LOAN AND SECURITY AGREEMENT
by and among
NORTHLAND CRANBERRIES, INC.
as Borrower,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent
Dated as of November 6, 2001
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of
November 6, 2001, between and among, on the one hand, Foothill Capital
Corporation and Ableco Finance LLC and the other lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a California
corporation, as the arranger and administrative agent for the Lenders ("Agent"),
and, on the other hand, NORTHLAND CRANBERRIES, INC., a Wisconsin corporation
("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have
the following definitions:
"Ableco" shall mean Ableco Finance LLC, a Delaware limited liability
company.
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.
"Accounts" means all of Borrower's now owned or hereafter acquired
right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect
thereof.
"Additional Documents" has the meaning set forth in Section 4.4.
"Adjusted Letter of Credit Usage" means, as of the date of
determination, the sum of (a) 100% of the undrawn amount of all outstanding
Letters of Credit, plus (b) 100% of the amount of outstanding time drafts
accepted by an Underlying Issuer as a result of drawings under Underlying
Letters of Credit.
"Adjusted Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the
then extant amount of the Adjusted Letter of Credit Usage.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means
the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of
Stock, by contract, or otherwise; provided, however, that, in any event:
(a) any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or
other members of the governing body of a Person or 10% or more of the
partnership
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or other ownership interests of a Person (other than as a limited partner
of such Person) shall be deemed to control such Person, (b) each director
(or comparable manager) of a Person shall be deemed to be an Affiliate of
such Person, and (c) each partnership or joint venture in which a Person is
a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agent" means Foothill, solely in its capacity as agent for the
Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by Agent from
time to time as the account into which Borrower shall make all payments to
Agent for the benefit of the Lender Group and into which the Lender Group
shall make all payments to Agent under this Agreement and the other Loan
Documents; unless and until Agent notifies Borrower and the Lender Group to
the contrary, Agent's Account shall be that certain deposit account bearing
account number 323-266193 and maintained by Agent with The Chase Manhattan
Bank, 4 New York Plaza, 15th Floor, New York, New York 10004, ABA
#021000021.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Liens" means the Liens granted by Borrower to Agent for the
benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period of time from and
after the date of the execution and delivery of this Agreement up to the
date that is the first anniversary of the Closing Date, 5% multiplied by
the sum of the Maximum Revolver Amount plus the then outstanding balance of
the Term Loans, (b) during the period of time from and including the date
that is the first anniversary of the Closing Date up to the date that is
the second anniversary of the Closing Date, 4% multiplied by the sum of the
Maximum Revolver Amount plus the then outstanding balance of the Term
Loans, (c) during the period of time from and including the date that is
the second anniversary of the Closing Date up to the date that is the third
anniversary of the Closing Date, 3% multiplied by the sum of the Maximum
Revolver Amount plus the then outstanding balance of the Term Loans, (d)
during the period of time from and including the date that is the third
anniversary of the Closing Date up to the date that is the fourth
anniversary of the Closing Date, 2% multiplied by the sum of the Maximum
Revolver Amount plus the then outstanding balance of the Term Loans, and
(e) during the period of time from and including the date that is the
fourth anniversary of the Closing Date up to the Maturity Date, 1%
multiplied by the sum of the Maximum Revolver Amount plus the then
outstanding balance of the Term Loans.
"Assignee" has the meaning set forth in Section 14.1.
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"Assignment and Acceptance" means an Assignment and Acceptance in the
form of Exhibit A-1.
"Authorized Person" means any officer or other employee of Borrower.
"Availability" means, as of any date of determination, if such date is
a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business
Day, the amount that Borrower is entitled to borrow as Advances under
Section 2.1 (after giving effect to all then outstanding Obligations and
all sublimits and reserves applicable hereunder).
"Bankruptcy Code" means the United States Bankruptcy Code, as in
effect from time to time.
"Base Rate" means, the rate of interest announced within Wells Fargo
at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in
such internal publication or publications as Wells Fargo may designate.
"Base Rate Margin" means one (1%) percentage point.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of
Borrower has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Borrower or any committee thereof duly authorized to act on
behalf of the board.
"Books" means Borrower's now owned or hereafter acquired books and
records (including all of its Records indicating, summarizing, or
evidencing its assets (including the Collateral) or liabilities, all of its
Records relating to its business operations or financial condition, and all
of its goods or General Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances (or
term loans, in the case of the Term Loans) made on the same day by the
Lenders (or Agent on behalf thereof) or by Swing Lender in the case of a
Swing Loan, or by Agent in the case of an Agent Advance.
"Borrowing Base" has the meaning set forth in Section 2.1.
"Borrowing Base Certificate" means a certificate in the form of
Exhibit B-1.
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which national banks are authorized or required to close.
"Capital Lease" means a lease that is required to be capitalized for
financial
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reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable 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 1 year from the date of acquisition thereof and, at
the time of acquisition, having the highest rating obtainable from either
S&P or Moody's, (c) commercial paper maturing no more than 1 year from the
date of acquisition thereof and, at the time of acquisition, having a
rating of A-1 or P-1, or better, from S&P or Moody's, and (d) certificates
of deposit or bankers' acceptances maturing within 1 year from the date of
acquisition thereof either (i) issued by any bank organized under the laws
of the United States or any state thereof which bank has a rating of A or
A2, or better, from S&P or Moody's, or (ii) certificates of deposit less
than or equal to $100,000 in the aggregate issued by any other bank insured
by the Federal Deposit Insurance Corporation.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Cash Management Account" has the meaning set forth in Section 2.7(a).
"Cash Management Agreements" means those certain cash management
service agreements, in form and substance satisfactory to Agent, each of
which is among Borrower, Agent, and one of the Cash Management Banks.
"Change of Control" means (a) Sun Capital Partners II LP shall cease
to be the managing member of Sun Northland, LLC, or (b) Sun Northland, LLC
shall cease to own and control, beneficially and of record more than 50.1%
or more of the Stock of the Borrower, or (c) Borrower ceases to directly
own and control 100% of the outstanding capital Stock of each of its
Subsidiaries extant as of the Closing Date, except with respect to W.S.C.
Water Management Corp., Borrower ceases to directly own and control 66 2/3%
of the outstanding capital stock of such Subsidiary, subject to the rights
of Borrower under Section 7.3(b) to cause certain mergers, dissolutions or
other actions with respect to Borrower's Subsidiaries.
"Cliffstar Note" means the Promissory Note dated March8, 2000, in the
original principal amount of $28,000,000, payable by Cliffstar Corporation
to Borrower, as in effect on the date hereof.
"Closing Date" means the date of the making of the initial Advance (or
other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of Borrower
for the 3 year period following the Closing Date (on a year by year basis,
and for the 1 year period following the Closing Date, on a month by month
basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
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"Code" means the New York Uniform Commercial Code, as in effect from
time to time.
"Collateral" means all of Borrower's now owned or hereafter acquired
right, title, and interest in and to each of the following:
(a) Accounts,
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) Farm Products,
(j) money or other assets of Borrower that now or hereafter come into
the possession, custody, or control of any member of the Lender Group, and
(k) the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any
of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof;
notwithstanding anything to the contrary set forth in this definition of
Collateral, Collateral shall not include:
(i) the Excluded Collateral,
(ii) any rights or interests in any contract, lease, permit,
license, charter or license agreement covering real or personal
property, as such, if under the terms of such contract, lease, permit,
license, charter or license agreement, or applicable law with respect
thereto, the valid grant of a security interest or lien therein to
Agent is prohibited and such prohibition has not been or is not waived
or the consent of the other party to such contract, lease, permit,
license, charter or license agreement has not been or is not otherwise
obtained or under applicable law such prohibition cannot be waived;
provided, that, the foregoing exclusion shall in
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no way be construed (A) to apply if any such prohibition is
unenforceable under the UCC or other applicable law or (B) so as to
limit, impair or otherwise affect Agent's unconditional continuing
security interests in and liens upon any rights or interests of
Borrower in or to the proceeds thereof, including, without limitation,
monies due or to become due under any such contract, lease, permit,
license, charter or license agreement (including any Accounts), or
(iii) Principal payments on account of the Cliffstar Note and
"Earnout Amount" payments under and as defined in the Asset Purchase
Agreement by and between Borrower and Cliffstar Corporation dated
January 5, 2000 to the extent the aggregate of such payments actually
received by Agent exceeds $10,000,000.
"Collateral Access Agreement" means a landlord waiver, bailee letter,
or acknowledgment agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment, Inventory or Books constituting
Collateral, in each case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower.
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the
context requires, and, with respect to all Lenders, their Revolver
Commitments, their Term Loan Commitments, or their Total Commitments, as
the context requires, in each case as such Dollar amounts are set forth
beside such Lender's name under the applicable heading on Schedule C-1 or
on the signature page of the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder in accordance with the provisions of
Section 14.1.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of Borrower to
Agent.
"Concentrate Cash Cost" means, per gallon, (A) the sum of (i) Ocean
Spray's lowest base pool price for raw cranberries for the immediately
preceding harvest, plus (ii) $3.00, plus (iii) Borrower's per barrel cost
(as determined by Agent) of hauling and storage of such frozen cranberries
prior to conversion to concentrate, divided by 1.5 (or such other factor as
Agent determines to be appropriate, provided that Agent may not decrease
such factor without the consent of the Required Lenders) plus (B) the per
gallon cost (as determined by Agent), to convert frozen cranberries into
such concentrate, including labor, overhead, manufacturing costs and
depreciation, and shall exclude, without limitation, all hauling and
storage after conversion into concentrate.
"Continuing Bank Group" means, individually and collectively, U.S.
Bank National Association, St. Francis Bank, F.S.B. and ARK CLO 2000-1
Limited.
"Continuing Bank Group Documents" means the Amended and Restated
Credit Agreement, by and among the Borrower and the Continuing Bank Group,
the Amended and Restated Security Agreement, by Borrower in favor of the
Continuing Bank Group and the Amended and Restated Collateral Pledge
Agreement, by Borrower in favor of the Continuing
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Bank Group, the Amended and Restated Mortgages and the Assignments of
Leases and Rents and Collateral Assignments of Rent by Borrower in favor of
the Continuing Bank Group, each dated as of the Closing Date, in form and
substance satisfactory to Agent in its sole discretion.
"Continuing Bank Group Intercreditor Agreement" means the
Intercreditor Agreement, dated as of the Closing Date between Agent and the
Continuing Bank Group, as amended.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Borrower on the Closing Date,
and (b) any individual who becomes a member of the Board of Directors after
the Closing Date if such individual was appointed or nominated for election
to the Board of Directors by a majority of the Continuing Directors, but
excluding any such individual originally proposed for election in
opposition to the Board of Directors in office at the Closing Date in an
actual or threatened election contest relating to the election of the
directors (or comparable managers) of Borrower (as such terms are used in
Rule 14a-11 under the Exchange Act) and whose initial assumption of office
resulted from such contest or the settlement thereof.
"Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower, Agent, and the
applicable securities intermediary with respect to a Securities Account or
bank with respect to a deposit account.
"Cranberry Concentrate Value" shall mean the Eligible Inventory of
Borrower consisting of gallons of cranberry concentrate, up to a maximum of
850,000 gallons at any time between October1st and December 31st and
between January 1st and the last day of February of each year, 675,000
gallons between March 1st and March 31st of each year, and 500,000 gallons
at all other times, multiplied, per gallon, by the lesser of (a) (i)
through April 30, 2002, the weighted average sale price for the immediately
preceding three (3) months, as determined by Agent, and (ii) thereafter the
lowest sales price per gallon for Borrower's sales of cranberry concentrate
in the immediately preceding three (3) months, and (b) the per gallon
Concentrate Cash Cost of such cranberry concentrate, in each case as
determined by Agent.
"Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account maintained by
Borrower.
"Default" means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance
(or other extension of credit) that it is required to make hereunder on the
date that it is required to do so hereunder.
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"Defaulting Lender Rate" means (a) the Base Rate for the first 3 days
from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means account number 754771517 of Borrower
maintained with Borrower's Designated Account Bank, or such other deposit
account of Borrower (located within the United States) that has been
designated as such, in writing, by Borrower to Agent.
"Designated Account Bank" means Firstar Bank, N.A., whose office is
located at Milwaukee, Wisconsin, and whose ABA number is 042000013.
"Dilution" means, as of any date of determination, a percentage, based
upon the experience of the immediately prior ninety (90) days, that is the
result of dividing the Dollar amount of (a) bad debt write-downs,
discounts, advertising allowances, credits, or other dilutive items with
respect to the Accounts during such period, by (b) Borrower's Collections
with respect to Accounts during such period (excluding extraordinary items)
plus the Dollar amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess
of 5%.
"Disbursement Letter" means an instructional letter executed and
delivered by Borrower to Agent regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory
to Agent.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by Agent's
counsel to Borrower, together with Borrower's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Borrower's and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains
and interest income, plus interest expense, income taxes, non-cash
nonrecurring, unusual or extraordinary losses and depreciation and
amortization for such period, as determined in accordance with GAAP.
"Eligible Accounts" means those Accounts created by Borrower in the
ordinary course of its business, that arise out of Borrower's sale of goods
or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrower in the Loan
Documents, and that are not excluded as ineligible by virtue of one or more
of the criteria set forth below; provided, however, that such criteria may
be fixed and revised from time to time by Agent in Agent's Permitted
Discretion to address the results of any audit performed by Agent from time
to time after the Closing Date. In determining the amount to be included,
Eligible Accounts shall be calculated net of customer deposits and
unapplied cash remitted to Borrower. Eligible Accounts shall not include
the following, except that:
(a) (i) Accounts that the Account Debtor has failed to pay within the
lesser of
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(A) 90 days of original invoice date and (B) 60 days of the due date, and
(ii) in the case of Accounts due and owing from up to any three (3) Account
Debtors, Accounts (on terms satisfactory to Agent) that the Account Debtor
has failed to pay within the lesser of (A) 120 days of original invoice
date and (B) 90 days of the due date and provided further that the
aggregate of Eligible Accounts under this Section (ii) shall not exceed
$588,000 at any time.
(b) Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of Borrower,
(d) Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a bill and hold, or any other terms by reason of which
the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
(f) Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States, or (ii) is
not organized under the laws of the United States or any state thereof, or
(iii) is the government of any foreign country or sovereign state, or of
any state, province, municipality, or other political subdivision thereof,
or of any department, agency, public corporation, or other instrumentality
thereof, unless (A) the Account is supported by an irrevocable letter of
credit satisfactory to Agent (as to form, substance, and issuer or domestic
confirming bank) that has been delivered to Agent and is directly drawable
by Agent, or (B) the Account is covered by credit insurance in form,
substance, and amount, and by an insurer, satisfactory to Agent,
(g) Accounts with respect to which the Account Debtor is either (i)
the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which
Borrower has complied, to the reasonable satisfaction of Agent, with the
Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the
United States (exclusive, however, of (y) Accounts owed by any state that
does not have a statutory counterpart to the Assignment of Claims Act, or
(z) Accounts owed by any state that does have a statutory counterpart to
the Assignment of Claims Act as to which Borrower has complied to Agent's
satisfaction) provided that Section (g) shall not apply to Accounts which
are otherwise Eligible Accounts and do not exceed $500,000 in the aggregate
at any time.
(h) Accounts with respect to which the Account Debtor is a creditor
of Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10% of all Eligible Accounts (or, in
the case of Tropicana Products, Inc., Wal-Mart Stores, Inc. and Nestle,
S.A., obligations owing to Borrower which, in the case of each
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of any two (2) such Account Debtors, exceed 15%, or in the case of any one
(1) such Account Debtor exceed 20%, or in the case of all such Account
Debtors exceed 45% in the aggregate, of all Eligible Accounts), to the
extent of the obligations owing by such Account Debtor in excess of such
percentage,
(j) Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as
to which Borrower has received notice of an imminent Insolvency Proceeding
or a material impairment of the financial condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is located in
the states of New Jersey or Minnesota (or any other state that requires a
creditor to file a business activity report or similar document in order to
bring suit or otherwise enforce its remedies against such Account Debtor in
the courts or through any judicial process of such state), unless Borrower
has qualified to do business in New Jersey or Minnesota, or such other
states, or has filed a business activities report with the applicable
division of taxation, the department of revenue, or with such other state
offices, as appropriate, for the then-current year, or is exempt from such
filing requirement,
(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and perfected first
priority Agent's Lien except as otherwise expressly permitted under Section
(g) above,
(n) Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to
the Account Debtor, or
(o) Accounts that represent the right to receive progress payments or
other advance billings that are due prior to the completion of performance
by Borrower of the subject contract for goods or services.
"Eligible Inventory" means Inventory consisting of first quality goods
held for sale in the ordinary course of Borrower's business located at one
of Borrower's business locations set forth on Schedule E-1 (or in-transit
between any such locations), that complies with each of the representations
and warranties respecting Eligible Inventory made by Borrower in the Loan
Documents and that is not excluded as ineligible by virtue of the one or
more of the criteria set forth below; provided, however, that such criteria
may be fixed and revised from time to time by Agent in Agent's Permitted
Discretion to address the results of any audit or appraisal performed by
Agent from time to time after the Closing Date. Borrower may revise
Schedule E-1, in a manner reasonably acceptable to Agent, upon not less
than twenty (20) days advance written notice to Agent. In determining the
amount to be so included, Inventory shall be valued at the lower of cost
(subject to the other terms and provisions of this Agreement with respect
to calculation of cost) or market on a basis consistent with Borrower's
historical accounting practices. An item of Inventory shall not be included
in Eligible Inventory if:
(a) Borrower does not have good, valid, and marketable title thereto,
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(b) it is not located at one of the locations in the United States
set forth on Schedule E-1 or in transit from one such location to another
such location,
(c) it is located on real property leased by Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral
Access Agreement executed by the lessor, warehouseman, or other third
party, as the case may be, and unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the
premises,
(d) it is not subject to a valid and perfected first priority Agent's
Lien,
(e) it consists of goods returned or rejected by Borrower's
customers, or
(f) it consists of goods that are obsolete or slow moving (which with
respect to goods consisting of concentrate shall be goods held by Borrower
for three (3) years or more, with respect to goods consisting of frozen
berries shall be goods held by Borrower for eighteen (18) months or more,
and with respect to goods consisting of finished goods other than
concentrate shall be goods held by Borrower for fifteen (15) months or
more), restrictive or custom items, work-in-process or goods that
constitute spare parts, packaging and shipping materials, supplies used or
consumed in Borrower's business, bill and hold goods, defective goods,
"seconds," or Inventory acquired on consignment.
