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EXHIBIT 10(q)
LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 16, 1998
AMONG
THORN APPLE VALLEY, INC.,
AS BORROWER,
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
AS ADMINISTRATIVE AGENT AND AS A LENDER,
HELLER FINANCIAL, INC.,
AS COLLATERAL AGENT, AS DOCUMENTATION AGENT AND AS A LENDER,
HARRIS TRUST AND SAVINGS BANK,
AS CO-AGENT AND AS A LENDER,
AND THE OTHER LENDERS FROM TIME TO TIME PARTY HERETO
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS...........................................................................................2
1.1. Certain Defined Terms...............................................................................2
1.2. Accounting Terms...................................................................................24
1.3. Other Definitional Provisions......................................................................24
SECTION 2. LOANS AND COLLATERAL.................................................................................25
2.1. Loans..............................................................................................25
2.2. Interest...........................................................................................39
2.3. Fees...............................................................................................41
2.4. Payments and Prepayments...........................................................................43
2.5. Term of this Agreement.............................................................................45
2.6. Statements.........................................................................................45
2.7. Grant of Security Interest.........................................................................46
2.8. Capital Adequacy and Other Adjustments.............................................................46
2.9. Taxes..............................................................................................47
2.10. Required Termination and Prepayment...............................................................49
2.11. Optional Prepayment/Replacement of Agents or Lenders in Respect of Increased Costs................49
2.12. Compensation......................................................................................50
2.13. Booking of LIBOR Loans............................................................................50
2.14. Assumptions Concerning Funding of LIBOR Loans.....................................................50
SECTION 3. CONDITIONS TO LOANS AND LENDER LETTERS OF CREDIT.....................................................51
3.1. Conditions to Initial Funding......................................................................51
3.2. Conditions to All Fundings.........................................................................51
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES............................................................53
4.1. Organization, Powers, Capitalization...............................................................53
4.2. Authorization of Borrowing, No Conflict............................................................54
4.3. Financial Condition................................................................................54
4.4. Indebtedness and Liabilities.......................................................................54
4.5. Account Warranties.................................................................................54
4.6. Names..............................................................................................55
4.7. Locations; FEIN....................................................................................55
4.8. Title to Properties; Liens.........................................................................55
4.9. Litigation; Adverse Facts..........................................................................55
4.10. Payment of Taxes..................................................................................56
4.11. Performance of Agreements.........................................................................56
4.12. Employee Benefit Plans............................................................................56
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4.13. Intellectual Property.............................................................................56
4.14. Broker's Fees.....................................................................................56
4.15. Environmental Compliance..........................................................................57
4.16. Solvency..........................................................................................58
4.17. Disclosure........................................................................................58
4.18. Insurance.........................................................................................59
4.19. Compliance with Laws..............................................................................59
4.20. Bank Accounts.....................................................................................59
4.21. Subsidiaries......................................................................................59
4.22. Employee Matters..................................................................................59
4.23. Governmental Regulation...........................................................................60
SECTION 5. AFFIRMATIVE COVENANTS................................................................................60
5.1. Financial Statements and Other Reports.............................................................60
5.2. Access to Accountants and Management...............................................................65
5.3. Inspection.........................................................................................65
5.4. Collateral Records.................................................................................66
5.5. Account Covenants; Verification....................................................................66
5.6. Collection of Accounts and Payments................................................................66
5.7. Endorsement........................................................................................67
5.8. Corporate Existence................................................................................67
5.9. Payment of Taxes...................................................................................67
5.10. Maintenance of Properties.........................................................................68
5.11. Compliance with Laws..............................................................................68
5.12. Further Assurances................................................................................68
5.13. Collateral Locations..............................................................................68
5.14. Bailees...........................................................................................69
5.15. Mortgages; Title Insurance; Surveys...............................................................69
5.16. Use of Proceeds and Margin Security...............................................................70
5.17. Compliance with PASA and PPFPA....................................................................70
5.18. Insurance.........................................................................................70
5.19. Environmental Reports.............................................................................72
5.20. Compliance with FSA...............................................................................72
5.21. Authorized Stock..................................................................................73
SECTION 6. FINANCIAL COVENANTS..................................................................................73
6.1. Net Worth..........................................................................................73
6.2. EBITDA.............................................................................................73
6.3. Capital Expenditure Limits.........................................................................74
6.4. Fixed Charge Coverage..............................................................................74
6.5. Availability.......................................................................................74
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SECTION 7. NEGATIVE COVENANTS...................................................................................74
7.1. Indebtedness and Liabilities.......................................................................75
7.2. Guaranties.........................................................................................75
7.3. Transfers, Liens and Related Matters...............................................................76
7.4. Investments and Loans..............................................................................77
7.5. Restricted Junior Payments.........................................................................77
7.6. Restriction on Fundamental Changes.................................................................77
7.7. Changes Relating to Subordinated Debt..............................................................77
7.8. Transactions with Affiliates.......................................................................78
7.9. Environmental Liabilities..........................................................................78
7.10. Conduct of Business...............................................................................78
7.11. Compliance with ERISA.............................................................................78
7.12. Tax Consolidations................................................................................78
7.13. Subsidiaries......................................................................................79
7.14. Fiscal Year.......................................................................................79
7.15. Press Release; Public Offering Materials..........................................................79
7.16. Bank Accounts.....................................................................................79
7.17. Certain Salaries..................................................................................79
SECTION 8. DEFAULT, RIGHTS AND REMEDIES.........................................................................79
8.1. Event of Default...................................................................................79
8.2. Suspension of Commitments..........................................................................83
8.3. Acceleration.......................................................................................83
8.4. Remedies...........................................................................................83
8.5. Appointment of Attorney-in-Fact....................................................................84
8.6. Limitation on Duty with Respect to Collateral......................................................85
8.7. Application of Proceeds............................................................................85
8.8. License of Intellectual Property...................................................................85
8.9. Waivers, Non-Exclusive Remedies....................................................................86
SECTION 9. AGENTS...............................................................................................86
9.1. Agents.............................................................................................86
9.2. Notice of Default..................................................................................92
9.3. Action by Agents...................................................................................92
9.4. Amendments, Waivers and Consents...................................................................92
9.5. Assignments and Participations in Loans............................................................93
9.6. Set Off and Sharing of Payments....................................................................95
9.7. Disbursement of Funds..............................................................................95
9.8. Settlements, Payments and Information..............................................................96
9.9. Dissemination of Information.......................................................................97
9.10. Discretionary Advances............................................................................97
9.11. Documentation Agent and Co-Agent..................................................................97
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SECTION 10. MISCELLANEOUS.......................................................................................98
10.1. Expenses and Attorneys' Fees......................................................................98
10.2. Indemnity.........................................................................................98
10.3. Notices...........................................................................................99
10.4. Survival of Warranties and Certain Agreements....................................................100
10.5. Indulgence Not Waiver............................................................................101
10.6. Marshaling; Payments Set Aside...................................................................101
10.7. Entire Agreement.................................................................................101
10.8. Severability.....................................................................................101
10.9. Lenders' Obligations Several; Independent Nature of Lenders' Rights..............................102
10.10. Headings........................................................................................102
10.11. APPLICABLE LAW..................................................................................102
10.12. Successors and Assigns..........................................................................102
10.13. No Fiduciary Relationship; Limitation of Liabilities............................................102
10.14. CONSENT TO JURISDICTION.........................................................................103
10.15. WAIVER OF JURY TRIAL............................................................................103
10.16. Construction....................................................................................104
10.17. Counterparts; Effectiveness.....................................................................104
10.18. Confidentiality.................................................................................104
10.19. Illinois Collateral Protection Act..............................................................105
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is dated as of April 16, 1998
and entered into among THORN APPLE VALLEY, INC., a Michigan corporation
("Borrower"), with its principal place of business at 26999 Central Park
Boulevard, Suite 300, Southfield, Michigan 48076, the financial institutions
listed on the signature pages hereof and their respective successors and
assignees who are eligible Assignees and have executed an Assignment and
Assumption Agreement which has been accepted by Agents (as defined below) (each
individually a "Lender" and collectively "Lenders"), COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH, a New
York state chartered bank (in its individual capacity, "Rabobank"), with offices
at 245 Park Avenue, New York, New York 10167, for itself as a Lender and as
Administrative Agent for the Lenders, HELLER FINANCIAL, INC., a Delaware
corporation (in its individual capacity, "Heller"), with offices at 500 West
Monroe Street, Chicago, Illinois 60661, for itself as a Lender, as Collateral
Agent for the Lenders and as Documentation Agent for the Lenders and HARRIS
TRUST AND SAVINGS BANK (in its individual capacity, "Harris"), with offices at
111 West Monroe Street, Chicago, Illinois 60690, for itself as a Lender and as
Co-Agent for the Lenders. All capitalized terms used herein are defined in
Section 1 of this Agreement.
WHEREAS, Borrower desires that Lenders extend a credit
facility to provide working capital financing and to provide funds for other
general corporate purposes; and
WHEREAS, Borrower desires to secure its obligations under the
Loan Documents by granting to Collateral Agent, for the benefit of Agents and
Lenders, a security interest in and lien upon substantially all of the real and
personal property of Borrower; and
WHEREAS, each Subsidiary of Borrower (collectively, "Corporate
Guarantors") is willing to guaranty all of the obligations of Borrower to Agents
and Lenders under the Loan Documents and to grant to Collateral Agent, for the
benefit of Agents and Lenders, a security interest in substantially all of the
real and personal property of such Corporate Guarantor to secure such guaranty;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Borrower, Agents and
Lenders agree as follows:
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SECTION 1. DEFINITIONS
1.1. Certain Defined Terms.
The following terms used in this Agreement shall have the
following meanings:
"Accounts" means all "accounts" (as defined in the UCC),
accounts receivable, contract rights and general intangibles relating thereto,
notes, drafts and other forms of obligations owed to or owned by Borrower
arising or resulting from the sale of goods or owed to or owned by Borrower or a
Transportation Subsidiary arising or resulting from the rendering of services.
"Additional Mortgaged Property" has the meaning assigned to
that term in subsection 5.15.
"Administrative Agent" means Rabobank, in its capacity as
administrative agent for Lenders under the Loan Documents, and any successor in
such capacity appointed pursuant to subsection 9.1(G).
"Administrative Questionnaire" means an Administrative
Questionnaire in the form of Exhibit A.
"Adjustment Date" means, with respect to each adjustment of
the Applicable Revolving Loan Margin or the Applicable Term Loan Margin, the
first day of the Fiscal Quarter next commencing after the Fiscal Quarter in
which the applicable financial statements were received. For example, the
Adjustment Date relating to the test completed with respect to the first Fiscal
Quarter of the 1999 Fiscal Year shall be the first day of the third Fiscal
Quarter of the 1999 Fiscal Year.
"Advertising Ineligible Deduction" means an amount determined
by Collateral Agent following each inspection conducted by Collateral Agent
pursuant to subsection 5.3 in respect of cooperative advertising credits given
by Borrower to its customers.
"Affiliate" means any Person (other than any Agent or any
Lender): (a) directly or indirectly controlling, controlled by, or under common
control with, any Loan Party; (b) directly or indirectly owning or holding
fifteen percent (15%) or more of any equity interest in Borrower; (c) fifteen
percent (15%) or more of whose stock or other equity interest having ordinary
voting power for the election of directors or the power to direct or cause the
direction of management, is directly or indirectly owned or held by Borrower; or
(d) which has a senior executive officer who is also a senior executive officer
of Borrower. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with") means the possession directly or indirectly of the power to
direct or cause the direction of
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the management and policies of a Person, whether through the ownership of voting
securities or other equity interest, or by contract or otherwise.
"Agents" means, collectively, the Administrative Agent, the
Collateral Agent, the Documentation Agent and the Co-Agent.
"Agent's Account" means ABA No. 0710-001-3, Account No.
52-98695 at The First National Bank of Chicago, One First National Plaza,
Chicago, Illinois 60670. Reference: Heller Business Credit for the benefit of
Thorn Apple Valley, Inc.
"Agreement" means this Loan and Security Agreement as it may
be amended, restated, supplemented or otherwise modified from time to time.
"Applicable Eligible Meat Inventory Percentage" means a
percentage equal to (a) seventy percent (70%) during the period from February 1
to and including August 1 of each year and (b) seventy-five percent (75%) at all
other times.
"Applicable Non-Use Fee Margin" means a rate equal to
three-eighths of one percent (0.375%); provided, that such rate shall be
adjusted, based on the Funded Debt to EBITDA Ratio as of the last day of the
first Fiscal Quarter of the 1999 Fiscal Year and as of the last day of each
Fiscal Quarter thereafter, as calculated pursuant to the financial statements
delivered pursuant to subsection 5.1(B) or (C), as applicable, as set forth
below:
Funded Debt to Non-Use Fee Margin
EBITDA Ratio ------------------
------------
Greater than or equal to 8.0:1.0 0.50%
Less than 8.0:1.00 and greater than or equal 0.50%
to 6.0:1.0
Less than 6.0:1.0 and greater than or equal to 0.375%
4.0:1.0
Less than 4.0:1.0 and greater than or equal to 0.25%
3.0:1.0
Less than 3.0:1.0 0.25%
Each such adjustment shall take effect on the first day of the Fiscal Quarter
next commencing after the Fiscal Quarter in which the applicable financial
statements were received. For example, the adjustment resulting from the test
completed with respect to the first Fiscal Quarter of the 1999 Fiscal Year shall
be effective on the first day of the third Fiscal Quarter of the 1999 Fiscal
Year.
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"Applicable Revolving Loan Margin" means (a) with respect to
Base Rate Revolving Loans, a rate equal to zero percent (0%) and (b) with
respect to LIBOR Revolving Loans, a rate equal to two and one-quarter percent
(2.25%); provided, that such rates shall be adjusted, based on the Funded Debt
to EBITDA Ratio as of the last day of the first Fiscal Quarter of the 1999
Fiscal Year and as of the last day of each Fiscal Quarter thereafter, as
calculated pursuant to the financial statements delivered pursuant to subsection
5.1(B) or (C), as applicable, as set forth below:
Funded Debt to Applicable Revolving Applicable Revolving Loan
EBITDA Ratio Loan Margin for Base Margin for LIBOR
-------------- Rate Revolving Loans Revolving Loans
-------------------- -------------------------
Greater than or equal to 0.50% 3.00%
8.0:1.0
Less than 8.0:1.0 and greater 0.25% 2.50%
than or equal to 6.0:1.0
Less than 6.0:1.0 and greater 0.00% 2.25%
than or equal to 4.0:1.0
Less than 4.0:1.0 and greater 0.00% 2.00%
than or equal to 3.0:1.0
Less than 3.0:1.0 0.00% 1.75%
Each adjustment in the Applicable Revolving Loan Margin for Base Rate Revolving
Loans shall take effect on the applicable Adjustment Date. Each adjustment in
the Applicable Revolving Loan Margin for LIBOR Revolving Loans shall take effect
on the first day of each Interest Period that commences or is continued on or
after the Adjustment Date.
"Applicable Term Loan Margin" means (a) with respect to Base
Rate Term Loans, a rate equal to one half of one percent (0.50%) and (b) with
respect to LIBOR Term Loans, a rate equal to two and three-quarters percent
(2.75%); provided, that such rates shall be adjusted, based on the Funded Debt
to EBITDA Ratio as of the last day of the first Fiscal Quarter of the 1999
Fiscal Year and as of the last day of each Fiscal Quarter thereafter, as
calculated pursuant to the financial statements delivered pursuant to subsection
5.1(B) or (C), as applicable, as set forth below:
Funded Debt to Applicable Term Loan Applicable Term Loan
EBITDA Ratio Margin for Base Rate Margin for LIBOR
-------------- Term Loans Term Loans
-------------------- ----------------------
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Term Loans Term Loans
---------- ----------
Greater than or equal to 1.00% 3.25%
8.0:1.0
Less than 8.0:1.0 and greater 0.75% 3.00%
than or equal to 6.0:1.0
Less than 6.0:1.0 and greater 0.50% 2.75%
than or equal to 4.0:1.0
Less than 4.0:1.0 and greater 0.25% 2.50%
than or equal to 3.0:1.0
Less than 3.0:1.0 0.00% 2.25%
Each adjustment in the Applicable Term Loan Margin for Base Rate Term Loans
shall take effect on the applicable Adjustment Date. Each adjustment in the
Applicable Term Loan Margin for LIBOR Term Loans shall take effect on the first
day of each Interest Period that commences or is continued on or after the
Adjustment Date.
"Asset Disposition" means the disposition, whether by sale,
lease, transfer, loss, damage, destruction, condemnation or otherwise, of any or
all of the assets of Borrower or any of its Subsidiaries other than sales of
Inventory in the ordinary course of business.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement substantially in the form of Exhibit B.
"Bank Letter of Credit" means each letter of credit issued by
a bank acceptable to and approved by Issuing Lender for the account of Borrower
and supported by a Risk Participation Agreement.
"Base Rate" means a variable rate of interest per annum equal
to the higher of (a) the rate of interest from time to time published by the
Board of Governors of the Federal Reserve System as the "Bank Prime Loan" rate
in Federal Reserve Statistical Release H.15(519) entitled "Selected Interest
Rates" or any successor publication of the Federal Reserve System reporting the
Bank Prime Loan rate or its equivalent, or (b) the Federal Funds Effective Rate
plus fifty (50) basis points. The statistical release generally sets forth a
Bank Prime Loan rate for each Business Day. In the event the Board of Governors
of the Federal Reserve System ceases to publish a Bank Prime Loan rate or its
equivalent, the term "Base Rate" shall mean a variable rate of interest per
annum equal to
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the highest of the "prime rate", "reference rate", "base rate", or other similar
rate announced from time to time by any of Bankers Trust Company, The Chase
Manhattan Bank, N.A., Citibank, N.A. or their successors (with the understanding
that any such rate may merely be a reference rate and may not necessarily
represent the lowest or best rate actually charged to any customer by any such
bank).
"Base Rate Loans" means any portions of the Loans bearing
interest at rates determined by reference to the Base Rate.
"Base Rate Revolving Loans" means any portions of the
Revolving Loan that are also Base Rate Loans.
"Base Rate Term Loans" means any portions of the Term Loan
that are also Base Rate Loans.
"Beneficial Ownership" has the meaning assigned to that term
in Rule 13d-3 of the Securities Exchange Act of 1934, as amended.
"Blocked Accounts" has the meaning assigned to that term in
subsection 5.6.
"Borrower" has the meaning assigned to that term in the
preamble to this Agreement.
"Borrowing" means Loans of the same type and, in the case of
LIBOR Loans, having the same Interest Period, made by all Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
subsection 2.1(D)(1).
"Borrowing Base" has the meaning assigned to that term in
subsection 2.1(B).
"Borrowing Base Certificate" means a certificate and
assignment schedule duly executed by an authorized officer of Borrower
appropriately completed and in substantially the form of Exhibit C.
"Borrowing Request" means a loan request and certificate duly
executed by an authorized officer of Borrower, in the form of Exhibit D.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the States of Illinois or New
York or the Commonwealth of Pennsylvania, or is a day on which banking
institutions located in any such state are closed, and for the purposes of
Eurodollar Rate Loans only, is a day on which commercial banks are not open for
dealings in U.S. Dollar deposits in the London, England (U.K.)
interbank market.
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"Capital Expenditures" means all expenditures (including
deposits) for, or contracts for expenditures that, in conformity with GAAP,
should be accounted for as capital expenditures.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) that, in conformity with GAAP, should be accounted for as a
capital lease.
"Cash Collateralize" means to pledge and deposit with or
deliver to Collateral Agent, for the benefit of Agents, Issuing Lender and
Lenders, as additional collateral for the Letter of Credit Liability, cash or
deposit account balances pursuant to documentation in form and substance
satisfactory to Collateral Agent and Issuing Lender. Derivatives of such term
shall have corresponding meaning. Borrower hereby grants Collateral Agent, for
the benefit of Agents, Issuing Lender and Lenders, a security interest in all
such cash and deposit account balances. Cash collateral shall be maintained in
blocked, non-interest bearing deposit accounts.
"Cash Equivalents" means: (a) marketable direct obligations
issued or unconditionally guaranteed by the United States Government or issued
by any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within six (6) months from the date of acquisition
thereof; (b) commercial paper maturing no more than six (6) months from the date
issued and, at the time of acquisition, having a rating of at least A-1 from
Standard & Poor's Corporation or at least P-1 from Moody's Investors Service,
Inc.; (c) certificates of deposit or bankers' acceptances maturing within six
(6) months from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $250,000,000 and not subject to
setoff rights in favor of such bank; and (d) collected funds on deposit at any
bank acceptable to Collateral Agent in its reasonable judgment.
"Change in Control" means
(a) the acquisition, through purchase or otherwise
(including the agreement to act in concert without more), by any Person
(other than Designated Persons) or group of Persons acting in concert
(other than Designated Persons), directly or indirectly, in one or more
transactions, of Beneficial Ownership or control of securities
representing more than 30% of the combined voting power of Borrower's
Voting Stock; or
(b) the distribution by Borrower of cash, securities
or other properties (other than regular periodic cash dividends at a
rate which is substantially consistent with past practice, including
with respect to increases in dividends, and other than common stock of
Borrower or rights to acquire common stock of Borrower) to holders of
capital stock (including by means of dividend,
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reclassification, recapitalization or otherwise) which, together with
all other such distributions during the 365-day period preceding the
date of such distribution, has an aggregate fair market value in excess
of an amount equal to 30% of the fair market value of the Voting Stock
of Borrower outstanding on the date immediately prior to such
distribution.
A merger or consolidation pursuant to subsection 7.6 with
respect to which the Voting Stock of the surviving corporation is more than 30%
owned by a Person or group of Person acting in concert (other than Designated
Persons) who did not own such Voting Stock prior to such merger or consolidation
shall constitute a "Change of Control."
"Closing Date" means April 16, 1998.
"Co-Agent" means Harris, in its capacity as co-agent for
Lenders under the Loan Documents, and any successor in such capacity appointed
pursuant to subsection 9.1(G).
"Collateral" has the meaning assigned to that term in
subsection 2.7.
"Collateral Agent" means Heller, in its capacity as collateral
agent for Lenders under the Loan Documents, and any successor in such capacity
appointed pursuant to subsection 9.1(G).
"Collecting Banks" has the meaning assigned to that term in
subsection 5.6.
"Commitment" or "Commitments" means the commitment or
commitments of Lenders to make Loans as set forth in subsections 2.1(A) and/or
2.1(B) and to provide Lender Letters of Credit as set forth in subsection
2.1(G).
"Compliance Certificate" means a certificate duly executed by
the chief executive officer or chief financial officer of Borrower appropriately
completed and in substantially the form of Exhibit E.
"Confidential Information Memorandum" means the Confidential
Information Memorandum of Borrower dated February, 1998.
"Continuation/Conversion Notice" means a notice of
continuation or conversion and certificate duly executed by an authorized
officer of Borrower, substantially in the form of Exhibit F.
"Corporate Guarantors" has the meaning assigned to that term
in the preamble to this Agreement.
"Corporate Guaranties" means, collectively, the continuing
guaranty by each Corporate Guarantor in a form reasonably acceptable to
Collateral Agent and
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Administrative Agent, as each such agreement may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
"Default" means a condition, act or event that, after notice
or lapse of time or both, would constitute an Event of Default if that condition
or event were not cured or removed within any applicable grace or cure period.
"Defaulted Amount" means, with respect to any Lender at any
time, any amount required to be paid by such Lender to Collateral Agent, any
other Agent or any other Lender hereunder or under any other Loan Documents,
which has not been so paid.
"Defaulting Lender" means, at any time, any Lender that owes a
Defaulted Amount.
"Default Rate" has the meaning assigned to that term in
subsection 2.2(A).
"Designated Persons" means any of the following:
(a) (i) Henry S. Dorfman, Mala Dorfman, Gayle Weiss,
Carolyn Dorfman and Joel Dorfman; (ii) the estates of the Persons set
forth in clause (i); and (iii) inter vivos or testamentary trusts the
beneficiaries of which are one or more Persons falling within the scope
of clauses (i) or (ii) above;
(b) Joel Dorfman, Henry S. Dorfman, Louis Glazier,
Michael Rozzano, Keith Jahnke and Edward Boan;
(c) a group of Persons fifty percent (50%) or more of
which are comprised of Person set forth in paragraphs (a) and/or (b)
above; or
(d) an Employee Stock Ownership Plan as defined in
Section 4975(e)(7) of the IRC.
"Documentation Agent" means Heller, in its capacity as
documentation agent for Lenders under the Loan Documents, and any successor in
such capacity appointed pursuant to subsection 9.1(G).
"EBITDA" means, for any period, without duplication, the total
of the following for Borrower and its Subsidiaries on a consolidated basis, each
calculated for such period: (1) Net Income; plus, to the extent included in the
calculation of Net Income, (2) the sum of (a) income and franchise taxes paid or
accrued; (b) Interest Expense, net of interest income, paid or accrued; (c)
interest paid in kind; (d) amortization and depreciation; (e) other non-cash
charges (excluding accruals for cash expenses made in the ordinary course of
business); (f) capitalized interest included in cost of sales; and (g)
prepayment fees paid in cash on the Closing Date to Borrower's existing lenders;
less, to the extent included in the calculation of Net Income, (3) the sum of
(a) the income of any
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Person (other than wholly-owned Subsidiaries of Borrower) in which Borrower or a
wholly owned Subsidiary of Borrower has an ownership interest except to the
extent such income is received by Borrower or such wholly-owned Subsidiary in a
cash distribution during such period; (b) gains or losses from sales or other
dispositions of assets (other than Inventory in the normal course of business);
and (c) extraordinary or non-recurring gains, but not net of extraordinary or
non-recurring "cash" losses.
"Eligible Accounts" has the meaning assigned to that term in
subsection 2.1(C).
"Eligible Assignee" shall mean (a) a commercial bank or
commercial finance company 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 (or $250,000,000 in the case of an assignment of a Revolving Loan
Commitment); (b) a commercial bank or commercial finance company 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 (or
$250,000,000 in the case of an assignment of a Revolving Loan Commitment),
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another country which is also a member of
the OECD; (c) any other entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933, as amended) which extends credit
or buys loans as one of its businesses, including but not limited to, insurance
companies, mutual funds and lease financing companies, and (d) a Person that is
primarily engaged in the business of lending that is (i) a Subsidiary of a
Lender, (ii) a Subsidiary of a Person of which a Lender is a Subsidiary, or
(iii) a Person of which a Lender is a Subsidiary; provided however, that no
Affiliate of Borrower shall be an Eligible Assignee.
"Eligible Contract Inventory" has the meaning assigned to that
term in subsection 2.1(C).
"Eligible Inventory" means, collectively, Eligible Meat
Inventory, Eligible Supplies Inventory and Eligible Contract Inventory.
"Eligible Meat Inventory" has the meaning assigned to that
term in subsection 2.1(C).
"Eligible Supplies Inventory" has the meaning assigned to that
term in subsection 2.1(C).
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (a) is maintained for employees of
any Loan Party or any ERISA Affiliate or (b) has at any time within the
preceding six (6) years been maintained for the employees of any Loan Party or
any current or former ERISA Affiliate.
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"Environmental Claims" means claims, liabilities,
investigations, litigation, administrative proceedings, judgments or orders
relating to Hazardous Materials.
"Environmental Laws" means any present or future federal,
state or local law, rule, regulation or order relating to pollution, waste,
disposal or the protection of human health or safety, plant life or animal life,
natural resources or the environment.
"Equipment" means all "equipment" (as defined in the UCC),
including, without limitation, all furniture, furnishings, fixtures, machinery,
motor vehicles, trucks, trailers, vessels, aircraft and rolling stock and all
parts thereof and all additions and accessions thereto and replacements
therefor.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to any Loan Party, means any
Person who is a member of a group which is under common control with any Loan
Party, who together with any Loan Party is treated as a single employer within
the meaning of Sections 414(b) and (c) of the IRC.
"Event of Default" means each of the events set forth in
subsection 8.1.
"Excess Availability" means the amount by which the Borrowing
Base exceeds the sum of the Revolving Loan and the Letter of Credit Reserve.
