1
EXHIBIT 10.41
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________________________________________________________________________________
REVOLVING LOAN AGREEMENT
DATED AS OF FEBRUARY 28, 1997
AMONG
MICHAEL FOODS, INC.,
THE BANKS LISTED HEREIN
AND
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS AGENT
ARRANGED BY BANCAMERICA, SECURITIES, INC.
________________________________________________________________________________
________________________________________________________________________________
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TABLE OF CONTENTS*
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1. DEFINITIONS AND TERMS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Advance" . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 1
"Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Agent-Related Persons" . . . . . . . . . . . . . . . . . . . . . 2
"Aggregate Amount" . . . . . . . . . . . . . . . . . . . . . . . 2
"Arranger" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Banking Day" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"BofA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Capital Lease" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Capital Lease Obligation" . . . . . . . . . . . . . . . . . . . 3
"Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Commitment" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Computation Period" . . . . . . . . . . . . . . . . . . . . . . 4
"Consolidated Funded Indebtedness" . . . . . . . . . . . . . . . 4
"Consolidated Net Earnings Available for Fixed Charges" . . . . 4
"Consolidated Net Income" . . . . . . . . . . . . . . . . . . . . 4
"Consolidated Net Worth" . . . . . . . . . . . . . . . . . . . . 5
"Credit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Dollars" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Domestic Advance" . . . . . . . . . . . . . . . . . . . . . . . . 5
"Eligible Assignee" . . . . . . . . . . . . . . . . . . . . . . . 5
"ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"ERISA Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . 6
"Eurocurrency Reserve Percentage" . . . . . . . . . . . . . . . . 6
"Eurodollar Advance" . . . . . . . . . . . . . . . . . . . . . . 7
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . 7
"Event Risk Occurrence" . . . . . . . . . . . . . . . . . . . . . 7
"Federal Funds Rate" . . . . . . . . . . . . . . . . . . . . . . . 7
"Fixed Charges" . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Governmental Authority" . . . . . . . . . . . . . . . . . . . . 8
"Indebtedness" . . . . . . . . . . . . . . . . . . . . . . . . . 8
"Interbank Rate" . . . . . . . . . . . . . . . . . . . . . . . . 9
"Interbank Rate (Reserve Adjusted)" . . . . . . . . . . . . . . . 10
"Interest Period" . . . . . . . . . . . . . . . . . . . . . . . . 10
"Investment" . . . . . . . . . . . . . . . . . . . . . . . . . . 10
"Lien" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Majority Banks" . . . . . . . . . . . . . . . . . . . . . . . . 11
"Margin" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
"Net Income" . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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* The Table of Contents is not a part of this Agreement.
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"Net Worth" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
"New Michael" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Note Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"NSU" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Old Michael" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Papetti Companies" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
"PBGC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Pending Reorganization" . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Priority Indebtedness" . . . . . . . . . . . . . . . . . . . . . . . . . . 14
"Reference Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Related Party" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
"Reportable Event" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Restricted Investment" . . . . . . . . . . . . . . . . . . . . . . . . . . 16
"Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Taxes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Termination Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Total Capitalization" . . . . . . . . . . . . . . . . . . . . . . . . . . 17
"Total Debt to Capitalization Ratio" . . . . . . . . . . . . . . . . . . . . 17
"Unconsolidated Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . 17
"Unmatured Event of Default" . . . . . . . . . . . . . . . . . . . . . . . 18
1.2 Financial Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18
2. COMMITMENTS OF THE BANKS AND CERTAIN LOAN TERMS
2.1 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Advance Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.3 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.4 Continuation and/or Conversion of Advances . . . . . . . . . . . . . . . . 20
2.5 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.6 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.7 Increase of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 22
3. NOTES EVIDENCING BORROWINGS
4. INTEREST AND FEES
4.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Domestic Advances. . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Eurodollar Advances. . . . . . . . . . . . . . . . . . . . . . . . . 25
(c) Interest After Maturity . . . . . . . . . . . . . . . . . . . . . . 25
4.2 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.3 Agency and Arrangement Fees. . . . . . . . . . . . . . . . . . . . . . . . 27
4.4 Method of Calculating Interest and Fees . . . . . . . . . . . . . . . . . 27
5. PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION OF THE CREDIT AND SETOFF
5.1 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3 Reduction or Termination of the Credit . . . . . . . . . . . . . . . . . . 29
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5.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.5 Proration of Payments. . . . . . . . . . . . . . . . . . . . . . . 30
6. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR ADVANCES
6.1 Increased Cost . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Eurodollar Deposits Unavailable or Interest Rate Unascertainable . 32
6.3 Changes in Law Rendering Eurodollar Advances Unlawful. . . . . . . 33
6.4 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7. WARRANTIES
7.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4 Validity and Binding Effect . . . . . . . . . . . . . . . . . . . 35
7.5 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 36
7.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.9 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.10 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.11 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.12 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.13 Pension and Welfare Plans. . . . . . . . . . . . . . . . . . . . . 39
7.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.15 Investment Company Act Representation. . . . . . . . . . . . . . . 40
7.16 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.17 No Burdensome Provisions . . . . . . . . . . . . . . . . . . . . . 40
7.18 Trading with the Enemy Act, etc. . . . . . . . . . . . . . . . . . 41
7.19 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . 41
7.20 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.21 Governmental Action. . . . . . . . . . . . . . . . . . . . . . . . 42
7.22 Compliance with Other Instruments. . . . . . . . . . . . . . . . . 42
8. COMPANY'S COVENANTS
8.1 Financial Statements and Other Reports. . . . . . . . . . . . . . . 43
(a) Quarterly Financial Statements . . . . . . . . . . . . . . . . 43
(b) Annual Audited Statements. . . . . . . . . . . . . . . . . . . 44
(c) Accountants' Statements. . . . . . . . . . . . . . . . . . . . 45
(d) Officer's Certificates . . . . . . . . . . . . . . . . . . . . 46
(e) SEC and Other Reports . . . . . . . . . . . . . . . . . . . . 46
(f) Report of Change in Subsidiaries . . . . . . . . . . . . . . . 47
(g) Requested Information. . . . . . . . . . . . . . . . . . . . . 47
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(c) Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(d) Pension and Welfare Plans . . . . . . . . . . . . . . . . . . 48
(e) Material Adverse Change . . . . . . . . . . . . . . . . . . . 48
(f) Other Events . . . . . . . . . . . . . . . . . . . . . . . . . 48
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8.3 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.4 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . 49
8.5 Books, Records and Access . . . . . . . . . . . . . . . . . . . . 49
8.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.7 Insurance Reports . . . . . . . . . . . . . . . . . . . . . . . . 50
8.8 Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.10 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.11 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.12 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.13 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.14 Maximum Consolidated Total Indebtedness to Capitalization Ratio. . 55
8.15 Maintenance of Interest Expense Coverage . . . . . . . . . . . . 55
8.16 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 55
8.17 Limitation on Disposition of Assets . . . . . . . . . . . . . . . 56
8.18 Merger, Consolidation, Sale or Lease . . . . . . . . . . . . . . . 56
8.19 Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . 56
8.20 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.21 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . 59
8.22 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.23 Transactions with Related Parties . . . . . . . . . . . . . . . . 60
9. CONDITIONS PRECEDENT TO ALL ADVANCES
9.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.2 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
9.3 Certification . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10. CONDITIONS PRECEDENT TO INITIAL ADVANCE
10.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.2 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.3 Incumbency . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.4 Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.5 Note Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.6 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.7 NSU Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . 63
11. EVENTS OF DEFAULT AND REMEDIES
11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 63
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . 63
(b) Non-Payment of other Indebtedness . . . . . . . . . . . . . . 63
(c) Insolvency. . . . . . . . . . . . . . . . . . . . . . . . . . 64
(d) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(e) Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 65
(f) Warranty. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(g) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 65
(h) Event Risk Occurrence . . . . . . . . . . . . . . . . . . . . 66
(i) Material Adverse Change . . . . . . . . . . . . . . . . . . . 66
11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12. THE AGENT
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12.1 Appointment and Authorization . . . . . . . . . . . . . . . . . 67
12.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . 67
12.3 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . 67
12.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . 68
12.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 69
12.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . 70
12.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 71
12.8 Agent in Individual Capacity . . . . . . . . . . . . . . . . . 73
12.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 74
12.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . 75
13. ASSIGNMENT AND ASSUMPTION.
14. GENERAL
14.1 Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
14.2 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
14.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
14.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 81
14.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 81
14.6 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . 81
14.7 U.S. Withholding Tax Exemptions . . . . . . . . . . . . . . . . 82
14.8 Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
14.9 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
14.10 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
14.11 Assignments, Participations, etc. . . . . . . . . . . . . . . . 83
14.12 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 87
EXHIBIT A - Revolving Note
EXHIBIT B - Schedule of Litigation
EXHIBIT C - Schedule of Liens
EXHIBIT D - Schedule of Subsidiaries
EXHIBIT E - Schedule of Contingent Liabilities with Respect to
Post-Retirement Welfare Benefit Plans
EXHIBIT F - Form of Opinion of Counsel
EXHIBIT G - [Form of] Assignment and Acceptance Agreement
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REVOLVING LOAN AGREEMENT
THIS AGREEMENT, dated as of February 28, 1997, is entered into among MICHAEL
FOODS, INC., a Delaware corporation (the "Company"), the banks listed on the
signature pages hereof (each called a "Bank" and collectively called the
"Banks") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national
banking association having its principal office at 1455 Market Street, Agency
Management Services #5596, San Francisco, California 94103, as Agent.
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
1. DEFINITIONS AND TERMS.
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the meanings indicated for purposes
of this Agreement (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Advance" means an advance by a Bank to the Company under Section 2.1
and shall be a Domestic Advance or a Eurodollar Advance.
"Affiliate" means any Person (other than the Company or any Subsidiary)
which, directly or indirectly, (a) controls or is controlled by or is under
common control with the Company or any Subsidiary, or (b) beneficially owns or
holds or has the power to direct the voting power of five percent (5%) or more
of any class
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of voting stock of the Company or any Subsidiary or (c) has five
percent (5%) or more of its voting stock (or in the case of a Person which is
not a corporation, five percent (5%) or more of its equity interest)
beneficially owned or held, directly or indirectly, by the Company or any
Subsidiary or (d) is a director or officer of the Company or any Subsidiary.
For purposes of this definition, "control" means the power to direct the
management and policies of a Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means BofA as Agent for the Banks hereunder and each successor,
as provided in Section 12.8, who shall act as Agent.
"Agent-Related Persons" means BofA and any successor agent arising
under Section 12.9, together with their respective Affiliates (including, in
the case of BofA, the Arranger), and the officers, directors, employees, agents
and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Amount", when used with respect to any Investment of any
Person as of the date of determination thereof, means an amount (which may be a
positive or negative figure, as the case may be) equal to (i) the greater of
the amount carried on the books of such Person as at such date with respect to
such Investment and the cost of such Investment to such Person, minus (ii) the
net proceeds (after the deduction of income taxes applicable thereto) realized
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from the sale or liquidation of such Investment or any part thereof, or
otherwise.
"Arranger" means BancAmerica Securities, Inc., a Delaware corporation.
"Banking Day" means any day on which banks are open for business in
Chicago, Illinois and San Francisco, California and, with respect to Eurodollar
Advances, on which dealings in foreign currencies and exchange may be carried
on by the Banks in the interbank eurodollar market.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
"Capital Lease" means and includes at any time any lease of property,
real or personal, which in accordance with generally accepted accounting
principles would at such time be required to be capitalized on a balance sheet
of the lessee.
"Capital Lease Obligation" means at any time the capitalized amount of
the rental commitment under a Capital Lease which in accordance with generally
accepted accounting principles would at such time be required to be shown on a
balance sheet.
"Code" means the Internal Revenue Code of 1986 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 the Code shall
be construed to also refer to any successor sections.
"Commitment" means the maximum amount that any Bank has agreed to lend
under Section 2.1 as set forth on the signature pages
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hereof as such amount may be reduced pursuant to Section 5.3, increased
pursuant to Section 2.7, or increased or reduced pursuant to Section 14.11.
"Computation Period" means as at the end of any fiscal quarter or
fiscal year the shorter of: (a) the period from April 1, 1997 to such fiscal
quarter end or fiscal year end or (b) the four fiscal quarter period then
ending.
"Consolidated Funded Indebtedness" means, without duplication, all
Indebtedness of the Company and its Subsidiaries, as consolidated and
determined in accordance with generally accepted accounting principles.
"Consolidated Net Earnings Available for Fixed Charges" means, for the
period of determination, Consolidated Net Income of the Company and its
Subsidiaries, plus cash dividends received from Unconsolidated Subsidiaries,
plus income taxes, plus extraordinary items of expense or minus extraordinary
items of income which are included in the determination of Net Income, plus any
loss from discontinued operations or minus any gain from discontinued
operations which is included in the determination of Net Income, plus any
charge or minus any credit which results from the cumulative effect of a change
in accounting principle which is included in the determination of Net Income,
plus all Fixed Charges. Prior to January 1, 1999, in any determination of
"Consolidated Net Earnings Available for Fixed Charges" there shall be an
addition for any loss (and a deduction for any gain) on "disposal of a product
line" (or "restructuring charges" relating
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11
to such disposal) which are included in determination of Net Income. For
purposes hereof, the terms "disposal of a product line" and "restructuring
charges" shall have such meanings as are viewed as acceptable to the Securities
and Exchange Commission when such terms are used for financial reporting.
"Consolidated Net Income" means, for any period, the Net Income of the
Company and its Subsidiaries, as consolidated and determined in accordance with
generally accepted accounting principles.
"Consolidated Net Worth" means the Net Worth of the Company and its
Subsidiaries, as consolidated and determined in accordance with generally
accepted accounting principles.
"Credit" means the aggregate Commitments of the Banks to make Advances
under the terms of this Agreement.
"Dollars" and the sign "$" means lawful money of the United States of
America.
"Domestic Advance" means any Advance which bears interest at a rate
determined with reference to the Reference Rate.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (ii) a commercial bank organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, and having a combined capital and surplus of at least
$100,000,000, provided that such bank is acting
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12
through a branch or agency located in the United States; and (iii) a Person
that is primarily engaged in the business of commercial banking and that is (A)
a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (C) a Person of which a Bank is a Subsidiary; (iv) any other
financial institution in good standing under the laws of any country which is a
member of the OECD and which has a combined capital and surplus of at least
$100,000,000 and (v) any other Person to which the Company and the Agent may in
their discretion consent.
"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 shall be construed to also refer to any successor
sections.
"ERISA Affiliate" means any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in sections 414(b) and
414(c), respectively, of the Code or section 4001 of ERISA.