"Eligible Transferee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of
any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country
and which has total assets in excess of $250,000,000, provided that such
bank is acting through a branch or agency located in the United States, (c)
a finance company, insurance company, or other financial institution or
fund that is engaged in making, purchasing, or otherwise investing in
commercial loans in the ordinary course of its business and having
(together with its Affiliates) total assets in excess of $250,000,000, (d)
any Affiliate (other than individuals) of a Lender that was party hereto as
of the Closing Date or any fund, money market account, investment account
or other account managed by a Lender or an Affiliate of a Lender, (e) so
long as no Event of Default has occurred and is continuing, any other
Person approved by Agent and Borrower, and (f) during the continuation of
an Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from
any Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of Borrower or any predecessor in interest, (b)
from adjoining properties or businesses, or (c) from or onto any facilities
which received Hazardous Materials generated by Borrower or any predecessor
in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or
12
local statute, law, rule, regulation, ordinance, code, legally binding and
enforceable guideline, legally binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended,
or any judicial or administrative interpretation thereof, including any
legally binding judicial or administrative order, consent decree or
judgment, to the extent binding on Borrower, relating to the environment,
employee health and safety, or Hazardous Materials, including CERCLA; RCRA;
the Federal Water Pollution Control Act, 33 USC Section 1251 et seq.; the
Toxic Substances Control Act, 15 USC, Section 2601 et seq.; the Clean Air
Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC.
Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. Section 2701
et seq.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation
Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health
Act, 29 USC. Section 651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or
consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or
demand by any Governmental Authority or any third party, and which relate
to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter acquired
right, title, and interest with respect to equipment, machinery, machine
tools, motors, furniture, furnishings, fixtures, vehicles (including motor
vehicles), tools, parts, goods (other than consumer goods, farm products,
or Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any
of the foregoing.
"Equitable Intercreditor Agreement" means the Intercreditor Agreement
dated as of the Closing Date by and between Agent and The Equitable Life
Assurance Society of the United States, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower under IRC Section 414(c), (c) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any organization subject
to ERISA that is a member of an affiliated service group of which Borrower
is a member under IRC Section 414(m), or (d) solely for purposes of Section
302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that
is a party to an arrangement with Borrower and whose employees are
aggregated with the employees of Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
13
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the
aggregate amount, if any, of all trade payables of Borrower aged in excess
of historical levels with respect thereto and all book overdrafts in excess
of historical practices with respect thereto, in each case as determined by
Agent in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect
from time to time.
"Excluded Collateral" means the real and personal property of Borrower
set forth on Schedule 4.1 hereto.
"Existing Lenders" means individually and collectively, the Continuing
Bank Group, the Equitable Life Assurance Society of the United States and
Wood County National Bank.
"Farm Products" means all of Borrower's now owned or hereafter
existing or acquired farm products of every kind and nature, including
without limitation, crops, livestock and supplies used or produced in
farming operations, and products of crops or livestock, wherever located.
"Farm Products Sellers" shall mean, individually and collectively,
sellers or suppliers to Borrower of any farm product (as such term is
defined in both the Food Security Act and the Code) and including any
perishable agricultural commodity (as defined in PACA).
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
"Fee Notes" means the Fee Note in the original principal amount of
$2,500,000, payable by Borrower to Foothill and the Fee Note in the
original principal amount of $2,500,000 in favor of Ableco.
"FEIN" means Federal Employer Identification Number.
"Food Security Act" shall mean the Food Security Act of 1984, 7 U.S.C.
Section 1631 et. seq., as the same now exists or may hereafter from time to
time be amended, modified, recodified or supplemented, together with all
rules and regulations thereunder.
"Food Security Act Notices" shall have the meaning set forth in
Section 5.21.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Frozen Cranberry Sublimit" shall mean, during each month of any year
of the term of this Agreement, the amount set forth below opposite such
month:
October $10,000,000
November $ 9,400,000
14
December $ 8,800,000
January $ 8,200,000
February $ 7,600,000
March $ 7,000,000
April $ 6,400,000
May $ 5,800,000
June $ 5,200,000
July $ 4,600,000
August $ 4,000,000
September $ 3,400,000
"Frozen Cranberry Cost" means, per barrel, (i) Ocean Spray's lowest
base pool price for frozen cranberries for the immediately preceding
harvest, plus (ii) $3.00, plus (iii) the hauling and storage cost (as
determined by Agent) of such frozen cranberries prior to conversion to
concentrate.
"Frozen Cranberry Value" means the Eligible Inventory of Borrower
consisting of barrels of frozen cranberries multiplied, per barrel, by the
lesser of (a) during the first six (6) fiscal months following the Closing
Date, the weighted average sale price of cranberry concentrate for the
immediately preceding three (3) months, as determined by Agent, and
thereafter the lowest sales price per gallon for Borrower's sales of
cranberry concentrate in the immediately preceding three (3) months, in
each case, less the per barrel cost to convert such frozen cranberries into
concentrate, multiplied by 1.5 (or such other multiple as Agent determines
to be appropriate, provided that Agent may not increase such multiple
without the consent of the Required Lenders), and (b) the Frozen Cranberry
Cost of such frozen cranberries.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights,
15
blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other
rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes,
software, literature, reports, catalogs, money, deposit accounts, insurance
premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property
other than goods, Accounts, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency
or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Guarantor" and "Guarantors" means, individually and collectively, NCI
Foods, LLC, Wildhawk, Inc., Northland Insurance Center, Inc., Northland
Cranberries Sales Corp., PFVA Acquisition Corp., and Potomac Foods of
Virginia, Inc.
"Hazardous Materials" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations
as "hazardous substances," "hazardous materials," "hazardous wastes,"
"toxic substances," or any other formulation intended to define, list, or
classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive
toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived
substances, natural gas, natural gas liquids, synthetic gas, drilling
fluids, produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal
resources, (c) any flammable substances or explosives or any radioactive
materials, and (d) asbestos in any form or electrical equipment that
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
"Indebtedness" means (a) all obligations of Borrower for borrowed
money, (b) all obligations of Borrower evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other
obligations of Borrower in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of Borrower under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of Borrower,
irrespective of whether such obligation or liability is assumed, (e) all
obligations of Borrower for the deferred purchase price of assets (other
than trade debt incurred in the ordinary course of Borrower's business and
repayable in accordance with customary trade practices), and (f) any
obligation of Borrower guaranteeing or intended to guarantee (whether
directly or indirectly guaranteed, endorsed, co-made, discounted, or sold
with recourse to Borrower) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
16
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit
of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion of
the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Inventory" means all Borrower's now owned or hereafter acquired
right, title, and interest with respect to inventory, including goods held
for sale or lease or to be furnished under a contract of service, goods
that are leased by Borrower as lessor, goods that are furnished by Borrower
under a contract of service, and raw materials, work in process, or
materials used or consumed in Borrower's business.
"Inventory Reserves" means reserves (determined from time to time by
Agent in its Permitted Discretion) for (a) the estimated costs relating to
unpaid freight charges, warehousing or storage charges, taxes, duties, and
other similar unpaid costs associated with the acquisition of Eligible
In-Transit Inventory by Borrower, plus (b)the estimated reclamation claims
of unpaid sellers of Inventory sold to Borrower.
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made
in the ordinary course of business, and (b) bona fide Accounts arising from
the sale of goods or rendition of services in the ordinary course of
business consistent with past practice), purchases or other acquisitions
for consideration of Indebtedness or Stock, and any other items that are or
would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "investment property"
as that term is defined in the Code, and any and all supporting obligations
in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time
to time.
"Issuing Lender" means Foothill or any other Lender that, at the
request of Borrower and with the consent of Agent agrees, in such Lender's
sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender pursuant
to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party
to this Agreement in accordance with the provisions of Section 14.1.
17
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower under any of
the Loan Documents that are paid or incurred by the Lender Group, (b) fees
or charges paid or incurred by Lender Group in connection with the Lender
Group's transactions with Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches
and including searches with the patent and trademark office, the copyright
office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic Collateral appraisals or
business valuations to the extent of the fees and charges (and up to the
amount of any limitation) contained in this Agreement), real estate
surveys, real estate title policies and endorsements, and environmental
audits, (c) costs and expenses incurred by Agent in the disbursement of
funds to Borrower (by wire transfer or otherwise), (d) charges paid or
incurred by Agent resulting from the dishonor of checks, (e) reasonable
costs and expenses paid or incurred by the Lender Group to correct any
default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit
fees and expenses of Lender Group related to audit examinations of the
Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses
of third party claims or any other suit paid or incurred by the Lender
Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or the Lender Group's
relationship with Borrower or any guarantor of the Obligations, (h) Agent's
and each Lender's reasonable fees and expenses (including attorneys fees)
incurred in advising, structuring, drafting, reviewing, administering, or
amending the Loan Documents, and (i) Agent's and each Lender's reasonable
fees and expenses (including attorneys fees) incurred in terminating,
enforcing (including attorneys fees and expenses incurred in connection
with a "workout," a "restructuring," or an Insolvency Proceeding concerning
Borrower or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or
in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
Lender, together with such Lender's Affiliates, and the officers,
directors, employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the context
requires.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of
the amount of outstanding time drafts accepted by an Underlying Issuer as a
result of drawings under Underlying Letters of Credit.
18
"Lien" means any interest in an asset securing an obligation owed to,
or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest
shall be contingent upon the occurrence of some future event or events or
the existence of some future circumstance or circumstances, including the
lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement,
security agreement, conditional sale or trust receipt, or from a lease,
consignment, or bailment for security purposes and also including
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases, and other title exceptions and
encumbrances affecting Real Property.
"Liquidating Assets" shall mean the assets of Borrower listed on the
attached Schedule 1.1, as in effect on the Closing Date.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Cash Management Agreements,
the Control Agreements, the Disbursement Letter, the Fee Letter, the Fee
Notes, the Letters of Credit, the Mortgages, the Officers' Certificate, the
Stock Pledge Agreement, the Subsidiary Documents, the Trademark Security
Agreement, the Warrants, any note or notes executed by Borrower in
connection with this Agreement and payable to a member of the Lender Group,
and any other agreement entered into, now or in the future, by Borrower,
any Guarantor and the Lender Group in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of Borrower, (b) a material
impairment of Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to
enforce the Obligations or realize upon the Collateral, or (c) a material
impairment of the enforceability or priority of the Agent's Liens with
respect to the Collateral as a result of an action or failure to act on the
part of Borrower.
"Material Subsidiary" shall mean any Subsidiary of Borrower, excluding
W.S.C. Water Management Corp,. which owns assets with a value equal to 5%
or more of the value of the Borrower's assets, or which owns General
Intangibles or other property necessary or material to the Borrower's
conduct of its business.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Credit Line" means $50,000,000.
"Maximum Revolver Amount" means $30,000,000.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered
by Borrower in favor of Agent, for the benefit of the Lender Group, in form
and substance satisfactory to Agent, that encumber the Real Property
Collateral and the related improvements thereto.
19
"Negotiable Collateral" means all of Borrower's now owned and
hereafter acquired right, title, and interest with respect to letters of
credit, letter of credit rights, instruments, promissory notes (including,
but not limited to, Borrower's right to payment of principal and interest
on the Cliffstar Note), drafts, documents, and chattel paper (including
electronic chattel paper and tangible chattel paper), and any and all
supporting obligations in respect thereof.
"Net Liquidation Percentage" means the percentage of the book value of
Borrower's Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from
time to time by a qualified appraisal company selected by Agent.
"Obligations" means all loans (including the Term Loans), Advances,
debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), contingent
reimbursement obligations with respect to outstanding Letters of Credit,
premiums, liabilities (including all amounts charged to Borrower's Loan
Account pursuant hereto), obligations, fees (including the fees provided
for in the Fee Letter), charges, costs, Lender Group Expenses (including
any fees or expenses that, but for the provisions of the Bankruptcy Code,
would have accrued), lease payments, guaranties, covenants, and duties of
any kind and description owing by Borrower to the Lender Group pursuant to
or evidenced by the Loan Documents and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, and including all
interest not paid when due and all Lender Group Expenses that Borrower is
required to pay or reimburse by the Loan Documents, by law, or otherwise.
Any reference in this Agreement or in the Loan Documents to the Obligations
shall include all amendments, changes, extensions, modifications, renewals
replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
"Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Borrower, together with Borrower's
completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"PACA" shall mean the Perishable Agricultural Commodities Act, 1930,
as amended, 7 U.S.C. Section 499a et. seq., as the same now exists or may
from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
"Participant" has the meaning set forth in Section 14.1(e).
"Permitted Discretion" means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
20
"Permitted Dispositions" means (a) sales or other dispositions by
Borrower of Equipment that is no longer used or useful in the conduct of
Borrower's business, with a fair market value not to exceed $100,000 in
each year, or substantially worn, damaged, or obsolete in the ordinary
course of Borrower's business, (b) sales by Borrower of Inventory to buyers
in the ordinary course of business, (c) the use or transfer of money or
Cash Equivalents by Borrower in a manner that is not prohibited by the
terms of this Agreement or the other Loan Documents, (d) the licensing by
Borrower, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of Borrower's
business and (e) the sale or other disposition by Borrower of the
Liquidating Assets.
"Permitted Investments" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) the Cliffstar Note, (e) Stock of Subsidiaries and (f) Stock
of Beaver Creek Cranberry Growers Assoc., Inc.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not
yet delinquent, or (ii) do not constitute an Event of Default hereunder and
are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1,
(d) the interests of lessors under operating leases, (e) purchase money
Liens or the interests of lessors under Capital Leases to the extent that
such Liens or interests secure Permitted Purchase Money Indebtedness and so
long as such Lien attaches only to the asset purchased or acquired and the
proceeds thereof, (f) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, wage
claimants, or suppliers, incurred in the ordinary course of business of
Borrower and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of
Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens
or deposits to secure performance of bids, tenders, or leases incurred in
the ordinary course of business of Borrower and not in connection with the
borrowing of money, (i) Liens granted as security for surety or appeal
bonds in connection with obtaining such bonds in the ordinary course of
business of Borrower, (j) Liens resulting from any judgment or award that
is not an Event of Default hereunder, (k) Liens with respect to the Real
Property Collateral that are exceptions to the commitments for title
insurance issued in connection with the Mortgages, as accepted by Agent,
(l) with respect to any Real Property that is not part of the Real Property
Collateral, Liens easements, rights of way, and zoning restrictions that do
not materially interfere with or impair the use or operation thereof by
Borrower, and (m) Liens or Trust Claims on Borrower's Inventory or other
assets, in favor of any Farm Product Seller, whether or not such Liens or
claims are inchoate or are fully perfected (with respect to perfected
liens, to the extent Agent has established and maintains a Reserve with
respect thereto) and payable, arising from any federal or state statute,
including, without limitation, PACA, the Food Security Act, the Oregon
Agricultural Produce Lien or Agricultural Services Lien statutes, (O.R.S.
Section 87.700, et seq.), the Wisconsin Agricultural Lien statute (W.S.A.
Section 409.109, et seq.), or otherwise arising by operation of law.
"Permitted Protest" means the right of Borrower to protest any Lien
(other than any such Lien that secures the Obligations), taxes (other than
payroll taxes or taxes that are the subject of a United States federal tax
lien), or rental payment, provided that (a)a reserve with respect to such
obligation is established on the Books in such amount as is required under
21
GAAP, (b)any such protest is instituted promptly and prosecuted diligently
by Borrower in good faith, and (c)Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date
in an aggregate principal amount outstanding at any one time not in excess
of $1,800,000 on or before the first anniversary of the Closing Date,
$2,000,000 from and after the first anniversary of the Closing Date and
before the second anniversary of the Closing Date, and from and after the
second anniversary of the Closing Date, $2,500,000.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
"Projections" means Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
basis consistent with Borrower's historical financial statements, together
with appropriate supporting details and a statement of underlying
assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with
respect thereto, the percentage obtained by dividing (i) such Lender's
Revolver Commitment, by (ii) the aggregate Revolver Commitments of all
Lenders,
(b) with respect to a Lender's obligation to participate in Letters
of Credit, to reimburse the Issuing Lender, and to receive payments of fees
with respect thereto, the percentage obtained by dividing (i) such Lender's
Revolver Commitment, by (ii) the aggregate Revolver Commitments of all
Lenders,
(c) with respect to a Lender's obligation to make the Term Loans and
receive payments of interest, fees, and principal with respect thereto, the
percentage obtained by dividing (i) such Lender's Term Loan Commitment, by
(ii) the aggregate amount of all Lenders' Term Loan Commitments, and
(d) with respect to all other matters (including the indemnification
obligations arising under Section 16.7), the percentage obtained by
dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount
of Total Commitments of all Lenders; provided, however, that, in each case,
in the event all Commitments have been terminated, Pro Rata Share shall be
determined according to the Commitments in effect immediately prior to such
termination.
"PSA" shall mean the Packers and Stockyard Act of 1921, 7 U.S.C.
Section 181
22
et. seq., as the same now exists or may from time to time hereafter be
amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for
the purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property now
owned or hereafter acquired by Borrower and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter
acquired by Borrower.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
a release or threatened release of Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a release or threatened
release of Hazardous Materials so they do not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment, (c) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (d) conduct any
other actions authorized by 42 USC Section 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Availability" means Excess Availability and unrestricted
cash and Cash Equivalents in an aggregate amount of not less than
$5,000,000.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate 66*% of the Total Commitments, or if the Commitments have been
terminated irrevocably, 66*% of the Obligations then outstanding.