"Excess Cash Flow" means, for any period, the greater of (A)
zero (0); or (B) without duplication, the total of the following for Borrower
and its Subsidiaries on a consolidated basis, each calculated for such period:
(1) EBITDA; plus (2) tax refunds actually received; less (3) Capital
Expenditures (to the extent actually made in cash and/or due to be made in cash
within such period but in no event more than the amount permitted by subsection
6.3 hereof); less (4) income and franchise taxes paid or accrued excluding any
provision for deferred taxes included in the determination of net income; less
(5) decreases in deferred income taxes resulting from payments of deferred taxes
accrued in prior periods; less (6) Interest Expense paid or accrued; less (7)
scheduled amortization of Indebtedness actually paid in cash and/or due to be
paid in cash within such period and permitted under subsection 7.5; less (8)
voluntary prepayments and mandatory prepayments made under subsection 2.4(B)(2),
but only to the extent that the transaction that precipitated the mandatory
prepayment increased EBITDA.
"Executive Officers" means, collectively, George Weiss;
Michael J. Rozzano, Jr.; Ronald A. Risher; Lawrence Charlupski; Edward E. Boan;
Keith Jahnke; Louis Glazier; and Joel Dorfman.
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"Existing Letters of Credit" has the meaning assigned to such
term in subsection 2.1(G).
"Federal Funds Effective Rate" means, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the immediately following Business Day by the Federal Reserve Bank
of New York or, if such rate is not published for any Business Day, the average
of the quotations for the day of the requested Loan received by Collateral Agent
from three Federal funds brokers of recognized standing selected by Collateral
Agent.
"Fiscal Period" means each period of 4 consecutive weeks in
any Fiscal Year.
"Fiscal Quarters" means the following consecutive Fiscal
Periods in each Fiscal Year:
Fiscal Quarter Fiscal Periods
-------------- --------------
1 1-4
2 5-7
3 8-10
4 11-13
"Fiscal Year" means each period of 52 or 53 consecutive weeks,
as applicable, ending on the last Friday in May in each year.
"Fixed Charge Coverage" means, for any period, Operating Cash
Flow divided by Fixed Charges.
"Fixed Charges" means, for any period, and each calculated for
such period for Borrower and its Subsidiaries on a consolidated basis (without
duplication), (a) Interest Expense paid or accrued; plus (b) scheduled payments
of principal with respect to all Indebtedness; plus (c) any provision for (to
the extent it is greater than zero) income or franchise taxes included in the
determination of net income, excluding any provision for deferred taxes; plus
(d) Restricted Junior Payments made in cash to the extent permitted under
subsection 7.5(b); plus (e) payment of deferred taxes accrued in any prior
period and minus (f) scheduled payments of principal in respect of the Premium
Notes.
"FSA" means the Food Security Act of 1985 ( 7 U.S.C. Section
1631 et seq.), as amended from time to time, and any successor statute.
"Funded Debt to EBITDA Ratio" means, on any date, the ratio of
(a) the aggregate outstanding amount of all interest-bearing Indebtedness on
such date, determined for Borrower and its Subsidiaries on a consolidated basis,
to (b) EBITDA for the period of
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four (4) consecutive Fiscal Quarters ending on such date; provided, that for
each date of determination during the 1999 Fiscal Year, EBITDA shall be measured
for the period from the first day of such Fiscal Year through the date of
determination and annualized.
"Funding Date" means the date of each funding of a Loan or
issuance of a Lender Letter of Credit.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"Guarantor Security Agreements" means, collectively, the
guarantor security agreement to be executed and delivered by each Corporate
Guarantor, in a form reasonably acceptable to Collateral Agent and
Administrative Agent, as each such agreement may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
"Harris" has the meaning assigned to that term in the preamble
to this Agreement.
"Hazardous Material" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified pursuant to,
any Environmental Laws or regulations as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity, or
toxicity; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls.
"Heller" has the meaning assigned to that term in the preamble
to this Agreement.
"Honor Date" has the meaning assigned to that term in
subsection 2.1(G)(3).
"Indebtedness", as applied to any Person, means without
duplication: (a) all indebtedness for borrowed money; (b) obligations under
leases which in accordance with GAAP constitute Capital Leases; (c) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money; (d) any obligation owed for all or
any part of the deferred purchase price of property or services if the purchase
price is due more than six months from the date the obligation is incurred or
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is evidenced by a note or similar written instrument; (e) all indebtedness
secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non recourse to the credit of that Person and (f)
obligations in respect of letters of credit.
"Insolvency Proceeding" means, with respect to any Person, (a)
any case, action or proceeding with respect to such Person before any court or
other governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, wind-up or relief of debtors (including
any proceeding under the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
Section 101 et seq.) or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other, similar arrangement
in respect of such Person's creditors generally or any substantial portion of
such creditors.
"Intangible Assets" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, Intellectual
Property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income and restricted funds, all calculated for Borrower and
its Subsidiaries on a consolidated basis.
"Intellectual Property" means all present and future designs,
patents, patent rights and applications therefor, trademarks and registrations
or applications therefor, trade names, corporate names, inventions, copyrights
and all applications and registrations therefor, software or computer programs,
license rights, trade secrets, methods, processes, know-how, drawings,
specifications, descriptions, and all memoranda, notes and records with respect
to any research and development, whether now owned or hereafter acquired, all
goodwill associated with any of the foregoing, and proceeds of all of the
foregoing, including, without limitation, proceeds of insurance policies
thereon.
"Interest Expense" means, without duplication, for any period,
the following, for Borrower and its Subsidiaries on a consolidated basis, each
calculated for such period: interest expense deducted in the determination of
net income (excluding (i) the amortization of fees and costs with respect to the
transactions contemplated by this Agreement which have been capitalized as
transaction costs in accordance with the provisions of subsection 1.2, (ii) the
amortization of interest expense which has been capitalized and (iii) interest
paid in kind).
"Interest Period" means relative to any LIBOR Loan, the period
beginning on (and including) the date on which such LIBOR Loan is made or
continued as, or converted into, a LIBOR Loan pursuant to subsection 2.2(D), and
shall end on (but exclude) the day which numerically corresponds to such date
one, two, three or six months thereafter (or, if the applicable month has no
numerically corresponding day, on the last Business Day of such month), in
either case as Borrower may select in its relevant notice pursuant to subsection
2.2; provided, however, that
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(a) Borrower shall not be permitted to select Interest Periods
to be in effect at any one time which have expiration dates occurring
on more than six (6) different dates;
(b) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of a calendar month, in which case such Interest
Period shall end on the Business Day next preceding such numerically
corresponding day); and
(d) no Interest Period may end later than the Termination
Date.
"Interest Rate" means the Revolving Loan Interest Rate or the
Term Loan Interest Rate, as applicable.
"Inventory" means all "inventory" (as defined in the UCC),
including, without limitation, finished goods, raw materials, work in process
and other materials and supplies used or consumed in a Person's business, farm
products, livestock, livestock products and by-products and livestock issue,
poultry, poultry products and by-products and poultry issue, and goods which are
returned or repossessed.
"Inventory Report" means a report with respect to Inventory
electronically transmitted by an authorized officer of Borrower to Collateral
Agent from time to time, containing such information as is reasonably required
by Collateral Agent.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute and all rules and regulations
promulgated thereunder.
"Issuing Lender" means Rabobank, in its capacity as the issuer
of one or more Lender Letters of Credit or Risk Participation Agreements or such
other Person as Borrower shall request and Collateral Agent and Administrative
Agent shall agree shall act as the issuer of Lender Letters of Credit or Risk
Participation Agreements hereunder; provided that Issuing Lender shall
specifically include Rabobank and Old Kent in their respective capacities as
issuers of the Existing Letters of Credit.
"L/C Advance" means each Lender's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
"L/C Amendment Application" means an application form for
amendment of an outstanding standby or commercial documentary letter of credit
as shall at any time be in use at Issuing Lender, as Issuing Lender shall
request.
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"L/C Application" means an application form for issuances of a
standby or commercial documentary letter of credit as shall at any time be in
use at Issuing Lender, as Issuing Lender shall request.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Lender Letter of Credit which shall not have been reimbursed
on the date when made nor converted into a Revolving Advance under subsection
2.1(G)(3).
"L/C-Related Documents" means the Lender Letters of Credit,
the Bank Letters of Credit, the L/C Applications, the L/C Amendment Applications
and any other documents relating to any Lender Letter of Credit, including any
of Issuing Lender's standard form documents for letter of credit issuances.
"Lender" or "Lenders" has the meaning assigned to that term in
the preamble to this Agreement.
"Lender Letter of Credit" has the meaning assigned to that
term in subsection 2.1(G).
"Letter of Credit Liability" means, all reimbursement and
other liabilities of Borrower or any of its Subsidiaries with respect to each
Lender Letter of Credit, whether contingent or otherwise, including: (a) the
amount available to be drawn or which may become available to be drawn; (b) all
amounts which have been paid or made available by any Lender issuing a Lender
Letter of Credit or any bank issuing a Bank Letter of Credit to the extent not
reimbursed; and (c) all unpaid interest, fees and expenses related thereto.
"Letter of Credit Reserve" means, at any time, an amount equal
to (a) the aggregate amount of Letter of Credit Liability with respect to all
Lender Letters of Credit outstanding at such time plus, without duplication, (b)
the aggregate amount theretofore paid by any Agent or any Lender under Lender
Letters of Credit and not debited to Borrower's loan account pursuant to
subsection 2.1(G)(3) or otherwise reimbursed by Borrower.
"Liabilities" shall have the meaning given that term in
accordance with GAAP and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate of interest
equal to:
(a) the rate for deposits in Dollars for the relevant Interest
Period that appears on the Telerate Page 3750 as of 11:00 A.M. (London time) on
the second Business Day prior to the first day of such Interest Period ("LIBOR
Telerate"). "Telerate Page 3750" means the display designated as page "3750" on
the Telerate Services (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank offered
rates for Dollar deposits). If no rate appears on the Telerate Page 3750,
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LIBOR in respect of that date will be determined as if the parties had specified
the rate described in (b) below.
(b) with respect to any date on which no rate appears on
Telerate Page 3750, as specified in (a) above, LIBOR will be determined on the
basis of the rates at which deposits in Dollars for the relevant Interest Period
are offered at approximately 11:00 A.M. (London time) on that date by four major
banks in the London interbank market selected by Collateral Agent ("Reference
Banks") to prime banks in the London interbank market commencing on the second
Business Day prior to the first day of such Interest Period and in a principal
amount equal to an amount of not less than $1,000,000 that is representative for
a single transaction in such market at such time. Collateral Agent will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided, LIBOR in
respect of that date will be the arithmetic mean of such quotations. If fewer
than two quotations are provided, LIBOR in respect of that date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M. (New York City
time) on such date by three major banks in the City of New York selected by
Collateral Agent for loans in Dollars to leading European banks for the relevant
Interest Period commencing on the second Business Day prior to the first day of
such Interest Period and in a principal amount equal to an amount of not less
than $1,000,000 that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
Collateral Agent are not quoting as mentioned in this sentence, LIBOR with
respect to such date will be the rate of LIBOR in effect on the date on which
such rate was last determinable.
The rate determined by either (a) or (b) above shall be
divided by a number equal to 1.0 minus the aggregate (but without duplication)
of the rates (expressed as a decimal fraction) of reserve requirements in effect
on the day which is two (2) Business Days prior to the beginning of such
Interest Period (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a member bank of the Federal
Reserve System (such rate to be adjusted to the nearest one sixteenth of one
percent (1/16 of 1%) or, if there is not a nearest one sixteenth of one percent
(1/16 of 1%), to the next higher one sixteenth of one percent (1/16 of 1%).
"LIBOR Loans" means any portions of the Loans bearing interest
by reference to LIBOR.
"LIBOR Revolving Loans" means any portions of the Revolving
Loan that are also LIBOR Loans.
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"LIBOR Term Loans" means any portions of the Term Loan that
are also LIBOR Loans.
"Lien" means any lien, mortgage, pledge, security interest,
charge or encumbrance of any kind, whether voluntary or involuntary, (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means an advance or advances under the Term
Loan Commitment or the Revolving Loan Commitment.
"Loan Documents" means this Agreement, the Term Notes, the
Revolving Notes, the Corporate Guaranties, the Guarantor Security Agreements,
the Pledge Agreement, the Mortgages, and all other instruments, documents and
agreements executed by or on behalf of Borrower or any Corporate Guarantor and
delivered concurrently herewith or at any time hereafter to or for any Agent or
any Lender in connection with the Loans, any Lender Letter of Credit, and other
transactions contemplated by this Agreement, all as amended, restated,
supplemented or modified from time to time.
"Loan Party" means each of Borrower, Borrower's Subsidiaries
and any other Person (other than any Agent or any Lender) which is or becomes a
party to any Loan Document.
"Loan Year" means each period of twelve (12) consecutive
calendar months commencing on the Closing Date and ending on each anniversary
thereof.
"Material Adverse Effect" means a material adverse effect upon
(a) the business, operations, properties, assets or condition (financial or
otherwise) of the Loan Parties taken as a whole or (b) the ability of any Loan
Party to perform its obligations under any Loan Document to which it is a party
or of any Agent or any Lender to enforce or collect any of the Obligations.
"Maximum Revolving Loan Amount" has the meaning assigned to
that term in subsection 2.1(B).
"Mortgages" means, collectively, the mortgages, deeds of
trust, leasehold mortgages, leasehold deeds of trust, collateral assignments of
leases or other real estate security documents delivered by any Loan Party to
Collateral Agent, on behalf of Agents and Lenders, with respect to Mortgaged
Property or Additional Mortgaged Property, all in form and substance
satisfactory to Collateral Agent and Administrative Agent.
"Mortgaged Property" means the real property owned or leased
by Borrower or its Subsidiaries as described on Schedule 1.1(A).
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"Net Income" means, for any period, net income for such
period, calculated for Borrower and its Subsidiaries on a consolidated basis in
conformity with GAAP.
"Net Worth" means, as of any date, the sum of capital stock
and additional paid-in capital plus retained earnings (or minus accumulated
deficit), calculated for Borrower and its Subsidiaries on a consolidated basis
in conformity with GAAP.
"Notes" means the Revolving Notes and the Term Notes.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of each Loan Party from time to time owed to any
Agent or to any Lender under the Loan Documents including the principal amount
of all debts, claims and indebtedness (whether incurred before or after the
Termination Date), accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable including, without
limitation, all interest, fees, cost and expenses accrued or incurred after the
commencement of any Insolvency Proceeding.
"Old Kent" means Old Kent Bank and Trust Company.
"Operating Cash Flow" means, for any period, (a) EBITDA; less
(b) Capital Expenditures.
"Original Term" has the meaning assigned to that term in
subsection 2.5.
"PASA" means the Packers and Stockyards Act of 1921 (7 U.S.C.
Section 181 et seq.), as amended from time to time, and any successor statute.
"Permitted Encumbrances" means the following types of Liens:
(a) Liens (other than Liens relating to Environmental Claims or ERISA) for
taxes, assessments or other governmental charges not yet due and payable; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and
other similar liens imposed by law, which are incurred in the ordinary course of
business for sums not more than thirty (30) days delinquent; (c) Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (d) encroachments, easements, rights-of-way,
restrictions, and other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of any Loan Party or
any of its Subsidiaries; (e) Liens for purchase money obligations, provided that
(i) the purchase of the asset subject to any such Lien is permitted under
subsection 6.3, (ii) the Indebtedness secured by any such Lien is permitted
under subsection 7.1, and (iii) such Lien encumbers only the asset so purchased;
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(f) Liens in favor of Collateral Agent, on behalf of Agents and Lenders; (g)
Liens on real property securing unpaid real estate taxes that are due and
payable and that under applicable law may be paid without incurring a penalty or
bearing interest; (h) Liens that have been bonded in cash to the reasonable
satisfaction of Collateral Agent and Administrative Agent; (i) Liens in favor of
the holders of the Premium Notes; (j) Liens on shares of preferred stock of
Michigan Livestock Credit Corporation owned by Borrower, to secure the
Indebtedness described in subsection 7.1(g); (k) Liens on leased Equipment
arising under operating leases of such Equipment entered into in the ordinary
course of business; and (l) Liens set forth on Schedule 1.1(B).
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"Pledge Agreement" means each stock pledge agreement executed
and delivered by any Loan Party, in favor of Collateral Agent, on behalf of
Agents and Lenders, in form and substance satisfactory to Collateral Agent and
Administrative Agent.
"PPFPA" means the Poultry Producers Financial Protection Act
of 1987 (7 U.S.C. Section 197 et seq.), as amended from time to time, and any
successor statute.
"Premium Notes" means the Subordinated Notes of even date
herewith in the aggregate original principal amount of $2,200,000 executed by
Borrower in favor of Allstate Life Insurance Company, Principal Mutual Life
Insurance Company and Great-West Life & Annuity Insurance Company, respectively.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as of the Closing Date after
giving effect to the transactions contemplated by this Agreement.
The Pro Forma is annexed hereto as Schedule 1.1(C).
"Pro Rata Share" means (a) with respect to matters relating to
a particular Commitment of a Lender, the percentage obtained by dividing (i)
such Commitment of that Lender by (ii) all such Commitments of all Lenders and
(b) with respect to all other matters, the percentage obtained by dividing (i)
the Total Loan Commitment of a Lender by (ii) the Total Loan Commitments of all
Lenders, in either case as such percentage may be adjusted by assignments
permitted pursuant to subsection 9.1; provided, however, if any Commitment is
terminated pursuant to the terms hereof, then "Pro Rata Share" means the
percentage obtained by dividing (x) the aggregate amount of such Lender's
outstanding Loans related to such Commitment by (y) the aggregate amount of all
outstanding Loans related to such Commitment.
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"Projections" means Borrower's forecasted: (a) balance sheets;
(b) profit and loss statements; (c) cash flow statements; and (d) capitalization
statements, all prepared on a consolidated and a consolidating basis (on a
division by division basis, separating the fresh meats division from the
processing division), and otherwise consistent with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"Rabobank" has the meaning assigned to that term in the
preamble to this Agreement.
"Reconciliation Report" means a report duly executed by the
chief executive officer or chief financial officer of Borrower appropriately
completed and in substantially the form of Exhibit H.
"Renewal Term" has the meaning assigned to that term in
subsection 2.5.
"Requisite Lenders" means Lenders (other than any Defaulting
Lenders) holding or being responsible for sixty-six and two thirds percent (66
2/3%) or more of the sum of (a) outstanding Loans (other than Loans owing to any
Defaulting Lenders), (b) outstanding Letter of Credit Liability (other than
Letter of Credit Liability owing to any Defaulting Lenders) and (c) unutilized
Commitments (other than unutilized Commitments of any Defaulting Lenders).
"Restricted Junior Payment" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Borrower or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely with shares of the class of stock on which such dividend
is declared; (b) any payment or prepayment of principal of, premium, if any, or
interest on, or any redemption, conversion, exchange, retirement, defeasance,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any Subordinated Debt or any shares of any class of stock of
Borrower or any of its Subsidiaries now or hereafter outstanding, or the
issuance of a notice of an intention to do any of the foregoing; (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock of Borrower or any of
its Subsidiaries now or hereafter outstanding; and (d) any payment by Borrower
or any of its Subsidiaries of any management, consulting or similar fees to any
Affiliate, whether pursuant to a management agreement or otherwise.
"Revolving Advance" means each advance made by Lenders
pursuant to subsection 2.1(B).
"Revolving Loan" means the outstanding balance of all
Revolving Advances and any amounts added to the principal balance of the
Revolving Loan pursuant to this Agreement.
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"Revolving Loan Commitment" means (a) as to any Lender, the
commitment of such Lender to make Revolving Advances pursuant to subsection
2.1(B), and to purchase participations in Lender Letters of Credit pursuant to
subsection 2.1(G) in the aggregate amount set forth on the signature page of
this Agreement opposite such Lender's signature or in the most recent Assignment
and Assumption Agreement, if any, executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Advances and
to purchase participations in Lender Letters of Credit.
"Revolving Loan Interest Rate" has the meaning assigned to
that term in subsection 2.2(A).
"Revolving Loan Limit" means an amount equal to (a)
$85,000,000 during the period from February 1 to and including August 1 of each
year and (b) $95,000,000 at all other times.
"Revolving Notes" means, collectively, each promissory note of
Borrower in a form reasonably acceptable to Collateral Agent and Administrative
Agent, issued pursuant to subsection 2.1(E).
"Risk Participation Agreement" has the meaning assigned to
that term in subsection 2.1(G).
"Scheduled Installment" has the meaning assigned to that term
in subsection 2.1(A).
"Special Ineligible Deduction" means, at any date of
determination, an amount equal to the sum of (a) the aggregate amount of
Borrower's Liabilities to unpaid cash sellers of livestock, as defined under
PASA and (b) the aggregate amount of Borrower's Liabilities to unpaid cash
sellers of live poultry, as defined under PPFPA.
"Subordinated Debt" means, collectively, (a) all Indebtedness
owing by Borrower under certain 9% Convertible Subordinated Debentures Due April
1, 2007 in the aggregate principal amount of $17,250,000, issued pursuant to a
certain Indenture dated as of March 25, 1997 between Borrower and State Street
Bank and Trust Company, as Trustee (the "Indenture"); (b) all Indebtedness owing
by Borrower under the Premium Notes; and (c) any other Indebtedness of Borrower
that is subordinated to the Obligations in a manner satisfactory to Collateral
Agent and Administrative Agent.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than fifty
percent (50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other subsidiaries of that Person or a combination
thereof.
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"Supermajority Lenders" means Lenders (other than any
Defaulting Lenders) holding or being responsible for eighty-nine percent (89%)
or more of the sum of (a) outstanding Loans (other than Loans owing to any
Defaulting Lenders), (b) outstanding Letter of Credit Liability (other than
Letter of Credit Liability owing to any Defaulting Lenders) and (c) unutilized
Commitments (other than unutilized Commitments of any Defaulting Lenders).
"Term Loan means the unpaid balance of the term loan made
pursuant to subsection 2.1(A).
"Term Loan Commitment" means (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share of the Term Loan in the
maximum aggregate amount set forth on the signature page of this Agreement
opposite such Lender's signature or in the most recent Assignment and Assumption
Agreement, if any, executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make the Term Loan.
"Term Loan Interest Rate" has the meaning assigned to that
term in subsection 2.2(A).
"Term Notes" means, collectively, each promissory note of
Borrower in a form reasonably acceptable to Collateral Agent and Administrative
Agent, issued pursuant to subsection 2.1(E).
"Termination Date" means the date this Agreement is
terminated as set forth in subsection 2.5.
"Total Loan Commitment" means as to any Lender the aggregate
commitments of such Lender with respect to its Revolving Loan Commitment and
Term Loan Commitment.
"Transportation Subsidiary" means any Subsidiary of Borrower
that operates primarily in the transportation services business.
"UCC" means the Uniform Commercial Code as in effect on the
date hereof in the State of Illinois, as amended from time to time, and any
successor statute.
"Voting Stock" shall mean capital stock of any class or
classes of a corporation having power under ordinary circumstances to vote
for the election of members of the board of directors of such corporation, or
persons performing similar functions (irrespective of whether or not at the
time stock of any of the class or classes shall have or might have special
voting power or rights by reason of the happening of any contingency).
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"Warehouse Reserve" means, at any date of determination, a
reserve equal to the aggregate of 3 calendar months' average warehouse charges
for each warehouse location for which Borrower has not delivered to Collateral
Agent a warehouseman's agreement acceptable to Collateral Agent.
1.2. Accounting Terms.
For purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Financial statements and other information furnished to
any Agent or any Lender pursuant to subsection 5.1 shall be prepared in
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis, including the reflection of Inventory values on a LIFO basis;
provided, that notwithstanding the foregoing, for the purposes of calculating
compliance with the financial covenants contained in Section 6, the Applicable
Non-Use Fee Margin, the Applicable Revolving Loan Margin, the Applicable Term
Loan Margin and Excess Cash Flow, all amounts with respect to Inventory shall be
shown on a FIFO basis, without regard to LIFO adjustments. In the event any
"Accounting Changes" (as defined below) shall occur and such changes affect
financial covenants, standards or terms in this Agreement, then Borrower and
Lenders agree to enter into negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating the financial condition of
Borrower shall be the same after such Accounting Changes as if such Accounting
Changes had not been made, and until such time as such an amendment shall have
been executed and delivered by Borrower and Requisite Lenders, (A) all financial
covenants, standards and terms in this Agreement shall be calculated and/or
construed as if such Accounting Changes had not been made, and (B) Borrower
shall prepare footnotes to each Compliance Certificate and the financial
statements required to be delivered hereunder that show the differences between
the financial statements delivered (which reflect such Accounting Changes) and
the basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). "Accounting Changes" means: (a) changes in accounting
principles required by GAAP and implemented by Borrower; (b) changes in
accounting principles recommended by Borrower's certified public accountants;
and (c) changes in carrying value of Borrower's or any of its Subsidiaries'
assets, liabilities or equity accounts resulting from any adjustments that, in
each case, were applicable to, but not included in, the Pro Forma. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including, but not limited to, capitalization of costs and expenses or payment
of pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in such
period.
1.3. Other Definitional Provisions.
References to "Sections", "subsections", "Exhibits" and
"Schedules" shall be to Sections, subsections, Exhibits and Schedules,
respectively, of this Agreement unless otherwise specifically provided. Any of
the terms defined in subsection 1.1 may, unless
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the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, words importing any gender include the
other genders; the words "including," "includes" and "include" shall be deemed
to be followed by the words "without limitation"; references to agreements and
other contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL
2.1. Loans.
(A) Term Loan.
Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower and the other Loan
Parties set forth herein and in the other Loan Documents, each Lender,
severally, agrees to lend to Borrower, on the Closing Date, its Pro Rata Share
of the Term Loan, which is in the aggregate amount of $75,000,000. The Term Loan
shall be funded in one drawing. Amounts borrowed under this subsection 2.1(A)
and repaid may not be reborrowed. Borrower shall make principal payments in the
Term Loan in successive monthly installments ("Scheduled Installments") of
$781,250 on the first day of each calendar month hereafter commencing April 1,
1999; provided, that notwithstanding the foregoing, the entire outstanding
principal balance of the Term Loan shall be due and owing on the Termination
Date.
(B) Revolving Loan.
Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower and the other Loan
Parties set forth herein and in the other Loan Documents, each Lender,
severally, agrees to lend to Borrower from time to time its Pro Rata Share of
each Revolving Advance. The aggregate amount of all Revolving Loan Commitments
shall not exceed at any time the Revolving Loan Limit at such time, as reduced
by Section 2.4(B). Amounts borrowed under this subsection 2.1(B) may be repaid
and reborrowed at any time prior to the earlier of (i) the termination of the
Revolving Loan Commitment pursuant to subsection 8.3 or (ii) the Termination
Date. Except as otherwise provided herein, no Lender shall have any obligation
to make an advance under this subsection 2.1(B) to the extent such advance would
cause the Revolving Loan (after giving effect to any immediate application of
the proceeds thereof) to exceed the Maximum Revolving Loan Amount.
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(1) "Maximum Revolving Loan Amount" means, as of
any date of determination, the lesser of (a) the Revolving Loan Commitments of
all Lenders minus the Letter of Credit Reserve and (b) the Borrowing Base
minus the Letter of Credit Reserve.
(2) "Borrowing Base" means, as of any date of
determination, an amount equal to the sum of (a) eighty-five percent (85%) of
the amount by which Eligible Accounts exceeds the Advertising Ineligible
Deduction plus (b) the Applicable Eligible Meat Inventory Percentage of the
amount by which Eligible Meat Inventory exceeds the Special Ineligible Deduction
plus (c) eighty-five (85%) of Eligible Contract Inventory; plus (d) the lesser
of (i) $7,500,000 and (ii) fifty percent (50%) of Eligible Supplies Inventory;
plus (e) one hundred percent (100%) of Borrower's cash located in accounts in
which Collateral Agent has a first and only perfected Lien; less in each case
such reserves (other than the Letter of Credit Reserve) as Collateral Agent in
its reasonable discretion (or at the direction of Requisite Lenders) may elect
to establish, including without limitation the Warehouse Reserve; provided, that
no additional reserves instituted by Collateral Agent or Requisite Lenders shall
be effective until Borrower has received telephonic or written notice thereof
from Collateral Agent.
(C) Eligible Collateral.
