Exhibit 10.6
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CREDIT AGREEMENT
among
DIVERSIFIED FOOD GROUP, L.L.C.,
Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
CANADIAN IMPERIAL BANK OF COMMERCE
as Agent
Dated as of October 16, 1997
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TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS................................................1
1.1 Defined Terms....................................................l
1.2 Other Definitional Provisions...................................21
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS.................22
2.1 Term Loan Commitments...........................................22
2.2 Term Notes......................................................22
2.3 Procedure for Term Loan Borrowing...............................22
SECTION 3. AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENTS...............23
3.1 Bridge Loan Commitments.........................................23
3.2 Bridge Loan Notes...............................................23
3.3 Procedure for Bridge Loan Borrowing.............................23
SECTION 4. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS..........24
4.1 Revolving Credit Commitments....................................24
4.2 Revolving Credit Notes..........................................24
4.3 Procedure for Revolving Credit Borrowing........................25
4.4 Commitment Fee..................................................25
4.5 Termination or Reduction of Revolving Credit Commitments........26
SECTION 5. LETTERS OF CREDIT.........................................26
5.1 L/C Commitment..................................................26
5.2 Procedure for Issuance of Letters of Credit.....................27
5.3 Fees, Commissions and Other Charges.............................27
5.4 L/C Participations..............................................27
5.5 Reimbursement Obligations of the Borrower.......................28
5.6 Obligations Absolute............................................29
5.7 Letter of Credit Payments.......................................29
5.8 Application.....................................................30
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS....................30
6.1 Interest Rates and Payment Dates................................30
6.2 Conversion and Continuation Options.............................30
6.3 Minimum Amounts and Maximum Number of Tranches..................31
6.4 Optional Prepayments............................................31
6.5 Mandatory Prepayments...........................................32
6.6 Computation of Interest and Fees................................33
6.7 Inability to Determine Interest Rate............................34
6.8 Pro Rata Treatment and Payments.................................34
6.9 Illegality......................................................35
6.10 Requirements of Law............................................35
6.11 Taxes..........................................................36
6.12 Indemnity......................................................38
6.13 Lending Offices; Change of Lending Office......................38
SECTION 7. REPRESENTATIONS AND WARRANTIES............................39
7.1 Financial Condition.............................................39
7.2 No Change.......................................................41
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7.3 Existence; Compliance with Law.........................................41
7.4 Power; Authorization; Enforceable Obligations..........................41
7.5 No Legal Bar...........................................................41
7.6 No Material Litigation.................................................42
7.7 No Default.............................................................42
7.8 Ownership of Property; Liens...........................................42
7.9 Intellectual Property..................................................42
7.10 No Burdensome Restrictions............................................42
7.11 Taxes.................................................................42
7.12 Federal Regulations...................................................43
7.13 ERISA.................................................................43
7.14 Investment Company Act; Other Regulations.............................43
7.15 Subsidiaries..........................................................44
7.16 Security Documents....................................................44
7.17 Accuracy and Completeness of Information..............................44
7.18 Labor Relations.......................................................45
7.19 Insurance.............................................................45
7.20 ▇▇▇▇▇'▇ Acquisition Documents.........................................45
7.21 Solvency..............................................................46
7.22 Purpose of Loans......................................................46
7.23 Environmental Matters.................................................47
SECTION 8. CONDITIONS PRECEDENT.............................................48
8.1 Conditions to Initial Extensions of Credit.............................48
8.2 Conditions to Each Extension of Credit.................................53
SECTION 9. AFFIRMATIVE COVENANTS............................................54
9.1 Financial Statements...................................................54
9.2 Certificates; Other Information........................................55
9.3 Payment of Obligations.................................................56
9.4 Conduct of Business and Maintenance of Existence.......................56
9.5 Maintenance of Property; Insurance.....................................56
9.6 Inspection of Property; Books and Records; Discussions.................57
9.7 Notices................................................................57
9.8 Environmental Laws.....................................................58
9.9 Changes to Advance Rates, Standards of Eligibility and Reserves........58
9.10 Periodic Audit of Accounts Receivable and Inventory...................58
9.11 Additional Collateral; Additional Guarantors..........................59
9.12 Interest Rate Protection..............................................59
9.13 Warehouse Bailment Agreements.........................................59
9.14 Key-Person Life Insurance.............................................60
SECTION 10. NEGATIVE COVENANTS..............................................60
10.1 Financial Condition Covenants.........................................60
10.2 Limitation on Indebtedness............................................62
10.3 Limitation on Liens...................................................62
10.4 Limitation on Guarantee Obligations...................................63
10.5 Limitation on Fundamental Changes.....................................64
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10.6 Limitation on Sale of Assets............................ 64
10.7 Limitation on Leases.................................... 64
10.8 Limitation on Dividends................................. 64
10.9 Limitation on Capital Expenditures...................... 65
10.10 Limitation on Investments, Loans and Advances........... 65
10.11 Limitation on Optional Payments and Modifications of
Certain Agreements...................................... 66
10.12 Limitation on Transactions with Affiliates.............. 66
10.13 Limitation on Sales and Leasebacks...................... 66
10.14 Limitation on Changes in Fiscal Year.................... 66
10.15 Limitation on Negative Pledge Clauses................... 66
10.16 Limitation on Lines of Business......................... 66
10.17 Governing Documents..................................... 67
10.18 Limitation on Subsidiary Formation...................... 67
10.19 Limitation on Securities Issuances...................... 67
SECTION 11. EVENTS OF DEFAULT................................... 67
SECTION 12. THE AGENT........................................... 71
12.1 Appointment............................................. 71
12.2 Delegation of Duties.................................... 71
12.3 Exculpatory Provisions.................................. 71
12.4 Reliance by Agent....................................... 71
12.5 Notice of Default....................................... 72
12.6 Non-Reliance on Agent and Other Lenders................. 72
12.7 Indemnification......................................... 73
12.8 Agent in Its Individual Capacity........................ 73
12.9 Successor Agent......................................... 73
SECTION 13. MISCELLANEOUS....................................... 74
13.1 Amendments and Waivers.................................. 74
13.2 Notices................................................. 74
13.3 No Waiver; Cumulative Remedies.......................... 75
13.4 Survival of Representations and Warranties.............. 75
13.5 Payment of Expenses and Taxes........................... 75
13.6 Successors and Assigns; Participations and Assignments.. 76
13.7 Adjustments; Set-off.................................... 78
13.8 Counterparts............................................ 79
13.9 Severability............................................ 79
13.10 Integration............................................. 79
13.11 Governing Law........................................... 79
13.12 Submission To Jurisdiction; Waivers..................... 80
13.13 Acknowledgments......................................... 80
13.14 WAIVERS OF JURY TRIAL................................... 81
13.15 Confidentiality......................................... 81
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SCHEDULES
Schedule 1.0 Lenders, Commitments and Applicable Lending Offices
Schedule 1.1 Terms of Permitted Junior Takeout Securities
Schedule 1.2 Roll-Up Documents
Schedule 2.2 Scheduled Term Loan Repayments
Schedule 7.15 Subsidiaries
Schedule 7.16 Filing Jurisdictions
Schedule 7.19 Insurance
Schedule 7.20 Transactions Costs
Schedule 7.23 Environmental Matters
Schedule 8.1(d) Employment Agreements, Incentive Plans
Schedule 10.2A Existing Indebtedness to be Repaid
Schedule 10.2B Existing Indebtedness to Remain Outstanding
EXHIBITS
Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Bridge Loan Note
Exhibit A-3 Form of Revolving Credit Note
Exhibit B Form of Bridge Guarantee
Exhibit C Form of Borrower Pledge Agreement
Exhibit D Form of Borrower Security Agreement
Exhibit E Form of Borrowing Base Certificate
Exhibit F Form of Subsidiaries Guarantee
Exhibit G Form of Subsidiaries Security Agreement
Exhibit H Form of Non-Bank Status Certificate
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Exhibit I Form of Closing Certificate
Exhibit J-1 Form of Opinion of Katten, Muchin & ▇▇▇▇▇
Exhibit J-2 Form of Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd.
Exhibit K Form of Assignment and Acceptance
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CREDIT AGREEMENT, dated as of October 16, 1997, among DIVERSIFIED FOOD
GROUP, L.L.C., a Delaware limited liability company (the "Borrower"), the
lenders from time to time parties to this Agreement (the "Lenders") and CANADIAN
IMPERIAL BANK OF COMMERCE, as agent for the Lenders hereunder.
RECITALS
Pursuant to that Asset Purchase Agreement, dated as of October 9, 1997
(as amended, supplemented or otherwise modified as permitted hereunder, the
"▇▇▇▇▇'▇ Purchase Agreement"), among the Borrower, ▇▇▇▇▇'▇ Famous Frozen Foods,
Inc., a New Jersey corporation ("Old ▇▇▇▇▇'▇"), ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇,
the Borrower (or an assignee thereof) will purchase (the "▇▇▇▇▇'▇ Acquisition")
substantially all of the assets of Old ▇▇▇▇▇'▇ on a going concern basis. The
Borrower has requested that (a) certain of the Lenders make a term loan to the
Borrower in the aggregate principal amount of $23,000,000, (b) certain of the
Lenders make a bridge loan to the Borrower in the aggregate principal amount of
S5,000,000, and (c) certain of the Lenders make available to the Borrower
revolving credit loans and letters of credit in an aggregate principal and face
amount at any one time outstanding not to exceed $9,000,000, the proceeds of
which loans and letters of credit would be used (i) to finance a portion of the
purchase price of the ▇▇▇▇▇'▇ Acquisition, (ii) to refinance substantially all
indebtedness of the Borrower and its subsidiaries, (iii) to finance the working
capital requirements of the Borrower and its subsidiaries in the ordinary course
of business and (iv) to pay fees and expenses incurred in connection with the
foregoing and in connection herewith. The Lenders are willing to make such
extensions of credit available to the Borrower, but only on the terms, and
subject to the conditions, set forth in this Agreement.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Account": as defined in the Uniform Commercial Code as in effect in
the State of New York on the date hereof.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person (including, with its correlative
meanings, "controlled by" and "under common control with") means the power,
directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person
or (b) direct or cause the direction of the management and policies of such
Person, whether by contract or otherwise.
