part A of said Schedule III hereto) held by the
Company or any of its Subsidiaries (other than Unrestricted 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 permitted by
Section 8.06(c) hereof and Liens created pursuant to the Security Documents),
all such Investments.
(c) None of the Subsidiaries (other than Unrestricted
Subsidiaries) of the Company is, on the Effective Date, subject to any
indenture, agreement, instrument or other arrangement of the type described in
Section 8.17(b) hereof, except as permitted thereby.
P. 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.
Q. 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
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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.
R. 7.18 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 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.
S.
T. 7.19 YEAR 2000 PROBLEM. Any reprogramming required to permit the
proper functioning in and following the year 2000 of (i) the Company's or any
of its Subsidiaries' computer systems and (ii) any necessary equipment of the
Company or any of its Subsidiaries containing embedded microchips (including
systems and equipment supplied by any other Person with which such Company's or
Subsidiary's systems interface) and the testing of all such systems and
equipment as so reprogrammed, will be completed by July 1, 1999. The cost to
the Company and its Subsidiaries of such reprogramming and testing and the
reasonably foreseeable consequences of the year 2000 to the Company and its
Subsidiaries (including, without limitation, reprogramming errors and failure
of the systems or equipment of such other Person) will not result in a Default
or a Material Adverse Effect. Except for such of the reprogramming referred to
in the preceding sentence as may be necessary, the computer and management
information systems of the Company and its Subsidiaries are and, with ordinary
course upgrading and maintenance, will continue for the term of this Agreement
to be, sufficient to permit the Company and its Subsidiaries to conduct its
business without Material Adverse Effect.
NOTE
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IX. 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:
A. 8.01 FINANCIAL STATEMENTS, ETC. The Company shall deliver to the
Agent and to each of the Lenders:
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarterly fiscal periods of each fiscal year of
the Company, (i) (A) consolidated statements of income and cash flows of the
Company and its Subsidiaries, (B) consolidated statements of income and cash
flows of the Company and its Subsidiaries (but excluding Unrestricted
Subsidiaries), in each case for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and (C)
consolidating statements of income of the Company and its directly owned
Subsidiaries combined in significant groups for such period, and (ii) (A) the
related consolidated and consolidating balance sheet of the Company and its
Subsidiaries and (B) the related consolidated balance sheet of the Company and
its Subsidiaries (but excluding Unrestricted Subsidiaries), in each case as at
the end of such period, setting forth in each case (other than consolidating
statements) 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 or of the Company and its Subsidiaries (but
excluding Unrestricted Subsidiaries), as the case may be, and said
consolidating financial statements fairly present the respective unconsolidated
financial condition and results of operations of the Company and each group of
such Subsidiaries, in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such period (subject to normal
yearend audit adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company:
(i)(A) consolidated statements of income, stockholders' equity and
cash flows of the Company and its Subsidiaries for such fiscal year and
(B) 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 and
NOTE
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(ii)(A)(I) consolidated statements of income and cash flows of the
Company and its Subsidiaries (but excluding Unrestricted Subsidiaries)
and (II) consolidating statements of income of the Company and its
directly owned Subsidiaries combined in significant groups, in each case
for such fiscal year, and (B) (I) the related consolidating balance sheet
of the Company and its directly owned Subsidiaries combined in
significant groups and (II) the related consolidated balance sheet of the
Company and its Subsidiaries (but excluding Unrestricted Subsidiaries),
in each case as at the end of such fiscal year, setting forth in each
case (other than consolidating statements) in comparative form the
corresponding consolidated figures for 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 or of the
Company and its Subsidiaries (but excluding Unrestricted Subsidiaries),
as the case may be, and said consolidating financial statements fairly
present the respective unconsolidated financial condition and results of
operations of the Company and each group of such Subsidiaries, in
accordance with generally accepted accounting principles, consistently
applied, as at the end of, and for, such period (subject to normal
yearend audit adjustments)
(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, 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;
NOTE
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(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;
(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 the Company and for each significant group of directly owned Subsidiaries
of the Company the consolidated and consolidating (combined in significant
groups) statements of anticipated income and cash flows for each quarter during
such fiscal year; 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
NOTE
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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 and 8.13 hereof
as of the end of the respective quarterly fiscal period or fiscal year.