"Reserves" means, with respect to the Borrowing Base (a) the Inventory
Reserves, (b) the Supplemental Reserve, and (c) such other reserves against
Eligible Accounts, Eligible Inventory or Availability that Agent may, in
its reasonable credit judgment, establish from time to time. Without
limiting the generality of the foregoing, (i) Reserves established to
ensure the payment of accrued Indebtedness or other charges Borrower is
obligated to pay and discharge pursuant to this Agreement, shall be deemed
to be a reasonable exercise of Agent's credit judgment and (ii) Agent shall
have the right at all times to establish a reserve, and to increase and
decrease such reserve from time to time, in respect of any or all amounts
owed, or which may under any contingency be owed, by Borrower to any Farm
Products Sellers, any wage claimants or other Person, which amounts are or
may be secured by any of the Collateral, or if Agent
23
believes in good faith such reserve is or may be necessary to protect it
against statutory or common law Liens or trust fund claims or other Liens
in favor of any Farm Products Sellers or any agent to any Farm Product
Sellers or any other Person with a security interest in the assets of such
supplier or seller or any category of Indebtedness or other obligation or
liability owed to a third party, the payment of which is or may be secured
by a statutory or common law Lien or entitled to the benefit of a trust or
other Lien upon any of the assets and properties of Borrower.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the
reserve requirements (including any basic, supplemental, marginal, or
emergency reserves) that are in effect on such date with respect to
eurocurrency funding (currently referred to as "eurocurrency liabilities")
of that Lender, but so long as such Lender is not required or directed
under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the Issuing Lender with respect to
an L/C Undertaking, consisting of (a) the amount available to be drawn or
which may become available to be drawn, (b) all amounts that have been paid
by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrower, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect
thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Securities Account" means a "securities account" as that term is
defined in the Code.
"Settlement" has the meaning set forth in Section 2.3(e)(i).
"Settlement Date" has the meaning set forth in Section 2.3(e)(i).
"Solvent" means, with respect to any Person on a particular date, that
such Person is not insolvent (as such term is defined in the Uniform
Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or
in a Person, whether voting or nonvoting, including common stock, preferred
stock, or any other "equity security" (as such term is defined
24
in Rule3a11-1 of the General Rules and Regulations promulgated by the SEC
under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in form and
substance satisfactory to Agent, executed and delivered by Borrower to
Agent with respect to the pledge of the Stock owned by Borrower.
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting
power to elect a majority of the board of directors (or appoint other
comparable managers) of such corporation, partnership, limited liability
company, or other entity.
"Subsidiary Documents" means the Guarantee, Trademark Security
Agreement and General Security Agreement by each Guarantor with or in favor
of Agent and any other agreement entered into, now or in the future, by any
Guarantor and the Lender Group in connection with this Agreement.
"Sun Capital" shall mean Sun Capital Partners Management, LLC.
"Sun Capital Management Agreement" shall mean the Management Services
Agreement dated as of the Closing Date between Sun Capital and Borrower, as
in effect on the Closing Date.
"Supplemental Reserve" means the reserves established at the Closing
Date in the amount of $4,000,000, which Supplemental Reserve shall decrease
by $135,000 per month on the first day of each of the first eleven (11)
months following the Closing Date. On the first anniversary of the Closing
Date and at all times thereafter, the Supplemental Reserve shall be set at
$2,500,000 and shall not be reduced.
"Swing Lender" means Foothill or any other Lender that, at the request
of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Term Loans" has the meaning set forth in Section 2.2.
"Term Loan A Amount" means $10,000,000.
"Term Loan B Amount" means $10,000,000.
"Term Loan Commitment" means, with respect to each Lender, its Term
Loan Commitment, and, with respect to all Lenders, their Term Loan
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of
Section 14.1.
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"Terminating Bank Group" shall mean Bank of America, National Trust &
Savings Association, M&I Marshall & Isley Bank, Bank Boston N.A., LaSalle
National Bank National Association and Wells Fargo Bank Minnesota, N.A.
" Terminating Bank Group Documents" shall mean in form and substance
satisfactory to Agent, from the Terminating Bank Group respecting, among
other things, the amount necessary to repay in full all of the obligations
of Borrower owing to the Terminating Bank Group and obtain a release of all
of the Liens existing in favor of the Terminating Bank Group in and to the
assets of Borrower.
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 attached hereto or on the
signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of
Section 14.1.
"Trademark Security Agreement" means a Trademark Security Agreement
executed and delivered by Borrower and Agent, the form and substance of
which is satisfactory to Agent.
"Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request
of the Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Warrant" shall mean the warrants issued by Borrower and delivered to
each Lender entitling each Lender to purchase for a nominal price its pro
rata share of up to 5% of the fully diluted common stock of Borrower, upon
terms and conditions satisfactory to such Lender in its sole discretion.
"Wells Fargo" means Wells Fargo Bank, National Association, a national
banking association.
1.2 Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
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1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and during
the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances
("Advances") to Borrower in an amount at any one time outstanding not to
exceed such Lender's Pro Rata Share of an amount equal to the lesser of:
(i) the Maximum Revolver Amount less the Letter of Credit Usage
or
(ii) the Borrowing Base less the Letter of Credit Usage, less
the aggregate amount of the Reserves. For purposes of this Agreement,
"Borrowing Base," as of any date of determination, shall mean the
result of:
(A) the lesser of:
(1) 85% of the Dollar amount of Eligible Accounts,
less the amount, if any, of the Dilution Reserve, and
(2) a Dollar amount equal to Borrower's Collections
with respect to Accounts for the immediately preceding 60
day period, plus
(B) the lesser of:
(1) $25,000,000 during the first year after the
Closing Date and
27
$20,000,000 thereafter; and
(2) the sum of (a) the lesser of (x) the Frozen
Cranberry Sublimit, (y) sixty-five percent (65%) of the
Frozen Cranberry Value, and (z) eighty percent (80%) of the
net recovery liquidation value of Eligible Inventory
consisting of frozen cranberries as determined from time to
time after closing by appraisers acceptable to Agent, plus
(b) the lesser of (x) $10,000,000, (y) sixty-five percent
(65%) of the Cranberry Concentrate Value, and (z) eighty
percent (80%) of the net recovery liquidation value of
Eligible Inventory consisting of cranberry concentrate as
determined from time to time after closing by appraisers
acceptable to Agent, plus
(3) the lesser of (x)sixty-five percent (65%) of the
cost of Eligible Inventory consisting of other finished
goods and other raw materials, and (y)eighty percent (80%)
of the net recovery liquidation value of eligible inventory
consisting of such other finished goods and other raw
materials as determined by appraisers acceptable to Agent,
less
(C) the aggregate amount of the Reserves, if any,
including those established by Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1 notwithstanding, in
addition to the Reserves, Agent shall have the right to establish reserves
in such amounts, and with respect to such matters, as Agent in its
Permitted Discretion shall deem necessary or appropriate, against the
Borrowing Base, including reserves with respect to (i) sums that Borrower
is required to pay (such as taxes, assessments, insurance premiums, or, in
the case of leased assets, rents or other amounts payable under such
leases) and has failed to pay under any Section of this Agreement or any
other Loan Document, and (ii) amounts owing by Borrower to any Person to
the extent secured by a Lien on, or trust over, any of the Collateral
(other than any existing Permitted Lien set forth on Schedule P-1 which is
specifically identified thereon as entitled to have priority over the
Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens
or trusts in favor of landlords, warehousemen, carriers, mechanics,
materialmen, laborers, or suppliers, or Liens or trusts for ad valorem,
excise, sales, or other taxes where given priority under applicable law) in
and to such item of the Collateral. In addition to the foregoing, Agent
shall have the right to have the Inventory reappraised by a qualified
appraisal company selected by Agent from time to time after the Closing
Date for the purpose of redetermining the Net Liquidation Percentage of the
Eligible Inventory portion of the Collateral and, as a result,
redetermining the Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no obligation to
make additional Advances hereunder to the extent such additional Advances
would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 Term Loans. Subject to the terms and conditions of this Agreement, on
the
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Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans, in the form of Term Loan A
and Term Loan B (collectively, the "Term Loans"), to Borrower in an amount equal
to such Lender's Pro Rata Share of each of the Term Loan A Amount and the Term
Loan B Amount. The Term Loans shall be repaid on the following dates and in the
following amounts:
TERM LOAN A
Date Each Installment Amount
December 1, 2001 and the first day of $166,667
each month thereafter
TERM LOAN B
Date Each Installment Amount
November 30th of each year $625,000
the last day of February of each year $625,000
May 31st of each year $625,000
August 31st of each year $625,000
The outstanding unpaid principal balance and all accrued and unpaid interest
under the Term Loans shall be due and payable on the date of termination of this
Agreement, whether by its terms, by prepayment, or by acceleration. All amounts
outstanding under the Term Loans shall constitute Obligations. In addition to
the regularly scheduled payments of principal due on Term Loan B, Borrower shall
make mandatory prepayments of Term Loan B in an amount equal to the aggregate of
all principal payments in excess of $625,000 per calendar quarter received by
Borrower in each calendar quarter on account of the Cliffstar Note and all
payments received by Borrower in each calendar quarter on account of the earnout
payments payable under the Asset Purchase Agreement by and between Borrower and
Cliffstar Corporation dated January 5, 2000. Each such prepayment shall be
applied against the unpaid installment of Term Loan B in the inverse order of
maturity thereof.
2.3 Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent
(which notice must be
29
received by Agent no later than 10:00 a.m. (California time) on the
Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance or the Term Loan specifying (i) the amount
of such Borrowing, and the requested Funding Date, which shall be a
Business Day; provided, however, that in the case of a request for a Swing
Loan in an amount of $3,000,000, or less, such notice will be timely
received if it is received by Agent no later than 10:00 a.m. (California
time) on the Business Day that is the requested Funding Date) specifying
(i) the amount of such Borrowing, and (ii) the requested Funding Date,
which shall be a Business Day. At Agent's election, in lieu of delivering
the above-described written request, any Authorized Person may give Agent
telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving
of such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c) apply to such requested Borrowing,
or (ii) if the Borrowing is for an Advance, to request Swing Lender to make
a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of the
requested Borrowing; provided, however, that if Swing Lender declines in
its sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent
shall elect to have the terms of Section 2.3(c) apply to such requested
Borrowing.
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms of
this Section 2.3(c) apply to a requested Borrowing as described in
Section 2.3(b), then promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders,
not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such
Lender's Pro Rata Share of the requested Borrowing available to Agent
in immediately available funds, to Agent's Account, not later than
10:00 a.m. (California time) on the Funding Date applicable thereto.
After Agent's receipt of the proceeds of such Advances (or the Term
Loan, as applicable), upon satisfaction of the applicable conditions
precedent set forth in Section 3 hereof, Agent shall make the proceeds
thereof available to Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds
received by Agent to Borrower's Designated Account; provided, however,
that, subject to the provisions of Section 2.3(i), Agent shall not
request any Lender to make, and no Lender shall have the obligation to
make, any Advance (or its portion of the Term Loans) if Agent shall
have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed
the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one (1) Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrower the amount of
that Lender's Pro Rata Share of the Borrowing, Agent may assume that
each Lender has made
30
or will make such amount available to Agent in immediately available
funds on the Funding Date and Agent may (but shall not be so
required), in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If and to the extent any
Lender shall not have made its full amount available to Agent in
immediately available funds and Agent in such circumstances has made
available to Borrower such amount, that Lender shall on the Business
Day following such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to Agent shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is not
made available to Agent on the Business Day following the Funding
Date, Agent will notify Borrower of such failure to fund and, upon
demand by Agent, Borrower shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall
not relieve any other Lender of any obligation hereunder to make an
Advance on such Funding Date, but no Lender shall be responsible for
the failure of any other Lender to make the Advance to be made by such
other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrower to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Borrower and if no Default or
Event of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance was not funded by the Lender Group),
retain same to be re-advanced to Borrower as if such Defaulting Lender
had made Advances to Borrower. Subject to the foregoing, Agent may
hold and, in its Permitted Discretion, re-lend to Borrower for the
account of such Defaulting Lender the amount of all such payments
received and retained by it for the account of such Defaulting Lender.
Solely for the purposes of voting or consenting to matters with
respect to the Loan Documents, such Defaulting Lender shall be deemed
not to be a "Lender" and such Lender's Commitment shall be deemed to
be zero. This Section shall remain effective with respect to such
Lender until (x) the Obligations under this Agreement shall have been
declared or shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting Lender
makes its Pro Rata Share of the applicable Advance and pays to Agent
all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the
performance by Borrower of its duties and obligations hereunder to
Agent or to the Lenders other than such Defaulting Lender. Any such
failure to fund by any Defaulting Lender shall constitute a material
breach by such Defaulting Lender of this Agreement and shall entitle
Borrower at its
31
option, upon written notice to Agent, to arrange for a substitute
Lender to assume the Commitment of such Defaulting Lender, such
substitute Lender to be acceptable to Agent. In connection with the
arrangement of such a substitute Lender, the Defaulting Lender shall
have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance
Agreement in favor of the substitute Lender (and agrees that it shall
be deemed to have executed and delivered such document if it fails to
do so) subject only to being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind
whatsoever; provided further, however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute
a waiver of any of the Lender Groups' or Borrower's rights or remedies
against any such Defaulting Lender arising out of or in relation to
such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply to
a requested Borrowing as described in Section 2.3(b), Swing Lender as
a Lender shall make such Advance in the amount of such Borrowing (any
such Advance made solely by Swing Lender as a Lender pursuant to this
Section 2.3(d) being referred to as a "Swing Loan" and such Advances
being referred to collectively as "Swing Loans") available to Borrower
on the Funding Date applicable thereto by transferring immediately
available funds to Borrower's Designated Account. Each Swing Loan is
an Advance hereunder and shall be subject to all the terms and
conditions applicable to other Advances, and all payments on any Swing
Loan shall be payable to Swing Lender as a Lender solely for its own
account (and for the account of the holder of any participation
interest with respect to such Swing Loan). Subject to the provisions
of Section 2.3(i), Agent shall not request Swing Lender as a Lender to
make, and Swing Lender as a Lender shall not make, any Swing Loan if
Agent has actual knowledge that (i) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (ii) the requested Borrowing would
exceed the Availability on such Funding Date. Swing Lender as a Lender
shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the
Funding Date applicable thereto prior to making, in its sole
discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens,
shall constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances that are
Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrower and the Lenders,
from time to time in Agent's sole discretion, (1) after the occurrence
and during the continuance of a
32
Default or an Event of Default, or (2) at any time that any of the
other applicable conditions precedent set forth in Section 3 have not
been satisfied, to make Advances to Borrower on behalf of the Lenders
that Agent, in its Permitted Discretion deems necessary or desirable
(A) to preserve or protect the Collateral, or any portion thereof, (B)
to enhance the likelihood of repayment of the Obligations, or (C) to
pay any other amount chargeable to Borrower pursuant to the terms of
this Agreement, including Lender Group Expenses and the costs, fees,
and expenses described in Section 10 (any of the Advances described in
this Section 2.3(e) shall be referred to as "Agent Advances");
provided, that notwithstanding anything to the contrary contained in
this Section 2.3(e), the aggregate principal amount of Agent Advances
outstanding at any one time, when taken together with the aggregate
principal amount of Overadvances made in accordance with Section
2.3(i) outstanding at any time, shall not exceed an amount equal to
the lesser of (x) 10% of the Borrowing Base then in effect and (y)
$3,000,000. Each Agent Advance is an Advance hereunder and shall be
subject to all the terms and conditions applicable to other Advances,
except that all payments thereon shall be payable to Agent solely for
its own account (and for the account of the holder of any
participation interest with respect to such Agent Advance).
(ii) The Agent Advances shall be repayable on demand and secured
by the Agent's Liens granted to Agent under the Loan Documents, shall
constitute Advances and Obligations hereunder, and shall bear interest
at the rate applicable from time to time to Advances.
(f) Settlement. It is agreed that each Lender's funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender and the other Lenders agree (which agreement shall not
be for the benefit of or enforceable by Borrower) that in order to
facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances and the Agent Advances
shall take place on a periodic basis in accordance with the following
provisions:
(i) Agent shall request settlement ("Settlement") with the
Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Collections received, as to
each by notifying the Lenders by telecopy, telephone, or other similar
form of transmission, of such requested Settlement, no later than 2:00
p.m. (California time) on the Business Day immediately prior to the
date of such requested Settlement (the date of such requested
Settlement being the "Settlement Date"). Such notice of a Settlement
Date shall include a summary statement of the amount of outstanding
Advances, Swing Loans, and Agent Advances for the period since the
prior Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances exceeds such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of
a Settlement Date, then Agent shall, by no later than 12:00 p.m.
(California time) on the Settlement Date, transfer in immediately
available funds to the account of such Lender as such Lender may
designate, an amount such that each such Lender shall, upon receipt of
such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances, and (z) if a Lender's
balance of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, such Lender shall no later than
12:00 p.m. (California time) on the Settlement Date transfer in
immediately available funds to the Agent's Account, an amount such
that each such Lender shall, upon transfer of such amount, have as of
the
33
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and
Agent Advances. Such amounts made available to Agent under clause (z)
of the immediately preceding sentence shall be applied against the
amounts of the applicable Swing Loan or Agent Advance and, together
with the portion of such Swing Loan or Agent Advance representing
Swing Lender's Pro Rata Share thereof, shall constitute Advances of
such Lenders. If any such amount is not made available to Agent by any
Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the Advances,
Swing Loans, and Agent Advances is less than, equal to, or greater
than such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to principal,
interest, fees payable by Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net amount
is owed to any such Lender after such application, such net amount
shall be distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of
this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as
of any Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to Agent
for the accounts of the Lenders, and Agent shall pay to the Lenders,
to be applied to the outstanding Advances of such Lenders, an amount
such that each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Advances. During the
period between Settlement Dates, Swing Lender with respect to Swing
Loans, Agent with respect to Agent Advances, and each Lender (subject
to the effect of letter agreements between Agent and individual
Lenders) with respect to the Advances other than Swing Loans and Agent
Advances, shall be entitled to interest at the applicable rate or
rates payable under this Agreement on the daily amount of funds
employed by Swing Lender, Agent, or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal amount of
the Advances owing to each Lender, including the Swing Loans owing to Swing
Lender and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment
of principal of such Lender's Advances in its books and records, including
computer
34
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than Swing Loans
and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder,
nor shall any Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations
hereunder, and (ii) no failure by any Lender to perform its obligations
hereunder shall excuse any other Lender from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances
(including Swing Loans) to Borrower notwithstanding that an Overadvance
exists or thereby would be created, so long as (i) after giving effect to
such Advances (including a Swing Loan), the outstanding Adjusted Revolver
Usage does not exceed the Borrowing Base by more than an amount equal to
the lesser of 10% of the Borrowing Base then in effect and $3,000,000, (ii)
after giving effect to such Advances (including a Swing Loan), the
outstanding Revolver Usage (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses) does not exceed
the Maximum Revolver Amount, (iii) the aggregate principal amount of
Overadvances made pursuant to this Section 2.3(i) when taken together with
the aggregate principal amount of Agent Advances made pursuant to Section
2.3(e) does not exceed at any time an amount equal to the lesser of (1) 10%
of the Borrowing Base then in effect and (2) $3,000,000, and (iv) at the
time of the making of any such Advance (including a Swing Loan), Agent does
not believe, in good faith, that the Overadvance created by such Advance
will be outstanding for more than 90 days. The foregoing provisions are for
the exclusive benefit of Agent, Swing Lender and the Lenders and are not
intended to benefit Borrower in any way. The Advances and Swing Loans that
are made pursuant to this Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, except that the rate of
interest applicable thereto shall be the rate applicable to Advances under
Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
(i) In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to making
any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior notice would
result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with
Agent, jointly determine the terms of arrangements that shall be
implemented with Borrower intended to reduce, within a reasonable
time, the outstanding principal amount of the Advances to Borrower to
an amount permitted by the preceding paragraph. In the event Agent or
any Lender disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be
implemented according to the determination of the Required Lenders.