"Eurocurrency Reserve Percentage" means, with respect to each Interest
Period, a percentage equal to the daily average during such Interest Period of
the percentages in effect on each day of such Interest Period, as prescribed by
the Board of Governors of the Federal Reserve System (or any successor), for
determining reserve requirements applicable to "Eurocurrency liabilities"
pursuant to Regulation D or any other then applicable regulation of
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13
the Board of Governors which prescribes reserve requirements applicable to
"Eurocurrency liabilities," as presently defined in Regulation D. For purposes
of this definition, any Eurodollar Advances hereunder shall be deemed to be
"Eurocurrency liabilities" as defined in Regulation D.
"Eurodollar Advance" means any Advance which bears interest at a rate
determined with reference to the Interbank Rate (Reserve Adjusted).
"Event of Default" means any of the events described in Section 11.1.
"Event Risk Occurrence" shall have the meaning ascribed to such terms
in the note(s) issued by the Company pursuant to the terms and provisions of
the Note Agreement.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor publication, "H.15(519)") on the preceding Banking Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Banking Day, the rate for such day
will be the arithmetic mean as determined by the Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
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14
"Fixed Charges" means, for any period of calculation, the sum of (i)
all interest on Indebtedness incurred by the Company and its Subsidiaries,
including interest payments partially or entirely contingent on earnings and
the portion of rents payable under Capital Leases allocable to interest, and
(ii) all debt discount or premium amortized or required to be amortized during
such period by the Company or any of its Subsidiaries.
"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.
"Indebtedness" of any Person means and includes, without duplication,
(i) all indebtedness or obligations of such Person for money borrowed (and any
notes payable and drafts accepted representing extensions of credit, whether or
not representing indebtedness or obligations for money borrowed), (ii)
indebtedness or obligations of such Person owed for all or any part of the
purchase price of property or other assets or for the cost of property or other
assets constructed or of improvements thereto, other than accounts payable
included in current liabilities and incurred in respect of property purchased
in the ordinary course of business, (iii) indebtedness or obligations secured
or evidenced by any Lien existing on property owned by such Person, whether or
not
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15
the indebtedness or obligations secured or evidenced thereby shall have been
assumed by such Person, (iv) Capital Lease Obligations of such Person, (v)
guarantees and endorsements by such Person of (other than endorsements for
purposes of collection in the ordinary course of business), and obligations of
such Person to purchase goods or services for the purpose of supplying funds
for the purchase or payment of, or measured by, indebtedness, liabilities or
obligations of others (whether or not representing money borrowed) and other
contingent obligations of such Person in respect of, or to purchase or
otherwise acquire or service, indebtedness, liabilities or obligations of
others (whether or not representing money borrowed) and (vi) all indebtedness,
liabilities or obligations (whether or not representing money borrowed) in
effect guaranteed by such Person by an agreement, contingent or otherwise, to
make a loan, advance or capital contribution to or other investment in the
debtor for the purpose of assuring or maintaining a minimum equity, asset base,
working capital or other balance sheet condition for any date, or to provide
funds for the payment of any liability, dividend or stock liquidation payment,
or otherwise to supply funds to or in any manner invest in the debtor for such
purpose. A renewal or extension of any Indebtedness without increase in the
principal amount thereof shall not be deemed to be the incurrence of the
Indebtedness so renewed or extended. In case any Person shall become a
Subsidiary, such Person shall be deemed to have incurred at the time it becomes
a
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16
Subsidiary all Indebtedness of such Person outstanding immediately thereafter.
"Interbank Rate" means, with respect to each Interest Period, the rate
per annum at which Dollar deposits in immediately available funds are offered
to the Agent two Banking Days prior to the beginning of such Interest Period by
major banks in the interbank eurodollar market as at or about 10:00 a.m.,
Chicago time, for delivery on the first day of such Interest Period, for the
number of days comprised therein and in an amount equal to the aggregate amount
of the Eurodollar Advance to be outstanding during such Interest Period.
"Interbank Rate (Reserve Adjusted)" means, with respect to any
Eurodollar Advance 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:
Interbank Rate = Interbank Rate
(Reserve Adjusted) 1-Eurocurrency Reserve Percentage
"Interest Period" means, with respect to any Eurodollar Advance, the
seven (7) day, the one (1) month, two (2) month, three (3) month or six (6)
month period selected by the Company pursuant to Sections 2.3 or 2.4 and
commencing on the applicable borrowing date or conversion date of any
Eurodollar Advance or the last day of the prior Interest Period for such
Advance, as the case may be; provided, however, that no Interest Period shall
extend beyond the Termination Date. Each Interest Period which would otherwise
end on a day which is not a Banking Day shall end on the next
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17
succeeding Banking Day unless such next succeeding Banking Day is the first
Banking Day of a calendar month, in which case it shall end on the next
preceding Banking Day.
"Investment" of any Person means any investment made by such Person in
any other Person by acquisition of stock or indebtedness, loan, advance,
transfer or purchase of property, capital contribution or otherwise (other than
a direct or indirect guarantee of such other Person's indebtedness or any
agreement to pay, purchase or service such other Person's indebtedness).
"Lien" means any mortgage, pledge, hypothecation, judgment lien or
similar legal process, title retention lien, or other lien or security
interest, including, without limitation, the interest of a vendor under any
conditional sale or other title retention agreement and the interest of a
lessor under any Capital Lease.
"Majority Banks" means those Banks whose interest in the Credit
constitutes (or if the Credit has been terminated, whose share in the aggregate
Advances outstanding constitutes) at least fifty-one percent (51%).
"Margin" means the rate per annum set forth in the schedule below
opposite the applicable Total Debt to Capitalization Ratio:
Total Debt to Capitalization
Ratio Margin
Less than or equal to .30 to 1 0.25%
Less than or equal to .40 to 1 but 0.30%
greater than .30 to 1
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18
Less than or equal to .50 to 1 but 0.35%
greater than .40 to 1
Greater than .50 to 1.0 0.475%
The Margin shall be 0.35% commencing on the date of the effectiveness
of this Agreement and thereafter shall be adjusted 60 days or, in the case of
the last fiscal quarter of any fiscal year, 90 days after the end of each
fiscal quarter (beginning with the fiscal quarter ended March 31, 1997) based
on the Total Debt to Capitalization Ratio as of the last day of such fiscal
quarter; it being understood that (a) if the Company fails to deliver the
financial statements required by Section 8.1(a) or (b) by the 60th (or, if
applicable, the 90th) day after any fiscal quarter, the Margin shall be 0.475%
until such financial statements are delivered; and (b) no decrease in the
Margin shall be effected on any date on which an Event of Default exists (but
shall be delayed until the first date on which no Event of Default exists).
Any change in the Margin shall be immediately effective for all outstanding
Eurodollar Advances.
"Net Income" means, with respect to any Person for any period, the net
income (or the net deficit, if expenses and charges exceed revenues and other
proper income credits) of such Person for such period determined in accordance
with generally accepted accounting principles as in effect from time to time,
provided, however, that the Net Income of the Company or any Subsidiary shall
not include
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19
the Net Income of any Subsidiary prior to the date it becomes a Subsidiary.
"Net Worth" means, with respect to any Person as of the date of
determination, the sum of redeemable preferred stock and common stockholders'
equity accounts of such Person as of such date, as determined in accordance
with generally accepted accounting principles.
"New Michael" means NSU after giving effect to the merger of NSU Merger
Co. into Michael Foods, Inc.
"Note Agreement" means collectively the various loan agreements, each
dated as of February 26, 1997, between the Company and certain lenders entered
into in connection with the issuance of certain notes not in excess of
$125,000,000.
"Notes" means the Notes referred to in Section 3.
"NSU" means North Star Universal, Inc., a Minnesota corporation.
"NSU Merger Co." means NSU Merger Co., a Delaware corporation.
"Old Michael" means Michael Foods, Inc. prior to its merger with NSU
Merger Co.
"Papetti Companies" means Papetti's Hygrade Egg Products, Inc., Papetti
Foods, Inc., Quaker State Farms, Inc., Papetti's of Iowa Food Products, Inc.,
Monark Egg Corporation, Casa Trucking Limited Partnership, Egg Specialties,
Inc., Papetti Transport Leasing Limited Partnership and Papetti Equipment
Leasing Partnership.
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20
"Payment Date" means (a) as to any Eurodollar Advance, the last day of
each Interest Period with respect thereto and, if such Interest Period is in
excess of three (3) months, the day three (3) months after the commencement of
such Interest Period, and (b) as to any Domestic Advance, the first day of each
January, April, July and October commencing on the first of such dates to occur
hereafter.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pending Reorganization" means the merger of NSU Merger Co. with and
into Old Michael, the transfer by NSU of certain of its assets and liabilities
to ENStar, Inc., and the distribution of the stock of ENStar, Inc. to the
shareholders of NSU as more fully described in the proxy statement of the
Company dated November 26, 1996.
"Person" means an individual, partnership, corporation, trust, joint
venture, joint stock company, association, unincorporated organization,
government or agency or political subdivision thereof, or other entity.
"Plan" means a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributes or is a member or otherwise may
have any liability. "Priority Indebtedness" means the sum (without duplication)
of the amounts described in the following clauses (i), (ii) and (iii) and
outstanding at the time of computation: (i) the aggregate
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21
principal amount of all Indebtedness of the Company and its Subsidiaries
secured or evidenced by Liens permitted by Section 8.13(e) outstanding at such
time, (ii) the aggregate principal amount of unsecured Indebtedness of all
Subsidiaries, other than Indebtedness owed to the Company or a Subsidiary, and
(iii) the Aggregate Amount of all outstanding capital stock of any Subsidiary
acquired pursuant to Section 8.19(c) not owned by the Company or any Subsidiary
having preference as to dividends or upon liquidation, and all rights, options
and warrants to acquire any such preference stock.
"Reference Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors, including BofA's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Related Party" means, for purposes of Section 8.23 only, any Person
(other than a Subsidiary) (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
the Company, (ii) which beneficially owns or holds five percent (5%) or more of
the equity
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22
interest of the Company, or (iii) five percent (5%) or more of the equity
interest of which is beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Reportable Event" has the meaning given to such term in ERISA.
"Restricted Investment" means any Investment by the Company or any
Subsidiary in any other Person other than:
(i) marketable obligations issued or guaranteed by the United States
of America or by any agency of the United States of America, and maturing not
later than twelve (12) months from the date of acquisition thereof;
(ii) commercial paper which has the highest credit rating by Standard
& Poor's Corporation or Moody's Investors Service, Inc., and maturing not later
than 270 days from the date of acquisition thereof;
(iii) (a) negotiable certificates of deposit or bankers' acceptances
issued by or drawn on BofA or any Affiliate thereof and which mature not later
than twelve (12) months from the date of acquisition thereof and (b) negotiable
certificates of deposit or bankers' acceptances which have at least an A rating
by Standard & Poor's Corporation or Moody's Investors Service, Inc., are issued
by or drawn on a United
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23
States commercial bank (other than BofA or any Affiliate thereof) or trust
company which has capital and surplus of at least $150,000,000, and which
mature not later than twelve (12) months from the date of acquisition thereof;
(iv) any Investment in any Subsidiary or in any corporation
which by reason thereof will become a Subsidiary; and
(v) variable rate demand municipal securities rated AAA by
Standard & Poor's Corporation or Aaa by Moody's Investors Service, Inc.,
provided, however, that such securities must be redeemable at par upon
thirty (30) days or less notice.
"Subsidiary" means any corporation, voluntary association, joint stock
company, voting trust or similar organization of which the Company and its
other Subsidiaries own directly or indirectly more than 50% of the shares of
stock having general voting power under ordinary circumstances to elect a
majority of the board of directors, managers, trustees or others performing
similar functions.
"Taxes" with respect to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"Termination Date" means February 28, 2002, or such earlier date as may
be fixed by the Company on at least ten (10) Banking Days' written notice to
the Agent.
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"Total Capitalization" means, as of any particular time, the sum of (i)
Consolidated Net Worth and (ii) Consolidated Funded Indebtedness.
"Total Debt to Capitalization Ratio" means at any time the ratio of
Consolidated Funded Indebtedness to Total Capitalization.
"Unconsolidated Subsidiary" means any corporation less than a majority
of whose outstanding stock having ordinary voting power for the election of
the members of the board of directors (or other governing body) of such
corporation (other than stock having such power only by reason of the happening
of a contingency) shall at the time be owned by the Company and/or one or more
Subsidiaries of the Company.
"Unmatured Event of Default" means an event or condition which with the
lapse of time or giving of notice to the Company, or both, would constitute an
Event of Default.
1.2 Financial Terms. Unless otherwise defined or the context
otherwise requires, all financial and accounting terms shall be defined under
generally accepted accounting principles.
2. COMMITMENTS OF THE BANKS AND CERTAIN LOAN TERMS.
2.1 Advances. Subject to the terms and conditions of this
Agreement, each Bank, severally but not jointly, agrees to make loans
(collectively called the "Advances" and individually called an "Advance") to
the Company on any Banking Day, which Advances the Company may repay and
reborrow during the period from the date hereof to, but not including, the
Termination Date, in such amounts as the Company may from time to time request,
but not
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exceeding in the aggregate at any one time outstanding the amount set forth
opposite each Bank's name on the signature pages hereof (or such reduced amount
as may be fixed by the Company pursuant to Section 5.3 or such increased amount
as may be provided for pursuant to Section 2.7 hereof).
2.2 Advance Options. Each Advance shall be either a Domestic Advance
or a Eurodollar Advance as shall be selected by the Company, except as
otherwise provided herein. Any combination of types of Advances may be
outstanding at the same time. As to any Eurodollar Advance, each Bank may, if
it so elects, fulfill its commitment by causing a foreign branch or affiliate
to make or continue such Advance, provided that in such event such Advance
shall be deemed for the purposes of this Agreement to have been made by such
Bank and the obligation of the Company to repay such Advance shall nevertheless
be to such Bank and shall be deemed held by the Bank, to the extent of such
Advance, for the account of such branch or affiliate.
2.3 Borrowing Procedures. The Company shall give the Agent prior
telephonic notice (on or before 11:30 a.m., Chicago time, in the case of a same
day borrowing), promptly confirmed in writing, of each Domestic Advance and at
least three (3) Banking Days' prior telephonic notice (on or before 11:30 a.m.,
Chicago time, in the case of a notice given three (3) Banking Days prior to the
proposed borrowing date), promptly confirmed in writing, of each Eurodollar
Advance, in each case specifying the date (which day shall be a Banking Day),
amount and type of Advance and, if
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26
such Advance is to be a Eurodollar Advance, the initial Interest Period for
such Advance and the Agent shall promptly advise each Bank thereof. Not later
than 12:30 p.m., Chicago time, on the date of a proposed borrowing, each Bank
shall provide the Agent at its principal office in Chicago with immediately
available funds covering such Bank's ratable share of the borrowing and the
Agent shall pay over such funds to the Company upon the Agent's receipt of the
documents required under Sections 9 and 10 with respect to such Advance. Each
borrowing of Advances shall be in aggregate principal amount of $500,000 or a
higher integral multiple of $100,000.