B. 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 noncompliance 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.
C. 8.03 EXISTENCE, ETC. The Company will, and will cause each of its
Subsidiaries (other than Unrestricted 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;
(d) maintain all of its Properties used or useful in its business
in good working order and condition, ordinary wear and tear excepted;
NOTE
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(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) upon reasonable prior notice, 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).
D. 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.
On or before the Effective Date, the Company will deliver, to the
extent not previously delivered, to the Agent certificates of insurance
satisfactory to the Agent evidencing the existence of all insurance required to
be maintained by the Company hereunder and setting forth the respective
coverages, limits of liability, carrier, policy number and period of coverage.
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.
E. 8.05 PROHIBITION OF FUNDAMENTAL CHANGES. (a) The Company will
not, nor will it permit any of its Subsidiaries (other than Unrestricted
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 (other than Unrestricted 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; and
(iii) Permitted Acquisitions.
(c) The Company will not, nor will it permit any of its
Subsidiaries (other than Unrestricted 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:
NOTE
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(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
$10,000,000;
(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 ten percent
of the fair market value of the total assets of the Company and its
Subsidiaries (but excluding assets of Unrestricted Subsidiaries) owned on
the first day of such fiscal year.
(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 (including, with
the consent of the Majority Lenders, an Unrestricted Subsidiary);
(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
(including, with the consent of the Majority Lenders, an Unrestricted
Subsidiary); and
(iii) any Unrestricted Subsidiary may be sold, liquidated, wound
up or dissolved, or may sell, lease, transfer or otherwise dispose of any
or all of its Property.
F. 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;
NOTE
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(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;
(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
$10,000,000 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
NOTE
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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 Company or its
Subsidiaries 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 Person;
(l) protective Uniform Commercial Code filings with respect to
personal Property leased by, or consigned to, any of the Company or its
Subsidiaries;
(m) Liens securing Indebtedness of up to $75,000,000 in aggregate
principal amount at any one time outstanding which Indebtedness is permitted
under Section 8.07(g) hereof;
(n) Liens upon Property of Unrestricted Subsidiaries; and
(o) 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.
G. 8.07 INDEBTEDNESS. The Company will not, nor will it permit any of
its Subsidiaries (other than Unrestricted Subsidiaries) to, create, incur or
suffer to exist any Indebtedness except:
(a) Indebtedness to the Lenders hereunder and under the other Loan
Documents;
(b) Indebtedness outstanding on the date hereof and listed in Part
A or Part C of Schedule I hereto and any Indebtedness issued or incurred to
refinance such Indebtedness, provided, however, that the principal amount
thereof shall not be increased;
(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), 8.08(g) or 8.08(j)
hereof;
(d) Indebtedness (including Capital Lease Obligations) incurred to
finance the purchase of equipment, and other Capital Lease Obligations, not to
exceed $60,000,000 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 aggregate
amount not exceeding $5,000,000 at any one time outstanding;
NOTE
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(f) Indebtedness in respect of (i) certain irrevocable letters of
credit outstanding on the Effective Date issued by Fleet National Bank,
BankBoston, N.A., Michigan National Bank, Old Kent Bank, Bank of America,
Nevada and NationsBank of Texas, N.A., respectively, and described in Part C of
Schedule I hereto and (ii) letters of credit outstanding from time to time
issued by First Union National Bank, provided that the aggregate face amount
thereof shall not exceed $5,000,000 at any one time outstanding; and
(g) additional Indebtedness of the Company and its Subsidiaries up
to but not exceeding $75,000,000 at any one time outstanding.