35
(ii) Each Lender with a Revolver Commitment shall be obligated
to settle with Agent as provided in Section 2.3(e) for the amount of
such Lender's Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances made as
permitted under this Section 2.3(h), and any Overadvances resulting
from the charging to the Loan Account of interest, fees, or Lender
Group Expenses.
2.4 Payments.
(a) Payments by Borrower.
(i) Except as otherwise expressly provided herein, all payments
by Borrower shall be made to Agent's Account for the account of the
Lender Group and shall be made in immediately available funds, no
later than 11:00 a.m. (California time) on the date specified herein.
Any payment received by Agent later than 11:00 a.m. (California time)
shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue until such
following Business Day.
(ii) Unless Agent receives notice from Borrower prior to the
date on which any payment is due to the Lenders that Borrower will not
make such payment in full as and when required, Agent may assume that
Borrower has made (or will make) such payment in full to Agent on such
date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender
on such due date an amount equal to the amount then due such Lender.
If and to the extent Borrower does not make such payment in full to
Agent on the date when due, each Lender severally shall repay to Agent
on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the
date such amount is distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to Defaulting
Lenders and except as otherwise provided in the Loan Documents
(including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably
among the Lenders (according to the unpaid principal balance of the
Obligations to which such payments relate held by each Lender) and
payments of fees and expenses (other than fees or expenses that are
for Agent's separate account, after giving effect to any letter
agreements between Agent and individual Lenders) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of
Commitment or Obligation to which a particular fee relates. All
payments shall be remitted to Agent and all such payments (other than
payments received while no Default or Event of Default has occurred
and is continuing and which relate to the payment of principal or
interest of specific Obligations or which relate to the payment of
specific fees), and all proceeds of Accounts or other Collateral
received by Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due to
Agent under
36
the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due to
the Lenders under the Loan Documents, on a ratable basis, until
paid in full,
(C) third, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan Documents
until paid in full,
(D) fourth, to pay any fees then due to any or all of the
Lenders (after giving effect to any letter agreements between
Agent and individual Lenders) under the Loan Documents, on a
ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of all Agent
Advances, until paid in full,
(F) sixth, ratably to pay interest due in respect of the
Advances (other than Agent Advances) and the Term Loans until
paid in full,
(G) seventh, to pay the principal of all Agent Advances
until paid in full,
(H) eighth, ratably to pay all principal amounts then due
and payable (other than as a result of an acceleration thereof)
with respect to the Term Loans until paid in full,
(I) ninth, to pay the principal of all Swing Loans until
paid in full,
(J) tenth, to pay the principal of all Advances until
paid in full,
(K) eleventh, if an Event of Default has occurred and is
continuing, to pay the outstanding principal balance of the Term
Loans (in the inverse order of the maturity of the installments
due thereunder) until the Term Loans are paid in full,
(L) twelfth, if an Event of Default has occurred and is
continuing, to Agent, to be held by Agent, for the ratable
benefit of Issuing Lender and those Lenders having a Revolver
Commitment, as cash collateral in an amount up to 105% of the
then extant Letter of Credit Usage until paid in full,
(M) thirteenth, to pay any other Obligations until paid
in full, and
(N) fourteenth, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto under
applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to
the applicable wire instructions received from each Lender in writing,
such funds as it may be entitled to receive, subject to a Settlement
delay as provided in Section 2.3(e).
37
(iii) In each instance, so long as no Default or Event of
Default has occurred and is continuing, Section 2.4(b) shall not be
deemed to apply to any payment by Borrower specified by Borrower to be
for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full" means payment
of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees,
interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) In the event of a direct conflict between the priority
provisions of this Section 2.4 and other provisions contained in any
other Loan Document, it is the intention of the parties hereto that
such priority provisions in such documents shall be read together and
construed, to the fullest extent possible, to be in concert with each
other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this Section 2.4
shall control and govern.
2.5 Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrower to the Lender Group pursuant to Sections 2.1 and
2.12 is greater than either the Dollar or percentage limitations set forth in
Sections 2.1 or 2.12, (an "Overadvance"), Borrower immediately shall pay to
Agent, in cash, the amount of such excess, which amount shall be used by Agent
to reduce the Obligations in accordance with the priorities set forth in Section
2.4(b). In addition, Borrower hereby promises to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full to the Lender
Group as and when due and payable under the terms of this Agreement and the
other Loan Documents.
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged
to the Loan Account pursuant to the terms hereof shall bear interest on the
Daily Balance thereof at a per annum rate equal to the Base Rate plus the
Base Rate Margin.
The foregoing notwithstanding, at no time shall any portion of the
non-contingent Obligations bear interest on the Daily Balance thereof at a
per annum rate less than 7%. To the extent that interest accrued hereunder
at the rate set forth herein would be less than the foregoing minimum daily
rate, the interest rate chargeable hereunder for such day automatically
shall be deemed increased to the minimum rate.
(b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 2.5% per annum times the
Daily Balance of the undrawn amount of all outstanding Letters of Credit.
(c) Default Rate. Upon the occurrence and during the continuation of
an
38
Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit )
that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof at a per annum
rate equal to four (4) percentage points above the per annum rate
otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above shall be
increased to four (4) percentage points above the per annum rate
otherwise applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of
each month at any time that Obligations or Commitments are outstanding.
Borrower hereby authorizes Agent, from time to time without prior notice to
Borrower, to charge such interest and fees, all Lender Group Expenses (as
and when incurred), the charges, commissions, fees, and costs provided for
in Section 2.12(e) (as and when accrued or incurred), the fees and costs
provided for in Section 2.11 (as and when accrued or incurred), and all
other payments as and when due and payable under any Loan Document
(including the installments due and payable with respect to the Term Loan)
to Borrower's Loan Account, which amounts thereafter constitute Advances
hereunder and shall accrue interest at the rate then applicable to Advances
hereunder. Any interest not paid when due shall be compounded by being
charged to Borrower's Loan Account and shall thereafter constitute Advances
hereunder and shall accrue interest at the rate then applicable to
Advances.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to
time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount
equal to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible
under any law that a court of competent jurisdiction shall, in a final
determination, deem applicable. Borrower and the Lender Group, in executing
and delivering this Agreement, intend legally to agree upon the rate or
rates of interest and manner of payment stated within it; provided,
however, that, anything contained herein to the contrary notwithstanding,
if said rate or rates of interest or manner of payment exceeds the maximum
allowable under applicable law, then, ipso facto, as of the date of this
Agreement, Borrower is and shall be liable only for the payment of such
maximum as allowed by law, and payment received from Borrower in excess of
such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
(a) Borrower shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and
shall request in writing and otherwise take such
39
reasonable steps to ensure that all of its Account Debtors forward payment
of the amounts owed by them directly to such Cash Management Bank, and (ii)
deposit or cause to be deposited promptly, and in any event no later than
the first Business Day after the date of receipt thereof, all Collections
(including those sent directly by Account Debtors to a Cash Management
Bank) into a bank account in Agent's name (a "Cash Management Account") at
one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with respect to the Cash Management Accounts with
Agent and Borrower, in form and substance acceptable to Agent. Each such
Cash Management Agreement shall provide, among other things, that (i) all
items of payment deposited in such Cash Management Account and proceeds
thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights
of setoff or recoupment or any other claim against the applicable Cash
Management Account other than for payment of its service fees and other
charges directly related to the administration of such Cash Management
Account and for returned checks or other items of payment, and (iii) it
immediately will forward by daily sweep all amounts in the applicable Cash
Management Account to the Agent's Account.
(c) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i)
such prospective Cash Management Bank shall be satisfactory to Agent and
Agent shall have consented in writing in advance to the opening of such
Cash Management Account with the prospective Cash Management Bank, and (ii)
prior to the time of the opening of such Cash Management Account, Borrower
and such prospective Cash Management Bank shall have executed and delivered
to Agent a Cash Management Agreement. Borrower shall close any of its Cash
Management Accounts (and establish replacement cash management accounts in
accordance with the foregoing sentence) promptly and in any event within 30
days of notice from Agent that the creditworthiness of any Cash Management
Bank is no longer acceptable in Agent's reasonable judgment, or as promptly
as practicable and in any event within 60 days of notice from Lender Group
that the operating performance, funds transfer, or availability procedures
or performance of the Cash Management Bank with respect to Cash Management
Accounts or Agent's liability under any Cash Management Agreement with such
Cash Management Bank is no longer acceptable in Agent's reasonable
judgment.
(d) The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrower is hereby deemed
to have granted a Lien to Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should
40
any payment item not be honored when presented for payment, then Borrower shall
be deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent's Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Agent's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Agent as of the opening of business on the immediately
following Business Day. From and after the Closing Date, Agent shall be entitled
to charge Borrower for one (1) Business Day of 'clearance' or 'float' at the
rate applicable to Base Rate Loans under Section 2.6 on all Collections that are
received by Borrower (regardless of whether forwarded by the Cash Management
Banks to Agent). This across-the-board one (1) Business Day clearance or float
charge on all Collections is acknowledged by the parties to constitute an
integral aspect of the pricing of the financing of Borrower and shall apply
irrespective of whether or not there are any outstanding monetary Obligations;
the effect of such clearance or float charge being the equivalent of charging
one (1) Business Days of interest on such Collections. The parties acknowledge
and agree that the economic benefit of the foregoing provisions of this Section
2.8 shall be for the exclusive benefit of Agent.
2.9 Designated Account. Agent is authorized to make the Advances and the
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance,
Agent Advance, or Swing Loan requested by Borrower and made by Agent or the
Lenders hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrower (the "Loan Account") on
which Borrower will be charged with the Term Loan, all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrower or for Borrower's account, the Letters of Credit issued by Issuing
Lender for Borrower's account, and with all other payment Obligations hereunder
or under the other Loan Documents, including, accrued interest, fees and
expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan
Account will be credited with all payments received by Agent from Borrower or
for Borrower's account, including all amounts received in the Agent's Account
from any Cash Management Bank. Agent shall render statements regarding the Loan
Account to Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrower and the Lender Group
unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver
to Agent written objection thereto describing the error or errors contained in
any such statements.
2.11 Fees. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter
41
agreements between Agent and individual Lenders:
(a) Unused Line Fee. On the first day of each month during the term
of this Agreement, an unused line fee in an amount equal to .50% per annum
times the result of (a) the Maximum Revolver Amount, less (b) the sum of
(i) the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily Balance of the
Letter of Credit Usage during the immediately preceding month,
(b) Fee Letter Fees. As and when due and payable under the terms of
the Fee Letter, Borrower shall pay to Agent the fees set forth in the Fee
Letter, and
(c) Audit, Appraisal, and Valuation Charges. For the separate account
of Agent, audit, appraisal, and valuation fees and charges as follows (i) a
fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of Borrower performed by personnel employed by Agent, (ii)
if implemented, a one time charge of $5,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems,
(iii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses,
for each appraisal of the Collateral performed by personnel employed by
Agent, and (iv) the actual charges paid or incurred by Agent if it elects
to employ the services of one or more third Persons to perform financial
audits of Borrower, to appraise the Collateral, or any portion thereof, or
to assess Borrower's business valuation. For any strategic business advisor
or consultant retained by Agent, at the direction of the Required Lenders,
(the "Strategic Advisor"), retained not less than three (3) months after
the Closing Date, to conduct an exit strategy analysis. Borrower shall
fully cooperate with any Strategic Advisor and shall authorize Strategic
Advisor to provide such information and reports from time to time with
respect to Borrower and Guarantors and their financial condition, business,
assets, liabilities and prospects, as Agent shall from time to time
request. All reasonable fees and expenses of any Strategic Advisors shall
be solely the responsibility of Borrower.
2.12 Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of
Borrower (each, an "L/C") or to purchase participations or execute
indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying
Issuer (as of the Closing Date, the prospective Underlying Issuer is to be
Wells Fargo) for the account of Borrower. To request the issuance of an L/C
or an L/C Undertaking (or the amendment, renewal, or extension of an
outstanding L/C or L/C Undertaking), Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for
doing so have been approved by the Issuing Lender) to the Issuing Lender
and Agent (reasonably in advance of the requested date of issuance,
amendment, renewal, or extension) a notice requesting the issuance of an
L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the
beneficiary thereof (or the beneficiary of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to
prepare, amend, renew, or extend such L/C or L/C Undertaking. If requested
by the Issuing Lender, Borrower also shall be an applicant under the
application with respect to any Underlying Letter of Credit that is to be
the subject of an L/C
42
Undertaking. The Issuing Lender shall have no obligation to issue a Letter
of Credit if any of the following would result after giving effect to the
requested Letter of Credit:
(i) the Adjusted Letter of Credit Usage would exceed the
Borrowing Base less the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $5,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding Advances.
Borrower and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit
(and corresponding Underlying Letter of Credit) shall have an expiry date
no later than 30 days prior to the Maturity Date and all such Letters of
Credit (and corresponding Underlying Letter of Credit) shall be in form and
substance acceptable to the Issuing Lender (in the exercise of its
Permitted Discretion), including the requirement that the amounts payable
thereunder must be payable in Dollars. If Issuing Lender is obligated to
advance funds under a Letter of Credit, Borrower immediately shall
reimburse such L/C Disbursement to Issuing Lender by paying to Agent an
amount equal to such L/C Disbursement not later than 11:00 a.m., California
time, on the date that such L/C Disbursement is made, if Borrower shall
have received written or telephonic notice of such L/C Disbursement prior
to 10:00 a.m., California time, on such date, or, if such notice has not
been received by Borrower prior to such time on such date, then not later
than 11:00 a.m., California time, on the Business Day that Borrower
receives such notice, if such notice is received prior to 10:00 a.m.,
California time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at
the rate then applicable to Advances under Section 2.6. To the extent an
L/C Disbursement is deemed to be an Advance hereunder, Borrower's
obligation to reimburse such L/C Disbursement shall be discharged and
replaced by the resulting Advance. Promptly following receipt by Agent of
any payment from Borrower pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that
Lenders have made payments pursuant to Section 2.12(c) to reimburse the
Issuing Lender, then to such Lenders and the Issuing Lender as their
interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees
to fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if Borrower had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount
thereof) and without any further action on the part of the Issuing Lender
or the Lenders with Revolver Commitment, the Issuing Lender shall be deemed
to have granted to each Lender with a Revolver Commitment, and each Lender
with a Revolver Commitment shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata
Share of the Risk Participation Liability of such
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Letter of Credit, and each such Lender agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of any payments
made by the Issuing Lender under such Letter of Credit. In consideration
and in furtherance of the foregoing, each Lender with a Revolver Commitment
hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender and not reimbursed by Borrower on
the date due as provided in clause (a) of this Section, or of any
reimbursement payment required to be refunded to Borrower for any reason.
Each Lender with a Revolver Commitment acknowledges and agrees that its
obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this Section
2.12(b) shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of Default
or Default or the failure to satisfy any condition set forth in Section 3
hereof. If any such Lender fails to make available to Agent the amount of
such Lender's Pro Rata Share of any payments made by the Issuing Lender in
respect of such Letter of Credit as provided in this Section, Agent (for
the account of the Issuing Lender) shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that Borrower
shall not be obligated hereunder to indemnify for any loss, cost, expense,
or liability that is caused by the gross negligence or willful misconduct
of the Issuing Lender or any other member of the Lender Group. Borrower
agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for Borrower's
account, even though this interpretation may be different from Borrower's
own, and Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or
commission, in following Borrower's instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto.
Borrower understands that the L/C Undertakings may require Issuing Lender
to indemnify the Underlying Issuer for certain costs or liabilities arising
out of claims by Borrower against such Underlying Issuer. Borrower hereby
agrees to indemnify, save, defend, and hold the Lender Group harmless with
respect to any loss, cost, expense (including reasonable attorneys fees),
or liability incurred by the Lender Group under any L/C Undertaking as a
result of the Lender Group's indemnification of any Underlying Issuer;
provided, however, that Borrower shall not be obligated hereunder to
indemnify for any loss, cost, expense, or liability that is caused by the
gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group.
(d) Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing
Lender's instructions with respect to all matters arising in connection
with such Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Agent for the account of
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the Issuing Lender; it being acknowledged and agreed by Borrower that, as
of the Closing Date, the issuance charge imposed by the prospective
Underlying Issuer is .825% per annum times the face amount of each
Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of
charges for amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental
Authority or monetary authority including, Regulation D of the Federal
Reserve Board as from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto,
and the result of the foregoing is to increase, directly or indirectly, the
cost to the Lender Group of issuing, making, guaranteeing, or maintaining
any Letter of Credit or to reduce the amount receivable in respect thereof
by the Lender Group, then, and in any such case, Agent may, at any time
within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrower, and Borrower shall pay on
demand such amounts as Agent may specify to be necessary to compensate the
Lender Group for such additional cost or reduced receipt, together with
interest on such amount from the date of such demand until payment in full
thereof at the rate then applicable to Advances hereunder. The
determination by Agent of any amount due pursuant to this Section, as set
forth in a certificate setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest or demonstrable error, be final
and conclusive and binding on all of the parties hereto.
