1
EXHIBIT 10(r)
U.S. $90,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of September 11, 1996
among
THORN APPLE VALLEY, INC.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
New York Branch,
as the Agent for the Lenders
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TABLE OF CONTENTS
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I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 1
1.2. Intercreditor Agreement Definitions; Use of Defined Terms . . . . . . .. . . . . . 18
1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 18
1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . .. . . . . . 18
II COMMITMENTS, BORROWING PROCEDURES AND NOTES . . . . . . . . . . . . . . . . . . . . . .. . . . . . 18
2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 18
2.1.1. Commitment of Each Lender . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 18
2.1.2. Lenders Not Required To Make Loans . . . . . . . . . . . . . . . . . .. . . . . . 19
2.2. Reductions of Commitment Amount . . . . . . . . . . . . . . . . . . . .. . . . . . 19
2.3. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 19
2.4. Continuation and Conversion Elections . . . . . . . . . . . . . . . . .. . . . . . 20
2.5. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 20
2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 20
2.7. The Letter of Credit Subfacility. . . . . . . . . . . . . . . . . . . .. . . . . . 21
2.8. Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . .. . . . . . 21
2.9. Risk Participations, Drawings and Reimbursements . . . . . . . . . . .. . . . . . 23
2.10. Repayment of Participations . . . . . . . . . . . . . . . . . . . . . .. . . . . . 25
2.11. Role of the Issuing Lender . . . . . . . . . . . . . . . . . . . . . .. . . . . . 25
2.12. Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 26
2.13. Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 27
2.14. Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 28
2.15. Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . .. . . . . . 28
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 28
3.1. Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . .. . . . . . 28
3.2. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 30
3.2.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 30
3.2.2. Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 30
3.2.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 30
3.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 31
3.3.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 31
3.3.2. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 31
3.3.3. Restructuring Fee . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 31
ARTICLE IV CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS . . . . . . . . . . . . .. . . . . . 31
4.1. Eurodollar Rate Lending Unlawful . . . . . . . . . . . . . . . . . . .. . . . . . 31
4.2. Deposits Unavailable . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 32
4.3. Increased Eurodollar Rate Loan Costs, etc. . . . . . . . . . . . . . .. . . . . . 32
4.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 32
4.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 33
4.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 33
4.7. Payments, Computations, etc. . . . . . . . . . . . . . . . . . . . . .. . . . . . 35
4.8. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . 35
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4.9. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
V CONDITIONS TO RESTATEMENT AND BORROWING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.1. Restatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.1.1. Equity Infusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1.3. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1.4. Intercreditor Agreement; Other Financing Agreements . . . . . . . . . . . . . . . . . . . 37
5.1.5. Environmental Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1.6. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1.7. Closing Fees, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.2. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.2.1. Compliance with Warranties, No Default, etc. . . . . . . . . . . . . . . . . . . . . . . 38
5.2.2. Borrowing Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.1. Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.2. Due Authorization, Non-Contravention, etc. . . . . . . . . . . . . . . . . . . . . . . . 39
6.3. Government Approval, Regulation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.4. Validity, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.6. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.7. Litigation, Labor Controversies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.13. Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.14. Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.15. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.16. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.17. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.18. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
VII COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
VIII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . . . . . . . . . . 45
8.1.4. Non-Performance of Other Covenants and Obligations . . . . . . . . . . . . . . . . . . . 46
8.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.1.7. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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TABLE OF CONTENTS
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8.1.8. Control of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1.9. Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1.10. Scheduled Cap[ital Infusion Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1.11 Security Documents
8.1.12. Subsidiaries Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
IX THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.1. Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.2. Funding Reliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.3. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.4. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.5. Loans by RBN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.6. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.7. Copies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
X MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.3. Payment of Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.8. Execution in Counterparts, Effectiveness, etc; Waiver. . . . . . . . . . . . . . . . . 55
10.9. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.11. Sale and Transfer of Loans and Note; Participations in Loans and Note . . . . . . . . . 56
10.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.12. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.13. Waiver and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.14. Forum Selection and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . 61
10.15. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
APPENDIX A - Covenants Appendix
SCHEDULE I - Disclosure Schedule
SCHEDULE 10.2 - Notice Addresses
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Base Certificate
EXHIBIT C - Form of Borrowing Request
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Lender Assignment Agreement
EXHIBIT F - Form of Opinion of Counsel to the Borrower
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AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 11,
1996, among THORN APPLE VALLEY, INC., a Michigan corporation (the "Borrower"),
the various financial institutions as are or may become parties hereto
(collectively, the "Lenders"), and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., acting through its New York Branch ("RBN"), as
agent (the "Agent") for the Lenders,
W I T N E S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties to the
Credit Agreement dated as of May 30, 1995, as heretofore amended (the
"Revolving Credit Agreement"), pursuant to which the Lenders have made
available loans to the Borrower; and
WHEREAS, the Borrower, the Lenders, the Agent, certain other lenders
to the Borrower (such lenders together with the Lenders being "Creditor
Parties") and RBN as collateral agent for the Creditor Parties (the "Collateral
Agent") are parties to the Intercreditor Agreement dated as of September 11,
1996 (as it may be amended from time to time in accordance with the terms
thereof, the "Intercreditor Agreement"), contemplating the provision of
collateral from the Borrower and its Subsidiaries and guaranties from its
Subsidiaries to secure certain obligations owing to the Creditor Parties and
providing for certain intercreditor matters among the Creditor Parties; and
WHEREAS, the Borrower, the Lenders and the Agent wish to amend and
restate the Revolving Credit Agreement in the form of and on the terms and
conditions of this Agreement, in order to, among other things, increase the
aggregate commitments by $10,000,000, reflect changes in pricing, the Borrowing
Base, and various covenants, the provision of collateral and guaranties in
connection with the Intercreditor Agreement, and certain required prepayment
provisions; and
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its
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preamble and recitals, shall, except where the context otherwise requires, have
the following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
"Affiliate" shall mean any Person:
(a) which directly or indirectly controls, or is
controlled by, the Borrower; or
(b) which beneficially owns or holds 5% or more of
any class of Voting Stock of the Borrower.
"Agent's Fee Letter" means the letter dated May 15, 1995 between the
Borrower and the Agent.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of:
(i) the rate of interest announced by the Agent from
time to time in New York, New York as its base rate; or
(ii) one percent (1%) per annum above the fluctuating
rate of interest that is the rate determined by RBN to be the opening
rate per annum paid or payable by it on the day in question in New
York, New York for federal funds purchased overnight from other
banking institutions (the " Federal Funds Rate").
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by the RBN in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate. The Agent will give notice promptly to the Borrower and the Lenders
of changes in the Alternate Base Rate.
"Amended Credit Agreements" means this Agreement and the New Seasonal
Line of Credit Agreement.
"Applicable Margin" means, with respect to Eurodollar Rate Loans after
the Scheduled Proceeds Application Date, a percentage determined as follows: a
percentage that, when added to the LIBOR Rate (Reserve Adjusted) for an
Interest Period of one month duration commencing on the Scheduled Proceeds
Application Date,
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equals the Alternate Base Rate on the Scheduled Proceeds Application Date minus
0.75%.
"Assignee Lender" is defined in Section 10.11.1.
"Authorized Officer" means, relative to the Borrower, those of its
officers whose signatures and incumbency shall have been certified to the Agent
and the Lenders pursuant to Section 5.1.1.
"Available Borrowing Base" means, at any time, the excess (if any) of
the Borrowing Base, as calculated in the then most recently delivered Borrowing
Base Certificate, over the aggregate principal amount of all outstanding Other
Borrowing Base Debt.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Beneficial Ownership" has the meaning given to such term in Rule
13d-3 under the Securities Exchange Act of 1934, as amended, and as it may be
further amended from time to time.
"Borrower" is defined in the preamble.
"Borrowing" means the Loans of the same type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by all Lenders on
the same Business Day and pursuant to the same Borrowing Request in accordance
with Section 2.1.
"Borrowing Base" means at any time an amount equal to the sum of: (i)
85% of the unpaid principal amount of Eligible Receivables plus (ii) 85% of
Eligible Contract Inventory plus (iii) 65% (70% during the Borrower's Fiscal
Periods three through nine only if the cash price quoted in the "Wall Street
Journal" for Omaha hogs, as of the Borrowing Base calculation date, is greater
than $55.00 per hundredweight of live hogs) of the difference between (a)
Eligible Inventory (excluding Eligible Contract Inventory) and (b) Hog Payables
plus (iv) until the earlier of April 30, 1997 and the Scheduled Proceeds
Application Date, $10,000,000.
"Borrowing Base Certificate" means a certificate of an Authorized
Officer of the Borrower, substantially in the form of Exhibit B, or such other
form as the Agent may approve from time to time, setting forth a calculation of
the Borrowing Base.
"Borrowing Base Debt" means the Loans and the Other Borrowing Base
Debt.
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"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the Borrower, substantially in the form of Exhibit
C hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a
legal holiday on which banks are authorized or required to be closed
in New York, New York and Chicago, Illinois; and
(b) relative to the making, continuing, prepaying or
repaying of any Eurodollar Rate Loans, any day on which dealings in
Dollars are carried on in the London interbank market.
"Capital Lease" means any lease of property which in accordance with
GAAP should be capitalized on the lessee's balance sheet, or for which the
amount of the asset and liability thereunder as if so capitalized should be
disclosed in a note to such balance sheet, and, for purposes of this Agreement
and each other Loan Document, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may
be terminated by the lessee without payment of a penalty.
"Cash Collateralize" means to pledge and deposit with or deliver to
the Agent, for the benefit of the Agent, the Issuing Lender and the Lenders, as
additional collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the Agent and
the Issuing Lender (which documents are hereby consented to by the Lenders).
Derivatives of such term shall have corresponding meaning. The Borrower hereby
grants the Agent, for the benefit of the Agent, the Issuing Lender and the
Lenders, a security interest in all such cash and deposit account balances.
Cash collateral shall be maintained in blocked, non-interest bearing deposit
accounts at the Agent.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means
(a) the acquisition, through purchase or otherwise (including
the agreement to act in concert without more), by any Person (other
than Designated Persons) or group of Persons
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acting in concert (other than Designated Persons), directly or
indirectly, in one or more transactions, of Beneficial Ownership or
control of securities representing more than 30% of the combined voting
power of the Borrower's Voting Stock; or
(b) the distribution by the Borrower of cash, securities or
other properties (other than regular periodic cash dividends at a rate
which is substantially consistent with past practice, including with
respect to increases in dividends, and other than common stock of the
Borrower or rights to acquire common stock of the Borrower) to holders
of capital stock (including by means of dividend, reclassification,
recapitalization or otherwise) which, together with all other such
distributions during the 365-day period preceding the date of such
distribution, has an aggregate fair market value in excess of an
amount equal to 30% of the fair market value of the Voting Stock of
the Borrower outstanding on the date immediately prior to such
distribution.
A merger or consolidation pursuant to Section 2.7 of Appendix A with
respect to which the Voting Stock of the surviving corporation is more
than 30% owned by a Person or group of Persons acting in concert (other than
Designated Persons) who did not own such Voting Stock prior to such merger or
consolidation shall constitute a "Change of Control."
"Claims" is defined in Section 10.13.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Collateral Agent" is defined in the recitals.
"Commitment" means, relative to any Lender, such Lender's obligation
to make Loans pursuant to Section 2.1.1.
"Commitment Amount" means, on any date, $90,000,000, as such amount
may be reduced from time to time pursuant to Section 2.2.
"Commitment Termination Date" means May 30, 1998.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of Exhibit D hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control
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which, together with the Borrower, are treated as a single employer under
Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
"Creditor Parties" is defined in the recitals.
"Default" means any condition, occurrence or event that after notice
or lapse of time or both would constitute on Event of Default.
"Designated Persons" means any of the following:
(a) (i) Henry S Dorfman, Marla Dorfman, Gayle Weiss, Carolyn
Dorfman and Joel Dorfman; (ii) the estates of the Persons set forth in
clause (i); and (iii) inter vivos or testamentary trusts the
beneficiaries of which are one or more Persons falling within the
scope of clauses (i) or (ii) above;
(b) Joel Dorfman, Henry S Dorfman, Louis Glazier, Michael
Rozzano, Keith Jahnke and Edward Boan;
(c) a group of Persons fifty percent or more of which are
comprised of Persons set forth in paragraphs (a) and/or (b) above; or
(d) an Employee Stock Ownership Plan as defined in Section
4975(e)(7) of the Code.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in a Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto.
"Effective Amount" means, with respect to any outstanding L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any Issuances of Letters of Credit occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid
drawings under any Letter of Credit or any reduction in the maximum amount
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available for drawing under Letters of Credit taking effect on such
date.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 10.8.
"Eligible Contract Inventory" means Eligible Inventory consisting of
deliverable hedged pork bellies, hedged on the Chicago Mercantile Exchange
which are owned Inventory in public warehouses, finished goods to be delivered
to food retailers pursuant to written fixed price contracts or written fixed
price purchase orders. The Agent, in its sole discretion or if directed by the
Required Lenders, may deem ineligible any item listed as Eligible Contract
Inventory based on the identity of the contract party or the form or substance
of a contract or purchase order.
"Eligible Inventory" means inventory of the Borrower, valued at the
lower of cost (on a first-in, first-out basis) or fair market value excluding
inventory which:
(i) consists of obsolete or unsaleable items;
(ii) is not subject to a perfected security interest in favor
of the Collateral Agent prior to all other Liens (other than Liens
under the Packers and Stockyards Act of 1921, as amended, and the
regulations thereunder and Liens permitted under Section 2.3(c) of
Appendix A);
(iii) is located at a location not owned by the Borrower and
for which the Borrower has failed to comply with its undertaking under
Section 1.8 of Appendix A to use its best efforts to deliver to the
Collateral Agent an appropriate landlord's, warehouseman's or bailee's
waiver which is in form and substance satisfactory to the Collateral
Agent;
(iv) consists of general supplies, packaging or labels; or
(v) is subject to a Lien in favor of any party other than the
Collateral Agent and other than a Lien under the Packers and
Stockyards Act of 1921, as amended, and the regulations thereunder.
"Eligible Receivable" at any time means a Receivable that meets each
of the following requirements:
(i) the obligor is not an Affiliate of the Borrower;
(ii) the obligor is a United States resident;
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(iii) is subject to a perfected security interest in favor of
the Collateral Agent prior to all other Liens (other than a Lien under
the Packers and Stockyards Act of 1921, as amended, and the
regulations thereunder);
(iv) (other than the fiscal 1996 federal tax refund
receivable) is not owed by the United States of America or any
department, agency, or instrumentality thereof unless the Federal
Assignment of Claims Act has been complied with;
(v) the obligor of which is not the obligor of any Receivable
as to which any payment or part thereof remains unpaid for more than
30 days from the original due date for such payment in an aggregate
amount of 20% or more of the aggregate unpaid principal amount of all
the Receivables of such obligor;
(vi) as to which any payment or part thereof is past due for
more than 30 days from the original due date for such payment;
(vii) with regard to which the obligor thereof is not
insolvent or the subject of any bankruptcy or insolvency proceeding or
which has made an assignment for the benefit of creditors, suspended
normal business operations, dissolved, liquidated, terminated its
existence, ceased to pay its debts as they become due or suffered a
receiver or trustee to be appointed for any of its assets or affairs;
(viii) which is denominated and payable only in Dollars; and
(ix) which is owned by the Borrower free and clear of any
Liens (other than the lien in favor of the Collateral Agent and other
than a Lien under the Packers and Stockyards Act of 1921, as amended,
and the regulations thereunder).
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"Eurodollar Rate Loan" means a Loan bearing interest, at all times
during an Interest Period applicable to such Loan, at a fixed
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rate of interest determined by reference to the LIBOR Rate (Reserve Adjusted).
"Event of Default" is defined in Section 8.1.
"Existing Credit Agreements" means the Revolving Credit Agreement and
the Seasonal Line of Credit letter agreement dated March 11, 1996, as
heretofore amended, among the Borrower, the Lenders and the Agent.
"Federal Funds Rate" is defined in the definition of "Alternate Base
Rate".
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of fifty-two consecutive weeks ending
on, in the case of 1995, May 26, 1995 and, in the case of any other Fiscal
Year, the last Friday in May; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1994 Fiscal Year") refer to the
Fiscal Year ending in May of such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means all obligations (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection
or obligations incurred in the ordinary course of business in connection with
repurchase agreements) of a Person guaranteeing or, in effect, guaranteeing any
Indebtedness, dividend or other obligation, of any other Person in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such Indebtedness or obligations, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring
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the owner of such Indebtedness, or (iv) otherwise to assure the owner of the
Indebtedness or obligation against loss in respect thereof. For the purposes
of all computations made under this Agreement, a Guaranty in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
"Hazardous Material" means:
(a) any "hazardous substance," as defined by CERCLA;
(b) any "hazardous waste," as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous
or toxic chemical, material or substance within the meaning of any
other applicable federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning
any hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"herein," "hereof," "hereto," "hereunder" and similar terms contained
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
Section, paragraph or provision of this Agreement or such other Loan Document.
"Hog Payables" means at any time the aggregate amount payable by the
Borrower for purchases of livestock which are subject to the Packers and
Stockyards Act of 1921, as amended, and the regulations thereunder.