H. 8.08 INVESTMENTS. The Company will not, nor will it permit any of
its Subsidiaries (other than Unrestricted 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;
(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 (other than
Unrestricted Subsidiaries) or by any Subsidiary of the Company in the Company
or any other Subsidiary of the Company (other than Unrestricted Subsidiaries);
(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 $10,000,000 in
the aggregate;
(j) additional Investments up to but not exceeding $45,000,000 in
the aggregate during 1998, and up to but not exceeding $30,000,000 in the
aggregate during each year thereafter, including Investments in Unrestricted
Subsidiaries;
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(k) Investments by the Company or any of its Subsidiaries, each of
which (A) existed before the time of acquisition of the Person or Property of
the Person who made such Investment and (B) was not made in anticipation of
such acquisition; and
(l) any guarantees permitted under Section 8.07 hereof.
I. 8.09 [INTENTIONALLY LEFT BLANK]
J. 8.10 LEVERAGE RATIO. The Company will not permit the Leverage
Ratio to exceed 3.25 to 1 at any time.
K. 8.11 MINIMUM NET WORTH. The Company will not permit its Net Worth
at any time to be less than $900,000,000 plus 50% of net income (excluding net
income of Unrestricted Subsidiaries) 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, 1998. The amount of
required 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 April 1,
1998 (other than increases to the extent such increases result from an offering
in connection with the acquisition of an Unrestricted Subsidiary). 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.
L. 8.12 [INTENTIONALLY LEFT BLANK]
M. 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.
N. 8.14 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 coffee, dairy products, fruit juices or bottled water, the
manufacture and distribution of packaging materials for petroleum products,
food and household products, the performance of engineering and environmental
services currently conducted by Lockwood, Kessler & Bartlett, Inc., and its
Subsidiaries (provided that such services are conducted by neither the Company
nor any of its Subsidiaries other than Lockwood, Kessler & Bartlett, Inc., and
its Subsidiaries and their successors) or the lines of business conducted by
the Company or any of its Subsidiaries as of the Effective Date or which are
related thereto.
O. 8.15 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 other than Investments permitted under Section 8.08 hereof; (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
NOTE
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(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 (other than Unrestricted Subsidiaries) as the monetary or business
consideration that would obtain in a comparable transaction with a Person not
an Affiliate.
P. 8.16 USE OF PROCEEDS. The Company will use the proceeds of the
Loans to be made at any time hereunder solely to repay Indebtedness outstanding
under the Existing Credit Agreement, for working capital or for other general
corporate purposes (including, without limitation, to finance Permitted
Acquisitions). 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.
Q. 8.17 CERTAIN OBLIGATIONS RESPECTING SUBSIDIARIES.
(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 (other than Suiza Capital Trust, Suiza Capital Trust II and
any Unrestricted Subsidiary) is a Wholly Owned Subsidiary, except for (i)
issuances of capital stock upon exercise of warrants outstanding on the
Effective Date and other issuances of capital stock to Alan M. Bernon or Peter
J. Bernon, or both, to permit them to own in the aggregate up to 17-1/2% of the
outstanding capital stock of Franklin Plastics, Inc., a Delaware corporation,
and (ii) as otherwise may be permitted or agreed in connection with a Permitted
Acquisition. In the event that any additional shares of stock, partnership or
other ownership interests (including, without limitation, warrants, options or
other securities convertible into ownership interests) shall be issued by any
Subsidiary (other than an Unrestricted Subsidiary) to an Obligor, the
respective Obligor agrees forthwith to deliver to the Agent pursuant to the
Security Agreement, Subsidiary Guarantee and Security Agreement or a pledge
agreement in form and substance satisfactory to the Agent all (or, in the case
of a Foreign Subsidiary, upon the request of the Agent up to 65% of such
ownership interest acquired) of the certificates evidencing such shares of
stock, partnership or other ownership interests (including, without limitation,
warrants, options or other securities convertible into ownership interests)
accompanied by undated stock powers or forms of transfer executed in blank and
to take such other action including, without limitation, (A) supplementing the
Security Agreement and/or supplementing the Subsidiary Guarantee and Security
Agreement in a manner and in form and substance satisfactory to the Agent, (B)
delivering to the Agent 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 (C) filing
appropriately completed and duly executed copies of Uniform Commercial Code
Financing Statements, as the Agent shall request to perfect the security
interest created therein pursuant to such Security Document.