"Eligible Accounts" means, as at any date of determination,
the aggregate of all Accounts that Collateral Agent, in its reasonable judgment
(or as directed by Requisite Lenders), deems to be eligible for borrowing
purposes. Without limiting the generality of the foregoing, unless otherwise
agreed by Agents or Requisite Lenders, the following Accounts are not Eligible
Accounts:
(1) Accounts which remain unpaid for more than
fifty (50) days after the actual delivery date of the goods specified in the
applicable invoice;
(2) Accounts which are otherwise eligible with
respect to which the account debtor is owed a credit by Borrower or a
Transportation Subsidiary, but only to the extent of such credit;
(3) Accounts due from a customer whose principal
place of business is located outside the United States of America unless such
Account is backed by a letter of credit, in form and substance acceptable
to Collateral Agent and issued or confirmed by a bank that is organized under
the laws of the United States of America or a State thereof, that is acceptable
to Collateral Agent; provided that such letter of credit has been delivered to
Collateral Agent as additional collateral;
(4) Accounts due from a customer which Collateral
Agent has notified Borrower does not have a satisfactory credit standing;
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(5) Accounts with respect to which the customer
is the United States of America, any state or any municipality, or any
department, agency or instrumentality thereof unless Borrower or a
Transportation Subsidiary, as applicable, has, with respect to such Accounts,
complied with the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or
any applicable statute or municipal ordinance of similar purpose and effect;
(6) Accounts with respect to which the customer
is an Affiliate of Borrower or a director, officer, agent, stockholder or
employee of Borrower or any of its Affiliates;
(7) Accounts due from a customer if more than
twenty-five percent (25%) of the aggregate amount of Accounts of such
customer (excluding any amounts in dispute which Collateral Agent has agreed
may be so excluded), have at the time remained unpaid for more than fifty (50)
days after the actual delivery date of the goods specified in the applicable
invoice;
(8) Accounts with respect to which there is any
unresolved dispute with the respective customer (but only to the extent of such
dispute);
(9) Accounts evidenced by an "instrument" or
"chattel paper" (as defined in the UCC) not in the possession of Collateral
Agent, on behalf of Agents and Lenders;
(10) Accounts with respect to which Collateral
Agent, on behalf of Agents and Lenders, does not have a valid, first priority
and fully perfected security interest;
(11) Accounts subject to any Lien except those in
favor of Collateral Agent, on behalf of Agents and Lenders;
(12) Accounts with respect to which the customer
is the subject of any bankruptcy or other insolvency proceeding;
(13) Accounts due from a customer to the extent
that such Accounts exceed in the aggregate an amount equal to twenty percent
(20%) of the aggregate of all Accounts at said date;
(14) Accounts with respect to which the customer's
obligation to pay is conditional or subject to a repurchase obligation or right
to return or with respect to which the goods or services giving rise to such
Account have not been delivered (or performed, as applicable) and accepted by
such account debtor, including progress billings, bill and hold sales,
guarantied sales, sale or return transactions, sales on approval or consignment
sales;
(15) Accounts with respect to which the customer
is located in New Jersey or any other state denying creditors access to its
courts in the absence of a Notice of
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Business Activities Report or other similar filing, in each case unless Borrower
or a Transportation Subsidiary, as applicable, has either qualified as a foreign
corporation authorized to transact business in such state or has filed a Notice
of Business Activities Report or similar filing with the applicable state agency
for the then current year; and
(16) Accounts with respect to which the customer
is a creditor of Borrower or a Transportation Subsidiary, provided, however,
that any such Account shall only be ineligible as to that portion of such
Account which is less than or equal to the amount owed by Borrower or such
Transportation Subsidiary to such Person.
No additional categories of ineligible Accounts instituted by Collateral Agent
or Requisite Lenders shall be effective until Borrower has received telephonic
or written notice thereof from Collateral Agent.
"Eligible Contract Inventory" means, as at any date of
determination, the value (determined at the lower of cost or market on a
first-in, first-out basis) of all finished goods Inventory produced by Borrower
under the holiday sales contract with Sam's Warehouse Clubs or under any similar
holiday sales contract approved by Supermajority Lenders, owned by and in the
possession of Borrower and located in the United States of America that
Collateral Agent, in its reasonable credit judgment (or as directed by Requisite
Lenders), deems to be eligible for borrowing purposes; provided, that the
aggregate amount of Eligible Contract Inventory shall not at any time exceed
$25,000,000. Without limiting the generally of the foregoing, unless otherwise
agreed by Agents or Requisite Lenders, the following is not Eligible Contract
Inventory: (a) goods which do not meet the specifications of the contract for
such goods or, if such contract does not contain specifications, goods that do
not meet general industry specifications; (b) Inventory which Collateral Agent
determines is unacceptable for borrowing purposes due to age, quality, type,
category and/or quantity; (c) Inventory with respect to which Collateral Agent,
on behalf of Agents and Lenders, does not have a valid, first priority and fully
perfected security interest; (d) Inventory with respect to which there exists
any Lien in favor of any Person other than Collateral Agent, on behalf of Agents
and Lenders; (e) Inventory produced in violation of the Fair Labor Standards Act
and subject to the so-called "hot goods" provisions contained in Title 29 U.S.C.
215 (a)(i); (f) Inventory located at a location of a co-packer for Borrower; (g)
Inventory in transit either to or from one of Borrower's locations; and (h)
Inventory located at any location other than Borrower's principal location or a
co-packer, unless a waiver of interest acceptable in form and substance is
delivered to Collateral Agent. No additional categories of ineligible contract
Inventory instituted by Collateral Agent or Requisite Lenders shall be effective
until Borrower has received telephone or written notice thereof from Collateral
Agent.
"Eligible Meat Inventory" means, as at any date of
determination, the value (determined at the lower of cost or market on a
first-in, first-out basis) of all Inventory consisting of live hogs, livestock
carcasses, meat and meat products, hides, rendering products, offal, poultry and
poultry products, other than Eligible Contract Inventory,
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owned by and in the possession of Borrower and located in the United States of
America that Collateral Agent, in its reasonable credit judgment (or as directed
by Requisite Lenders), deems to be eligible for borrowing purposes. Without
limiting the generality of the foregoing, unless otherwise agreed by Agents or
Requisite Lenders, the following is not Eligible Meat Inventory: (a) goods which
do not meet the specifications of the purchase order for such goods or, if such
purchase order does not contain specifications, goods that do not meet general
industry specifications; (b) Inventory which Collateral Agent determines is
unacceptable for borrowing purposes due to age, quality, type, category and/or
quantity; (c) Inventory with respect to which Collateral Agent, on behalf of
Agents and Lenders, does not have a valid, first priority and fully perfected
security interest; (d) Inventory with respect to which there exists any Lien in
favor of any Person other than Collateral Agent, on behalf of Agents and
Lenders; (e) Inventory produced in violation of the Fair Labor Standards Act and
subject to the so-called "hot goods" provisions contained in Title 29 U.S.C. 215
(a)(i); (f) Inventory located at a location of a co-packer for Borrower; (g)
Inventory in transit more than 3 days either to or from one of Borrower's
locations, other than Inventory in transit to customers in Russia, (h) Inventory
in transit to customers in Russia, other than such Inventory (I) as to which
title has not yet passed from Borrower to the customer, (II) which is fully
insured to Collateral Agent's satisfaction, and (III) as to which all applicable
documents of title, bills of lading and other documents and instruments
evidencing Borrower's right, title and interest in such Inventory have been
physically delivered to Collateral Agent or its agent (including any carrier
acting as such); and (i) Inventory located at any location other than in transit
Inventory described in clause (g) or (h) and other than Inventory located at
Borrower's principal location or a co-packer, unless a waiver of interest
acceptable in form and substance is delivered to Collateral Agent. No additional
categories of ineligible meat Inventory instituted by Collateral Agent or
Requisite Lenders shall be effective until Borrower has received telephonic or
written notice thereof from Collateral Agent.
"Eligible Supplies Inventory" means at any date of
determination, the value (determined at the lower of cost or market on a
first-in, first-out basis) of all Inventory of packaging materials, supplies,
labels, spices and crackers, cheese, candy bars, cookies and other food
components of snack packs, other than Eligible Contract Inventory, owned by and
in the possession of Borrower and located in the United States of America that
Collateral Agent, in its reasonable credit judgment (or as directed by Requisite
Lenders), deems to be eligible for borrowing purposes. Without limiting the
generality of the foregoing, unless otherwise agreed by Agents or Requisite
Lenders, the following is not Eligible Supply Inventories: (a) Inventory which
Collateral Agent determines is unacceptable for borrowing purposes due to age,
quality, type, category and/or quantity; (b) Inventory with respect to which
Collateral Agent, on behalf of Agents and Lenders, does not have a valid, first
priority and fully perfected security interest; (c) Inventory with respect to
which there exists any Lien in favor of any Person other than Collateral Agent,
on behalf of Agents and Lenders; and (d) Inventory located at any location other
than Borrower's principal location, unless a waiver of interest acceptable in
form and substance
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is delivered to Collateral Agent. No additional categories of ineligible
supplies Inventory instituted by Collateral Agent or Requisite Lenders shall be
effective until Borrower has received telephonic or written notice thereof from
Collateral Agent.
(D) Borrowing Mechanics.
(1) By delivering a Borrowing Request to
Collateral Agent on or before 11:00 a.m., Central time, on a Business Day,
Borrower may from time to time irrevocably request, on not less than three (3)
Business Days' notice (in the case of a request for a LIBOR Loan) or on the day
of the requested Borrowing (in the case of a request for a Base Rate Loan), that
a Borrowing be made in (a) the case of a LIBOR Loan, in a minimum amount of
$1,000,000 and an integral multiple of $100,000 or in the unused amount of the
Revolving Loan Commitments or (b) the case of Base Rate Loans, in any unused
portion of the Revolving Loan Commitments. Collateral Agent shall advise each
Lender of such Borrowing Request on or before 12:30 p.m., Central time, on the
date of such Borrowing Request. On the terms and subject to the conditions of
this Agreement, each Borrowing shall be comprised of the type of Loans, and
shall be made on the Business Day, specified in such Borrowing Request. On or
before 10:00 a.m. Central time, on such Business Day if the requested Borrowing
is for LIBOR Loans or on or before 3:00 p.m., Central time, if the requested
Borrowing is for Base Rate Loans, each Lender shall deposit with Collateral
Agent same-day funds in an amount equal to such Lender's Pro Rata Share of the
requested Borrowing. Such deposit will be made to an account which Collateral
Agent shall specify from time to time by notice to Lenders. To the extent funds
are received from Lenders, Collateral Agent shall make such funds available to
Borrower by wire transfer to the accounts Borrower shall have specified in its
Borrowing Request. No Lender's obligation to make any Loan shall be affected by
any other Lender's failure to make any Loan.
(2) The becoming due of any amount required to be
paid under this Agreement or any of the other Loan Documents as principal,
accrued interest, fees and expenses shall be deemed irrevocably to be a request
by Borrower for a Base Rate Revolving Loan on the due date of, and in the amount
required to pay, such principal, accrued interest and fees, and the proceeds of
each such Revolving Advance if made by any Agent or any Lender shall be
disbursed by such Agent or such Lender by way of direct payment of the relevant
obligation; provided, that no amounts due in respect of expenses shall be
disbursed by any Agent or any Lender until Borrower has received written notice
thereof from such Agent or such Lender.
(E) Notes.
Borrower shall execute and deliver to each Lender with
appropriate insertions (i) a Term Note to evidence such Lender's Term Loan
Commitment, and (ii) a Revolving Note to evidence such Lender's Revolving Loan
Commitment. In the event of an assignment under subsection 9.5, Borrower shall,
upon surrender of the assigning
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Lender's Notes, issue new Notes to reflect the interest held by the assigning
Lender and its Eligible Assignee.
(F) Evidence of Revolving Loan Obligations.
Each Revolving Advance shall be evidenced by this Agreement,
the Revolving Notes, and notations made from time to time by Collateral Agent in
its books and records, including computer records. Collateral Agent shall record
in its books and records, including computer records, the principal amount of
the Revolving Loan owing to each Lender from time to time. Collateral Agent's
books and records shall constitute presumptive evidence, absent manifest error,
of the accuracy of the information contained therein. Failure by Collateral
Agent to make any such notation or record shall not affect the obligations of
Borrower to Lenders with respect to the Revolving Loan.
(G) Letters of Credit.
Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
herein set forth, the Revolving Loan Commitments may, in addition to Revolving
Advances be utilized, upon the request of Borrower, for (i) the issuance of
letters of credit by Issuing Lender or (ii) the issuance by Issuing Lender of
risk participations (each, a "Risk Participation Agreement") to banks to induce
such banks to issue letters of credit for the account of Borrower (each of (i)
and (ii) above, a "Lender Letter of Credit"). Prior to the Closing Date, (a)
Rabobank issued certain letters of credit for the account of Borrower under a
financing arrangement among Borrower, Rabobank and certain other lenders and (b)
Old Kent issued certain letters of credit for the account of Borrower under a
letter of credit financing arrangement between Borrower and Old Kent
(collectively, the "Existing Letters of Credit"). All Existing Letters of Credit
still outstanding on the date hereof (including the undrawn and drawable face
amounts and expiry dates thereof) are listed on Schedule 2.1(G). Agents, Lenders
and Borrower hereby agree that the Existing Letters of Credit shall be deemed to
be Lender Letters of Credit issued under this Agreement on the Closing Date for
the account of Borrower and each of Rabobank and Old Kent shall be deemed to be
the Issuing Lender hereunder with respect to the Existing Letters of Credit
issued by it. Each of Borrower, Rabobank and Old Kent hereby agrees that any
agreements or documents evidencing or relating to the Existing Letters of Credit
or the reimbursement obligations of Borrower with respect thereto (including
without limitation any reimbursement agreements relating thereto) are deemed to
be terminated and that all obligations of Borrower with respect of the Existing
Letters of Credit shall be deemed to be governed solely by this Agreement. Each
Lender shall be deemed to have purchased a participation in each Lender Letter
of Credit issued on behalf of Borrower in an amount equal to its Pro Rata Share
thereof. In no event shall any Lender Letter of Credit be issued to the extent
that the issuance of such Lender Letter of Credit would cause the sum of the
Letter of Credit Reserve (after giving effect to such issuance) plus the
Revolving Loan to exceed the lesser of (x) the Borrowing Base and (y) the
Revolving Loan Commitment. In addition to all other terms and
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conditions set forth in this Agreement, the issuance of any Lender Letter of
Credit shall also be subject to the satisfaction of all conditions applicable to
Revolving Advances, and the conditions that the letter of credit which Borrower
requests be in such form, be for such amount, contain such terms and support
such transactions as are reasonably satisfactory to Issuing Lender and
Collateral Agent. The expiration date of each Lender Letter of Credit shall be
on a date which is at least thirty (30) days prior to the Termination Date.
(1) Maximum Amount.
The aggregate amount of Letter of Credit Liability with
respect to all Lender Letters of Credit outstanding at any time shall not exceed
$15,000,000.
(2) Issuance, Amendment and Renewal of Lender Letters of
Credit.
(a) Issuing Lender shall issue each Letter of
Credit upon the irrevocable written request of Borrower received by Collateral
Agent (who shall forward it to Issuing Lender) at least four (4) Business Days
(or such shorter time as Issuing Lender and Collateral Agent may agree in a
particular instance in their sole discretion) prior to the proposed date of
issuance. Each such request for issuance of a Lender Letter of Credit shall be
made in an original writing or by facsimile in the form of an L/C Application,
and shall specify in form and detail satisfactory to Issuing Lender: (i) the
proposed date of issuance of the Lender Letter of Credit (which shall be a
Business Day); (ii) the face amount of the Lender Letter of Credit, which shall
be expressed in U.S. dollars; (iii) the expiry date of the Lender Letter of
Credit; (iv) the name and address of the beneficiary thereof; (v) the documents
to be presented by the beneficiary of the Lender Letter of Credit in case of any
drawing thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and (vii) such other matters as
Issuing Lender may require.
(b) Unless Issuing Lender has received, on or
before the Business Day immediately preceding the date Issuing Lender is to
issue a requested Lender Letter of Credit, notice from Collateral Agent
directing Issuing Lender not to issue such Lender Letter of Credit because such
issuance is not then permitted hereunder, then subject to the terms and
conditions hereof, Issuing Lender shall, on the requested date, issue a Lender
Letter of Credit for the account of Borrower in accordance with Issuing Lender's
usual and customary business practices.
(c) From time to time while a Lender Letter of
Credit is outstanding and prior to the Termination Date, Issuing Lender may upon
the written request of Borrower received by Collateral Agent (who shall forward
it to Issuing Lender) at least five (5) Business Days (or which shorter time as
Issuing Lender and Collateral Agent may agree in a particular instance in their
sole discretion) prior to the proposed date of amendment, amend any Lender
Letter of Credit issued by it. Each such request for amendment of a Lender
Letter of Credit shall be made in an original writing or by facsimile, made in
the form of an L/C Amendment Application and shall specify in form and detail
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satisfactory to Issuing Lender; (i) the Lender Letter of Credit to be amended;
(ii) the proposed date of amendment of such Lender Letter of Credit (which shall
be a Business Day); (iii) the nature of the proposed amendment; and (iv) such
other matters as Issuing Lender may require. Issuing Lender shall have no
obligation to amend any Lender Letter of Credit. Collateral Agent will promptly
notify Lenders of the receipt by it of any L/C Application or L/C Amendment
Application.
(d) Issuing Lender and Lenders agree that, while a
Lender Letter of Credit is outstanding and prior to the Termination Date, upon
the written request of Borrower received by Collateral Agent (who shall forward
it to Issuing Lender) at least five (5) Business Days (or such shorter time as
Issuing Lender and Collateral Agent may agree in a particular instance in their
sole discretion) prior to the proposed date of notification of renewal, Issuing
Lender shall be entitled to authorize the automatic renewal of any Lender Letter
of Credit issued by it. East such request for renewal of a Lender Letter of
Credit shall be made in an original writing or by facsimile in the form of an
L/C Amendment Application, and shall specify in form and detail satisfactory to
Issuing Lender: (i) the Lender Letter of Credit to be renewed; (ii) the proposed
date of notification of renewal of such Lender Letter of Credit (which shall be
a Business Day); (iii) the revised expiry date of such Lender Letter of Credit
(which, unless all Lenders otherwise consent, shall be prior to the Termination
Date); and (iv) such other matters as Issuing Lender may require. Issuing Lender
shall be under no obligation to renew any Lender Letter of Credit. If any
outstanding Lender Letter of Credit shall provide that it shall be automatically
renewed unless the beneficiary thereof receives notice from Issuing Lender that
such Lender Letter of Credit shall not be renewed, and if at the time of renewal
Issuing Lender would be entitled to authorize the automatic renewal of such
Lender Letter of Credit in accordance with this subsection 2.1(G)(2)(d) upon the
request of Borrower, but Issuing Lender shall not have received any L/C
Amendment Application from Borrower with respect to such renewal or other
written direction by Borrower with respect thereto, Issuing Lender shall
nonetheless be permitted to allow such Lender Letter of Credit to renew, and
Borrower and Lenders hereby authorize such renewal, and, accordingly, Issuing
Lender shall be deemed to have received an L/C Amendment Application from
Borrower requesting such renewal.
(e) Issuing Lender may, at its election (or as
required by Collateral Agent at the direction of Lenders holding the aggregate
Pro Rata Shares required under the applicable provision of this Agreement, as
applicable), deliver any notices of termination or other communications to any
Lender Letter of Credit beneficiary or transferee, and take any other action as
necessary or appropriate, at any time and from time to time, in order to cause
the expiry date of such Lender Letter of Credit to be a date not later than the
Termination Date.
(f) This Agreement shall control in the event of
any conflict with any L/C-Related Document (other than any Lender Letter of
Credit).
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(g) Issuing Lender will deliver to Collateral
Agent concurrently or promptly following its delivery of a Lender Letter of
Credit, or amendment to or renewal of a Lender Letter of Credit, to an advising
bank or a beneficiary, a true and complete copy of each such Lender Letter of
Credit or amendment to or renewal of a Lender Letter of Credit.
(3) Risk Participations, Drawings and Reimbursements.
(a) Immediately upon the issuance of each Lender
Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from Issuing Lender a participation in which
Lender Letter of Credit and each drawing thereunder in an amount equal to such
Lenders Pro Rata Share of the maximum amount available to be drawn under such
Lender Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing
under a Lender Letter of Credit by the beneficiary or transferee thereof,
Issuing Lender will promptly notify Borrower and Collateral Agent. Borrower
shall reimburse Issuing Lender prior to 11:00 a.m., Central time, on each date
that any amount is to be paid by Issuing Lender under any Lender Letter of
Credit (each such date, an "Honor Date"), in an amount equal to the amount so
paid by Issuing Lender. If Borrower fails to reimburse Issuing Lender for the
full amount of any drawing under any Lender Letter of Credit by 11:00 a.m.,
Central time, on the Honor Date, Issuing Lender will notify Collateral Agent
thereof by 11:30 a.m., Central time, on the Honor Date, and Collateral Agent
will notify each Lender thereof by 12:30 p.m., Central time, on the Honor Date,
and Borrower shall be deemed to have requested that Base Rate Revolving Loans be
made by Lenders to be disbursed on the Honor Date under such Lender Letter of
Credit. Any notice given by Issuing Lender or Collateral Agent pursuant to this
subsection 2.1(G)(3)(b) may be oral if immediately confirmed in writing
(including by facsimile); provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(c) Each Lender shall upon any notice from
Collateral Agent pursuant to subsection 2.1(G)(3)(b) make available to
Collateral Agent for the account of Issuing Lender an amount in U.S. Dollars and
in immediately available funds equal to its Pro Rata Share of the amount of the
drawing, whereupon the participating Lenders shall each be deemed to have made a
Base Rate Revolving Loan to Borrower in such amount. If any Lender so notified
fails to make available to Collateral Agent for the account of Issuing Lender
the amount of such Lender's Pro Rata Share of the amount of such drawing by 2:00
p.m., Central time, on the Honor Date, then interest shall accrue on such
Lender's obligation to make such payment, from the Honor Date to the date such
Lender makes such payment, at a rate per annum equal to the Federal Funds
Effective Rate in effect from time to time during such period plus fifty (50)
basis points. Collateral Agent will promptly give notice of the occurrence of
the Honor Date, but failure of Collateral Agent to give any such notice on the
Honor Date or in sufficient time to enable any Lender to effect such payment
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on such date shall not relieve such Lender from its obligations under this
subsection 2.1(G)(3)(c).
(d) With respect to any unreimbursed drawing that
is not converted into Base Rate Revolving Loans in whole or in part, for any
reason, Borrower shall be deemed to have incurred from Issuing Lender an L/C
Borrowing in the amount of such drawing, which L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at a rate per
annum equal to the highest Interest Rate then applicable to Base Rate Revolving
Loans plus 2% per annum, and each Lender's payment to Issuing Lender pursuant to
subsection 2.1(G)(3)(c) shall be deemed payment in respect of its participation
in such L/C Borrowing and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this subsection 2.1(G)(3).
(e) Each Lender's obligation in accordance with
this Agreement to make Loans or L/C Advances, as contemplated by this subsection
2.1(G)(3), as a result of a drawing under a Lender Letter of Credit, shall be
absolute and unconditional and without recourse to Issuing Lender and shall not
be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against Issuing
Lender, Borrower or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of an Event of Default, a Default or a material
adverse event with respect to Borrower or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
(4) Repayment of Participations.
(a) Upon (and only upon) receipt by Collateral
Agent for the account of Issuing Lender of immediately available funds from
Borrower (i) in reimbursement of any payment made by Issuing Lender under a
Lender Letter of Credit with respect to which any Lender has paid Collateral
Agent for the account of Issuing Lender for such Lender's participation in such
Lender Letter of Credit pursuant to subsection 2.1(G)(3) or (ii) in payment of
interest thereon, Collateral Agent will pay to each Lender, in the same funds as
those received by Collateral Agent for the account of Issuing Lender, the amount
of such Lender's Pro Rata Share of such funds, and Issuing Lender shall receive
the amount of the Pro Rata Share of such funds of any Lender that did not so pay
Collateral Agent for the account of the Issuing Lender.
(b) If Collateral Agent or Issuing Lender is
required at any time to return to Borrower or to a trustee, receiver, liquidator
or custodian, or to any official in any Insolvency Proceeding, any portion of
any payment made by Borrower to Collateral Agent for the account of Issuing
Lender pursuant to subsection 2.1(G)(4)(a) in reimbursement of a payment made
under a Lender Letter of Credit or interest or fee thereon, each Lender shall,
on demand of Collateral Agent, forthwith return to Collateral Agent or Issuing
Lender the amount of its Pro Rata Share of any amount so returned by Collateral
Agent or Issuing Lender plus interest thereon from the date such demand is made
to the date
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such amount is returned by such Lender to Collateral Agent or Issuing Lender, at
a rate per annum equal to the Federal Funds Effective Rate in effect from time
to time plus fifty (50) basis points.
(H) Role of the Issuing Lender.
(1) No Obligation to Inquire.
Each Lender and Borrower agree that, in paying any drawing
under a Lender Letter of Credit, Issuing Lender shall not have any
responsibility to obtain any document (other than any sight draft and
certificate expressly required by such Lender Letter of Credit) or to ascertain
or inquire as to the validity or accuracy of any such document or the authority
of the Person executing or delivering any such document.
(2) No Liability to Lenders.
Neither Issuing Lender nor any of its respective
correspondents, participants or assignees shall be liable to any Lender for: (a)
any action taken or omitted in connection herewith at the request or with the
approval of Lenders (including Requisite Lenders, as applicable); (b) any action
taken or omitted in the absence of gross negligence or willful misconduct; or
(c) the due execution, effectiveness, validity or enforceability of any
L/C-Related Document.
(3) No Liability to Borrower.
Borrower hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Lender Letter of
Credit; provided that this assumption is not intended to, and shall not,
preclude Borrower's pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. Neither Issuing
Lender nor any of its respective correspondents, participants or assignees shall
be liable or responsible for any of the matters described in subsection 2.1(I);
provided, that, anything in such clauses to the contrary notwithstanding,
Borrower may have a claim against Issuing Lender, and Issuing Lender may be
liable to Borrower, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by Borrower which
Borrower proves were caused by Issuing Lender's willful misconduct or gross
negligence or Issuing Lender's willful failure to pay under any Lender Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of such Lender
Letter of Credit. In furtherance and not in limitation of the foregoing: (i)
Issuing Lender may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice of
information to the contrary; and (ii) Issuing Lender shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Lender Letter of Credit or the
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rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason.
(I) Obligations Absolute. The obligations of Borrower
under this Agreement and any L/C-Related Document to reimburse Issuing Lender
for a drawing under a Lender Letter of Credit, and to repay any L/C Borrowing
and any drawing under a Lender Letter of Credit converted into Base Rate
Revolving Loans, shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other
L/C-Related Document under all circumstances, including the following:
(1) any lack of validity of enforceability of this
Agreement or any L/C-Related Document;
(2) any change in the time, manner or place of
payment of, or in any other term of, all or any of the obligations of Borrower
in respect of any Lender Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the L/C-Related Documents, other
than an improper payment by Issuing Lender under a Lender Letter of Credit;
(3) the existence of any claim, set-off, defense
or other right that Borrower may have at any time against any beneficiary or any
transferee of any Lender Letter of Credit or Bank Letter of Credit (or any
Person for whom any such beneficiary or any such transferee may be acting),
Issuing Lender or any other Person, whether in connection with this Agreement,
the transactions contemplated hereby or by the L/C-Related Documents or any
unrelated transaction;
(4) any draft, demand, certificate or other
document presented under any Lender Letter of Credit or Bank Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Lender Letter of Credit;
(5) any payment under any Lender Letter of Credit
or Bank Letter of Credit against presentation of a draft or certificate that
does not strictly comply with the terms of such Lender Letter of Credit; or any
payment made by Issuing Lender under any Lender Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of any Lender Letter of Credit,
including any arising in connection with any Insolvency Proceeding;
(6) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the obligations of Borrower in respect of
any Lender Letter of Credit; or
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(7) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, Borrower or a guarantor.
(J) Cash Collateral Pledge. If (1) any Lender Letter of
Credit remains outstanding partially or wholly undrawn as of the Termination
Date or (2) Borrower is required to Cash Collateralize Lender Letters of Credit
pursuant to subsection 2.4(C) or 8.3 then Borrower shall immediately Cash
Collateralize the Letter of Credit Liability in an amount equal to 105% of the
Letter of Credit Reserve at such time.