2.4 Continuation and/or Conversion of Advances. The Company may elect
(a) to continue any outstanding Eurodollar Advance from the current Interest
Period of such Advance into a subsequent Interest Period to begin on the last
day of such current Interest Period, or (b) to convert any outstanding Domestic
Advance into a Eurodollar Advance or, on the last day of the current Interest
Period, vice versa, by giving (i) at least three (3) Banking Days' prior
telephonic notice (on or before 11:30 a.m., Chicago time, in the case of a
notice given three (3) Banking Days prior to the proposed continuation or
conversion date), promptly confirmed in writing, to the Agent (which
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27
shall promptly advise each Bank) if the Advance, after such conversion, is to
be a Domestic Advance, in each case specifying the date, amount and the
Interest Period, if applicable. Absent notice of continuation or conversion,
each Eurodollar Advance shall automatically convert into a Domestic Advance on
the last day of the current Interest Period for such Advance, unless paid in
full on such last day. No Domestic Advance shall be converted into a
Eurodollar Advance and no Eurodollar Advance shall be continued less than seven
(7) days before the Termination Date or at any time that an Event of Default or
an Unmatured Event of Default shall exist. Each conversion or continuation of
Advances shall be in an aggregate principal amount of $500,000 or a higher
integral multiple of $100,000.
2.5 Funding Losses. The Company will indemnify each Bank upon demand
against any loss or expense which such Bank may sustain or incur (including,
without limitation, any loss or expense sustained or incurred in obtaining,
liquidating or employing deposits or other funds acquired to effect, fund or
maintain any Advance) as a consequence of any failure of the Company to borrow,
continue or convert a Eurodollar Advance on the date specified therefor in a
notice thereof.
2.6 Capital Adequacy. If any Bank shall reasonably determine that
the application or adoption of any law, rule, regulation, directive,
interpretation, treaty or guideline regarding capital adequacy, or any change
therein or in the interpretation or administration thereof, whether or not
having the
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28
force of law increases the amount of capital required or expected to be
maintained by such Bank or any Person controlling such Bank, and such increase
is based upon the existence of such Bank's obligations hereunder and other
commitments of this type, then from time to time, within ten (10) days after
demand from such Bank, the Company shall pay to such Bank such amount or
amounts as will compensate such Bank or such controlling Person, as the case
may be, for such increased capital requirement. The determination of any
amount to be paid by the Company under this Section 2.6 shall take into
consideration the policies of such Bank or any Person controlling such Bank
with respect to capital adequacy and shall be based upon any reasonable
averaging, attribution and allocation methods. A certificate of such Bank
setting forth the amount or amounts as shall be necessary to compensate such
Bank as specified in this Section 2.6 shall be delivered to the Company and
shall be conclusive in the absence of manifest error.
SECTION 2.7 Increase of Commitments. The Company may from time
to time, by notice to the Agent (which shall promptly deliver a copy to each of
the Banks), request that the aggregate Commitments be increased by an amount
that will not result in the aggregate Commitments under this Agreement exceeding
$100,000,000. Each such notice shall set forth the requested amount of the
increase in the aggregate Commitments and the date on which such increase is to
become effective (which shall be not fewer than 20 days after the date of such
notice), and shall offer each Bank the opportunity to increase its Commitment by
its pro rata share of
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such requested increase in the aggregate Commitments. Each Bank shall, by
notice to the Company and the Agent given not more than 10 Banking Days after
the date of the Company's notice, either agree to increase its Commitment by
all or a portion of the offered amount or decline to increase its Commitment
(and any Bank that does not deliver such a notice within such period of 10
Banking Days shall be deemed to have declined to increase its Commitment). In
the event that, on the 10th Banking Day after the Company shall have delivered
a notice pursuant to the first sentence of this paragraph, the Banks shall have
agreed pursuant to the preceding sentence to increase their Commitments by an
aggregate amount less than the increase in the aggregate Commitments requested
by the Company, the Company shall have the right, but not the obligation, to
arrange for one or more commercial banks or other financial institutions (any
such bank or other financial institution being called an "Augmenting Bank"),
which may include any Bank, to extend Commitments or increase their existing
Commitments in an aggregate amount up to, but not greater than, the
unsubscribed amount, provided that each Augmenting Bank, if not already a Bank
hereunder, (i) shall extend a new Commitment of not less than $5,000,000 and
(ii) shall execute all such documentation as the Agent shall specify to
evidence its status as a Bank hereunder. If (and only if) Banks (including
Augmenting Banks) shall have agreed to increase their aggregate Commitments or
to extend new Commitments in an aggregate amount not less than $5,000,000 in
the aggregate, such increases and such Commitments shall become
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30
effective on the date specified in the notice delivered by the Company pursuant
to the first sentence of this paragraph. Notwithstanding the foregoing, no
increase in the aggregate Commitments (or in the Commitment of any Bank) shall
become effective under this paragraph unless, on the date of such increase, the
conditions set forth in Section 9 shall be satisfied (with all references in
such Section to an Advance being deemed to be references to such increase), the
Agent shall have received a certificate to that effect dated such date and
executed by the chief financial officer of the Company, any Augmenting Bank
(not already a Bank) shall be satisfactory to the Agent in its reasonable
discretion and any increase in the aggregate Commitments requested after May
31, 1997 or any increase causing the aggregate Commitments to exceed
$85,000,000 shall have been agreed to by the Majority Banks.
Upon the effectiveness of any increase pursuant to this Section 2.7 of the
aggregate Commitments and any resulting adjustment in any Bank's pro rata share,
the Banks and the Augmenting Banks will purchase from each other and sell to
each other outstanding Advances sufficient to cause the Advances of each Bank
and Augmenting Bank to equal its pro rata share (as so adjusted) of the
aggregate outstanding Advances. Such purchase and sale shall be made pursuant
to Section 14.11 except that no minimum amount shall be required, no processing
fee shall be charged and, if any Bank shall suffer a loss or incur an expense as
a result of the effectiveness of such purchase or sale being during an Interest
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Period, the Company shall reimburse such Bank the amount of such loss or
expense. Each such Bank shall furnish the Company with a certificate setting
forth the basis for determining the amount to be paid to it hereunder.
3. NOTES EVIDENCING BORROWINGS. The Advances shall be evidenced by
the Company's promissory notes (the "Notes") in the form set forth as Exhibit A
hereto, with appropriate insertions, each of which shall be dated the date of
this Agreement, made payable to the order of the Bank making the Advance and
each of which shall mature on the Termination Date. All Advances made by the
Banks to the Company pursuant to this Agreement and all payments of principal
shall be evidenced by each Bank in its records, or, at such Bank's option, on
the schedule attached to its respective Note, which records or schedule shall be
rebuttable presumptive evidence of the subject matter thereof.
4. INTEREST AND FEES.
4.1 Interest.
(a) Domestic Advances. The unpaid principal of the
Domestic Advances shall bear interest prior to maturity at a rate per annum
equal to the Reference Rate in effect from time to time. Interest on Domestic
Advances prior to maturity shall be payable on each Payment Date and at
maturity.
(b) Eurodollar Advances. The unpaid principal of the Eurodollar
Advances shall bear interest prior to maturity at a rate per annum equal to the
Interbank Rate (Reserve Adjusted) in effect
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for each Interest Period plus the Margin. Interest on Eurodollar Advances prior
to maturity shall be payable on each Payment Date.
(c) Interest After Maturity. The Company shall pay to the Banks
interest on any amount of principal of any Advance which is not paid when due,
whether at the Termination Date, by acceleration or otherwise, accruing from and
including the date such amount shall have become due to (but not including) the
date of payment thereof in full at the rate per annum which is equal to the
greater of (i) one percent (1%) in excess of the rate applicable to the unpaid
amount immediately before it became due, or (ii) one percent (1%) in excess of
the Reference Rate from time to time in effect. Interest after maturity shall be
payable on demand.
4.2 Facility Fee. The Company agrees to pay to the Agent, for the
ratable benefit of the Banks, a facility fee at a rate per annum equal to the
Facility Fee Rate on the daily average amount of the Credit (whether used or
unused). Such facility fee shall be payable in arrears on (i) the first day of
each January, April, July and October and (ii) on the Termination Date or, if
earlier, the date the Credit terminates for any period then ending for which
such facility fee shall not have been theretofore paid. For purposes of this
Section 4.2, "Facility Fee Rate" means the rate per annum set forth in the
schedule below opposite the applicable Total Debt to Capitalization Ratio:
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=================================================================
Total Debt to Capitalization Facility Fee Rate
Ratio -------------------
-----------------
- -----------------------------------------------------------------
Less than or equal to .30 to 1 0.125%
- -----------------------------------------------------------------
Less than or equal to .40 to 1 but 0.15%
greater than .30 to 1
- -----------------------------------------------------------------
Less than or equal to .50 to 1 but 0.20%
greater than .40 to 1
=================================================================
Greater than .50 to 1 0.225%
=================================================================
The Facility Fee Rate shall be 0.20% commencing on the date of the
effectiveness of this Agreement and thereafter shall be adjusted 60 days or, in
the case of the last fiscal quarter of any fiscal year, 90 days after the end
of each fiscal quarter (beginning with the fiscal quarter ended March 31, 1997)
based on the Total Debt to Capitalization Ratio as of the last day of such
fiscal quarter; it being understood that (a) if the Company fails to deliver
the financial statements required by Section 8.1(a) or (b) by the 60th (or, if
applicable, the 90th) day after any fiscal quarter, the Facility Fee Rate shall
be 0.225% until such statements are delivered; and (b) no decrease in the
Facility Fee Rate shall be effected on any date on which an Event of Default
exists (but shall be delayed until the first date on which no Event of Default
exists). Any change in the Facility Fee Rate shall be immediately effective
for computation of the facility fee.
4.3 Agency and Arrangement Fees. The Company agrees to pay BofA
for its own account as Agent and for the account of the
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Arranger such fees as shall have been mutually agreed upon between the Company,
BofA and the Arranger.
4.4 Method of Calculating Interest and Fees. Interest on each
Domestic Advance shall be computed on the basis of a year consisting of 365 days
and paid for actual days elapsed. All other computations of interest and fees
shall be computed on the basis of a year consisting of 360 days and paid for
actual days elapsed. Interest and fees shall accrue for the period during which
interest or fees are computed from and including the first day thereof to but
excluding the last day thereof.
5. PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION OF THE CREDIT AND
SETOFF.
5.1 Place of Payment. All payments hereunder (including payments
with respect to the Notes) shall be made without set-off or counterclaim and
shall be made in immediately available funds by the Company to the Agent for the
respective accounts of the Banks, in accordance with the amount owed to each
Bank. All such payments shall be made to the Agent, prior to 12:30 p.m.,
Chicago time, on the date due at the Agent's office at Agency Administrative
Services #5596, 1455 Market Street, 12th Floor, San Francisco, California
94103, Account No. 12336-14460, Re: Michael Foods, Inc., or at such other
place as may be designated by the Agent to the Company in writing. The Agent
shall promptly remit in immediately available funds to each Bank its share of
all payments of principal, interest and fees received by the Agent for the
account of such Bank. Any payments received after 12:30 p.m.,
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Chicago time, shall be deemed received on the next Banking Day. Subject to the
definition of "Interest Period", whenever any payment to be made hereunder or
under any Note shall be stated to be due on a date other than a Banking Day,
such payment may be made on the next succeeding Banking Day, and such extension
of time shall be included in the computation of payment of interest or any
fees.
5.2 Prepayments. The Company may from time to time, upon prior
telephonic notice (on or before 11:30 a.m., Chicago time, in the case of a same
day prepayment) (to be confirmed in writing promptly thereafter) received by the
Agent (which shall promptly advise each Bank thereof), prepay the principal of
the Domestic Advances in whole or in part without penalty or premium and may
prepay the principal of the Eurodollar Advances on the last day of any Interest
Period with respect to such Eurodollar Advances without penalty or premium,
except as provided in Section 6.4; provided, however, any partial prepayment of
principal shall be in a minimum amount of $500,000 or a higher integral multiple
of $100,000.
5.3 Reduction or Termination of the Credit. The Company may from
time to time, upon at least five (5) Banking Days' prior written notice received
by the Agent (which shall promptly advise each Bank thereof), permanently reduce
the amount of the Credit (such reduction to be made among the Banks according to
their respective pro rata share of the Credit), but only upon payment of the
outstanding principal of the Notes in excess of the then
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reduced amount of the Credit, plus accrued interest to the date of such payment
on the principal amount being repaid; provided, however, that any reduction of
the Credit which would require payment of a Eurodollar Advance may be made only
on the last day of the relevant Interest Period for such Eurodollar Advance.
Any such reduction shall be in a minimum amount of $1,000,000 or in an integral
multiple of $1,000,000. The Company may at any time on like notice terminate
the Credit upon payment in full of the outstanding Notes and other liabilities
of the Company hereunder.
5.4 Setoff. In addition to and not in limitation of all rights of
offset that any Bank or other holder of any Note may have under applicable law,
each Bank or other holder of any Note shall, upon the occurrence of any Event of
Default described in Section 11.1 or any Unmatured Event of Default described in
Section 11.1(c), have the right to appropriate and apply to the payment of each
Note any and all balances, credits, deposits, accounts or moneys of the Company
then or thereafter with such Bank or other holder.
5.5 Proration of Payments. If any Bank or other holder of a Note
shall obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of principal of or interest on
any Note in excess of its pro rata share of payments and other recoveries
obtained by all Banks or other holders on account of principal of and interest
on Notes then held by them, such Bank or other holder shall purchase from the
other Banks or holders such participation in the Notes
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held by them as shall be necessary to cause such purchasing Bank or other
holder 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 holder, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest. The Company agrees that the Bank so purchasing
a participation from the other Banks under this Section 5.5 may exercise all
its rights of payment, including the right of set-off, with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation.
6. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR ADVANCES.