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(b) The Company will not permit any of its Subsidiaries (other
than Unrestricted Subsidiaries) to enter into, after the date of this
Agreement, any indenture, agreement, instrument or other arrangement 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; provided, that the
foregoing shall not apply to (i) restrictions and conditions imposed by law or
by this Agreement, (ii) customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary or Property pending such sale,
provided such restrictions and conditions apply only to the Subsidiary or
Property that is to be sold and such sale is permitted hereunder, (iii)
restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the Property securing such Indebtedness, (iv) restrictions or
conditions as the result of the issuance of preferred stock by a Subsidiary
pursuant to currently outstanding warrants for the acquisition thereof, (v)
customary provisions in leases and other contracts restricting the assignment
thereof, (vi) restrictions set forth in the Franklin Plastics Stockholders
Agreement, (vii) restrictions set forth in the Amended and Restated Operating
Agreement of Land-O-Sun Dairies, L.L.C., a Delaware limited liability company,
with respect to the terms and conditions of the LOS Preferred Member Interests,
(viii) restrictions set forth in any trust or other indenture executed by Suiza
Capital Trust or Suiza Capital Trust II in connection with the issuance of the
Trust Issued Securities, and (ix) any indenture agreement, instrument or other
arrangement relating to the assets or business of any Subsidiary and existing
prior to the consummation of the Permitted Acquisition in which such Subsidiary
was acquired.
(c) The Company will take such action, and will cause each of its
Subsidiaries (other than Garrido, any Foreign Subsidiary, Suiza Capital Trust
II, any Unrestricted Subsidiary and any Subsidiary having no material assets
formed with the intent of merging with or into a Person that will be a
Subsidiary subject to this provision) to take such action, from time to time as
shall be necessary to ensure that all such Subsidiaries of the Company are
party to, as Obligors, the Subsidiary Guarantee and Security Agreement. Except
as set forth above and without otherwise limiting the generality of the
foregoing, in the event that the Company or any of its Subsidiaries shall form
or acquire any new Subsidiary other than a Foreign Subsidiary or an
Unrestricted Subsidiary or a Subsidiary hereafter formed to issue Trust Issued
Securities, the Company or the respective Subsidiary will cause such new
Subsidiary to (i) become a party to the Subsidiary Guarantee and Security
Agreement pursuant to a Joinder Agreement substantially in the form of Exhibit
C-1 hereto or other written instrument in form and substance satisfactory to
the Agent, (ii) pledge all of its ownership interests (including, without
limitation, warrants, options or other securities convertible into ownership
interests) in its Subsidiaries and Affiliates, if any, to the Agent for the
benefit of the Lenders, except as otherwise provided herein and provided,
however, that, upon the request of the Agent such Supplemental Guarantor shall
pledge up to 65% of its ownership interests (including, without limitation,
warrants, options or other securities convertible into ownership interests) in
any Foreign Subsidiary; and provided, further, that any Subsidiary not required
to become a party to a Joinder Agreement hereunder shall pledge any ownership
interests acquired (but, in the case of a Foreign Subsidiary, upon the
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request of the Agent up to 65% of such ownership interests, and other than
interests in an Unrestricted Subsidiary) to the Agent for the benefit of the
Lenders pursuant to an instrument in form and substance satisfactory to the
Agent and (iii) take such other action, including without limitation, (A)
delivering such proof of corporate action, incumbency of officers, opinions of
counsel and other documents relating to the foregoing as the Agent shall
reasonably request, (B) delivering to the Agent 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 (C) such other documents or instruments as any Lender or the Agent
shall have reasonably requested.