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"Agent": CIBC. together with its affiliates, as the arranger of the
Commitments and as the agent for the Lenders under this Agreement and the
other Loan Documents.
"Aggregate Outstanding RC Extensions of Credit": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount
of all Revolving Credit Loans made by such Lender then outstanding and (b)
such Lender's Revolving Credit Commitment Percentage of the L/C Obligations
then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Lending Office": for each Lender and for each Type of
Loan, the lending office of such Lender designated for such Type of Loan on
Schedule I hereto (or any other lending office from time to time notified
to the Agent by such Lender) as the office at which its Loans of such Type
are to be made and maintained.
"Applicable Margin": for any Loan of any Type, the rate per annum set
forth under the relevant column heading below:
Base Rate Eurodollar
Loans Loans
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1.00% 2.75%
"Application": an application, in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to open a Letter of
Credit.
"Arranger": CIBC WG, as arranger of the Commitments.
"Assigned Policy": any life insurance policy assigned to the Agent
pursuant to an Assignment of Life Insurance.
"Assignee": as defined in Section 13.6(c).
"Assignment and Acceptance": as defined in Section 13.6(c).
"Assignments of Life Insurance": the collective reference to the
Borrower Assignment of Life Insurance and the Subsidiaries Assignment of
Life Insurance.
"Available RC Commitment": as to any Lender, at any time, an amount
equal to the excess, if any, of (a) such Lender's Revolving Credit
Commitment over (b) such Lender's Aggregate Outstanding RC Extensions of
Credit.
"Base Rate": for any day, the rate per annum (rounded upward, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall
mean the rate of interest publicly announced by CIBC in
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ from time to time as its base rate (the base rate not
being intended to be the lowest rate of interest charged by CIBC in
connection with extensions of credit to debtors).
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Borrower": as defined in the heading to this Agreement.
"Borrower Assignment of Life Insurance": the Assignment of Life
Insurance to be executed and delivered by the Borrower, in form and
substance reasonably satisfactory to the Agent (or similar instrument
sufficient to provide the Agent, for the benefit of the Lenders, with
collateral security in the life insurance policies referenced in Section
9.14), as the same may be amended, supplemented or otherwise modified from
time to time.
"Borrower Patent Assignment": the Patent Assignment to be executed and
delivered by the Borrower, substantially in the form of Annex A to the
Borrower Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
"Borrower Pledge Agreement": the Pledge Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit C, as the
same may be amended, supplemented or otherwise modified from time to time.
"Borrower Security Agreement": the Security Agreement to be executed
and delivered by the Borrower, substantially in the form of Exhibit D, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Borrower Security Documents": the collective reference to the
Borrower Assignment of Life Insurance, the Borrower Patent Assignment, the
Borrower Pledge Agreement, the Borrower Security Agreement, and the
Borrower Trademark Assignment.
"Borrower Trademark Assignment": each Memorandum of Security Interest
in Trademarks to be executed and delivered by the Borrower, substantially
in the form of Annex B to the Borrower Security Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"Borrowing Base": at any time, the sum of (a) 85% (or such other
percentage as the Agent shall determine in accordance with Section 9.9) of
the then Eligible Accounts and (b) 50% (or such other percentage as the
Agent shall determine in accordance with Section 9.9) of the then Eligible
Inventory. The Borrowing Base in effect at any time shall be the Borrowing
Base as shown on the Borrowing Base Certificate most recently delivered by
the Borrower pursuant to this Agreement; provided, however, that if the
Borrower shall
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Certificate when required pursuant to Section 9.2(c), the Borrowing Base in
effect shall be zero until such Borrowing Base Certificate is delivered.
"Borrowing Base Certificate": a certificate, substantially in the form
of Exhibit E, with appropriate insertions, showing the Borrowing Base as of
the date set forth therein, and executed on behalf of the Borrower by a
duly authorized officer thereof.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.3, 3.3 or 4.3 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Bridge Guarantees": the Limited Guarantees to be executed and
delivered by each of ▇▇▇▇ and ▇▇▇▇▇, substantially in the form of Exhibit
B, as the same may be amended, supplemented or otherwise modified from time
to time.
"Bridge Loan": as defined in Section 3.1.
"Bridge Loan Commitment": as to any Lender, its obligation to make a
Bridge Loan to the Borrower pursuant to Section 3.1 in the amount set forth
opposite such Lender's name on Schedule 1.0 under the caption "Bridge
Loan".
"Bridge Loan Commitment Percentage": as to any Lender, the percentage
equal to the quotient of such Lender's Bridge Loan Commitment divided by
the aggregate Bridge Loan Commitments.
"Bridge Loan Note": as defined in Section 3.2.
"Business": as defined in Section 7.23(b).
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or Chicago, Illinois are authorized
or required by law to close, and, if such day relates to a borrowing of, a
payment or prepayment of principal of or interest on, or a Conversion of or
into, or an Interest Period for, a Eurodollar Loan or a notice by the
Borrower with respect to any such borrowing, payment, prepayment,
Conversion or Interest Period, which is also a day on which dealings in
Dollar deposits arc carried out in the London interbank market.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all similar ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of 90 days or less
from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit
and eurodollar time
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deposits with maturities of 90 days or less from the date of acquisition
and overnight bank deposits of any Lender or of any commercial bank having
capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than seven days
with respect to securities issued or fully guaranteed or insured by the
United States Government, (d) commercial paper of a domestic issuer rated
at least A-1 or the equivalent thereof by Standard and Poor's Ratings Group
("S&P") or P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's") and in either case maturing within 90 days after the day of
acquisition, (e) securities with maturities of 90 days or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's, (f) securities with
maturities of 90 days or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares
of money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"CIBC": Canadian Imperial Bank of Commerce.
"CIBC WG": CIBC Wood Gundy Securities Corp.
"Clean-Down Period": during each fiscal year of the Borrower during
the Revolving Credit Commitment Period, any period of 30 consecutive days
specified by the Borrower in a notice to the Agent identified as a "Notice
of Clean-Down Period" no later than five Business Days after the end of
such period, or if no such notice shall be delivered for any such fiscal
year, the last 30 days of such fiscal year.
"Closing Date": the date on which the conditions precedent set forth
in Section 8.1 shall be satisfied or waived pursuant to the terms hereof.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"▇▇▇▇▇ Employment Agreements": collectively, the Employment and Non-
Competition Agreements to be entered into between each of ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and the Borrower, substantially in
the form of Exhibits C, D, E and F to the ▇▇▇▇▇'▇ Purchase Agreement, as
the same may be amended, supplemented or otherwise modified as permitted
hereunder; each, a"▇▇▇▇▇ Employment Agreement".
"▇▇▇▇▇'▇ Acquisition": as defined in the recitals hereto.
"▇▇▇▇▇'▇ Acquisition Documents": collectively, the ▇▇▇▇▇'▇ Purchase
Agreement, the ▇▇▇▇▇'▇ Assumption, the ▇▇▇▇▇'▇ Assignment, the ▇▇▇▇▇
Employment
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Agreements, the ▇▇▇▇ ▇▇▇▇▇ Option Agreement, the ▇▇▇▇▇'▇ Escrow Agreement,
the ▇▇▇▇▇'▇ Lease and the ▇▇▇▇▇'▇ Subordinated Seller Note, and all other
agreements, instruments and documents executed and delivered pursuant to
any thereof.
"▇▇▇▇▇'▇ Assignment": the Instrument of Assignment to be entered into
among the Borrower, Old ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇,
substantially in the form of Exhibit B to the ▇▇▇▇▇'▇ Purchase Agreement,
as the same may be amended, supplemented or otherwise modified as permitted
hereunder.
"▇▇▇▇▇'▇ Assumption": the Assumption Agreement to be entered into by
the Borrower and Old ▇▇▇▇▇'▇, substantially in the form of Exhibit A to the
▇▇▇▇▇'▇ Purchase Agreement, as the same may be amended, supplemented or
otherwise modified as permitted hereunder.
"▇▇▇▇▇'▇ Escrow Agreement": the Escrow Agreement to be entered into
among Old ▇▇▇▇▇'▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, New
▇▇▇▇▇'▇ and Lampf, Lipkind, Prupis, Petigrow & ▇▇▇▇▇, as escrow agent,
substantially in the form of Exhibit H to the ▇▇▇▇▇'▇ Purchase Agreement,
as the same may be amended, supplemented or otherwise modified as permitted
hereunder.
"▇▇▇▇▇'▇ Lease": the Lease to be entered into between the Borrower, as
lessee and Sidey ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, as lessors, substantially in the
form of Exhibit G to the ▇▇▇▇▇'▇ Purchase Agreement, as the same may be
amended, supplemented or otherwise modified as permitted hereunder.
"▇▇▇▇▇'▇ Purchase Agreement": as defined in the recitals hereto.
"▇▇▇▇▇'▇ Subordinated Seller Note": the Borrower's 8.5% Convertible
Unsecured Subordinated Note due October 9, 2002, made by the Borrower in
favor of Old ▇▇▇▇▇'▇, in the original principal amount of $1,197,082,
substantially in the form of Exhibit K to the ▇▇▇▇▇'▇ Purchase Agreement,
as the same may be amended, supplemented or otherwise modified as permitted
hereunder.
"Collateral": all property and interests in property of the Loan
Parties, now owned or hereinafter acquired, upon which a Lien is purported
to be created by any Security Document.
"Commercial Letter of Credit": as defined in Section 5.1(b)(1)(B).
"Commmitments": the collective reference to the Bridge Loan
Commitments. The Revolving Credit Commitments and the Term Loan
Commitments.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
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"Consolidated Current Assets": at a particular date, all amounts which
would, in conformity with GAAP, be included under current assets on a
consolidated balance sheet of the Borrower and the Subsidiaries as at such
date.
"Consolidated Current Liabilities": at a particular date, all amounts
which would, in conformity with GAAP, be included under current liabilities
on a consolidated balance sheet of the Borrower and the Subsidiaries as at
such date.