6.1 Increased Cost. If, as a result of any law, regulation, treaty
or directive, or any change therein, or in the interpretation or application
thereof or compliance by any Bank with any request or directive (whether or not
having the force of law) from any court, central bank, governmental authority,
agency or instrumentality or comparable agency:
(i) any tax, duty or other charge with respect to any
Eurodollar Advance, the Note of any Bank or any Bank's
obligation to make any Eurodollar Advance is imposed,
modified or deemed applicable, or the basis of taxation of
payments to any Bank of the principal of or interest on any
Eurodollar Advance (other than taxes imposed on the overall
net income of such Bank by the jurisdiction
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in which such Bank has its principal office) is changed;
(ii) any reserve, special deposit, special assessment or similar
requirements against assets of, deposits with or for the
account of, or credit extended by, any Bank are imposed,
modified or deemed applicable; or
(iii) any other condition affecting this Agreement or the
Eurodollar Advances is imposed on any Bank or the interbank
eurodollar market;
and such Bank determines that, by reason thereof, the cost to such Bank of
making or maintaining any of the Eurodollar Advances is increased, or the amount
of any sum receivable by such Bank hereunder in respect of any of the Eurodollar
Advances is reduced;
then, the Company shall pay to any such affected Bank upon demand such
additional amount or amounts as will compensate such Bank for such additional
cost or reduction (provided such amount has not been compensated for in the
calculation of the Eurocurrency Reserve Percentage). Determinations by such
Bank for purposes of this section of the additional amounts required to
compensate such Bank in respect of the foregoing shall be conclusive, absent
manifest error. In determining such amounts, the affected Bank may use any
reasonable averaging, attribution and allocation methods.
6.2 Eurodollar Deposits Unavailable or Interest Rate Unascertainable.
If the Company has any Eurodollar Advance outstanding, or has notified the Agent
of its intention to borrow
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a Eurodollar Advance as provided herein, then in the event that prior to any
Interest Period any Bank shall have determined (which determination shall be
conclusive and binding on the parties hereto) that deposits of the necessary
amount for the relevant Interest Period are not available to such Bank in the
interbank eurodollar market or that, by reason of circumstances affecting such
market, adequate and reasonable means do not exist for ascertaining the
Interbank Rate applicable to such period or term, as the case may be, the
affected Bank shall promptly give notice of such determination to the Company,
the Agent and the other Bank, and (i) any notice of new Eurodollar Advances
previously given by the Company and not yet borrowed or converted shall be
deemed a notice to make a Domestic Advance, to the extent of the affected
Bank's ratable share of the proposed Eurodollar Advance, and (ii) the Company
shall be obligated either to prepay or to convert any outstanding Eurodollar
Advances to Domestic Advances on the last day of the then current Interest
Period with respect thereof for the affected Bank's ratable share of the
outstanding Eurodollar Advance.
6.3 Changes in Law Rendering Eurodollar Advances Unlawful. If at any
time due to any new law, rule, regulation, treaty or directive, or any change
therein or in the interpretation or administration thereof by any court, central
bank, governmental authority, agency or instrumentality or comparable agency
charged with the interpretation or administration thereof, or for any other
reason arising subsequent to the date hereof, it shall become
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unlawful for any Bank to make or fund any Eurodollar Advance which it is
committed to make hereunder, the obligation of such Bank to provide Eurodollar
Advances shall, upon the happening of such event, forthwith be suspended for
the duration of such illegality. If any such event shall make it unlawful for
any Bank to continue Eurodollar Advances previously made by it hereunder, such
Bank shall, upon the happening of such event, notify the Agent, the Company and
the other Bank thereof in writing stating the reasons therefor, and the Company
shall, on the earlier of (i) the last day of the then current Interest Period
with respect thereto or (ii) if required by such law, rule, regulation, treaty,
directive or interpretation, on such date as shall be specified in such notice,
either convert such unlawful Eurodollar Advances to Domestic Advances or prepay
all such Eurodollar Advances, without any penalty or premium whatsoever (except
as provided in Section 6.4), to such Bank in full.
6.4 Indemnity. The Company will indemnify each Bank against any loss
or expense which such Bank may sustain due to any payment, prepayment or
conversion of any Eurodollar Advance on a date other than the last day of the
Interest Period for such Advance.
7. WARRANTIES. To induce the Banks to grant the Credit and to make
the Advances, the Company warrants that:
7.1 Existence. The Company and all of its Subsidiaries are
corporations duly organized, validly existing and in good standing under the
laws of the states of their respective
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incorporation. The Company and all of its Subsidiaries are in good standing
and are duly qualified to do business in each state where, because of the
nature of their respective activities or properties, such qualification is
required.
7.2 Authorization. The Company is duly authorized to execute and
deliver this Agreement and the Notes and is and will continue to be duly
authorized to borrow monies hereunder and to perform its obligations under this
Agreement and the Notes. The execution, delivery and performance by the Company
of this Agreement and the Notes and the borrowings hereunder do not and will not
require any consent or approval of any governmental agency or authority.
7.3 No Conflicts. The execution, delivery and performance by the
Company of this Agreement and the Notes do not and will not conflict with (i)
any provision of law, (ii) the charter or by-laws of the Company, (iii) any
agreement binding upon the Company, or (iv) any court or administrative order or
decree applicable to the Company, and do not and will not require, or result in,
the creation or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
7.4 Validity and Binding Effect. This Agreement is, and each of the
Notes when duly executed and delivered will be, a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application affecting the enforcement of
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creditors' rights or by general principles of equity limiting the availability
of equitable remedies.
7.5 No Default. Except as may have been waived in writing, neither
the Company nor any of its Subsidiaries is in default under any agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
their respective properties or assets is bound or affected, which default might
materially and adversely affect the financial condition or operations of the
Company and its Subsidiaries taken as a whole.
7.6 Financial Statements. (a) The Company's audited consolidated
financial statements as at December 31, 1995 and the Company's unaudited
consolidated financial statements as at September 30, 1996, copies of which have
been furnished to the Banks, have been prepared in conformity with generally
accepted accounting principles applied on a basis consistent with that of the
preceding fiscal year and present fairly the financial condition of the Company
and its Subsidiaries as at such dates and the results of their operations for
the periods then ended. Since September 30, 1996, there has been no material
adverse change in the financial condition of the Company and its Subsidiaries
taken as a whole.
(b) To the best of the Company's knowledge, the audited consolidated
financial statements of the Papetti Companies as at December 31, 1995 and the
unaudited consolidated financial statements of Papetti Companies as at September
30, 1996, included in the pro forma financial statements of the Company, copies
of
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43
which have been furnished to the Banks, have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the preceding fiscal year and present fairly the financial condition of
the Papetti Companies as at such dates and the results of their operations for
the periods then ended. To the best of the Company's knowledge, since December
31, 1995, there has been no material adverse change in the financial condition
of the Papetti Companies taken as a whole.
7.7 Litigation. No claims, litigation, arbitration proceedings or
governmental proceedings are pending or, to the knowledge of the Company,
threatened against or are affecting the Company or any of its Subsidiaries, the
results of which might materially and adversely affect the financial condition
or operations of the Company and its Subsidiaries taken as a whole, except those
referred to in the schedule attached hereto as Exhibit B. Other than any
liability incident to such claims, litigation or proceedings or provided for or
disclosed in the financial statements referred to in Section 7.6 neither the
Company nor any of its Subsidiaries has any known contingent liabilities which
are material to the Company and its Subsidiaries taken as a whole.
7.8 Liens. None of the property, revenues or assets of the Company
or any of its Subsidiaries is subject to any Lien, except:
(a) Liens for current Taxes not delinquent or Taxes being
contested in good faith and by appropriate proceedings and as to which such
reserves or other appropriate provisions
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as may be required by generally accepted accounting principles are
being maintained;
(b) carriers', warehousemen's, mechanics', materialmen's and
other like statutory Liens arising in the ordinary course of business
securing obligations which are not overdue for a period of more than
thirty (30) days or which are being contested in good faith and by
appropriate proceedings and as to which such reserves or other
appropriate provisions as may be required by generally accepted
accounting principles are being maintained;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, and other obligations of a
like nature incurred in the ordinary course of business;
(e) Liens disclosed in the financial statements referred to
in Section 7.6; and
(f) Liens listed on Exhibit C.
7.9 Subsidiaries. The Company has no Subsidiaries except as
listed on Exhibit D. The Company and its Subsidiaries own 100% of the stock of
their Subsidiaries, except any required directors' qualifying shares.
7.10 Purpose. The proceeds of the Advances will be used by the
Company for general working capital purposes.
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7.11 Regulation U. The Company is not engaged in the business of
purchasing or selling "margin stock," as such term is defined in Regulation U of
the Federal Reserve Board, or extending credit to others for the purpose of
purchasing or carrying margin stock, and no part of the proceeds of any Advance
will be used to purchase or carry any margin stock or for any other purpose
which would violate any of the margin regulations of the Federal Reserve Board.
7.12 Compliance. The Company and all of its Subsidiaries are, to the
best of the Company's knowledge, in material compliance with all statutes and
governmental rules and regulations applicable to them.
7.13 Pension and Welfare Plans. Each Plan complies in all material
respects with all applicable statutes and governmental rules and regulations,
and (i) no Reportable Event has occurred and is continuing with respect to any
Plan, (ii) neither the Company nor any ERISA Affiliate has withdrawn from any
Plan or instituted steps to do so, and (iii) no steps have been instituted to
terminate any Plan. No condition exists or event or transaction has occurred in
connection with any Plan which could result in the incurrence by the Company or
any ERISA Affiliate of any material liability, fine or penalty. Neither the
Company nor any ERISA Affiliate is a member of, or contributes to, any multiple
employer Plan as described in section 4064 of ERISA. Neither the Company nor
any of its Subsidiaries has any contingent liability with
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respect to any post-retirement "welfare benefit plans," as such term is defined
in ERISA, except as listed on Exhibit E.
7.14 Taxes. Each of the Company and its Subsidiaries has filed all
tax returns which are required to have been filed and has paid, or made adequate
provisions for the payment of, all of its Taxes which are due and payable,
except such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by generally accepted accounting principles have
been maintained. The Company is not aware of any proposed assessment against
the Company or any of its Subsidiaries for additional Taxes (or any basis for
any such assessment) which might be material to the Company and its Subsidiaries
taken as a whole.
7.15 Investment Company Act Representation. The Company is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
7.16 Licenses. The Company and its Subsidiaries possess all
trademarks, trade names, copyrights, patents, governmental licenses, franchises,
certificates, consents, permits and approvals necessary to enable them to
carry on their business in all material respects as now conducted and to own
and operate the properties material to their business as now owned and
operated, without known conflict with the rights of others. All such
trademarks, trade names, copyrights, patents, licenses, franchises,
certificates,
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consents, permits and approvals which are material to the Company and its
Subsidiaries taken as a whole are valid and subsisting.
7.17 No Burdensome Provisions. Neither the Company nor any
Subsidiary is a party to any agreement or instrument or subject to any charter
or other corporate restriction or statute or any judgment, order, writ,
injunction, decree, award, rule or regulation which materially and adversely
affects or in the future may (so far as the Company can now foresee) materially
and adversely affect the business, operations, properties, prospects, assets or
condition, financial or other, of the Company and its Subsidiaries taken as a
whole.
7.18 Trading with the Enemy Act, etc. Neither this Agreement nor any
of the transactions contemplated hereby is in violation of any of the foreign
asset control regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) or any ruling issued thereunder or any
enabling legislation or Presidential Executive Order in connection therewith.
7.19 Environmental Matters. To the best of the Company's knowledge,
the Company and its Subsidiaries have complied in all material respects with all
federal, state, local and other statutes, ordinances, orders, judgments, rulings
and regulations relating to environmental pollution or to environmental
regulation or control and neither the Company nor any Subsidiary has received
notice of any failure to comply which alone or together with any other such
failure could result in a material and adverse effect on
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the business, operations, properties, prospects, assets or condition, financial
or other, of the Company and its Subsidiaries, taken as a whole. To the best
of the Company's knowledge, the Company's and its Subsidiaries' plants do not
manage any hazardous wastes, hazardous substances, hazardous materials, toxic
substances or toxic pollutants, as those terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act or the Clean Water Act, in
violation of any regulation promulgated thereunder or in any other applicable
law where such violation would result, individually or together with other
violations, in a material and adverse effect on the business, operations,
properties, prospects, assets or condition, financial or other, of the Company
and its Subsidiaries, taken as a whole.
7.20 Disclosure. Neither this Agreement, nor any of the Exhibits
hereto, nor any certificate or other data furnished to the Banks in writing by
or on behalf of the Company in connection with the transactions contemplated by
this Agreement, when taken as a whole, contains any untrue statement of a
material fact or omits a material fact necessary to make the statements
contained herein or therein not misleading. There is no fact now known to the
Company which materially and adversely affects or in the future may (so far as
the Company can now reasonably foresee) materially and adversely affect the
business, operations, properties, prospects, assets or
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condition, financial or other, of the Company and its Subsidiaries, taken as a
whole, which has not been disclosed to the Banks.
7.21 Governmental Action. No action of, or filing with, any
governmental or public body or authority is required to authorize, or is
otherwise required in connection with, the execution, delivery and performance
of the Agreements or the Notes by the Companies.
7.22 Compliance with Other Instruments. Except as may have been
waived in writing, neither the Company nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any bond, debenture, note or other evidence
of indebtedness of the Company or any Subsidiary or contained in any instrument
under or pursuant to which any thereof has been issued or made and delivered,
the effect of which would materially and adversely affect the business,
operations, properties, prospects, assets or condition, financial or other, of
the Company and its Subsidiaries, taken as a whole. No consent of the
stockholders of the Company is required for the execution, delivery and
performance of this Agreement or the Notes by the Company.