R. 8.18 MODIFICATIONS OF CERTAIN DOCUMENTS. The Company will furnish
to the Agent a copy of each modification, supplement or waiver of any
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
promptly upon the effectiveness thereof (and the Agent will promptly furnish a
copy thereof to each Lender). Without the consent of the Agent (with the
approval of the Majority Lenders), the Company will not, nor will it permit any
of its Subsidiaries to, consent to any modification, supplement or waiver of
any of the material provisions of (i) the Indenture providing for the issuance
by the Company of 5% Convertible Subordinated Debentures due 2018 in an
aggregate principal amount equal to $100,000,000; (ii) the Amended and Restated
Declaration of Trust of Suiza Capital Trust; (iii) the Amended and Restated
Declaration of Trust of Suiza Capital Trust II; (iv) the terms of any Trust
Issued Securities, as in effect on the date of issuance thereof; and (v) the
Indenture providing for the issuance by the Company of 5 1/2% Trust Convertible
Subordinated Debentures due 2028 in an aggregate principal amount equal to
$618,556,750.
X. 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 otherwise); 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 when due and such default shall have continued unremedied
for three or more Business Days; or
(b) The Company or any of its Subsidiaries (other than an
Unrestricted Subsidiary) shall default in the payment when due of any principal
of or interest on any of its other Indebtedness aggregating $10,000,000 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
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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
(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, 8.10, 8.11,
8.13, 8.14, 8.15 or 8.17 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 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 (other than an
Unrestricted Subsidiary) 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 (other than an
Unrestricted Subsidiary) 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 (other than an
Unrestricted 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,
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or (iii) similar relief in respect of the 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 $10,000,000 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 (other than an
Unrestricted Subsidiary) 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) 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
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(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, 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
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.
XI. SECTION 10. THE AGENT
A. 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
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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.
B. 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.
C. 10.03 DEFAULTS. The Agent shall not be deemed to have knowledge
or notice of the occurrence of a Default (other than a failure by the Company
to pay when due any principal of or interest on the Loans) 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
Company fails to pay when due any principal of or interest on the Loans or 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 failure or 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
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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.
D. 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.
E. 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, 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, 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.
F. 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
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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.
G. 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.
H. 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 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.
I. 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 June 30, 1998 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.
J. 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 the Agent may (without any such prior consent), consent to
amendments of the Security Documents which merely increase the collateral
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security provided and provided, further, 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.
K. 10.11 SYNDICATION AGENT. The Syndication Agent named on the cover
page of this Agreement shall have no duties, obligations or responsibilities
hereunder except in its capacity as a Lender.
XII. SECTION 11. MISCELLANEOUS
A. 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.
B. 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 (a) if to the Company or
to the Agent at the "Address for Notices" specified below its name on the
signature pages hereof or (b) if to any Lender at the address (or telecopy
number) set forth in such Lender's Administrative Questionnaire; 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.
C. 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) 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; and (c) all
NOTE
<PAGE> 81
-76-
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.
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 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 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 of the Company and its Subsidiaries 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.
D. 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
NOTE
<PAGE> 82
-77-
by an instrument signed by all of the Lenders or by the Agent acting with the
consent of all of the Lenders: (i) 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, or (viii) waive any of the conditions
precedent set forth in Section 6.01 hereof, (b) any increase in, or extension
of the term of, the Commitment of any Lender shall require the consent of such
Lender and (c) any modification of any of the rights or obligations of the
Agent or any Issuing Bank shall require the consent of the Agent or such
Issuing Bank, as the case may be.