(K) Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the International Chamber of
Commerce most recently at the time of issuance of any Lender Letter of Credit
shall (unless otherwise expressly provided in such Lender Letter of Credit)
apply to each Lender Letter of Credit.
(L) Availability of Lender's Share.
(1) Unless Collateral Agent receives written
notice from a Lender on or prior to any Funding Date, that such Lender will not
make available as and when required hereunder to Collateral Agent for the
account of Borrower the amount of that Lender's Pro Rata Share of such Lender's
Total Loan Commitment, Collateral Agent may assume that each Lender has made
such amount available to Collateral Agent in immediately available funds on the
Funding Date and Collateral Agent may (but shall not be so required), in
reliance upon such assumption, make available to Borrower on such date a
corresponding amount.
(2) A Defaulting Lender shall pay interest at the
Federal Funds Effective Rate plus fifty (50) basis points on the Defaulted
Amount from the Business Day following the applicable Funding Date of such
Defaulted Amount until the date such Defaulted Amount is paid to Collateral
Agent. A notice of Collateral Agent submitted to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is not paid when due to Collateral Agent, Collateral Agent, at
its option, may notify Borrower of such failure to fund and, upon demand by
Collateral Agent, Borrower shall pay the unpaid amount to Collateral Agent for
Collateral Agent's account, together with interest thereon for each day elapsed
since the date of such borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loan made by the other Lenders on such Funding
Date. The failure of any Lender to make available any portion of its Commitment
on any Funding Date or to fund its participation in a Lender Letter of Credit
shall not relieve any other Lender of any obligation hereunder to fund such
Lender's Commitment on such Funding Date or to fund any such participation, but
no Lender shall be responsible for the failure of any other Lender to make such
other Lender's Commitment on any Funding Date or to fund any participation to be
funded by any other Lender.
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(3) Collateral Agent shall not be obligated to
transfer to a Defaulting Lender any payment made by Borrower to Collateral Agent
or any amount otherwise received by Collateral Agent for application to the
Obligations nor shall a Defaulting Lender be entitled to the sharing of any
interest, fees or payments hereunder.
(4) For purposes of voting or consenting to
matters with respect to the Loan Documents and determining Pro Rata Shares, a
Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitments shall be deemed to be zero.
2.2. Interest.
(A) Rate of Interest.
(1) The Term Loan shall bear interest (the "Term
Loan Interest Rate") from the date the Term Loan is made to the date paid at a
rate per annum equal to (i) in the case of a LIBOR Term Loan, LIBOR plus the
Applicable Term Loan Margin and (ii) in the case of a Base Rate Term Loan, the
Base Rate plus the Applicable Term Loan Margin. The applicable basis for
determining the rate of interest shall be selected by Borrower initially at the
time the Borrowing Request is given pursuant to subsection 2.1(D)(1).
(2) The Revolving Loans and all other Obligations
(other than the Term Loan) shall bear interest (the "Revolving Loan Interest
Rate") from the date such Revolving Loans are made or such other Obligations
become due to the date paid at a rate per annum equal to (i) in the case of a
Base Rate Revolving Loan and other Obligations for which no other interest rate
is specified, the Base Rate plus the Applicable Revolving Loan Margin and (ii)
in the case of a LIBOR Revolving Loan, LIBOR plus the Applicable Revolving Loan
Margin. The applicable basis for determining the rate of interest shall be
selected by Borrower initially at the time a Borrowing Request is given pursuant
to subsection 2.1(D)(1).
(3) The basis for determining the interest rate
with respect to any Loan or a portion of any Loan may be changed from time to
time pursuant to subsection 2.2(D). If on any day a Loan or a portion of any
Loan is outstanding with respect to which notice has not been delivered to
Collateral Agent in accordance with the terms of this Agreement specifying the
basis for determining the rate of interest, then for that day that Loan or
portion thereof shall bear interest determined by reference to the Base Rate.
(4) After the occurrence and during the
continuance of an Event of Default (i) the Loans and all other Obligations
shall, unless Requisite Lenders otherwise determine, bear interest at a rate per
annum equal to two percent (2%) plus the otherwise applicable Interest Rate (the
"Default Rate"), (ii) each LIBOR Loan shall automatically convert to a Base Rate
Loan at the end of any applicable Interest Period and (iii) no Loans may be
converted to LIBOR Loans.
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(B) Computation and Payment of Interest.
Interest on the Loans and all other Obligations shall be
computed on the daily principal balance on the basis of a 360 day year for the
actual number of days elapsed in the period during which it accrues. In
computing interest on any Loan, the date of funding of the Loan or the first day
of an Interest Period applicable to such Loan or, with respect to a Base Rate
Loan being converted from a LIBOR Loan, the date of conversion of such LIBOR
Loan to such Base Rate Loan, shall be included; and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan, or
with respect to a Base Rate Loan being converted to a LIBOR Loan, the date of
conversion of such Base Rate Loan to such LIBOR Loan, shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan. Interest on Base Rate Loans and all other
Obligations other than LIBOR Loans shall be payable to Collateral Agent for the
benefit of Lenders monthly in arrears on the first day of each calendar month,
on the date of any prepayment of Loans, and at maturity, whether by acceleration
or otherwise. Interest on LIBOR Loans shall be payable to Collateral Agent for
the benefit of Lenders on the last day of the applicable Interest Period for
such Loans, on the date of any prepayment of such Loans, and at maturity,
whether by acceleration or otherwise. In addition, for each LIBOR Loan having an
Interest Period longer than three (3) months, interest accrued on such Loan
shall also be payable on the last day of each three (3) month interval during
such Interest Period.
(C) Interest Laws.
Notwithstanding any provision to the contrary contained in
this Agreement or any other Loan Document, Borrower shall not be required to
pay, and neither any Agent nor any Lender shall be permitted to collect, any
amount of interest in excess of the maximum amount of interest permitted by
applicable law ("Excess Interest"). If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been provided for in
this Agreement or in any other Loan Document, then in such event: (1) the
provisions of this subsection shall govern and control; (2) neither Borrower nor
any other Loan Party shall be obligated to pay any Excess Interest; (3) any
Excess Interest that any Agent or any Lender may have received hereunder shall
be, at such Lender's option, (a) applied as a credit against the outstanding
principal balance of the Obligations or accrued and unpaid interest (not to
exceed the maximum amount permitted by law), (b) refunded to the payor thereof,
or (c) any combination of the foregoing; (4) the interest rate(s) provided for
herein shall be automatically reduced to the maximum lawful rate allowed from
time to time under applicable law (the "Maximum Rate"), and this Agreement and
the other Loan Documents shall be deemed to have been and shall be, reformed and
modified to reflect such reduction; and (5) neither Borrower nor any Loan Party
shall have any action against any Agent or any Lender for any damages arising
out of the payment or collection of any Excess Interest. Notwithstanding the
foregoing, if for any period of time interest on any Obligations is calculated
at the Maximum Rate rather than
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the applicable rate under this Agreement, and thereafter such applicable rate
becomes less than the Maximum Rate, the rate of interest payable on such
Obligations shall remain at the Maximum Rate until each Lender shall have
received the amount of interest which such Lender would have received during
such period on such Obligations had the rate of interest not been limited to the
Maximum Rate during such period.
(D) Continuation and Conversion Elections.
By delivering a Continuation/ Conversion Notice to Collateral
Agent on or before 11:00 a.m., Central time, on a Business Day, Borrower may
from time to time irrevocably elect on not less than three (3) Business Days'
notice that the total amount, or any portion in an aggregate minimum amount of
$500,000 and an integral multiple of $100,000, of any Loans be, in the case of
Base Rate Loans, converted into LIBOR Loans or, in the case of LIBOR Loans, be
converted into a Base Rate Loan or continued as a LIBOR Loan (in the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBOR Loan at
least three (3) Business Days before the last day of the then current Interest
Period with respect thereto, such LIBOR Loan shall, on such last day,
automatically convert to a Base Rate Loan); provided, however, that (i) each
such conversion or continuation shall be pro-rated among the applicable
outstanding Loans of all Lenders, and (ii) no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into, LIBOR
Loans when any Default or an Event of Default has occurred and is continuing.
2.3. Fees.
(A) Fee Letter.
In addition to all interest, fees and charges set forth in
this Agreement and the other Loan Documents, Borrower shall pay to Collateral
Agent, for the account of the parties specified therein, such fees and charges
as are set forth in the certain Fee Letter of even date herewith executed by
Borrower in favor of Collateral Agent (the "Fee Letter"), at such times as are
set forth in the Fee Letter.
(B) Unused Line Fee.
Borrower shall pay to Collateral Agent, for the benefit of
Lenders, a per annum fee in an amount equal to (a) the Revolving Loan Commitment
less (b) the sum of (i) the average daily balance of the Revolving Loan plus
(ii) the average daily face amount of the Lender Letter of Credit Reserve during
the preceding calendar month multiplied by (c) the Applicable Non-Use Fee
Margin, such fee to be calculated on the basis of a 360 day year for the actual
number of days elapsed and to be payable monthly in arrears on the first day of
the first calendar month following the Closing Date and the first day of each
calendar month thereafter.
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(C) Letter of Credit Fees.
Borrower shall pay to Collateral Agent, for the benefit of
Lenders, a fee with respect to each Lender Letter of Credit in the amount of the
average daily amount of Letter of Credit Liability with respect to such Lender
Letter of Credit, multiplied by two and one-quarter percent (2.25%) per annum,
computed on a quarterly basis in advance on the first Business Day of each
calendar quarter. Such fees will be calculated on the basis of a 360 day year
for the actual number of days elapsed and will be payable on the first day of
each calendar quarter during which Lender Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the date hereof.
Borrower shall also pay to Collateral Agent, for the benefit of Issuing Lender,
a letter of credit fronting fee for each Lender Letter of Credit issued by
Issuing Lender on the date of issuance thereof at a rate per annum equal to
one-quarter of one percent (0.25%) of the maximum original stated amount of such
Lender Letter of Credit. Such fronting fee will be calculated on the basis of a
360 day year. Borrower shall also pay to Issuing Lender from time to time (i)
the normal issuance, presentation, amendment and other processing fees and other
standard costs and charges of Issuing Lender relating to Lender Letters of
Credit as from time to time in effect and (ii) for the benefit of Issuing Lender
and any other applicable Agent or Lender, any and all fees and expenses, if any,
paid by any such Person to the issuer of any Bank Letter of Credit. Issuing
Lender shall from time to time, on request by Borrower, provide Borrower with a
written schedule of all such fees, costs and charges of Issuing Lender in
respect of Lender Letters of Credit and all such fees and expenses of any issuer
of Bank Letters of Credit (to the extent available to Issuing Lender).
(D) Prepayment Fees.
If (1) Borrower voluntarily prepays the Obligations in full
or, in the case of any voluntary prepayment of the Term Loan, in part (other
than (a) voluntary prepayments of the Revolving Loan which do not terminate the
Revolving Loan Commitment or (b) any prepayment made pursuant to subsection
2.11) or (2) Borrower repays the Obligations in full or in part after or in
connection with the occurrence of a Change of Control, Borrower, at the time of
prepayment, shall pay to Collateral Agent, for the benefit of Lenders, as
compensation for the costs of being prepared to make funds available to Borrower
under this Agreement, and not as a penalty, the applicable amount set forth in
the Fee Letter. No prepayment fees shall be applicable to any mandatory
prepayment of all or any part of the Obligations under subsection 2.4(b)(2) or
subsection 2.4(b)(3).
(E) Audit Fees.
Borrower agrees to pay to Collateral Agent for its own account
an audit fee for each inspection equal to $750 per auditor per day or any
portion thereof, excluding all full days spent by Collateral Agent traveling to
or from Borrower's locations, together with out of pocket fees, costs and
expenses (including any of the same paid to any auditors not employed by
Collateral Agent).
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(F) Other Fees and Expenses.
Borrower shall pay to Collateral Agent, for the account of the
applicable Agent, all charges for returned items and all other bank charges
incurred by such Agent, as well as such Agent's standard wire transfer charges
for each wire transfer made under this Agreement.
2.4. Payments and Prepayments.
(A) Manner and Time of Payment.
In its sole discretion, Collateral Agent may charge interest
and other amounts payable hereunder to the Revolving Loan, all as set forth on
Collateral Agent's books and records. If Collateral Agent elects to bill
Borrower for any amount due hereunder, such amount shall be immediately due and
payable with interest thereon as provided herein. All payments made by Borrower
with respect to the Obligations shall be made without deduction, defense, setoff
or counterclaim. All payments hereunder shall, unless otherwise directed by
Collateral Agent, be made to Agent's Account or in accordance with subsection
5.6. Proceeds received in immediately available federal funds in Agent's Account
at or before 2:00 p.m. Central time on any Business Day shall be credited to the
Obligations for all purposes on the same Business Day on which such proceeds
were received; proceeds received after such time will be credited on the next
Business Day thereafter. Notwithstanding the foregoing, so long as no Default or
Event of Default is then in existence, if all Revolving Loans outstanding at the
time of receipt of any such proceeds in Agent's Account are LIBOR Loans, then
Borrower may direct that such proceeds be held by Collateral Agent in a
non-interest bearing cash collateral account maintained by Collateral Agent
until the earliest to occur of (1) receipt by Collateral Agent of a direction by
Borrower for the disbursement of such proceeds by Collateral Agent, (2) the
expiration of an Interest Period relating to LIBOR Revolving Loans, in which
case such proceeds shall be applied to the payment of principal of the
applicable LIBOR Revolving Loans, (3) the existence of outstanding Obligations
in respect of Base Rate Revolving Loans, in which case such proceeds shall be
applied to the payment of principal of such Base Rate Revolving Loans or (4) a
Default or an Event of Default, in which case such proceeds shall be applied as
Collateral Agent shall determine.
(B) Mandatory Prepayments.
(1) Overadvance.
At any time that the Revolving Loan exceeds the Maximum
Revolving Loan Amount, Borrower shall immediately repay the Revolving Loan to
the extent necessary to reduce the principal balance to an amount equal to or
less than the Maximum Revolving Loan Amount.
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(2) Proceeds of Asset Dispositions.
Immediately upon receipt by Borrower or any of its
Subsidiaries of proceeds of any Asset Disposition at any time that the aggregate
amount of such proceeds exceed $2,000,000 in any Fiscal Year, Borrower shall
prepay the Obligations in an amount equal to the amount of such proceeds in
excess of $2,000,000. If Borrower reasonably expects the proceeds of any Asset
Disposition to be reinvested within 180 days to repair or replace such assets
with like assets, Borrower shall deliver the proceeds to Collateral Agent to be
applied to the Revolving Loan, and Borrower may, so long as no Default or Event
of Default shall have occurred and be continuing, reborrow such proceeds only
for such repair or replacement If Borrower fails to reinvest such proceeds
within 180 days, Borrower hereby authorizes Lenders to make a Revolving Advance
to repay the Term Loan as required hereby and/or if the Term Loan has been
repaid, the Revolving Loan Commitment shall be permanently reduced as provided
herein.
All such prepayments shall be applied in payment of Scheduled
Installments of the Term Loan, in inverse order of maturity, and, at any time
after the Term Loan shall have been repaid in full, such payments shall be
applied as a permanent reduction of the Revolving Loan Commitment.
(3) Prepayments from Excess Cash Flow.
On or prior to the earlier to occur of (1) one hundred (100)
days after the end of each Fiscal Year and (2) ten (10) days after receipt by
Collateral Agent and Administrative Agent of Borrower's audited financial
statements for such Fiscal Year delivered pursuant to subsection 5.1(C),
Borrower shall prepay the Obligations in an amount equal to (a) for the 1999
Fiscal Year, fifty percent (50%) of Excess Cash Flow for such prior Fiscal Year
and (b) for each Fiscal Year other than the 1999 Fiscal Year, twenty-five
percent (25%) of Excess Cash Flow for such prior Fiscal Year, in each case
calculated on the basis of the audited financial statements for such Fiscal Year
delivered to Collateral Agent and Administrative Agent pursuant to subsection
5.1(C). All such prepayments from Excess Cash Flow shall be applied in payment
of Scheduled Installments of the Term Loan in inverse order of maturity, and, at
any time after the Term Loan shall have been repaid in full, such payments shall
be applied as a permanent reduction of the Revolving Loan Commitment.
Concurrently with the making of any such payment, Borrower shall deliver to
Collateral Agent and Administrative Agent a certificate of Borrower's chief
executive officer or chief financial officer demonstrating its calculation of
the amount required to be paid.
(C) Voluntary Prepayments and Repayments.
Borrower may, at any time upon not less than three Business
Days' prior notice to Collateral Agent and Administrative Agent, prepay all or
any portion of the Term Loan or prepay all or any portion of, or terminate, the
Revolving Loan Commitment;
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provided, however, the Revolving Loan Commitment may not be terminated by
Borrower until the Term Loan is paid in full. Upon termination of the Revolving
Loan Commitment, Borrower shall cause each Agent and each Lender to be released
from all liability under any Lender Letters of Credit or, at Collateral Agent's
option, Borrower will Cash Collateralize the Letter of Credit Liability.
(D) Payments on Business Days.
Whenever any payment to be made hereunder shall be stated to
be due on a day that is not a Business Day, the payment may be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the amount of interest or fees due hereunder.
2.5. Term of this Agreement.
This Agreement shall be effective until April 15, 2001 (the
"Original Term") and may, upon the written request of Borrower not less than
ninety (90) days prior to the end of the Original Term or the first Renewal
Term, as applicable, and the written agreement of all Agents and all Lenders, be
renewed for two additional terms of one year each thereafter (each such year a
"Renewal Term"). The last day of the Original Term, or if applicable, any
Renewal Term, is hereinafter referred to as the "Termination Date." Borrower
acknowledges that Agents and Lenders may, in their sole discretion, (a)
condition any agreement by Agents and Lenders to renew this Agreement upon such
changes and modifications to this Agreement as are acceptable to Agents and
Lenders, including without limitation changes in interest rates, fees and other
pricing mechanisms and (b) charge renewal fees satisfactory to Agents and
Lenders in connection with any such renewal. The Commitments shall (unless
earlier terminated) terminate upon the earlier of (i) the occurrence of an event
specified in subsection 8.3 or (ii) the Termination Date. Upon termination in
accordance with subsection 8.3 or on the Termination Date, all Obligations shall
become immediately due and payable without notice or demand. Notwithstanding any
termination, until all Obligations have been fully paid and satisfied,
Collateral Agent, on behalf of Agents and Lenders, shall be entitled to retain
security interests in and liens upon all Collateral, and even after payment of
all Obligations hereunder, Borrower's obligation to indemnify each Agent and
each Lender in accordance with the terms hereof shall continue.
2.6. Statements.
Collateral Agent shall render a monthly statement of account
to Borrower within twenty (20) days after the end of each calendar month. Such
statement of account shall constitute an account stated unless Borrower makes
written objection thereto within sixty (60) days from the date such statement is
mailed to Borrower. Borrower promises to pay all of its Obligations as such
amounts become due or are declared due pursuant to the terms of this Agreement.
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2.7. Grant of Security Interest.
To secure the payment and performance of the Obligations,
including all renewals, extensions, restructurings and refinancings of any or
all of the Obligations, Borrower hereby grants to Collateral Agent, on behalf of
Agents and Lenders, a continuing security interest, lien and mortgage in and to
all right, title and interest of Borrower in the following property of Borrower,
whether now owned or existing or hereafter acquired or arising and regardless of
where located (all being collectively referred to as the "Collateral"): (A)
Accounts, and all guaranties and security therefor, and all goods and rights
represented thereby or arising therefrom including the rights of stoppage in
transit, replevin and reclamation; (B) Inventory; (C) general intangibles (as
defined in the UCC), including without limitation Intellectual Property; (D)
documents (as defined in the UCC) or other receipts covering, evidencing or
representing goods; (E) instruments (as defined in the UCC); (F) chattel paper
(as defined in the UCC); (G) Equipment; (H) Mortgaged Property; (I) investment
property (as defined in the UCC); (J) all deposit accounts of Borrower
maintained with any bank or financial institution; (K) all cash and other monies
and property of Borrower in the possession or under the control of any Agent,
any Lender or any participant; (L) all amounts held in trust by Borrower for
unpaid cash sellers of livestock or live poultry; (M) all books, records, ledger
cards, files, correspondence, computer programs, tapes, disks and related data
processing software that at any time evidence or contain information relating to
any of the property described above or are otherwise necessary or helpful in the
collection thereof or realization thereon; and (N) proceeds of all or any of the
property described above, including, without limitation, the proceeds of any
insurance policies covering any of the above described property.
2.8. Capital Adequacy and Other Adjustments.
In the event any Agent or any Lender shall have determined
that the adoption after the date hereof of any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by such
Agent or such Lender or any corporation controlling such Agent or such Lender
with any request or directive regarding capital adequacy, reserve requirements
or similar requirements (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) from any central bank or
governmental agency or body having jurisdiction and which generally applies to
Persons similarly situated to such Agent or Lender, does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by such Agent or such Lender or any corporation controlling such
Agent or such Lender and thereby reducing the rate of return on such Agent's or
such Lender's or such corporation's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time within thirty (30) days after
notice and demand from such Lender or such Agent (with a copy to Administrative
Agent) (together with the certificate referred to in the next sentence) pay to
such Agent or such Lender additional amounts sufficient to compensate such Agent
or such
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Lender for such reduction. A certificate as to the amount of such cost and
showing the basis of the computation of such cost submitted by any Agent or any
Lender to Borrower shall, absent manifest error, be final, conclusive and
binding for all purposes.
2.9. Taxes.
(A) No Deductions.
Any and all payments or reimbursements made hereunder or under
the Revolving Notes or Term Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto; excluding, however, the
following: taxes imposed on the net income of any Lender or any Agent by the
jurisdiction under the laws of which such Agent or such Lender is organized or
doing business or any political subdivision thereof (including without
limitation the Michigan Single Business Tax) and taxes imposed on its net income
by the jurisdiction of such Agent's or such Lender's applicable lending office
or any political subdivision thereof (all such taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto
excluding such taxes imposed on net income, herein "Tax Liabilities"). If
Borrower shall be required by law to deduct any such Tax Liabilities from or in
respect of any sum payable hereunder to any Agent or any Lender, then the sum
payable hereunder shall be increased as may be necessary so that, after making
all required deductions, such Agent or such Lender receives an amount equal to
the sum it would have received had no such deductions been made.
(B) Changes in Tax Laws.
In the event that, subsequent to the Closing Date, (i) any
changes in any existing law, regulation, treaty or directive or in the
interpretation or application thereof, (ii) any new law, regulation, treaty or
directive enacted or any interpretation or application thereof, or (iii)
compliance by any Agent or any Lender with any request or directive (whether or
not having the force of law) from any governmental authority, agency or
instrumentality:
(1) does or shall subject any Agent or any Lender
to any tax of any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or Lender Letters of Credit issued hereunder, or
change the basis of taxation of payments to such Agent or such Lender of
principal, fees, interest or any other amount payable hereunder (except for net
income taxes, or franchise taxes imposed in lieu of net income taxes, imposed
generally by federal, state or local taxing authorities with respect to interest
or commitment or other fees payable hereunder or changes in the rate of tax on
the overall net income of such Agent or such Lender); or
(2) does or shall impose on any Agent or any
Lender any other condition or increased cost in connection with the transactions
contemplated hereby or
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participations herein; and the result of any of the foregoing is to increase the
cost to such Agent or such Lender of issuing any Lender Letter of Credit or
making or continuing any Loan hereunder, as the case may be, or to reduce any
amount receivable hereunder, then, in any such case, Borrower shall promptly pay
to such Agent or such Lender, within thirty (30) days after receipt of a request
by such Agent or such Lender, any additional amounts necessary to compensate
such Agent or such Lender, on an after-tax basis, for such additional cost or
reduced amount receivable, as determined by such Agent or such Lender with
respect to this Agreement or the other Loan Documents. If any Agent or any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify Borrower of the event by reason of which
such Agent or such Lender has become so entitled. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by such
Agent or any Lender to Borrower shall, absent manifest error, be final,
conclusive and binding for all purposes.
(C) Foreign Lenders.
Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
this Agreement or under the Revolving Notes or Term Notes, are exempt from
United States withholding tax or are subject to United States withholding tax at
a reduced rate under an applicable statute or tax treaty shall provide to
Borrower and Administrative Agent (i) a properly completed and executed Internal
Revenue Service Form 4224 or Form 1001 or other applicable form, certificate or
document prescribed by the Internal Revenue Service of the United States
certifying as to such Foreign Lender's entitlement to such exemption or reduced
rate of withholding with respect to payments to be made to such Foreign Lender
under this Agreement, or under the Revolving Notes or the Term Notes (a
"Certificate of Exemption"), or (ii) a letter from any such Foreign Lender
stating that it is not entitled to any such exemption or reduced rate of
withholding (a "Letter of Non-Exemption"). Prior to becoming a Lender under this
Agreement and within fifteen (15) days after a reasonable written request of
Borrower or Administrative Agent from time to time thereafter, each Foreign
Lender that becomes a Lender under this Agreement shall provide a Certificate of
Exemption or a Letter of Non-Exemption to Borrower and Administrative Agent.
If a Foreign Lender is entitled to an exemption with respect
to payments to be made to such Foreign Lender under this Agreement (or to a
reduced rate of withholding) and does not provide a Certificate of Exemption to
Borrower and Administrative Agent within the time periods set forth in the
preceding paragraph, Borrower shall withhold taxes from payments to such Foreign
Lender at the applicable statutory rates and Borrower shall not be required to
pay any additional amounts as a result of such withholding; provided, however,
that all such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrower and Administrative Agent.
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2.10. Required Termination and Prepayment.
If on any date any Lender shall have reasonably determined
(which determination shall be final and conclusive and binding upon all parties)
that the making or continuation of its LIBOR Loans has become unlawful or
impossible by compliance by such Lender in good faith with any law, governmental
rule, regulation or order (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful), then, and in any such event,
such Lender shall promptly give notice (by telephone confirmed in writing) to
Borrower and Collateral Agent of that determination. Subject to prior withdrawal
of a Borrowing Request or a Continuation/Conversion Notice or prepayment of
LIBOR Loans as contemplated by subsection 2.11, the obligation of such Lender to
make or maintain its LIBOR Loans during any such period shall be terminated at
the earlier of the termination of the Interest Period then in effect or when
required by law and Borrower shall no later than the termination of the Interest
Period in effect at the time any such determination pursuant to this subsection
2.10 is made or, earlier when required by law, repay or prepay LIBOR Loans
together with all interest accrued thereon or convert LIBOR Loans to Base Rate
Loans.
2.11. Optional Prepayment/Replacement of Agents or Lenders
in Respect of Increased Costs.
Within fifteen (15) days after receipt by Borrower of written
notice and demand from any Agent or any Lender (an "Affected Lender") for
payment of additional costs as provided in subsection 2.8, Borrower may, at its
option, notify Collateral Agent and Administrative Agent and such Affected
Lender of its intention to do one of the following:
(A) Borrower may obtain, at Borrower's expense, a
replacement Lender ("Replacement Lender") for such Affected Lender, which
Replacement Lender shall be reasonably satisfactory to Collateral Agent and
Administrative Agent. In the event Borrower obtains a Replacement Lender within
ninety (90) days following notice of its intention to do so, the Affected Lender
shall sell and assign its Loans and Commitments to such Replacement Lender
provided, that Borrower has reimbursed such Affected Lender for its increased
costs for which it is entitled to reimbursement under this Agreement through the
date of such sale and assignment.
(B) So long as no Event of Default is then in existence,
Borrower may notify such Affected Lender of Borrower's intention to prepay in
full all outstanding Obligations owed to such Affected Lender and terminate such
Affected Lender's Commitments. So long as no Event of Default is then in
existence, Borrower shall, within ninety (90) days following notice of its
intention to do so, prepay in full all outstanding Obligations owed to such
Affected Lender (including such Affected Lender's increased costs for which it
is entitled to reimbursement under this Agreement through the date of such
prepayment) and terminate such Affected Lender's Commitments.
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2.12. Compensation.