"Honor Date" is defined in Section 2.9.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this
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Agreement and each other Loan Document, the parties hereto agree that the rule
of ejusdem generis shall not be applicable to limit a general statement, which
is followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and
all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments;
(b) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
Capital Leases;
(d) all other items which, in accordance with GAAP, would
be included as liabilities on the liability side of the balance sheet
of such Person as of the date at which Indebtedness is to be
determined;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in
accordance with GAAP, all obligations of such Person to pay the
deferred purchase price of property or services, and indebtedness
(excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention agreements),
whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; and
(g) all Guaranties of such Person in respect of any of
the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
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"Insolvency Proceeding" means, without respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors (including any proceeding under the Bankruptcy Code) or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of such Person's creditors
generally or any substantial portion of such creditors.
"Intercreditor Agreement" is defined in the recitals.
"Interest Period" means, relative to any Eurodollar Rate Loan, the
period beginning on (and including) the date on which such Eurodollar Rate Loan
is made or continued as, or converted into, a Eurodollar Rate Loan pursuant to
Section 2.3 or 2.4, and shall end on (but exclude) the day which numerically
corresponds to such date one month thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), in
either case as the Borrower may select in its relevant notice pursuant to
Section 2.3 or 2.4; provided, however, that
(a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have expiration
dates occurring on more than ten different dates;
(b) Interest Periods commencing on the same date for
Loans comprising part of the same Borrowing shall be of the same
duration;
(c) if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the
next following Business Day (unless such next following Business Day
is the first Business Day of a calendar month, in which case such
Interest Period shall end on the Business Day next preceding such
numerically corresponding day); and
(d) no Interest Period may end later than the Commitment
Termination Date.
"Issuance Date" -- see subsection 2.7(a).
"Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Lender" means RBN in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of credit
issuer arising hereunder.
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"L/C Advance" means each Lender's participation in any L/C Borrowing
in accordance with its Percentage.
"L/C Amendment Application" means an application form for amendment of
an outstanding standby or commercial documentary letter of credit as shall at
any time be in use at the Issuing Lender, as the Issuing Lender shall request.
"L/C Application" means an application form for issuances of a standby
or commercial documentary letter of credit as shall at any time be in use at
the Issuing Lender, as the Issuing Lender shall request.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date
when made nor converted into a Borrowing of Loans under subsection 2.9(c).
"L/C Fee Rate" means a rate per annum equal to (a) 3.00% prior to the
Scheduled Proceeds Application Date, and (b) 2.00% on such date and thereafter.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount
of all unreimbursed drawings under all Letters of Credit, including all
outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any of the Issuing Lender's standard form
documents for letter of credit issuances.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit E hereto.
"Lenders" is defined in the preamble.
"Letters of Credit" means any letters of credit (whether standby
letters of credit or commercial documentary letters of credit) Issued by the
Issuing Lender pursuant to Section 2.7.
"LIBOR Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the
Lender Assignment Agreement or such other office of a Lender as designated from
time to time by notice from such Lender to the Borrower and the Agent, whether
or not outside the United States, which shall be making or maintaining
Eurodollar Rate Loans of such Lender hereunder.
"LIBOR Rate" means the rate with respect to the relevant Interest
Period to be determined on the basis of the offered rates
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for deposits in Dollars for the relevant Interest Period which appear on
Telerate Page 3750 (or, if such service or page is not available, such other
service or page as the Agent may determine as the appropriate service and page
for the purpose of displaying offered rates of leading reference banks in
London for interbank deposits in U.S. Dollars) as of 11:00 A.M. (London time)
on the day that is two (2) Business Days prior to the first day of the relevant
Interest Period.
"LIBOR Rate (Reserve Adjusted)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a Eurodollar Rate Loan for
any Interest Period, a rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) determined pursuant to the following formula:
LIBOR Rate = LIBOR Rate
(Reserve Adjusted) -------------------------------
1.00 - LIBOR Reserve Percentage
The LIBOR Rate (Reserve Adjusted) for any Interest Period for
Eurodollar Rate Loans will be determined by the Agent on the basis of the LIBOR
Reserve Percentage in effect on, and the applicable rates furnished to and
received by the Agent from RBN, two Business Days before the first day of such
Interest Period.
"LIBOR Reserve Percentage" of RBN for the Interest Period for any
Eurodollar Rate Loan means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable,
the daily average of such percentages for those days in such Interest Period
during which any such percentage shall be so applicable) under regulations
issued from time to time by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Lender with respect to liabilities or assets
consisting of or including "eurocurrency liabilities" (as such term is defined
in Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time) having a term equal to such Interest Period.
"Lien" shall mean with respect to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance in or on,
or interest or title of any vendor, lessor, lender or other secured party to or
of such Person under a conditional sale or other title retention agreement or
Capital Lease with respect to, any property or asset of such Person, or the
signing or filing of a financing statement which names such Person as debtor,
or the signing of any security agreement authorizing any other party as the
secured party thereunder to file any financing statement.
"Loan" is defined in Section 2.1.1.
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"Loan Documents" means this Agreement, the Notes, the Agent's Fee
Letter, the Intercreditor Agreement, the Subsidiaries Guaranty and the Security
Documents.
"Material Adverse Effect" is defined in Section 6.1.
"Monthly Payment Date" means the first day of each month or, if any
such day is not a Business Day, the next succeeding Business Day.
"Note" means a promissory note of the Borrower payable to any Lender,
in the form of Exhibit A hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Loans,
and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower arising under or in connection with this Agreement, the Notes and each
other Loan Document.
"Organic Document" means, relative to the Borrower, its certificate of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.
"Other Borrowing Base Debt" means any Indebtedness outstanding under
the New Seasonal Line of Credit Agreement as in effect on the date hereof, or a
Replacement Seasonal Line of Credit Agreement.
"Participant" is defined in Section 10.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the
Borrower, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the meaning of
section 4063 of ERISA at any time during the preceding five years, or by reason
of being deemed to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Lender Assignment
Agreement, as such percentage may be adjusted from time to time pursuant to
Lender Assignment Agreement(s) executed by such
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Lender and its Assignee Lender(s) and delivered pursuant to Section
10.11.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Ponca City Litigation" means an action entitled Facility
Constructors, Inc. v. Thorn Apple Valley, Inc. filed in February, 1996, in
District Court, Kay County, Oklahoma against the Borrower in connection with
the construction of the Borrower's plant in Ponca City, Oklahoma.
"Property" means any real or personal or tangible or intangible asset.
"RBN" is defined in the preamble.
"Receivable" means any right to payment of the Borrower from any
Person arising from the sale of goods or services by the Borrower in the
ordinary course of its business and the Borrower's right to receive any federal
income tax refund in respect of its 1996 tax return.
"Release" means a "release," as such term is defined in CERCLA.
"Released Parties" is defined in Section 10.13.
"Releasors" is defined in Section 10.13.
"Required Lenders" means, at any time, Lenders holding at least 66
2/3% of the then aggregate outstanding principal amount of the Loans and L/C
Obligations then held by the Lenders, or, if no such principal amount is then
outstanding, Lenders having at least 66 2/3% of the Commitments.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as in effect
from time to time.
"Restructuring" is defined in Section 6.2.
"Revolving Credit Agreement" is defined in the recitals.
"Sale and Lease-Back Transaction" means any arrangement, directly or
indirectly, with any Person whereby a seller or a
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transferor shall sell or otherwise transfer any real or personal property and
then or thereafter lease (whether or not a Capitalized Lease), or repurchase
under any extended purchase contract, the same or similar property from the
purchaser or the transferee of such property.
"Scheduled Proceeds Application Date" means the last date on which the
Scheduled Subordinated Debt Proceeds are applied to Creditor Obligations in
accordance with the Intercreditor Agreement.
"Stated Maturity Date" means, with respect to the Loans of any Lender,
the Commitment Termination Date.
"Subsidiary" means any corporation of which the Borrower directly or
indirectly owns more than 50% of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency).
"Subsidiaries Guaranty" means the "Guaranty" as defined in the
Intercreditor Agreement.
"Taxes" is defined in Section 4.6.
"TAVFSC" means Thorn Apple Valley Foreign Sales Corporation, a U.S.
Virgin Islands corporation.
"Type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan, or a Eurodollar Rate Loan.
"United States" or "U.S." means the United States of America, its
fifty States and the District of Columbia.
"Voting Stock" shall mean capital stock of any class or classes of a
corporation having power under ordinary circumstances to vote for the election
of members of the board of directors of such corporation, or persons performing
similar functions (irrespective of whether or not at the time stock of any of
the class or classes shall have or might have special voting power or rights by
reason of the happening of any contingency).
"Welfare Plan" means a "welfare plan," as such term is defined in
section 3(1) of ERISA.
"Wilson Acquisition" means the purchase of assets consummated in
accordance with the Asset Purchase Agreement, dated as of April 29, 1995, as
amended, between the Borrower and Doskocil Companies
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Incorporated, Wilson Foods Corporation, Concordia Foods Corporation, Dixie
Foods Company and Shreveport Foods Company.
SECTION 1.2. Intercreditor Agreement Definitions; Use of Defined
Terms. Unless otherwise defined herein, capitalized terms defined in the
Intercreditor Agreement are used herein as defined therein. Unless otherwise
defined or the context otherwise requires, terms for which meanings are
provided in this Agreement shall have such meanings when used in the Disclosure
Schedule and in each Note, Borrowing Request, Continuation/Conversion Notice,
Loan Document, notice and other communication delivered from time to time in
connection with this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references
to such clause of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Appendix A) shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared in accordance with those generally accepted accounting principles
("GAAP") applied in the preparation of the financial statements referred to in
Section 6.5; provided, however, that for purposes of calculating compliance
with the covenants set forth in Appendix A, the effects of changes subsequent
to May 31, 1996 in the Borrower's LIFO inventory reserve shall be eliminated.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender severally
agrees to make Loans pursuant to the Commitments described in this Section 2.1.
SECTION 2.1.1. Commitment of Each Lender. From time to time on any
Business Day occurring prior to such Lender's Commitment Termination Date, each
Lender will make loans (relative to such Lender, and of any type, its "Loans")
to the Borrower equal to such Lender's Percentage of the aggregate amount of
the Borrowing requested by the Borrower to be made on such day. The commitment
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of each Lender described in this Section 2.1.1 is herein referred to as its
"Commitment." On the terms and subject to the conditions hereof, the Borrower
may from time to time borrow, prepay and reborrow Loans.
SECTION 2.1.2. Lenders Not Required To Make Loans. No Lender shall
be required to make any Loan (x) if, after giving effect thereto, the aggregate
outstanding principal amount of all Loans plus the Effective Amount of all L/C
Obligations
(a) of all Lenders would exceed the lesser of (i) the
Available Borrowing Base and (ii) the Commitment Amount, or
(b) of such Lender would exceed such Lender's Percentage
of the lesser of (i) the Available Borrowing Base and (ii) the
Commitment Amount, or
if, after giving effect thereto, any loans are outstanding under the Seasonal
(y) Line of Credit Agreement.
SECTION 2.2. Reductions of Commitment Amount. The Borrower may,
from time to time on any Business Day occurring after the time of the initial
Borrowing hereunder, voluntarily reduce the Commitment Amount; provided,
however, that all such reductions shall require at least five Business Days'
prior notice to the Agent and be permanent, and any partial reduction of the
Commitment Amount shall be in a minimum amount of $1,000,000 and in an integral
multiple of $1,000,000. The Commitment Amount shall be permanently reduced
from time to time by the amount of each prepayment out of Scheduled Capital
Infusion Proceeds and Disposition Proceeds.
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing
Request to the Agent on or before 12:00 Noon, New York City time, on a Business
Day, the Borrower may from time to time irrevocably request, on not less than
three Business Days' notice (in the case of a request for a Eurodollar Rate
Loan) or on the day of the requested Borrowing (in the case of a request for a
Base Rate Loan), that a Borrowing be made in a minimum amount of $500,000 and
an integral multiple of $100,000 or in the unused amount of the Commitments;
provided, however, that no Eurodollar Rate Loans shall be made prior to the
Subordinated Debt Application Date. The Agent shall promptly advise each
Lender of such Borrowing Request. On the terms and subject to the conditions
of this Agreement, each Borrowing shall be comprised of the type of Loans, and
shall be made on the Business Day, specified in such Borrowing Request. On or
before 12:00 Noon, New York City time, on such Business Day if the requested
Borrowing is for Eurodollar Rate Loans or on or before 2:00 p.m., New York City
time, if the requested Borrowing is for Base Rate Loans each Lender shall
deposit with the Agent same-day funds in an amount equal to such Lender's
Percentage of the
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requested Borrowing. Such deposit will be made to an account which the Agent
shall specify from time to time by notice to the Lenders. To the extent funds
are received from the Lenders, the Agent shall make such funds available to the
Borrower by wire transfer to the accounts the Borrower shall have specified in
its Borrowing Request. No Lender's obligation to make any Loan shall be
affected by any other Lender's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering
a Continuation/Conversion Notice to the Agent on or before 11:00 a.m., New York
City time, on a Business Day, the Borrower may from time to time irrevocably
elect on not less than three Business Days' notice that the total amount, or
any portion in an aggregate minimum amount of $500,000 and an integral multiple
of $100,000, of any Loans be, in the case of Base Rate Loans, converted into
Eurodollar Rate Loans or, in the case of Eurodollar Rate Loans, be converted
into a Base Rate Loan or continued as a Eurodollar Rate Loan (in the absence of
delivery of a Continuation/Conversion Notice with respect to any Eurodollar
Rate Loan at least three Business Days before the last day of the then current
Interest Period with respect thereto, such Eurodollar Rate Loan shall, on such
last day, automatically convert to a Base Rate Loan); provided, however, that
(i) each such conversion or continuation shall be pro-rated among the
applicable outstanding Loans of all Lenders, and (ii) no portion of the
outstanding principal amount of any Loans may be continued as, or be converted
into, Eurodollar Rate Loans when any Default has occurred and is continuing or
prior to the Subordinated Debt Proceeds Application.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill
its obligation to make, continue or convert Eurodollar Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international banking
facility created by such Lender) to make or maintain such Eurodollar Rate Loan;
provided, however, that such Eurodollar Rate Loan shall nonetheless be deemed
to have been made and to be held by such Lender, and the obligation of the
Borrower to repay such Eurodollar Rate Loan shall nevertheless be to such
Lender for the account of such foreign branch, Affiliate or international
banking facility. In addition, the Borrower hereby consents and agrees that,
for purposes of any determination to be made for purposes of Sections 4.1, 4.2,
4.3 or 4.4, it shall be conclusively assumed that each Lender elected to fund
all Eurodollar Rate Loans by purchasing, as the case may be, Dollar
certificates of deposit in the U.S. or Dollar deposits in its LIBOR Office's
interbank eurodollar market.
SECTION 2.6. Notes. Each Lender's Loans under its Commitment
shall be evidenced by a Note payable to the order of such Lender in a maximum
principal amount equal to such Lender's Percentage of the original Commitment
Amount. The Borrower hereby irrevocably authorizes each Lender to make (or
cause to be made)
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appropriate notations on the grid attached to such Lender's Note (or on any
continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loans evidenced thereby. Such notations
shall be conclusive and binding on the Borrower absent manifest error;
provided, however, that the failure of any Lender to make any such notations
shall not limit or otherwise affect any Obligations of the Borrower.
SECTION 2.7. The Letter of Credit Subfacility. (a) On the terms
and conditions set forth herein (i) the Issuing Lender may, in its discretion
at the request of the Borrower, (A) from time to time on any Business Day prior
to the Commitment Termination Date, issue Letters of Credit for the account of
the Borrower, and amend or renew Letters of Credit previously issued by it, in
accordance with subsections 2.8(c) and 2.8(d), and (B) honor properly drawn
drafts under the Letters of Credit issued by it; and (ii) the Lenders severally
agree to participate in Letters of Credit Issued for the account of the
Borrower; provided that the Issuing Lender shall not be obligated to Issue, and
no Lender shall be obligated to participate in, any Letter of Credit if as of
the date of Issuance of such Letter of Credit (the "Issuance Date") the
Effective Amount of all L/C Obligations plus the aggregate amount of all Loans
exceeds the lesser of (x) the Commitment Amount and (y) the Available Borrowing
Base.
(b) The Issuing Lender shall be under no obligation to
Issue any Letter of Credit.
SECTION 2.8. Issuance, Amendment and Renewal of Letters of Credit.
(a) The Issuing Lender may in its discretion issue each Letter of Credit upon
the irrevocable written request of the Borrower received by the Agent (who
shall forward it to the Issuing Lender) at least four days (or such shorter
time as the Issuing Lender and the Agent may agree in a particular instance in
their sole discretion) prior to the proposed date of issuance. Each such
request for issuance of a Letter of Credit shall be made in an original writing
or by facsimile in the form of an L/C Application, and shall specify in form
and detail satisfactory to the Issuing Lender: (i) the proposed date of
issuance of the Letter of Credit (which shall be a Business Day); (ii) the face
amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit;
(iv) the name and address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other matters as
the Issuing Lender may require.