E. 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.
F. 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 Note, its
Commitment and its Letter of Credit Interest with the consent of the Company
and the Agent, and in the case of the Commitment or the Letter of Credit
Interest, each Issuing Bank (which consents shall not be unreasonably withheld)
pursuant to an Assignment and Acceptance substantially in the form of Exhibit G
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
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; and
(iii) any such assignment of less than all of such Lender's
interests in the Loans, Note and Commitment, 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 Banks of such Assignment and Acceptance,
and upon consent thereto by the Company, the Agent and Issuing Bank, to the
extent required above, the assignee shall have,
NOTE
<PAGE> 83
-78-
to the extent of such assignment, the obligations, rights and benefits of a
Lender hereunder holding the Commitment 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, 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 (or portion(s) thereof) so assigned. Upon each such assignment
(other than an assignment required under Section 5.07 hereof) 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 Commitment, 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
Commitment 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 Commitment, shall be determined as if
such Lender had not sold or agreed to sell any participations in such Loans,
Letter of Credit Interests and Commitment, and as if such Lender were funding
each of such Loans, Letter of Credit Interests and Commitment in the same way
that it is funding the portion of such Loans, Letter of Credit Interests and
Commitment 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, 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 (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, Note and/or Letter
of Credit Interests to any Federal Reserve Bank as
NOTE
<PAGE> 84
-79-
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, Note 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. 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 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.
H. 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.
I. 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.
J. 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
NOTE
<PAGE> 85
-80-
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 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.
K. 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.
L. 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 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
NOTE
<PAGE> 86
-81-
nonpublic 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 F 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 F hereto shall be superseded
by this Section 11.12 upon the date upon which such assignee becomes a Lender
hereunder pursuant to Sections 2.03(c), 2.10 or 11.06 hereof.
NOTE
<PAGE> 87
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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Credit Agreement to be duly executed and delivered as of the day and year first
above written.
COMPANY
-------
SUIZA FOODS CORPORATION
By: /s/ J. MICHAEL LEWIS
---------------------------------
Title: Vice President
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
NOTE
<PAGE> 88
-83-
LENDERS
<TABLE>
<S> <C>
Commitment FIRST UNION NATIONAL BANK
- ----------
/s/ JORGE GONZALEZ
----------------------------
$50,000,000 By: Jorge Gonzalez
Title: Senior Vice President
Commitment THE FIRST NATIONAL BANK OF
- ----------
CHICAGO
/s/ JAMES F. GABBA
----------------------------
$50,000,000 By: James F. Gabba
Title: Customer Service Officer
Commitment BANK OF AMERICA NT&SA
- ----------
/s/ W. THOMAS BARNETT
----------------------------
$40,000,000 By: W. Thomas Barnett
Title: Managing Director
Commitment NATIONSBANK, N.A.
- ----------
/s/ THOMAS J. BUTKAS
----------------------------
$40,000,000 By: Thomas J. Butkas
Title: Vice President
Commitment BANCO POPULAR DE PUERTO RICO
- ----------
/s/ HECTOR A. VINA
----------------------------
$36,000,000 By: Hector A. Vina
Title: Vice President
/s/ KAREN HAMILTON
----------------------------
By: Karen Hamilton
Title: Vice President
</TABLE>
NOTE
<PAGE> 89
-84-
<TABLE>
<S> <C>
Commitment THE BANK OF NOVA SCOTIA
- ----------
/s/ F.C.H. ASHBY
----------------------------
$36,000,000 By: F.C.H. Ashby
Title: Senior Manager Loan Operations
Commitment THE BANK OF TOKYO - MITSUBISHI,
- ----------
LTD., HOUSTON AGENCY
/s/ DOUGLAS M. BARNELL
----------------------------
$36,000,000 By: Douglas M. Barnell
Title: Vice President
Commitment CREDIT AGRICOLE INDOSUEZ
- ----------
/s/ KATHERINE L. ABBOTT
----------------------------
$36,000,000 By: Katherine L. Abbott
Title: First Vice President
/s/ W. LEROY STARTZ
----------------------------
By: W. Leroy Startz
Title: First Vice President
Commitment CREDIT LYONNAIS NEW YORK BRANCH
- ----------
/s/ ROBERT IVOSEVICH
----------------------------
$36,000,000 By: Robert Ivosevich
Title: Senior Vice President
Commitment FLEET NATIONAL BANK
- ----------
/s/ STEVE KALIN
----------------------------
$36,000,000 By: Steve Kalin
Title: Vice President
Commitment WELLS FARGO BANK (TEXAS) N.A.