Borrower shall compensate each Agent and each Lender, upon
written request by such Agent or such Lender (which request shall set forth in
reasonable detail the basis for requesting such amounts and which shall, absent
manifest error, be conclusive and binding upon all parties hereto), for all
reasonable actual losses, expenses and liabilities including, without
limitation, any actual loss sustained by such Agent or such Lender in connection
with the re-employment of such funds: (i) if for any reason (other than a
default by such Agent or such Lender) a borrowing of any LIBOR Loan does not
occur on a date specified therefor in a Borrowing Request or a
Continuation/Conversion Notice; (ii) if any prepayment of any of its LIBOR Loans
occurs on a date that is not the last day of an Interest Period applicable to
that Loan; (iii) if any prepayment of any of its LIBOR Loans is not made on any
date specified in a notice of prepayment given by Borrower; or (iv) as a
consequence of any other default by Borrower to repay its LIBOR Loans when
required by the terms of this Agreement; provided that during the period while
any such amounts have not been paid, Collateral Agent shall reserve an equal
amount from amounts otherwise available to be borrowed under the Revolving Loan.
All amounts owing pursuant to this subsection 2.12 shall be in addition to any
prepayment fees due and owing hereunder.
2.13. Booking of LIBOR Loans.
Each Agent and each Lender may make, carry or transfer LIBOR
Loans at, to, or for the account of, any of its branch offices or the office of
an affiliate of such Agent or such Lender, as applicable, whether or not located
in the United States.
2.14. Assumptions Concerning Funding of LIBOR Loans.
Calculation of all amounts payable to each Agent and each
Lender under subsection 2.12 shall be made as though such Agent or such Lender
had actually funded its relevant LIBOR Loan through the purchase of a
certificate of deposit bearing interest at LIBOR in an amount equal to the
amount of that LIBOR Loan and having maturity comparable to the relevant
Interest Period and through the transfer of such certificate of deposit from an
offshore office to a domestic office in the United States of America; provided,
however, that each Agent and each Lender may fund each of its LIBOR Loans in any
manner it sees fit and the foregoing assumption shall be utilized only for the
calculation of amounts payable under subsection 2.12.
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SECTION 3. CONDITIONS TO LOANS AND LENDER LETTERS OF CREDIT
3.1 Conditions to Initial Funding.
The obligations of each Agent and each Lender to make Loans and the
obligation of Issuing Lender to issue Lender Letters of Credit on the Closing
Date are subject to satisfaction of all of the conditions set forth below.
(A) Closing Deliveries.
Collateral Agent and Administrative Agent shall have received, in form
and substance satisfactory to Collateral Agent and Administrative Agent, all
documents, instruments and information identified on Schedule 3.1(A).
(B) Security Interest.
Collateral Agent and Administrative Agent shall have received
satisfactory evidence that all security interests and liens granted to
Collateral Agent, for the benefit of Agents and Lenders, pursuant to this
Agreement or the other Loan Documents have been duly perfected and constitute
first priority liens on the Collateral, subject only to Permitted Encumbrances.
(C) Closing Date Availability.
After giving effect to the consummation of the transactions
contemplated hereunder on the Closing Date and the payment by Borrower of all
costs, fees and expenses relating thereto, Excess Availability on the Closing
Date shall be at least $10,000,000.
(D) Fees.
Borrower shall have paid the fees payable on the Closing Date referred
to in the Fee Letter.
(E) Commitments.
Borrower shall have received commitments, in form and substance
satisfactory to Collateral Agent and Administrative Agent, and from institutions
satisfactory to Collateral Agent and Administrative Agent, representing Total
Loan Commitments of $170,000,000.
3.2. Conditions to All Fundings.
The obligations of each Agent and each Lender to make Loans and the
obligations of Issuing Lender to issue Lender Letters of Credit on each Funding
Date (including the initial Funding Date) are subject to satisfaction of all of
the conditions set forth below.
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(A) Deliveries.
Collateral Agent shall have received, in form and substance
satisfactory to Collateral Agent all agreements, notes, certificates, orders,
authorizations, financing statements, mortgages and other documents which any of
Collateral Agent, Documentation Agent or Administrative Agent may at any time
reasonably request under any other provision of this Agreement or any other Loan
Document.
(B) Representations and Warranties.
The representations and warranties contained herein and in the Loan
Documents shall be true, correct and complete in all material respects on and as
of that Funding Date to the same extent as though made on and as of that date,
except for any representation or warranty limited by its terms to a specific
date and taking into account any disclosures made by Borrower to Collateral
Agent and Administrative Agent after the Closing Date whether made pursuant to a
specific requirement of this Agreement or otherwise, and which have been
approved by Agents.
(C) No Default.
No event shall have occurred and be continuing or would result from
the consummation of the requested borrowing or notice requesting issuance of a
Lender Letter of Credit that would constitute an Event of Default or a Default.
(D) Performance of Agreements.
Each Loan Party shall have performed in all material respects all
agreements and satisfied all conditions which any Loan Document provides shall
be performed by it on or before that Funding Date.
(E) No Prohibition.
No order, judgment or decree of any court, arbitrator or governmental
authority shall purport to enjoin or restrain any Agent or any Lender from
making any Loans or issuing any Lender Letters of Credit.
(F) No Litigation.
There shall not be pending or, to the knowledge of Borrower,
threatened, any action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration by, against or affecting any Loan
Party or any of its Subsidiaries or any property of any Loan Party or any of its
Subsidiaries that has not been disclosed to Collateral Agent and Administrative
Agent by Borrower in writing, and there shall have occurred no development in
any such action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration that, in the opinion of either Collateral
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Agent or Administrative Agent, would reasonably be expected to have a Material
Adverse Effect.
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce each Agent and each Lender to enter into this Agreement, to
make Loans and to issue Lender Letters of Credit, Borrower represents and
warrants to each Agent and each Lender that the following statements are and
will be true, correct and complete:
4.1. Organization, Powers, Capitalization.
(A) Organization and Powers.
Each of the Loan Parties is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and qualified to do business in all states where such
qualification is required except where failure to be so qualified could not be
reasonably expected to have a Material Adverse Effect. Each of the Loan Parties
has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and proposed to be
conducted and to enter into each Loan Document.
(B) Capitalization.
The authorized capital stock of each of the Loan Parties is as set
forth on Schedule 4.1(B). All issued and outstanding shares of capital stock of
each of the Loan Parties are duly authorized and validly issued, fully paid,
nonassessable, other than those in favor of Collateral Agent for the benefit of
Agents and Lenders, and such shares were issued in compliance with all
applicable state and federal laws concerning the issuance of securities. All
issued and outstanding shares of capital stock of each of the Loan Parties other
than Borrower and all issued and outstanding shares of capital stock of Borrower
owned by each Designated Person, are owned free and clear of all Liens, except,
in the case of the Loan Parties other than Borrower, for the Liens of Collateral
Agent for the benefit of Agents and Lenders. As of the Closing Date, the capital
stock of each of the Loan Parties other than Borrower is owned by the
stockholders and in the amounts set forth on Schedule 4.1(B). As of the Closing
Date, the amounts of capital stock of Borrower owned by each Designated Person
is set forth on Schedule 4.1(B). No shares of the capital stock of any Loan
Party other than Borrower, other than those described above, are issued and
outstanding. There are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Loan Party other than Borrower, of any shares
of capital stock or other securities of any such entity.
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4.2. Authorization of Borrowing, No Conflict.
Borrower has the corporate power and authority to incur the
Obligations and to grant security interests in the Collateral. On the Closing
Date, the execution, delivery and performance of the Loan Documents by each Loan
Party signatory thereto will have been duly authorized by all necessary
corporate and shareholder action. The execution, delivery and performance by
each Loan Party of each Loan Document to which it is a party and the
consummation of the transactions contemplated by this Agreement and the other
Loan Documents by each Loan Party do not contravene and will not be in
contravention of any applicable law, the corporate charter or bylaws of any Loan
Party or any agreement or order by which any Loan Party or any Loan Party's
property is bound. This Agreement is, and the other Loan Documents, including
the Revolving Notes and Term Notes when executed and delivered will be, the
legally valid and binding obligations of the applicable Loan Parties
respectively, each enforceable against the Loan Parties, as applicable, in
accordance with their respective terms.
4.3. Financial Condition.
All financial statements concerning Borrower and its Subsidiaries
which have been or will hereafter be furnished by Borrower and its Subsidiaries
to any Agent or any Lender pursuant to this Agreement have been or will be
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as disclosed therein) and do or will present fairly the
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended. The Pro Forma
was prepared by Borrower based on the unaudited consolidated balance sheet of
Borrower and its Subsidiaries as of the last day of the tenth Fiscal Period of
the 1998 Fiscal Year. The Projections delivered and to be delivered have been
and will be prepared by Borrower in light of the past operations of the business
of Borrower and its Subsidiaries, and such Projections represent and will
represent the good faith estimate of Borrower and its senior management
concerning the most probable course of its business as of the date such
Projections are prepared and delivered.
4.4. Indebtedness and Liabilities.
As of the Closing Date, neither Borrower nor any of its Subsidiaries
has (a) any Indebtedness except as reflected on the Pro Forma; or (b) any
Liabilities other than as (i) reflected on the Pro Forma, (ii) incurred in the
ordinary course of business following the date of the Pro Forma or (iii) listed
on Schedule 4.4.
4.5. Account Warranties.
Borrower represents, warrants and covenants as to each Account that,
at the time of its creation, unless otherwise disclosed to Collateral Agent in
writing at such time, the Account is a valid, bona fide account, representing an
undisputed indebtedness incurred
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by the named account debtor for goods actually sold and delivered or for
services completely rendered; there are no setoffs, offsets or counterclaims,
genuine or otherwise, against the Account; the Account does not represent a sale
to an Affiliate or a consignment, sale or return or a bill and hold transaction;
Borrower or a Transportation Subsidiary, as applicable, is the lawful owner of
the Account and has the right to assign the same to Collateral Agent, for the
benefit of Agents and Lenders; the Account is free of all security interests,
liens and encumbrances other than those in favor of Collateral Agent, on behalf
of Agents and Lenders, and the Account is due and payable in accordance with its
terms.
4.6. Names.
Schedule 4.6 sets forth all names, trade names, fictitious names and
business names under which Borrower conducts business as of the Closing Date or
has at any time during the past five years conducted business.
4.7. Locations; FEIN.
Schedule 4.7 sets forth as of the Closing Date the location of
Borrower's principal place of business, the location of Borrower's books and
records, the location of all other offices of Borrower and all Collateral
locations, and such locations are Borrower's sole locations for its business and
the Collateral. Borrower's federal employer identification number is set forth
on the signature page hereof.
4.8. Title to Properties; Liens.
Borrower or each of its Subsidiaries, as the case may be, has good,
sufficient and legal title, subject to Permitted Encumbrances, to all its
respective material properties and assets. Except for Permitted Encumbrances,
all such properties and assets are free and clear of Liens. To the best
knowledge of Borrower after due inquiry, there are no actual, threatened or
alleged defaults with respect to any leases of real property under which
Borrower or any of its Subsidiaries is lessee or lessor which would have a
Material Adverse Effect.
4.9. Litigation; Adverse Facts.
Except as disclosed on Schedule 4.9, there are no judgments
outstanding against any Loan Party or affecting any property of any Loan Party
nor is there any action, charge, claim, demand, suit, proceeding, petition,
governmental action or investigation or arbitration now pending or, to the best
knowledge of Borrower after due inquiry, threatened against or affecting any
Loan Party or any property of any Loan Party which could reasonably be expected
to result in any Material Adverse Effect.
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4.10. Payment of Taxes.
All material tax returns and reports of Borrower and each of its
Subsidiaries required to be filed by any of them have been timely filed, and all
taxes, assessments, fees and other governmental charges upon such Persons and
upon their respective properties, assets, income and franchises which are shown
on such returns as due and payable have been paid when due and payable. As of
the Closing Date, none of the United States income tax returns of Borrower or
any of its Subsidiaries are under audit. No tax liens have been filed and no
claims (except as otherwise permitted by Section 5.9) are being asserted with
respect to any such taxes. The charges, accruals and reserves on the books of
Borrower and each of its Subsidiaries in respect of any taxes or other
governmental charges are in accordance with GAAP.
4.11. Performance of Agreements.
None of the Loan Parties and none of their respective Subsidiaries is
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any contractual obligation of
any such Person, which default could reasonably be expected to have a Material
Adverse Effect, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default.
4.12. Employee Benefit Plans.
Borrower, each of its Subsidiaries and each ERISA Affiliate is in
compliance in all material respects with all applicable provisions of ERISA, the
IRC and all other applicable laws and the regulations and interpretations
thereof with respect to all Employee Benefit Plans. No material liability has
been incurred by Borrower, any Subsidiaries or any ERISA Affiliate which remains
unsatisfied for any funding obligation, taxes or penalties with respect to any
Employee Benefit Plan.
4.13. Intellectual Property.
Borrower and each of its Subsidiaries owns, is licensed to use or
otherwise has the right to use, all Intellectual Property used in or necessary
for the conduct of its business as currently conducted; and all Intellectual
Property consisting of patents, patent rights and applications therefor,
trademarks, registrations and applications therefor, tradenames, copyrights and
applications therefor and license rights in existence as of the Closing Date is
identified on Schedule 4.13.
4.14. Broker's Fees.
No broker's or finder's fee or commission will be payable with respect
to any of the transactions contemplated hereby.
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4.15. Environmental Compliance.
Except as set forth on Schedule 4.15:
(A) all facilities and property (including underlying groundwater)
owned or leased by Borrower or any of its Subsidiaries have been, and continue
to be, owned or leased by Borrower and its Subsidiaries in material compliance
with all Environmental Laws;
(B) there have been no past, and there are no pending or threatened:
(1) claims, complaints, notices or requests for information
received by Borrower or any of its Subsidiaries with respect to any alleged
violation of any Environmental Law; or
(2) complaints, notices or inquires to Borrower or any of its
Subsidiaries regarding potential liability under any Environmental Law;
in any case, that singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect;
(C) there have been no releases of Hazardous Materials at, on or
under any property now or previously owned or leased by Borrower or any of its
Subsidiaries that, singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect;
(D) Borrower and its Subsidiaries have been issued and are in material
compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary or desirable for
their businesses;
(E) no property now or previously owned or leased by Borrower or any
of its Subsidiaries is listed or proposed for listing (with respect to owned
property only) on any federal or state list of sites requiring investigation or
clean up;
(F) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or previously
owned or leased by Borrower or any of its Subsidiaries that, singly or in the
aggregate have, or may reasonably be expected to have, a Material Adverse
Effect;
(G) neither Borrower nor any Subsidiary of Borrower has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on any federal
or state list or which is the subject of federal, state or local enforcement
actions or other investigations which may lead to material claims against
Borrower or such Subsidiary thereof for any remedial work, damage to natural
resources or personal injury, including claims under any Environmental Laws;
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(H) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by Borrower or any
Subsidiary of Borrower that, singly or in the aggregate, have, or may reasonably
be expected to have, a Material Adverse Effect; and
(I) no conditions exist at, on or under any property now or
previously owned or leased by Borrower which, with the passage of time, or the
giving of notice or both, would give rise to liability under any Environmental
Law, which liability could reasonably be expected to have a Material Adverse
Effect.
4.16. Solvency.
After giving effect to the transactions contemplated by the Loan
Documents, and as of, from and after the date of this Agreement, Borrower and
each of its Subsidiaries: (a) owns and will own assets the fair salable value of
which are (i) greater than the total amount of its liabilities (including
contingent liabilities) and (ii) greater than the amount that will be required
to pay the probable liabilities of such Loan Party as they mature; (b) has
capital that is not unreasonably small in relation to its business as presently
conducted or any contemplated or undertaken transaction; and (c) does not intend
to incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due. There is no material fact known to Borrower that
has or could have a Material Adverse Effect and that has not been fully
disclosed herein or in such other documents, certificates and statements
furnished to any Agent or any Lender for use in connection with the transactions
contemplated hereby.
4.17. Disclosure
No representation or warranty of Borrower, any of its Subsidiaries or
any other Loan Party contained in this Agreement, the financial statements, the
other Loan Documents, or any other document, certificate or written statement
furnished to any Agent or any Lender by or on behalf of any such Person for use
in connection with the Loan Documents, including without limitation the
Confidential Information Memorandum, contains any untrue statement of a material
fact or omitted, omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading in light of
the circumstances in which the same were made. The Projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by Agents and Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results. There is no material fact known to Borrower that has had or will have a
Material Adverse Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to any Agent or any Lender for
use in connection with the transactions contemplated hereby.
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4.18. Insurance.
Borrower and each of its Subsidiaries maintains adequate insurance
policies for public liability, property damage for its business and properties,
product liability, and business interruption, no notice of cancellation has been
received with respect to such policies and Borrower and each of its Subsidiaries
is in compliance with all conditions contained in such policies.
4.19. Compliance with Laws.
Except as disclosed on Schedule 4.15 or Schedule 4.19, neither
Borrower nor any of its Subsidiaries is in violation of any law, ordinance,
rule, regulation, order or other requirement of any domestic or foreign
government or any instrumentality or agency thereof, having jurisdiction over
the conduct of its business or the ownership of its properties, except for any
such violation which could not reasonably be expected to have a Material Adverse
Effect and except for compliance with Environmental Laws (which is covered by
subsection 4.15).
4.20. Bank Accounts.
Schedule 4.20 sets forth the account numbers and locations of all bank
accounts of Borrower and its Subsidiaries.
4.21. Subsidiaries.
Borrower has no Subsidiaries other than as set forth on Schedule 4.21.
As of the Closing Date, each of Borrower's Subsidiaries other than Coast
Refrigerated Trucking Co., Inc., National Food Express, Inc., TAV Brands, Inc.
and Thorn Apple Valley Foreign Sales Corporation, conducts no material business
or other operations and has no material assets or liabilities.
4.22. Employee Matters.
Except as set forth on Schedule 4.22, (a) no Loan Party nor any of
such Loan Party's employees is subject to any collective bargaining agreement,
(b) no petition for certification or union election is pending with respect to
the employees of any Loan Party and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of any
Loan Party, (c) there are no strikes, slowdowns, work stoppages or controversies
pending or, to the best knowledge of Borrower after due inquiry, threatened
between any Loan Party and its respective employees, other than employee
grievances arising in the ordinary course of business which could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (d) the hours worked by and payments made to employees of each Loan
Party have not been in violation of the Fair Labor Standards Act or any other
applicable federal, state, local or foreign law dealing with such matters and
(e) the consummation of the transactions
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contemplated hereby will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which any Loan Party is a party. Except as set forth on Schedule 4.22,
neither Borrower nor any of its Subsidiaries is subject to a written employment
contract.
4.23. Governmental Regulation.
None of the Loan Parties is, or after giving effect to any Loan will
be, subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act or the Investment Company Act of 1940 or to any federal or
state statute or regulation limiting its ability to incur indebtedness for
borrowed money.
Borrower may, at any time and from time to time and subject to
subsection 5.13, amend any one or more of the Schedules referred in this Section
4 and any representation or warranty contained herein which refers to any such
Schedule shall from and after the date of any such amendment refer to such
Schedule as so amended, provided, however, that in no event may the Borrower
amend any such Schedule if the existence of facts disclosed in such amendment
would constitute a Default or Event of Default.
SECTION 5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall be in effect and until payment in full of all Obligations and
termination of all Lender Letters of Credit, unless Requisite Lenders shall
otherwise give their prior written consent, Borrower shall perform, and shall
cause each of its Subsidiaries to perform, all covenants in this Section 5
applicable to such Person.
5.1. Financial Statements and Other Reports.
Borrower will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Borrower will deliver to each of Collateral Agent and
Administrative Agent (unless specified to be delivered solely to one of such
Agents) the financial statements and other reports described below and, in the
case of the reports listed in subsections 5.1(A), (B), (C), (D), (E), (H), and
(P), together with copies sufficient for each Lender. Administrative Agent
agrees to promptly distribute such copies of such financial statements and
reports to each Lender.
(A) Fiscal Period Financials.
As soon as available and in any event within twenty-six (26) days
after the end of each Fiscal Period, Borrower will deliver (1) the consolidated
balance sheet of Borrower and its Subsidiaries as at the end of such Fiscal
Period, the related consolidated
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statements of stockholders' equity and cash flow for such Fiscal Period and for
the period from the beginning of the then current Fiscal Year to the end of such
Fiscal Period, and the related consolidated and consolidating (on a division by
division basis, separating the fresh meats division from the processing
division) statement of income for such Fiscal Period and for the period from the
beginning of the then current Fiscal Year to and of such Fiscal Period, and (2)
a schedule of the outstanding Indebtedness for borrowed money of Borrower and
its Subsidiaries describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan.
(B) Fiscal Quarter Financials.
As soon as available and in any event within forty-five (45) days
after the end of each Fiscal Quarter of a Fiscal Year, Borrower will deliver the
consolidated balance sheet of Borrower and its Subsidiaries as at the end of
such Fiscal Quarter and the related consolidated statements of income,
stockholders' equity and cash flow for such Fiscal Quarter and for the period
from the beginning of the then current Fiscal Year to the end of such Fiscal
Quarter and such financial statements shall have been reviewed by a firm of
independent certified public accountants selected by Borrower.
(C) Year-End Financials.
As soon as available and in any event within ninety (90) days after
the end of each Fiscal Year, Borrower will deliver: (1) the consolidated balance
sheet of Borrower and its Subsidiaries as at the end of such Fiscal Year and the
related consolidated statements of income, stockholders' equity and cash flow
for such Fiscal Year; (2) a schedule of the outstanding Indebtedness of Borrower
and its Subsidiaries describing in reasonable detail each such debt issue or
loan outstanding and the principal amount and amount of accrued and unpaid
interest with respect to each such debt issue or loan; and (3) a report with
respect to the financial statements from a firm of independent certified public
accountants selected by Borrower and acceptable to Collateral Agent and
Administrative Agent, which report shall be unqualified as to going concern and
scope of audit of Borrower and its Subsidiaries and shall state that (a) such
consolidated financial statements present fairly the consolidated financial
position of Borrower and its Subsidiaries as at the dates indicated and the
results of its operations and cash flow for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years and (b) that the
examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards.
(D) Accountants' Certification and Reports.
Together with each delivery of consolidated financial statements of
Borrower and its Subsidiaries pursuant to subsection 5.1(C), Borrower will
deliver a letter
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in the form of Exhibit I hereunder. Promptly upon receipt thereof, Borrower will
deliver copies of all significant reports submitted to Borrower by independent
public accountants in connection with each annual, interim or special audit of
the financial statements of Borrower made by such accountants, including the
comment letter submitted by such accountants to management in connection with
their annual audit.
(E) Compliance Certificate.
Together with the delivery of each set of financial statements
referenced in subsections 5.1(A), (B) and (C), Borrower will deliver a
Compliance Certificate, together with copies of the calculations and work-up
employed to determine Borrower's compliance or noncompliance with the financial
covenants set forth in Section 6.
(F) Borrowing Base Certificates, Related Materials.
On the Closing Date and on the Friday of each week thereafter,
Borrower shall deliver to Collateral Agent: (1) a Borrowing Base Certificate as
of the last day of the prior week, updated to reflect the most recent sales and
collections of Borrower and each Transportation Subsidiary, with supporting
detail for all listed Accounts and Inventory; (2) an aged trial balance of all
then existing Accounts; (3) an Inventory Report as of the last day of such
period; and (4) a detailed Inventory listing and cover summary report. All such
reports shall be in form and substance satisfactory to Collateral Agent.
(G) Reconciliation Reports, Payables.
On the Closing Date and within ten (10) Business Days after the last
day of each Fiscal Period and from time to time upon the request of Collateral
Agent, Borrower will deliver to Collateral Agent (1) a Reconciliation Report as
of the last day of such Fiscal Period; (2) a listing of all amounts owing to
suppliers of livestock or live poultry as of the last day of such period; and
(3) a listing of existing accounts payable as of the last day of such period;
each in form and substance satisfactory to Collateral Agent.
(H) Management Report.
Together with each delivery of financial statements of Borrower and
its Subsidiaries pursuant to subsections 5.1(A), (B) and (C), Borrower will
deliver a management report: (1) describing the operations and financial
condition of Borrower and its Subsidiaries for the Fiscal Period then ended and
the portion of the current Fiscal Year then elapsed (or for the Fiscal Year then
ended in the case of year-end financials); (2) setting forth in comparative form
the corresponding figures for the corresponding periods of the previous Fiscal
Year and the corresponding figures from the most recent Projections for the
current Fiscal Year delivered pursuant to subsection 5.1(P); and (3) discussing
the reasons for any significant variations. The information above shall be
presented on a consolidated basis and with respect to income statements only,
consolidating basis (on a
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division by division basis, separating the fresh meats division from the
processing division) and in reasonable detail and shall be certified by the
chief financial officer of Borrower to the effect that such information fairly
presents the results of operations and financial condition of Borrower and its
Subsidiaries as at the dates and for the periods indicated.
(I) Appraisals.
From time to time, upon the request of either Collateral Agent or
Collateral Agent at the direction of Requisite Lenders, Borrower will obtain and
deliver to Collateral Agent, at Borrower's expense, appraisal reports in form
and substance and from appraisers satisfactory to Collateral Agent, stating the
then current fair market and orderly liquidation values of all or any portion of
the Collateral; provided, however, so long as no Event of Default is continuing,
Collateral Agent shall not request an appraisal as to any particular category of
Collateral to be performed more than once every Loan Year at Borrower's expense.
(J) Government Notices.
Borrower will deliver to Administrative Agent within five (5) Business
Days after receipt by an Executive Officer copies of all notices, requests,
subpoenas, inquiries or other writings received from any governmental agency
concerning any Employee Benefit Plan; PASA; PPFPA; FSA; the violation or alleged
violation of any Environmental Laws; the storage, use or disposal of any
Hazardous Material; the violation or alleged violation of the Fair Labor
Standards Act; or Borrower's payment or non-payment of any taxes including any
tax audit; in each case at any time after the aggregate amount of all possible
claims, penalties, liabilities and amounts in controversy under all of the
foregoing exceeds $100,000 or if the foregoing relates to a matter that could
reasonably be expected to have a Material Adverse Effect.
(K) Events of Default, etc.
Within two (2) Business Days after any Executive Officer of Borrower
obtains knowledge of any of the following events or conditions, Borrower shall
deliver a certificate of Borrower's chief executive officer specifying the
nature and period of existence of such condition or event and what action
Borrower has taken, is taking and proposes to take with respect thereto: (1) any
condition or event that constitutes an Event of Default or Default; (2) any
notice of default that any Person has given to Borrower or any of its
Subsidiaries or any other action taken with respect to a claimed default; (3)
any Material Adverse Effect; or (4) any interruption of the business of Borrower
or any of its Subsidiaries for two (2) Business Days or more and that results
from action by any governmental or regulatory authority.
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(L) Trade Names.
Borrower and each of its Subsidiaries will give Collateral Agent at
least thirty (30) days advance written notice of any change of name or of any
new trade name or fictitious business name. Borrower's use of any trade name or
fictitious business name will be in compliance with all laws regarding the use
of such names.
(M) Locations.
Borrower will give Collateral Agent (1) at least thirty (30) days
advance written notice of any change in Borrower's principal place of business
or any change in the location of its books and records or the Collateral (other
than offsite warehouse facilities) or of any new location for its books and
records or the Collateral (other than offsite warehouse facilities) and (2)
contemporaneous notice of the use of any new offsite warehouse facilities.
(N) Bank Accounts.
Borrower will give Collateral Agent notice of any new bank accounts
Borrower or any of its Subsidiaries intends to establish at least five (5)
Business Days prior to their opening same.
(O) Litigation.
Within five (5) Business Days after any Executive Officer of Borrower
or its Subsidiaries obtains knowledge of (1) the institution of any action,
suit, proceeding, governmental investigation or arbitration against or affecting
any Loan Party or any property of any Loan Party not previously disclosed by
Borrower to Collateral Agent and Administrative Agent, to the extent that either
the amount in controversy exceeds $250,000 or such action, suit, proceeding,
investigation or arbitration seeks injunctive relief or (2) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting any Loan Party or any
property of any Loan Party which could reasonably be expected to have a Material
Adverse Effect, Borrower will promptly give notice thereof to Collateral Agent
and Administrative Agent, and will thereafter provide such other information as
may be reasonably available to them to enable Collateral Agent and
Administrative Agent, and their counsel to evaluate such matter.
(P) Projections.
As soon as available and in any event no later than thirty (30) days
prior to the end of each Fiscal Year of Borrower, Borrower will deliver
consolidated and consolidating (on a division by division basis, separating the
fresh meats division from the processing division) Projections of Borrower and
its Subsidiaries for the forthcoming four
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(4) Fiscal Years, year by year, and for the forthcoming Fiscal Year, Fiscal
Period by Fiscal Period.