2.13 Capital Requirements. If, after the date hereof, any Lender determines
that (a) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (b) compliance by such
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in
45
reasonable detail such Lender's calculation thereof and the assumptions upon
which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before December 5, 2001;
(b) Agent shall have received all financing statements required by
Agent, duly authorized by Borrower and the Guarantors, and Agent shall have
received searches reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following documents, in
form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) [intentionally omitted];
(ii) the Disbursement Letter;
(iii) the Fee Notes;
(iv) the Fee Letter;
(v) the Cash Management Agreements;
(vi) the Mortgages;
(vii) the Officers' Certificate;
(viii) the Subsidiary Documents;
(ix) Sun Capital Management Agreement;
(x) the Trademark Security Agreement;
(xi) the Terminating Bank Group Documents, together with UCC
termination statements and other documentation evidencing the
termination by the Terminating Bank Group of its Liens in and to the
properties and assets of Borrower,
(xii) the Warrants;
(xiii) the Continuing Bank Group Intercreditor Agreement and the
Equitable Intercreditor Agreement;
46
(d) Agent shall have received a certificate from the Secretary of
Borrower attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and
the other Loan Documents to which Borrower is a party and authorizing
specific officers of Borrower to execute the same;
(e) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Borrower;
(f) Agent shall have received a certificate of status with respect to
Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good
standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect to
Borrower, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than
the jurisdiction of organization of Borrower) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Change,
which certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the Secretary of
Guarantor attesting to the resolutions of Guarantor's Board of Directors
authorizing its execution, delivery, and performance of the Loan Documents
to which Guarantor is a party and authorizing specific officers of
Guarantor to execute the same;
(i) Agent shall have received copies of Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Guarantor;
(j) Agent shall have received a certificate of status with respect to
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Guarantor, which certificate shall indicate that Guarantor is in good
standing in such jurisdiction;
(k) Agent shall have received certificates of status with respect to
Guarantor, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than
the jurisdiction of organization of Guarantor) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Change,
which certificates shall indicate that Guarantor is in good standing in
such jurisdictions;
(l) Agent shall have received the original Cliffstar Note and any
related documents as Agent may request, in its sole discretion, including
without limitation, a Note Pledge Agreement and a certificate from an
officer of Borrower satisfactory to Agent that, except as set forth on
Schedule 3.1(l), no payment default has occurred on account of the
Cliffstar Note and that, to Borrower's knowledge, no event of default has
occurred under Cliffstar Corporation's existing bank credit facility;
47
(m) Agent shall have received copies of the fully executed Continuing
Bank Group Documents and such documents shall be in full force and effect,
and no event of default shall have occurred thereunder;
(n) Agent shall have received from Borrower a written analysis of the
tax consequences to Borrower of the refinancing of Borrower's existing
Indebtedness to the Bank Group from Borrower's independent accountants with
respect to the foregoing, all of which shall be satisfactory to Agent in
its sole discretion.
(o) Agent shall have received from Borrower copies of all written
agreements with its Farm Product Sellers, and with its other material
vendors and material customers, as well as Borrower's written analysis of
any arrangements with such vendors or customers, which may not be
memorialized in writing, all of which shall be satisfactory to Agent, in
Agent's sole discretion.
(p) No Default or Event of Default exists as of the Closing Date;
(q) Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.7, the form and
substance of which shall be satisfactory to Agent;
(r) Agent shall have received Collateral Access Agreements from Wood
County National Bank, Congress Financial Corporation and such other parties
as Lender may require in its sole discretion with respect to, without
limitation, the following locations: 2321 West Grand Avenue, Wisconsin
Rapids, Wisconsin 54455, and Cornelius, Oregon;
(s) [Intentionally omitted];
(t) Agent shall have received from Borrower a written analysis of
Borrower's preferential wage claims and related Liens, along with an
opinion of counsel to Borrower with respect to the foregoing, all of which
shall be satisfactory to Agent in its sole discretion;
(u) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Borrower) that, except as
listed on Schedule 3.1(u), all tax returns required to be filed by Borrower
have been timely filed and all taxes upon Borrower or its properties,
assets, income, and franchises (including Real Property taxes and payroll
taxes) have been paid prior to delinquency, except such taxes that are the
subject of a Permitted Protest;
(v) Borrower shall have the Required Availability after giving effect
to the initial extensions of credit hereunder;
(w) Agent shall have completed its business, legal, and collateral
due diligence, including (i) a collateral audit and review of Borrower's
books and records and verification of Borrower's representations and
warranties to the Lender Group, the results of which shall be satisfactory
to Agent, and (ii) an inspection of each of the locations where Inventory
is located, the results of which shall be satisfactory to Agent;
48
(x) Agent shall have received completed reference checks with respect
to Borrower's senior management, the results of which are satisfactory to
Agent in its sole discretion;
(y) Agent shall have received an appraisal of the Liquidation
Percentage applicable to Borrower's Inventory and an appraisal of
Borrower's Equipment, the results of which shall be satisfactory to Agent
and an analysis by a third party industry expert satisfactory to Agent of
the Hilco Appraisal Services LLC Inventory Appraisal dated November, 2000,
in form and substance satisfactory to Agent;
(z) Agent shall have received a testing, satisfactory to Agent in all
respects from a market expert satisfactory to Agent, of the Borrower's
Inventory, including the concentrate Inventory, verifying that Inventory is
in good and saleable condition.
(aa) Agent shall have received Borrower's Closing Date Business Plan
together with a certificate of the chief executive officer of Borrower
stating that the Closing Date Business Plan has been prepared on a
reasonable basis and in good faith and is based on assumptions believed by
Borrower to be reasonable at the time made and from the best information
then available to Borrower;
(bb) Borrower shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(cc) Agent shall have received (i) appraisals of the Real Property
Collateral satisfactory to Agent, and (ii) mortgagee title insurance
policies (or marked commitments to issue the same) for the Real Property
Collateral issued by a title insurance company satisfactory to Agent (each
a "Mortgage Policy" and, collectively, the "Mortgage Policies") in amounts
satisfactory to Agent assuring Agent that the Mortgages on such Real
Property Collateral are valid and enforceable first priority mortgage Liens
on such Real Property Collateral free and clear of all defects and
encumbrances except Permitted Liens, and the Mortgage Policies otherwise
shall be in form and substance satisfactory to Agent;
(dd) Agent shall have received a phase-I environmental report and a
real estate survey with respect to each parcel composing the Real Property
Collateral; the environmental consultants and surveyors retained for such
reports or surveys, the scope of the reports or surveys, and the results
thereof shall be acceptable to Agent;
(ee) [Intentionally deleted];
(ff) Borrower shall have received all licenses, approvals or evidence
of other actions required by any Governmental Authority in connection with
the execution and delivery by Borrower of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby
and thereby;
(gg) Borrower shall have received a cash equity investment from Sun
Capital in an amount not less than $6,300,000, net of all fees paid or
payable to Sun Capital at closing of such equity investment, on terms and
conditions satisfactory to Agent, in its sole discretion; and
49
(hh) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to
Agent.
(ii) Agent shall have received from Borrower a written analysis
identifying all crops which it purchases from agricultural producers, all
states in which it conducts processing operations or receives its product
for processing, and all states in which the crops purchased by Borrower
have been grown, along with an opinion from Borrower's counsel with respect
to the applicability of any state or federal statutory agricultural liens
or trust rights with respect to 90% or more of the crops subject to
Borrower's purchases, all of which shall be satisfactory to Agent, in its
sole discretion.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 60 days prior to or 30 days after the Closing Date,
deliver to Agent certified copies of the policies of insurance, together
with the endorsements thereto, as are required by Section 6.7, the form and
substance of which shall be satisfactory to Agent and its counsel; and
(b) Satisfy all terms and conditions set forth in the Letter re:
certain Post Closing Items dated as of the Closing Date, by Borrower in
favor of Lender, within the applicable time as set forth therein.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make all Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this Agreement
and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made
on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date),
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result
from the making thereof,
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority
against Borrower, Agent, any Lender, or any of their Affiliates.
(d) no Material Adverse Change shall have occurred, except as set
forth on Schedule 3.3(d) as in effect on the Closing Date.
50
3.4 Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrower, Agent, and the Lenders and shall continue in full
force and effect for a term ending on November 6, 2006 (the "Maturity Date").
The foregoing notwithstanding, the Lender Group, upon the election of the
Required Lenders, shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit) immediately shall become due and
payable without notice or demand. No termination of this Agreement, however,
shall relieve or discharge Borrower of its duties, Obligations, or covenants
hereunder and the Agent's Liens in the Collateral shall remain in effect until
all Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been fully
and finally discharged and the Lender Group's obligations to provide additional
credit under the Loan Documents have been terminated irrevocably, Agent will, at
Borrower's sole expense, execute and deliver any UCC termination statements,
lien releases, mortgage releases, re-assignments of trademarks, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are reasonably necessary to release, as of
record, the Agent's Liens and all notices of security interests and liens
previously filed by Agent with respect to the Obligations.
3.6 Early Termination by Borrower. Borrower has the option, at any time
upon 30 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, for the benefit of the Lender Group, in cash, the Obligations
(including either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender), in full, together with the
Applicable Prepayment Premium (to be allocated based upon letter agreements
between Agent and individual Lenders). Notwithstanding anything to the contrary
contained herein, in the event the Obligations are paid in full and the Loan
Documents are terminated as the result of a conventional bank credit facility
provided by Wells Fargo Bank and no Event of Default exists as of the date of
termination, the Applicable Prepayment Premium shall be waived. If Borrower has
sent a notice of termination pursuant to the provisions of this Section, then
the Commitments shall terminate and Borrower shall be obligated to repay the
Obligations (including either (i) providing cash collateral to be held by Agent
for the benefit of those Lenders with a Revolver Commitment in an amount equal
to 105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to the Issuing Lender), in full, together with
the Applicable Prepayment Premium, on the date set forth as the date of
termination of this Agreement in such notice. In the event of the termination of
this Agreement and repayment of the Obligations at any time prior to the
Maturity Date, for any other reason, including (a) termination upon the election
of the Required Lenders to terminate after the occurrence of an Event of
Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in
any Insolvency Proceeding, or (iv) restructure, reorganization, or compromise of
the Obligations by
51
the confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrower shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower hereby grants to Agent, for the
benefit of the Lender Group, a continuing security interest in all of its right,
title, and interest in all currently existing and hereafter acquired or arising
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by Borrower of each of its covenants and duties
under the Loan Documents. The Agent's Liens in and to the Collateral shall
attach to all Collateral without further act on the part of Agent or Borrower.
Anything contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrower has no authority,
express or implied, to dispose of any item or portion of the Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, Borrower, immediately upon the request of Agent,
shall endorse and deliver physical possession of such Negotiable Collateral to
Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrower that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Borrower agrees that it will
hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections on account of Collateral that it receives and immediately will
deliver said Collections to Agent or a Cash Management Bank in their original
form as received by Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
request of Agent, Borrower shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), to create and
52
perfect Liens in favor of Agent in any Real Property acquired after the Closing
Date, and in order to fully consummate all of the transactions contemplated
hereby and under the other Loan Documents. To the maximum extent permitted by
applicable law, Borrower authorizes Agent to execute any such Additional
Documents in Borrower's name and authorizes Agent to file such executed
Additional Documents in any appropriate filing office. In addition, on such
periodic basis as Agent shall require, Borrower shall (a) provide Agent with a
report of all new patentable, copyrightable, or trademarkable materials acquired
or generated by Borrower during the prior period, (b) cause all patents,
copyrights, and trademarks acquired or generated by Borrower that are not
already the subject of a registration with the appropriate filing office (or an
application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of Borrower's ownership thereof, and (c) cause to be prepared, executed, and
delivered to Agent supplemental schedules to the applicable Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5 Power of Attorney. Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent's officers, employees, or agents designated by
Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or bill of lading
relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Borrower's name on any Collection item that may come into the Lender Group's
possession and which is Collateral or proceeds of Collateral, (e) at any time
that an Event of Default has occurred and is continuing, make, settle, and
adjust all claims under Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, except
to the extent that property covered by such insurance does not constitute
Collateral and (f) at any time that an Event of Default has occurred and is
continuing, settle and adjust disputes and claims respecting the Accounts,
chattel paper, or General Intangibles directly with Account Debtors, for amounts
and upon terms that Agent determines to be reasonable, and Agent may cause to be
executed and delivered any documents and releases that Agent determines to be
necessary. The appointment of Agent as Borrower's attorney, and each and every
one of its rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully and finally repaid and performed
and the Lender Group's obligations to extend credit hereunder are terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right during regular
business hours prior to the occurrence of any Event of Default and at any time
after the occurrence of an Event of Default, from time to time hereafter to
inspect the Books and to check, test, and appraise the Collateral in order to
verify Borrower's financial condition or the amount, quality, value, condition
of, or any other matter relating to, the Collateral.
4.7 Control Agreements. Borrower agrees that it will not transfer assets
out of any Securities Accounts other than as permitted under Section 7.19 and,
if to another securities intermediary, unless each of Borrower, Agent, and the
substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control
53
Agreement in respect of any Securities Accounts or other Investment Property
shall be modified by Borrower without the prior written consent of Agent. Upon
the occurrence and during the continuance of a Default or Event of Default,
Agent may notify any securities intermediary to liquidate the applicable
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement, Borrower
makes the following representations and warranties to the Lender Group which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Advance (or
other extension of credit) made thereafter, as though made on and as of the date
of such Advance (or other extension of credit) (except to the extent that such
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Borrower has good and indefeasible title to the
Collateral and the Real Property constituting Collateral, free and clear of
Liens except for Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrower's business, owed to Borrower without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Eligible
Account, such Account is not:
(a) owed by an employee, Affiliate, or agent of Borrower,
(b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a bill and hold, or on any other terms by reason of which
the payment by the Account Debtor may be conditional,
(c) payable in a currency other than Dollars,
(d) owed by an Account Debtor that has or has asserted a right of
setoff, has disputed its liability, or has made any claim with respect to
its obligation to pay the Account,
(e) owed by an Account Debtor that is subject to any Insolvency
Proceeding or is not Solvent or as to which Borrower has received notice of
an imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
(f) on account of a transaction as to which the goods giving rise to
such Account have not been shipped and billed to the Account Debtor or the
services giving rise to such Account have not been performed and accepted
by the Account Debtor,
(g) a right to receive progress payments or other advance billings
that are due prior to the completion of performance by Borrower of the
subject contract for goods or services, and
54
(h) an Account that has not been billed to the customer.
5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable
quality, free from defects. As to each item of Eligible Inventory, such
Inventory is:
(a) owned by Borrower free and clear of all Liens other than Liens in
favor of Lender,
(b) either located at one of the locations set forth on Schedule E-1
or in transit from one such location to another such location,
(c) not located on real property leased by Borrower or in a contract
warehouse, in each case, unless subject to a Collateral Access Agreement
executed by the lessor, the warehouseman, or other third party, as the case
may be, and unless segregated or otherwise separately identifiable from
goods of others, if any, stored on the premises,
(d) not goods that have been returned or rejected by Borrower's
customers, and
(e) not goods that are obsolete or slow moving, restrictive or custom
items, work-in-process, or that constitute spare parts, packaging and
shipping materials, supplies used or consumed in Borrower's business, bill
and hold goods, defective goods, "seconds," or Inventory acquired on
consignment.
5.4 Equipment. All of the Equipment is used or held for use in Borrower's
business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory and Equipment
constituting Collateral are not stored with a bailee, warehouseman, or similar
party and are located only at the locations identified on Schedule 5.5. Borrower
may from time to time update Schedule 5.5 so long as (i) Borrower gives Agent
not less than thirty (30) days advance written notice and (ii) Borrower delivers
to Agent a Collateral Access Agreement with respect to each additional location
listed on any revised Schedule 5.5.
5.6 Inventory Records. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive office
of Borrower is located at the address indicated in Schedule 5.7 and Borrower's
FEIN is identified in Schedule 5.7. Borrower may from time to time update
Schedule 5.7 so long as (i) Borrower gives Agent not less than thirty (30) days
advance written notice and (ii) Borrower delivers to Lender a Collateral Access
Agreement with respect to each additional location listed on any revised
Schedule 5.7.
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5.8 Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b) is a complete and accurate
description as of the Closing Date of the authorized capital Stock of
Borrower, by class, and, as of the Closing Date, a description of the
number of shares of each such class that are issued and outstanding. Other
than as described on Schedule 5.8(b), there are no subscriptions, options,
warrants, or calls relating to any shares of Borrower's capital Stock,
including any right of conversion or exchange under any outstanding
security or other instrument. Borrower is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list of
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization, (ii) the number of shares of each class of common
and preferred Stock authorized for each of such Subsidiaries, and (iii) the
number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Borrower. All of the outstanding capital
Stock of each such Subsidiary has been validly issued and is fully paid and
non-assessable, except as otherwise expressly provided under Wisconsin
Stat.180.0622(2)(b).
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of
Borrower's Subsidiaries' capital Stock, including any right of conversion
or exchange under any outstanding security or other instrument. Neither
Borrower nor any of its Subsidiaries is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of Borrowers' Subsidiaries' capital Stock or any security
convertible into or exchangeable for any such capital Stock.
(e) Borrower is in compliance with all applicable provisions of law,
including, without limitation, the Food Security Act, PACA and Borrower,
and each of its subsidiaries and affiliates possess all necessary
authorizations, permits and licenses to lawfully conduct business
operations. Borrower, and each of Borrower's subsidiaries, affiliates,
divisions and branches possess all necessary dealer's license(s) under
PACA, and such licenses are current and valid.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which it is a party do not and will not
(i)violate any provision of federal, state, or local law or regulation
applicable to Borrower, the Governing Documents of Borrower, or any order,
judgment, or decree of any court or other Governmental Authority binding on
Borrower, (ii) conflict with, result in a breach of, or constitute (with
due notice or lapse of time or both) a default under any material
contractual obligation of Borrower, (iii) result
56
in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Borrower, other than Permitted
Liens, or (iv) require any approval of Borrower's interestholders or any
approval or consent of any Person under any material contractual obligation
of Borrower, except to the extent any such approval or consent has been
obtained.
(c) Other than the filing of financing statements, fixture filings,
and Mortgages and NASDAQ disclosure statements, the execution, delivery,
and performance by Borrower of this Agreement and the Loan Documents to
which Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by,
any Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents to which Borrower is
a party, and all other documents contemplated hereby and thereby, when
executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or
similar laws relating to or limiting creditors' rights generally.
(e) The Agent's Liens on Collateral are validly created, perfected,
and first priority Liens, subject only to Permitted Liens.
(f) The execution, delivery, and performance by each Guarantor of the
Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of Guarantor.