- -----------
/s/ BRENT BERTINO
----------------------------
$36,000,000 By: Brent Bertino
Title: Assistant Vice President
</TABLE>
NOTE
<PAGE> 90
-85-
<TABLE>
<S> <C>
Commitment CIBC INC.
- ----------
/s/ CHERYL ROOT
----------------------------
$32,000,000 By: Cheryl Root
Title: Executive Director
Commitment COMPAGNIE FINANCIERE DE
- ---------- CIC ET DE L'UNION EUROPEENNE
/s/ BRIAN O'LEARY
----------------------------
$32,000,000 By: Brian O'Leary
Title: Vice President
/s/ ANTHONY ROCK
----------------------------
By: Anthony Rock
Title: Vice President
Commitment COOPERATIEVE CENTRALE RAIFFEISEN-
- ---------- BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
/s/ W PIETER C. KODDE
----------------------------
$32,000,000 By: W Pieter C. Kodde
Title: Vice President
/s/ M. CHRISTINA DEBLER
----------------------------
By: M. Christina Debler
Title: Vice President
Commitment HARRIS TRUST AND SAVINGS BANK
- ----------
/s/ KAREN L. KNUDSEN
----------------------------
$32,000,000 By: Karen L. Knudsen
Title: Vice President
</TABLE>
NOTE
<PAGE> 91
-86-
<TABLE>
<S> <C>
Commitment SOCIETE GENERALE, SOUTHWEST
- ---------- AGENCY
/s/ CHRISTOPHER J. SPELTZ
----------------------------
$32,000,000 By: Christopher J. Speltz
Title: Director
Commitment AMSOUTH BANK
- ----------
/s/ MARY ANN RABURN
----------------------------
$24,000,000 By: Mary Ann Raburn
Title: Vice President
Commitment BANK ONE, TEXAS, N.A.
- ----------
/s/ CHRIS W. HOLDER
----------------------------
$24,000,000 By: Chris W. Holder
Title: Vice President
Commitment BANKBOSTON N.A.
- ----------
/s/ ESTEBAN ARRONDO
----------------------------
$24,000,000 By: Esteban Arrondo
Title: Vice President
Commitment BANQUE NATIONALE DE PARIS
- ----------
HOUSTON AGENCY
/s/ DAVID CAMP
----------------------------
$24,000,000 By: David Camp
Title: Assistant Vice President
</TABLE>
NOTE
<PAGE> 92
-87-
<TABLE>
<S> <C>
Commitment BHF-BANK AKTIENGESELLSCHAFT
- ----------
/s/ JOHN SYKES
----------------------------
$24,000,000 By: John Sykes
Title: Vice President
/s/ THOMAS J. SCIFO
----------------------------
By: Thomas J. Scifo
Title: Assistant Vice President
Commitment THE INDUSTRIAL BANK OF JAPAN,
- ----------
LIMITED
/s/ WALTER WOLFF
----------------------------
$24,000,000 By: Walter Wolff
Title: Senior Vice President
Commitment THE LONG-TERM CREDIT BANK OF
- ----------
JAPAN, LIMITED
/s/ SADAO MURAOKA
----------------------------
$24,000,000 By: Sadao Muraoka
Title: Head of Southwest Region
Commitment MELLON BANK, N.A.