"Consolidated EBITDA": for any period, the sum for such period of (a)
Consolidated Net Income, and (b) the sum of provisions for income taxes,
interest expense, and depreciation and amortization expense used in
determining such Consolidated Net Income.
"Consolidated Fixed Charges": for any period, the sum of (i) the
amounts deducted for Consolidated Interest Expense and Consolidated Lease
Expense in determining Consolidated Net Income for such period, (ii) the
amount of scheduled payments of principal of Indebtedness during such
period, and (iii) the provision for income taxes used in determining
Consolidated Net Income for such period.
"Consolidated Indebtedness": at any time, the sum of (a) aggregate
Indebtedness of the Borrower and its consolidated Subsidiaries, excluding
the ▇▇▇▇▇'▇ Subordinated Seller Note. at such time determined on a
consolidated basis in accordance with GAAP, and (b) without duplication,
the aggregate amount of the Revolving Credit Commitments at such time.
"Consolidated Interest Expense": for any period, the amount which, in
conformity with GAAP, would be set forth opposite the caption "interest
expense" or any like caption (including without limitation, imputed
interest included in payment under Financing Leases) on a consolidated
income statement of the Borrower and the Subsidiaries for such period
excluding the amortization of any original issue discount.
"Consolidated Lease Expense": for any period, the aggregate amount of
fixed or contingent rentals payable by the Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, for such period
with respect to leases of real and personal property.
"Consolidated Net Income": for any period, the consolidated net income
(or deficit) of the Borrower and the Subsidiaries for such period (taken as
a cumulative whole), determined in accordance with GAAP; provided that
there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated
with the Borrower or any Subsidiary, (except with respect to any such
merger or consolidation accounted for on a pooling of interest basis), (b)
the income (or deficit) of any Person (other than a Subsidiary) in which
the Borrower or any Subsidiary has an ownership interest, except to the
extent that any such income has been actually received by the Borrower or
such Subsidiary in the form of dividends or similar distributions, (c) the
undistributed earnings of any
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Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation or Requirement of Law applicable to
such Subsidiary, (d) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made out of income
accrued during such period, (e) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or
other disposition of capital assets (such term to include all fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), (f) any write-up of any
asset, (g) any net gain from the collection of the proceeds of life
insurance policies, (h) any gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of the
Borrower or any Subsidiary, (i) in the case of a successor to the Borrower
by consolidation or merger or as a transferee of its assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets, and (j) any deferred credit representing the excess of
equity in any Subsidiary at the date of acquisition over the cost of the
investment in such Subsidiary.
"Continue", "Continuation" and "Continued" shall refer to the
continuation of a Eurodollar Loan from one Interest Period to the next
Interest Period.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Convert", "Conversion" and "Converted" shall refer to a conversion of
Base Rate Loans into Eurodollar Loans or of Eurodollar Loans into Base Rate
Loans, which may be accompanied by the transfer by a Lender (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Credit Exposure": as to any Lender at any time, the sum of (a) its
Revolving Credit Commitment (or, if the Revolving Credit Commitments shall
have expired or been terminated, the aggregate unpaid principal amount of
its Revolving Credit Loans plus the amount of its Revolving Credit
Commitment Percentage of any L/C Obligations), (b) the unpaid principal
amount of its Term Loan and (c) the unpaid principal amount of its Bridge
Loan.
"Credit Exposure Percentage": as to any Lender at any time, the
fraction (expressed as a percentage), the numerator of which is the Credit
Exposure of such Lender at such time and the denominator of which is the
aggregate Credit Exposures of all of the Lenders at such time.
"Default": any of the events specified in Section 11, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
-8-
"Designated Beneficiary": ▇▇▇▇ or ▇▇▇▇▇ or any other Person for whom a
key person life insurance policy that is subject to an Assignment of Life
Insurance is taken out.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Eligible Accounts" as to the Borrower and the other Loan Parties, at
a particular date, the total outstanding balance of Accounts of the Loan
Parties, minus (without duplication): (a) Accounts which are not bona fide,
valid and legally enforceable obligations of the obligor in respect thereof
that arise from the actual sale and delivery of goods or rendition and
acceptance of services in the ordinary course of business to such obligor;
(b) Accounts which have not been documented by an invoice in a customary
form used by the Loan Parties, and reasonably acceptable to the Agent; (c)
Accounts which contravene, or arise from sales which contravene in any
material respect, any Requirement of Law applicable thereto; (d) Accounts
which have been invoiced by the relevant Loan Party which have been
outstanding and unpaid for ninety (90) days or more from the date of
invoice ("Past Due Receivables"); (e) the lesser of (i) Accounts of any
obligor which is both a customer of and a vendor to any Loan Party and (ii)
the amount owing by such Loan Party to such obligor; (f) if more than 50%
of the Accounts of any obligor constitute Past Due Receivables, the
Accounts of such obligor; (g) Accounts which arise from a ▇▇▇▇ and hold
sale prior to the shipment of the goods that are the subject thereof; (h)
Accounts of any obligor which is an Affiliate or Subsidiary of the Borrower
or any other Loan Party; (i) without limitation of clause (p) of this
definition, Accounts of any obligor which is organized under the laws of a
jurisdiction outside the United States of America ("Foreign Accounts"),
unless each such Foreign Account is supported by a letter of credit
approved by the Agent in favor of the Borrower or by credit insurance
reasonably acceptable to the Agent, in either case subject to a perfected
first priority security interest in favor of the Agent for the ratable
benefit of the Lenders; (j) Accounts of the United States of America or any
instrumentality thereof, unless the relevant Loan Party duly assigns its
rights to payment of such Accounts to the Agent for the ratable benefit of
the Lenders pursuant to the Assignment of Claims Act of 1940, as amended
from time to time (31 U.S.C. (S) 3723 et seq.); (k) without limitation of
clause (p) of this definition, Accounts which are not denominated and
payable in Dollars in the United States of America; (l) without limitation
of clause (p) of this definition. Accounts which are not subject to a
perfected first priority security interest in favor of the Agent for the
ratable benefit of the Lenders pursuant to the Security Agreements, other
than Foreign Accounts; (m) Accounts which do not conform in all material
respects to the representations and warranties contained in the Security
Agreements with respect thereto; (n) Accounts of obligors which are
insolvent or the subject of any bankruptcy or insolvency proceeding of any
kind; and (o) such other Accounts as the Agent, in its commercially
reasonable judgment, believes will not be paid in full within ninety (90)
days of the date of invoice thereof, (p) Accounts of any obligor which is
organized under the laws of the United Kingdom of Great Britain and
Northern Ireland or any political subdivision thereof, provided that
-9-
the aggregate amount of Accounts included as Eligible Accounts pursuant to
this clause (p) may not to exceed $750,000 at any time.
"Eligible Inventory": as to the Borrower and the other Loan Parties,
at a particular date, the aggregate amount of Inventory as recorded at cost
on a first in, first out basis in its accounting records, minus (without
duplication) the sum of: (a) Inventory which is not owned solely by the
Borrower or another Loan Party free and clear of all Liens or other rights
or claims of any other Person (except in favor of the Agent for the ratable
benefit of the Lenders); (b) Inventory which is not subject to a perfected
first priority security interest in favor of the Agent for the ratable
benefit of the Lenders pursuant to the Security Agreements; (c) Inventory
which is damaged; (d) work-in-process; (e) seventy percent (70%) of
packaging materials; (f) Inventory which is allocable to a contract with
the United States of America or any instrumentality thereof, unless the
relevant Loan Party duly assigns its rights to payment for such Inventory
to the Agent for the ratable benefit of the Lenders pursuant to the
Assignment of Claims Act of 1940, as amended from time to time (31 U.S.C.
(S) 3723 et seq.); (g) Inventory that is more than twelve (12) months old
and any additional reserve provided by the Loan Parties for obsolete,
second quality or slow-moving goods; (h) Inventory which does not conform
in all material respects to the representations and warranties contained in
the applicable Security Agreement; (i) Inventory of the Loan Parties which
is held by any Person (other than a Loan Party) that has not executed and
delivered a Warehouse Bailment Agreement in form and substance reasonably
satisfactory to the Agent; and (j) such other Inventory as the Agent,
exercising its commercially reasonable judgment, has otherwise determined
to be unacceptable because the Agent believes that such Inventory is not
readily saleable on the customary terms on which it is usually sold.
"Employment Agreements": as defined in Section 8.1(d)(iv).
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (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) dealing with reserve requirements prescribed for
-10-
Borrower for such fiscal year, (iv) the amount of capital expenditures
actually made during such fiscal year to the extent permitted by Section
6.8, (v) the increase (if any) in the amount of the excess of Consolidated
Current Assets (excluding cash and cash equivalents) over Consolidated
Current Liabilities at the end of such fiscal year compared to the amount
of the excess of Consolidated Current Assets (excluding cash and cash
equivalents) over Consolidated Current Liabilities at the end of the
immediately preceding fiscal year of the Borrower, and (vi) the aggregate
amount of distributions actually made in respect of such fiscal year by
the Borrower to the extent permitted by the proviso to Section 10.8.
"Existing Financing Documents": all credit agreements, indentures,
notes, guarantees and other financing documents evidencing or governing the
Indebtedness listed on Schedule 10.2A.
"Family Group": with respect to any Person, such Person's spouse,
descendants and ancestors (in each case whether natural or adopted), a
spouse of any such descendant or ancestor and a trustee of any trust
established primarily for the benefit of any one or more of the foregoing.
"Federal Funds Effective Rate": 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 next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Agent from three federal funds brokers of recognized standing selected
by it.
"Fee Letter": that certain Fee Letter, dated September 25, 1997,
between CIBC and the Borrower, as amended, supplemented or otherwise
modified from time to time.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"▇▇▇▇▇": ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Governing Documents": as to any Person, its articles or certificate
of incorporation and by-laws, its partnership agreement, its certificate of
information and operating agreement, and/or the other organizational or
governing documents of such Person.
-12-
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments or similar items of payment for deposit or collection in the
ordinary course of business. The terms "Guarantee" and "Guaranteed" used as
a verb shall have a correlative meaning. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of
(a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which
such guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.