8. COMPANY'S COVENANTS. From the date of this Agreement and
thereafter until the expiration or termination of the Credit and until the
Notes and other liabilities of the Company hereunder are paid in full, the
Company agrees that, unless the Majority Banks shall otherwise expressly
consent in writing, it will:
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8.1 Financial Statements and Other Reports. Furnish to each Bank and
to the Agent:
(a) Quarterly Financial Statements. As soon as practicable, and
in any event within sixty (60) days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year of the Company,
the consolidated statement of income of the Company and its Subsidiaries
for such period and for that part of the fiscal year ended with such
quarterly period and the consolidated statement of cash flows of the
Company and its Subsidiaries for that part of the fiscal year ended with
such quarterly period and the consolidated balance sheet of the Company and
its Subsidiaries as at the end of such period, setting forth in each case
in comparative form the corresponding figures for the corresponding periods
of the preceding fiscal year (or in the case of the consolidated balance
sheet, as of the end of the then most recent fiscal year) all in reasonable
detail, prepared in conformity with generally accepted accounting
principles applied on a basis consistent with that of the previous year
(except as otherwise stated therein or in the notes thereto and except that
footnotes shall not be required) and certified by the chief financial
officer of the Company as presenting fairly the financial condition and
results of operations of the Company and its Subsidiaries as at the end of
and for the fiscal periods to which they relate, subject to the Company's
year end adjustments;
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(b) Annual Audited Statements. As soon as practicable, and in
any event within ninety (90) days after the end of each fiscal year, the
consolidated balance sheet and related consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries as
at the end of and for such fiscal year, setting forth in each case in
comparative form the corresponding figures of the previous fiscal year, all
in reasonable detail, prepared in conformity with generally accepted
accounting principles applied on a basis consistent with that of the
previous year (except as otherwise stated therein or in the notes thereto)
and certified by the chief financial officer of the Company as presenting
fairly the financial condition, results of operations and cash flows of the
Company and its Subsidiaries as at the end of and for the fiscal year to
which such financial statements relate, and accompanied by a report or
opinion of independent certified public accountants of recognized national
standing selected by the Company stating that such financial statements
present fairly the consolidated financial condition, results of operations
and cash flows of the Company and its Subsidiaries in accordance with
generally accepted accounting principles consistently applied (except for
changes with which such accountants concur) and that the examination of
such accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards;
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(c) Accountants' Statements. Concurrently with the financial
statements delivered pursuant to Section 8.1(b), the written statement of
said accountants that in making the examination necessary for their report
or opinion on said financial statements they have obtained no knowledge of
any Event of Default or Unmatured Event of Default or, if such accountants
shall have obtained knowledge of any such Event of Default or Unmatured
Event of Default, they shall disclose in such statement the Event of
Default or Unmatured Event of Default and the nature and status thereof,
but such accountants shall not be liable, directly or indirectly, to anyone
for any failure to obtain knowledge of any such Event of Default or
Unmatured Event of Default;
(d) Officer's Certificates. Concurrently with the financial
statements delivered pursuant to Sections 8.1(a) and 8.1(b), a certificate
of the chief financial officer of the Company (1) stating that a review of
the activities of the Company and its Subsidiaries during such fiscal
quarter or fiscal year, as appropriate, has been made under his supervision
to determine whether the Company has fulfilled all of its obligations under
this Agreement and the Notes, (2) stating that, to the best of his
knowledge, there exists no Event of Default or Unmatured Event of Default,
or, if any such Event of Default or Unmatured Event of Default exists,
specifying such Event of Default or Unmatured Event of Default and the
nature and status thereof and (3) (i) in the case of
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a financial statement delivered pursuant to Section 8.1(a), containing a
computation of, and showing compliance with, Sections 8.14 and 8.15 and
(ii) in the case of a financial statement delivered pursuant to Section
8.1(b), containing a computation of, and showing compliance with, each of
the financial ratios and restrictions contained in this Section 8;
(e) SEC and Other Reports. Copies of each filing and report made
by the Company or any Subsidiary with or to any securities exchange or the
Securities and Exchange Commission and of each communication from the
Company or any Subsidiary to shareholders generally, promptly upon the
filing or making thereof;
(f) Report of Change in Subsidiaries. Promptly from time to
time, a written report of any change in the list of the Company's
Subsidiaries set forth on Exhibit D; and
(g) Requested Information. Promptly from time to time, such
other reports or information as the Agent or any Bank may reasonably
request.
8.2 Notices. Notify the Agent in writing of any of the following
immediately upon learning of the occurrence thereof, describing the same and, if
applicable, the steps being taken by the Person(s) affected with respect
thereto:
(a) Default. The occurrence of an Event of Default or an
Unmatured Event of Default;
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54
(b) Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding which is material to the Company and
its Subsidiaries taken as a whole;
(c) Judgment. The entry of any judgment or decree against the
Company or any Subsidiary if the aggregate amount of all judgments and
decrees then outstanding against the Company and all Subsidiaries exceeds
$250,000 after deducting (i) the amount with respect to which the Company
or any Subsidiary is insured and with respect to which the insurer has
assumed responsibility in writing and (ii) the amount for which the Company
or any Subsidiary is otherwise indemnified if the terms of such
indemnification and the Person providing such indemnification are
satisfactory to the Majority Banks;
(d) Pension and Welfare Plans. The occurrence of a Reportable
Event with respect to any Plan; the institution of any steps by the
Company, any ERISA Affiliate, the PBGC or any other Person to terminate any
Plan; the institution of any steps by the Company or any ERISA Affiliate to
withdraw from any Plan; or the incurrence of any material increase in the
contingent liability of the Company or any Subsidiary with respect to any
post-retirement welfare benefits;
(e) Material Adverse Change. The occurrence of a material
adverse change in the business, operations or financial condition of the
Company and its Subsidiaries taken as a whole; or
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(f) Other Events. The occurrence of such other events as any Bank
may from time to time reasonably specify.
The Agent will promptly notify each of the Banks of the receipt by the
Agent of any notice from the Company pursuant to this Section
8.3 Existence. Except as otherwise set forth in this Agreement, do
all things, and cause each of its Subsidiaries to do all things, necessary to
preserve and keep in full force and effect its corporate existence, rights and
franchises; provided, however, that nothing in this Section 8.3 shall prevent
the abandonment or termination of the corporate existence, rights and franchises
of any such Subsidiary if, in the opinion of the Company, such abandonment or
termination would not have a material and adverse effect on the business,
operations, properties, prospects, assets or condition, financial or other, of
the Company and its Subsidiaries taken as a whole; and provided, further, that
nothing in this Section 8.3 shall prevent the merger of the Company with NSU
Merger Co., pursuant to the terms of the Agreement and Plan of Reorganization,
dated as of December 21, 1995 and amended as of September 27, 1996, as more
fully described in that certain proxy statement of the Company dated November
26, 1996.
8.4 Nature of Business. Engage, and cause each Subsidiary to engage,
in substantially the same fields of business as it is engaged in on the date
hereof.
8.5 Books, Records and Access. Maintain, and cause each Subsidiary
to maintain, complete and accurate books and records in
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which full and correct entries in conformity with generally accepted accounting
principles shall be made of all dealings and transactions in relation to its
respective business and activities; permit, and cause each Subsidiary to permit,
access by the Agent or any Bank to the books and records of the Company and such
Subsidiary during normal business hours; and permit, and cause each Subsidiary
to permit, any Bank to make copies of such books and records. All information
provided to any Bank that is not of public record will be kept confidential by
such Bank except as may be necessary in any litigation involving this Agreement
and any Note or as may be required by any applicable regulatory authorities or
by any court order or subpoena.
8.6 Insurance. Maintain, and cause each Subsidiary to maintain,
insurance to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated or as the Majority Banks may
reasonably request from time to time; provided that the Company and its
Subsidiaries may maintain a system or systems of self-insurance which, in the
opinion of the chief financial officer of the Company, will accord with sound
practices of corporations maintaining such systems engaged in the same or a
similar business similarly situated and under which the Company or such
Subsidiaries shall maintain adequate reserves in accordance with sound actuarial
and insurance principles and practice.
8.7 Insurance Reports. Provide to the Agent and the Banks at least
annually within ninety (90) days of the end of the
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Company's fiscal year, a certificate signed by its chief financial officer that
attests to and summarizes the property and casualty insurance program carried
by the Company and its Subsidiaries.
8.8 Repair. Maintain, preserve and keep, and cause each Subsidiary
to maintain, preserve and keep, its properties in good repair, working order and
condition; and from time to time make, and cause each Subsidiary to make, all
necessary and proper repairs, renewals, replacements, additions, betterments and
improvements thereto so that at all times the efficiency thereof shall be fully
preserved and maintained.
8.9 Taxes. Pay, and cause each Subsidiary to pay, when due, all of
its Taxes, unless and only to the extent that the Company or such Subsidiary, as
the case may be, is contesting such Taxes in good faith and by appropriate
proceedings and the Company or such Subsidiary has set aside on its books such
reserves or other appropriate provisions therefor as may be required by
generally accepted accounting principles.
8.10 Compliance. Use, and cause each of its Subsidiaries to use, its
best efforts to comply in all respects with all applicable statutes, rules,
regulations and orders of all governmental authorities with respect to the
conduct of its businesses and the ownership of properties (including, without
limitation, all applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls), except to the extent that any
of the foregoing are contested in good faith by appropriate proceedings.
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8.11 Pension Plans. Not permit, and not permit any Subsidiary to
permit, any condition to exist in connection with any Plan which might
constitute grounds for the PBGC to institute proceedings to have such Plan
terminated or a trustee appointed to administer such Plan; and not engage in, or
permit to exist or occur, or permit any of its Subsidiaries to engage in, or
permit to exist or occur, any other condition, event or transaction with respect
to any Plan which could result in the incurrence by the Company or any of its
Subsidiaries of any material liability, fine or penalty.
8.12 Indebtedness. Not, and not permit any Subsidiary to, create,
assume, incur or otherwise become liable, in each case contingently or
otherwise, in respect of any Indebtedness, whether secured or unsecured, other
than:
(a) in the case of the Company, unsecured Indebtedness;
(b) in the case of any Subsidiary (other than Old Michael after
the effectiveness of the Pending Reorganization and the assignment and
assumption set forth in Section 13), (i) unsecured Indebtedness, provided
that at the time of the creation, assumption or incurrence thereof and
immediately after giving effect thereto, the Company would be in compliance
with Section 8.14 hereof and the then outstanding aggregate principal
amount of Priority Indebtedness shall not exceed twenty-five percent (25%)
of the Consolidated Net Worth of the Company and its Subsidiaries and (ii)
Indebtedness owing to the Company or a Subsidiary; and
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(c) in the case of the Company or any Subsidiary (other than Old
Michael after the effectiveness of the Pending Reorganization and the
assignment and assumption set forth in Section 13), Indebtedness secured by
Liens as and to the extent permitted by Section 8.13.
8.13 Liens. Not, and not permit any Subsidiary to, (i) create,
assume, incur or suffer to exist any Lien upon (or, whether by transfer to any
Subsidiary or Affiliate or otherwise, subject, or permit any Subsidiary or
Affiliate to subject, to the prior payment of any Indebtedness other than that
represented by the Notes) any property or assets (real or personal, tangible or
intangible) of the Company or any Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom, or (ii) own or acquire or agree to
acquire any property or assets (real or personal, tangible or intangible)
subject to or upon any Lien; provided; however, that the foregoing restrictions
shall not prevent the Company or any Subsidiary from:
(a) (i) making pledges or deposits under workmen's compensation
laws, unemployment insurance laws or similar legislation or good faith
deposits in connection with bids, tenders, contracts (other than for the
repayment of money borrowed) or under leases to which the Company or such
Subsidiary is a party, (ii) making deposits to secure public or statutory
obligations of the Company or such Subsidiary or deposits of cash or
obligations of the United States of America to secure surety and appeal
bonds to which the Company
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or such Subsidiary is a party or deposits in lieu of such bonds, (iii)
incurring Liens or priorities imposed by law, such as employees' carriers'
warehousemen's, mechanics', materialmen's and vendors' liens or priorities,
and Liens arising out of judgments or awards against the Company or such
Subsidiary with respect to which the Company or such Subsidiary at the time
shall be prosecuting an appeal or proceedings for review and with respect
to which it shall have secured a stay of execution pending such appeal or
proceedings for review or (iv) entering into leases and from incurring
landlords' liens on fixtures and movable property located on premises
leased in the ordinary course of business so long as the rent secured
thereby is not in default and any applicable grace period has not expired;
(b) creating, incurring or suffering to exist (i) Liens for Taxes
or import duties not yet subject to penalties for nonpayment or the
nonpayment of which shall be permitted by Section 7.14 or (ii) minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of
others for, rights of way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning or other restrictions as to the
use of real properties, which Liens, exceptions, encumbrances, easements,
reservations, rights and restrictions do not, in the opinion of the
Company, in the aggregate materially detract from the value of such
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properties or materially impair their use in the operation of the business
of the Company or such Subsidiary;
(c) suffering to exist the Liens existing on the date hereof
securing Indebtedness in an aggregate principal amount outstanding on the
date hereof not in excess of $3,000,000 and extensions, renewals or
replacements of any such Lien upon the same property theretofore subject
thereto without increase in the principal amount of the Indebtedness then
secured or evidenced thereby;
(d) in case of a Subsidiary, creating, incurring, assuming or
suffering to exist any Lien solely to secure Indebtedness owing to the
Company or a Subsidiary; or
(e) creating, incurring, assuming or suffering to exist Liens not
otherwise permitted by the foregoing clauses (a) through (d), inclusive, of
this Section 8.13; provided, however, that at the time of the creation,
incurrence or assumption thereof, and immediately after giving effect to
the Indebtedness secured or evidenced by any such Lien, (x) the then
outstanding aggregate principal amount of Priority Indebtedness shall not
exceed twenty-five percent (25%) of Consolidated Net Worth of the Company
and its Subsidiaries as of the end of the previous fiscal year of the
Company and (y) the Company would be in compliance with Section 8.14
hereof.
8.14 Maximum Consolidated Total Indebtedness to Capitalization Ratio.
Not permit the Total Debt to Capitalization Ratio at any time to exceed .55 to
1.
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8.15 Maintenance of Interest Expense Coverage. Maintain the ratio of
Consolidated Net Earnings Available for Fixed Charges to Fixed Charges
determined as of the last day of each fiscal quarter ending on or after June 30,
1997 for the Computation Period then ending at not less than 2.0 to 1.
8.16 Restricted Payments. Not, directly or indirectly, (a) declare
or pay any dividend or make any other distribution (whether by reduction of
capital or otherwise) on any shares of any class of its capital stock (other
than a dividend or distribution payable in shares of common stock of the
Company) or (b) purchase, redeem, retire or otherwise acquire, or cause or
permit any Subsidiary or Affiliate to purchase, otherwise acquire or make any
payment in respect of, any such shares, unless, immediately after giving effect
to such action No Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
8.17 Limitation on Disposition of Assets. Subject to Section 8.18,
not at any time sell, transfer or otherwise dispose of, other than in the
ordinary course of business, all or any part of its assets and properties, for
less than the fair market value (as determined in good faith by the Company) of
the properties and assets so disposed of if, immediately after giving effect
thereto, the aggregate value of all such properties and assets so disposed of
(valued at the book value thereof) during the immediately preceding 365 days
exceeds twenty percent (20%) of Total Capitalization as of the end of the then
most recently ended fiscal year of the Company.
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8.18 Merger, Consolidation, Sale or Lease. Not consolidate with or
merge into any Person, or permit any Person to merge into it, or sell, transfer
or otherwise dispose of all or substantially all of its properties and assets,
unless:
(a) the Company shall be the surviving corporation; and
(b) immediately after giving effect to such transaction, no Event
of Default or Unmatured Event of Default shall have occurred and be
continuing.