- ----------
/s/ MARTIN J. RANDAL
----------------------------
$24,000,000 By: Martin J. Randal
Title: Assistant Vice President
Commitment THE MITSUBISHI TRUST AND BANKING
- ----------
CORPORATION
/s/ MR. NOBUO TOMINAGA
----------------------------
$24,000,000 By: Mr. Nobuo Tominaga
Title: Chief Manager
</TABLE>
NOTE
<PAGE> 93
-88-
<TABLE>
<S> <C>
Commitment NATEXIS BANQUE BFCE
- ----------
/s/ MARK A. HARRINGTON
----------------------------
$24,000,000 By: Mark A. Harrington
Title: Vice President and Regional Manager
/s/ PAUL H. DIOURI
----------------------------
By: Paul H. Diouri
Title: Assistant Treasurer
Commitment NATIONAL CITY BANK OF KENTUCKY
- ----------
/s/ DONALD PULLEN
----------------------------
$24,000,000 By: Donald Pullen
Title: Vice President
Commitment THE ROYAL BANK OF SCOTLAND PLC
- ----------
/s/ DEREK BONNAR
----------------------------
$24,000,000 By: Derek Bonnar
Title: Vice President
Commitment THE SANWA BANK, LIMITED,
- ----------
NEW YORK BRANCH
/s/ CHRISTOPHER DICARLO
----------------------------
$24,000,000 By: Christopher DiCarlo
Title: Assistant Vice President
Commitment THE SUMITOMO TRUST & BANKING CO.
- ----------
LTD., NEW YORK BRANCH
/s/ SURAJ P. BHATIA
----------------------------
$24,000,000 By: Suraj P. Bhatia
Title: Senior Vice President
</TABLE>
NOTE
<PAGE> 94
-89-
<TABLE>
<S> <C>
Commitment SUNTRUST BANK, ATLANTA
- ----------
/s/ F. STEVEN PARRISH
----------------------------
$24,000,000 By: F. Steven Parrish
Title: Vice President
/s/ WILLIAM J.R. MAYFIELD
----------------------------
By: William J.R. Mayfield
Title: Vice President
Commitment THE TOKAI BANK, NEW YORK BRANCH
- ----------
/s/ SHINICHI NAKATANI
----------------------------
$24,000,000 By: Shinichi Nakatani
Title: Assistant General Manager
Commitment THE TOYO TRUST & BANKING CO., LTD.
- ----------
/s/ T. MIKUMO
----------------------------
$24,000,000 By: T. Mikumo
Title: Vice President
</TABLE>
NOTE
<PAGE> 95
-90-
AGENT
-----
FIRST UNION NATIONAL BANK,
as Agent
/s/ JORGE GONZALEZ
----------------------------
By: Jorge Gonzalez
Title: Senior Vice President
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
NOTE
<PAGE> 1
EXHIBIT 11 - Statement re computation of per share earnings
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
(In thousands, except share and per-share amounts)
<S> <C> <C> <C> <C>
Calculation of basic earnings per share:
Income from continuing operations $ 29,630 $ 16,263 $ 47,683 $ 38,668
Less preferred stock dividends (75) (75) (162) (150)
------------ ------------ ------------ ------------
Income from continuing operations applicable to
common stock $ 29,555 $ 16,188 $ 47,521 $ 38,518
============ ============ ============ ============
Total weighted average shares outstanding 32,516,846 29,545,871 31,645,463 28,789,948
============ ============ ============ ============
Basic EPS from continuing operations $ 0.91 $ 0.55 $ 1.50 $ 1.34
============ ============ ============ ============
Calculation of diluted earnings per share:
Income from continuing operations $ 29,630 $ 16,263 $ 47,683 $ 38,668
Less preferred stock dividends (75) (75) (162) (150)
Net effect on earnings from conversion of mandatorily
redeemable convertible preferred securities 5,981 6,755
------------ ------------ ------------ ------------
Income from continuing operations applicable to
common stock $ 35,536 $ 16,188 $ 54,276 $ 38,518
============ ============ ============ ============
Weighted average shares outstanding 32,516,846 29,545,871 31,645,463 28,789,948
Stock option conversion 1,969,220 1,796,192 2,165,329 1,628,454
Dilutive effect of conversion of mandatorily redeemable
convertible preferred securities 9,096,303 5,219,999
------------ ------------ ------------ ------------
Total weighted average shares outstanding 43,582,369 31,342,063 39,030,791 30,418,402
============ ============ ============ ============
Diluted EPS from continuing operations $ 0.82 $ 0.52 $ 1.39 $ 1.27
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
FINANCIAL STATEMENTS FOR THE 6-MONTH PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
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682,646
3,741
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