"Guarantor": any Person delivering a Bridge Guarantee or the
Subsidiaries Guarantee (or which becomes party to the Subsidiaries
Guarantee by supplement thereto) pursuant to this Agreement.
"Incentive Plan": as defined in Section 8.1(d)(iv).
"Incremental Taxable Income": with respect to any period, an amount
equal to the excess of (a) the aggregate amount of taxable income (and
gain) of the Borrower for such period and for all prior taxable years over
(b) the sum of (i) the aggregate amount of ordinary taxable loss of the
Borrower for such periods and taxable years plus (ii) the aggregate amount
of capital loss of the Borrower for such periods and taxable years,
-13-
taking into account any capital loss only to the extent of capital gains
recognized in or after the taxable year of the capital loss (and only to
the extent any capital gain was not used to allow any other capital loss to
be taken into account), plus (iii) the aggregate positive Incremental
Taxable Income for all such prior periods and taxable years in which
Incremental Taxable Income was positive.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Financing Leases, (d) all obligations of such Person in
respect of letters of credit, acceptances or similar instruments issued or
created for the account of such Person and (e) all liabilities secured by
any Lien on any property owned by such Person even though such Person has
not assumed or otherwise become liable for the payment thereof.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day of
each March, June, September and December, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar Loan having an Interest
Period longer than three months, (i) each day which is three months, or a
whole multiple thereof, after the first day of such Interest Period, and
(ii) the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
Conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of Conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Agent not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
are subject to the following:
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(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date or beyond the date final payment is due on the Term
Loans shall end on the Termination Date or such date of final payment,
as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month; and
(4) during the period commencing on the Closing Date and ending
30 days following the Closing Date, the Borrower may only select
Interest Periods having a duration of one month.
"Issuing Bank": CIBC, in its capacity as issuer of any Letter of
Credit.
"Landlord Agreement": each Landlord Agreement executed and delivered
by the lessee of premises leased by the Borrower or any other Loan Party,
in a form heretofore approved by the Agent or such other form as the Agent
may approve, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof.
"L/C Commitment": $9,000,000.
"L/C Fee Payment Date": the last day of each March, and June,
September and December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 5.5(a).
"L/C Participants": the collective reference to all the Lenders other
than the Issuing Bank.
"Letters of Credit": as defined in Section 5.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or
-15-
any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing), and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction in respect of any of
the foregoing.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Notes, the Applications, the
Subsidiaries Guarantee and the Security Documents.
"Loan Parties": the Borrower and each Subsidiary of the Borrower which
is a party to a Loan Document.
"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this or any of the other Loan Documents or
the rights or remedies of the Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Borrower
and/or its Subsidiaries in excess of $500,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Multiemplover Plan": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Proceeds": (i) the aggregate cash consideration received by the
Borrower or a Subsidiary in connection with any transaction referred to in
Section 6.5(e) less (ii) the expenses (including out-of-pocket expenses)
incurred by the Borrower or such Subsidiary in connection with such
transaction (including, in the case of any issuance of debt or equity
securities, underwriters' commissions and fees) less (iii) the amount of
any federal and state taxes incurred in connection with such transaction,
in each case as certified by a Responsible Officer to the Agent at the time
of such transaction less (iv) in the case of any sale of assets, the
outstanding principal amount of any Indebtedness (other than the Secured
Obligations (as defined in the Borrower Security Agreement and the
Subsidiaries Security Agreement)) secured thereby.
-16-
"New ▇▇▇▇▇'▇": ▇▇▇▇▇'▇ Kosher Food, L.L.C., a Delaware limited
liability company.
"Non-Bank Status Certificate": as defined in Section 6.11(b)(i)(B).
"Non-Excluded Taxes": as defined in Section 6.11.
"Notes": the collective reference to the Revolving Credit Notes, the
Bridge Notes and the Term Notes.
"Obligations": the unpaid principal amount of, and interest
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding) on the Loans, and all
other obligations and liabilities of the Loan Parties to the Agent and the
Lenders, whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
or out of or in connection with this Agreement, the Notes, the Bridge
Guarantee, the Subsidiaries Guarantee, the Security Documents and any other
Loan Documents and any other document made, delivered or given in
connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to
the Agent or to the Lenders that are required to be paid by a Loan Party
pursuant to the terms of the Loan Documents) or otherwise.
"Old ▇▇▇▇▇'▇": as defined in the Recitals hereto.
"Participant": as defined in Section 13.6(b).
"Patent Assignments": the collective reference to the Borrower Patent
Assignment, and the Subsidiaries Patent Assignment.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"Permitted Junior Takeout Securities": subordinated indebtedness of
the Borrower to be issued not later than December 31, 1997 in an aggregate
principal amount at least sufficient to refinance the Bridge Loans then
outstanding, having the terms set forth on Schedule 1.1 and such other
terms and conditions as may be acceptable to the Agent and the Required
Lenders, and the net proceeds of which shall be applied to the payment of
the Bridge Loans and the other Obligations in accordance with the terms of
Section 6.5(c), as such subordinated indebtedness may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms of Section 10.11.
-17-
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pro Forma Balance Sheet": as defined in Section 7.1(c).
"Properties": as defined in Section 7.23(a).
"Register": as defined in Section 13.6(d).
"Regulation G": Regulation G of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Bank pursuant to Section 5.5(a) for amounts drawn
under Letters of Credit.
"Related Fund": with respect to any Lender that is a fund that invests
in bank loans, any other fund that invests in bank loans and is managed by
the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under Sections .13, .14, .16, .18. .19 or .20 of PBGC Reg. (S) 4043.
"Required Lenders": at any time, Lenders the Credit Exposure
Percentages of which aggregate at least 51%.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or Governing Documents of
such Person. and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"Responsible Officer": the chief executive officer, the chief
operating officer and the president of the Borrower or, with respect to
financial matters, the chief financial officer of the Borrower.
-18-
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, (a) the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate
Page 375O (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable
to such Interest Period, or (b) if for any reason such rate is not
available, the rate per annum equal to the rate at which CIBC is offered
Dollar deposits at or about 10:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/l00th of 1%):
Eurodollar Base Rate
----------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8; provided
that any requirement for the giving of notice, the lapse of time, or both,
or any other condition, has been satisfied.
"Excess Cash Flow": as to the Borrower for each fiscal year:
(a) Consolidated EBITDA of the Borrower for such fiscal year;
plus (b) the decrease (if any) in the amount of the excess of
Consolidated Current Assets (excluding cash and cash equivalents) over
Consolidated Current Liabilities at the end of such fiscal year compared to
the amount of the excess of Consolidated Current Assets (excluding cash and
cash equivalents) over Consolidated Current Liabilities at the end of the
immediately preceding fiscal year of the Borrower;
minus (c) the sum of (i) the amount of all regularly scheduled
payments of principal of the Term Loan actually made during such fiscal
year and the amount of any voluntary prepayment of principal of the Term
Loan made during such fiscal year, (ii) the amount of all interest payments
actually made in cash during such fiscal year by the Borrower and its
consolidated Subsidiaries, (iii) Consolidated Lease Expense of the
-11-
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender to make Revolving Credit Loans to and for issue or participate
in Letters of Credit issued on behalf of the Borrower pursuant to Section
4.1 in an aggregate principal and/or face amount at any one time
outstanding not to exceed the amount set forth opposite such Lender's name
on Schedule 1.0 under the caption "Revolving Credit Loan" or in an
Assignment and Acceptance, as such amount may be reduced from time to time
in accordance with the provisions of this Agreement.
"Revolving Credit Commitment Percentage": as to any Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"Revolving Credit Commitment Period": the period from and including
the date hereof to but not including the Termination Date or such earlier
date on which the Revolving Credit Commitments shall terminate as provided
herein.
"Revolving Credit Loans": as defined in Section 4.1.
"Revolving Credit Note": as defined in Section 4.2.
"Roll-Up Documents": the documents set forth on Schedule 1.2.
"Roll-Up Transactions": the transactions described in and/or effected
by the Roll-Up Documents.
"Security Agreements": the collective reference to the Borrower
Security Agreement and the Subsidiaries Security Agreement.
"Security Documents": the collective reference to the Assignments of
Life Insurance, the Borrower Pledge Agreement, the Patent Assignments, the
Security Agreements, the Trademark Assignments and all other security
documents hereafter delivered to the Agent granting a Lien on any asset or
assets of any Person to secure any of the Obligations or to secure any
guarantee of any such Obligations.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Standby Letter of Credit": as defined in Section 5.1(b)(1)(A).
"Subsidiaries Guarantee": the Guarantee to be executed and delivered
by each Subsidiary of the Borrower, substantially in the form of Exhibit F,
as the same may be amended, supplemented or otherwise modified from time to
time.
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"Subsidiaries Patent Assignment": the Patent Assignment to be executed
and delivered by each Subsidiary, substantially in the form of Annex A to
the Subsidiaries Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiaries Security Agreement": the Security Agreement to be
executed and delivered by each Subsidiary in favor of the Agent,
substantially in the form of Exhibit G, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiaries Security Documents": the collective reference to the
Subsidiaries Patent Assignment, the Subsidiaries Security Agreement, and
the Subsidiaries Trademark Assignment.
"Subsidiaries Trademark Assignment": each Memorandum of Security
Interests in Trademarks to be executed and delivered by each Subsidiary,
substantially in the form of Annex B to the Subsidiaries Security
Agreement, as the same may be amended, supplemented or otherwise modified
from time to time.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock, membership
interests, or other ownership interests having ordinary voting power (other
than stock, membership interests, or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation.
partnership, limited liability company or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified. all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Subsidiary Guarantor": any Subsidiary party to the Subsidiaries
Guarantee as a guarantor.
"Termination Date": March 31, 2004.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, its obligation to make a
Term Loan to the Borrower pursuant to Section 2.1 in the amount set forth
opposite such Lender's name on Schedule 1.0 under the caption "Term Loan".
"Term Loan Commitment Percentage": as to any Lender, the percentage
equal to the quotient of such Lender's Term Loan Commitment divided by the
aggregate Term Loan Commitments.
"Term Note": as defined in Section 2.2.
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"Trademark Assignments": the collective reference to the Borrower
Trademark Assignment and the Subsidiaries Trademark Assignment.