(g) The execution, delivery, and performance by Guarantor of the Loan
Documents to which it is a party do not and will not (i)violate any
provision of federal, state, or local law or regulation applicable to
Guarantor, the Governing Documents of Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on Guarantor,
(ii)conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation
of Guarantor, (iii)result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of Guarantor,
other than Permitted Liens, or (iv)require any approval of Guarantor's
interestholders or any approval or consent of any Person under any material
contractual obligation of Guarantor.
(h) The execution, delivery, and performance by Guarantor of the Loan
Documents to which Guarantor is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority or other Person.
(i) The Loan Documents to which Guarantor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by
Guarantor will be the legally valid and binding obligations of Guarantor,
enforceable against Guarantor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10, there
are no
57
actions, suits, or proceedings pending or, to the best knowledge of Borrower,
threatened against Borrower, or any of its Subsidiaries, as applicable, except
for (a) matters that are fully covered by insurance (subject to customary
deductibles), and (b) matters arising after the Closing Date that, if decided
adversely to Borrower, or any of its Subsidiaries, as applicable, reasonably
could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial statements relating to
Borrower or Guarantors that have been delivered by Borrower to the Lender Group
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Borrower's (or
Guarantors, as applicable) financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Borrower and Guarantors taken as a whole, since
the date of the latest financial statements submitted to the Lender Group on or
before the Closing Date.
5.12 Fraudulent Transfer.
(a) Borrower is Solvent after giving effect to transactions
contemplated on the Closing Date by Borrower with Agent, Lenders, Sun
Capital, the Terminating Bank Group and the Continuing Bank Group.
(b) No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future
creditors of Borrower.
5.13 Employee Benefits. Except as set forth on Schedule 5.13, none of
Borrower, any of its Subsidiaries, or any of their ERISA Affiliates maintains or
contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Borrower's knowledge, none of Borrower's assets has ever been used by Borrower
or by previous owners or operators in the disposal of, or to produce, store,
handle, treat, release, or transport, any Hazardous Materials, where such
production, storage, handling, treatment, release or transport was in violation,
in any material respect, of applicable Environmental Law, (b) to Borrower's
knowledge, none of Borrower's properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) Borrower has not received notice that a
Lien arising under any Environmental Law has attached to any revenues or to any
Real Property owned or operated by Borrower, and (d) Borrower has not received a
summons, citation, notice, or directive from the Environmental Protection Agency
or any other federal or state governmental agency concerning any action or
omission by Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment.
5.15 Brokerage Fees. Except as set forth on Schedule 5.15,Borrower has not
utilized the services of any broker or finder in connection with Borrower's
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Borrower in connection herewith.
58
5.16 Intellectual Property. Borrower owns, has rights to use or holds
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted. Attached hereto as Schedule 5.16 is a true, correct, and complete
listing of all material patents, patent applications, trademarks, trademark
applications, copyrights, and copyright registrations as to which Borrower is
the owner or is an exclusive licensee. Borrower may from time to time update
Schedule 5.16 on not less than thirty (30) days advance written notice to Agent.
5.17 Leases. Except as expressly set forth on Schedule 5.17, Borrower
enjoys peaceful and undisturbed possession under all leases material to the
business of Borrower and to which it is a party or under which it is operating.
All of such leases are valid and subsisting and no material default by Borrower
exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of Borrower's DDAs,
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository. Borrower may from time to time update Schedule 5.18 on not less than
thirty (30) days advance written notice to Agent.
5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrower in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents, or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower in writing to Agent or any Lender will be, true and accurate,
in all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrower's good faith best estimate of its future
performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list
of all Indebtedness of Borrower outstanding immediately prior to the Closing
Date that is to remain outstanding after the Closing Date and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness as of
the Closing Date and the principal terms thereof.
5.21 Notices from Farm Products Sellers, etc.
(a) Except as set forth in Schedule 5.21(a) hereto, Borrower has not,
within the one (1) year period prior to the date hereof, received any
written notice pursuant to the applicable provisions of the Food Security
Act, or pursuant to the Code or any state statutory agricultural or
producers' lien laws or any other applicable local laws from (i) any Farm
Products Seller or (ii) any lender to any Farm Products Seller or any other
Person with a security interest in the assets of any Farm Products Seller
or (iii) the Secretary of State (or equivalent official) or other
Governmental Authority of any State, Commonwealth or political subdivision
thereof
59
in which any Farm Products purchased by Borrower are produced, in any case
advising or notifying Borrower of the intention of such Farm Products
Seller or other Person to preserve the benefits of any trust, lien or other
interest applicable to any assets of Borrower established in favor of such
Farm Products Seller or other Person under any other law other than PACA or
claiming a Lien or security interest in and to any perishable agricultural
commodity or any other Farm Products which may be or have been purchased by
Borrower or any related or other assets of Borrower (all of the foregoing,
together with any such notices as Borrower may at any time hereafter
receive, collectively, the "Food Security Act Notices").
(b) Borrower is not engaged in, and shall not engage in, raising,
cultivating, propagating, fattening or grazing, livestock operations, or
other farming operations.
(c) Borrower is not and shall not function as a meat packer,
"livestock dealer", or "live poultry dealer" as those terms are defined
under the PSA nor does or shall Borrower purchase or deal in any type of
livestock, live poultry, or the slaughtered carcasses thereof whatsoever.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower shall
and shall cause each of its Subsidiaries to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrower also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2 Collateral Reporting. Provide Agent (and if so requested by Agent,
with copies for each Lender) with the following documents at the following times
in form satisfactory to Agent:
Daily (a) a sales journal, collection journal, and credit
register since the last such schedule and a
calculation of the Borrowing Base as of such date;
(b) notice of all returns, disputes, or claims in
excess of $5,000;
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Weekly (c) Inventory reports specifying Borrower's cost
and the wholesale market value of its Inventory, by
category, including without limitation a breakout
of cranberry concentrate and frozen cranberries by
gallons and pounds, respectively, with additional
detail showing additions to and deletions from the
Inventory;
(d) an invoice register, including the price per
gallon paid with respect to each sale, and
including a certification as to the lowest per
gallon price paid by any customer during the period
covered by such invoice register;
Monthly (not later (e) a detailed calculation of the Borrowing Base
than the 15th day (including detail regarding those Accounts that are
of each month) not Eligible Accounts);
(f) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously
provided to Agent;
(g) a summary aging, by vendor, of Borrower's
accounts payable and any book overdraft;
(h) a calculation of Dilution for the prior month;
(i) a cranberry concentrate forecast;
(j) a Schedule listing all inventory owned by
Nestle U.S.A., Inc. or Apple & Eve, LLC in the
Borrower's possession;
(k) a listing of Farm Products Sellers and amounts
owed to each such Person;
Quarterly (l) a detailed list of Borrower's customers;
(m) a report regarding Borrower's accrued, but
unpaid, ad valorem taxes;
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Upon request by (n) copies of invoices in connection with the
Agent Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in
connection with the Accounts and, for Inventory and
Equipment acquired by Borrower, purchase orders and
invoices;
(o) such other reports as to the Collateral, or the
financial condition of Borrower, as Agent may
request;
Upon occurrence (p) immediate notice of any default or notice of
default received with respect to the Cliffstar
Note, or the Continuing Bank Documents or the
federal multi-peril crop insurance policy
including a copy of any written notice received by
Borrower;
(q) within five (5) Business Days of Borrower's
receipt thereof, a copy of any notice or report
with respect to any earnout or similar
calculations with respect to the Cliffstar Note.
In addition, Borrower agrees to cooperate fully with Agent to facilitate
and implement a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45 days in
the case of a month that is the end of one of the first 3 fiscal quarters
in a fiscal year or that is the month immediately following the Closing
Date) after the end of each month during each of Borrower's fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Borrower's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Borrower to the effect that:
(A) the financial statements delivered hereunder have
been prepared in accordance with GAAP (except for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present in all material respects the financial condition
of Borrower and its Subsidiaries,
(B) the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are true
and correct in all material respects on and as of the date of
such certificate, as though made on and as of such date (except
to the extent that such representations and warranties relate
solely to an earlier date), and
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(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of
any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action Borrower has taken, is
taking, or proposes to take with respect thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested, a Compliance Certificate
demonstrating, in reasonable detail, compliance at the end of such
period with the applicable financial covenants contained in Section
7.20, and
(b) as soon as available, but in any event within 120 days after the
end of each of Borrower's fiscal years,
(i) financial statements of Borrower and its Subsidiaries for
each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications (including, without limitation, (i) any going concern
or like qualification or exception or (ii) any qualification as to the
scope of such audit), by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management),
(ii) a certificate of such accountants addressed to Agent and
the Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.20,
(c) as soon as available, but in any event within 30 days prior to
the start of each of Borrower's fiscal years,
(i) copies of Borrower's Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for the forthcoming 3 years, year by
year, and for the forthcoming fiscal year, month by month, certified
by the chief financial officer of Borrower as being such officer's
good faith best estimate of the financial performance of Borrower
during the period covered thereby,
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual reports, and
Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
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(iv) any other information that is provided by Borrower to its
shareholders generally,
(e) if and when filed by Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) Borrower conducts business or is required to pay
any such excise tax, (ii) where Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of
Borrower, or (iii) where Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse
Change,
(f) as soon as Borrower has knowledge of any event or condition that
constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrower proposes to take with
respect thereto, and
(g) upon the request of Agent, any other report reasonably requested
relating to the financial condition of Borrower.
In addition to the financial statements referred to above, Borrower agrees
to deliver financial statements prepared on both a consolidated and
consolidating basis and agrees that no Subsidiary of Borrower will have a fiscal
year different from that of Borrower. Borrower agrees that its independent
certified public accountants are authorized to communicate with Agent and to
release to Agent whatever financial information concerning Borrower Agent
reasonably may request. Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement, and agrees that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information.
6.4 Return. Cause returns and allowances, as between Borrower and its
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of Borrower, as they exist at the time of the execution and
delivery of this Agreement. If, at a time when no Event of Default has occurred
and is continuing, any Account Debtor returns any Inventory with a sale price in
excess of $25,000, or any Account Debtors return inventory in any fiscal quarter
with a sale price in excess of $50,000 in the aggregate, to Borrower, Borrower
promptly shall determine the reason for such return and, if Borrower accepts
such return, issue a credit memorandum (with a copy to be sent to Agent) in the
appropriate amount to such Account Debtor. If, at a time when an Event of
Default has occurred and is continuing, any Account Debtor returns any Inventory
to Borrower, Borrower promptly shall determine the reason for such return and,
if Agent consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Agent) in the appropriate amount to
such Account Debtor.
6.5 Maintenance of Properties. Except as expressly set forth on Schedule
5.17, maintain and preserve all of its properties which are necessary or useful
in the proper conduct to its business in good working order and condition,
ordinary wear and tear excepted, and comply at all times with the provisions of
all leases to which it is a party as lessee so as to prevent any loss or
forfeiture thereof or thereunder.
6.6 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due
64
or payable by, or imposed, levied, or assessed against Borrower or any of its
assets to be paid in full, before delinquency or before the expiration of any
extension period, except to the extent that the validity of such assessment or
tax shall be the subject of a Permitted Protest. Borrower will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that Borrower has made
such payments or deposits. Borrower shall deliver satisfactory evidence of
payment of applicable excise taxes in each jurisdictions in which Borrower is
required to pay any such excise tax.
6.7 Insurance.
(a) At Borrower's expense, maintain insurance respecting its assets
wherever located, covering loss or damage by fire, theft, explosion, and
all other hazards and risks as ordinarily are insured against by other
Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, multi-peril crop and
product liability insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation. All such policies of insurance
shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrower shall deliver copies of all such
policies to Agent with a satisfactory lender's loss payable endorsement
naming Agent as sole loss payee (with respect to Collateral) or additional
insured, as appropriate. Each policy of insurance or endorsement shall
contain a clause requiring the insurer to give not less than 30 days prior
written notice to Agent in the event of cancellation of the policy for any
reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss covered by
such insurance. Agent shall have the exclusive right to adjust any losses
payable under any such insurance policies in excess of $100,000, without
any liability to Borrower whatsoever in respect of such adjustments. Any
monies received as payment for any loss with respect to Collateral under
any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or
taking by eminent domain, shall be paid over to Agent to be applied at the
option of the Required Lenders either to the prepayment of the Obligations
or shall be disbursed to Borrower under staged payment terms reasonably
satisfactory to the Required Lenders for application to the cost of
repairs, replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items of property destroyed prior
to such damage or destruction.
(c) Borrower will not take out separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained
under this Section 6.7 with respect to Collateral, unless Agent is included
thereon as named insured with the loss payable to Agent under a lender's
loss payable endorsement or its equivalent. Borrower immediately shall
notify Agent whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the
same, and copies of such policies promptly shall be provided to Agent.
6.8 Location of Inventory and Equipment. Keep the Inventory and Equipment
only at the locations identified on Schedule 5.5; provided, however, that
Borrower may amend Schedule 5.5 so long as such amendment occurs by written
notice to Agent not less than 30 days
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prior to the date on which Inventory or Equipment constituting Collateral is
moved to such new location, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens on such assets and
also provides to Agent a Collateral Access Agreement.
6.9 Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act, the Americans With Disabilities Act, PACA, the
Food Security Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in
and reasonably could not be expected to result in a Material Adverse Change.
6.10 Leases. Except as expressly set forth on Schedule 5.17, pay when due
all rents and other amounts payable under any leases to which Borrower is a
party or by which Borrower's properties and assets are bound, unless such
payments are the subject of a Permitted Protest.
6.11 Brokerage Commissions. Pay any and all brokerage commission or finders
fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
6.12 Existence. At all times preserve and keep in full force and effect
Borrower's valid existence and good standing and any rights and franchises
material to Borrower's businesses.
6.13 Environmental.
(a) Keep any property either owned or operated by Borrower free of
any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with
Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release
of a Hazardous Material in any reportable quantity from or onto property
owned or operated by Borrower and take any Remedial Actions required to
abate said release or otherwise to come into compliance with applicable
Environmental Law, and (d) promptly provide Agent with written notice
within 10 days of the receipt of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal
property of Borrower, (ii) commencement of any Environmental Action or
notice that an Environmental Action will be filed against Borrower, and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
6.14 Agricultural Products.
(a) Borrower shall pay, not later than seven (7) Business Days prior
to the date required for payment therein, the amount of any outstanding
invoices for the purchase of perishable agricultural commodities (as
defined in PACA) which is required to be paid within
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thirty (30) days of Borrower's acceptance of such commodities unless
Borrower has obtained from the Farm Products Seller of such commodities a
waiver of its rights under PACA in form and substance acceptable to Agent;
provided, however, that in the event that any such invoice requires payment
upon delivery, payment shall be made on such date of delivery. Borrower
acknowledges that Agent shall establish a reserve against the Borrowing
Base in the amount of, at any given time, all accounts payable to sellers
of perishable agricultural commodities with terms of thirty (30) days
(after Borrower's receipt and acceptance of such commodities) or less,
unless Borrower has obtained from any such seller a waiver of its rights
under PACA, in form and substance acceptable to Agent. Borrower shall at
all times comply with all existing and future Food Security Act Notices
during their periods of effectiveness under the Food Security Act,
including, without limitation, directions to make payments to the Farm
Products Seller by issuing payment instruments directly to the secured
party with respect to any assets of the Farm Products Seller or jointly
payable to the Farm Products Seller and any secured party with respect to
the assets of such Farm Products Seller, as specified in the Food Security
Act Notice, so as to terminate or release the security interest in any farm
products maintained by such Farm Products Seller or any secured party with
respect to the assets of such Farm Products Seller under the Food Security
Act.
(b) Borrower shall take all other actions as may be reasonably
required, if any, to ensure that any perishable agricultural commodity (in
whatever form) or other Farm Products are purchased free and clear of any
security interest, Lien, trust or other claim in favor of any Farm Products
Seller or any secured party with respect to the assets of any Farm Products
Seller, including, without limitation, registration with all states which
have established central filing systems as contemplated under the Food
Security Act.
(c) Borrower shall notify Agent in writing within three (3) Business
Days after receipt by Borrower of any Food Security Act Notice or amendment
to a previous Food Security Act Notice and including any notice from any
Farm Products Seller of the intention of such Farm Products Seller to
preserve the benefits of any trust applicable to any assets of Borrower
established in favor of such Farm Products Seller or other Person under the
provisions of PACA or any local law, and within such three (3) Business
Days, Borrower shall provide Agent with a true, correct and complete copy
of such Food Security Act Notice or amendment or other notice, as the case
may be, and including any master lists of effective financing statements
delivered to Borrower pursuant to the Food Security Act. Borrower shall,
upon Agent's request, at any time and from time to time, furnish Agent with
a true, correct and complete list of Persons from whom Borrower or any
Subsidiary purchases any perishable agricultural commodity or other Farm
Products and the outstanding amounts owed by Borrower or any other
Subsdiary to such Person.
In the event Borrower receives a Food Security Act Notice, Borrower shall
pay the related invoice within one (1) Business Day of receipt of such Food
Security Act Notice and notify Agent of such receipt; provided, however,
that such invoice may remain unpaid if, and only so long as (i) appropriate
legal or administrative action has been commenced in good faith and is
being diligently pursued or defended by Borrower, (ii) adequate reserves
with respect to such contest are maintained on the books of Borrower, in
accordance with GAAP, (iii) the ability of
67
the vendor to pursue any fights or enforce any Liens or trusts provided
under PACA has been stayed or otherwise legally prohibited during the
pendency of such action, (iv) Agent shall have established a Reserve
against the Borrowing Base in an amount at least equal to the amount
claimed to be due by such vendor under the relevant invoice (but without
duplication of any Reserve established under Section 6.14(a)) and (v)
Borrower shall promptly pay or discharge such contested invoice and all
additional charges, interest, penalties and expenses, if any, and shall
deliver to Agent evidence reasonably acceptable to Agent of such payment,
if such contest is terminated or discontinued adversely to Borrower or the
conditions set forth in this Section 6.14(c) are no longer met, and (vi)
Agent has not advised Borrower in writing that Agent reasonably believes
that nonpayment thereof could have or result in a Material Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 7 Business
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower will
not and will not permit any of its Subsidiaries to do any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness, and
(d) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this Section 7.1 (and continuance or renewal
of any Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not, in Agent's
judgment, materially impair the prospects of repayment of the Obligations
by Borrower or materially impair Borrower's creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity
of the Indebtedness so refinanced, renewed, or extended, nor are they on
terms or conditions that, taken as a whole, are materially more burdensome
or restrictive to Borrower, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to
the Obligations, then the terms and conditions of the refinancing, renewal,
or extension Indebtedness
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must include subordination terms and conditions that are at least as
favorable to the Lender Group as those that were applicable to the
refinanced, renewed, or extended Indebtedness.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution provided that Borrower may, so long as (i) no Event of
Default has occurred or would directly result, (ii) Agent has received not
less than thirty (30) days advance written notice and (iii) no Material
Adverse Change would result, cause one or more of its wholly-owned
Subsidiaries to enter into any merger or consolidation with any other
wholly-owned Subsidiary of Borrower, or to liquidate, windup or dissolve.