(Q) Subordinated Debt and Other Indebtedness Notices.
Within two (2) Business Days of receipt thereof, Borrower shall
deliver copies of all notices given or received by Borrower and any of its
Subsidiaries with respect to noncompliance with any term or condition related to
any Subordinated Debt and other Indebtedness, in each case with an outstanding
principal balance in excess of $500,000 and shall promptly notify Collateral
Agent and Administrative Agent of any potential or actual event of default with
respect to any such Subordinated Debt or other Indebtedness.
(R) Intellectual Property.
Within forty-five (45) days after the end of each Fiscal Quarter,
Borrower will deliver an update as of the last day of such Fiscal Quarter of the
information set forth on Schedule 4.13 with respect to Intellectual Property.
(S) Other Information.
With reasonable promptness, Borrower will deliver such other
information and data with respect to any Loan Party, any Subsidiary of any Loan
Party or the Collateral as any Agent or any Lender may reasonably request from
time to time.
5.2. Access to Accountants and Management.
Borrower authorizes each Agent and each Lender to discuss the
financial condition and financial statements of Borrower and its Subsidiaries
with Borrower's independent public accountants upon reasonable notice to
Borrower of its intention to do so, and authorizes such accountants to respond
to all of each Agent's and each Lender's inquiries. Each Lender may with the
consent of Collateral Agent and Administrative Agent, which will not be
unreasonably denied, and each of Collateral Agent and Administrative Agent may
at any time, confer with Borrower's management directly regarding Borrower's
business, operations and financial condition.
5.3. Inspection.
Borrower shall permit each of Collateral Agent and Administrative
Agent and any authorized representatives designated by such Agent to visit and
inspect any of the properties of Borrower or any of its Subsidiaries, including
its and their financial and accounting records, and in conjunction with such
inspection, to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and business with its and their officers and independent
public accountants, at such reasonable times during normal business hours and as
often as may be reasonably requested. Borrower acknowledges that Collateral
Agent intends to make such inspections at least two (2) times in each calendar
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year. Each Lender may, at its own expense, and with the consent of the
applicable Agent, which will not be unreasonably denied, accompany such Agent on
any such visit or inspection.
5.4. Collateral Records.
Borrower shall keep full and accurate books and records relating to
the Collateral and shall mark such books and records to indicate Collateral
Agent's security interests in the Collateral, for the benefit of Agents and
Lenders.
5.5. Account Covenants; Verification.
Borrower shall, at its own expense: (a) cause all invoices evidencing
its Accounts and all copies thereof to bear a notice that such invoices are
payable to the lockboxes established in accordance with subsection 5.6 and (b)
use its best efforts to assure prompt payment of all amounts due or to become
due under its Accounts. No discounts, credits or allowances will be issued,
granted or allowed by Borrower to customers and no returns will be accepted
without Collateral Agent's prior written consent, other than (i) returns
required by applicable law to be accepted by Borrower and (ii) discounts,
credits and allowances in the ordinary course of Borrower's business and which
in the aggregate as to any Account Debtor at any time do not exceed $150,000;
provided, that until Collateral Agent notifies Borrower to the contrary,
Borrower may presume consent. Borrower will immediately notify Collateral Agent
in the event that a customer alleges any dispute or claim with respect to an
Account if the amount of such dispute or claim exceeds $150,000 or of any other
circumstances known to Borrower that may impair the validity or collectibility
of an Account. Collateral Agent shall have the right, at any time or times
hereafter, to verify the validity, amount or any other matter relating to an
Account, by mail, telephone or in person. After the occurrence of a Default or
an Event of Default, Borrower shall not, without the prior consent of Collateral
Agent, adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any customer or obligor thereof, or allow any credit or
discount thereon.
5.6. Collection of Accounts and Payments.
Borrower shall establish lockboxes and blocked accounts (collectively,
"Blocked Accounts") in Borrower's name with such banks ("Collecting Banks") as
are acceptable to Collateral Agent (subject to irrevocable instructions
acceptable to Collateral Agent as hereinafter set forth) to which all account
debtors shall directly remit all payments on Accounts and in which Borrower will
immediately deposit all payments made for Inventory or other payments
constituting proceeds of Collateral in the identical form in which such payment
was made, whether by cash or check. The Collecting Banks shall acknowledge and
agree, in a manner satisfactory to Collateral Agent, that all payments made to
the Blocked Accounts are the sole and exclusive property of Collateral Agent,
for the benefit of Agents and Lenders, and that the Collecting Banks have no
right of setoff
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against the Blocked Accounts and that all such payments received will be
promptly transferred to Agent's Account. Borrower hereby agrees that all
payments received by Collateral Agent, whether by cash, check, wire transfer or
any other instrument, made to such Blocked Accounts or otherwise received by
Collateral Agent and whether on the Accounts or as proceeds of other Collateral
or otherwise will be the sole and exclusive property of Collateral Agent, for
the benefit of Agents and Lenders. Borrower shall irrevocably instruct each
Collecting Bank to promptly transfer all payments or deposits to the Blocked
Accounts into Agent's Account. Borrower, and any of its Affiliates, employees,
agents or other Persons acting for or in concert with Borrower, shall, acting as
trustee for Collateral Agent, receive, as the sole and exclusive property of
Collateral Agent, any monies, checks, notes, drafts or any other payments
relating to and/or proceeds of Accounts or other Collateral which come into the
possession or under the control of Borrower or any of Borrower's Affiliates,
employees, agents or other Persons acting for or in concert with Borrower, and
immediately upon receipt thereof, Borrower or such Persons shall remit the same
or cause the same to be remitted, in kind, to the Blocked Accounts or to
Collateral Agent at its address set forth in subsection 10.4 below.
5.7. Endorsement.
Borrower hereby constitutes and appoints Collateral Agent and all
Persons designated by Collateral Agent for that purpose as Borrower's true and
lawful attorney-in-fact, with power to endorse Borrower's name to any of the
items of payment or proceeds described in subsection 5.6 above and all proceeds
of Collateral that come into Collateral Agent's possession or under Collateral
Agent's control. Both the appointment of Collateral Agent as Borrower's attorney
and Collateral Agent's rights and powers are coupled with an interest and are
irrevocable until payment in full and complete performance of all of the
Obligations.
5.8. Corporate Existence.
Borrower will, and will cause each of its Subsidiaries to, at all
times preserve and keep in full force and effect its corporate existence and all
rights and franchises material to its business; provided, that (i) any
Subsidiary of Borrower may at any time merge with another Subsidiary of Borrower
or with Borrower itself and (ii) on or before June 30, 1998, Borrower shall
cause its Subsidiary, TAV Products, Inc., to be dissolved and shall furnish to
Collateral Agent satisfactory evidence of such dissolution. Borrower will
promptly notify Collateral Agent and Administrative Agent of any change in its
or its Subsidiaries' ownership or corporate structure.
5.9. Payment of Taxes.
Borrower will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or with respect to any of its franchises, business, income
or property before any
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penalty accrues thereon provided that no such tax need be paid if Borrower or
one of its Subsidiaries is contesting same in good faith by appropriate
proceedings promptly instituted and diligently conducted and if Borrower or such
Subsidiary has established appropriate reserves as shall be required in
conformity with GAAP.
5.10. Maintenance of Properties.
Borrower will maintain or cause to be maintained in good repair,
working order and condition, normal wear and tear excepted, all material
properties used in the business of Borrower and its Subsidiaries and will make
or cause to be made all appropriate repairs, renewals and replacements thereof;
provided, that Borrower or any of its Subsidiaries may, in its sole judgment,
close or cease operating in any facility of Borrower or such Subsidiary.
5.11. Compliance with Laws.
Borrower will, and will cause each of its Subsidiaries to, comply with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority as now in effect and which may be imposed in the future
in all jurisdictions in which Borrower or any of its Subsidiaries is now doing
business or may hereafter be doing business, other than those laws, rules,
regulations and orders the noncompliance with which would not be reasonably
likely to have a Material Adverse Effect.
5.12. Further Assurances.
Borrower shall, and shall cause each of its Subsidiaries to, from time
to time, execute such guaranties, financing or continuation statements,
documents, security agreements, reports and other documents or deliver to
Collateral Agent such instruments, certificates of title or other documents as
Collateral Agent at any time may reasonably request to evidence, perfect or
otherwise implement the guaranties and security for repayment of the Obligations
provided for in the Loan Documents. One or before June 30, 1998, Borrower shall
take such action as is reasonably required by Collateral Agent to perfect
Collateral Agent's Lien on Borrower's trademarks registered in Russia and
Borrower's trademarks registered in South Korea. At Collateral Agent's request,
Borrower shall cause any Subsidiaries of Borrower promptly to guaranty the
Obligations and to grant to Collateral Agent, on behalf of Agents and Lenders,
security interests in the real, personal and mixed property of such Subsidiary
to secure the Obligations.
5.13. Collateral Locations.
Borrower will keep the Collateral at the locations specified on
Schedule 4.7, as updated from time to time pursuant to subsection 5.1(M). With
respect to any new location (which in any event shall be within the continental
United States), Borrower will execute such documents and take such actions as
Collateral Agent deems necessary to
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perfect and protect the security interests of Collateral Agent, on behalf of
Agents and Lenders, in the Collateral, prior to the transfer or removal of any
Collateral to such new location.
5.14. Bailees.
If any Collateral is at any time in the possession or control of any
warehouseman, bailee, feedlot operator or any of Borrower's agents or
processors, Borrower shall, upon the request of Collateral Agent, notify such
warehouseman, bailee, feedlot operator, agent or processor of the security
interests in favor of Collateral Agent, for the benefit of Agents and Lenders,
created hereby and shall instruct such Person to hold all such Collateral for
Collateral Agent's account subject to Collateral Agent's instructions.
5.15. Mortgages; Title Insurance; Surveys.
(A) Title Insurance.
On the Closing Date (or within thirty (30) days following delivery of
any Mortgage with respect to Additional Mortgaged Property), Borrower shall
deliver or cause to be delivered to Collateral Agent ALTA lender's title
insurance policies issued by title insurers reasonably satisfactory to
Collateral Agent (the "Mortgage Policies") in form and substance and in amounts
reasonably satisfactory to Collateral Agent assuring Collateral Agent that the
Mortgages are valid and enforceable first priority mortgage liens on the
respective Mortgaged Property or Additional Mortgaged Property, free and clear
of all defects and encumbrances except Permitted Encumbrances. The Mortgage
Policies shall be in form and substance reasonably satisfactory to Collateral
Agent and shall include an endorsement insuring against the effect of future
advances under this Agreement, for mechanics' liens and for any other matter
that Collateral Agent may reasonably request, and shall provide for affirmative
insurance and such reinsurance as Collateral Agent may reasonably request. In
the case of each leasehold constituting Mortgaged Property or Additional
Mortgaged Property, Collateral Agent shall have received such estoppel letters,
consents and waivers from the landlords and non-disturbance agreements from any
holders of mortgages or deeds of trust on such real estate as may have been
requested by Collateral Agent, which letters shall be in form and substance
satisfactory to Collateral Agent.
(B) Additional Mortgaged Property.
Collateral Agent may from time to time designate real property or
leasehold interests of any Loan Party or any Subsidiary of any Loan Party after
the date hereof as "Additional Mortgaged Property", in which case Borrower shall
as promptly as possible (and in any event within sixty (60) days after such
designation) deliver to Collateral Agent a fully executed Mortgage, in form and
substance satisfactory to Collateral Agent together with title insurance
policies and surveys as required by this subsection 5.15. Borrower agrees that,
following the taking of the actions with respect to any Additional Mortgaged
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Property required by the immediately preceding sentence, Collateral Agent, on
behalf of Agents and Lenders, shall have a valid and enforceable first priority
mortgage on the respective Additional Mortgaged Property, free and clear of all
defects and encumbrances except for Permitted Encumbrances.
(C) Surveys.
On or before the Closing Date (or within thirty (30) days following
delivery of any Mortgage with respect to Additional Mortgaged Property),
Borrower shall deliver or cause to be delivered to Collateral Agent surveys,
certified by a licensed surveyor, for all real property that is the subject of
the Mortgage Policies including Additional Mortgaged Property for which a
Mortgage Policy is issued. All such surveys shall be sufficient to allow the
issuer of the mortgage policy to issue an ALTA lender's policy. Notwithstanding
the foregoing, Borrower shall have until June 1, 1998 to deliver or cause to be
delivered to Collateral Agent a survey with respect to the Mortgaged Property in
Holly Ridge, North Carolina that satisfies the above conditions.
5.16. Use of Proceeds and Margin Security.
Borrower shall use the proceeds of all Loans for proper business
purposes (as described in the recitals to this Agreement) consistent with all
applicable laws, statutes, rules and regulations. No portion of the proceeds of
any Loan shall be used by Borrower or any of its Subsidiaries for the purpose of
purchasing or carrying margin stock within the meaning of Regulation G or
Regulation U, or in any manner that might cause the borrowing or the application
of such proceeds to violate Regulation T or Regulation X or any other regulation
of the Board of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, as amended.
5.17. Compliance with PASA and PPFPA.
In addition to the requirements set forth in subsection 5.11, Borrower
and each of its Subsidiaries shall at all times (a) comply with all applicable
provisions of each of PASA and PPFPA, including those pertaining to bonding and
payment requirements, (b) maintain written records relating to livestock,
livestock byproducts and live poultry in its possession for which payment has
not been made and (c) at Collateral Agent's request notify Collateral Agent of
any contract arrangements for the purchase of livestock or live poultry on
credit.
5.18. Insurance.
(A) Borrower will maintain or cause to be maintained, with financially
sound and reputable insurers, public liability and property damage insurance
with respect to its business and properties and the business and properties of
its Subsidiaries against loss or
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damage of the kinds customarily carried or maintained by corporations of
established reputation engaged in similar businesses and in amounts acceptable
to Collateral Agent.
(B) Borrower will (i) cause all insurance policies of Borrower and
its Subsidiaries to be endorsed or otherwise amended to include a lender's loss
payable endorsement, in form and substance satisfactory to Collateral Agent,
which endorsement shall provide that, from and after the Closing Date, the
insurance carrier shall pay all proceeds otherwise payable to Borrower or any of
its Subsidiaries under such policies directly to Collateral Agent; (ii) cause
all such policies to provide that none of Borrower, any Agent, any Lender or any
other party shall be a coinsurer thereunder and to contain a "Replacement Cost
Endorsement", without any deduction for depreciation, and such other provisions
as Collateral Agent may reasonably require from time to time to protect its
interests; (iii) deliver original or certified copies of all such certificates
of insurance to Collateral Agent; (iv) cause each such policy to provide that it
shall not be canceled, modified or not renewed (x) by reason of nonpayment of
premium upon not less than ten (10) days' prior written notice thereof by the
insurer to Collateral Agent (giving Collateral Agent the right to cure defaults
in the payment of premiums) or (y) for any other reason upon not less than
thirty (30) days' prior written notice thereof by the insurer to Collateral
Agent; and (v) deliver to Collateral Agent, prior to the cancellation,
modification or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to Collateral Agent) together with evidence satisfactory to Collateral
Agent of payment of the premium therefor.
(C) Borrower will notify Collateral Agent immediately whenever any
separate insurance concurrent in form or contributing in the event of loss with
that required to be maintained under this subsection 5.18 is taken out by
Borrower and promptly deliver to Collateral Agent a duplicate original copy of
such policy or policies.
(D) Borrower shall collaterally assign to Collateral Agent, for the
benefit of Agents and Lenders, as security for the payment of the Obligations,
all business interruption insurance of Borrower.
(E) Borrower shall apply any proceeds received from any policies of
insurance relating to any Collateral to the Obligations as set forth in
subsection 2.4(B).
(F) In connection with the covenants set forth in this subsection
5.18, it is understood and agreed that:
(1) Neither any Agent nor any Lender or other respective agents
or employees shall be liable for any loss or damage insured by the insurance
policies required to be maintained under this subsection 5.18, it being
understood that (A) Borrower and its Subsidiaries shall look solely to their
insurance companies or any other parties other than the aforesaid parties for
the recovery of such loss or damage and (B) such insurance companies shall have
no rights of subrogation against Agents or Lenders or their agents or employees.
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If, however, the insurance policies do not provide waiver of subrogation rights
against such parties, as required above, then Borrower hereby agrees, to the
extent permitted by law, to waive its, and to cause each of its Subsidiaries to
waive its, right of recovery, if any, against Agents and Lenders and their
agents and employees; and
(2) the designation of any form, type or amount of insurance coverage
by Collateral Agent under this subsection 5.18 shall in no event be deemed a
representation, warranty or advice by Collateral Agent, any other Agent or any
Lender that such insurance is adequate for the purposes of the business of
Borrower and its Subsidiaries or the protection of their properties and
Collateral Agent and Requisite Lenders shall have the right from time to time to
require Borrower and its Subsidiaries to keep other insurance in such form and
amount as Collateral Agent or Requisite Lenders may reasonably request, provided
that such insurance shall be obtainable on commercially reasonable terms.
5.19. Environmental Reports.
If an Event of Default occurs and is continuing due to a breach of
either subsection 4.15 or subsection 7.9, Borrower shall, at the request of
Requisite Lenders, provide to Agents and Lenders, within forty-five (45) days
after such request, at Borrower's expense, an environmental site assessment
report for any property that is the subject of such Event of Default, prepared
by an environmental consulting firm reasonably acceptable to Collateral Agent
and Administrative Agent and indicating the presence or absence of Hazardous
Materials and the estimated cost of any compliance or remedial action required
or recommended in connection therewith.
5.20. Compliance with FSA.
Within sixty (60) days of the Closing Date, Borrower and each of its
applicable Subsidiaries shall have provided Collateral Agent with evidence
satisfactory to Collateral Agent that Borrower or such Subsidiary has registered
as a buyer of farm products with the Secretary of State (or other applicable
office) of each state in which Borrower or such Subsidiary buys livestock,
poultry or other farm products as of the Closing Date and that maintains a
"central filing system" (as defined in the FSA) as of the Closing Date, and
Borrower or such Subsidiary shall have provided Collateral Agent with copies of
all notifications of any security interests in livestock or farm products,
received by Borrower or such Subsidiary as of such time, whether pursuant to the
FSA or otherwise. In addition to the foregoing, not more than ten (10) days
after its purchase of any livestock, poultry or other farm products produced in
a state that maintains a central filing system, if such purchase occurs after
the Closing Date, Borrower and each of its applicable Subsidiaries shall have
registered as a buyer of such livestock, poultry or other farm products with the
office of the Secretary of State or such other office of such state that
maintains such filing system. Borrower agrees to deliver to Collateral Agent
promptly after Borrower's or such Subsidiary's receipt thereof, copies of all
notifications received by Borrower or such Subsidiary, whether pursuant to the
UCC, the FSA or otherwise, and
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whether sent by a seller of livestock, poultry or other farm products, a lender
to such seller, the Secretary of State of any state or any other Person, of any
security interests in any livestock, poultry or other farm products to be
purchased hereafter. In addition, Borrower covenants that Borrower and each of
its applicable Subsidiaries will comply with all payment obligations imposed on
it with respect to such livestock, poultry or farm products and at Collateral
Agent's request, promptly provide Collateral Agent with evidence of such
compliance.
5.21. Authorized Stock.
Within sixty (60) days of the Closing Date, Borrower shall deliver to
Collateral Agent an opinion of Borrower's counsel satisfactory to Collateral
Agent to the effect that all issued and outstanding shares of capital stock of
Borrower's Subsidiaries have been duly authorized.
SECTION 6. FINANCIAL COVENANTS
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Obligations and termination of
all Lender Letters of Credit, unless Borrower has received the prior written
consent of Requisite Lenders, Borrower shall comply with and shall cause each of
its Subsidiaries to comply with all covenants in this Section 6 applicable to
such Person.
6.1. Net Worth.
Borrower shall maintain (a) as of the last day of the first Fiscal
Quarter of the 1999 Fiscal Year, Net Worth of at least the sum of (i)
eighty-five percent (85%) of Net Worth as of the Closing Date plus (ii) fifty
percent (50%) of positive Net Income (if any) for the period from the Closing
Date through such date (the "Base Net Worth") and (b) as of the last day of the
second Fiscal Quarter of the 1999 Fiscal Year and the last day of each Fiscal
Quarter thereafter, Net Worth of at least the sum of (i) the Base Net Worth plus
(ii) fifty percent (50%) of positive Net Income (if any) for each complete
Fiscal Quarter after the First Fiscal Quarter of the 1999 Fiscal Quarter. The
foregoing computation shall not take into account any negative Net Income for
any Fiscal Quarter.
6.2. EBITDA.
Borrower shall maintain (a) as of the last day of the fourth (4th)
Fiscal Period of the 1999 Fiscal Year, for the period from the first day of the
eighth (8th) Fiscal Period of the 1998 Fiscal Year through such date, EBITDA of
at least $9,250,000 and (b) as of the last day of the seventh (7th) Fiscal
Period of the 1999 Fiscal Year, for the 13 consecutive Fiscal Periods ending on
such date, EBITDA of at least $20,000,000.
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6.3. Capital Expenditure Limits.
The aggregate amount of all Capital Expenditures of Borrower and its
Subsidiaries (excluding Capital Expenditures in respect of the replacement of an
asset (including a tractor or trailer) that was the subject of an Asset
Disposition permitted under this Agreement or to which Required Lenders have
consented, to the extent of the cash proceeds of such Asset Disposition) will
not exceed (a) $9,500,000 in the 1998 Fiscal Year or (b) $8,000,000 in any
Fiscal Year other than the 1998 Fiscal Year. In the event that Borrower or any
of its Subsidiaries enters into a Capital Lease or other contract with respect
to fixed assets, for purposes of calculating Capital Expenditures under this
subsection only, the amount of the Capital Lease or contract initially
capitalized on Borrower's or any Subsidiary's balance sheet prepared in
accordance with GAAP shall be considered expended in full on the date that
Borrower or any of its Subsidiaries enters into such Capital Lease or contract.
6.4. Fixed Charge Coverage.
Borrower shall not permit its Fixed Charge Coverage as of the last day
of any period set forth below, for the period indicated below, to be less than
the amount set forth below for such period.
Period Ratio
Fiscal Periods 11-13 in 1998 Fiscal Year 0.50:1.0
Fiscal Periods 1-4 in 1999 Fiscal Year 1.00:1.0
Fiscal Periods 1-7 in 1999 Fiscal Year 1.00:1.0
Fiscal Periods 1-10 in 1999 Fiscal Year 1.00:1.0
13 consecutive Fiscal Periods ending 1.00:1.0
on the last day of 1999 Fiscal Year
13 consecutive Fiscal Periods ending on the 1.25:1.0
last day of each Fiscal Quarter in 2000 Fiscal Year
13 consecutive Fiscal Periods ending on the 1.50:1.0
last day of each Fiscal Quarter in 2001 Fiscal Year
6.5. Availability.
Borrower shall maintain Excess Availability, as of the last day of
each week hereafter, of at least $4,000,000.
SECTION 7. NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Obligations and termination of
all Lender
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Letters of Credit, unless Borrower has received the prior written consent of
Requisite Lenders, Borrower shall not and will not permit any of its
Subsidiaries to:
7.1. Indebtedness and Liabilities.
Directly or indirectly create, incur, assume, guaranty, or otherwise
become or remain directly or indirectly liable, on a fixed or contingent basis,
with respect to any Indebtedness except: (a) the Obligations; (b) intercompany
Indebtedness, not to exceed any amounts outstanding on the Closing Date and
identified on Schedule 7.1, plus (i) unsecured loans from TAV Brands, Inc. to
Borrower from time to time in amounts not in excess of the amounts paid by
Borrower to TAV Brands, Inc. in respect of that certain License Agreement dated
April 6, 1991, as amended to date and (ii) additional unsecured intercompany
Indebtedness not to exceed $5,000,000 outstanding at any time in the aggregate,
among Borrower and its Subsidiaries; provided that such Indebtedness is
subordinated in right of payment to the Obligations; (c) Indebtedness (excluding
capital leases) not to exceed $750,000 in the aggregate at any time outstanding
secured by purchase money Liens; (d) Indebtedness under Capital Leases not to
exceed $5,000,000 outstanding at any time in the aggregate; (e) Indebtedness
existing on the Closing Date and identified on Schedule 7.1 and any amendments,
extensions or renewals thereof which do not increase the principal then
outstanding thereunder, increase the interest rate or fees thereunder or make
the covenants thereunder more restrictive; (f) Indebtedness under the Premium
Notes; (g) Indebtedness of up to $2,000,000 secured solely by shares of
preferred stock of Michigan Livestock Credit Corporation owned by Borrower,
having terms, and evidenced by agreements, satisfactory to Collateral Agent and
Administrative Agent in their reasonable judgment; and (h) Indebtedness in
respect of surety bonds or letters of credit issued to secure Borrower's
obligations under PASA or PPFPA. Except for Indebtedness described permitted in
the preceding sentence, Borrower will not, and will not permit any of its
Subsidiaries to, incur any Liabilities except for trade payables and normal
accruals in the ordinary course of business not yet due and payable or with
respect to which Borrower or any of its Subsidiaries is contesting in good faith
the amount or validity thereof by appropriate proceedings and then only to the
extent that Borrower or any of its Subsidiaries has established adequate
reserves therefor, if appropriate under GAAP.
7.2. Guaranties.
Except as described on Schedule 7.2 and except for endorsements of
instruments or items of payment for collection in the ordinary course of
business, guaranty, endorse, or otherwise in any way become or be responsible
for any obligations of any other Person, whether directly or indirectly by
agreement to purchase the indebtedness of any other Person or through the
purchase of goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or discharging
any indebtedness or obligation of such other Person or otherwise.
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7.3. Transfers, Liens and Related Matters.
(A) Transfers.
Sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to any of the Collateral or the assets of
such Person, except that Borrower and its Subsidiaries may (i) sell inventory in
the ordinary course of business; (ii) consummate Asset Dispositions consisting
of sales of tractors and trailers in connection with the acquisition of new
tractors and trailers; and (iii) make Asset Dispositions (other than sales of
tractors under clause (ii)) if all of the following conditions are met: (1) the
aggregate proceeds of assets sold or otherwise disposed of in any Fiscal Year
does not exceed $2,000,000; (2) the consideration received is at least equal to
the fair market value of such assets; (3) the sole consideration received is
cash or, if the Asset Disposition is a sale of real property, at least 50% of
the consideration received is cash; (4) if the Asset Disposition is a sale of
real property, any noncash portion of the proceeds thereof are evidenced by a
note secured by a mortgage lien on the real property being so transferred and
such note and mortgage lien have been collaterally assigned to Collateral Agent
in a manner acceptable to Collateral Agent; (5) the net proceeds of such Asset
Disposition are applied as required by subsection 2.4(B); (6) after giving
effect to the sale or other disposition of the assets included within the Asset
Disposition and the repayment of the Obligations with the proceeds thereof,
Borrower is in compliance on a pro forma basis with the covenants set forth in
Section 6 recomputed for the most recently ended calendar month for which
information is available and is in compliance with all other terms and
conditions contained in this Agreement; and (7) no Default or Event of Default
shall then exist or result from such sale or other disposition.
(B) Liens.
Except for Permitted Encumbrances, directly or indirectly create,
incur, assume or permit to exist any Lien on or with respect to any of the
Collateral or the assets of such Person or any proceeds, income or profits
therefrom.
(C) No Negative Pledges.
Enter into or assume any agreement (other than the Loan Documents)
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
(D) No Restrictions on Subsidiary Distributions to Borrower.
Except as provided herein, directly or indirectly create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to: (1) pay
dividends or make any other distribution on any of such Subsidiary's capital
stock owned by Borrower or any Subsidiary of
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Borrower; (2) subject to subordination provisions, pay any indebtedness owed to
Borrower or any other Subsidiary; (3) make loans or advances to Borrower or any
other Subsidiary; or (4) transfer any of its property or assets to Borrower or
any other Subsidiary.
7.4. Investments and Loans.
Except as described in Schedule 7.4, make or permit to exist
investments in or loans to any other Person, except: (a) Cash Equivalents; (b)
loans and advances to employees for moving, entertainment, travel and other
similar expenses in the ordinary course of business in an aggregate outstanding
amount not in excess of $250,000 at any time; (c) intercompany loans permitted
by subsection 7.1(b); and (d) investments by Borrower or its Subsidiaries in the
amounts in existence on the date hereof.