"Tranche": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Transferee": as defined in Section 13.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Warehouse Bailment Agreement": each Warehouse Bailment Agreement to
be made among the Agent, the Borrower and each Person holding any inventory
of any Loan Party in a warehouse operated by such Person, in such form as
has been heretofore approved by the Agent or such other form as the Agent
may approve, as the same may be amended, supplemented or otherwise modified
from time to time in accordance herewith.
"Warrant Agreement": the Warrant Agreement, to be entered into between
the Borrower and CIBC, as the same may be amended, supplemented or
otherwise modified from time to time.
"Warrants": the warrants for the purchase of membership interests in
the Borrower referenced in the Warrant Agreement.
"▇▇▇▇": ▇▇▇▇▇▇ ▇▇▇▇, an individual residing at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
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(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions hereof,
each Lender severally agrees to make a term loan (a "Term Loan") to the Borrower
on the Closing Date in an amount not to exceed the amount of the Term Loan
Commitment of such Lender then in effect; provided, that the Term Loan
Commitments shall terminate at 3:00 p.m., New York City time, on October 22,
1997 if the Term Loans have not been made prior to that time. The Term Loans may
from time to time be (a) Eurodollar Loans, (b) Base Rate Loans or (c) a
combination thereof, as determined by the Borrower and notified to the Agent in
accordance with Sections 2.3 and 6.2.
2.2 Term Notes. The Term Loan of each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit A-1 with
appropriate insertions as to payee, date and principal amount (a "Term Note"),
payable to the order of such Lender and representing the obligation of the
Borrower to pay the amount of the Term Loan made by such Lender. Each Lender is
hereby authorized to record the date, Type and amount of its Term Loan and the
date and amount of each payment or prepayment of principal thereof and each
Conversion of all or a portion thereof to another Type and, and in the case of
Eurodollar Loans, the Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Term Note, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
recorded; provided, that the failure of such Lender to make any such recordation
shall not impair or otherwise affect the validity or enforceability of its Term
Note. Each Term Note shall (a) be dated the Closing Date, (b) be stated to
mature in installments in amounts equal to such Lender's Term Loan Commitment
Percentage of the amounts, and payable on the dates, set forth on Schedule 2.2,
and (c) bear interest for the period from the date thereof on the unpaid
principal amount thereof at the applicable interest rates per annum specified in
Section 6.1. Interest on the Term Notes shall be payable on the dates specified
in Section 6.1(d).
2.3 Procedure for Term Loan Borrowing. The Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
10:00 a.m., New York City time, (a) three Business Days prior to the Closing
Date, if all or any part of the Term Loans are to be initially Eurodollar Loans,
or (b) one Business Day prior to the Closing Date, otherwise) requesting that
the Lenders make the Term Loans on the Closing Date and specifying (i) the
Closing Date, (ii) the amount to be borrowed, (iii) whether the Term Loans are
to be initially Eurodollar Loans, Base Rate Loans or a combination thereof and
(iv) if the Term Loans are to be entirely or partly Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Upon receipt of such notice the Agent shall
promptly notify each Lender thereof. Not later than 11:00 a.m. on the Closing
Date each Lender shall make available to the Agent at its office specified in
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Section 13.2 the amount of such Lender's pro rata share of such borrowing in
immediately available funds. The Agent shall on such date credit the account of
the Borrower on the books of such office of the Agent with the aggregate of the
amounts made available to the Agent by the Lenders and in like funds as received
by the Agent.
SECTION 3. AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENTS
3.1 Bridge Loan Commitments. Subject to the terms and conditions
hereof, each Lender severally agrees to make a term loan (a "Bridge Loan") to
the Borrower on the Closing Date in an amount not to exceed the amount of the
Bridge Loan Commitment of such Lender then in effect; provided, that the Bridge
Loan Commitments shall terminate at 3:00 p.m., New York City time, on October
22, 1997, if the Bridge Loans have not been made prior to that time. The Bridge
Loans may from time to time be (a) Eurodollar Loans, (b) Base Rate Loans or (c)
a combination thereof, as determined by the Borrower and notified to the Agent
in accordance with Sections 2.3 and 6.2.
3.2 Bridge Loan Notes. The Bridge Loan of each Lender shall be
evidenced by a promissory note of the Borrower, substantially in the form of
Exhibit A-2 with appropriate insertions as to payee, date and principal amount
(a "Bridge Loan Note"), payable to the order of such Lender and representing the
obligation of the Borrower to pay the amount of the Bridge Loan made by such
Lender. Each Lender is hereby authorized to record the date, Type and amount of
its Bridge Loan and the date and amount of each payment or prepayment of
principal thereof and each Conversion of all or a portion thereof to another
Type and, and in the case of Eurodollar Loans, the Interest Period with respect
thereto, on the schedule annexed to and constituting a part of its Bridge Loan
Note, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded; provided, that the failure of such
Lender to make any such recordation shall not impair or otherwise affect the
validity or enforceability of its Bridge Loan Note. Each Bridge Loan Note shall
(a) be dated the Closing Date, (b) be stated to mature in a single installment
on December 31, 1997, and (c) bear interest for the period from the date thereof
on the unpaid principal amount thereof at the applicable interest rates per
annum specified in Section 6.1. Interest on the Bridge Loan Notes shall be
payable on the dates specified in Section 6.1(d).
3.3 Procedure for Bridge Loan Borrowing. The Borrower shall give the
Agent irrevocable notice (which notice must be received by the Agent prior to
10:00 a.m., New York City time, (a) three Business Days prior to the Closing
Date, if all or any part of the Bridge Loans are to be initially Eurodollar
Loans, or (b) one Business Day prior to the Closing Date, otherwise) requesting
that the Lenders make the Bridge Loans on the Closing Date and specifying (i)
the Closing Date, (ii) the amount to be borrowed, (iii) whether the Bridge Loans
are to be initially Eurodollar Loans, Base Rate Loans or a combination thereof,
and (iv) if the Bridge Loans are to be entirely or partly Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Upon receipt of such notice the Agent shall
promptly notify each Lender thereof. Not later than
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11:00 a.m. on the Closing Date each Lender shall make available to the Agent at
its office specified in Section 13.2 the amount of such Lender's pro rata share
of such borrowing in immediately available funds. The Agent shall on such date
credit the account of the Borrower on the books of such office of the Agent
with the aggregate of the amounts made available to the Agent by the Lenders and
in like funds as received by the Agent.
SECTION 4. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
4.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans") to the Borrower from time to time during the
Revolving Credit Commitment Period in an aggregate principal amount at any one
time outstanding which, when added to such Lender's Revolving Credit Commitment
Percentage of the outstanding L/C Obligations, does not exceed the lesser of (i)
the amount of such Lender's Revolving Credit Commitment then in effect and (ii)
such Lender's Revolving Credit Commitment Percentage of the Borrowing Base then
in effect; provided, that the Revolving Credit Commitments shall terminate at
3:00 p.m., New York City time, on October 22, 1997 if the Term Loans have not
been made prior to that time. During the Revolving Credit Commitment Period the
Borrower may use the Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Base Rate Loans, or (iii) a combination thereof, as determined by
the Borrower and notified to the Agent in accordance with Sections 4.3 and 6.2,
provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Termination Date.
4.2 Revolving Credit Notes. The Revolving Credit Loans made by each
Lender shall be evidenced by a promissory note of the Borrower, substantially in
the form of Exhibit A-3 with appropriate insertions as to payee, date and
principal amount (a "Revolving Credit Note"), payable to the order of such
Lender and evidencing the obligation of the Borrower to pay a principal amount
equal to the lesser of (a) the amount of the Revolving Credit Commitment of such
Lender and (b) the aggregate unpaid principal amount of all Revolving Credit
Loans made by such Lender. Each Lender is hereby authorized to record the date,
type and amount of each Revolving Credit Loan made or Converted by such Lender,
the date and amount of each payment or prepayment of principal thereof, and, in
the case of Eurodollar Loans, the Interest Period with respect thereto, on the
schedule annexed to and constituting a part of its Revolving Credit Note, and
any such recordation shall constitute prima facie evidence of the accuracy of
the information so recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Termination Date and (z) bear
interest on the unpaid principal amount thereof from time to time outstanding at
the applicable interest rate per annum determined as provided in Section 6.1.
Interest on each Revolving Credit Note shall be payable on the dates specified
in Section 6.1(d).
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4.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day in an aggregate principal amount not exceeding the
lesser of (A) the aggregate Available RC Commitments then in effect and (B) the
Borrowing Base then in effect, provided that the Borrower shall give the Agent
irrevocable notice (which notice must be received by the Agent prior to 10:00
a.m., New York City time, (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans, or (b) one Business Day prior to the requested
Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, Base Rate Loans or a combination thereof and (iv) if the borrowing is to
be entirely or partly of Eurodollar Loans, the respective amounts of each such
Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of Base Rate Loans, $100,000 or a whole multiple
thereof (or, if the then Available RC Commitments are less than $100,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $500,000 or a whole
multiple of $100,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Agent shall promptly notify each Lender thereof. Each Lender will
make the amount of its pro rata share of each borrowing available to the Agent
for the account of the Borrower at the office of the Agent specified in Section
13.2 prior to 11:00 a.m., New York City time, on the Borrowing Date requested by
the Borrower in funds immediately available to the Agent. Such borrowing will
then be made available to the Borrower by the Agent crediting the account of the
Borrower on the books of such office with the aggregate of the amounts made
available to the Agent by the Lenders and in like funds as received by the
Agent.
4.4 Commitment Fee. The Borrower agrees to pay to the Agent for the
account of each Lender a commitment fee for the period from and including the
first day of the Revolving Credit Commitment Period to the Termination Date,
computed at the rate of 1/2 of 1% per annum on the average daily amount of the
Available RC Commitment of such Lender during the period for which payment is
made, payable quarterly in arrears on the last day of each March, June,
September and December and on the Termination Date or such earlier date as the
Revolving Credit Commitments shall terminate as provided herein, commencing on
the first of such dates to occur after the date hereof.