8.19 Restrictions on Subsidiaries.
(a) Not cause, suffer or permit any Subsidiary to:
(i) issue or dispose of any shares of such Subsidiary's
capital stock to any Person other than the Company or a Subsidiary,
except to the extent that any such shares are required to qualify
directors under any applicable law or required to be issued to other
stockholders of such Subsidiary by virtue of their exercise of
preemptive rights or as their pro rata share of any stock dividend;
(ii) sell, assign, pledge, transfer, dispose of, or in any
way part with control of, any shares of capital stock of another
Subsidiary, or any Indebtedness owing to such Subsidiary from another
Subsidiary, to any Person other than the Company or a Subsidiary,
except in connection with a transaction which complies with Section
8.19(b); and, in the case of shares of capital stock, to
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the extent, if any, required to qualify directors of such other
Subsidiary under any applicable law; or
(iii) sell, assign, lease, pledge, transfer or otherwise dispose
of any substantial part of such Subsidiary's properties and assets to
any Person or consolidate with or merge into any other Person or
permit any other Person to merge into it; provided, however, that
(x) any Subsidiary may sell all or substantially all of its
properties and assets for cash in an amount not less than their fair
market value (as determined in good faith by the Company) if (1) such
Subsidiary does not own any capital stock or any Indebtedness of the
Company or any other Subsidiary not simultaneously being disposed of,
(2) such sale is not prohibited by the provisions of Section 8.17, and
(3) at the time of such transaction and immediately after giving
effect thereto, no Event of Default or Unmatured Event of Default
shall have occurred and be continuing; and
(y) any Subsidiary may sell, lease, transfer or otherwise
dispose of all or any part of its properties and assets to, or
consolidate with or merge into, the Company (subject to the provisions
of Section 8.18) or a Subsidiary.
(b) Not sell, assign, pledge, transfer, dispose of, or in any way
part with control of, any shares of capital stock of any
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Subsidiary or any Indebtedness owing from any Subsidiary to the Company, except,
in the case of shares of capital stock, to the extent, if any, required to
qualify directors of such Subsidiary under any applicable law; provided,
however, that all shares of capital stock of all classes, together with all
Indebtedness, of any Subsidiary owned by the Company and/or one or more
Subsidiaries may be sold if such sale, if deemed a sale of properties and assets
by such Subsidiary, would not be prohibited by the provisions of Section
8.19(a)(iii)(x).
(c) Not, and not cause, suffer or permit any Subsidiary to,
acquire, directly or indirectly, any stock of any other corporation which
immediately after such acquisition would become a Subsidiary, unless immediately
after giving effect to such acquisition:
(i) no Event of Default or Unmatured Event of Default shall have
occurred and be continuing; and
(ii) the Company could incur at least $1 of additional Indebtedness
secured or evidenced by Liens in compliance with the provisions of
Section 8.13(e).
8.20 Investments. Not, and not permit any Subsidiary to, make any
Restricted Investment if, after giving effect thereto, the Aggregate Amount of
all Restricted Investments of the Company and its Subsidiaries exceeds thirty
percent (30%) of Consolidated Net Worth as of the end of the Company's most
recently completed fiscal year; provided, however, that the Aggregate Amount of
all Restricted Investments of the Company and its Subsidiaries in
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businesses not related to the food industry shall not exceed five percent (5%)
of Consolidated Net Worth for such fiscal year.
8.21 Other Agreements. Not, and not permit any Subsidiary to, enter
into any agreement containing any provision which would be violated or breached
by the Company's performance of its obligations hereunder or under any
instrument or document delivered or to be delivered by the Company hereunder or
in connection herewith.
8.22 Use of Proceeds. Not permit any proceeds of the Advances to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of (i) "purchasing or carrying any margin stock" within
the meaning of Regulation U of the Federal Reserve Board, as amended from time
to time or (ii) acquiring any of the outstanding shares of capital stock of any
corporation unless, at the time such proceeds are so used, the Board of
Directors (or persons exercising similar functions) of the issuer of the shares
to be acquired shall have approved such acquisition and recommended it to its
shareholders. The Company will furnish to any Bank, upon its request, a
statement in conformity with the requirements of Federal Reserve Form U1
referred to in Regulation U.
8.23 Transactions with Related Parties. Not, and not permit any
Subsidiary to, enter into or be a party to any transaction or arrangement with
any Affiliate (except (i) the Pending Reorganization) including, without
limitation, the purchase, sale, lease or exchange of property or the rendering
of
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any service, with any Related Party (except those transactions or arrangements
existing on the date hereof, including any renewals or extensions thereof),
except in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not a Related Party.
9. CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of the Banks
to make any Advance is subject to the satisfaction of each of the following
conditions precedent:
9.1 Default. Before and after giving effect to such Advance, no
Event of Default or Unmatured Event of Default shall have occurred and be
continuing.
9.2 Warranties. Before and after giving effect to such Advance, the
warranties in Section 7 shall be true and correct as though made on the date of
such Advance, except for such changes as are specifically permitted hereunder.
9.3 Certification. The Company shall have delivered to the Agent and
each Bank a certificate of the Company's chief financial officer as to the
matters set out in Sections 9.1 and 9.2.
10. CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of the
Banks to make the initial Advance hereunder is subject to the satisfaction of
the condition precedent, in addition to the
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applicable conditions precedent set forth in Section 9 above, that the Company
shall have delivered to each Bank:
10.1 Notes. Its duly executed Note, payable to such Bank's order in
the amount of such Bank's share of the Credit.
10.2 Resolutions. A copy, duly certified as of the date of this
Agreement by the Company's secretary or vice president - finance, of (a) the
resolutions of the Company's Board of Directors authorizing the borrowings
hereunder and the execution and delivery of this Agreement and the Notes, (b)
all documents evidencing other necessary corporate action and (c) all approvals
or consents, if any, with respect to this Agreement and the Notes.
10.3 Incumbency. A certificate of the Company's secretary or vice
president - finance, dated the date of this Agreement, certifying the names of
the Company's officers authorized to sign this Agreement, the Notes and all
other documents or certificates to be delivered hereunder, together with the
true signatures of such officers.
10.4 Opinion. An opinion of Maun & Simon, PLC counsel to the
Company, addressed to the Agent and the Banks and dated the date of this
Agreement, in substantially the form of Exhibit F.
10.5 Note Agreement. A copy, duly certified as of the date of this
Agreement by the Company's secretary or vice president - finance, of the duly
executed Note Agreement, together with all amendments or modifications thereto,
if any, as of the date of such certification.
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10.6 Certificate. A Certificate of the Company, duly executed by
the Company's Secretary or Vice President-Finance that: (a) Not less than
$125,000,000 of notes shall have been issued pursuant to the Note Agreement on
terms and conditions in the form of the Note Agreement delivered to the Banks;
(b) The Company shall have purchased the Papetti Companies
pursuant to an Agreement and Plan of Reorganization dated June 28, 1996, as
amended.
(c) The Revolving Loan Agreement dated as of March 30, 1990 as
amended, among the Company, certain banks and Bank of America National Trust and
Savings Association, as agent shall have been terminated and all obligations
thereunder shall have been paid in full.
10.7 NSU Resolutions. A copy, duly certified as of the date of
this Agreement by NSU's Secretary or Assistant Secretary, of (a) the resolutions
of the NSU's Board of Directors authorizing the execution and delivery of this
Agreement; (b) all documents evidencing other necessary corporate action of NSU;
and (c) all approvals or consents, if any, with respect to Section 13 of this
Agreement.
11. EVENTS OF DEFAULT AND REMEDIES.
11.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement.
(a) Non-Payment. Default, and the continuance thereof for five
(5) days, in the payment of principal of, or interest on, the Note when due, or
any fee hereunder.
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(b) Non-Payment of other Indebtedness. Default in the
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any other Indebtedness of, or guaranteed
by, the Company or any Subsidiary (except any such Indebtedness of any
Subsidiary to the Company or to any other Subsidiary) in an amount
equal to or greater than $2,500,000 or default in the performance or
observance of any obligation or condition with respect to any such
other Indebtedness if the effect of such default is to accelerate the
maturity of any such Indebtedness or to permit the holder or holders
thereof, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed
maturity.
(c) Insolvency. The Company or any of its Subsidiaries
becomes insolvent or generally fails to pay, or admits in writing its
inability to pay, its debts as they mature, or applies for, consents
to, or acquiesces in the appointment of a trustee, receiver or other
custodian for the Company, such Subsidiary or any other property
thereof; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for
the Company, any of its Subsidiaries or for a substantial part of the
property of the Company or any of its Subsidiaries and is not
discharged within thirty (30) days; or any bankruptcy, reorganization,
debt arrangement, or other proceeding under any bankruptcy or
insolvency law, or any dissolution or
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liquidation proceeding is instituted by or against the Company or any of
its Subsidiaries and if instituted against the Company or any of its
Subsidiaries is consented to or acquiesced in by the Company or such
Subsidiaries or remains for thirty (30) days undismissed; or any warrant of
attachment is issued against any substantial portion of the property of the
Company or any of its Subsidiaries which is not released within thirty (30)
days of service.
(d) ERISA. The PBGC applies to a United States District Court
for the appointment of a trustee to administer any Plan or for a decree
adjudicating that any such Plan must be terminated; a trustee is appointed
pursuant to ERISA to administer any such Plan; any action is taken to
terminate any such Plan or any such Plan is permitted or caused to be
terminated if, at the time such action is taken or such termination of any
such Plan occurs, the Plan's "vested liabilities", as defined in Section
3(25) of ERISA, exceed the then value of its assets at the time of such
termination.
(e) Agreements. Default in the performance of any of the
Company's agreements herein set forth (and not constituting an Event of
Default under any of the preceding subsections of this Section 11.1) and
continuance of such default for thirty (30) days after the earlier of (i)
written notice thereof to the Company from the Agent and (ii) a responsible
officer of the Company's obtaining knowledge of the occurrence of such
default.
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(f) Warranty. Any warranty made by the Company herein is untrue
in any material respect, or any schedule, statement, report, notice,
writing or certification furnished by the Company to any Bank is untrue in
any material respect on the date as of which the facts set forth are stated
or certified.
(g) Judgments. Any final judgment for the payment of money in
excess of $250,000 shall be rendered against the Company or any Subsidiary
and the same shall remain undischarged for a period of not less than thirty
(30) days during which execution shall not be effectively stayed.
(h) Event Risk Occurrence. Any Event Risk Occurrence shall have
occurred.
(i) Material Adverse Change. The Banks shall have determined in
good faith that (i) a material adverse change has occurred in the business,
operations or financial condition of the Company or (ii) the prospect of
payment or performance of any obligation or agreement of the Company
hereunder or under the Notes is materially impaired, and the condition
giving rise to such determination (which does not constitute an Event of
Default under any of the other subsections of this Section 11.1) continues
for at least thirty (30) days after notice to the Company from the Agent.
11.2 Remedies. If any Event of Default described in Section 11.1
shall be continuing, the Agent, upon request of the Majority Banks, may declare
the Credit to be terminated and all Notes to be due and payable, whereupon the
Credit shall immediately
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terminate and any outstanding Note shall become immediately due and payable,
all without notice of any kind (except that if an event described in Section
11.1(c) occurs, the Credit shall immediately terminate and any outstanding Note
shall become immediately due and payable without declaration or notice of any
kind). The Agent shall promptly advise the Company of any such declaration,
but failure to do so shall not impair the effect of such declaration.
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12. THE AGENT
12.1 Appointment and Authorization. Each Bank hereby irrevocably
(subject to Section 12.9) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and each other
document executed in connection with this Agreement (herein, a "Loan Document")
and to exercise such powers and perform such duties as are expressly delegated
to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities except those
expressly set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
12.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects with
reasonable care.
12.3 Liability of Agent. None of the Agent Related Persons shall (i)
be liable for any action taken or omitted to be
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taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Banks for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of the Company's Subsidiaries or
Affiliates.
12.4 Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel
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(including counsel to the Company), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Majority Banks
as it deems appropriate and, if it so requests, confirmation from the Banks of
their obligation to indemnify the Agent against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Banks and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 10, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
12.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or Unmatured Event
of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Agent for the account of the Banks,
unless the Agent
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shall have received written notice from a Bank or the Company referring to this
Agreement, describing such Event of Default or Unmatured Event of Default and
stating that such notice is a "notice of default". The Agent will notify the
Banks of its receipt of any such notice. The Agent shall take such action with
respect to such Event of Default or Unmatured Event of Default as may be
requested by the Majority Banks in accordance with Section 11; provided,
however, that unless and until the Agent has received any such request, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default or Unmatured Event of
Default as it shall deem advisable or in the best interest of the Banks.
12.6 Credit Decision. Each Bank acknowledges that none of the Agent
Related Persons has made any representation or warranty to it, and that no act
by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent Related Person to any Bank. Each Bank represents to
the Agent that it has, independently and without reliance upon any Agent Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this
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Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any Agent
Related Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the Banks by the
Agent, the Agent shall not have any duty or responsibility to provide any Bank
with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the Agent Related Persons.
12.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent Related
Persons (to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata, from and against any
and all Indemnified Liabilities; provided, however, that no Bank shall be liable
for the payment to the Agent Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Agent upon demand for its
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ratable share of any costs or out of pocket expenses (including reasonable fees
of attorneys for the Agent (including the allocable costs of internal legal
services and all disbursements of internal counsel)) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive the expiration or termination of the
Credit and payment of the Notes and other liabilities of the Company hereunder
and the resignation or replacement of the Agent.
For the purposes of this Section 12.7, "Indemnified Liabilities" shall
mean: "any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
reasonable fees of attorneys for the Agent (including the allocable costs of
internal legal services and all disbursements of internal counsel)) of any kind
or nature whatsoever which may at any time (including at any time following
repayment of the Advances and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
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contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including (a) any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code or appellate proceeding) related to or arising
out of this Agreement or the Advances or the use of the proceeds thereof,
whether or not any Agent-Related Person, any Bank or any of their respective
officers, directors, employees, counsel, agents or attorneys-in-fact is a party
thereto."
12.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that, pursuant
to such activities, BofA or its Affiliates may receive information regarding the
Company or its Affiliates (including information that may be subject to
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confidentiality obligations in favor of the Company or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to their Loans, BofA and its Affiliates
shall have the same rights and powers under this Agreement as any other Bank
and may exercise the same as though BofA were not the Agent, and the terms
"Bank" and "Banks" include BofA and its Affiliates, to the extent applicable,
in their individual capacities.
12.9 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If the
Agent resigns under this Agreement, the Majority Banks shall appoint from among
the Banks a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Banks and the Company, a successor agent from
among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 12 and Section 14.3 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of resignation, the
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retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above.