(b) Unless the Issuing Lender has received, on or before
the Business Day immediately preceding the date the Issuing Lender is to issue
a requested Letter of Credit, notice from the Agent
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directing the Issuing Lender not to issue such Letter of Credit because such
issuance is not then permitted under subsection 2.7(a) as a result of the
limitations set forth in clause (1) or (2) thereof, then subject to the terms
and conditions hereof, the Issuing Lender may, on the requested date, issue a
Letter of Credit for the account of the Borrower in accordance with the Issuing
Lender's usual and customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Commitment Termination Date, the Issuing Lender
may upon the written request of the Borrower received by the Agent (who shall
forward it to the Issuing Lender) at least five days (or such shorter time as
the Issuing Lender and the Agent may agree in a particular instance in their
sole discretion) prior to the proposed date of amendment, amend any Letter of
Credit issued by it. Each such request for amendment of a Letter of Credit
shall be made in an original writing or by facsimile, made in the form of an
L/C Amendment Application and shall specify in form and detail satisfactory to
the Issuing Lender: (i) the Letter of Credit to be amended; (ii) the proposed
date of amendment of such Letter of Credit (which shall be a Business Day);
(iii) the nature of the proposed amendment; and (iv) such other matters as the
Issuing Lender may require. The Issuing Lender shall have no obligation to
amend any Letter of Credit. The Agent will promptly notify the Lenders of the
receipt by it of any L/C Application or L/C Amendment Application.
(d) The Issuing Lender and the Lenders agree that, while
a Letter of Credit is outstanding and prior to the Commitment Termination Date,
upon the written request of the Borrower received by the Agent (who shall
forward it to the Issuing Lender) at least five days (or such shorter time as
the Issuing Lender and the Agent may agree in a particular instance in their
sole discretion) prior to the proposed date of notification of renewal, the
Issuing Lender shall be entitled to authorize the automatic renewal of any
Letter of Credit issued by it. Each such request for renewal of a Letter of
Credit shall be made in an original writing or by facsimile in the form of an
L/C Amendment Application, and shall specify in form and detail satisfactory to
the Issuing Lender: (i) the Letter of Credit to be renewed; (ii) the proposed
date of notification of renewal of such Letter of Credit (which shall be a
Business Day); (iii) the revised expiry date of such Letter of Credit (which,
unless all Lenders otherwise consent, shall be prior to the Commitment
Termination Date); and (iv) such other matters as the Issuing Lender may
require. The Issuing Lender shall be under no obligation to renew any Letter
of Credit. If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
Issuing Lender that such Letter of Credit shall not be renewed, and if at the
time of renewal the Issuing Lender would be entitled to authorize the automatic
renewal of such Letter of Credit in
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accordance with this subsection 2.8(d) upon the request of the Borrower but the
Issuing Lender shall not have received any L/C Amendment Application from the
Borrower with respect to such renewal or other written direction by the
Borrower with respect thereto, the Issuing Lender shall nonetheless be
permitted to allow such Letter of Credit to renew, and the Borrower and the
Lenders hereby authorize such renewal, and, accordingly, the Issuing Lender
shall be deemed to have received an L/C Amendment Application from the Borrower
requesting such renewal.
(e) The Issuing Lender may, at its election (or as
required by the Agent at the direction of the Required Lenders), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Commitment
Termination Date.
(f) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Lender will deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or
amendment to or renewal of a Letter of Credit.
SECTION 2.9. Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the Issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Issuing Lender a participation in such Letter of
Credit and each drawing thereunder in an amount equal to the product of (i)
such Lender's Percentage times (ii) the maximum amount available to be drawn
under such Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a
Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender
will promptly notify the Borrower and the Agent. The Borrower shall reimburse
the Issuing Lender prior to 12:00 Noon, New York time, on each date that any
amount is paid by the Issuing Lender under any Letter of Credit (each such
date, an "Honor Date"), in an amount equal to the amount so paid by the Issuing
Lender. If the Borrower fails to reimburse the Issuing Lender for the full
amount of any drawing under any Letter of Credit by 12:00 Noon, New York time
on the Honor Date, the Issuing Lender will promptly notify the Agent and the
Agent will promptly
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notify each Lender thereof, and the Borrower shall be deemed to have requested
that Base Rate Loans be made by the Lenders to be disbursed on the Honor Date
under such Letter of Credit, subject to the amount of the unutilized portion of
the Commitment Amount and subject to the conditions set forth in Section 5.2.
Any notice given by the Issuing Lender or the Agent pursuant to this subsection
2.9(b) may be oral if immediately confirmed in writing (including by
facsimile); provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.
(c) Each Lender shall upon any notice pursuant to subsection
2.9(b) make available to the Agent for the account of the Issuing Lender an
amount in Dollars and in immediately available funds equal to its Percentage of
the amount of the drawing, whereupon the participating Lenders shall (subject
to subsection 2.9(d)) each be deemed to have made a Loan consisting of a Base
Rate Loan to the Borrower in such amount. If any Lender so notified fails to
make available to the Agent for the account of the Issuing Lender the amount of
such Lender's Percentage of the amount of such drawing by no later than 2:00
p.m., New York time on the Honor Date, then interest shall accrue on such
Lender's obligation to make such payment, from the Honor Date to the date such
Lender makes such payment, at a rate per annum equal to the Federal Funds Rate
in effect from time to time during such period. The Agent will promptly give
notice of the occurrence of the Honor Date, but failure of the Agent to give
any such notice on the Honor Date or in sufficient time to enable any Lender to
effect such payment on such date shall not relieve such Lender from its
obligations under this Section 2.9.
(d) With respect to any unreimbursed drawing that is not
converted into Loans consisting of Base Rate Loans in whole or in part, because
of the Borrower's failure to satisfy the conditions set forth in Section 5.2 or
for any other reason, the Borrower shall be deemed to have incurred from the
Issuing Lender an L/C Borrowing in the amount of such drawing, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at a rate per annum equal to the Base Rate plus 2% per annum, and
each Lender's payment to the Issuing Lender pursuant to subsection 2.9(c) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.9.
(e) Each Lender's obligation in accordance with this
Agreement to make Loans or L/C Advances, as contemplated by this Section 2.9,
as a result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Lender and shall not be
affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or
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other right which such Lender may have against the Issuing Lender, the Borrower
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of an Event of Default, a Default or a material adverse event with
respect to the Borrower; or (iii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided that each
Lender's obligation to make Loans under this Section 2.9 is subject to the
conditions set forth in Section 5.2.
SECTION 2.10. Repayment of Participations. (a) Upon (and only
upon) receipt by the Agent for the account of the Issuing Lender of immediately
available funds from the Borrower (i) in reimbursement of any payment made by
the Issuing Lender under a Letter of Credit with respect to which any Lender
has paid the Agent for the account of the Issuing Lender for such Lender's
participation in such Letter of Credit pursuant to Section 2.9 or (ii) in
payment of interest thereon, the Agent will pay to each Lender, in the same
funds as those received by the Agent for the account of the Issuing Lender, the
amount of such Lender's Percentage of such funds, and the Issuing Lender shall
receive the amount of the Percentage of such funds of any Lender that did not
so pay the Agent for the account of the Issuing Lender.
(b) If the Agent or the Issuing Lender is required at any
time to return to the Borrower or to a trustee, receiver, liquidator or
custodian, or to any official in any Insolvency Proceeding, any portion of any
payment made by the Borrower to the Agent for the account of the Issuing Lender
pursuant to subsection 2.10(a) in reimbursement of a payment made under a
Letter of Credit or interest or fee thereon, each Lender shall, on demand of
the Agent, forthwith return to the Agent or the Issuing Lender the amount of
its Percentage of any amount so returned by the Agent or the Issuing Lender
plus interest thereon from the date such demand is made to the date such amount
is returned by such Lender to the Agent or the Issuing Lender, at a rate per
annum equal to the Federal Funds Rate in effect from time to time.
SECTION 2.11. Role of the Issuing Lender. (a) Each Lender and the
Borrower agree that, in paying any drawing under a Letter of Credit, the
Issuing Lender shall not have any responsibility to obtain any document (other
than any sight draft and certificate expressly required by such Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document.
(b) Neither the Issuing Lender nor any of its respective
correspondents, participants or assignees shall be liable to any Lender for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Lenders (including the Required Lenders, as applicable);
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii)
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the due execution, effectiveness, validity or enforceability of any L/C-Related
Document.
(c) The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided that this assumption is not intended to, and shall
not, preclude the Borrower's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement.
Neither the Issuing Lender nor any of its respective correspondents,
participants or assignees shall be liable or responsible for any of the matters
described in clauses (i) through (vii) of Section 2.12; provided that, anything
in such clauses to the contrary notwithstanding, the Borrower may have a claim
against the Issuing Lender, and the Issuing Lender may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by the Issuing Lender's willful misconduct or gross
negligence or the Issuing Lender's willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of such Letter
of Credit. In furtherance and not in limitation of the foregoing: (i) the
Issuing Lender may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Issuing Lender shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
SECTION 2.12. Obligations Absolute. The obligations of the
Borrower under this Agreement and any L/C-Related Document to reimburse the
Issuing Lender for a drawing under a Letter of Credit, and to repay any L/C
Borrowing and any drawing under a Letter of Credit converted into Loans, shall
be unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following:
(i) any lack of validity or enforceability of this
Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the obligations of
the Borrower in respect of any Letter of Credit or any other amendment
or waiver of or any consent to departure from all or any of the
L/C-Related Documents;
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(iii) the existence of any claim, set-off, defense
or other right that the Borrower may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any Person
for whom any such beneficiary or any such transferee may be acting),
the Issuing Lender or any other Person, whether in connection with
this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other
document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit;
(v) any payment by the Issuing Lender under any
Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of such Letter of Credit; or
any payment made by an Issuing Lender under any Letter of Credit to
any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of any Letter of Credit, including any
arising in connection with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the obligations of the
Borrower in respect of any Letter of Credit; or
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.
SECTION 2.13. Cash Collateral Pledge. Subject in all cases to the
Intercreditor Agreement, if (i) any Letter of Credit remains outstanding and
partially or wholly undrawn as of the Commitment Termination Date or (ii) the
Borrower is required to Cash Collateralize Letters of Credit pursuant to
Section 3.1 or 8.3 then the Borrower shall immediately Cash Collateralize the
L/C Obligations in an amount equal to (a) in the case of clause (i) above, the
maximum amount then available to be drawn under all Letters of Credit and (b)
in the case of clause (ii) above, the amount required pursuant to Section 3.1
or 8.3.
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SECTION 2.14. Letter of Credit Fees. (a) The Borrower shall pay to
the Agent for the account of each Lender a letter of credit fee with respect to
each Letter of Credit equal to the L/C Fee Rate per annum of the average daily
maximum amount available to be drawn on such Letter of Credit, computed on a
quarterly basis in advance on the first Business Day of each calendar quarter.
The letter of credit fees shall be due and payable quarterly in advance on the
first Business Day of each calendar quarter during which Letters of Credit are
outstanding, commencing on the first such quarterly date to occur after the
date hereof, through the Commitment Termination Date (or such later date upon
which all outstanding Letters of Credit shall expire or be fully drawn).
(b) The Borrower shall pay to the Issuing Lender a letter
of credit fronting fee for each Letter of Credit issued by the Issuing Lender
on the date of Issuance at a rate per annum equal to 0.25% of the maximum
original stated amount of such Letter of Credit.
(c) The letter of credit fees payable under subsection
2.14(a) and the fronting fees payable under subsection 2.14(b) shall be due and
payable quarterly in advance on the last Business Day of each calendar quarter
during which Letters of Credit are outstanding, commencing on the first such
quarterly date to occur after the date hereof, through the Commitment
Termination Date (or such later date upon which all outstanding Letters of
Credit shall expire or be fully drawn).
(d) The Borrower shall pay to the Issuing Lender from
time to time on demand the normal issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the Issuing Lender
relating to letters of credit as from time to time in effect.
SECTION 2.15. Uniform Customs and Practice. The Uniform Customs
and Practice for Documentary Credits as published by the International Chamber
of Commerce most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in such Letter of Credit) apply to each
Letter of Credit.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall repay
in full the unpaid principal amount of each Loan upon the Stated Maturity Date
therefor. Prior thereto, the Borrower:
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(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding
principal amount of any Loans; provided, however, that
(i) any such prepayment shall be made pro rata
among Loans of the same type and, if applicable, having the
same Interest Period of all Lenders;
(ii) all voluntary prepayments of Eurodollar Loans
shall require at least five Business Days' prior written
notice to the Agent; and
(iii) all such voluntary partial prepayments shall be
in an aggregate minimum amount of $500,000 and an integral
multiple of $100,000;
(b) shall, on each date when any reduction in the
Commitment Amount shall become effective, including pursuant to
Section 2.2, make a mandatory prepayment of all Loans and/or Cash
Collateralize outstanding Letters of Credit in an amount equal to the
excess, if any, of (i) the sum of the aggregate outstanding principal
amount of all Loans and the Effective Amount of all L/C Obligations
over (iii) the Commitment Amount as so reduced;
(c) shall, if on any date the sum of aggregate principal
amount of outstanding Loans plus the Effective Amount of all L/C
Obligations exceeds the Available Borrowing Base, as calculated in the
then most recently delivered Borrowing Base Certificate, first make a
mandatory prepayment of all Loans in an amount equal to the lesser of
(i) such excess and (ii) the aggregate principal amount of all Loans
outstanding and second after all Loans are repaid, Cash Collateralize
the L/C Obligations in the remaining amount of such excess; and
(d) shall, on each date proceeds of Capital Infusion
Proceeds or Disposition Proceeds are received by the Borrower or any
Subsidiary, first make a mandatory prepayment of the Loans in an
amount equal to the lesser of (i) the amount as provided in the
Intercreditor Agreement and (ii) the aggregate principal amount of all
Loans outstanding; and second after all Loans are repaid, Cash
Collateralize the L/C Obligations in the remaining amount as provided
in the Intercreditor Agreement; provided that, with respect to
Scheduled Capital Infusion Proceeds, the Borrower shall make a
mandatory prepayment of the Obligations and the other Creditor
Obligations on or before April 30, 1997 in an amount equal to the
greater of (x) $15,000,000 and (y) 50% of such net Capital Infusion
Proceeds, to be applied among the Creditor Obligations as provided in
the Intercreditor Agreement; and
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(e) shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 8.2 or Section
8.3, repay all Loans, unless, pursuant to Section 8.3, only a portion
of all Loans is so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount unless so specified.
SECTION 3.2. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance with this
Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Borrower may elect
that Loans comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a
Base Rate Loan, equal to (x) the sum of the Alternate Base Rate from
time to time in effect plus 0.25% prior to the Scheduled Proceeds
Application Date, or (y) the Alternate Base Rate from time to time in
effect on and after the Scheduled Proceeds Application Date; and
(b) on that portion maintained as a Eurodollar Rate Loan,
during each Interest Period applicable thereto, equal to the sum of
the LIBOR Rate (Reserve Adjusted) for such Interest Period, plus the
Applicable Margin then in effect.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal
amount of any Loan is due and payable (whether on the Stated Maturity Date,
upon acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on
such amounts at a rate per annum equal to the rate which would otherwise be in
effect, plus a margin of 2%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall
be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) if the Borrower reduces the Commitment to zero, on
the date of any payment or prepayment, in whole, of the principal
outstanding on such Loan pursuant to Section 3.1(b);
(c) with respect to Base Rate Loans, on each Monthly
Payment Date occurring after the Effective Date;
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(d) with respect to Eurodollar Rate Loans, the last day
of each applicable Interest Period and if such Eurodollar Rate Loan is
prepaid prior to the last day of such Interest Period, on the date of
such prepayment; and
(e) on that portion of any Loans the Stated Maturity Date
of which is accelerated pursuant to Section 8.2 or Section 8.3,
immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth
in this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the
Agent for the account of each Lender, for the period (including any portion
thereof when its Commitment is suspended by reason of the Borrower's inability
to satisfy any condition of Article V) commencing on the Effective Date and
continuing through such Lender's Commitment Termination Date, a commitment fee
at the rate of .25 of 1% per annum on such Lender's Percentage of the sum of
the average daily unused portion of the Commitment Amount. Such commitment
fees shall be payable by the Borrower in arrears on each Monthly Payment Date,
commencing with the first such day following the Effective Date and on such
Lender's Commitment Termination Date.
SECTION 3.3.2. Agent's Fee. The Borrower agrees to pay to the Agent
for its own account, the amounts set forth in the Agent's Fee Letter at the
times set forth therein for payment.
SECTION 3.3.3. Restructuring Fee. The Borrower agrees to pay to the
Agent for the account of each Lender on the Effective Date a restructuring fee
equal to 0.25% per annum on the principal amount of such Lender's Loans
outstanding under the Revolving Credit Agreement computed for the period from
and including August 1, 1996 to the Effective Date.
ARTICLE IV
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 4.1. Eurodollar Rate Lending Unlawful. If any Lender
shall determine (which determination shall, upon notice thereof to the Borrower
and the Lenders, be conclusive and binding on the Borrower) that the
introduction of or any change in or in the interpretation of any law makes it
unlawful, or any central
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bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Loan as, or to convert any Loan into,
a Eurodollar Rate Loan, the obligations of all Lenders to make, continue,
maintain or convert any such Loans shall, upon such determination, forthwith be
suspended until such Lender shall notify the Agent that the circumstances
causing such suspension no longer exist, and all Eurodollar Rate Loans shall
automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION 4.2. Deposits Unavailable. If the Agent shall have
determined that:
(a) Dollar certificates of deposit or Dollar deposits, as
the case may be, in the relevant amount and for the relevant Interest
Period are not available to RBN in its relevant market; or
(b) by reason of circumstances affecting RBN's relevant
market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurodollar Rate Loans of such type;
then, upon notice from the Agent to the Borrower and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, Eurodollar Rate Loans
shall forthwith be suspended until the Agent shall notify the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.