4.5 Termination or Reduction of Revolving Credit Commitments. The
Borrower shall have the right, upon not less than five Business Days' notice to
the Agent, to terminate the Revolving Credit Commitments or, from time to time,
to reduce the amount of the Revolving Credit Commitments provided that no such
termination or reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Revolving Credit Loans made on the effective date
thereof, the aggregate principal amount of the Revolving Credit Loans then
outstanding. when added to the then outstanding L/C Obligations, would exceed
the Revolving Credit Commitments then in effect. Any such reduction shall be in
an amount equal to $100,000 or a whole multiple thereof and shall reduce
permanently the Revolving Credit Commitments then in effect.
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SECTION 5. LETTERS OF CREDIT
5.1 L/C Commitment
(a) Subject to the terms and conditions hereof, the Issuing Bank, in
reliance on the agreements of the other Lenders set forth in Section 5.4(a),
agrees to issue letters of credit ("Letters of Credit") for the account of the
Borrower on any Business Day during the Revolving Credit Commitment Period in
such form as may be approved from time to time by the Issuing Bank; provided
that the Issuing Bank shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, (1) the L/C Obligations would exceed the
L/C Commitment or (2) the Available Revolving Credit Commitment would be less
than zero.
(b) Each Letter of Credit shall:
(1) be denominated in Dollars and shall be either (A) a standby
letter of credit issued to support obligations of the Borrower, contingent or
otherwise, to ▇▇▇▇▇▇▇'▇ compensation board or similar Governmental Authority for
▇▇▇▇▇▇▇'▇ compensation liabilities of the Borrower, to replace the Borrower's
existing letter of credit arrangement with a co-packer and for such other
purposes as may be approved by the Issuing Lender and the Agent (a "Standby
Letter of Credit"), or (B) a commercial letter of credit issued in respect of
the purchase of goods or services by the Borrower and its Subsidiaries in the
ordinary course of business (a "Commercial Letter of Credit") and
(2) expire no later than the Termination Date.
(c) Each Letter of Credit shall be subject to the Uniform Customs and,
to the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
5.2 Procedure for Issuance of Letters of Credit.
The Borrower may from time to time request that the Issuing Bank issue
a Letter of Credit by delivering to the Issuing Bank at its address for notices
specified herein an Application therefor, completed to the satisfaction of the
Issuing Bank, and such other certificates, documents and other papers and
information as the Issuing Bank may request. Upon receipt of any Application,
the Issuing Bank will process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Bank be required to
issue any Letter of Credit earlier than [three] Business Days after its receipt
of the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed
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by the Issuing Bank and the Borrower. The Issuing Bank shall furnish a copy of
such Letter of Credit to the Borrower promptly following the issuance thereof.
5.3 Fees, Commissions and Other Charges.
(a) The Borrower shall pay to the Agent, for the account of the
Issuing Bank and the L/C Participants, a letter of credit commission with
respect to each Letter of Credit, computed for the period from the date of such
payment to the date upon which the next such payment is due hereunder at the
rate of 3.00% per annum, calculated on the basis of a 360 day year, of the
aggregate amount available to be drawn under such Letter of Credit on the date
on which such fee is calculated. 0.25% of such fee shall be payable to the
Issuing Bank, and the remaining 2.75% of such fee shall be payable to the L/C
Participants to be shared ratably among them in accordance with their respective
Commitment Percentages. Such commissions shall be payable in advance on the date
of issuance of each Letter of Credit and on each L/C Fee Payment Date to occur
thereafter and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Bank for such normal and customary costs and
expenses as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(c) The Agent shall, promptly following its receipt thereof,
distribute to the Issuing Bank and the L/C Participants all fees and commissions
received by the Agent for their respective accounts pursuant to this subsection.
5.4 L/C Participations.
(a) The Issuing Bank irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Bank to issue Letters of Credit
hereunder, each L/C Participant irrevocably agrees to accept and purchase and
hereby accepts and purchases from the Issuing Bank, on the terms and conditions
hereinafter stated, for such L/C Participant's own account and risk, an
undivided interest equal to such L/C Participant's Revolving Credit Commitment
Percentage in the Issuing Bank's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing Bank
thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Bank that, if a draft is paid under any Letter of Credit for which the
Issuing Bank is not reimbursed in full by the Borrower in accordance with the
teens of this Agreement, such L/C Participant shall pay to the Issuing Bank upon
demand at the Issuing Bank's address for notices specified herein an amount
equal to such L/C Participant's Revolving Credit Commitment Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to Section 5.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Bank under any Letter of Credit is paid to
the Issuing Bank within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Bank on demand an amount equal to
the product of (1) such amount, times (2) the daily
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average Federal funds rate, as quoted by the Issuing Bank, during the period
from and including the date such payment is required to the date on which such
payment is immediately available to the Issuing Bank, times (3) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to Section 5.4(a) is not in fact made available to the
Issuing Bank by such L/C Participant within three Business Days after the date
such payment is due, the Issuing Bank shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated form such
due date at the rate per annum applicable to Base Rate Loans hereunder. A
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this Section shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 5.4(a), the Issuing Bank
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Bank), or any payment of interest on account thereof, the Issuing Bank
will distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the Issuing Bank
shall be required to be returned by the Issuing Bank, such L/C Participant shall
return to the Issuing Bank the portion thereof previously distributed by the
Issuing Bank to it.
5.5 Reimbursement Obligations of the Borrower.
(a) The Borrower agrees to reimburse the Issuing Bank on each date on
which the Issuing Bank notifies the Borrower of the date and amount of a draft
presented under any Letter of Credit and paid by the Issuing Bank for the amount
of (1) such draft so paid and (2) any taxes and any reasonable fees, charges or
other costs or expenses incurred by the Issuing Bank at its address for notices
specified herein in lawful money of the United States of America and in
immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this Section from the date such amounts become payable
(whether at stated maturity, by acceleration or otherwise) until payment in full
at the rate which would be payable on any outstanding Base Rate Loans which were
then overdue.
(c) Each drawing under any Letter of Credit shall constitute a request
by the Borrower to the Agent for a borrowing pursuant to Section 4.3 of Base
Rate Loans in the amount of such drawing. The Borrowing Date with respect to
such borrowing shall be the date of such drawing.
5.6 Obligations Absolute.
(a) The Borrower's obligations under this Section 5 shall be absolute
and unconditional under any and all circumstances and irrespective of any set-
off, counterclaim or
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defense to payment which the Borrower may have or have had against the Issuing
Bank or any beneficiary of a Letter of Credit.
(b) The Borrower also agrees with the Issuing Bank that the Issuing
Bank shall not be responsible for, and the Borrower's Reimbursement Obligations
under Section 5.5(a) shall not be affected by, among other things, (1) the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or (2)
any dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
(3) any claims whatsoever of the Borrower against any beneficiary of such Letter
of Credit or any such transferee.
(c) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Bank's gross negligence or willful
misconduct.
(d) The Borrower agrees that any action taken or omitted by the
Issuing Bank under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Bank to the Borrower.
5.7 Letter of Credit Payments.
If any draft shall be presented for payment under any Letter of
Credit, the Issuing Bank shall promptly notify the Borrower of the date and
amount thereof. The responsibility of the Issuing Bank to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
5.8 Application.
To the extent that any provision of any Application related to any
Letter of Credit is inconsistent with the provisions of this Section 5, the
provisions of this Section 5 shall apply.
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS
6.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
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(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 2%
or (y) in the case of any such overdue interest, commitment fee or other amount,
the rate described in paragraph (b) of this Section plus 2%, in each case from
the date of such non-payment until such overdue principal, interest, commitment
fee or other amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
6.2 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to Convert Eurodollar Loans or to Base Rate Loans by giving
the Agent at least two Business Days' prior irrevocable notice of such election,
provided that any such Conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to Convert Base Rate Loans to Eurodollar Loans by giving the Agent
at least three Business Days' prior irrevocable notice of such election. Any
such notice of Conversion to Eurodollar Loans shall specify the length of the
initial Interest Period or Interest Periods therefor. Upon receipt of any such
notice the Agent shall promptly notify each Lender thereof. All or any part of
outstanding Eurodollar Loans and Base Rate Loans may be Convened as provided
herein, provided that (i) no Loan may be Converted into a Eurodollar Loan when
any Event of Default has occurred and is continuing and the Agent has or the
Required Lenders have determined that such a Conversion is not appropriate, (ii)
any such Conversion may only be made if, after giving effect thereto, Section
6.3 shall not have been contravened, and (iii) no Loan may be converted into a
Eurodollar Loan after the date that is one month prior to the Termination Date
(in the case of Conversions of Revolving Credit Loans) or the date of the final
installment of principal (in the case of Conversions of Term Loans or Bridge
Loans).
(b) Any Eurodollar Loans may be Continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Agent, in accordance with the applicable provisions of the term
"Interest Period" set forth in Section 1.1, of the length of the next Interest
Period to be applicable to such Loans, provided that no Eurodollar Loan may be
Continued as such (i) when any Event of Default has occurred and is continuing
and the Agent has or the Required Lenders have determined that such a
Continuation is not appropriate, (ii) if, after giving effect thereto, Section
6.3 would be contravened or (iii) after the date that is one month prior to the
Termination Date (in the case of Continuations of Revolving Credit Loans) or the
date of the final installment of principal (in
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the case of Continuations of Term Loans or Bridge Loans) and provided, further,
that if the Borrower shall fail to give such notice or if such Continuation is
not permitted such Loans shall be automatically converted to Base Rate Loans on
the last day of such then expiring Interest Period.
6.3 Minimum Amounts and Maximum Number of Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Tranche shall be equal to $500,000 or a whole
multiple of $100,000 in excess thereof.