7.5. Restricted Junior Payments.
Directly or indirectly declare, order, pay, make or set apart
any sum for any Restricted Junior Payment, except that: (a) Subsidiaries of
Borrower may make Restricted Junior Payments with respect to their common stock
to the extent necessary to permit Borrower to pay the Obligations, to make
Restricted Junior Payments permitted under clause (b) below and to permit
Borrower to pay expenses incurred in the ordinary course of business; and (b)
Borrower may make payments on the Subordinated Debt in accordance with the terms
of the subordination provisions contained in the Indenture (as it exists on the
date hereof) or any subordination agreement or other subordination agreement
relating thereto, as applicable.
7.6. Restriction on Fundamental Changes.
(a) Except as provided in subsection 5.8, enter into any
transaction of merger or consolidation; (b) except as provided in subsection
5.8, liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution); (c) convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any substantial part
of its business or assets, or the capital stock of any of its Subsidiaries,
whether now owned or hereafter acquired; or (d) acquire by purchase or otherwise
all or any substantial part of the business or assets of, or stock or other
evidence of beneficial ownership of, any Person.
7.7. Changes Relating to Subordinated Debt.
Change or amend the terms of the Subordinated Debt if the
effect of such amendment is to: (a) increase the interest rate on such
Indebtedness; (b) change the dates upon which payments of principal or interest
are due on such Indebtedness; (c) change any event of default or add any
covenant with respect to such Indebtedness; (d) change the payment provisions of
such Indebtedness; (e) change the subordination provisions thereof; or (f)
change or amend any other term if such change or amendment would materially
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increase the obligations of the obligor or confer additional material rights on
the holder of such Indebtedness in a manner adverse to Borrower, any of its
Subsidiaries, any Agent or any Lender.
7.8. Transactions with Affiliates.
Directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale or exchange of property or the
rendering of any service) with any Affiliate or with any officer, director or
employee of any Loan Party, except (a) as set forth on Schedule 7.8 and (b) for
transactions in the ordinary course of and pursuant to the reasonable
requirements of such Loan Party's business and upon fair and reasonable terms
which are fully disclosed to Agents and Lenders and which are no less favorable
to Borrower than it would obtain in a comparable arm's length transaction with
an unaffiliated Person.
7.9. Environmental Liabilities.
(a) Violate any applicable Environmental Law, if such
violation could reasonably be expected to have a Material Adverse Effect; (b)
dispose of any Hazardous Materials (except in accordance with applicable law)
into or onto or from, any real property owned, leased or operated by any Loan
Party; or (c) permit any Lien imposed pursuant to any Environmental Law to be
imposed or to remain on any real property owned, leased or operated by any Loan
Party.
7.10. Conduct of Business.
From and after the Closing Date, engage in any business other
than businesses of the type engaged in by such Loan Party on the Closing Date.
7.11. Compliance with ERISA.
Establish any new Employee Benefit Plan or amend any existing
Employee Benefit Plan if the liability or increased liability resulting from
such establishment or amendment is material. Neither Borrower nor any Subsidiary
shall fail to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the IRC and
all other applicable laws and the regulations and interpretations thereof.
7.12. Tax Consolidations.
File or consent to the filing of any consolidated income tax
return with any Person other than Borrower or any of its Subsidiaries.
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7.13. Subsidiaries.
Establish, create or acquire any new Subsidiaries.
7.14. Fiscal Year.
Change its Fiscal Year.
7.15. Press Release; Public Offering Materials.
Disclose the name of any Agent or any Lender in any press
release or in any prospectus, proxy statement or other materials filed with any
governmental entity relating to a public offering of the capital stock of any
Loan Party except as may be required by law.
7.16. Bank Accounts.
Establish any new bank accounts, or amend or terminate any
Blocked Account or lockbox agreement without Collateral Agent's prior written
consent.
7.17. Certain Salaries.
Pay or permit any Subsidiary to pay, directly or indirectly,
any salary, bonus, or other cash compensation to any person who, as of the date
hereof, is (i) the chairman of Borrower's board of directors, (ii) Borrower's
president and chief executive officer, or (iii) Borrower's executive vice
president for finance and administration, if such payment or payments would
exceed, in the aggregate, 110% of the aggregate amount of salary, bonus and
other cash compensation paid to such person in the 1996 Fiscal Year.
Notwithstanding the foregoing, for each Fiscal Year after the 1998 Fiscal Year,
Borrower may compensate the persons described in this subsection 7.17 in
accordance with the bonus plan previously delivered to Collateral Agent and
Administrative Agent.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
8.1. Event of Default.
"Event of Default" shall mean the occurrence or existence of
any one or more of the following:
(A) Payment.
Failure to make payment of any of the Obligations when due and
in the case of interest, such failure shall not be cured within five (5) days of
the applicable due date; or
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(B) Default in Other Agreements.
(1) Failure of Borrower or any of its Subsidiaries to pay when
due any principal or interest on any Indebtedness (other than the Obligations)
or (2) breach or default of Borrower or any of its Subsidiaries with respect to
any Indebtedness (other than the Obligations), if such failure to pay, breach or
default entitles the holder to cause such Indebtedness having an aggregate
principal amount in excess of $500,000 to become or be declared due prior to its
stated maturity; or
(C) Breach of Certain Provisions.
Failure of Borrower to perform or comply with any term or
condition contained in subsections 5.1(A), (B), (C), (D), (E), (F), (G) and (P),
5.3, 5.5, 5.6 or 5.18 or contained in Section 6 or Section 7; or
(D) Breach of Warranty.
Any representation, warranty, certification or other statement
made by any Loan Party in any Loan Document or in any statement or certificate
at any time given by such Person in writing pursuant or in connection with any
Loan Document is false in any material respect on the date made; or
(E) Other Defaults Under Loan Documents.
Borrower or any other Loan Party defaults in the performance
of or compliance with any term contained in this Agreement or the other Loan
Documents and such default is not remedied or waived within ten (10) days after
receipt by Borrower of notice from Collateral Agent or Requisite Lenders of such
default (other than occurrences described in other provisions of this subsection
8.1 for which a different grace or cure period is specified or which constitute
immediate Events of Default); or
(F) Change in Control.
(1) Any change in Control of Borrower shall occur, or (2)
Borrower shall cease to beneficially own and control, directly or indirectly,
100% of the issued and outstanding shares of each class of capital stock of each
of Borrower's Subsidiaries.
(G) Involuntary Bankruptcy; Appointment of Receiver, etc.
(1) A court enters a decree or order for relief with respect
to Borrower or any of its Subsidiaries in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed or other similar relief is not
granted under any applicable federal or state law; or (2) the continuance of any
of the following events for sixty (60) days unless dismissed, bonded or
discharged: (a) an involuntary case is commenced against Borrower or any of its
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Subsidiaries, under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect; or (b) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Borrower or any of its Subsidiaries, or over
all or a substantial part of their respective property, is entered; or (c) an
interim receiver, trustee or other custodian is appointed without the consent of
Borrower or any of its Subsidiaries, for all or a substantial part of the
property of Borrower or any such Subsidiary; or
(H) Voluntary Bankruptcy; Appointment of Receiver, etc.
(1) An order for relief is entered with respect to Borrower or
any of its Subsidiaries or Borrower or any of its Subsidiaries commences a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case or to the conversion of an involuntary case to a voluntary
case under any such law or consents to the appointment of or taking possession
by a receiver, trustee or other custodian for all or a substantial part of its
property; or (2) Borrower or any of its Subsidiaries makes any assignment for
the benefit of creditors; or (3) the board of directors of Borrower or any of
its Subsidiaries adopts any resolution or otherwise authorizes action to approve
any of the actions referred to in this subsection 8.1(H); or
(I) Liens.
Any lien, levy or assessment is filed or recorded with respect
to or otherwise imposed upon all or any part of the Collateral with an aggregate
value (in Collateral Agent's determination) equal to or greater than $500,000,
or any or any part of the assets of Borrower or any of its Subsidiaries with an
aggregate value (in Collateral Agent's determination) equal to or greater than
$500,000, by the United States or any department or instrumentality thereof or
by any state, county, municipality or other governmental agency (other than
Permitted Encumbrances) and such lien, levy or assessment is not stayed,
vacated, paid or discharged within ten (10) days; or
(J) Judgment and Attachments.
Any one or more money judgments, writs or warrants of
attachment, or similar process involving an amount in the aggregate at any time
in excess of $500,000 (and not adequately covered by insurance as to which the
insurance company has acknowledged coverage) is entered or filed against
Borrower or any of its Subsidiaries or any of their respective assets and
remains undischarged, unvacated, unbonded or unstayed for a period of thirty
(30) days or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
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(K) Dissolution.
Any order, judgment or decree is entered against Borrower or
any of its Subsidiaries decreeing the dissolution or split up of Borrower or
that Subsidiary and such order remains undischarged or unstayed for a period in
excess of twenty (20) days; or
(L) Solvency.
Borrower ceases to be solvent (as represented by Borrower in
subsection 4.17) or admits in writing its present or prospective inability to
pay its debts as they become due; or
(M) Injunction.
Borrower or any of its Subsidiaries is enjoined, restrained or
in any way prevented by the order of any court or any administrative or
regulatory agency from conducting all or any material part of its business and
such order continues for more than thirty (30) days; or
(N) Invalidity of Loan Documents.
Any of the Loan Documents for any reason, other than a partial
or full release in accordance with the terms thereof, ceases to be in full force
and effect or is declared to be null and void, or any Loan Party denies that it
has any further liability under any Loan Documents to which it is party, or
gives notice to such effect; or
(O) Failure of Security.
Collateral Agent, on behalf of Agents and Lenders, does not
have or ceases to have a valid and perfected first priority security interest in
Collateral (subject to Permitted Encumbrances) with an aggregate value (as
determined by Collateral Agent) of more than $100,000, in each case, for any
reason other than the failure of any Agent or any Lender to take any action
within its control; or
(P) Damage, Strike, Casualty.
Any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which could
reasonably be expected to have a Material Adverse Effect; or
(Q) Licenses and Permits.
The loss, suspension or revocation of, or failure to renew,
any license or permit now held or hereafter acquired by Borrower or any of its
Subsidiaries, if such loss,
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suspension, revocation or failure to renew could reasonably be expected to have
a Material Adverse Effect; or
(R) Forfeiture.
There is filed against Borrower or any of its Subsidiaries any
civil or criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the Racketeer Influenced
and Corrupt Organization Act of 1970), which action, suit or proceeding (1) is
not dismissed within one hundred twenty (120) days; and (2) could result in the
confiscation or forfeiture of any material portion of the Collateral.
8.2. Suspension of Commitments.
Upon the occurrence of any Default or Event of Default,
notwithstanding any grace period or right to cure Collateral Agent, upon demand
by Requisite Lenders shall, without notice or demand, immediately cease making
additional Loans and the Commitments shall be suspended; provided that, in the
case of a Default, if the subject condition or event is waived or cured within
any applicable grace or cure period, the Commitments shall be reinstated.
8.3. Acceleration.
Upon the occurrence of any Event of Default described in the
foregoing subsections 8.1(G) or 8.1(H), all Obligations shall automatically
become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by
Borrower, and the Commitments shall thereupon terminate. Upon the occurrence and
during the continuance of any other Event of Default, Collateral Agent shall, by
written notice to Borrower, (a) upon demand by Requisite Lenders, declare all or
any portion of the Obligations to be, and the same shall forthwith become,
immediately due and payable and the Commitments shall thereupon terminate and
(b) upon demand by Requisite Lenders, demand that Borrower immediately Cash
Collateralize the Letter of Credit Liability.
8.4. Remedies.
If any Event of Default shall have occurred and be continuing,
in addition to and not in limitation of any other rights or remedies available
to Agents and Lenders at law or in equity, Collateral Agent may, and shall upon
the request of Requisite Lenders exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral) and may also
(a) notify any or all obligors on the Accounts to make all payments directly to
Collateral Agent; (b) require Borrower to, and Borrower hereby agrees that it
will, at its
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expense and upon request of Collateral Agent forthwith, assemble all or part of
the Collateral as directed by Collateral Agent and make it available to
Collateral Agent at a place to be designated by Collateral Agent which is
reasonably convenient to both parties; (c) withdraw all cash in the Blocked
Accounts and apply such monies in payment of the Obligations in the manner
provided in subsection 8.7; (d) without notice or demand or legal process, enter
upon any premises of Borrower and take possession of the Collateral; and (e)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Collateral
Agent's offices or elsewhere, at such time or times, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as
Collateral Agent may deem commercially reasonable. Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days notice to
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. At any sale
of the Collateral, if permitted by law, any Agent or any Lender may bid (which
bid may be, in whole or in part, in the form of cancellation of indebtedness)
for the purchase of the Collateral or any portion thereof for the account of
such Agent or such Lender. Collateral Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Borrower
shall remain liable for any deficiency. Collateral Agent may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. To the extent permitted by law, Borrower
hereby specifically waives all rights of redemption, stay or appraisal which it
has or may have under any law now existing or hereafter enacted. Collateral
Agent shall not be required to proceed against any Collateral but may proceed
against Borrower directly.
8.5. Appointment of Attorney-in-Fact.
Borrower hereby constitutes and appoints Collateral Agent as
Borrower's attorney-in-fact with full authority in the place and stead of
Borrower and in the name of Borrower, Collateral Agent or otherwise, from time
to time in Collateral Agent's discretion while an Event of Default is continuing
to take any action and to execute any instrument that Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (b) to adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any customer or obligor thereunder
or allow any credit or discount thereon; (c) to receive, endorse, and collect
any drafts or other instruments, documents and chattel paper, in connection with
clause (a) above; (d) to file any claims or take any action or institute any
proceedings that Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of Agents
and Lenders with respect to any of the Collateral; and (e) to sign and endorse
any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, assignments, verifications and notices in connection with Accounts and
other documents
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relating to the Collateral. The appointment of Collateral Agent as Borrower's
attorney and Collateral Agent's rights and powers are coupled with an interest
and are irrevocable until payment in full and complete performance of all of the
Obligations.
8.6. Limitation on Duty with Respect to Collateral.
Beyond the safe custody thereof, neither any Agent nor any
Lender shall have any duty with respect to any Collateral in its possession or
control (or in the possession or control of any agent or bailee) or with respect
to any income thereon or the preservation of rights against prior parties or any
other rights pertaining thereto. Each Agent and each Lender shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which such Agent and such Lender accords its own property. Neither any
Agent nor any Lender shall be liable or responsible for any loss or damage to
any of the Collateral, or for any diminution in the value thereof, by reason of
the act or omission of any warehouseman, carrier, forwarding agency, consignee
or other agent or bailee selected by such Agent or such Lender in good faith.
8.7. Application of Proceeds.
Upon the occurrence and during the continuance of an Event of
Default, (a) Borrower irrevocably waives the right to direct the application of
any and all payments at any time or times thereafter received by any Agent from
or on behalf of Borrower, and Borrower hereby irrevocably agrees that Collateral
Agent shall have the continuing exclusive right to apply and to reapply any and
all payments received at any time or times after the occurrence and during the
continuance of an Event of Default against the Obligations in such manner as
Collateral Agent may deem advisable notwithstanding any previous entry by
Collateral Agent upon any books and records and (b) the proceeds of any sale of,
or other realization upon, all or any part of the Collateral shall be applied:
first, to all fees, costs and expenses incurred by any Agent or any Lender with
respect to this Agreement, the other Loan Documents or the Collateral; second,
to all fees due and owing to Agents and Lenders; third, to accrued and unpaid
interest on the Obligations; fourth, to the principal amounts of the Obligations
outstanding; fifth, to any other indebtedness or obligations of Borrower owing
to any Agent or any Lender; and sixth, to Borrower.
8.8. License of Intellectual Property.
Borrower hereby assigns, transfers and conveys to Collateral
Agent, for the benefit Agents and Lenders, effective upon the occurrence of any
Event of Default hereunder, the non-exclusive right and license to use all
Intellectual Property owned or used by Borrower together with any goodwill
associated therewith, all to the extent necessary to enable Collateral Agent to
realize on the Collateral and any successor or assign to enjoy the benefits of
the Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Collateral Agent and its successors,
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assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.
Such right and license is granted free of charge, without requirement that any
monetary payment whatsoever be made to Borrower by Collateral Agent.
8.9. Waivers, Non-Exclusive Remedies.
No failure on the part of any Agent or any Lender to exercise,
and no delay in exercising and no course of dealing with respect to, any right
under this Agreement or the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise by any Agent or any Lender of
any right under this Agreement or any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The rights in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other remedies provided by law.
SECTION 9. AGENTS
9.1. Agents.
(A) Appointment.
Each Lender hereto and, upon obtaining an interest in any
Loan, any participant, transferee or other Eligible Assignee of any Lender
irrevocably appoints, designates and authorizes (1) Heller as Documentation
Agent and Collateral Agent, (2) Rabobank as Administrative Agent and (3) Harris
as Co-Agent, in each case to take such actions or refrain from taking such
action as such Agent on its behalf and to exercise such powers hereunder as are
delegated by the terms hereof, together with such powers as are reasonably
incidental thereto. Neither any Agent nor any of its directors, officers,
employees or agents shall be liable for any action so taken. The provisions of
this subsection 9.1 are solely for the benefit of Agents and Lenders and neither
Borrower nor any Loan Party shall have any rights as a third party beneficiary
of any of the provisions hereof. Each Agent may perform any of its duties
hereunder, or under the Loan Documents, by or through its agents or employees.
(B) Nature of Duties.
No Agent shall have any duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of each Agent shall be mechanical and administrative
in nature. No Agent shall have by reason of this Agreement a fiduciary, trust or
agency relationship with or in respect of any other Agent or any Lender,
Borrower or any Loan Party. Each Agent and Lender shall make its own appraisal
of the credit worthiness of Borrower, and shall have independently taken
whatever steps it considers necessary to evaluate the financial condition and
affairs of Borrower, and no Agent shall have any duty or responsibility, either
initially or on a
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continuing basis, to provide any other Agent or any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter. If any Agent seeks
the consent or approval of any Lenders to the taking or refraining from taking
any action hereunder, then such Agent shall send notice thereof to each Lender
and each other Agent. Each Agent shall promptly notify each other Agent and each
Lender any time that the applicable percentage of Lenders have instructed such
Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc.
Neither any Agent nor any of its officers, directors,
employees or agents shall be liable to any other Agent or any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that each Agent shall be obligated
on the terms set forth herein for performance of its express obligations
hereunder, and except that each Agent shall be liable with respect to its own
gross negligence or willful misconduct. No Agent shall be liable for any
apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made
in error, the sole recourse of any other Agent or any Lender to whom payment was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Agent or such Lender any such erroneous
payments received by them). In performing its functions and duties hereunder,
each Agent shall exercise the same care which it would in dealing with loans for
its own account, but no Agent shall be responsible to any other Agent or any
Lender for any recitals, statements, representations or warranties herein or for
the execution, effectiveness, genuineness, validity, enforceability,
collectability, or sufficiency of this Agreement or any of the Loan Documents or
the transactions contemplated thereby, or for the financial condition of any
Loan Party. No Agent shall be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Loan Documents or the financial condition of any Loan
Party, or the existence or possible existence of any Default or Event of
Default. Each Agent may at any time request instructions from Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the Loan Documents such Agent is permitted or required to take or to
grant, and each Agent shall be entitled to refrain from taking any action or to
withhold any approval and shall not be under any liability whatsoever to any
Person for refraining from any action or withholding any approval under any of
the Loan Documents until it shall have received such instructions from the
applicable percentage of Lenders. Without limiting the foregoing, no Agent or
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or refraining from acting under this Agreement or any of
the other Loan Documents in accordance with the instructions of the applicable
percentage of Lenders and notwithstanding the instructions of Lenders, no Agent
shall have obligation
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to take any action if it, in good faith, believes that such action exposes such
Agent to any liability.
(D) Reliance.
No Agent shall be under any duty to examine, inquire into, or
pass upon the validity, effectiveness or genuineness of this Agreement, any
other Loan Document, or any instrument, document or communication furnished
pursuant hereto or in connection herewith. Each Agent shall be entitled to rely
upon and assume that any written notices, statements, certificates, orders or
other documents or any telephone message or other communication (including any
writing, telex, telecopy or telegram) are genuine, valid, effective and correct
and to have been signed, sent or made by the proper Person, and with respect to
all matters pertaining to this Agreement or any of the Loan Documents and its
duties hereunder or thereunder, upon advice of counsel selected by it. Each
Agent shall be entitled to rely upon the advice of legal counsel, independent
accountants, and other experts selected by such Agent in its sole discretion.
(E) Indemnification.
Each Lender, in proportion to its Pro Rata Share, severally,
agrees to reimburse and indemnify each Agent for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
out-of-pocket costs, out-of-pocket expenses, advances or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against such Agent in any way relating to or arising out of this Agreement or
any of the Loan Documents or any action taken or omitted by such Agent under
this Agreement or any of the Loan Documents; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements resulting from any Agent's gross negligence or willful misconduct
as determined by a court of competent jurisdiction. The obligations of Lenders
under this subsection 9.1(E) shall survive the payment in full of the
Obligations and the termination of this Agreement.
(F) Heller, Rabobank and Harris Individually.
With respect to its Commitments and the Loans made by it, each
of Heller, Rabobank and Harris shall have and may exercise the same rights and
powers hereunder and is subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender. The terms "Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include Heller, Rabobank and Harris in its individual
capacity as a Lender or one of the Requisite Lenders. Each of Heller, Rabobank
and Harris may lend money to, and generally engage in any kind of banking, trust
or other business with any Loan Party as if it were not acting as an Agent
pursuant hereto.
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(G) Successor Agents.
(1) Resignation.
Each Agent may resign from the performance of all its functions and
duties hereunder at any time by giving at least 30 Business Days' prior written
notice to Borrower, the Lenders and the other Agents. Such resignation shall
take effect upon the acceptance by a successor Agent of appointment as provided
below.
(2) Appointment of Successor.
Upon any such notice of resignation pursuant to clause (G)(1) above,
Requisite Lenders shall, upon receipt of the prior written consent of Borrower,
Collateral Agent and Administrative Agent, which shall not unreasonably be
withheld, appoint a successor Agent; provided, that if an Event of Default is
then in existence, the consent of Borrower shall not be required. If a successor
Agent shall not have been so appointed within said 30 Business Day period, the
retiring Agent, upon notice to Borrower, Lenders and other Agents, shall then
appoint a successor Agent who shall serve as such Agent until such time as
Requisite Lenders, upon receipt of the prior written consent of Borrower,
Collateral Agent and Administrative Agent, which shall not be unreasonably
withheld, appoint a successor Agent as provided above.
(3) Successor Agent.
Upon the acceptance of any appointment as an Agent under the Loan
Documents by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring Agent's resignation as
an Agent under the Loan Documents, the provisions of this Section 9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
an Agent under the Loan Documents.
(H) Collateral Matters.
(1) Release of Collateral.
Lenders hereby irrevocably authorize Collateral Agent, at its option
and in its discretion, to release any Lien granted to or held by Collateral
Agent upon any property covered by this Agreement or the Loan Documents (i) upon
termination of the Commitments and upon final and indefeasible payment in full
in cash and satisfaction of all Obligations and termination of this Agreement;
(ii) constituting property being sold or disposed of in accordance with this
Agreement if Borrower certifies to Collateral Agent that the sale or disposition
is made in compliance with the provisions of this Agreement (and Collateral
Agent may rely in good faith conclusively on any such certificate, without
further inquiry); or (iii) constituting property leased to Borrower under an
operating lease
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which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
Borrower to be, renewed or extended. In addition during any Fiscal Year (x)
Collateral Agent may release Collateral having a book value of not more than
$500,000, (y) Collateral Agent, with the consent of Requisite Lenders, may
release Collateral having a book value of more than or equal to $500,000 and
less than $1,000,000 and (z) Collateral Agent, with the consent of all Lenders,
may release all or any portion of the Collateral. Collateral Agent may also
release any applicable Corporate Guaranty in connection with a release of Lien
permitted or consented to hereinabove, if such release is being made in
connection with the sale of all or substantially all of the assets of the
applicable Corporate Guarantor. Without limiting any of the foregoing, each
Lender agrees to confirm in writing, upon request by Borrower, the authority to
release any property or Corporate Guaranty covered by this Agreement or the Loan
Documents conferred upon Collateral Agent under this subsection.
(2) Execution of Releases.
So long as no Event of Default is then continuing, upon confirmation
from the requisite percentage (as set forth in subsection 9.1(H)(1) above) of
Lenders, of Collateral Agent's authority to release any Collateral, and upon at
least 10 Business Days prior written request by Borrower, Collateral Agent
shall, and is hereby irrevocably authorized by Lenders to, execute such
documents as may be necessary to evidence the release of the Liens upon such
Collateral; provided, however, that (i) Collateral Agent shall not be required
to execute any such document on terms which, in Collateral Agent's opinion,
would expose Collateral Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens granted to Collateral Agent on behalf of
Agents and Lenders upon (or obligations of any Loan Party, in respect of), all
interests retained by any Loan Party, including, without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the
property covered by this Agreement or the Loan Documents, and (iii) such release
is not inconsistent with the terms of this Agreement.
(3) Absence of Duty.
No Agent shall have any obligation whatsoever to any other Agent, any
Lender or any other Person to assure that the property covered by this Agreement
or the Loan Documents exists or is owned by Borrower or is cared for, protected
or insured or has been encumbered or that the Liens granted to Collateral Agent
on behalf of Agents and Lenders herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
any Agent in this Agreement or in any of the Loan Documents, it being understood
and agreed that in respect of the property covered by this Agreement or the Loan
Documents or any
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act, omission or event related thereto, each Agent may act in any manner it may
deem appropriate, in its discretion, given such Agent's own interest in property
covered by this Agreement or the Loan Documents as one of the Lenders and that
no Agent shall have any duty or liability whatsoever to any of the other Agents
or Lenders; provided, that each Agent shall exercise the same care which it
would in dealing with loans for its own account.
(I) Agency for Perfection.
Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting Lenders' security interest in Collateral which, in
accordance with Article 9 of the Uniform Commercial Code in any applicable
jurisdiction, can be perfected only by possession. Should any Lender (other than
Collateral Agent) obtain possession of any such Collateral, such Lender shall
notify Collateral Agent thereof, and, promptly upon Collateral Agent's request
therefor, shall deliver such Collateral to Collateral Agent or in accordance
with Collateral Agent's instructions. Collateral Agent may file such proofs of
claim or documents as may be necessary or advisable in order to have the claims
of Agents and Lenders (including any claim for the reasonable compensation,
expenses, disbursements and advances of Agents and Lenders, their respective
agents, financial advisors and counsel), allowed in any judicial proceedings
relative to Borrower and/or its Subsidiaries, or any of their respective
creditors or property, and shall be entitled and empowered to collect, receive
and distribute any monies, securities or other property payable or deliverable
on any such claims. Any custodian in any judicial proceedings relative to
Borrower and/or its Subsidiaries is hereby authorized by each Lender to make
payments to Collateral Agent and, in the event that Collateral Agent shall
consent to the making of such payments directly to Lenders, to pay to Collateral
Agent any amount due for the reasonable compensation, expenses, disbursements
and advances of each Agent, its agents, financial advisors and counsel, and any
other amounts due such Agent. Nothing contained in this Agreement or the other
Loan Documents shall be deemed to authorize any Agent to authorize or consent to
or accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment or composition affecting the Loans, or the rights of any
holder thereof, or to authorize any Agent to vote in respect of the claim of any
Lender in any such proceeding, except as specifically permitted herein.
(J) Exercise of Remedies.
Each Lender agrees that it will not have any right
individually to enforce or seek to enforce this Agreement or any Loan Document
or to realize upon any collateral security for the Loans, it being understood
and agreed that such rights and remedies may be exercised only by one or more
Agents as specified in this Agreement or such Loan Document.
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9.2. Notice of Default.