12.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Forms 1001 and W 8 before the payment of any interest in the first
calendar year and before the payment of any interest in each third
succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two
properly completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of such Bank
and in each succeeding taxable year of such Bank during which interest
may be paid under this Agreement, and IRS Form W 9; and
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(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Company to such Bank, such Bank agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Company to such
Bank, such Bank agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the
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applicable withholding tax after taking into account such reduction. If the
forms or other documentation required by subsection (a) of this Section are not
delivered to the Agent, then the Agent may withhold from any interest payment
to such Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts paid, directly
or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including reasonable fees of attorneys for the Agent (including the allocable
costs of internal legal services and all disbursements of internal counsel)).
The obligation of the Banks under this subsection shall survive the expiration
or termination of the Credit and payment of the Notes and other liabilities of
the Company hereunder and the resignation or replacement of the Agent.
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13. ASSIGNMENT AND ASSUMPTION.
Effective upon the Pending Reorganization, (a) NSU shall without
further act or deed of the parties hereto, be entitled to all of the benefits
and rights of the Company under this Agreement, the Notes and all documents
executed and delivered by the Company pursuant thereto (collectively, the "Loan
Documents"), (b) NSU shall, and it hereby does without further act or deed of
the parties hereto unconditionally and expressly, (i) assume all liabilities and
obligations of the Company under the Loan Documents and (ii) agree to perform
all liabilities and obligations of the Company under said Loan Documents, as if
said Loan Documents were originally executed and delivered by NSU, and (c) all
references in the Loan Documents to the "Company" shall refer to NSU except for
references to the Company relating to its status prior to the consummation of
the Pending Reorganization. NSU shall effective upon the Pending Reorganization
change its name to "Michael Foods, Inc." and give immediate notice of the
effectiveness thereof to the Agent. Upon (i) such notice and (ii) the delivery
to the Agent of an opinion of Maun & Simon, PLC, counsel to NSU upon the
consummation of the Pending Reorganization, addressed to the Agent and the Banks
and dated as of the effective date of the Pending Reorganization, in
substantially the form of Exhibit H, and so long as no Event of Default or
Unmatured Event of Default shall then have occurred and be continuing, Old
Michael shall be released from all liabilities and obligations under the Loan
Documents. As of the effectiveness of the Pending Reorganization, NSU
represents,
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warrants and affirms that each of the representations and warranties contained
in Section 7 of this Agreement is true and correct as of the effective date of
the Pending Reorganization.
14. GENERAL.
14.1 Delay. No delay on the part of any Bank or the holder of any
Note in the exercise of any power or right shall operate as a waiver thereof,
nor shall any single or partial exercise of any power or right preclude other or
further exercise thereof, or the exercise of any other power or right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
14.2 Notice. Any notice between the parties hereto or notices
provided herein to be given shall be in writing (unless otherwise provided
herein) and, if mailed, shall be deemed to be given when sent by registered or
certified mail, postage prepaid, and addressed to the Company, the Agent or the
Banks at the respective address set forth on the signature pages hereof.
14.3 Expenses. The Company agrees, whether or not any Advance is
made hereunder, to pay the Agent and the Banks upon demand for all reasonable
expenses, including reasonable fees of attorneys for the Agent and the Banks
(who may be employees of the Agent and the Banks), incurred by (i) the Agent in
connection with the preparation, negotiation and execution of this Agreement,
the Notes and any document required to be furnished therewith, (ii) the Agent in
connection with the preparation of any and all amendments to this Agreement or
the Notes and all other instruments or
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documents provided for herein or delivered or to be delivered hereunder or in
connection herewith, and (iii) the Agent and the Banks in connection with the
enforcement of the Company's obligations hereunder or under any Note. The
Company also agrees (iv) to indemnify and hold the Agent harmless from any loss
or expense which may arise or be created by the acceptance of telephonic or
other instructions for making Advances and (v) to pay, and save the Agent and
the Banks harmless from all liability for, any stamp or other taxes which may be
payable with respect to the execution or delivery of this Agreement or the
issuance of the Notes or of any other instruments or documents provided for
herein or to be delivered hereunder or in connection herewith. The Company
further agrees to indemnify, defend, reimburse and hold harmless the Agent, each
Bank and all directors, officers, employees, agents and advisors of the Agent
and the Banks (each, an "Indemnified Party") from and against all claims,
actions, proceedings, suits, damages, losses, liabilities, costs and expenses,
including the reasonable fees and expenses of counsel (who may be employees of
the Agent and the Banks), which may be incurred by or asserted against any
Indemnified Party in connection with, or arising out of, or relating to, any
transaction or proposed transaction (whether or not consummated) financed or to
be financed, in whole or in part, directly or indirectly with the proceeds of
any Advance(s), provided such Indemnified Party has acted in good faith and is
not in breach of this Agreement. The
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Company's obligations as set forth in this section shall survive any
termination of this Agreement.
14.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
14.5 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but one and the
same instrument.
14.6 Investment. Each Bank represents and warrants that: (i) it is
acquiring any Note to be issued to it hereunder for its own account as a result
of making loans in the ordinary course of its commercial banking business and
not with a view to the public distribution or sale thereof, nor with any present
intention of selling or distributing such Note, but subject, nevertheless, to
any legal or administrative requirement that the disposition of such Bank's
property at all times be within its control and (ii) in good faith it has not
and will not rely upon any margin stock (as such term is defined in Regulation U
of the Board of Governors of the Federal Reserve System) as collateral in the
making and maintaining of the Advances.
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14.7 U.S. Withholding Tax Exemptions. Each Bank represents that, on
the date of this Agreement, either (a) it is a bank organized under the laws of
the United States or any state thereof or (b) if it is not a bank organized
under the laws of the United States or any state thereof, it is entitled to
complete exemption from United States withholding tax imposed on or with respect
to payment of principal, interest and fees under this Agreement and the Notes
under an applicable provision of a tax convention to which the United States is
a party and either (i) it is entitled to complete exemption from United States
withholding tax imposed on or with respect to payments of principal, interest
and fees under this Agreement and the Notes under an applicable provision of a
tax convention to which the United States is a party or (ii) it is acting
through a branch, agency or office in the United States (including only the
states and the District of Columbia) and any payment received or to be received
by it with respect to payments of principal, interest and fees under this
Agreement and the Notes is effectively connected with the conduct of a trade or
business in the United States.
14.8 Law. This Agreement and each Note shall be contracts made under
and governed by the laws of the State of Illinois.
14.9 Successors. This Agreement shall be binding upon the Company,
the Banks and the Agent and their respective successors and assigns, and shall
inure to the benefit of the Company, the Banks and the Agent and the successors
and assigns of
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the Banks and the Agent. The Company shall not assign its rights or duties
hereunder without the consent of the Banks.
14.10 Amendments. No amendment or waiver of any provision of this
Agreement or the Notes, nor consent to any departure therefrom by the Company
shall be effective unless the same shall be in writing and signed by the Company
and the Majority Banks, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Banks, do any of the following: (a) waive any of the
conditions specified in Sections 9 and 10, (b) increase the amounts or extend
the terms of the Banks' Commitments or subject the Banks to any additional
obligations, (c) reduce the principal of, or interest on, the Notes or any fees
hereunder, (d) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees hereunder, (e) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Banks which shall be required to take action hereunder, or (f) change
any provisions of this Section 14.10; provided, further, that no amendment,
waiver or consent to Section 12 shall be effective unless signed by the Agent.
14.11 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Company at all
times other than during the existence of an Event of Default and the Agent,
which consents shall not be unreasonably
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withheld, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company or the Agent shall be required
in connection with any assignment and delegation by a Bank to an Eligible
Assignee that is an affiliate of such Bank) (each an "Assignee") all, or any
ratable part of all, of the Advances, its Commitment hereunder and the other
rights and obligations of such Bank hereunder, in a minimum amount of
$5,000,000; provided, however, that the Company and the Agent may continue to
deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Agent by such Bank and
the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance in the form of Exhibit G
("Assignment and Acceptance") and (iii) the assignor Bank or Assignee has paid
to the Agent a processing fee in the amount of $2,500. The Company shall not be
responsible for reimbursing any costs related to any assignment hereunder.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of
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a Bank under this Agreement and the Notes, and (ii) the assignor Bank shall, to
the extent that rights and obligations hereunder and under the Notes have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement and the Notes.
(c) Within five Banking Days after its receipt of notice by the Agent
that it has received an executed Assignment and Acceptance and payment of the
processing fee, (and provided that it consents to such assignment in accordance
with subsection 14.11), the Company shall execute and deliver to the Agent, new
Notes evidencing such Assignee's assigned Advances and Commitment and, if the
assignor Bank has retained a portion of its Advances and its commitment,
replacement Notes in the principal amount of the Advances retained by the
assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce the Commitment
of the assigning Bank by the amount of the Commitment assigned.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "Participant") participating
interests in any Advances, the Commitment of that Bank and the other interests
of that Bank (the
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"Originating Bank") hereunder and under the Notes; provided, however, that (i)
the Originating Bank's obligations under this Agreement shall remain unchanged,
(ii) the Originating Bank shall remain solely responsible for the performance of
such obligations, (iii) the Company and the Agent shall continue to deal solely
and directly with the Originating Bank in connection with the Originating Bank's
rights and obligations under this Agreement and the Notes, and (iv) no Bank
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any Note, except to the extent such amendment, consent or
waiver would require unanimous consent of the Banks. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 6
and 14.3 as though it were also a Bank hereunder, but shall not have any rights
under this Agreement, or any of the Notes, and all amounts payable by the
Company hereunder shall be determined as if such Bank had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement.
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(e) Notwithstanding any other provision in this Agreement, any Bank may at
any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement and any Note held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.12 WAIVER OF JURY TRIAL. THE COMPANY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (i) UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR (ii) ARISING FROM
ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed at Chicago, Illinois by their respective officers thereunto duly
authorized as of the date first written above.
MICHAEL FOODS, INC.
By: /s/ John Reedy
-----------------------------
Title: VICE PRESIDENT -FINANCE
--------------------------
Address: 324 Park National
Bank Building
5353 Wayzata Boulevard
Minneapolis, MN 55416
S-1
96
For the purposes of Section 13
only, NORTH STAR UNIVERSAL, INC.
By: /s/ Peter E. Flynn
-----------------------------
Title: EVP/CFO
--------------------------
Address: 6479 City West Parkway
Eden Prairie, Minnesota
55344-3246
S-2
97
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as agent
By: /s/ R. Guy Stapleton
-----------------------------
Title: R. Guy Stapleton
Managing Director
--------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
S-3
98
Amount of
Commitment Share
$25,000,000 31.25% BANK OF AMERICA ILLINOIS
By: /s/ R. Guy Stapleton
-----------------------------
Title: R. Guy Stapleton
Managing Director
--------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
S-4
99
Amount of
Commitment Share
$20,000,000 25.00% COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND"
By: /s/ W. Jeffrey Vollack
Vice President, Manager
------------------------------
By: /s/ Angela R. Reilly
Vice President
------------------------------
Address: 245 Park Avenue
New York, New York 10167
S-5
100
Amount of
Commitment Share
$15,000,000 18.75% BOATMEN'S NATIONAL BANK
By: /s/ Ellen M. Isch
--------------------------
Title: VP
-----------------------
Address: 10th & Baltimore
Kansas City, Missouri
64105
S-6
101
Amount of
Commitment Share
$10,000,000 12.50% NORWEST BANK MINNESOTA, N.A.
By: /s/ Perry T. Larson
-----------------------------
Title: Vice President
--------------------------
Address: Norwest Center
Sixth and Marquette Ave.
Minneapolis, MN 55479-
0079
S-7
102
Amount of
Commitment Share
$10,000,000 12.50% THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
By: /s/ Armund J. Schoen
----------------------------------
Title: V.P. & Deputy General Manager
-------------------------------
Address: 190 S. LaSalle Street
Suite #800
Chicago, Illinois 60603
S-8
103
EXHIBIT A
REVOLVING NOTE
$____________ Chicago, Illinois: February 28, 1997
FOR VALUE RECEIVED, the undersigned MICHAEL FOODS, INC. (the
"Company") hereby promises to pay to the order of _____________ (the "Bank") on
the Termination Date (as such term is defined in the Revolving Loan Agreement
hereinafter referred to), the principal sum of _______ DOLLARS ($________), or
if less, the then aggregate unpaid principal amount of all Domestic Advances
and Eurodollar Advances (as such terms are defined in the Revolving Loan
Agreement) as may be borrowed by the Company under the Revolving Loan
Agreement. The Company may borrow, repay and reborrow hereunder in accordance
with the provisions of the Revolving Loan Agreement.
The Company promises to pay interest on the unpaid principal amount of
the Advances from time to time outstanding from the date hereof until payment
in full at the rates per annum which shall be determined in accordance with the
provisions of the Revolving Loan Agreement. Said interest shall be payable on
each date provided for in the Revolving Loan Agreement; provided, however, that
interest on any principal portion which is not paid when due shall be payable
on demand.
The portions of the principal sum hereof from time to time
representing Domestic Advances or Eurodollar Advances, and payments of
principal thereof, shall be noted by the holder of this Note on the grid
schedule attached hereto.
All payments of principal and interest under this Note shall be made
in immediately available funds at the office of Bank of America National Trust
and Savings Association ("BofA") at 231 South LaSalle Street, Chicago, Illinois
60697 or at such other address as BofA shall notify the Company in writing.
This Note is one of the Notes referred to in, and is subject to the
terms and provisions of, the Revolving Loan Agreement dated as of February 28,
1997 (as the same may be amended, modified or supplemented from time to time,
herein called the "Revolving Loan Agreement") among the Company, certain banks
(including the Bank) and BofA, as Agent, to which Revolving Loan Agreement
reference is hereby made for a statement of said terms and provisions. The
Company expressly waives any presentment, demand, protest or notice in
connection with this Note.
104
This Note is made under and governed by the internal laws of the State of
Illinois
Address: 324 Park National MICHAEL FOODS, INC.
Bank Building
5353 Wayzata Boulevard By:___________________
Minneapolis, MN 55416
Title:________________
A-2
105
Schedule attached to Note dated as of February 28, 1997 of MICHAEL FOODS, INC.,
payable to the order of ________________.
ADVANCES AND PRINCIPAL PAYMENTS
======================================================================================================
Date Amount of Type of Advance & Amount of Unpaid Notation Made
Advance Made Applicable Principal Principal by
Interest Rate Repaid Balance
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
======================================================================================================
The aggregate unpaid principal amount shown on this schedule shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on
this Note. The failure to record the date and amount of any advance on this
schedule shall not, however, limit or otherwise affect the obligations of the
Company under the Revolving Loan Agreement or under this Note to repay the
principal amount of the advances together with all interest accruing thereon.