SECTION 4.3. Increased Eurodollar Rate Loan Costs, etc. The
Borrower agrees to reimburse each Lender for any increase in the cost to such
Lender of, or any reduction in the amount of any sum receivable by such Lender
in respect of, making, continuing or maintaining (or of its obligation to make,
continue or maintain) any Loans as, or of converting (or of its obligation to
convert) any Loans into, Eurodollar Rate Loans. Such Lender shall promptly
notify the Agent and the Borrower in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount. Such additional amounts shall be payable by the
Borrower directly to such Lender within five days of its receipt of such
notice, and such notice shall, in the absence of manifest error, be conclusive
and binding on the Borrower.
SECTION 4.4. Funding Losses. In the event any Lender shall incur
any loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any
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portion of the principal amount of any Loan as, or to convert any portion of
the principal amount of any Loan into, a Eurodollar Rate Loan) as a result of:
(a) any conversion or repayment or prepayment of the
principal amount of any Eurodollar Rate Loans on a date other than the
scheduled last day of the Interest Period applicable thereto, whether
pursuant to Section 3.1 or otherwise;
(b) any Loans not being made as Eurodollar Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into,
Eurodollar Rate Loans in accordance with the Continuation/ Conversion
Notice therefor;
then, upon the written notice of such Lender to the Borrower (with a copy to
the Agent), the Borrower shall, within five days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 4.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitment or the Loans made by such Lender is reduced to a
level below that which such Lender or such controlling Person could have
achieved but for the occurrence of any such circumstance, then, in any such
case upon notice from time to time by such Lender to the Borrower, the Borrower
shall immediately pay directly to such Lender additional amounts sufficient to
compensate such Lender or such controlling Person for such reduction in rate of
return. A statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower. In determining such
amount, such Lender may use any method of averaging and attribution that it (in
its sole and absolute discretion) shall deem applicable.
SECTION 4.6. Taxes. All payments by the Borrower of principal of,
and interest on, the Loans and all other amounts payable hereunder shall be
made free and clear of and without
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deduction for any present or future income, excise, stamp or franchise taxes
and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, but excluding franchise taxes and
taxes imposed on or measured by any Lender's net income or receipts (such
non-excluded items being called "Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation, then
the Borrower will:
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such authority; and
(c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount
such Lender would have received had no such withholding or deduction
been required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Person after the
payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount such Person would have received had not such Taxes been
asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Lenders, the required receipts or other required documentary
evidence, the Borrower shall indemnify the Lenders for any incremental Taxes,
interest or penalties that may become payable by any Lender as a result of any
such failure. For purposes of this Section 4.6, a distribution hereunder by
the Agent or any Lender to or for the account of any Lender shall be deemed a
payment by the Borrower.
Upon the request of the Borrower or the Agent, each Lender that is
organized under the laws of a jurisdiction other than the United States shall,
prior to the due date of any payments under the Notes, execute and deliver to
the Borrower and the Agent, on or about the first scheduled payment date in
each Fiscal Year, one or more (as the Borrower or the Agent may reasonably
request) United States Internal Revenue Service Forms 4224 or Forms 1001 or
such other forms or documents (or successor forms or documents),
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appropriately completed, as may be applicable to establish the extent, if any,
to which a payment to such Lender is exempt from withholding or deduction of
Taxes.
SECTION 4.7. Payments, Computations, etc. Unless otherwise
expressly provided, all payments by the Borrower pursuant to this Agreement,
the Notes or any other Loan Document shall be made by the Borrower to the Agent
for the pro rata account of the Lenders entitled to receive such payment. All
such payments required to be made to the Agent shall be made, without setoff,
deduction or counterclaim, not later than 11:00 a.m., New York City time, on
the date due, in same day or immediately available funds, to such account as
the Agent shall specify from time to time by notice to the Borrower. Funds
received after that time shall be deemed to have been received by the Agent on
the next succeeding Business Day. The Agent shall promptly remit in same day
funds to each Lender its share, if any, of such payments received by the Agent
for the account of such Lender. All interest and fees shall be computed on the
basis of the actual number of days (including the first day but excluding the
last day) occurring during the period for which such interest or fee is payable
over a year comprised of 360 days (or, in the case of interest on a Base Rate
Loan, 365 days or, if appropriate, 366 days). Whenever any payment to be made
shall otherwise be due on a day which is not a Business Day, such payment shall
(except as otherwise required by clause (c) of the definition of the term
"Interest Period" with respect to Eurodollar Rate Loans) be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 4.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms
of Sections 4.3, 4.4 and 4.5) in excess of its pro rata share of payments then
or therewith obtained by all Lenders, such Lender shall purchase from the other
Lenders such participations in Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender the
purchase price to the ratable extent of such recovery together with an amount
equal to such selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender
to
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(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 4.9) with respect to such participation as fully
as if such Lender were the direct creditor of the Borrower in the amount of
such participation. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a setoff to which
this Section applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner consistent with the
rights of the Lenders entitled under this Section to share in the benefits of
any recovery on such secured claim.
SECTION 4.9. Setoff. Each Lender shall, upon the occurrence of
any Default described in clauses (a) through (d) of Section 8.19 or any other
Event of Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and (as security for such
Obligations) the Borrower hereby grants to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrower then or thereafter maintained with such Lender; provided, however,
that any such appropriation and application shall be subject to the provisions
of Section 4.8. Each Lender agrees promptly to notify the Borrower and the
Agent after any such setoff and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff
under applicable law or otherwise) which such Lender may have.
SECTION 4.10. Use of Proceeds. Proceeds of each Borrowing shall be
used for general corporate purposes and working capital purposes of the
Borrower and its Subsidiaries. Without limiting the foregoing, no proceeds of
any Loan will be used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of 1934 or any
"margin stock," as defined in F.R.S. Board Regulation U.
ARTICLE V
CONDITIONS TO RESTATEMENT AND BORROWING
SECTION 5.1. Restatement. The effectiveness of the amendment and
restatement of the Revolving Credit Agreement by this
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Agreement shall be subject to the prior or concurrent satisfaction of each of
the conditions precedent set forth in this Section 5.1.
SECTION 5.1.1. Equity Infusion. The Borrower shall have received
cash proceeds of an additional $3,000,000 in capital contributions from one or
more of its shareholders upon terms and conditions satisfactory to the Lenders
and the Agent shall have received evidence satisfactory to the Agent of such
receipt.
SECTION 5.1.2. Resolutions, etc. The Agent shall have
received from the Borrower and each Subsidiary a certificate, dated a date
satisfactory to the Agent, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full
force and effect authorizing the execution, delivery and performance
of this Agreement, the Notes and each other Loan Document to be
executed by it; and
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement, the Notes
and each other Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary or Assistant Secretary of the
Borrower or such Subsidiary, as the case may be, canceling or amending such
prior certificate.
SECTION 5.1.3. Delivery of Notes. The Agent shall have received,
for the account of each Lender, its Notes duly executed and delivered by the
Borrower.
SECTION 5.1.4. Intercreditor Agreement; Other Financing Agreements.
The Intercreditor Agreement shall have been executed by the parties thereto,
and the Borrower and its Subsidiaries shall have executed and delivered to the
Collateral Agent the Security Documents and the Subsidiaries shall have
executed and delivered to the Collateral Agent the Subsidiaries Guaranty. The
Financing Agreements (other than this Agreement) shall have been amended and/or
restated in form and substance satisfactory to the Lenders and consistent with
this Agreement.
SECTION 5.1.5. Environmental Report. The Agent shall have received
Phase I environmental assessments with respect to the properties of the
Borrower to be mortgaged under the Security Documents which assessments shall
be, in form and substance, satisfactory to the Lenders.
SECTION 5.1.6. Opinion of Counsel. The Agent shall have received
opinions, dated a date satisfactory to the Agent and addressed to the Agent and
all Lenders, from Honigman, Miller,
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Schwartz & Cohn, counsel to the Borrower, substantially in the form of Exhibit
F hereto.
SECTION 5.1.7. Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and 10.3, if then invoiced.
SECTION 5.2. All Borrowings. The obligation of each Lender to
fund any Loan on the occasion of any Borrowing shall be subject to the
satisfaction of each of the conditions precedent set forth in this Section 5.2.
SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to any Borrowing (but, if any Default of the
nature referred to in Section 8.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true and
correct:
(a) the representations and warranties set forth in
Article VI (excluding, however, those contained in Section 6.7) shall
be true and correct with the same effect as if then made (unless
stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct as of such
earlier date);
(b) except as disclosed by the Borrower to the Agent and
the Lenders pursuant to Section 6.7:
(i) no labor controversy, litigation, arbitration
or governmental investigation or proceeding shall be pending
or, to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries which might materially
adversely affect the Borrower's consolidated business,
operations, assets, revenues, properties or prospects or which
purports to affect the legality, validity or enforceability of
this Agreement, the Notes or any other Loan Document; and
(ii) no development shall have occurred in any
labor controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section 6.7
which might materially adversely affect the consolidated
businesses, operations, assets, revenues, properties or
prospects of the Borrower and its Subsidiaries;
(c) no Default shall have then occurred and be
continuing, and neither the Borrower nor any of its
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Subsidiaries are in material violation of any law or governmental
regulation or court order or decree;
(d) the sum of the aggregate outstanding principal amount of
the Loans plus the Effective Amount of all L/C Obligations shall not
exceed the Available Borrowing Base, as calculated in the then most
recently delivered Borrowing Base Certificate, and the Borrower shall
not be delinquent in the delivery of any Borrowing Base Certificate;
and
(e) no loans shall be outstanding under the Seasonal Line of
Credit Agreement.
SECTION 5.2.2. Borrowing Request. The Agent shall have received a
Borrowing Request for such Borrowing. Each of the delivery of a Borrowing
Request and the acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty by the Borrower that on the date
of such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof) the statements made in
Section 5.2.1 are true and correct.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans hereunder, the Borrower represents and warrants
unto the Agent and each Lender as set forth in this Article VI.
SECTION 6.1. Organization, etc. The Borrower and each of its
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the State of its incorporation, is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification
(except where such failure to qualify could not reasonably be expected to have
a Material Adverse Effect on the condition (financial or otherwise) of the
Borrower and the Subsidiaries taken as a whole, or on the Borrower's ability to
perform its obligations under the Loan Documents (a "Material Adverse
Effect")), and has full power and authority and holds all requisite
governmental licenses, permits and other approvals to enter into and perform
its Obligations under this Agreement, the Notes and each other Loan Document
and to own and hold under lease its property and to conduct its business
substantially as currently conducted by it.
SECTION 6.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Borrower of this
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Agreement, the Notes and each other Loan Document executed or to be executed by
it, and the Borrower's participation in the consummation of the transactions
contemplated by the Intercreditor Agreement and the other Financing Agreements
(the "Restructuring") are within the Borrower's corporate powers, have been
duly authorized by all necessary corporate action, and do not:
(a) contravene the Borrower's Organic Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Borrower except for such contraventions, which, in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect; or
(c) result in, or require the creation or imposition of,
any Lien on any of the Borrower's properties.
SECTION 6.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance by the Borrower of this Agreement,
the Notes or any other Loan Document or for the Borrower's participation in the
consummation of the Restructuring (other than those required for the provision
and perfection of the Liens under the Security Documents and except for those
the failure to obtain or effect could not reasonably be expected to have a
Material Adverse Effect). Neither the Borrower nor any of its Subsidiaries is
an "investment company" within the meaning of the Investment Company Act of
1940, as amended, or a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the
Notes and each other Loan Document executed by the Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms.
SECTION 6.5. Financial Information. The balance sheets of the
Borrower and each of its Subsidiaries as at May 31, 1996, and the related
statements of earnings and cash flow of the Borrower and each of its
Subsidiaries, copies of which have been furnished to the Agent and each Lender,
have been prepared in accordance with GAAP consistently applied, and present
fairly the consolidated financial condition of the corporations covered thereby
as at the dates thereof and the results of their operations for the periods
then ended.
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SECTION 6.6. No Material Adverse Change. Since the date of the
financial statements described in Section 6.5, except as disclosed in Item 6.6
of the Disclosure Schedule there has been no material adverse change in the
financial condition, operations, assets, business, properties or prospects of
the Borrower and its Subsidiaries.
SECTION 6.7. Litigation, Labor Controversies, etc. There is no
pending or, to the knowledge of the Borrower, threatened litigation, action,
proceeding, or labor controversy affecting the Borrower or any of its
Subsidiaries, or any of their respective properties, businesses, assets or
revenues, which may materially adversely affect the financial condition,
operations, assets, business, properties or prospects of the Borrower or any
Subsidiary or which purports to affect the legality, validity or enforceability
of this Agreement, the Notes or any other Loan Document, except as disclosed in
Item 6.7 ("Litigation") of the Disclosure Schedule.
SECTION 6.8. Subsidiaries. The Borrower has no Subsidiaries,
except those Subsidiaries:
(a) which are identified in Item 6.8 ("Existing
Subsidiaries") of the Disclosure Schedule; or
(b) which are permitted to have been acquired in
accordance with Section 2.5 or 2.10 of Appendix A.
SECTION 6.9. Ownership of Properties. Set forth on Item 6.9 of
the Disclosure Schedule is a complete and accurate list of all real property
owned by the Borrower, showing as of the Effective Date the street address,
county or other relevant jurisdiction, state, record owner and book value
thereof (other than certain parcels near the Frederick facility and other real
property having an aggregate fair market value of less than $500,000). The
Borrower and each of its Subsidiaries owns good and marketable title to all of
its properties and assets, real and personal, tangible and intangible, of any
nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges or claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 2.3 of Appendix A.
SECTION 6.10. Taxes. The Borrower and each of its Subsidiaries has
filed all tax returns and reports required by law to have been filed by it and
has paid all taxes and governmental charges thereby shown to be owing, except
any such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
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SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Borrowing hereunder, no steps
have been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any material
liability, fine or penalty. Except as disclosed in Item 6.11 ("Employee
Benefit Plans") of the Disclosure Schedule, neither the Borrower nor any member
of the Controlled Group has any contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.12. Environmental Warranties. Except as set forth in
Item 6.12 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower or any of its
Subsidiaries have been, and continue to be, owned or leased by the
Borrower and its Subsidiaries in material compliance with all
Environmental Laws;
(b) there have been no past, and there are no pending or
threatened:
(i) claims, complaints, notices or requests for
information received by the Borrower or any of its
Subsidiaries with respect to any alleged violation of any
Environmental Law; or
(ii) complaints, notices or inquiries to the
Borrower or any of its Subsidiaries regarding potential
liability under any Environmental Law;
(c) there have been no Releases of Hazardous Materials
at, on or under any property now or previously owned or leased by the
Borrower or any of its Subsidiaries that, singly or in the aggregate,
have, or may reasonably be expected to have, a material adverse effect
on the financial condition, operations, assets, business, properties
or prospects of the Borrower and its Subsidiaries;
(d) the Borrower and its Subsidiaries have been issued
and are in material compliance with all permits, certificates,
approvals, licenses and other authorizations relating to environmental
matters and necessary or desirable for their businesses;
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(e) no property now or previously owned or leased by the
Borrower or any of its Subsidiaries is listed or proposed for listing
(with respect to owned property only) on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list of
sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any property
now or previously owned or leased by the Borrower or any of its
Subsidiaries that, singly or in the aggregate, have, or may reasonably
be expected to have, a material adverse effect on the financial
condition, operations, assets, business, properties or prospects of
the Borrower and its Subsidiaries;
(g) neither Borrower nor any Subsidiary of the Borrower
has directly transported or directly arranged for the transportation
of any Hazardous Material to any location which is listed or proposed
for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of
federal, state or local enforcement actions or other investigations
which may lead to material claims against the Borrower or such
Subsidiary thereof for any remedial work, damage to natural resources
or personal injury, including claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable
asbestos present at any property now or previously owned or leased by
the Borrower or any Subsidiary of the Borrower that, singly or in the
aggregate, have, or may reasonably be expected to have, a material
adverse effect on the financial condition, operations, assets,
business, properties or prospects of the Borrower and its
Subsidiaries; and
(i) no conditions exist at, on or under any property now
or previously owned or leased by the Borrower which, with the passage
of time, or the giving of notice or both, would give rise to liability
under any Environmental Law.
SECTION 6.13. Regulations G, U and X. The Borrower is not engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Loans will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation G, U or X.
Terms for which meanings are provided in F.R.S. Board Regulation G, U or X or
any regulations substituted therefor, as from time to time in effect, are used
in this Section with such meanings.
SECTION 6.14. Liabilities. As of the Effective Date, except for
trade payables, payroll not yet due and payable, and real
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estate, personal property and other similar taxes not yet due and payable
arising in the ordinary course of the business of the Borrower, and except for
those capitalized lease obligations, operating leases and other Indebtedness of
the Borrower disclosed in Item 6.14(a) of the Disclosure Schedule, the Borrower
does not have any capitalized lease obligations, operating leases or other
Indebtedness except the Obligations. As of the Effective Date, except as
disclosed in Item 6.14(b) of the Disclosure Schedule, the Borrower is not
liable under any Guaranty with respect to the obligations of any other Person.
SECTION 6.15. Leases. Set forth in Item 6.15 to the Disclosure
Schedule is a complete and accurate list of all leases of real property under
which the Borrower is the lessee and having an annual rental cost of more than
$50,000, showing as of the Effective Date the street address, county or other
relevant jurisdiction, state, lessor, lessee, expiration date and annual rental
cost thereof. Each such lease is the legal, valid and binding obligation of
the lessor thereof, enforceable in accordance with its terms (subject to
limitations imposed by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity) and the
effect of applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws of general application relating to or affecting creditors'
rights).