(c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets other than sales of Inventory in the
ordinary course of business or as otherwise expressly permitted under this
Agreement.
7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of any of Borrower's
Collateral, or any other assets of Borrower constituting Collateral or any other
assets of Borrower if, with respect to other assets of Borrower not constituting
Collateral, such action would result in a Material Adverse Change.
7.5 Change Name. Change Borrower's name, FEIN, corporate structure, or
identity, or add any new fictitious name; provided, however, that Borrower may
change its name upon at least 30 days prior written notice to Agent of such
change and so long as, at the time of such written notification, Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens.
7.6 Guarantee. Except as expressly set forth on Schedule 5.20, guarantee
or otherwise become in any way liable with respect to the obligations of any
third Person except by endorsement of instruments or items of payment for
deposit to the account of Borrower or which are transmitted or turned over to
Agent.
7.7 Nature of Business. Make any change in the principal nature of its
business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by Section
7.1(d), or
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except as expressly permitted under the Continuing Bank Group Intercreditor
Agreement, prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower, other than the Obligations in accordance with
this Agreement, and
(b) Except in connection with a refinancing permitted by Section
7.1(d), or except as expressly permitted under the Continuing Bank Group
Intercreditor Agreement, directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any agreement,
instrument, document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Sections 7.1(b) or (c).
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
7.10 Consignments. Consign any Inventory constituting Collateral or sell
any Inventory constituting Collateral on bill and hold, sale or return, sale on
approval, or other conditional terms of sale.
7.11 Distributions. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Borrower's Stock, of any class, whether now or
hereafter outstanding provided that so long as (i) no Event of Default exists or
has occurred and is continuing, (ii) Borrower has Excess Availability of not
less than $350,000 immediately after giving effect to such payment and (iii)
Agent receives not less than twenty (20) days advance written notice, Borrower
may redeem employee-owned Stock of the Borrower, in an aggregate amount not to
exceed $350,000 in any Fiscal Year, upon such employee's termination of
employment or death.
7.12 Accounting Methods. Modify or change its method of accounting (other
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrower's accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or Borrower's
financial condition.
7.13 Investments. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Borrower shall not have Permitted Investments (other than in the Cash Management
Accounts, advances made in connection with purchase of goods and services in the
ordinary course of business, the Cliffstar Note, Stock of Subsidiaries and Stock
of Beaver Creek Cranberry Grower Assoc. Inc.) in excess of $100,000 outstanding
at any one time unless Borrower and the applicable securities intermediary or
bank have entered into Control Agreements governing such Permitted Investments,
as Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.
7.14 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to Borrower than would be obtained in an arm's length transaction
70
with a non-Affiliate, provided that, so long as (i) no Event of Default under
Section 7.20 of this Agreement has occurred or would result, (ii) Borrower has
Excess Availability of not less than $500,000 immediately after giving effect to
such payment and (iii) Agent has received not less than fifteen (15) days
advance written notice of such payment, Borrower may pay regularly scheduled
fees and out of pocket expenses payable under the Sun Management Agreement as in
effect on the Closing Date.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
7.16 [Intentionally Omitted]
7.17 Use of Proceeds. Use the proceeds of the Advances and the Term Loan
for any purpose other than (a) on the Closing Date, (i) to repay, in full (after
giving effect to the Terminating Bank Group Documents), the outstanding
principal, accrued interest, and accrued fees and expenses owing to the
Terminating Bank Group, (ii) to repay in part, the outstanding principal,
accrued interest, and accrued fees and expenses owing to the Continuing Bank
Group and (iii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent with the terms
and conditions hereof, for its lawful and permitted purposes.
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees. Relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to Agent and so long as, at
the time of such written notification, Borrower provides any financing
statements or fixture filings necessary to perfect and continue perfected the
Agent's Liens and also provides to Agent a Collateral Access Agreement with
respect to such new location. The Inventory and Equipment constituting
Collateral shall not at any time now or hereafter be stored with a bailee,
warehouseman, or similar party without Agent's prior written consent.
7.19 Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrower shall not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrower may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
7.20 Financial Covenants.
(a) Minimum EBITDA. Fail to maintain EBITDA, measured on a fiscal
month-end basis, of not less than the required amount set forth in the
following table for the applicable period set forth opposite thereto;
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Applicable Amount Applicable Period
($897,298) For the 3 month period ending January 31, 2002
$429,998 For the 4 month period ending February 28, 2002
($339,393) For the 5 month period ending March 31, 2002
($288,953) For the 6 month period ending April 30, 2002
($293,551) For the 7 month period ending May 31, 2002
($566,533) For the 8 month period ending June 30, 2002
$1,044,984 For the 9 month period ending July 31, 2002
$2,132,232 For the 10 month period ending August 31, 2002
$2,442,526 For the 11 month period ending September 30, 2002
$2,959,933 For the 12 month period ending October 31, 2002
$2,826,729 For the 12 month period ending November 30, 2002
$5,692,444 For the 12 month period ending December 31, 2002
$6,778,870 For the 12 month period ending January 31, 2003
$6,499,141 For the 12 month period ending February 28, 2003
72
$8,543,857 For the 12 month period ending March 31, 2003
$9,529,124 For the 12 month period ending April 30, 2003
$10,862,950 For the 12 month period ending May 31, 2003
$12,756,309 For the 12 month period ending June 30, 2003
$12,215,248 For the 12 month period ending July 31, 2003
$12,511,558 For the 12 month period ending August 31, 2003
$13,909,954 For the 12 month period ending October 31, 2003
$14,000,000 For the 12 month period ending September 30, 2003 and
each rolling twelve month period (measured at the end of
each fiscal month) thereafter
(b) Capital Expenditures. Make Capital Expenditures in any fiscal
year in excess of the amount of $1,386,000 for each Fiscal Year. So long
as, as of the end of any Fiscal Year, no Event of Default then exists or
has occurred and is continuing, the amount of Capital Expenditures
permitted in such Fiscal Year which remains unused may be added to the
permitted amount of Capital Expenditures in the immediately following
Fiscal Year. In the event that Borrower requests an increase to the amount
of Capital Expenditures permitted under this Section, and so long as no
Event of Default has then occurred the Agent and Required Lenders shall not
charge an amendment or similar fee in connection with any increase in such
amount agreed to by the Required Lenders, provided that Agent and Required
Lenders shall have no commitment or obligation whatsoever, of any kind or
nature, to agree to any such increase.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
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8.1 If Borrower or any Guarantor which is a Material Subsidiary fails to
pay when due and payable, or when declared due and payable, all or any portion
of the Obligations (whether of principal, interest (including any interest
which, but for the provisions of the Bankruptcy Code, would have accrued on such
amounts), fees and charges due the Lender Group, reimbursement of Lender Group
Expenses, or other amounts constituting Obligations);
8.2 If Borrower or any Guarantor which is a Material Subsidiary fails to
perform, keep, or observe: (a) any term, provision, condition, covenant, or
agreement contained in Section 6.2 or Section 6.3 and such failure continues for
a period of five (5) days after the date of such failure; provided that a single
failure, for up to five (5) days, in any fiscal quarter to perform, keep or
observe any one of the daily and weekly reporting requirements contained in
Section 6.2 shall not, so long as no other Event of Default then exists or has
occurred and is continuing, constitute an Event of Default; (b) any term,
provision, condition, covenant or agreement contained in Sections 6.4, 6.5, 6.6,
6.8 or 6.10 and such failure continues for a period of fifteen (15) days after
the date of such failure or (c) any other term, provision, condition, covenant
or agreement contained in this Agreement or in any of the other Loan Documents;
8.3 If any material portion of Borrower's or any of its material
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of its
Material Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower, or any of
its Material Subsidiaries, and any of the following events occur: (a) Borrower
or the Subsidiary consents to the institution of such Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Agent (including any
successor agent) and each other member of the Lender Group shall be relieved of
their obligations to extend credit hereunder, (d) an interim trustee is
appointed to take possession of all or any substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
Borrower or any of its Subsidiaries, or (e) an order for relief shall have been
entered therein;
8.6 If Borrower or any of its Material Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's or any of its Material Subsidiaries' assets by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether choate or otherwise, upon any of Borrower's or any of its Subsidiaries'
assets and the same is not paid before such payment is delinquent;
74
8.8 If a judgment or other claim in excess of $ 50,000 becomes a Lien or
encumbrance upon any material portion of Borrower's or any of its Subsidiaries'
assets;
8.9 If there is a default in any material agreement, including, without
limitation, the Continuing Bank Group Documents, to which Borrower or any of its
Subsidiaries is a party and such default (a) occurs at the final maturity of the
obligations thereunder, or (b) results in a right by the other party thereto,
irrespective of whether exercised, to accelerate the maturity of Borrower's or
its Subsidiaries' obligations thereunder, to terminate such agreement, or to
refuse to renew such agreement pursuant to an automatic renewal right therein;
8.10 If Borrower or any of its Subsidiaries makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.11 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
Borrower, its Subsidiaries, or any officer, employee, agent, or director of
Borrower or any of its Subsidiaries;
8.12 The occurrence of an event of default of any kind, except as set forth
on Schedule 3.1(u), under the Cliffstar Note, provided that the failure on the
part of Cliffstar to make interest or principal payments under the Cliffstar
Note shall not constitute an Event of Default if the Borrower timely pays to the
Agent the regularly scheduled Term Loan B principal payments on the dates such
regularly scheduled payments are due, notwithstanding such nonpayment by
Cliffstar;
8.13 If the obligation of a Guarantor under any Guaranty is limited or
terminated by operation of law or by Guarantor thereunder, except to the extent
such obligation is limited or terminated by operation of law upon a merger,
liquidation or dissolution expressly permitted under this Agreement; or
8.14 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby; or
8.15 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Borrower, or a proceeding shall be commenced by Borrower or any
Guarantor which is a Material Subsidiary, or by any Governmental Authority
having jurisdiction over Borrower, seeking to establish the invalidity or
unenforceability thereof, or Borrower or any Guarantor which is a Material
Subsidiary shall deny that Borrower or such Guarantor has any liability or
obligation purported to be created under any Loan Document.
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9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation,
of an Event of Default, the Required Lenders (at their election but without
notice of their election and without demand) may authorize and instruct Agent to
do any one or more of the following on behalf of the Lender Group (and Agent,
acting upon the instructions of the Required Lenders, shall do the same on
behalf of the Lender Group), all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, under any of the Loan Documents, or under
any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of the Lender Group, but without
affecting any of the Agent's Liens in the Collateral and without affecting
the Obligations;
(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Agent considers advisable, and in
such cases, Agent will credit Borrower's Loan Account with only the net
amounts received by Agent in payment of such disputed Accounts after
deducting all Lender Group Expenses incurred or expended in connection
therewith;
(e) Cause Borrower to hold all returned Inventory in trust for the
Lender Group, segregate all returned Inventory from all other assets of
Borrower or in Borrower's possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(f) Without notice to or demand upon Borrower, make such payments and
do such acts as Agent considers necessary or reasonable to protect its
security interests in the Collateral. Borrower agrees to assemble the
Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate
which is reasonably convenient to both parties. Borrower authorizes Agent
to enter the premises where the Personal Property Collateral is located, to
take and maintain possession of the Personal Property Collateral, or any
part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens and to pay
all expenses incurred in connection therewith and to charge Borrower's Loan
Account therefor. With respect to any of Borrower's owned or leased
premises, Borrower hereby grants Agent a license to enter into possession
of such premises and to occupy the same, without charge, in order to
exercise any of the Lender Group's rights or remedies provided herein, at
law, in equity, or otherwise, subject to the express terms and conditions
of the Continuing Bank Group Intercreditor Agreement;
(g) Without notice to Borrower (such notice being expressly waived),
and without constituting a retention of any collateral in satisfaction of
an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by the
Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or
the account of Borrower held by the Lender Group, subject to the Continuing
Bank Group Intercreditor Agreement;
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(h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein)
the Personal Property Collateral. Borrower hereby grants to Agent a license
or other right to use, without charge, Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to
the Personal Property Collateral, in completing production of, advertising
for sale, and selling any Personal Property Collateral and Borrower's
rights under all licenses and all franchise agreements shall inure to the
Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including Borrower's
premises) as Agent determines is commercially reasonable. It is not
necessary that the Personal Property Collateral be present at any such
sale;
(k) Agent shall give notice of the disposition of the Personal
Property Collateral as follows:
(i) Agent shall give Borrower a notice in writing of the time
and place of public sale, or, if the sale is a private sale or some
other disposition other than a public sale is to be made of the
Personal Property Collateral, the time on or after which the private
sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 12, at least 10 days
before the earliest time of disposition set forth in the notice; no
notice needs to be given prior to the disposition of any portion of
the Personal Property Collateral that is perishable or threatens to
decline speedily in value or that is of a type customarily sold on a
recognized market;
(l) Agent, on behalf of the Lender Group, may credit bid and purchase
at any public sale; and
(m) Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document; and
(o) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrower.
Any excess will be returned, without interest and subject to the rights of
third Persons, by Agent to Borrower.
9.2 Remedies Cumulative. The rights and remedies of the Lender Group under
this
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Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its sole discretion and without prior
notice to Borrower, may do any or all of the following: (a) make payment of the
same or any part thereof, (b) set up such reserves in Borrower's Loan Account as
Agent deems necessary to protect the Lender Group from the exposure created by
such failure, or (c) in the case of the failure to comply with Section 6.8
hereof, obtain and maintain insurance policies of the type described in Section
6.8 and take any action with respect to such policies as Agent deems prudent.
Any such amounts paid by Agent shall constitute Lender Group Expenses and any
such payments shall not constitute an agreement by the Lender Group to make
similar payments in the future or a waiver by the Lender Group of any Event of
Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Borrower hereby agrees
that: (a) so long as Agent complies with its obligations, if any, under the
Code, the Lender Group shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
11.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons with respect to each Lender,
each Participant, and each of their respective officers, directors, employees,
agents, and attorneys-in-fact (each, an "Indemnified Person") harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
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attorneys fees and disbursements and other costs and expenses actually incurred
in connection therewith (as and when they are incurred and irrespective of
whether suit is brought), at any time asserted against, imposed upon, or
incurred by any of them (a) in connection with or as a result of or related to
the execution, delivery, enforcement, performance, or administration of this
Agreement, any of the other Loan Documents, or the transactions contemplated
hereby or thereby, and (b) with respect to any investigation, litigation, or
proceeding related to this Agreement, any other Loan Document, or the use of the
proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto (all the foregoing, collectively, the
"Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrower or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Agent, as applicable, may designate to each other
in accordance herewith), or telefacsimile to Borrower or Agent, as the case may
be, at its address set forth below:
If to Borrower: NORTHLAND CRANBERRIES, INC.
800 First Avenue South
Wisconsin Rapids, Wisconsin 54495
Attn: Mr. John Swendrowski
Fax No. 715-422-6800
with copies to: Foley & Lardner
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Patricia Lane, Esq.
Fax No. 414-297-4900
79
-and-
Sun Capital Partners
5200 Town Center Circle
Suite 470
Boca Raton, Florida 33486
Attn: C. Deryl Couch
General Counsel
Fax No. 561-394-0540
If to Agent: FOOTHILL CAPITAL CORPORATION
2450 Colorado Avenue
Suite 3000 West
Santa Monica, California 90404
Attn: Business Finance Division Manager
Fax No. 310-453-7413
FOOTHILL CAPITAL CORPORATION
400 Northpark Town Center
1000 Abernathy Road, N.E.
Suite 1450
Atlanta, Georgia 30328
Attn: Business Finance Division Manager
Fax No. 770-508-1375
with copies to: OTTERBOURG, STEINDLER, HOUSTON
& ROSEN, P.C.
230 Park Avenue
New York, New York 10169
Attn: Mitchell M. Brand, Esq.
Fax No. 212-682-6104
ABLECO FINANCE LLC
450 Park Avenue, 28th Floor
New York, New York 10022
Attn. Eric F. Miller
Fax No: 212-758-5305
SCHULTE ROTH & ZABLE LLP
919 Third Avenue
New York, New York 10022
Attn. Frederic L. Ragucci, Esq.
Fax No: 212-593-5955
Agent and Borrower may change the address at which they are to receive
notices
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hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 12, other
than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or five (5) Business Days after the
deposit thereof in the mail. Borrower acknowledges and agrees that notices sent
by the Lender Group in connection with the exercise of enforcement rights
against Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR
RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO
BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWER AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).
(c) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE
LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
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LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent (provided that
no written consent of Agent shall be required in connection with any
assignment and delegation by a Lender to an Eligible Transferee and no
notice to Agent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of a Lender or a fund or account
managed by a Lender or an Affiliate of a Lender), assign and delegate to
one or more assignees (each an "Assignee") all, or any ratable part of all,
of the Obligations, the Commitments and the other rights and obligations of
such Lender hereunder and under the other Loan Documents, in a minimum
amount of $5,000,000 (except that such minimum amount shall not apply to
any Affiliate of a Lender or any fund or account managed by a Lender or an
Affiliate of Lender); provided, however, that Borrower and Agent may
continue to deal solely and directly with such Lender in connection with
the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower and
Agent by such Lender and the Assignee, (ii) such Lender and its Assignee
have delivered to Borrower and Agent an Assignment and Acceptance in form
and substance satisfactory to Agent, and (iii) the assignor Lender or
Assignee has paid to Agent for Agent's separate account a processing fee in
the amount of $5,000. Anything contained herein to the contrary
notwithstanding, the consent of Agent shall not be required (and payment of
any fees shall not be required) if such assignment is in connection with
any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender or
the Assignee is an Affiliate of or a fund money market account, investment
account or other account managed by a Lender or an Affiliate of a Lender.