A-3
106
1. Michael Foods, Inc. and North Carolina State University vs.
Papetti's Hygrade Egg Products, Inc., U.S. District Court for the District of
New Jersey, File No. 89-4645. This action arises out of the alleged breach by
the Defendant of certain patents owned by North Carolina State University and
licensed to the Company. The Company obtained summary judgment affirming the
validity of one of the patents and finding the defendant to have infringed the
patent. This judgment was affirmed on appeal to the Federal Circuit Court of
Appeals. Discovery on the question of damages had been suspended pending a
reexamination of the patent in the Patent Office. As a condition precedent to
the acquisition of the Papetti Companies (including the Defendant herein), this
litigation was dismissed.
2. NuLaid Foods, Inc. vs. Michael Foods, Inc. and North Carolina
State University, U.S. District Court for the Eastern District of California,
Civil Action No. CIV-S-93-1319 WBS JFM. This is an action commenced by NuLaid
Foods, Inc. seeking a declaratory judgment that the patents which are the
subject of the patent litigation described in No. 1 above are invalid. The
Company and North Carolina State University have counterclaimed for
infringement of the patent by the Plaintiff. Further proceedings in this
litigation have been stayed pending a reexamination of the patent in the Patent
Office.
3. Schwan's Sales Enterprises, Inc. vs. Kohler Mix Specialties,
Inc., et. al., Lyon County District Court, 5th Judicial District, File No.
C6-95-357. In May, 1995 an action was commenced against the Company's
subsidiary, Kohler Mix Specialties, Inc. ("Kohler Mix") and certain other
parties by Schwan's Sales Enterprises, Inc. ("Schwan's") seeking recovery of
damages arising out of alleged salmonella contamination of Schwan's ice cream
that had been distributed to the public in the summer and fall of 1994.
Following an investigation by Schwan's and various governmental agencies, it
was determined that Schwan's ice cream product evidenced the presence of
salmonella bacteria. Schwan's operations were interrupted for a period of time
and Schwan's has made settlements with customers who claimed injury from
consuming Schwan's ice cream. Kohler Mix and others supplied ice cream mix to
Schwan's in tanker trucks operated by the same transporter during the time in
question. The complaint seeks to recover all or a portion of the loss
sustained by Schwan's as a result of the incident. Discovery is on-going. A
mediation conference is scheduled for April, 1997. The Company's and Kohler
Mix's products liability carrier, Liberty Mutual Insurance Company has
undertaken defense of the litigation without waiving coverage defenses.
Underlying insurance and excess insurance provides $55,000,000 in coverage.
EXHIBIT B
107
EXHIBIT C
LIENS SECURING INDEBTEDNESS OF THE COMPANY AND ITS SUBSIDIARIES
============================================================================================
Amount of
Obligor Obligee Nature of Indebtedness
Security Secured
============================================================================================
Kohler Mix City of White Bear Utility Assessments $ 14,200.00
Specialties Lake
--------------------------------------------------------------------------------------------
Northern Star Ryder Tractor/Trailers $ 67,149.00
Company
--------------------------------------------------------------------------------------------
M.G. Waldbaum Erwin and Delores Real estate $ 54,164.00
Company Siebrandt
--------------------------------------------------------------------------------------------
M.G. Waldbaum Bloomfield Real estate $211,362.00
Company Community
Development
============================================================================================
============================================================================================
Casa Trucking, Inc. Fleet Capital Tractor/Trailers $600,000.00
Leasing
--------------------------------------------------------------------------------------------
Papetti's Hygrade City of Lenox, Iowa Jobs Training $350,000.00
Egg Products, Inc. Agreement
--------------------------------------------------------------------------------------------
Papetti's Hygrade First Union Tractor/Trailers $677,000.00
Egg Products, Inc. Commercial
Corporation
============================================================================================
108
COMPANY SUBSIDIARIES
SUBSIDIARY NAME JURISDICTION
Crystal Farms Refrigerated
Distribution Company Minnesota
M.G. Waldbaum Company Nebraska
Including:
Papetti's Hygrade Egg
Products, Inc. Minnesota
Casa Trucking, Inc. Minnesota
Farm Fresh Foods, Inc. California
Drallos Potato Co., Inc. Michigan
Kohler Mix Specialties, Inc. Minnesota
Including:
Midwest Mix, Inc. Minnesota
Northern Star Co. Minnesota
Including:
Minnesota Products, Inc. Minnesota
B.C.K. Co. Minnesota
WFC, Inc. Wisconsin
Including:
Wisco Farm Cooperative Wisconsin
MIKLFS Corporation Virgin Islands
EXHIBIT D
109
EXHIBIT E
NONE
110
EXHIBIT F
FORM OF OPINION OF COUNSEL*
_______________, 1997
Bank of America National Trust
and Savings Association, as agent
and the Banks referred to below
231 South LaSalle Street
Chicago, Illinois 60697
Re: Michael Foods, Inc.
Ladies and Gentlemen:
We have acted as counsel to Michael Foods, Inc. (the "Company") and
North Star Universal, Inc. ("NSU"), and we are delivering to you this opinion
of counsel upon which you may rely, in connection with a Revolving Loan
Agreement, dated as of _______, 1997, entered into between the Company, Bank of
America National Trust and Savings Association, as Agent and certain banks (the
"Banks") (the "Revolving Loan Agreement"), and the transactions and other
documents and instruments described therein. Unless otherwise defined herein,
capitalized terms used herein shall have the respective meanings assigned to
such terms in the Revolving Loan Agreement.
In so acting, we, as counsel to the Company and NSU have made such
factual inquiries, and we have examined or caused to be examined such questions
or law, as we have considered necessary or appropriate for the purposes of this
opinion and, upon the basis of such inquiries and examinations, advise you
that, in our opinion:
1. NSU and the Company, and each of their Subsidiaries are
corporations duly organized, validly existing and in good standing under the
laws of the state of their respective incorporation, and each is duly qualified
and in good standing as a foreign corporation in all other jurisdictions in
which its respective present operations or properties require such
qualification.
__________________________________
* This opinion, as it relates to North Star Universal, Inc. may be given
by separate counsel.
111
2. NSU and the Company have full corporate power and authority to
own and operate their properties and assets, carry on its business as presently
conducted, and enter into and perform its obligations under the Revolving Loan
Agreement and the Notes.
3. The execution and delivery of the Revolving Loan Agreement and
the Notes, the performance by the Company and NSU of their obligations
thereunder, and the borrowings under the Revolving Loan Agreement, have been
duly authorized by all necessary corporate action, and all of said documents
and instruments have been duly executed and delivered on behalf of the Company
and NSU and constitute valid and binding obligations of the Company and NSU,
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
4. There is no provision in the Company's or NSU's articles of
incorporation or by-laws, nor any provision in any indenture, mortgage,
contract or agreement known to us to which the Company or NSU is a party or by
which it or its properties may be bound, nor any law, statute, rule or
regulation, nor any writ, order or decision of any court or governmental
instrumentality binding on the Company or NSU, which would be contravened by
the execution and delivery of the Revolving Loan Agreement or the Notes, nor do
any of the foregoing prohibit the Company's or NSU's performance of any term,
provision, condition, covenant or any other obligation of the Company or NSU
contained therein.
5. There are no actions, suits or proceedings pending or, to the
best of our knowledge after due inquiry, threatened against or affecting the
Company or NSU before any court or arbitrator or by or before any
administrative agency or governmental authority, which, if adversely
determined, would have a material adverse effect on the Company's or NSU's
financial condition or business or the Company's or NSU's ability to perform or
otherwise comply with its obligations set forth in the Revolving Loan Agreement
or the Notes.
6. Neither the making nor performance of the Revolving Loan
Agreement or the Notes, nor the borrowings under the Revolving Loan Agreement
or the Notes, requires the consent or approval of any governmental
instrumentality.
7. Neither NSU or the Company is an "investment company" or a
company "controlled" by an "investment company" within the meanings of the
Investment Company Act of 1940, as amended.
F-2
112
8. Neither the Company nor NSU is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock within
the meaning of Regulation U of the Federal Reserve Board.
Very truly yours,
F-3
113
EXHIBIT G
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, 199__ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain
Revolving Loan Agreement dated as of February 28, 1997 (as amended, amended and
restated, modified, supplemented or renewed, the "Credit Agreement") among
Michael Foods, Inc., a Delaware corporation (the "Company"), the several
financial institutions from time to time party thereto (including the Assignor,
the "Banks"), and Bank of America National Trust and Savings Association, as
agent for the Banks (the "Agent"). Any terms defined in the Credit Agreement
and not defined in this Assignment and Acceptance are used herein as defined in
the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Committed Loans") to the Company in an
aggregate amount not to exceed $__________ (the "Commitment");
WHEREAS, [the Assignor has made Committed Loans in the
aggregate principal amount of $__________ to the Company] [no Committed Loans
are outstanding under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part
of the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitment, in an amount equal to $__________ (the "Assigned
Amount") on the terms and subject to the conditions set forth herein and the
Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
114
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this
Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns
to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty
(except as provided in this Assignment and Acceptance) __% (the "Assignee's
Percentage Share") of (A) the Commitment [and the Committed Loans] of the
Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit Agreement
and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor
by Assignee of outstanding principal of, accrued interest on, and fees with
respect to, Committed Loans assigned.]
(b) With effect on and after the Effective Date (as
defined in Section 5 hereof), the Assignee shall be a party to the Credit
Agreement and succeed to all of the rights and be obligated to perform all of
the obligations of a Bank under the Credit Agreement, including the payment of
indemnification, with a commitment in an amount equal to the Assigned Amount.
The Assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank. It is the intent of the parties hereto that the
Commitment of the Assignor shall, as of the Effective Date, be reduced by an
amount equal to the Assigned Amount and the Assignor shall relinquish its
rights and be released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee; provided, however,
the Assignor shall not relinquish its rights under Section 14.13 of the Credit
Agreement to the extent such rights relate to the time prior to the Effective
Date.
(c) After giving effect to the assignment and assumption
set forth herein, on the Effective Date the Assignee's commitment will be
$__________.
(d) After giving effect to the assignment and assumption
set forth herein, on the Effective Date the Assignor's commitment will be
$__________.
2. Payments.
(a) As consideration for the sale, assignment and
transfer contemplated in Section 1 hereof, the Assignee shall pay to the
Assignor on the Effective Date in immediately available
G-2
115
funds an amount equal to $__________, representing the Assignee's pro rata
share of the principal amount of all Committed Loans.
(b) The [Assignor] [Assignee] further agrees to pay to
the Agent a processing fee in the amount specified in Section 14.11(a) of the
Credit Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment and Committed Loans shall be for the account of
the Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Amount shall be for the account of
the Assignee. Each of the Assignor and the Assignee agrees that it will hold
in trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding sentence
and pay to the other party any such amounts which it may receive promptly upon
receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with copies
of the most recent financial statements referred to in Section 8.1 of the
Credit Agreement, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter
into this Assignment and Acceptance; and (b) agrees that it will, independently
and without reliance upon the Assignor, the Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the
effective date for this Assignment and Acceptance shall be __________, 199__
(the "Effective Date"); provided that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be
executed and delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Agent
required for an effective assignment of the Assigned Amount by the Assignor to
the Assignee under Section 14.11(a) of the Credit
G-3
116
Agreement shall have been duly obtained and shall be in full force and effect
as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Assignment and Acceptance; and
(iv) the processing fee referred to in Section 2(b) hereof
and in Section 14.11(a) of the Credit Agreement shall have been paid to the
Agent.
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgement by the Agent, a Notice of Assignment substantially in the form
attached hereto as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to
take such action as agent on its behalf and to exercise such powers under the
Credit Agreement as are delegated to the Agent by the Banks pursuant to the
terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations
held by the Assignor in its capacity as Agent under the Credit Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Bank, the Agent and the
Company that under applicable law and treaties no tax will be required to be
withheld by the Bank with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent and
the Company prior to the time that the Agent or Company is required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a
tax treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by the Assignee, and (c) agrees to comply
with all applicable U.S. laws and regulations with regard to such withholding
tax exemption.
G-4
117
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim; (ii) it is
duly organized and existing and it has the full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company, or the performance or observance by the Company, of any of its
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by
G-5
118
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; (iii)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee,
enforceable against the Assignee in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights
and to general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own
costs and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS. The
Assignor and the Assignee each irrevocably submits to the non-exclusive
jurisdiction of any State or Federal court sitting in Illinois over any suit,
action or proceeding arising
G-6
119
out of or relating to this Assignment and Acceptance and irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such Illinois State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH 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 ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR
STATEMENTS (WHETHER ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
--------------------------
Title:
------------------------
By:
---------------------------
Title:
------------------------
Address:
G-7
120
[ASSIGNEE]
By:
----------------------------
Title:
-------------------------
By:
----------------------------
Title:
-------------------------
Address:
G-8
121
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 19__
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Global Agency #5596
Michael Foods, Inc.
324 Park National Bank Building
5353 Wayzata Boulevard
Minneapolis, MN 55416
Ladies and Gentlemen:
We refer to the Revolving Credit Agreement dated as of February 27,
1997 (as amended, amended and restated, modified, supplemented or renewed from
time to time the "Credit Agreement") among Michael Foods, Inc., (the
"Company"), the Banks referred to therein and Bank of America National Trust
and Savings Association as agent for the Banks (the "Agent"). Terms defined in
the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and
to the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor[,] [and] all
outstanding Loans made by the Assignor pursuant to the Assignment and
Acceptance Agreement attached hereto (the "Assignment and Acceptance"). Before
giving effect to such assignment the Assignor's Commitment is $ ___________[,]
[and] the aggregate amount of its outstanding Loans is $_____________.
2. The Assignee agrees that, upon receiving the consent of the
Agent, and, if applicable, Michael Foods, Inc. to such assignment, the Assignee
will be bound by the terms of the Credit Agreement as fully and to the same
extent as if the Assignee were the Bank originally holding such interest in the
Credit Agreement.
122
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:___________________________
Address:_________________________________
Attention: _____________________________
Telephone: (___) _______________________
Telecopier: (___) ______________________
Telex (Answerback):______________________
(B) Payment Instructions:
Account No.:_____________________________
At: _____________________________
_____________________________
Reference: _____________________________
Attention: _____________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
Title:_______________________
By:__________________________
Title:_______________________
[NAME OF ASSIGNEE]
By:__________________________
Title:_______________________
-2-
123
By:____________________________
Title:_________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
MICHAEL FOODS, INC.
By: _____________________________
Title: __________________________
By: _____________________________
Title: __________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: __________________________
Its: _________________________
-3-