SECTION 6.16. Material Contracts. Set forth in Item 6.16 to the
Disclosure Schedule is a complete and accurate list of all material contracts
of the Borrower showing as of the Effective Date the parties, subject matter
and term thereof. As of the Effective Date, each such material contract has
been duly authorized, executed and delivered by all parties thereto, has not
been amended or otherwise modified, is in full force and effect and is binding
upon and enforceable against all parties thereto in accordance with its terms
(subject to limitations imposed by general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity)
and the effect of applicable bankruptcy, reorganization, insolvency, moratorium
and similar laws of general application relating to or affecting creditors'
rights), and, to the best knowledge of the Borrower, as of the Effective Date,
there exists no material default under any such material contract by any party
thereto.
SECTION 6.17. Intellectual Property. Set forth in Item 6.17 to the
Disclosure Schedule is a complete and accurate list of all patents, trademarks,
trade names, service marks and copyrights, and all applications therefor and
licenses thereof, of the Borrower, showing as of the Effective Date the
jurisdiction in which registered, the registration number, the date of
registration and the expiration date.
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SECTION 6.18. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of the Borrower to the Agent or
any Lender will be, true and accurate in every material respect on the date as
of which such information is dated or certified and as of the date of execution
and delivery of this Agreement by the Agent and such Lender, and such
information is not, or shall not be, as the case may be, incomplete by omitting
to state any material fact necessary to make such information not misleading.
ARTICLE VII
COVENANTS
SECTION 7.1. Covenants. The Borrower agrees with the Agent and
each Lender that, until all Commitments have terminated and all Obligations
have been paid and performed in full, the Borrower will perform the obligations
set forth in Appendix A.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 8.1 shall constitute an "Event
of Default."
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall
default in the payment or prepayment when due of any principal of or interest
on any Loan or L/C Obligation, or in the payment when due of any commitment fee
or of any other Obligation and such default shall continue unremedied for two
Business Days.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty
of the Borrower or any Subsidiary made or deemed to be made hereunder, or in
any other Loan Document executed by it or any other writing or certificate
furnished by or on behalf of the Borrower or any Subsidiary to the Agent, the
Collateral Agent or any Lender for the purposes of or in connection with this
Agreement or any such other Loan Document (including any certificates delivered
pursuant to Article V), is or shall be incorrect when made in any material
respect.
SECTION 8.1.3. Non-Performance of Certain Covenants and Obligations.
The Borrower or any Subsidiary shall default in the
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due performance and observance of any of its obligations under Section 1.8 or
Section 2 of Appendix A.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations.
The Borrower shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Borrower by the Agent or any Lender.
SECTION 8.1.5. Default on Other Indebtedness. A default shall occur
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 8.1.1) of the Borrower or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of $1,000,000; or
a default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness having a principal amount,
individually or in the aggregate, in excess of $1,000,000, if the effect of
such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity.
SECTION 8.1.6. Judgments. Any judgment or order for the payment of
money in excess of $2,000,000 shall be rendered against the Borrower or any of
its Subsidiaries and there shall be any period during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect (other than a judgment in respect of the
Ponca City Litigation for an amount not greater than the sum of $6,000,000 plus
interest accrued thereon).
SECTION 8.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan:
(a) the institution of any steps by the Borrower, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower or any
such member could be required to make a contribution to such
Pension Plan, or could reasonably expect to incur a liability or obligation to
such Pension Plan, in excess of $2,000,000; or
(b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA.
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SECTION 8.1.8. Control of the Borrower. Any Change in Control shall
occur.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower or any of
its Subsidiaries shall:
(a) become insolvent or generally fail to pay, or admit
in writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian
for the Borrower or any of its Subsidiaries or any property of any
thereof, or make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of
its Subsidiaries or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 60 days; provided, that the Borrower
and each Subsidiary hereby expressly authorize the Agent and each
Lender to appear in any court conducting any relevant proceeding
during such 60-day period to preserve, protect and defend their rights
under the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding in respect of the Borrower or any
of its Subsidiaries; and, if any such case or proceeding is not
commenced by the Borrower or such Subsidiary, such case or proceeding
shall be consented to or acquiesced in by the Borrower or such
Subsidiary or shall result in the entry of an order for relief or
shall remain for 60 days undismissed; provided, that the Borrower and
each Subsidiary hereby expressly authorize the Agent and each Lender
to appear in any court conducting any such case or proceeding during
such 60-day period to preserve, protect and defend their rights under
the Loan Documents; or
(e) take any action authorizing, or in furtherance of,
any of the foregoing.
SECTION 8.1.10. Scheduled Cap[ital Infusion Proceeds. The Borrower
shall fail to receive at least $15,000,000 of Scheduled Capital Infusion
Proceeds on or before April 30, 1997.
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SECTION 8.1.11. Security Documents. The Borrower or any Subsidiary
shall fail to comply in any material respect with any one or more of the
provisions or requirements contained in the Security Documents; or any of the
Security Documents shall cease for any reason to be in full force or effect or
is declared to be null and void or the Borrower or any Subsidiary shall disavow
its respective obligations thereunder, or shall contest the validity or
enforceability of any thereof or give notice to such effect; or any Lien
purported to be granted pursuant to any of the Security Documents for any
reason (other than a release or termination thereof by the Collateral Agent or
the Creditor Parties) shall cease to be a legal, valid or enforceable Lien on
the Property subject thereto with the priority purported to be granted pursuant
to such Security Documents (other than the failure of the Collateral Agent or
any Creditor Party to take any action solely within its control).
SECTION 8.1.12. Subsidiaries Guaranty. Any Subsidiary shall fail
to comply in any material respect with any one or more of the provisions or
requirements contained in the Subsidiaries Guaranty; or the Subsidiaries
Guaranty shall cease for any reason to be in full force or effect or is
declared to be null and void (other than in respect of TAVFSC) or any
Subsidiary shall disavow its respective obligations thereunder, or shall
contest the validity or enforceability thereof or gives notice to such effect.
SECTION 8.2. Action if Bankruptcy. If any Event of Default
described in clauses (a) through (d) of Section 8.1.9) shall occur, the
Commitments (if not theretofore terminated) shall automatically terminate and
the outstanding principal amount of all outstanding Loans and all other
Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 8.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through (d)
of Section 8.1.9) shall occur for any reason, whether voluntary or involuntary,
and be continuing, the Agent, upon the direction of the Required Lenders, shall
by notice to the Borrower declare all or any portion of the outstanding
principal amount of the Loans and other Obligations to be due and payable
and/or an amount equal to the maximum aggregate amount that is or at any time
thereafter may become available for drawing under any outstanding Letter of
Credit (whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to
draw under such Letter of Credit) to be immediately due and payable, and/or the
Commitments (if not theretofore terminated) to be terminated, whereupon the
full unpaid amount of such Loans and other Obligations which shall be so
declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the case may be, the
Commitments shall terminate. Subject in
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all cases to the Intercreditor Agreement, any payments made in respect of the
undrawn amounts of Letters of Credit shall be applied to Cash Collateralize
such L/C Obligations.
ARTICLE IX
THE AGENT
SECTION 9.1. Actions. (a) Each Lender hereby appoints RBN as its
Agent under and for purposes of this Agreement, the Notes and each other Loan
Document. Each Lender authorizes the Agent to act on behalf of such Lender
under this Agreement, the Notes and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Agent (with respect to which the Agent agrees that it will
comply, except as otherwise provided in this Section or as otherwise advised by
counsel), to exercise such powers hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof, together
with such powers as may be reasonably incidental thereto. Each Lender hereby
indemnifies (which indemnity shall survive any termination of this Agreement)
the Agent, pro rata according to such Lender's Percentage, from and against any
and all liabilities, obligations, losses, damages, claims, costs or expenses of
any kind or nature whatsoever which may at any time be imposed on, incurred by,
or asserted against, the Agent in any way relating to or arising out of this
Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, and as to which the Agent is not reimbursed by the Borrower;
provided, however, that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, claims, costs or
expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted solely from the Agent's gross negligence or wilful
misconduct. The Agent shall not be required to take any action hereunder,
under the Notes or under any other Loan Document, or to prosecute or defend any
suit in respect of this Agreement, the Notes or any other Loan Document, unless
it is indemnified hereunder to its satisfaction. If any indemnity in favor of
the Agent shall be or become, in the Agent's determination, inadequate, the
Agent may call for additional indemnification from the Lenders and cease to do
the acts indemnified against hereunder until such additional indemnity is
given.
(b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit Issued by it and the documents associated
therewith; provided, however, that the Issuing Lender shall have all the
benefits and immunities (i) provided to the Agent in this Article IX with
respect to any acts taken or omissions suffered by the Issuing Lender in
connection with Letters
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of Credit Issued by it or proposed to be Issued by it and the application and
agreements for letters of credit pertaining to the Letters of Credit as fully
as if the term "Agent", as used in this Article IX, included the Issuing Lender
with respect to such acts or omissions and (ii) as additionally provided in
this Agreement with respect to the Issuing Lender.
SECTION 9.2. Funding Reliance, etc. Unless the Agent shall have
been notified by telephone, confirmed in writing, by any Lender by 5:00 p.m.,
New York City time, on the day prior to a Borrowing, in the case of a Borrowing
of Eurodollar Loans, that such Lender will not make available the amount which
would constitute its Percentage of such Borrowing on the date specified
therefor, the Agent may assume that such Lender has made such amount available
to the Agent and, in reliance upon such assumption, make available to the
Borrower a corresponding amount. If and to the extent that such Lender shall
not have made such amount available to the Agent, such Lender and the Borrower
severally agree to repay the Agent forthwith on demand such corresponding
amount, together with interest thereon, for each day from the date the Agent
made such amount available to the Borrower to the date such amount is repaid to
the Agent, at the interest rate applicable at the time to Loans comprising such
Borrowing in the case of a repayment by the Borrower and at the rate per annum
paid or payable by the Agent in New York, New York, for federal funds purchased
overnight from other banking institutions, in the case of a repayment by a
Lender.
SECTION 9.3. Exculpation. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other
Loan Document, or in connection herewith or therewith, except for its own
wilful misconduct or gross negligence, nor responsible for any recitals or
warranties herein or therein, nor for the effectiveness, enforceability,
validity or due execution of this Agreement or any other Loan Document, nor to
make any inquiry respecting the performance by the Borrower of its obligations
hereunder or under any other Loan Document. Any such inquiry which may be made
by the Agent shall not obligate it to make any further inquiry or to take any
action. The Agent shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement or writing
which the Agent believes to be genuine and to have been presented by a proper
Person.
SECTION 9.4. Successor. The Agent may resign as such at any time
upon at least 30 days' prior notice to the Borrower and all Lenders. If the
Agent at any time shall resign, the Required Lenders may (with the written
consent of the Borrower which consent shall not be unreasonably withheld or
delayed) appoint another Lender as a successor Agent, which shall thereupon
become the Agent
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hereunder. If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation, then the retiring Agent may
(with the written consent of the Borrower which consent shall not be
unreasonably withheld or delayed), on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as the Agent, the provisions of:
(a) this Article IX shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Agent
under this Agreement; and
(b) Section 10.3 and Section 10.4 shall continue to inure
to its benefit.
SECTION 9.5. Loans by RBN. RBN shall have the same rights and
powers with respect to (x) the Loans made by it or any of its Affiliates, and
(y) the Notes held by it or any of its Affiliates as any other Lender and may
exercise the same as if it were not the Agent. RBN and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any Subsidiary or Affiliate of the Borrower as if
RBN were not the Agent hereunder.
SECTION 9.6. Credit Decisions. Each Lender acknowledges that it
has, independently of the Agent and each other Lender, and based on such
Lender's review of the financial information of the Borrower, this Agreement,
the other Loan Documents (the terms and provisions of which being satisfactory
to such Lender) and such other documents, information and investigations as
such Lender has deemed appropriate, made its own credit decision to extend its
Commitment. Each Lender also acknowledges that it will, independently of the
Agent and each other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.
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SECTION 9.7. Copies, etc. The Agent shall give prompt notice to
each Lender of each notice or request required or permitted to be given to the
Agent by the Borrower pursuant to the terms of this Agreement (unless
concurrently delivered to the Lenders by the Borrower). The Agent will
distribute to each Lender each document or instrument received for its account
and copies of all other communications received by the Agent from the Borrower
for distribution to the Lenders by the Agent in accordance with the terms of
this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Required Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 10.1, change the definition of
"Required Lenders," increase the Commitment Amount or the Percentage
of any Lender, reduce any fees described in Article III, or extend the
Commitment Termination Date shall be made without the consent of each
Lender and each holder of a Note;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any
Loan) shall be made without the consent of the holder of that Note
evidencing such Loan; or
(d) affect adversely the interests, rights or obligations
of the Agent or the Issuing Lender shall be made without consent of
the Agent or the Issuing Lender, as the case may be.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand
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in similar or other circumstances. No waiver or approval by the Agent, any
Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder
shall require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
SECTION 10.2. Notices. All notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by facsimile and addressed, delivered or transmitted to
such party at its address, or facsimile number set forth on Schedule 10.2 or
set forth in the Lender Assignment Agreement or at such other address, Telex or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any notice, if transmitted by facsimile, shall be deemed
given when transmitted.
SECTION 10.3. Payment of Costs and Expenses. The Borrower agrees
to pay on demand all expenses of the Agent (including the fees and
out-of-pocket expenses of counsel to the Agent and of local counsel, if any,
who may be retained by counsel to the Agent) in connection with
(a) asset or collateral inspection and auditing and
financial consultants,
(b) the negotiation, preparation, execution and delivery
of this Agreement and of each other Loan Document, including
schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or any other Loan
Document as may from time to time hereafter be required, whether or not
the transactions contemplated hereby are consummated, and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other Loan
Document.
The Borrower further agrees to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Notes or any other Loan Documents (but not
including, to the extent reimbursement is prohibited by applicable law, the
Oklahoma real estate mortgage tax). The Borrower also agrees to reimburse the
Agent and each Lender upon demand for all reasonable out-of-pocket expenses
(including Lenders' travel expenses, attorneys' fees and legal expenses)
incurred by the Agent or such Lender in connection with (x) the negotiation of
any restructuring (including the
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Restructuring) or "work-out," whether or not consummated, of any Obligations
and (y) the enforcement of any Obligations.
SECTION 10.4. Indemnification. In consideration of the execution
and delivery of this Agreement by each Lender and the extension of the
Commitments, the Borrower hereby indemnifies, exonerates and holds the Agent
and each Lender and each of their respective officers, directors, employees and
agents (collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including reasonable attorneys'
fees and disbursements (collectively, the "Indemnified Liabilities"), incurred
by the Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(a) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Loan;
(b) the entering into and performance of this Agreement
and any other Loan Document by any of the Indemnified Parties
(including any action brought by or on behalf of the Borrower as the
result of any determination by the Required Lenders pursuant to
Article V not to fund any Borrowing);
(c) any investigation, litigation or proceeding related
to any acquisition or proposed acquisition by the Borrower or any of
its Subsidiaries of all or any portion of the stock or assets of any
Person, whether or not the Agent or such Lender is party thereto;
(d) any investigation, litigation or proceeding related
to any environmental cleanup, audit, compliance or other matter
relating to the protection of the environment or the Release by the
Borrower or any of its Subsidiaries of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from,
any real property owned or operated by the Borrower or any Subsidiary
thereof of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under
any Environmental Law), regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant
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Indemnified Party's gross negligence or wilful misconduct. If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
SECTION 10.5. Survival. The obligations of the Borrower under
Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders
under Section 9.1, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments.
SECTION 10.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. Headings. The various headings of this Agreement and
of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 10.8. Execution in Counterparts, Effectiveness, etc;
Waiver. This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be executed by the Borrower and the Agent and
be deemed to be an original and all of which shall constitute together but one
and the same agreement. This Agreement shall become effective (the "Effective
Date") when counterparts hereof executed on behalf of the Borrower and each
Lender (or notice thereof satisfactory to the Agent) shall have been received
by the Agent and notice thereof shall have been given by the Agent to the
Borrower and each Lender and the conditions set forth in Section 5.1 are met.
As of the Effective Date, the Agent and the Lenders hereby waive the Borrower's
non-compliance with Article VII of the Revolving Credit Agreement and any and
all Events of Default or Unmatured Events of Default arising from the
Borrower's non-compliance with Article VII of the Revolving Credit Agreement by
the Borrower for the period ending on the Effective Date.
SECTION 10.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter
hereof and
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supersede any prior agreements, written or oral, with respect thereto.
SECTION 10.10. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that:
(a) the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the Agent
and all Lenders; and
(b) the rights of sale, assignment and transfer of the
Lenders are subject to Section 10.11.
SECTION 10.11. Sale and Transfer of Loans and Note; Participations
in Loans and Note. Each Lender may assign, or sell participations in, its
Loans and Commitment to one or more other Persons in accordance with this
Section 10.11.