(b) From and after the date that Agent notifies the assignor Lender
(with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 11.3
hereof) and be released from its obligations under this Agreement (and in
the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a
party hereto and thereto), and such assignment shall affect a novation
between Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
assigning
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Lender thereunder and the Assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan
Document furnished pursuant hereto, (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of Borrower or the performance or observance by
Borrower of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto, (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance, (4) such
Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement,
(5) such Assignee appoints and authorizes Agent to take such actions and to
exercise such powers under this Agreement as are delegated to Agent, by the
terms hereof, together with such powers as are reasonably incidental
thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment, if applicable, under the Assignment and Acceptance and receipt and
acknowledgment by Agent of such fully executed Assignment and Acceptance,
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated
to each Assignee shall reduce such Commitments of the assigning Lender pro
tanto.
(e) Any Lender may at any time, with the written consent of Agent,
sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating
interests in its Obligations, the Commitment, and the other rights and
interests of that Lender (the "Originating Lender") hereunder and under the
other Loan Documents (provided that no written consent of Agent shall be
required in connection with any sale of any such participating interests by
a Lender to an Eligible Transferee); provided, however, that (i) the
Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other
rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or under the other Loan Documents and the
Originating Lender's obligations under this Agreement shall remain
unchanged, (ii) the Originating Lender shall remain solely responsible for
the performance of such obligations, (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall transfer or
grant any participating interest under which the Participant has the right
to approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment
to, or consent or waiver with respect to this Agreement or of any other
Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the
interest rate applicable to the Obligations hereunder in which such
Participant is
83
participating, (C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the
Loan Documents) supporting the Obligations hereunder in which such
Participant is participating, (D) postpone the payment of, or reduce the
amount of, the interest or fees payable to such Participant through such
Lender, or (E) change the amount or due dates of scheduled principal
repayments or prepayments or premiums, and (v) all amounts payable by
Borrower hereunder shall be determined as if such Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall
be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender
under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement
or the other Loan Documents or any direct rights as to the other Lenders,
Agent, Borrower, the Collections, the Collateral, or otherwise in respect
of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents
and information which it now or hereafter may have relating to Borrower or
Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower, do any of the following:
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(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to take
any action hereunder,
(e) amend, modify or waive this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
(g) change the definition of "Required Lenders" or "Pro Rata Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release Borrower or any Guarantor from any obligation for the
payment of money, or
(j) increase the advance rate with respect to Advances (except for
the restoration of an advance rate after the prior reduction thereof),
(k) amend, modify or waive any of the provisions of the Intercreditor
Agreements,
(l) change the definition of Borrowing Base or the definitions of
Eligible Accounts, Eligible Inventory, Reserves, Inventory Reserves,
Supplemental Reserves, Maximum Revolver Amount, Term Loan A Amount or Term
Loan B Amount, or change Section 2.1(a) or Section 2.1(b) or any definition
or term used in any of the foregoing definitions or Sections,
(m) amend, modify or waive any of the provisions of Section 2.1(d),
2.2, 2.3(e)(i), 2.3(i), 2.4(b), 15.1 or 16 or change the definitions used
in any such Sections.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this
Agreement or any other Loan Document that relates only to the relationship
of the Lender Group among themselves, and that does not affect the rights
or obligations of Borrower, shall not require consent by or the agreement
of Borrower.
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The Agent and the Lenders have executed a side letter agreement on the
Closing Date pursuant to which the Agent and the Lenders have agreed to certain
intercreditor arrangements, including but not limited to, certain arrangements
regarding allocation of payments of the Obligations. The rights and duties of
the Agent and the Lenders with respect to such matters, are subject to such
agreement.
15.2 Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders,
and a Lender ("Holdout Lender") fails to give its consent, authorization,
or agreement, then Agent, upon at least 5 Business Days prior irrevocable
notice to the Holdout Lender, may permanently replace the Holdout Lender
with one or more substitute Lenders (each, a "Replacement Lender"), and the
Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for
such replacement, which date shall not be later than 15 Business Days after
the date such notice is given.
(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment
and Acceptance Agreement, subject only to the Holdout Lender being repaid
its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability and the payment of all
fees by or otherwise due to such Holdout Lender as of the date of such
replacement) without any premium or penalty of any kind whatsoever. If the
Holdout Lender shall refuse or fail to execute and deliver any such
Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and
delivered such Assignment and Acceptance Agreement. The replacement of any
Holdout Lender shall be made in accordance with the terms of Section 14.1,
provided, that, in no event shall any Lender be required to become a
Replacement Lender. Until such time as the Replacement Lenders shall have
acquired all of the Obligations, the Commitments, and the other rights and
obligations of the Holdout Lender hereunder and under the other Loan
Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender's Pro Rata Share of Advances and to purchased a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
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16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby designates
and appoints Foothill as its representative under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrower shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management arrangements as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrower, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
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16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or the books or
records or properties of any of Borrower's Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
16.5 Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to the existence of Overadvances as to which the Agent has actual
knowledge and to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
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16.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrower is obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrower and without limiting the obligation of Borrower to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
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limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrower or its Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or
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other business with Borrower and its Subsidiaries and Affiliates and any other
Person (other than the Lender Group) party to any Loan Documents as though such
Lender were not a Lender hereunder without notice to or consent of the other
members of the Lender Group. The other members of the Lender Group acknowledge
that, pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding Borrower or its Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrower or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender shall not be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of Agent.
16.11 Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC,
such Lender agrees with and in favor of Agent and Borrower, to deliver to
Agent and Borrower promptly upon becoming a Lender:
(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (A) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank"
as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
or (III) a controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement
and at any other time reasonably requested by Agent or Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
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(b) If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of Borrower to such Lender, such Lender
agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrower to such Lender. To the
extent of such percentage amount, Agent will treat such Lender's IRS Form
W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required
by subsection (a) of this Section are not delivered to Agent, then Agent
may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the applicable
withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because
the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent under this
Section, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement
of Agent.
(e) All payments made by Borrower hereunder or under any note will be
made without setoff, counterclaim, or other defense, except as required by
applicable law and other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties,
fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction (other than the United States) or by any
political subdivision or taxing authority thereof or therein (other than of
the United States) with respect to such payments (but excluding, any tax
imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein (i) measured by or based on the net income or
net profits of a Lender, or (ii) to the extent that such tax results from a
change in the circumstances of the Lender, including a change in the
residence, place of organization, or principal place of business of the
Lender, or a change in the branch or lending office of the Lender
participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, Borrower agrees to pay the full amount of such Taxes,
and such additional amounts as may be necessary so that every payment of
all amounts due under this Agreement or under any note, including any
amount paid pursuant to this Section 16.11(e) after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Borrower shall not be required
to increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to
comply with the other requirements of this Section 16.11, or (ii) if
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the increase in such amount payable results from Agent's or such Lender's
own willful misconduct or gross negligence. Borrower will furnish to Agent
as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrower.
16.12 Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i)upon the
termination of the Commitments and payment and satisfaction in full by
Borrower of all Obligations, (ii)constituting property being sold or
disposed of if a release is required or desirable in connection therewith
and if Borrower certifies to Agent that the sale or disposition is
permitted under Section 7.4 of this Agreement or the other Loan Documents
(and Agent may rely conclusively on any such certificate, without further
inquiry), (iii) constituting property in which Borrower owned no interest
at the time the security interest was granted or at any time thereafter,
(iv) constituting property leased to Borrower under a lease that has
expired or is terminated in a transaction permitted under this Agreement or
(v) consisting of the Cliffstar Note, upon satisfaction of all terms and
conditions for release of the Cliffstar Note contained in this Agreement
and the other Loan Documents. Except as provided above, Agent will not
execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of any substantial
portion of the Collateral, all of the Lenders, or (z) otherwise, the
Required Lenders. Upon request by Agent or Borrower at any time, the
Lenders will confirm in writing Agent's authority to release any such Liens
on particular types or items of Collateral pursuant to this Section 16.12;
provided, however, that (1) Agent shall not be required to execute any
document necessary to evidence such release on terms that, in Agent's
opinion, would expose Agent to liability or create any obligation or entail
any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrower or is cared
for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the
terms and conditions contained herein, Agent may act in any manner it may
deem appropriate, in its sole discretion given Agent's own interest in the
Collateral in its capacity as one of the Lenders and that Agent shall have
no other duty or liability whatsoever to any Lender as to any of the
foregoing, except as otherwise provided herein.
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16.13 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express
consent of Agent, and that it shall, to the extent it is lawfully entitled
to do so, upon the request of Agent, set off against the Obligations, any
amounts owing by such Lender to Borrower or any deposit accounts of
Borrower now or hereafter maintained with such Lender. Each of the Lenders
further agrees that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the commencement of
any legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral the purpose of
which is, or could be, to give such Lender any preference or priority
against the other Lenders with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to,
this Agreement or the other Loan Documents, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii)payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1)
turn the same over to Agent, in kind, and with such endorsements as may be
required to negotiate the same to Agent, or in immediately available funds,
as applicable, for the account of all of the Lenders and for application to
the Obligations in accordance with the applicable provisions of this
Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so
that such excess payment received shall be applied ratably as among the
Lenders in accordance with their Pro Rata Shares; provided, however, that
if all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing
party, but without interest except to the extent that such purchasing party
is required to pay interest in connection with the recovery of the excess
payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this
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Agreement or the other Loan Documents relating to the Collateral and the
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared
by Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing
any audit or examination will inspect only specific information regarding
Borrower and will rely significantly upon the Books, as well as on
representations of Borrower's personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential
manner; it being understood and agreed by Borrower that in any event such
Lender may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required by any
bona fide potential or actual Assignee or Participant in connection with
any contemplated or actual assignment or transfer by such Lender of an
interest herein or any participation interest in such Lender's rights
hereunder, (c) of information that has become public by disclosures made by
Persons other than such Lender, its Affiliates, assignees, transferees, or
Participants, or (d) as required or requested by any court, governmental or
administrative agency, pursuant to any subpoena or other legal process, or
by any law, statute, regulation, or court order; provided, however, that,
unless prohibited by applicable law, statute, regulation, or court order,
such Lender shall notify Borrower of any request by any court, governmental
or administrative agency, or pursuant to any subpoena or other legal
process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any
other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of Borrower, and (ii) to pay and protect, and
indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses, and other amounts (including, attorneys fees and
costs) incurred by
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Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any
Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrower, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
17. GENERAL PROVISIONS.
17.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.
17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
96
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a writing
signed by Agent (on behalf of the requisite Lenders) and Borrower.
17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or payment
of the Obligations by Borrower or the transfer to the Lender Group of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a "Voidable Transfer"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrower
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
17.8 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
NORTHLAND CRANBERRIES, INC.,
a Wisconsin corporation, as Borrower
By: /s/
------------------------------------------
Title:
---------------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Agent and as a
Lender
By: /s/
------------------------------------------
Title:
---------------------------------------
ABLECO FINANCE LLC
By: /s/
------------------------------------------
Title:
---------------------------------------
98
TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION ....................................... 2
1.1 Definitions .................................................. 2
1.2 Accounting Terms ............................................. 28
1.3 Code ......................................................... 28
1.4 Construction ................................................. 28
1.5 Schedules and Exhibits ....................................... 28
2. LOAN AND TERMS OF PAYMENT .......................................... 28
2.1 Revolver Advances ............................................ 28
2.2 Term Loans ................................................... 30
2.3 Borrowing Procedures and Settlements ......................... 31
2.4 Payments ..................................................... 37
2.5 Overadvances ................................................. 40
2.6 Interest Rates and Letter of Credit Fee:
Rates, Payments, and Calculations ............................ 40
2.7 Cash Management .............................................. 41
2.8 Crediting Payments; Float Charge ............................. 42
2.9 Designated Account ........................................... 43
2.10 Maintenance of Loan Account; Statements of Obligations ....... 43
2.11 Fees ......................................................... 43
2.13 Capital Requirements ......................................... 47
3. CONDITIONS; TERM OF AGREEMENT ...................................... 47
3.1 Conditions Precedent to the Initial Extension of Credit ...... 47
3.2 Conditions Subsequent to the Initial Extension of Credit ..... 52
3.3 Conditions Precedent to all Extensions of Credit ............. 52
3.4 Term ......................................................... 53
3.5 Effect of Termination ........................................ 53
3.6 Early Termination by Borrower ................................ 53
4. CREATION OF SECURITY INTEREST ...................................... 54
4.1 Grant of Security Interest ................................... 54
4.2 Negotiable Collateral ........................................ 54
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral ........................................ 54
4.4 Delivery of Additional Documentation Required ................ 55
4.5 Power of Attorney ............................................ 55
4.6 Right to Inspect ............................................. 55
4.7 Control Agreements ........................................... 56
5. REPRESENTATIONS AND WARRANTIES ..................................... 56
5.1 No Encumbrances .............................................. 56
5.2 Eligible Accounts ............................................ 56
5.3 Eligible Inventory ........................................... 57
5.4 Equipment .................................................... 58
5.5 Location of Inventory and Equipment .......................... 58
5.6 Inventory Records ............................................ 58
5.7 Location of Chief Executive Office; FEIN ..................... 58
5.8 Due Organization and Qualification; Subsidiaries ............. 58
5.9 Due Authorization; No Conflict ............................... 59
5.10 Litigation ................................................... 60
5.11 No Material Adverse Change ................................... 60
5.12 Fraudulent Transfer .......................................... 61
5.13 Employee Benefits ............................................ 61
5.14 Environmental Condition ...................................... 61
5.15 Brokerage Fees ............................................... 61
5.17 Leases ....................................................... 61
5.18 DDAs ......................................................... 62
5.20 Indebtedness ................................................. 62
6. AFFIRMATIVE COVENANTS .............................................. 63
6.1 Accounting System ............................................ 63
6.2 Collateral Reporting ......................................... 63
6.3 Financial Statements, Reports, Certificates .................. 65
6.4 Return ....................................................... 67
6.5 Maintenance of Properties .................................... 67
6.6 Taxes ........................................................ 67
6.7 Insurance .................................................... 67
6.9 Compliance with Laws ......................................... 68
6.10 Leases ....................................................... 69
6.11 Brokerage Commissions ........................................ 69
6.12 Existence .................................................... 69
6.15 Disclosure Updates ........................................... 71
7. NEGATIVE COVENANTS ................................................. 71
7.1 Indebtedness ................................................. 71
7.2 Liens ........................................................ 72
7.3 Restrictions on Fundamental Changes .......................... 72
7.4 Disposal of Assets ........................................... 72
7.5 Change Name .................................................. 72
7.6 Guarantee .................................................... 72
7.7 Nature of Business ........................................... 72
7.8 Prepayments and Amendments ................................... 72
7.10 Consignments ................................................. 73
7.11 Distributions ................................................ 73
7.12 Accounting Methods ........................................... 73
7.13 Investments .................................................. 73
7.14 Transactions with Affiliates ................................. 73
7.15 Suspension ................................................... 74
7.16 [Intentionally Omitted] ...................................... 74
7.17 Use of Proceeds .............................................. 74
7.18 Change in Location of Chief Executive Office;
Inventory and Equipment with Bailees ......................... 74
7.19 Securities Accounts .......................................... 74
7.20 Financial Covenants .......................................... 74
8. EVENTS OF DEFAULT .................................................. 76
9. THE LENDER GROUP'S RIGHTS AND REMEDIES ............................. 78
9.1 Rights and Remedies .......................................... 78
9.2 Remedies Cumulative .......................................... 80
10. TAXES AND EXPENSES ................................................. 81
11. WAIVERS; INDEMNIFICATION ........................................... 81
11.1 Demand; Protest .............................................. 81
11.2 The Lender Group's Liability for Collateral .................. 81
11.3 Indemnification .............................................. 81
12. NOTICES ............................................................ 82
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER ......................... 84
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS ......................... 85
14.1 Assignments and Participations ............................... 85
14.2 Successors ................................................... 87
15. AMENDMENTS; WAIVERS. ............................................... 87
15.1 Amendments and Waivers ....................................... 87
15.2 Replacement of Holdout Lender ................................ 89
15.3 No Waivers; Cumulative Remedies .............................. 89
16. AGENT; THE LENDER GROUP ............................................ 90
16.1 Appointment and Authorization of Agent ....................... 90
16.2 Delegation of Duties ......................................... 91
16.3 Liability of Agent ........................................... 91
16.4 Reliance by Agent ............................................ 91
16.5 Notice of Default or Event of Default ........................ 91
16.6 Credit Decision .............................................. 92
16.7 Costs and Expenses; Indemnification .......................... 92
16.8 Agent in Individual Capacity ................................. 93
16.9 Successor Agent .............................................. 93
16.10 Lender in Individual Capacity ................................ 94
16.11 Withholding Taxes ............................................ 94
16.12 Collateral Matters ........................................... 96
16.13 Restrictions on Actions by Lenders; Sharing of Payments ...... 97
16.14 Agency for Perfection ........................................ 98
16.15 Payments by Agent to the Lenders ............................. 98
16.16 Concerning the Collateral and Related Loan Documents ......... 98
16.17 Field Audits and Examination Reports;
Confidentiality; Disclaimers by Lenders; Other
Reports and Information ...................................... 98
16.18 Several Obligations; No Liability ............................ 99
17. GENERAL PROVISIONS ................................................. 100
17.1 Effectiveness ................................................ 100
17.2 Section Headings ............................................. 100
17.3 Interpretation ............................................... 100
17.4 Severability of Provisions ................................... 100
17.5 Amendments in Writing ........................................ 100
17.6 Counterparts; Telefacsimile Execution ........................ 100
17.7 Revival and Reinstatement of Obligations ..................... 101
17.8 Integration .................................................. 101
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Schedule C-1 Commitments
Schedule E-1 Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 1.1 Liquidating Assets
Schedule 2.7(a) Cash Management Banks
Schedule 3.1(l) Cliffstar Payments
Schedule 3.1(u) Tax Returns
Schedule 3.2(d) Closing Date Material Changes
Schedule 4.1 Excluded Collateral
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 ERISA
Schedule 5.14 Environmental Matters
Schedule 5.15 Brokerage Fees
Schedule 5.16 Intellectual Property
Schedule 5.17 Leases
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.21(a) Disclosure Notices regarding PACA