In the event that any Agent or any Lender shall acquire actual
knowledge, or shall have been notified, of any Event of Default, such Agent or
such Lender shall promptly notify Lenders and Agents, and the applicable Agent
shall take such action and assert such rights under this Agreement as Requisite
Lenders or all of the Lenders, required for such action hereunder, shall request
in writing, and such Agent shall not be subject to any liability by reason of
its acting pursuant to any such request. If Requisite Lenders or any or all of
the Lenders, as applicable, shall fail to request the applicable Agent to take
action or to assert rights under this Agreement in respect of any Event of
Default within ten (10) days after their receipt of the notice of any Event of
Default from any Agent, or shall request inconsistent action with respect to
such Event of Default, the applicable Agent may, but shall not be required to,
take such action and assert such rights as it deems in its discretion, except
that, if Requisite Lenders or all of the Lenders, as applicable, have instructed
such Agent not to take such action or assert such right, in no event shall such
Agent act contrary to such instructions.
9.3. Action by Agents.
Each Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement,
unless such Agent shall have been instructed by Requisite Lenders or all of the
Lenders, as applicable, to exercise or refrain from exercising such rights or to
make or refrain from taking such action. No Agent shall incur any liability
under or in respect of this Agreement with respect to anything which it may do
or refrain from doing in the reasonable exercise of its judgment or which may
seem to it to be necessary or desirable in the circumstances, except for its
gross negligence or willful misconduct. No Agent shall be liable to the other
Agents, Lenders or to any Lender in acting or refraining from acting under this
Agreement in accordance with the instructions of Requisite Lenders or all of
Lenders, as the case may be, and any action taken or failure to act pursuant to
such instructions shall be binding on all Agents and Lenders.
9.4. Amendments, Waivers and Consents.
(A) Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or consent to any departure by any Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Requisite Lenders or the applicable Agent, as applicable; provided, that no
amendment, modification, termination, waiver or consent shall, unless in writing
and signed by all Lenders, do any of the following: (i) increase the Commitment
of any Lender; (ii) reduce, postpone or delay the principal of, rate or amount
of interest on or fees payable with respect to any Loan or Letter of Credit;
(iii) extend the Termination Date or any scheduled due date for all or any
portion of principal or interest of
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the Loans; (iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans, or the percentage of Lenders which shall
be required for Requisite Lenders; (v) amend or waive the definitions of the
terms "Requisite Lenders" or "Commitments" or amend or waive this subsection
9.4; (vi) increase the percentages contained in the definition of Borrowing
Base; or (vii) except as provided in subsection 9.1(H)(1), release any Corporate
Guaranty; provided, further, that no amendment, modification, termination,
waiver or consent affecting the rights or duties of any Agent under any Loan
Document shall in any event be effective, unless in writing and signed by such
Agent, in addition to Lenders required to take such action; and provided,
further, that no amendment, modification, termination, waiver or consent
affecting the rights or duties of Issuing Lender under any Loan Document
(including any Lender Letter of Credit) shall in any event be effective, unless
in writing and signed by Issuing Lender in addition to Lenders required to take
such action.
(B) Each amendment, modification, termination, waiver or
consent shall be effective only in the specific instance and for the specific
purpose of which it was given. No amendment, modification, termination or waiver
shall be required for Collateral Agent to take additional Collateral pursuant to
any Loan Documents.
(C) Each Lender grants each of Administrative Agent and
Collateral Agent the right to purchase all, but not less than all, of such
Lender's Commitment, in the event either such Agent requests the consent of a
Lender and such consent is denied. Administrative Agent or Collateral Agent, as
applicable, may, in such circumstances, at its option, require such Lender to
assign its interest in the Loans to it for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest, fees and other
amounts due such Lender under this Agreement, which interest, fees and other
amounts will be paid when collected from Borrower.
Collateral Agent, Administrative Agent and Borrower, without
the consent of Requisite Lenders or all Lenders, may execute amendments to this
Agreement and the Loan Documents which consist solely of the making of technical
corrections.
9.5. Assignments and Participations in Loans.
(A) Each Lender may assign its rights and delegate its
obligations under this Agreement to an Eligible Assignee; provided, that (a)
such Lender shall first obtain the written consent of each of Collateral Agent
and Administrative Agent, which shall not be unreasonably withheld, (b) if such
assignment takes place at a time when no Event of Default or Default is in
existence, such Lender shall first obtain the written consent of Borrower, which
shall not be unreasonably withheld; provided, that if Borrower fails to respond
within five (5) Business Days to a request for consent, such consent shall be
deemed to have been given, (c) the amount of Commitments and Loans of the
assigning Lender being assigned shall in no event be less than the lesser of (i)
$5,000,000 or (ii) the entire amount of the Commitments and Loans of such
assigning Lender and (d) (i) each such assignment shall be
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of a pro rata portion of all such assigning Lender's Loans and Commitments
hereunder, and (ii) the parties to such assignment shall execute and deliver to
Collateral Agent and Administrative Agent for acceptance and recording a
Assignment and Assumption Agreement together with (x) a processing and recording
fee of $3,500 payable to Collateral Agent (which shall be shared one-half each
by Administrative Agent and Collateral Agent); provided, that such fee shall not
be applicable to any interest in the Commitments and Loans purchased on or
within 90 days after the Closing Date, (y) each of the Notes originally
delivered to the assigning Lender and (z) an Administrative Questionnaire
completed in respect of such Eligible Assignee. Upon receipt of all of the
foregoing, Administrative Agent shall notify Borrower of such assignment and
Borrower shall comply with its obligations under the last sentence of subsection
2.1(E). To the extent of an assignment authorized under this subsection 9.5, the
assignee shall be considered to be a "Lender" hereunder and Borrower hereby
acknowledges and agrees that any assignment will give rise to a direct
obligation of Borrower to the assignee. The assigning Lender shall be relieved
of its obligations hereunder with respect to the assigned portion of its
Commitment. Notwithstanding any other provision in this Agreement, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Board or U.S.
Treasury Regulations 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted such
applicable law.
(B) Each Lender may sell participations in all or any part of
any Loans made by it to another Person; provided, that any such participation
shall be in a minimum amount of $5,000,000, and provided, further, that all
amounts payable by Borrower hereunder shall be determined as if that Lender had
not sold such participation and the holder of any such participation shall not
be entitled to require such Lender to take or omit to take any action hereunder
except action directly effecting (a) any reduction in the principal amount,
interest rate with respect to any Loan in which such holder participates; (b)
any extension of the Termination Date or the date fixed for any payment of
interest payable with respect to any Loan in which such holder participates; and
(c) any release of substantially all of the Collateral. Borrower hereby
acknowledges and agrees that the participant under each participation shall for
purposes of subsections 2.8, 2.9, 2.10, 9.6 and 10.2 be considered to be a
"Lender".
(C) Except as otherwise provided in subsection 9.5(A) no
Lender shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to Eligible Assignees and participants (including prospective
assignees and participants) provided that the Persons obtaining such information
agrees to maintain the confidentiality of such information to the extent
required by subsection 10.18.
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(D) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement or the other Loan Documents in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
9.6. Set Off and Sharing of Payments.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default, each Lender is
hereby authorized by Borrower at any time or from time to time, with reasonably
prompt subsequent notice to Borrower or to any other Person (any prior or
contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances held by such Lender at any of
its offices for the account of Borrower or any of its Subsidiaries (regardless
of whether such balances are then due to Borrower or its Subsidiaries), and (b)
other property at any time held or owing by such Lender to or for the credit or
for the account of Borrower or any of its Subsidiaries, against and on account
of any of the Obligations which are not paid when due; except that no Lender
shall exercise any such right without the prior written consent of Collateral
Agent. Any Lender which has exercised its right to set off shall purchase for
cash (and the other Lenders shall sell) participations in each such other
Lender's Pro Rata Share of the Obligations as would be necessary to cause such
Lender to share such excess with each other Lender in accordance with their
respective Pro Rata Shares. Borrower agrees, to the fullest extent permitted by
law, that (a) any Lender may exercise its right to set off with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such excess to other Lenders, and (b) any Lender so purchasing
a participation in the Loans made or other Obligations held by other Lenders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Loans and other Obligations in the amount of such participation.
9.7. Disbursement of Funds.
Collateral Agent may, on behalf of Lenders, disburse funds to
Borrower for Loans requested. Each Lender shall reimburse Collateral Agent on
demand for all funds disbursed on its behalf by Collateral Agent, or if
Collateral Agent so requests, each Lender will remit to Collateral Agent its Pro
Rata Share of any Loan or Revolving Advance before Collateral Agent disburses
same to Borrower. If Collateral Agent elects to require that funds be made
available prior to disbursement to Borrower, the parties shall follow the
procedures set forth in subsection 2.1(D)(1).
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9.8. Settlements, Payments and Information.
(A) Revolving Advances and Payments; Fee Payments.
(1) Payments of principal, interest and fees in respect
of the Term Loan will be settled on the Business Day received in accordance with
the provisions of Section 2. The Revolving Loan may fluctuate from day to day
through Collateral Agent's disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the frequency of transfers of funds between
Collateral Agent and each Lender notwithstanding terms to the contrary set forth
in Section 2 and subsection 9.7, Revolving Advances and repayments may be
settled according to the procedures described in this subsection 9.8.
Notwithstanding these procedures, each Lender's obligation to fund its Pro Rata
Share of Revolving Advances made by Collateral Agent to Borrower will commence
on the date such Revolving Advances are made by Collateral Agent. Such payments
will/ be made by such Lender without set-off, counterclaim or reduction of any
kind.
(2) Once each week for the Revolving Loan or more
frequently (including daily), if Collateral Agent so elects (each such day being
a "Settlement Date"), Collateral Agent will advise each Lender by 1:00 p.m.
Central time by telephone, telex, or telecopy of the amount of each such
Lender's Pro Rata Share of the Revolving Loan. In the event payments are
necessary to adjust the amount of such Lender's share of the Revolving Loan to
such Lender's Pro Rata Share of the Revolving Loan, the party from which such
payment is due will pay the other, in same day funds, by wire transfer to the
other's account not later than 3:00 p.m. Central time on the Business Day
following the Settlement Date.
(3) On the first Business Day of each calendar month
(each such day being an "Interest Settlement Date"), Collateral Agent will
advise each Lender by telephone, telefax or telecopy of the amount of interest
and fees charged to and collected from Borrower for the preceding calendar
month. Provided that such Lender has made all payments required to be made by it
under this Agreement, Collateral Agent will pay to such Lender, by wire transfer
to such Lender's account (as specified by such Lender on the signature page of
this Agreement as amended by such Lender from time to time after the date hereof
or in the applicable Assignment and Assumption Agreement) not later than 3:00
p.m. Central time on the next Business Day following the Interest Settlement
Date such Lender's share of such interest and fees actually collected by
Collateral Agent.
(B) Return of Payments.
(1) If Collateral Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Collateral Agent from Borrower and such related payment is
not received by Collateral Agent, then Collateral Agent will be entitled to
recover such amount from such Lender without set-off, counterclaim or deduction
of any kind.
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(2) If Collateral Agent determines at any time
that any amount received by Collateral Agent under this Agreement must be
returned to Borrower or paid to any other person pursuant to any solvency law or
otherwise, then, notwithstanding any other term or condition of this Agreement,
Collateral Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Collateral Agent on demand any
portion of such amount that Collateral Agent has distributed to such Lender,
together with interest at such rate, if any, as Collateral Agent is required to
pay to Borrower or such other Person, without set-off, counterclaim or deduction
of any kind.
9.9. Dissemination of Information.
Each of Collateral Agent and Administrative Agent will provide
Lenders with any information received by such Agent from Borrower which is
required to be provided to a Lender hereunder; provided, however, that neither
such Agent shall be liable to Lenders for any failure to do so, except to the
extent that such failure is attributable to such Agent's gross negligence or
willful misconduct.
9.10. Discretionary Advances.
(A) Provided that no Event of Default exists, Collateral Agent
may, in its sole discretion, and shall, at the direction of Requisite Lenders,
make Revolving Advances of up to $2,000,000 in excess of the limitations set
forth in the Borrowing Base, but not in excess of the Total Loan Commitment, up
to two times in any 12 month period and in each case for a period of not more
than 60 consecutive days, (B) during the continuance of an Event of Default,
Collateral Agent may in its sole discretion, make Revolving Advances of up to
$1,000,000 in excess of the limitations set forth in the Borrowing Base for the
purpose of preserving or protecting the Collateral or for incurring any costs
associated with collection or enforcing rights or remedies against the
Collateral, or incurred in any action to enforce this Agreement or any other
Loan Document and (C) during the continuance of an Event of Default, Collateral
Agent shall, at the direction of Requisite Lenders, make Revolving Advances in
an aggregate amount of not more than $2,000,000 in excess of the limitations set
forth in the Borrowing Base for the purpose of preserving or protecting the
Collateral or for incurring any costs associated with collection or enforcing
rights or remedies against the Collateral, or incurred in any action to enforce
this Agreement or any other Loan Document.
9.11. Documentation Agent and Co-Agent.
The duties of Documentation Agent shall be limited to (a)
coordinating documentation of the Loans prior to the Closing Date and (b)
coordinating documentation of each amendment, waiver, modification or other
change in the terms of the Loans and the Loan Documents after the Closing Date.
The duties of Co-Agent shall be limited to assisting the other Agents in the
process of closing the Loans.
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SECTION 10. MISCELLANEOUS
10.1. Expenses and Attorneys' Fees.
Whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to promptly pay all fees, costs and expenses
incurred by each of Collateral Agent, Documentation Agent, Administrative Agent
and Issuing Lender (and, with respect to subsection 10.1(f) only, each Lender,
each Agent and Issuing Lender) in connection with any matters contemplated by or
arising out of this Agreement or the other Loan Documents including the
following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand and secured by the Collateral: (a) fees, costs
and expenses (including reasonable attorneys' fees, allocated costs of internal
counsel and fees of environmental consultants, accountants and other
professionals retained by each of Collateral Agent, Documentation Agent,
Administrative Agent and Issuing Lender) incurred in connection with the
examination, review, due diligence investigation, documentation and closing of
the financing arrangements evidenced by the Loan Documents; (b) fees, costs and
expenses (including reasonable attorneys' fees, allocated costs of internal
counsel and fees of environmental consultants, accountants and other
professionals retained by each of Collateral Agent, Documentation Agent,
Administrative Agent and Issuing Lender) incurred in connection with the review,
negotiation, preparation, documentation, execution, syndication, and
administration of the Loan Documents, the Loans, and any amendments, waivers,
consents, forbearances and other modifications relating thereto or any
subordination or intercreditor agreements; (c) fees, costs and expenses incurred
by Collateral Agent in creating, perfecting and maintaining perfection of Liens
in favor of Collateral Agent, on behalf of Agents and Lenders; (d) fees, costs
and expenses incurred by each of Collateral Agent, Documentation Agent and
Administrative Agent in connection with forwarding to Borrower the proceeds of
Loans including any Agent's or any Lenders' standard wire transfer fee; (e)
fees, costs, expenses and bank charges, including bank charges for returned
checks, incurred by any Agent or any Lender in establishing, maintaining and
handling lock box accounts, blocked accounts or other accounts for collection of
the Collateral; (f) fees, costs, expenses (including reasonable attorneys' fees
and allocated costs of internal counsel) of any Agent, Issuing Lender or any
Lender and costs of settlement incurred in collecting upon or enforcing rights
against the Collateral or incurred in any action to enforce this Agreement or
the other Loan Documents or to collect any payments due from Borrower or any
other Loan Party under this Agreement or any other Loan Document or incurred in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement, whether in the nature of a "workout" or in
connection with any insolvency or bankruptcy proceedings or otherwise.
10.2. Indemnity.
In addition to the payment of expenses pursuant to subsection
10.1, whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to
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indemnify, pay and hold each Agent, Issuing Lender and each Lender and the
officers, directors, employees, agents, consultants, auditors, persons engaged
by any Agent, Issuing Lender or any Lender to evaluate or monitor the
Collateral, affiliates and attorneys of each Agent, Issuing Lender, each Lender
and such holders (collectively called the "Indemnitees") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including the fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this Agreement, the statements contained in the commitment
letters, if any, delivered by any Agent or any Lender, each Agent's and each
Lender's agreement to make the Loans hereunder, the use or intended use of the
proceeds of any of the Loans or the exercise of any right or remedy hereunder or
under the other Loan Documents (the "Indemnified Liabilities"); provided that
Borrower shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of that Indemnitee as determined by a court of competent jurisdiction.
10.3. Notices.
Unless otherwise specifically provided herein, all notices
shall be in writing addressed to the respective party as set forth below and may
be personally served, telecopied or sent by overnight courier service or United
States mail and shall be deemed to have been given: (a) if delivered in person,
when delivered; (b) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 4:00 p.m. Central time or, if not, on the
next succeeding Business Day; (c) if delivered by overnight courier, the next
Business Day after delivery to such courier properly addressed; or (d) if by
U.S. Mail, four (4) Business Days after depositing in the United States mail,
with postage prepaid and properly addressed.
If to Borrower: Thorn Apple Valley, Inc.
26999 Central Park Boulevard
Suite 300
Southfield, Michigan 48076
Telecopy No.: (810) 213-1101
With a copy to: Honigman, Miller, Schwartz and
Cohn
2290 First National Building
Detroit, Michigan 48226
Telecopy No.: (313) 256-4215
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If to Documentation HELLER FINANCIAL, INC.
Agent, Collateral Agent 500 West Monroe
or Heller: Chicago, Illinois, 60661
Attn: HBC Portfolio Manager
Telecopy No.: (312) 441-6158
With a copy to: HELLER FINANCIAL, INC.
500 West Monroe
Chicago, Illinois 60661
Attn: Legal Department/HBC
Telecopy No.: (312) 441-6876
If to Administrative Rabobank Nederland,
Agent or Rabobank: New York Branch
245 Park Avenue
New York, New York 10167
Attn: Corporate Services
Department
Telecopy: (212) 818-0233
With a copy to: Rabobank Nederland,
New York Branch
300 South Wacker Drive
Suite 3500
Chicago, Illinois 60606
Attn: Michael Butz
Telecopy: (312) 408-8240
If to Co-Agent or any Lender: Its address indicated on the
signature page hereto, in an Assignment and Assumption Agreement or in a notice
to Collateral Agent and Administrative Agent and Borrower or to such other
address as the party addressed shall have previously designated by written
notice to the serving party, given in accordance with this subsection 10.3.
10.4. Survival of Warranties and Certain Agreements.
All agreements, representations and warranties made herein
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Borrower set forth in subsections 10.1, 10.2,
10.6, 10.11, 10.14 and 10.15 shall survive the payment of the Loans and the
termination of this Agreement.
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10.5. Indulgence Not Waiver.
No failure or delay on the part of any Agent or any Lender in
the exercise of any power, right or privilege hereunder or under any Term Note
or any Revolving Note shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege.
10.6. Marshaling; Payments Set Aside.
Neither any Agent nor any Lender shall be under any obligation
to marshal any assets in favor of any Loan Party or any other party or against
or in payment of any or all of the Obligations. To the extent that any Loan
Party makes a payment or payments to any Agent and/or any Lender or any Agent
and/or any Lender enforces its security interests or exercise its rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
10.7. Entire Agreement.
This Agreement, the Term Notes, the Revolving Notes, and the
other Loan Documents referred to herein embody the final, entire agreement among
the parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties hereto.
10.8. Severability.
The invalidity, illegality or unenforceability in any
jurisdiction of any provision in or obligation under this Agreement or the other
Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents or of such provision or obligation in any other
jurisdiction.
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10.9. Lenders' Obligations Several; Independent Nature of
Lenders' Rights.
The obligation of each Lender hereunder is several and not
joint and neither any Agent nor any Lender shall be responsible for the
obligation or commitment of any other Lender hereunder. In the event that any
Lender at any time should fail to make a Loan as herein provided, the Lenders,
or any of them, at their sole option, may make the Loan that was to have been
made by the Lender so failing to make such Loan. Nothing contained in any Loan
Document and no action taken by any Agent or any Lender pursuant hereto or
thereto shall be deemed to constitute Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable at
any time hereunder to each Lender shall be a separate and independent debt, and,
provided the applicable Agent fails or refuses to exercise any remedies against
Borrower after receiving the direction of Requisite Lenders, as applicable, each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
10.10. Headings.
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.11. APPLICABLE LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.12. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns except that
Borrower may not assign its rights or obligations hereunder without the written
consent of each Agent and each Lender.
10.13. No Fiduciary Relationship; Limitation of Liabilities.
(A) No provision in this Agreement or in any of the other
Loan Documents and no course of dealing between the parties shall be deemed to
create any fiduciary duty by any Agent or any Lender to Borrower.
(B) All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by any Agent or any Lender shall
have the right to act exclusively in the interest of such Agent or such Lender
and shall have no duty of disclosure, duty of
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loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to Borrower or any of Borrower's shareholders or any other Person.
(C) Neither any Agent nor any Lender, nor any affiliate,
officer, director, shareholder, employee, attorney, or agent of any Agent or any
Lender shall have any liability with respect to, and Borrower hereby waives,
releases, and agrees not to sue any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by Borrower
in connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. Borrower hereby waives, releases,
and agrees not to sue any Agent or any Lender or any of any Agent's or any
Lender's affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
10.14. CONSENT TO JURISDICTION.
BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO COLLATERAL AGENT'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TERM NOTES, THE
REVOLVING NOTES, OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE TERM
NOTES, THE REVOLVING NOTES, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
10.15. WAIVER OF JURY TRIAL.
BORROWER, EACH AGENT AND EACH LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE TERM NOTES, THE REVOLVING NOTES OR THE OTHER
LOAN DOCUMENTS. BORROWER, EACH AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE TERM
NOTES, THE REVOLVING NOTES AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
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109
BORROWER, EACH AGENT AND EACH LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
10.16. Construction.
Borrower, each Agent and each Lender each acknowledge that it
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its legal
counsel and that this Agreement and the other Loan Documents shall be construed
as if jointly drafted by Borrower, each Agent and each Lender.
10.17. Counterparts; Effectiveness.
This Agreement and any amendments, waivers, consents, or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all of which counterparts together
shall constitute but one and the same instrument. This Agreement shall become
effective upon the execution of a counterpart hereof by each of the parties
hereto. Delivery of an executed counterpart of a signature page to this
Agreement, any amendments, waivers, consents or supplements, or to any other
Loan Document by telecopier shall be as effective as delivery of a manually
executed counterpart thereof.
10.18. Confidentiality.
Agents and Lenders shall hold all nonpublic information
obtained pursuant to the requirements hereof and identified as such by Borrower
in accordance with such Person's customary procedures for handling confidential
information of this nature and in accordance with safe and sound business
practices and in any event may make disclosure to such of its respective
Affiliates, officers, directors, employees, agents and representatives as need
to know such information in connection with the Loans. If any Lender is
otherwise a creditor of a Borrower, such Lender may use the information in
connection with its other credits. Agents and Lenders may also make disclosure
reasonably required by a bona fide offeree or assignee (or participation), or as
required or requested by any governmental authority or representative thereof,
or pursuant to legal process, or to its accountants, lawyers and other advisors,
and shall require any such offeree or assignee (or participant) to agree (and
require any of its offerees, assignees or participants to agree) to comply with
this Section 10.21. In no event shall any Agent or any Lender be obligated or
required to return any materials furnished by Borrower; provided, however, each
Offeree shall be required to agree that if it does not become a assignee (or
participant) it shall return all materials furnished to it by Borrower in
connection herewith.
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110
10.19. Illinois Collateral Protection Act.
Unless Borrower provides Collateral Agent with evidence of the
insurance coverage required by this Agreement, Collateral Agent may purchase
insurance at Borrower's expense to protect Collateral Agent's and the Lenders'
interests in Collateral. This insurance may, but need not, protect Borrower's
interests. The coverage that Collateral Agent purchases may not pay any claim
that Borrower may make or any claim that is made against Borrower in connection
with the Collateral. Borrower may later cancel any insurance purchased by
Collateral Agent, but only after providing Collateral Agent with evidence that
Borrower has obtained insurance as required by this Agreement. If Collateral
Agent purchases insurance for the Collateral, Borrower will be responsible for
the costs of that insurance, including interest and any other charges Borrower
may impose in connection with the placement of the insurance, until the
effective date of the cancellation or expiration of the insurance. This costs of
the insurance may be added to the Loans. The costs of the insurance may be more
than the cost of insurance Borrower may be able to obtain on its own.
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Witness the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written above.
THORN APPLE VALLEY, INC.
By: /s/Louis Glazier
-------------------------------------------
Title: Executive Vice President
-------------------------------------------
FEIN: 38-1964066
-------------------------------------------
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK
BRANCH, as Administrative Agent
By: /s/ M. Christina Debler
-------------------------------------------
Title: Vice President
-------------------------------------------
By: /s/ W. Pieter C. Kodde
-------------------------------------------
Title:
-------------------------------------------
HELLER FINANCIAL, INC.,
as Collateral Agent
By:/s/ Ronald E. Little
-------------------------------------------
Title: Vice President
-------------------------------------------
HELLER FINANCIAL, INC.,
as Documentation Agent
By: /s/ Ronald E. Little
-------------------------------------------
Title: Vice President
-------------------------------------------
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112
HARRIS TRUST AND SAVINGS BANK,
as Co-Agent
By:/s/ Carl Blackham
------------------------------
Title: Vice President
------------------------------
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113
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK
BRANCH, as a Lender
By: /s/ M. Christina Debler
------------------------------
Title: Vice President
------------------------------
By: /s/ W. Pieter C. Kodde
------------------------------
Title:
------------------------------
Revolving Loan Commitment: $16,764,750
Term Loan Commitment: $13,235,250
Total Commitments: $30,000,000
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114
HELLER FINANCIAL, INC.,
as a Lender
By:/s/ Ronald E. Little
------------------------------
Title: Vice President
------------------------------
Revolving Loan Commitment: $18,860,250
Term Loan Commitment: $14,889,750
Total Commitments: $33,750,000
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115
COMERICA BANK, N.A.,
as a Lender
By: /s/ Steven E. Dicker
------------------------------
Title: Vice President
------------------------------
Revolving Loan Commitment: $11,176,250
Term Loan Commitment: $ 8,823,750
Total Commitments: $20,000,000
110
116
SANWA BUSINESS
CREDIT CORPORATION,
as a Lender
By: /s/ Stanley Kaminski
------------------------------
Title: Vice President
------------------------------
Revolving Loan Commitment: $13,970,500
Term Loan Commitment: $11,029,500
Total Commitments: $25,000,000
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117
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By: /s/ Carl Blackham
------------------------------
Title: Vice President
------------------------------
Revolving Loan Commitment $18,860,250
Term Loan Commitment: $14,889,750
Total Commitments $33,750,000
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118
NATIONAL CITY BANK, as a Lender
By: /s/ Marybeth S. Howe
------------------------------
Title: Vice President
------------------------------
Revolving Loan Commitment: $ 5,588,500
Term Loan Commitment: $ 4,411,500
Total Commitments: $ 10,000,000
113
119
OLD KENT BANK & TRUST COMPANY,
as a Lender
By: /s/ Judy E. Rinkus
------------------------------
Title: Vice President
------------------------------
Revolving Loan Commitment: $ 4,191,000
Term Loan Commitment: $ 3,309,000
Total Commitments: $ 7,500,000
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120
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as a Lender
By: /s/ Michael J. Burns
------------------------------
Title: Senior Vice President
------------------------------
Revolving Loan Commitment: $ 5,588,500
Term Loan Commitment: $ 4,411,500
Total Commitments: $ 10,000,000
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EXHIBITS
Exhibit A - Form of Administrative Questionnaire
Exhibit B - Form of Assignment and Assumption Agreement
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Borrowing Request
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Continuation/Conversion Notice
Exhibit G - Intentionally Omitted
Exhibit H - Form of Reconciliation Report
Exhibit I - Form of Accountants' Letter
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SCHEDULES
Schedule 1.1(A) Mortgaged Property
Schedule 1.1(B) Other Liens
Schedule 1.1(C) Pro Forma
Schedule 2.1(G) Existing Letters of Credit
Schedule 3.1(A) List of Closing Documents
Schedule 4.1(B) Capitalization of Loan Parties
Schedule 4.4 Liabilities
Schedule 4.6 Trade Names
Schedule 4.7 Locations of Principal Place of Business, Books and Records
and Collateral
Schedule 4.9 Litigation
Schedule 4.13 Intellectual Property
Schedule 4.15 Environmental Matters
Schedule 4.19 Noncompliance
Schedule 4.20 Bank Accounts
Schedule 4.21 Subsidiaries
Schedule 4.22 Employee Matters
Schedule 7.1 Indebtedness
Schedule 7.2 Guaranties
Schedule 7.4 Investments
Schedule 7.8 Transactions with Affiliates