SECTION 10.11.1. Assignments. Any Lender,
(a) with the written consents of the Borrower and the
Agent (which consents shall not be unreasonably delayed or withheld
and which consent, in the case of the Borrower, shall be deemed to
have been given in the absence of a written notice delivered by the
Borrower to the Agent, on or before the fifth Business Day after
receipt by the Borrower of such Lender's request for consent, stating,
in reasonable detail, the reasons why the Borrower proposes to
withhold such consent), may at any time assign and delegate to one or
more commercial banks or other financial institutions, and
(b) with notice to the Borrower and the Agent, but
without the consent of the Borrower or the Agent, may assign and
delegate to any of its Affiliates, to any other Lender or to any
Federal Reserve Bank,
(each Person described in either of the foregoing clauses as being the Person
to whom such assignment and delegation is to be made, being hereinafter
referred to as an "Assignee Lender"), all or any fraction of such Lender's
total Loans and Commitment (which assignment and delegation shall be of a
constant, and not a varying, percentage of all the assigning Lender's Loans and
Commitment) in a minimum aggregate amount of $5,000,000; provided, however,
that any such Assignee Lender will comply, if applicable, with the provisions
contained in the penultimate sentence of Section 4.6; and further, provided,
however, that, the Borrower and the Agent shall be entitled to continue to deal
solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until:
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(c) written notice of such assignment and delegation,
together with payment instructions, addresses and related information
with respect to such Assignee Lender, shall have been given to the
Borrower and the Agent by such Lender and such Assignee Lender;
(d) such Assignee Lender shall have executed and
delivered to the Borrower and the Agent a Lender Assignment Agreement,
accepted by the Agent; and
(e) the processing fees described below shall have been
paid.
From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and, to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the Assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of notice that the
Agent has received an executed Lender Assignment Agreement, the Borrower shall
execute and deliver to the Agent (for delivery to the relevant Assignee Lender)
a new Note evidencing such Assignee Lender's assigned Loans and Commitment and,
if the assignor Lender has retained Loans and a Commitment hereunder, a
replacement Note in the principal amount of the Loans and Commitment retained
by the assignor Lender hereunder (such Note to be in exchange for, but not in
payment of, that Note then held by such assignor Lender). Each such Note shall
be dated the date of the predecessor Note. The assignor Lender shall mark the
predecessor Note "exchanged" and deliver it to the Borrower. Accrued interest
on that part of the predecessor Note evidenced by the new Note, and accrued
fees, shall be paid as provided in the Lender Assignment Agreement. Accrued
interest on that part of the predecessor Note evidenced by the replacement Note
shall be paid to the assignor Lender. Accrued interest and accrued fees shall
be paid at the same time or times provided in the predecessor Note and in this
Agreement. Such assignor Lender or such Assignee Lender must also pay a
processing fee to the Agent upon delivery of any Lender Assignment Agreement in
the amount of $3,000. Any attempted assignment and delegation not made in
accordance with this Section 10.11.1 shall be null and void.
SECTION 10.11.2. Participations. Any Lender may at any time sell to
one or more commercial banks or other Persons (each of such commercial banks
and other Persons being herein called a
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"Participant") participating interests in any of the Loans, its Commitment, or
other interests of such Lender hereunder; provided, however, that:
(a) no participation contemplated in this Section 10.11
shall relieve such Lender from its Commitment or its other obligations
hereunder or under any other Loan Document;
(b) such Lender shall remain solely responsible for the
performance of its Commitment and such other obligations;
(c) the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and each of the other Loan
Documents;
(d) no Participant, unless such Participant is an
Affiliate of such Lender or is itself a Lender, shall be
entitled to require such Lender to take or refrain from taking any
action hereunder or under any other Loan Document, except that such
Lender may agree with any Participant that such Lender will not,
without such Participant's consent, take any actions of the type
described in clause (b) or (c) of Section 10.1; and
(e) the Borrower shall not be required to pay any amount
under Section 4.6 that is greater than the amount which it would have
been required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a
Lender.
SECTION 10.12. Other Transactions. Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Affiliates in which the Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13. Waiver and Release. For and in consideration of the
agreements contained in the Amended Credit Agreements, and other good and
valuable consideration, the receipt and sufficiency of all of which are hereby
acknowledged, the Borrower, on its own behalf, and to the extent that it is
lawfully able to do so, on behalf of its predecessors, successors, assigns,
Subsidiaries, affiliates and agents and all of their respective past, present
and future officers, directors, shareholders, employees, contractors and
attorneys, and the predecessors, heirs, successors, and assigns of each of them
(collectively referred to in this Section 10.13 as
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the "Releasors") do hereby jointly and severally fully RELEASE, REMISE, ACQUIT,
IRREVOCABLY WAIVE and FOREVER DISCHARGE each of the Lenders and the Agent,
together with their respective predecessors, successors, assigns, subsidiaries,
affiliates and agents and all of their respective past, present and future
officers, directors, shareholders, employees, contractors and attorneys, and
the predecessors, heirs, successors and assigns of each of them (the Lenders,
the Agent and all of the foregoing being collectively referred to in this
Section 10.13 as the "Released Parties"), from and with respect to any and all
Claims (as defined below).
As used in this Section 10.13, the term "Claims" shall mean and include any and
all, and all manner of, action and actions, cause and causes of action, suits,
disputes, controversies, claims, debts, sums of money, offset rights, defenses
to payment, agreements, promises, notes, bonds, bills, covenants, losses,
damages, judgments, executions and demands of whatever nature, known or unknown,
whether in contract, in tort or otherwise, at law or in equity, for money
damages or dues, recovery of property, or specific performance, or any other
redress or recompense which have accrued or may ever accrue, may have been had,
may be now possessed, or may or shall be possessed in the future by or on behalf
of any one or more of the Releasors against any one or more of the Released
Parties for, upon, by reason of, on account of, or arising from or out of, or by
virtue of, any transaction, event or occurrence, duty or obligation,
indemnification, agreement, promise, warranty, covenant or representation,
breach of fiduciary duty, breach of any duty of fair dealing, breach of
confidence, breach of funding commitment, undue influence, duress, economic
coercion, conflict of interest, negligence, bad faith, malpractice, violations
of federal or state securities laws or the Racketeer Influenced and Corrupt
Organizations Act, intentional or negligent infliction of mental distress,
tortious interference with contractual relations, tortious interference with
corporate governance or prospective business advantage, breach of contract,
deceptive trade practices, libel, slander, usury, conspiracy, wrongful
acceleration of any indebtedness, wrongful foreclosure or attempt to foreclose
on any collateral relating to any indebtedness, action or inaction, relationship
or activity, service rendered, matter, cause or thing, whatsoever, express or
implied, transpiring, entered into, created or existing from the beginning of
time to the date of the execution of this Section 10.13 in respect of the
Existing Credit Agreements, and shall include, but not be limited to, any and
all Claims in connection with, as a result of, by reason of, or in any way
related to or arising from the existence of any relationships or communications
by and between the Releasors and the Released Parties with respect to the
Existing Credit Agreements, and all agreements, documents and instruments
related thereto, as presently constituted and as the same may from time to time
be amended.
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The Releasors acknowledge that they may hereafter discover facts,
which exist or existed on or before the Effective Date, different from or in
addition to those they now know or believe to be true with respect to the
Claims herein released. Notwithstanding the foregoing, the Releasors agree
that this Section 10.13 shall survive the termination hereof and shall remain
effective in all respects and waive the right to make any new, different or
additional claim on account of such different or additional facts. The
Releasors acknowledge that no representation or warranty of any kind or
character has been made to the Releasors by any one or more of the Released
Parties or any agent, representative or attorney of the Released Parties to
induce the execution of this Agreement containing this Section 10.13.
The Releasors hereby represent and warrant unto the Released Parties
that
(a) the Releasors have the full right, power, and
authority to execute and deliver this Agreement containing this Section 10.13
without the necessity of obtaining the consent of any other party;
(b) the Releasors have received independent legal advice
from attorneys of their choice with respect to the advisability of granting the
release provided herein, and with respect to the advisability of executing this
Agreement containing this Section 10.13;
(c) the Releasors have not relied upon any statements,
representations or promises of any of the Released Parties in executing this
Agreement containing this Section 10.13, or in granting the release provided
herein;
(d) the Releasors have not entered into any other
agreements or understandings relating to the Claims;
(e) the terms of this Section 10.13 are contractual, not
a mere recital, and are the result of negotiation among all the parties; and
(f) this Section 10.13 has been carefully read by, and
the contents hereof are known and understood by, and it is signed freely by the
Releasors.
The Releasors covenant and agree not to bring any claim, action, suit
or proceeding regarding or related in any manner to the matters released
hereby, and the Releasors further covenant and agree that this Section 10.13 is
a bar to any such claim, action, suit or proceeding.
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All prior discussions and negotiations regarding the Claims have been
and are merged and integrated into, and are superseded by, this Section 10.13.
The Releasors understand, agree and expressly assume the risk of any fact not
recited, contained or embodied in this Section 10.13 which may hereafter turn
out to be other than, different from, or contrary to, the facts now known to
the Releasors or believed by the Releasors to be true, and further agree that
this Section 10.13 shall not be subject to termination, modification, or
rescission, by reason of any such difference in facts.
SECTION 10.14. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.15. Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER. THE
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
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CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
THORN APPLE VALLEY, INC.
By_________________________________
Title:
AMENDED AND RESTATED
CREDIT AGREEMENT
S-1
68
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., acting
through its U.S. branches and agencies,
including initially its New York Branch,
as Agent
By_________________________________
Title:
By_________________________________
Title:
AMENDED AND RESTATED
CREDIT AGREEMENT
S-2
69
PERCENTAGE LENDERS
---------- -------
31.25% COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A.,
New York Branch
By________________________________
Title:
By_________________________________
Title:
25.0% OLD KENT BANK
By________________________________
Title:
25.0% NATIONAL CITY BANK
By________________________________
Title:
18.75% HARRIS TRUST AND SAVINGS BANK
By________________________________
Title: Vice President
____
100%
----
AMENDED AND RESTATED
CREDIT AGREEMENT
S-3
70
APPENDIX A
TEMPORARY COVENANTS(1)
SECTION 1. AFFIRMATIVE COVENANTS. The Borrower agrees with the
Agent and each Creditor Party that the Borrower will perform the obligations
set forth in this Section 1 and in Sections 6.3, 6.6(e), 6.6(f), 6.6(g),
6.6(h), 6.6(i), 6.8, 6.10, 6.11, and 6.12 of the Existing Note Agreement.
SECTION 1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
Borrower will furnish, or will cause to be furnished, to each Creditor Party
and the Agent copies of the following financial statements, reports, notices
and information:
(a) Weekly Reporting -- on the last Business Day of each
week,
(i) a Borrowing Base Certificate setting forth a
calculation of the Borrowing Base as of the last Business Day
of the preceding week; and
(ii) a Weekly P&L Statement in respect of the
preceding week;
(b) Fiscal Periodic Reporting --
(i) as soon as available and in any event within
26 days after the end of each of the first twelve Fiscal
Periods of each Fiscal Year, consolidated balance sheets of
the Borrower and its Subsidiaries as of the end of such Fiscal
Period and consolidated statements of earnings and cash flow
of the Borrower and its Subsidiaries for such Fiscal Period
and for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Period,
certified as true and correct by the chief financial
Authorized Officer of the Borrower (the parties hereto
acknowledge that such financial statements will not have been
audited, and that the annual audit of the Borrower may require
adjustments to the figures presented therein);
(ii) as soon as available and in any event within
26 days after the end of each Fiscal Period of each Fiscal
Year, a comparison of
(A) the actual consolidated balance
sheet of the Borrower and its Subsidiaries as of the
end of such Fiscal Period and actual consolidated
statements of earnings and cash flow of the Borrower
and its Subsidiaries for such Fiscal Period and for
the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal
Period (the parties hereto acknowledge that such
financial statements will not have been audited, and
that the annual audit of the Borrower may require
adjustments to the figures presented therein), with
________________________
(1) Capitalized terms used in this Appendix A are defined
in Section 3 of this Appendix A.
Appendix A-1
71
(B) the budgeted consolidated balance
sheet of the Borrower and its Subsidiaries as of the
end of such Fiscal Period and the budgeted
consolidated statements of earnings and cash flow of
the Borrower and its Subsidiaries for such Fiscal
Period and for the period commencing at the end of
the previous Fiscal Year and ending with the end of
such Fiscal Period, in each case, contained in the
most recent Rolling Projection (defined below),
certified as true and correct by the chief financial
Authorized Officer of the Borrower;
(iii) as soon as available and in any event within
26 days after the end of each of the first twelve Fiscal
Periods of each Fiscal Year and within 90 days after the end
of the last Fiscal Period of each Fiscal Year, a certificate,
executed by the chief financial Authorized Officer of the
Borrower, showing (in reasonable detail and with appropriate
calculations and computations in all respects satisfactory to
the Agent and each Creditor Party) compliance with the
financial covenants set forth in Section 2.4; and
(iv) as soon as available and in any event within
30 days after the end of each Fiscal Period of each Fiscal
Year, a management report describing in detail the Company's
results of operations during such Fiscal Period and
explaining, among other things, (x) any material variances
demonstrated by the comparison delivered in respect of such
Fiscal Period pursuant to clause (ii) above and (y) any
failure to comply with financial covenants identified in the
certificate delivered in respect of such Fiscal Period
pursuant to clause (iii) above;
(c) Quarterly Reporting -- as soon as available and in
any event within 45 days after the end of each of Fiscal Quarter of
each Fiscal Year, a projection (each, a "Rolling Projection"), for
each of the thirteen Fiscal Periods next succeeding the last day of
such Fiscal Quarter, of the consolidated balance sheet of the Borrower
and its Subsidiaries as of the end of each such next succeeding Fiscal
Period and the budgeted consolidated statements of earnings and cash
flow of the Borrower and its Subsidiaries for each such next
succeeding Fiscal Period and for the period commencing at the end of
such Fiscal Quarter and ending with the end of each such next
succeeding Fiscal Period, certified as true and correct by the chief
financial Authorized Officer of the Borrower;
(d) Annual Reporting --
(i) as soon as available and in any event within
90 days after the end of each Fiscal Year of the Borrower, a
copy of the annual audit report (including, without
limitation, any accompanying or related auditor's letter and
the Borrower's responses thereto) for such Fiscal Year for the
Borrower and its Subsidiaries, including therein consolidated
balance sheets of the Borrower and its Subsidiaries as of the
end of such Fiscal Year and consolidated statements of
earnings and cash flow of the Borrower and its Subsidiaries
for such Fiscal Year, in each case certified (without any
Impermissible Qualification) in a manner acceptable to the
Agent and each of the Creditor Parties by Coopers & Lybrand or
other
Appendix A-2
72
independent public accountants acceptable to the Agent and
each of the Creditor Parties, together with a certificate from
such accountants to the effect that, in making the examination
necessary for the signing of such annual report by such
accountants, they have not become aware of any Default or
Event of Default that has occurred and is continuing, or, if
they have become aware of such Default or Event of Default,
describing such Default or Event of Default and the steps, if
any, being taken to cure it; provided, however, that in the
case of the Company's financial statements for the Fiscal Year
ended May 31, 1996, such audit opinion shall be delivered not
later than September 13, 1996;
(ii) together with the financial reports delivered
pursuant to paragraph (i) of this Section 1.1(d), a
certificate of the independent certified public accountants
(i) stating that in making the examination necessary for
expressing an opinion on such financial statements, nothing
came to their attention that caused them to believe that there
is in existence or has occurred any Default or Event of
Default under any of the Financing Agreements (as defined in
the Intercreditor Agreement) or, if such accountants shall
have obtained knowledge of any such Default or Event of
Default, describing the nature thereof and the length of time
it has existed and (ii) acknowledging that the Creditor
Parties may rely on their opinion on such financial
statements;
(e) Defaults -- as soon as possible and in any event
within three days after the occurrence of each Default, a statement of
the chief financial Authorized Officer of the Borrower setting forth
details of such Default and the action which the Borrower has taken
and proposes to take with respect thereto;
(f) Litigation -- as soon as possible and in any event
within three days after (x) the occurrence of any adverse development
with respect to any litigation, action, proceeding, or labor
controversy described in Section 6.7 of the Bank Credit Agreement or
(y) the commencement of any labor controversy, litigation, action,
proceeding of the type described in Section 6.7 of the Bank Credit
Agreement, notice thereof and copies of all documentation relating
thereto;
(g) Securities Reports, etc. -- promptly after the
sending or filing thereof, copies of all reports which the Borrower
sends to any of its securityholders, and all reports and registration
statements which the Borrower or any of its Subsidiaries files with
the Securities and Exchange Commission or any national securities
exchange;
(h) Pension Plans -- immediately upon becoming aware of
the institution of any steps by the Borrower or any other Person to
terminate any Pension Plan, or the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under section 302(f) of ERISA, or the taking of any
action with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect
to any Pension Plan which could result in the incurrence by the
Borrower of any material liability, fine or penalty, or any material
increase in the contingent liability of the Borrower with respect to
any post-retirement Welfare Plan benefit, notice thereof and copies of
all documentation relating thereto; and
Appendix A-3
73
(i) Other -- such other information respecting the
condition or operations, financial or otherwise, of the Borrower or
any of its Subsidiaries as any Creditor Party may from time to time
reasonably request.
SECTION 1.2. COMPLIANCE WITH LAWS, ETC. The Borrower will, and
will cause each of its Subsidiaries to, comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of
all taxes, assessments and governmental charges imposed upon it or
upon its Property except to the extent being diligently contested in
good faith by appropriate proceedings and for which adequate reserves
in accordance with GAAP shall have been set aside on its books.
SECTION 1.3. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES.
(a) The Borrower will maintain and preserve, and will
cause each Subsidiary to maintain and preserve, its corporate
existence and right to carry on its business and will use, and cause
each Subsidiary to use, its best efforts to maintain, preserve, renew
and extend all of its rights, powers, privileges and franchises
necessary to the proper conduct of its business.