6.4 Optional Prepayments. The Borrower may on the last day of any
Interest Period with respect thereto, in the case of Eurodollar Loans, or at any
time and from time to time, in the case of Base Rate Loans, prepay the Loans, in
whole or in part, without premium or penalty, upon at least four Business Days'
irrevocable notice to the Agent, specifying the date and amount of prepayment
and whether the prepayment is of Eurodollar Loans, Base Rate Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice the Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such notice
shall be due and payable on the date specified therein, together with any
amounts payable pursuant to Section 6.12 and, in the case of prepayments of the
Term Loans and the Bridge Loans only, accrued interest to such date on the
amount prepaid. Partial prepayments of the Term Loans and the Bridge Loans
pursuant to this Section shall be applied to the installments of principal
thereof in the inverse order of their scheduled maturities. Amounts prepaid on
account of the Term Loans and the Bridge Loans may not be reborrowed. Partial
prepayments pursuant to this Section shall be in an aggregate principal amount
of $500,000 or a whole multiple of $100,000 in excess thereof.
6.5 Mandatory Prepayments. (a) Subject to Section 6.12, if on any date
on which a Borrowing Base Certificate is delivered pursuant to Section 9.2(c),
the Aggregate Outstanding RC Extensions of Credit of all the Lenders exceeds the
Borrowing Base, the Borrower shall prepay the Revolving Credit Loans and/or cash
collateralize or replace Letters of Credit in an amount equal to the amount of
such excess no later than the Business Day immediately following the date of
delivery of such Borrowing Base Certificate.
(b) Subject to Section 6.12, (i) if on any date the Aggregate
Outstanding RC Extensions of Credit of all the Lenders exceeds the Revolving
Credit Commitments, the Borrower shall immediately prepay the Revolving Credit
Loans and/or cash collateralize or replace Letters of Credit in an amount equal
to the amount of such excess; and (ii) if on any date during any Clean-Down
Period the Aggregate Outstanding RC Extensions of Credit of all Lenders exceeds
$3,000,000, the Borrower shall immediately prepay the Revolving Credit Loans
and/or cash collateralize or replace Letters of Credit in an amount equal to
such excess.
(c) Unless the Required Lenders otherwise agree, the Borrower shall
prepay the Loans and reduce the Commitments in an amount equal to (i) 100% of
the Net Proceeds of
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any sale or issuance of Permitted Junior Takeout Securities, (ii) 100% of the
Net Proceeds of any sale or issuance of any other debt securities, and 100% of
the Net Proceeds of any sale or issuance of any equity securities, in either
case by the Borrower or any Subsidiary, whether in a public offering, a private
placement or otherwise, (iii) 100% of the Net Proceeds of any sale, lease,
assignment, exchange or other disposition for cash of any asset or group of
assets (including, without limitation, but subject to clause (e) of this Section
6.5, insurance proceeds paid as a result of any destruction, casualty or taking
of any property of the Borrower or any Subsidiary) not made in the ordinary
course of business, by the Borrower or any Subsidiary of the Borrower, (iv) 100%
of the cash proceeds received in respect of any Assigned Policy upon the death
of a Designated Beneficiary, and (v) 100% of the Net Proceeds of any amounts
received by the Borrower as a release of funds escrowed pursuant to the ▇▇▇▇▇'▇
Escrow Agreement, in any such case no later than three Business Days following
receipt by the Borrower or such Subsidiary of such proceeds, together with
accrued interest to such date on the amount prepaid; provided that no such
prepayment shall be required pursuant to subclause (iii) of this Section 6.5(c)
unless the aggregate amount of such Net Proceeds received by the Borrower and
its Subsidiaries and not previously applied to prepayment of the Term Loans and
Bridge Loans and the reduction of the Commitments pursuant to Section
6.5(c)(iii) is at least $250,000. Amounts prepaid pursuant to this Section
6.5(c) shall be applied first to installments of principal of the Term Loans and
Bridge Loans until paid in full, pro rata, and second to the reduction of the
Revolving Credit Commitments and the prepayment of the Revolving Credit Loans
and cash collateralization of the Letters of Credit; provided that Net Proceeds
of any Permitted Junior Takeout Securities shall be applied first to the
principal of, and accrued and unpaid interest on, the Bridge Loans until paid in
full, and then as otherwise provided in this sentence. Prepayments of
installments of Term Loans shall be applied in the inverse order of maturity and
such amounts so prepaid may not be reborrowed. Nothing in this Section 6.5(c)
shall be construed to derogate any restriction or limitation contained in any
Loan Document imposed on any transaction of the types described in this Section
6.5(c), including without limitation the restrictions set forth in Sections
10.2. 10.5 and 10.6 hereof.
(d) On or before the earlier of the date on which the financial
statements referred to in Section 9.1(a) are required to be delivered in respect
of a fiscal year of the Borrower, beginning with the fiscal year ending December
31, 1997, and the date on which such financial statements are actually
delivered, the Borrower shall prepay the Term Loans and permanently reduce the
Commitments in the amount of 75% of Excess Cash Flow for the fiscal year covered
by such financial statements, together with accrued interest to such date on the
amount prepaid. Amounts prepaid pursuant to this Section 6.5(d) shall be applied
first to installments of principal of the Term Loans until paid in full, and
second to the reduction of the Revolving Credit Commitments and the prepayment
of the Revolving Credit Loans and the cash collateralization of the Letters of
Credit. Prepayments of installments of Term Loans shall be applied in the
inverse order of maturity and such amounts so prepaid may not be reborrowed.
(e) Net Proceeds received by the Borrower or any Subsidiary as
proceeds of insurance upon any destruction, casualty or taking with respect to
any property of the Borrower or any Subsidiary need not be applied as set forth
in Section 6.5(c) to the extent that
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such Net Proceeds are applied to the repair, rebuilding or replacement of the
property which was the subject of such destruction, casualty or taking within 60
days after the receipt of such Net Proceeds. If required by the Agent, such Net
Proceeds shall be held in an interest-bearing special collateral account,
subject to the sole dominion and control of the Agent and in a manner reasonably
satisfactory to the Agent, as additional Collateral for the Obligations and the
Subsidiaries Guarantee, until such time as it is released by Agent at the
request of the Borrower or such Subsidiary to be applied to such repair,
rebuilding or replacement.
6.6 Computation of Interest and Fees. (a) All commitment fees and
interest shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Agent shall as soon as practicable notify the Borrower and the
Lenders of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the Base Rate or the Eurocurrency
Reserve Requirements, shall become effective as of the opening of business on
the day on which such change becomes effective. The Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error. The Agent shall, at the
request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
Section 6.1(a).
6.7 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Agent shall have received notice from the Majority Lenders
that the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Base Rate Loans, (y) any Loans that were to have been Converted
on the first day of such Interest Period to Eurodollar Loans shall be Converted
to or Continued as Base Rate Loans and (z) any outstanding Eurodollar Loans
shall be Converted, on the first day of such Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Agent, no further Eurodollar,
shall be made or Continued as such, nor shall the Borrower have the right to
Convert Loans to Eurodollar Loans.
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6.8 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee hereunder and any reduction of the Term Loan Commitments,
Bridge Loan Commitments or the Revolving Credit Commitments of the Lenders shall
be made pro rata according to the respective Term Loan Commitment Percentages,
Bridge Loan Commitment Percentages or Revolving Credit Commitment Percentages,
as applicable, of the Lenders. Each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Term Loans, the Bridge
Loans or the Revolving Credit Loans shall be made pro rata according to the
respective outstanding principal amounts of the Term Loans, the Bridge Loans or
the Revolving Credit Loans, as applicable, then held by the Lenders. All
payments (including prepayments) to be made by the Borrower hereunder, whether
on account of principal, interest, fees or otherwise, shall be made without set-
off or counterclaim and shall be made prior to 12:00 noon, New York City time,
on the due date thereof to the Agent, for the account of the Lenders, at the
Agent's office specified in Section 13.2, in Dollars and in immediately
available funds. The Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. If any payment hereunder (other
than payments on Eurodollar Loans) becomes due and payable on a day other than a
Business Day, such payment shall be extended to the next succeeding Business
Day, and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day unless
the result of such extension would be to extend such payment into another
calendar month in which event such payment shall be made on the immediately
preceding Business Day.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its Term Loan Commitment Percentage, Bridge Loan Commitment
Percentage or Revolving Credit Commitment Percentage, as applicable, of such
borrowing available to the Agent, the Agent may assume that such Lender is
making such amount available to the Agent, and the Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. If such
amount is not made available to the Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Agent. A certificate of the Agent submitted to any Lender with respect to
any amounts owing under this Section shall be conclusive in the absence of
manifest error. If such Lender's Term Loan Commitment Percentage, Bridge Loan
Commitment Percentage or Revolving Credit Commitment Percentage, as applicable,
of such borrowing is not made available to the Agent by such Lender within three
Business Days of such Borrowing Date, the Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans hereunder, on demand, from the Borrower.
6.9 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this
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Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans,
Continue Eurodollar Loans as such and Convert Base Rate Loans to Eurodollar
Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be Converted automatically to Base Rate Loans
on the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
Conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 6.12.
6.10 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Letter of Credit, any Application,
or any Eurodollar Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 6.11 and changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, Converting into,
Continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Lender of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, the
-35-
Borrower shall promptly pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a copy to
the Agent) of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this Section
submitted by such Lender to the Borrower (with a copy to the Agent) shall be
conclusive in the absence of manifest error. The agreements in this Section
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
6.11 Taxes. (a) All payments made by the Borrower under this Agreement
and any Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Agent or any Lender as a result of a
present or former connection between the Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any Note). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under any Note, the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement,
provided, however, that the Borrower shall not be required to increase any such
amounts payable to any Lender that is not organized under the laws of the United
States of America or a state thereof if such Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
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(i) (A) if such Lender is a "bank" within the meaning of Section
881(c)(3)(A) of the Code, deliver to the Borrower and the Agent (x) two
duly completed copies of United States Internal Revenue Service Form 1001
or 4224, or successor applicable form, as the case may be, and (y) an
Internal Revenue Service Form W-8 or W-9, or successor applicable form, as
the case may be, or (B) if such Lender is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224, deliver (x) a certificate substantially
in the form of Exhibit I (a "Non-Bank Status Certificate") and (y) two
completed and signed copies of Internal Revenue Service Form W-8 or
successor applicable form;
(ii) deliver to the Borrower and the Agent two further copies of any
such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously delivered by it
to the Borrower; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the Borrower or
the Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, (ii) in the case of a
Non-bank Status Certificate, that it is not a "bank" as such term is defined in
Section 881(c)(3)(A) of the Code, and (iii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup withholding tax.