(b) The Borrower will, and will cause each of its
Subsidiaries to, maintain, preserve, protect and keep its properties
in good repair, working order and condition, and make necessary and
proper repairs, renewals and replacements so that its business carried
on in connection therewith may be properly conducted at all times
unless the Borrower determines in good faith that the continued
maintenance of any of its properties is no longer economically
desirable.
SECTION 1.4. INSURANCE. The Borrower will, and will cause each of
its Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
(including business interruption insurance) against such casualties and
contingencies and of such types and in such amounts and with only such
deductibles as is customary in the case of similar businesses and will, upon
request of the Agent or any Creditor Party, furnish to each Creditor Party at
reasonable intervals a certificate of an Authorized Officer of the Borrower
setting forth the nature and extent of all insurance maintained by the Borrower
and its Subsidiaries in accordance with this Section.
SECTION 1.5. BOOKS AND RECORDS. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect
all of its business affairs and transactions and permit the Agent and each of
(i) the Noteholders as a group and (ii) the Lenders as a group, or any of their
respective representatives, at reasonable times and intervals, to visit all of
its offices, to discuss its financial matters with its officers and independent
public accountant (and the Borrower hereby authorizes such independent public
accountant to discuss the Borrower's financial matters with each Creditor Party
or its representatives whether or not any
Appendix A-4
74
representative of the Borrower is present) and to examine (and, at the expense
of the Borrower, photocopy extracts from) any of its books or other corporate
records. The Borrower shall pay any fees of such independent public accountant
incurred in connection with the Agent's or any Creditor Party's exercise of its
rights pursuant to this Section.
SECTION 1.6. ENVIRONMENTAL COVENANT. The Borrower will, and will
cause each of its Subsidiaries to:
(a) use and operate all of its facilities and properties
in material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Agent and each Creditor Party
and provide copies upon receipt of all written claims, complaints,
notices or inquiries from governmental authorities relating to the
condition of its facilities and properties or compliance with
Environmental Laws, and shall promptly cure and have dismissed with
prejudice to the satisfaction of the Agent and each Creditor Party any
actions and proceedings relating to compliance with Environmental
Laws; and
(c) provide such information and certifications which the
Agent or any Creditor Party may reasonably request from time to time
to evidence compliance with this Section 1.6.
SECTION 1.7. EQUITY OR SUBORDINATED DEBT.
(a) The Borrower shall receive at least $15,000,000 in
proceeds of Subordinated Debt on or before April 30, 1997.
(b) In the event that the Borrower shall fail to receive
at least $15,000,000 in proceeds of equity or Subordinated Debt on or
before January 31, 1997, the Borrower shall retain a
nationally-recognized investment advisor, who shall be acceptable to
the Creditor Parties, to set up and implement a plan (a copy of which
shall be provided to each Creditor Party) to raise such proceeds on or
before April 30, 1997.
SECTION 1.8. COLLATERAL MATTERS. The Borrower shall, and shall
cause each Subsidiary to, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register, any and all acts, deeds, conveyances,
security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments, and do
such further acts, as the Collateral Agent may reasonably request from time to
time in order:
(a) to ensure that
(i) the obligations of the Borrower hereunder and
under the other Financing Agreements (as defined in the
Intercreditor Agreement) are secured by substantially all
assets of the Borrower, subject to the exceptions set forth in
Appendix A-5
75
Exhibit A-3 and guaranteed, pursuant to the Subsidiaries
Guaranty, by all Subsidiaries (including, promptly upon the
acquisition or creation thereof, any Subsidiary created or
acquired after the Effective Date), and
(ii) the obligations of each Subsidiary under the
Subsidiaries Guaranty are secured by substantially all of the
assets of such Subsidiary, and
(b) to perfect and maintain the validity, effectiveness
and priority of any of the Security Documents and the Liens intended
to be created thereby, subject to the exceptions set forth in Exhibit
A-3.
Without limiting the generality of the foregoing, the Borrower shall, and shall
cause each Subsidiary to, take the actions in respect of Collateral set forth
on Exhibit A-3 within the times set forth therein. Contemporaneously with the
execution and delivery of any document referred to above, the Borrower shall,
and shall cause each Subsidiary to, deliver all resolutions, opinions and
corporate documents as the Collateral Agent may reasonably request to confirm
the enforceability of such document and the perfection of the security interest
created thereby, if applicable.
SECTION 2. NEGATIVE COVENANTS. The Borrower agrees with the
Agent and each Creditor Party that the Borrower will perform the obligations
set forth in this Section 2.
SECTION 2.1. BUSINESS ACTIVITIES. The Borrower will not, and will
not permit any of its Subsidiaries to, engage in any business activity, except
the business of processing food and such activities as may be incidental or
related thereto.
SECTION 2.2. INDEBTEDNESS. The Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than, without
duplication, the following:
(a) Indebtedness in respect of the Creditor Obligations;
(b) Indebtedness existing as of the Effective Date which
is identified in Item 2.2(b) ("Ongoing Indebtedness") of the
Disclosure Schedule attached hereto;
(c) Indebtedness secured by Liens described in clause (h)
or (j) of Section 2.3;
(d) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by suppliers on
normal trade terms in connection with purchases of goods and services,
but excluding Indebtedness incurred through the borrowing of money or
Guaranties);
(e) Hedging Obligations to a Lender;
(f) Subordinated Debt; or
(g) obligations in respect of Capital Leases in an
aggregate amount not to exceed $7,000,000 at any time.
Appendix A-6
76
SECTION 2.3. LIENS. The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:
(a) Liens for taxes, assessments or governmental charges
not then due and delinquent and for which a penalty has not attached
or the validity of which is being contested in good faith and by
proper proceedings and with respect to which adequate reserves are
maintained in accordance with GAAP;
(b) Liens arising in connection with court proceedings,
provided that the execution of such Liens is effectively stayed, such
Liens are being contested in good faith and adequate reserves are
maintained with respect thereto in accordance with GAAP;
(c) Liens arising in the ordinary course of business and
not incurred in connection with the borrowing of money, including
encumbrances in the nature of zoning restrictions, easements, rights
and restrictions of record on the use of real Property, landlord's and
lessor's liens in the ordinary course of business, which do not,
individually or in the aggregate, materially interfere with the
conduct of the business of the Borrower and its Subsidiaries taken as
a whole and do not materially affect the value of the Property subject
to such Liens;
(d) Construction or materialmen's or mechanic's Liens
securing obligations not overdue or, if overdue, being contested in
good faith and by proper proceedings and with respect to which
adequate reserves are maintained in accordance with GAAP;
(e) Liens in connection with workers' compensation,
social security taxes or similar charges arising in the ordinary
course of business and not incurred in connection with the borrowing
of money;
(f) Liens existing on the Effective Date set forth in
Item 2.3(f) of the Disclosure Schedule attached hereto;
(g) Intercompany Liens (for purposes of intercompany
Liens, a Subsidiary shall mean any corporation of which the Borrower
directly or indirectly owns at least 80% of the Voting Stock);
(h) The extension, renewal or replacement of any Lien
permitted by the foregoing paragraph (f) in respect of the same
Property theretofore subject thereto or the extension, renewal or
replacement (without increase of principal amount of the Indebtedness
originally incurred);
(i) Liens incurred in connection with obtaining or
performing government contracts in the ordinary course of business and
not incurred in connection with the borrowing of money;
(j) (i) Any Lien in Property or in rights relating thereto to
secure any rights granted with respect to such Property in connection
with the provision of all or a part of the purchase price or cost of
the construction of such Property created
Appendix A-7
77
contemporaneously with, or within 270 days after, such acquisition or
the completion of such construction (except Liens in connection with
the Ponca City Litigation shall not be permitted under this clause
(j)(i)), or (ii) any Lien in Property existing in such Property at the
time of acquisition thereof, whether or not the debt secured thereby
is assumed by the Borrower or such Subsidiary; provided, that the
Indebtedness secured by any such Lien referred to in clauses (i) and
(ii) above shall not exceed 100% of the fair market value on the
related Property at the time the Lien was originally created;
(k) the Shared Lien; and
(l) Liens created, in the ordinary course of the
Borrower's and each Subsidiary's business, under the Packers and
Stockyards Act of 1921, as amended, and the regulations promulgated
thereunder,
provided, that the creation and continued existence of any such Liens, either
individually or in the aggregate, could not reasonably be expected to
have a material adverse effect on the condition (financial or
otherwise) of the Borrower and the Subsidiaries, taken as a whole, or
on the Borrower's ability to perform its obligations under any of the
Financing Agreements (as defined in the Intercreditor Agreement).
SECTION 2.4. FINANCIAL CONDITION. The Borrower will not permit:
(a) At any time during any period set forth in the table
below, Consolidated Adjusted Net Worth to be less than the amount set
forth opposite such period in such table:
CONSOLIDATED ADJUSTED NET WORTH SHALL NEVER BE LESS
DURING THE PERIOD THAN
From September 12, 1996 through and including $72,000,000
December 14, 1996
From December 15, 1996 through and including March $74,000,000
8, 1997
From March 9, 1997 through and including April 30, $76,000,000
1997
From May 1, 1997 through and including the date on $91,000,000 plus 50% of the Consolidated Net
which the Loans (under the Bank Credit Agreement Earnings for each Fiscal Year commencing with the
and the New Seasonal Line of Credit Agreement), 1997 Fiscal Year; provided, however, that if
-------- -------
other Obligations and the Insurance Notes shall Consolidated Net Earnings is less than zero in any
have been paid in full in cash Fiscal Year, Consolidated Net Earnings shall be
deemed to be zero in such Fiscal Year for purposes
of this Section 2.4(a).
As of any date (prior to May 1, 1997) on which the Borrower receives
the proceeds of any Subordinated Debt, the amount set forth in the
table above opposite (i) the period
Appendix A-8
78
containing such date and (ii) each subsequent period (other than the
last such period), shall be increased by the amount of such proceeds;
provided, however, that the aggregate amount of such increases shall
in no event exceed $15,000,000 in respect of any such period
regardless of the aggregate amount of such proceeds.
(b) As of the end of each Fiscal Period commencing with
the seventh Fiscal Period in the 1997 Fiscal Year and ending with the
seventh Fiscal Period in the 1998 Fiscal Year, the ratio of
Consolidated Earnings Available for Interest Expense to Consolidated
Interest Expense for the Relevant Period to be less than 1.65 to 1.
As of the end of each Fiscal Period commencing with the eighth Fiscal
Period in the 1998 Fiscal Year and ending with the twelfth Fiscal
Period in the 1998 Fiscal Year, the ratio of Consolidated Earnings
Available for Interest Expense to Consolidated Interest Expense for
the Relevant Period to be less than 1.85 to 1. As of the end of each
Fiscal Period commencing with the thirteenth Fiscal Period in the 1998
Fiscal Year, the ratio of Consolidated Earnings Available for Interest
Expense to Consolidated Interest Expense for the Relevant Period to be
less than 2.0 to 1. For purposes of this clause (b), "Relevant
Period" shall mean (i) in respect of any Fiscal Period ending on or
before May 30, 1997, the period commencing on May 31, 1996 and ending
on the last Business Day of such Fiscal Period, and (ii) in respect of
any other Fiscal Period (each, a "Testing Period"), the period
commencing on the first Business Day of the twelfth preceding Fiscal
Period and ending on the last Business Day of such Testing Period.
(c) At any time, the obligations of the Borrower and its
Subsidiaries for the payment of rental for any Property during the
next succeeding 365-day period under existing leases, subleases or
similar arrangements (other than Capital Leases) to exceed in the
aggregate $9,000,000.
(d) The aggregate amount of Consolidated Earnings
Available for Interest Expense in respect of the 1997 Fiscal Year to
be less than $24,630,880.
(e) (i) The aggregate amount of Fresh Meats Earnings
Available for Interest Expense in respect of the first seven
(7) Fiscal Periods of the 1997 Fiscal Year to be less than
$2,000,000.
(ii) The aggregate amount of Fresh Meats Earnings
Available for Interest Expense in respect of the first ten
(10) Fiscal Periods of the 1997 Fiscal Year to be less than
--$1,000,000.
(iii) The aggregate amount of Fresh Meats Earnings
Available for Interest Expense in respect of the 1997 Fiscal
Year to be less than --$3,000,000.
SECTION 2.5. INVESTMENTS. The Borrower will not, and will not
permit any Subsidiary to, make, incur, assume or suffer to exist any Investment
in any other Person, except:
(a) Investments existing on the Effective Date set forth
in Item 2.5(a) of the Disclosure Schedule attached hereto;
Appendix A-9
79
(b) Investments in certificates of deposit, repurchase
agreements or bankers' acceptances, maturing within one year from the
date or origin, issued by a bank organized under the laws of the
United States or any state thereof, having capital, surplus and
undivided profits aggregating at least $100,000,000;
(c) Investments in commercial paper maturing in 270 days
or less from the date of issuance which, at the time of acquisition by
the Borrower or any Subsidiary, is accorded at least an "A-1" rating
by Standard & Poor's Ratings Group or "P-1" by Moody's Investors
Service, Inc.;
(d) Investments in direct obligations of the United
States of America, or any agency thereof, the obligations of which are
guaranteed by the United States of America, maturing in twelve months
or less from the date of acquisition thereof;
(e) Investments in "money market" preferred stock rated
"A" or better by Standard & Poor's Corporation or "A2" by Moody's
Investors Service, Inc.;
(f) Investments in tax-exempt floating rate option tender
bonds backed by an irrevocable letter of credit issued by a bank the
long-term debt rating of which is at least "AA" by Standard & Poor's
Rating Group or "Aa2" by Moody's Investors Service, Inc.;
(g) Investments in Subsidiaries in existence on the
Effective Date and which operate principally in lines of business
similar to lines of business of the Borrower or its Subsidiaries
existing on the Effective Date; and
(h) Investments in or commitments to purchase foreign
currency; provided, that such Investment is made solely to the extent
that the Borrower and its Subsidiaries are obligated to make payments
to other Persons in such foreign currency.
In valuing any Investments for the purpose of applying the limitations
set forth above, such Investments shall be taken at the original cost thereof,
without allowance for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of capital or
principal.
For purposes of this Section 2.5 at any time when a corporation
becomes a Subsidiary, all investments of such corporation at such time shall be
deemed to have been made by such corporation, as a Subsidiary, at such time.
SECTION 2.6. RESTRICTED PAYMENTS, ETC. On and at all times after
the Effective Date, the Borrower will not:
(a) declare or pay any dividends, either in cash or
Property, on any shares of its capital stock of any class (except
dividends or other distributions payable solely in shares of capital
stock of the Borrower); or
(b) directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of Borrower's capital stock of
any class or any warrants, rights or options to purchase or acquire
any shares of the Borrower's capital stock; or
Appendix A-10
80
(c) make any other payment or distribution, either
directly or indirectly or through any Subsidiary, in respect of its
capital stock; or
(d) make any payment, either directly or indirectly or
through any Subsidiary, of principal of any Subordinated Debt other
than at the expressed maturity date thereof and scheduled mandatory
prepayments or redemptions thereof in accordance with the terms in
effect on the date of creation of such Subordinated Debt.
SECTION 2.7. CONSOLIDATION, MERGER, ETC. The Borrower will not,
and will not permit any Subsidiary to, liquidate or dissolve, consolidate with,
or merge into or with, any other corporation, or purchase or otherwise acquire
all or substantially all of the assets of any Person (or of any division
thereof) except any such Subsidiary may liquidate or dissolve voluntarily into,
and may merge with and into, the Borrower or any other Subsidiary, and the
assets or stock of any Subsidiary may be purchased or otherwise acquired by the
Borrower or any other Subsidiary.
SECTION 2.8. ASSET DISPOSITIONS, ETC. The Borrower will not, and
will not permit any Subsidiary to, sell, lease, transfer or otherwise dispose
of any assets, including the disposition of the stock of any Subsidiary and
including any Sale and Lease-Back Transaction (collectively, a "Disposition"),
in one or a series of transactions to any Person other than the Borrower or a
Majority-Owned Subsidiary, other than:
(a) in the ordinary course of business (including,
without limitation, the disposition of tractors and trailers owned by
the Borrower in the ordinary course of business and consistent with
the Borrower's past practice);
(b) in the Frederick Disposition, provided that the
Borrower receives all cash consideration, and the net cash proceeds
therefrom are simultaneously paid to the Creditor Parties (in
accordance with the Intercreditor Agreement), in each case, on or
before November 30, 1997, or thereafter with the consent of each of
the Creditor Parties, which consent shall not be unreasonably
withheld; or
(c) the following Dispositions:
(i) the plant and equipment located in Concordia,
Missouri which is subject to a purchase option in favor of the
lessee of such facility (approximate balance of purchase
price: $2,000,000);
(ii) the Borrower's facility known as "Tri-Miller"
located in Hyrum, Utah, which has an approximate value of
$600,000;
(iii) A building known as the "H&R Building"
located in Detroit, Michigan, which has an approximate value
of $475,000; and
(iv) a condominium located in Bloomfield Hills, Mi
chigan (approximate balance of purchase price: $300,000);
Appendix A-11
81
provided that the aggregate book value of all such assets sold,
leased, transferred or otherwise disposed of from time to time
pursuant to this Section 2.8(c) shall not exceed $4,000,000;
provided, however, that:
(x) the Borrower may, and may permit any Subsidiary to,
sell, lease, transfer or otherwise dispose of equipment if the cash
proceeds therefrom are utilized within one year after such Disposition
to purchase or are committed to the purchase of Property of a similar
nature and of at least equivalent value; and
(y) the Borrower may otherwise, and may permit any
Subsidiary otherwise to, sell, lease, transfer or otherwise dispose of
equipment so long as the aggregate amount of the book value of
equipment so disposed (as of the time of its disposition) does not
exceed $2,000,000 in any 365-day period.
SECTION 2.9. SALES AND LEASEBACKS. The Borrower will not, and
will not permit any Subsidiary to, effect any Sale and Lease-Back Transaction
with respect to:
(a) any Property of the Borrower or any Subsidiary which
Property was owned or leased by the Borrower or any Subsidiary on or
prior to September 12, 1996; or
(b) any other Property, if the aggregate book value of
all such other Property that is the subject of a Sale and Lease- Back
Transaction during any period of 365 consecutive days would exceed
$1,000,000.
SECTION 2.10. TRANSACTIONS WITH AFFILIATES. The Borrower will not,
and will not permit any Subsidiary to, enter into any transaction (including
the furnishing of goods or services) with an Affiliate except in the ordinary
course of business and on terms and conditions no less favorable to the
Borrower or such Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate.
SECTION 2.11. COMPLIANCE WITH BORROWING BASE. The Borrower will
not incur any Borrowing Base Debt if, after giving effect to such incurrence,
and any concurrent repayment of Loans or Other Borrowing Base Debt, the
aggregate principal amount of Borrowing Base Debt would exceed the Borrowing
Base.
SECTION 2.12. HEDGING ACTIVITIES. The Borrower will not, and will
not permit any Subsidiary to, buy, sell, trade or otherwise deal in futures
contracts or options thereon or other derivatives thereof except pursuant to
transactions that represent substitutes for transactions to be made by the
Borrower or such Subsidiary at a later time in the physical pork or pork
products market and the purpose of which is solely to reduce the risk to the
Borrower or such Subsidiary of future fluctuations in the market prices of pork
or pork products.
Appendix A-12
82
SECTION 2.13. NET CAPITAL EXPENDITURES.
(a) Net Capital Expenditures of the Borrower and its
Subsidiaries shall not exceed $8,200,000 in either the 1997 or the 1998
Fiscal Year. In each Fiscal Year thereafter, Net Capital Expenditures
shall not exceed the sum of $8,200,000 plus twenty-five percent (25%) of
Consolidated Net Earnings in respect of such Fiscal Year; provided,
however, that if Consolidated Net Earnings is less than zero in any
Fiscal Year, Consolidated Net Earnings shall be deemed to be zero in
such Fiscal Year for purposes of this Section 2.13(a).
(b) To the extent that the Net Capital Expenditures of
the Borrower during any Fiscal Year are less than the amount permitted
in respect of such Fiscal Year under Subsection 2.13(a) above, such
difference in respect of such period shall be available during the
first Fiscal Year succeeding such period to support capital
expenditures of the Borrower during such first succeeding Fiscal Year,
and, if such difference shall not be fully utilized by the end of such
first succeeding Fiscal Year, it shall not be available to support any
additional capital expenditures thereafter. With respect to the
utilization of the availability for the making of capital expenditures
by the Borrower in each Fiscal Year, any availability for such period
provided in Subsection 2.13(a) above shall be deemed utilized first to
support the capital expenditures to be made during such period, and
any availability carried forward from the previous Fiscal Year shall
be deemed utilized second to support the capital expenditures to be
made during such period.
(c) Up to an aggregate amount of $5,000,000 paid by the
Borrower in settlement of, or in satisfaction of a judgment against
the Borrower in respect of, the Ponca City Litigation shall not be
considered a Net Capital Expenditure for purposes of this Section
2.13.
SECTION 2.14. CERTAIN SALARIES. At no time will the Borrower, nor
will it permit any Subsidiary to, pay, directly or indirectly, any salary,
bonus, or other cash compensation to any person who, as of the date hereof, is
(i) the chairman of the Borrower's board of directors, (ii) the Borrower's
president and chief executive officer, or (iii) the Borrower's executive vice
president for finance and administration, if such payment or payments would
exceed, in the aggregate, 110% of the aggregate amount of salary, bonus and
other cash compensation paid to such person in the immediately preceding Fiscal
Year. Notwithstanding the foregoing, for each Fiscal Year after the 1998
Fiscal Year, the Borrower may compensate the persons described in this Section
2.14 in accordance with the bonus plan previously delivered to the Creditor
Parties.
SECTION 3. DEFINED TERMS. As used in this Exhibit A-2, the
following terms shall have the meanings set forth below or in the Section of
this document referenced below. The terms used herein and not defined herein
shall have the respective meanings ascribed to such terms in the Bank Credit
Agreement (as defined herein).
"Bank Credit Agreement" shall mean that certain Amended and
Restated Credit Agreement, dated as of September 11, 1996, among (i)
Thorn Apple Valley, Inc. and (ii) Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., Old Kent Bank, National City Bank and
Harris Trust and Savings Bank, as in effect on the Effective Date.
Appendix A-13
83
"Collateral" shall have the meaning ascribed to such term in
the Intercreditor Agreement.
"Collateral Agent" shall have the meaning ascribed to such
term in the Intercreditor Agreement.
"Consolidated Adjusted Net Worth" shall mean the sum of:
(a) (i) Consolidated Shareholders' Equity less
(ii) all goodwill, trade names, trademarks, patents,
organizational expense, unamortized debt discount and expense
and other intangible assets properly classified as intangibles
in accordance with GAAP and incurred after the date of
consummation of the Wilson Acquisition; plus
(b) Subordinated Debt.
"Consolidated Earnings Available for Interest Expense" shall
mean, for any period, the sum of:
(a) Consolidated Net Earnings for such period
before deduction of any amount which, in conformity with GAAP,
would be set forth opposite the caption "income tax expense"
(including deferred income taxes) (or any like caption) on a
consolidated income statement of Borrower for such period;
plus
(b) Consolidated Interest Expense for such
period; plus
(c) the amortization of any financing cost and of
any debt discount; plus
(d) an amount which, in conformity with GAAP,
would be set forth, opposite the caption "depreciation and
amortization expense" (or any like caption) (including,
without limitation, amortization of intangible assets) on such
income statement for such period, to the extent the same are
deducted from Borrower's net revenues, in conformity with
GAAP, in determining Consolidated Net Earnings for such
period.
"Consolidated Net Earnings" shall mean the net earnings of the
Borrower and its Subsidiaries in accordance with GAAP, excluding:
(a) extraordinary items (including extraordinary
gains and losses, and including acquisition costs including
agents' fees); and
(b) any equity interest of the Borrower on the
unremitted earnings of any corporation not a Subsidiary.
"Consolidated Interest Expense" shall mean the interest
expense (including capitalized and non-capitalized interest, the
interest component of rentals under Capital
Appendix A-14
84
Leases and any expense associated with the termination of a swap
arrangement) of the Borrower and its Subsidiaries on a consolidated
basis for any period.
"Consolidated Net Earnings" shall mean the net earnings of the
Borrower and its Subsidiaries in accordance with GAAP, excluding:
(a) extraordinary items (including extraordinary
gains and losses, and including acquisition closing costs
including agents' fees); and
(b) any equity interest of the Borrower on the
unremitted earnings of any corporation not a Subsidiary.
"Consolidated Shareholders' Equity" shall mean consolidated
shareholders' equity of the Borrower and its Subsidiaries determined
in accordance with GAAP.
"Creditor Obligations" shall have the meaning ascribed to such
term in the Intercreditor Agreement.
"Creditor Parties" shall mean, collectively and individually
(as the context requires) (i) the "Lenders" as defined in the Bank
Credit Agreement and (ii) the Noteholders.
"Disposition" is defined in Section 2.8.
"Fiscal Period" shall mean each period of four consecutive
weeks ending on (i) the last Friday in May in each Fiscal Year or (ii)
the Friday which is four weeks, or any even multiple of four weeks,
thereafter.
"Frederick Disposition" shall mean the sale of the plant,
property, inventory and equipment located at 1487 Farnsworth Avenue,
Detroit, Michigan, and the goodwill, licenses, permits, franchises,
patents, copyrights, trademarks, service marks and trade names
associated therewith.
"Fresh Meats Earnings Available for Interest Expense" shall
mean Consolidated Earnings Available for Interest Expense but only in
respect of the Borrower's fresh meats division, as regularly and
historically reported by the Borrower.
"Impermissible Qualification" means, relative to the opinion
or certification of any independent public accountant as to any
financial statement of the Borrower, any qualification or exception:
(a) which is of a "going concern" or similar
nature;
(b) which relates to the limited scope of
examination of relevant to such financial statement; or
(c) which relates to the treatment or
classification of any item in such financial statement and
which, as a condition to its removal, would require an
Appendix A-15
85
adjustment to such item the effect of which would be to cause
the Borrower to be in default of its obligations under Section
2.4 of this Exhibit A-2.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed
money and all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(b) all obligations, contingent or otherwise,
relative to the face amount of all letters of credit, whether
or not drawn, and banker's acceptances issued for the account
of such Person;
(c) all obligations of such Person as lessee
under leases which have been or should be, in accordance with
GAAP, recorded as Capital Leases;
(d) all other items which, in accordance with
GAAP, would be included as liabilities on the liability side
of the balance sheet of such Person as of the date at which
Indebtedness is to be determined;
(e) net liabilities of such Person under all
Hedging Obligations;
(f) whether or not so included as liabilities in
accordance with GAAP, all obligations of such Person to pay
the deferred purchase price of Property or services, and
indebtedness (excluding prepaid interest thereon) secured by a
Lien on Property owned or being purchased by such Person
(including indebtedness arising under conditional sales or
other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is
limited in recourse; and
(g) all Guaranties of such Person in respect of
any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Insurance Note Agreements" shall mean, collectively, (i) that
certain Note Agreement, dated as of April 1, 1994, by and between the
Borrower and Allstate Life Insurance Company, pursuant to which the
Borrower issued Fifteen Million Dollars ($15,000,000) in aggregate
principal amount of its six and forty-five one-hundredths percent
(6.45%) Senior Notes due April 21, 2006, (ii) that certain Note
Agreement, dated as of October 1, 1994, by and between the Borrower
and Allstate Life Insurance Company, pursuant to which the Borrower
issued Eight Million Dollars ($8,000,000) in aggregate principal
amount of its eight and forty-two one-hundredths percent (8.42%)
Senior Notes due October 1, 2003, and (iii) that certain Note
Agreement, dated as of May 15 1995, by and among the Borrower,
Allstate Life Insurance Company, Principal Mutual Life Insurance
Company, and Great-West Life & Annuity Insurance Company, pursuant to
which the Borrower issued Forty-Two Million Five Hundred Thousand
Dollars
Appendix A-16
86
($42,500,000) in aggregate principal amount of its seven and
fifty-eight one-hundredths percent (7.58%) Senior Notes due May 15,
2005, in each case, as amended from time to time.
"Insurance Notes" shall mean those certain Notes, as amended
from time to time, issued pursuant to the Insurance Note Agreements.
"Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated as of September 11, 1996 by and among
the Creditor Parties, and acknowledged and agreed to by the Borrower
and its Subsidiaries.
"Investment" shall mean, relative to any Person:
(a) any loan or advance made by such Person to
any other Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary course
of business);
(b) any Guaranty of such Person; or
(c) any ownership or similar interest held by
such Person in any other Person.
The amount of any Investment shall be the original principal or
capital amount thereof, less all returns of principal or equity
thereon (and without adjustment by reason of the financial condition
of such Person) and shall, if made by the transfer or exchange of
Property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such
Property.
"Majority-Owned Subsidiary" shall mean, when applied to a
Subsidiary, any Subsidiary 80% or more of the Voting Stock of which is
owned by the Borrower or a Majority-Owned Subsidiary (other than
Voting Stock required to be held as directors' qualifying stock).
"Net Capital Expenditures" shall mean, in any period, the remainder of
(i) the aggregate cost of acquisition or
construction of all tangible assets acquired or constructed
during such period which at the time of acquisition or
construction have an expected useful life of more than one (1)
year and would be shown on a balance sheet of the acquiring or
constructing Person as an asset ("Capital Assets"), minus
(ii) the aggregate net proceeds of all sales or
other Dispositions of Capital Assets during such period, other
than proceeds which were used to permanently reduce Creditor
Obligations.
"New Seasonal Line of Credit Agreement" shall mean that
certain letter agreement regarding a Senior Secured Seasonal Line of
Credit for the Borrower dated as of September 11, 1996 by and among
(i) Thorn Apple Valley, Inc. and (ii) Cooperatieve
Appendix A-17
87
Centrale Raiffeisen-Boerenleenbank, B.A., Old Kent Bank, National City
Bank and Harris Trust and Savings Bank.
"Noteholders" shall mean the holders of the Insurance Notes
from time to time.
"Ongoing Indebtedness" is defined in Section 2.2(b).
"Ponca City Litigation" shall mean that certain action
entitled Facility Constructors, Inc. v. Thorn Apple Valley, Inc. filed
in February, 1996, in District Court, Kay County, Oklahoma against the
Company in connection with the construction of the Company's plant in
Ponca City, Oklahoma.
"Rolling Projection" is defined in Section 1.1(c).
"Section" unless otherwise specified, shall mean a Section of
this Exhibit A-2.
"Security Documents" shall have the meaning ascribed to such
term in the Intercreditor Agreement.
"Shared Lien" shall mean the lien upon the Collateral (as
defined in the Intercreditor Agreement) created by the Security
Documents (as defined in the Intercreditor Agreement) in favor of the
Creditor Parties (as defined in the Intercreditor Agreement).
"Subordinated Debt" shall mean the principal of and premium,
if any, and interest on all indebtedness of the Borrower, whether
currently outstanding or hereafter created, for money borrowed, or any
indebtedness incurred in connection with an acquisition or lease of
Property or with a merger, consolidation, or acquisition of assets
which is expressly subordinated, on terms satisfactory to the Creditor
Parties, in right of payment pursuant to its terms to the Loans and
the Insurance Notes (regardless of whether it is subordinated to other
indebtedness of the Borrower).
"Subsidiaries Guaranty" shall have the meaning assigned to the
term "Guaranty" in the Intercreditor Agreement.
"Weekly P&L Statement" shall mean, in respect of any week, a
statement, in form acceptable to the Creditor Parties, setting forth,
for each of the Borrower's fresh meats and processed meats divisions,
the income and expenses of the Borrower during such week.
Appendix A-18
88
DISCLOSURE SCHEDULE TO APPENDIX A
ITEM 2.2(B) - ONGOING INDEBTEDNESS:
Operating Leases. See Exhibit A to Disclosure Schedule to Exhibit A-2.
BALANCE OUTSTANDING
@ 8/23/96
Lines of Credit:
Combined $94,100,000
-----------
Notes Payable:
Corporate: Allstate Unsecured Notes 23,000,000
Corporate: Allstate Life Ins. Unsecured Notes 15,000,000
Principal Mutual Life Unsecured Notes 14,000,000
Great-West Life & Annuity Unsecured Notes 13,500,000
Dixie: Forrest City Note 1,282,222
---------
Subtotal 160,882,000
-----------
Industrial Revenue Bonds:
Corporate: (Branch Banking) 2,400,000
Dixie Plant: (Economic Development Revenue Bond) 2,442,000
Corporate: (Michigan Strategic Fund - Adjustable Rate Demand
Limited Obligation Revenue bond, Series 1993)
5,500,000
---------
Subtotal:
10,342,000
----------
Capital Leases:
Corporate 518,744
Frederick division 2,304,521
Smoked Meats division 314,296
Concordia & Shreveport division 93,018
Dixie division 1,913,235
---------
Subtotal 5,143,814
Total Outstanding Indebtedness $176,367,814
============
Letters of Credit - See Exhibit B to Disclosure Schedule to Exhibit A-2.
Disclosure Schedule - 1
89
ITEM 2.3(F) - EXISTING LIENS:
DEBT DESCRIPTION OF COLLATERAL AMOUNT OF
LOCATION REFERENCE O/S DEBT
Industrial Revenue Bonds:
Corporate Branch Banking Carolina manufacturing
facility $2,400,000
Dixie division Dixie facility $2,442,000
Mich. Strat. Fund. Grand Rapids $5,500,000
Capital Leases:
Corporate, Frederick, Smoked Meats, Concordia, Various machinery and $5,143,814
Shreveport and Dixie divisions. equipment located at the
company's various divisions
and subsidiaries
All other Liens existing as of the Effective Date and permitted under Section 1.8 of Exhibit A-2.
ITEM 2.5(A) ONGOING INVESTMENTS:
-------------------
INVESTMENT BALANCE
FINANCIAL INSTITUTION TYPE @ 8/23/96
Short-Term Investments
United Carolina Bank CD 500,000
Providence TempCash 3,059,000
Chicago operation U.S. Treasury Bills 300,000
Subtotal $3,859,000
Michigan Livestock Exchange Preferred Stock 2,000,000
Total Investments $5,859,000
==========
Disclosure Schedule - 2
90
EXHIBIT A TO DISCLOSURE SCHEDULE TO APPENDIX A
Operating Leases
Disclosure Schedule - 3
91
EXHIBIT B TO DISCLOSURE SCHEDULE TO APPENDIX A
Thorn Apple Valley, Inc.
Standby Letters of Credit Summary as of May 31, 1996
92
EXHIBIT A-3
COLLATERAL AGAINST WHICH PERFECTION WILL OCCUR POST-CLOSING
AND OTHER COLLATERAL MATTERS
Exhibit A-3-1