Each Person that shall become a Lender or a Participant pursuant to Section 13.6
shall, upon the effectiveness of the related transfer, be required to provide
all of the forms and statements required pursuant to this Section, provided that
in the case of a Participant such Participant shall furnish all such required
forms and statements to the Lender from which the related participation shall
have been purchased.
6.12 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any actual loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of, Conversion into or Continuation of Eurodollar Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
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6.13 Lending Offices; Change of Lending Office. (a) Loans of each Type
made by any Lender shall be made and maintained at such Lender's Applicable
Lending Office for Loans of such Type.
(b) Each Lender agrees that if it makes any demand for payment under
Section 6.10 or 6.11(a), or if any adoption or change of the type described in
Section 6.9 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for the Borrower to make payments
under Section 6.10 or 6.11(a), or would eliminate or reduce the effect of any
adoption or change described in Section 6.9.
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, the
Borrower hereby represents and warrants to the Agent and each Lender that:
7.1 Financial Condition. (a) The consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at January 3, 1997 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by ▇▇▇▇▇▇▇▇▇▇, Melvoin and ▇▇▇▇▇▇▇ LLP, copies of which
have heretofore been furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. The
unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at June 27, 1997 and the related unaudited consolidated
statements of income and of cash flows for the six-month period ended on such
date, certified by a Responsible Officer, copies of which have heretofore been
furnished to each Lender, are complete and correct and present fairly the
consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the six-month period then ended (subject
to normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved by
such accountants or Responsible Officer, as the case may be, and as disclosed
therein). Neither the Borrower nor any of its consolidated Subsidiaries had, at
the date of the most recent balance sheet referred to above, any material
Guarantee Obligation, contingent liability or liability for taxes, or any long-
term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction
or other financial derivative, which is not reflected in the foregoing
statements or in the notes thereto. During the period from June 27, 1997 to and
including the date hereof there has been no sale, transfer or other disposition
by the Borrower or any of its consolidated Subsidiaries of any material part of
its business or property and no purchase or other acquisition of any business or
-38-
property (including any Capital Stock of any other Person) material in relation
to the consolidated financial condition of the Borrower and its consolidated
Subsidiaries at June 30, 1997.
(b) To the best of Borrower's knowledge the consolidated balance sheet
of Old ▇▇▇▇▇'▇ and its consolidated Subsidiaries as at December 31, 1996 and the
related consolidated statements of income and of cash flows for the fiscal year
ended on such date, reported on by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ruchowitz ▇▇▇▇▇▇▇, copies of
which have heretofore been furnished to each Lender, are complete and correct in
all material respects and present fairly the consolidated financial condition of
Old ▇▇▇▇▇'▇ and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the fiscal year then ended. To the best of Borrower's knowledge the unaudited
consolidated balance sheet of Old ▇▇▇▇▇'▇ and its consolidated Subsidiaries as
at June 30, 1997 and the related unaudited consolidated statements of income and
of cash flows for the six-month period ended on such date, certified by a
Responsible Officer, copies of which have heretofore been furnished to each
Lender, are complete and correct in all material respects and present fairly the
consolidated financial condition of Old ▇▇▇▇▇'▇ and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the six-month period then ended (subject
to normal year-end audit adjustments). To the best of Borrower's knowledge all
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or Responsible Officer,
as the case may be, and as disclosed therein). To the best of Borrower's
knowledge neither Old ▇▇▇▇▇'▇ nor any of its consolidated Subsidiaries had, at
the date of the most recent balance sheet referred to above, any material
Guarantee Obligation, contingent liability or liability for taxes, or any long-
term lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange transaction
or other financial derivative, which is not reflected in the foregoing
statements or in the notes thereto. To the best of Borrower's knowledge during
the period from June 30, 1997 to and including the date hereof there has been no
sale, transfer or other disposition by Old ▇▇▇▇▇'▇ or any of its consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial condition
of Old ▇▇▇▇▇'▇ and its consolidated Subsidiaries at June 30, 1997.
(c) The pro forma consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at September 30, 1997, certified by a Responsible
Officer of the Borrower (the "Pro Forma Balance Sheet"), a copy of which has
been provided to the Agent and each Lender, is the unaudited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries adjusted to give
effect (as if such events had occurred on such date) to (i) the Roll-Up
Transactions, (ii) the ▇▇▇▇▇'▇ Acquisition, (iii) the making of the Term Loans
and the Bridge Loans, (iv) the making of the Revolving Credit Loans to be made
on the Closing Date, (v) the application of the proceeds of the foregoing in
accordance with the terms of the Loan Documents and (vi) the payment of all fees
and expenses related to the foregoing transactions, as estimated in good faith
as of the date of the Pro Forma Balance Sheet. The
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Pro Forma Balance Sheet, together with the notes thereto, presents fairly in all
material respects, on a pro forma basis, the consolidated financial position of
the Borrower and its Subsidiaries as at September 30, 1997, assuming that the
events specified in the preceding sentence had actually occurred on such date.
(d) The operating forecast and cash flow projections of the Borrower
and its consolidated Subsidiaries, copies of which have heretofore been
furnished to the Lenders, have been prepared in good faith under the direction
of a Responsible Officer of the Borrower. The Borrower has no reason to believe
that as of the date of delivery thereof such operating forecast and cash flow
projections are materially incorrect or misleading in any material respect, or
omit to state any material fact which would render them misleading in any
material respect.
7.2 No Change. (a) January 3, 1997 there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect, and (b) except for the Roll-Up Transactions and distributions to members
of the Borrower in respect of tax liability of such members attributable to the
income of the Borrower, during the period from January 3, 1997 to and including
the date hereof no dividends or other distributions have been declared, paid or
made upon the Capital Stock of the Borrower nor has any of the Capital Stock of
the Borrower been redeemed, retired, purchased or otherwise acquired for value
by the Borrower or any of its Subsidiaries.
7.3 Existence; Compliance with Law. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation or foreign
limited liability company, as applicable, and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
7.4 Power; Authorization; Enforceable Obligations. Each Loan Party has
the power and authority, and the legal right, to make, deliver and perform the
Loan Documents to which it is a party and, in the case of the Borrower, to
borrow hereunder, and has taken all necessary action to authorize, in the case
of the Borrower, the borrowings on the terms and conditions of this Agreement
and any Notes and to authorize the execution, delivery and performance of the
Loan Documents to which it is a party. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with the borrowings hereunder or with
the execution, delivery, performance, validity or enforceability of the Loan
Documents to which such Loan Party is a party. Each Loan Document to which a
Loan Party is a party has been, duly executed and delivered on behalf of such
Loan Party. Each Loan Document to which a Loan Party is a party constitutes a
legal, valid and binding obligation of such Loan Party enforceable
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against such Loan Party in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
7.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents to which any Loan Party is a party, the borrowings hereunder and the
use of the proceeds thereof, and the execution, delivery and performance of the
▇▇▇▇▇'▇ Acquisition Documents, will not violate in any material respect any
Requirement of Law or Contractual Obligation of any Loan Party or of any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation (other than Liens created
by the Security Documents in favor of the Agent).
7.6 No Material Litigation. No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of its
Subsidiaries or against any of its or their respective properties or revenues
(a) with respect to any of the Loan Documents, the ▇▇▇▇▇'▇ Acquisition Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
7.7 No Default. Neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
7.8 Ownership of Property; Liens. Each of the Borrower and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by Section 10.3.
7.9 Intellectual Property. Each of the Borrower and its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted that are material to the conduct of its business (the "Intellectual
Property"). No claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does any Loan Party know of
any valid basis for any such claim. The use of such Intellectual Property by the
Borrower and its Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
7.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
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7.11 Taxes. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Borrower, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower or its Subsidiaries, as the case may be); except as set
forth on Schedule 10.3, no tax Lien has been filed, and, to the knowledge of the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
7.12 Federal Regulations. No part of the proceeds of any Loans will be
used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U, or for
any purpose which violates, or which would be inconsistent with, the provisions
of the regulations of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect. If requested by any Lender or the
Agent, the Borrower will furnish to the Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form G-1 or FR Form
U-1 referred to in Regulation G or Regulation U, as the case may be.
7.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits by an amount in excess of $100,000.
7.14 Investment Company Act; Other Regulations. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the
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meaning of the Investment Company Act of 1940, as amended. The Borrower is not
subject to regulation under any Federal or State statute or regulation (other
than Regulation X of the Board of Governors of the Federal Reserve System) which
limits its ability to incur Indebtedness.
7.15 Subsidiaries. Schedule 7.15 sets forth the name of each direct or
indirect Subsidiary of the Borrower, its form of organization, its jurisdiction
of organization, the total number of issued and outstanding shares, membership
interests, or other interests of Capital Stock thereof, the classes and number
of issued and outstanding shares, membership interests, or other interests of
Capital Stock of each such class, the name of each holder of Capital Stock
thereof and the number of shares, membership interests, or other interests of
such Capital Stock held by each such holder and the percentage of all
outstanding shares, membership interests, or other interests of such class of
Capital Stock held by such holders.
7.16 Security Documents. (a) The provisions of each Security Agreement
are effective to create in favor of the Agent for the ratable benefit of the
Lenders a legal, valid and enforceable security interest in all right, title and
interest of the Loan Party party thereto in the "Collateral" described therein.
The provisions of the Borrower Pledge Agreement are effective to create in favor
of the Agent for the ratable benefit of the Lenders a legal, valid and
enforceable security interest in all right, title and interest of the Loan Party
party thereto in the "Pledged Collateral" described therein.
(b)(i) When financing statements have been filed in the offices in the
jurisdictions listed in Schedule 7.16, the Security Agreements shall each
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of the Borrower in the "Collateral" described therein, which
can be perfected by such filing.
(ii) When certificates representing the Pledged Stock (as defined in
the Borrower Pledge Agreement) are delivered to the Agent, together with stock
powers endorsed in blank by a duly authorized officer of the pledgors thereof,
the Borrower Pledge Agreement shall constitute a fully perfected first Lien on,
and security interest in, all right, title and interest of the pledgors parties
thereto in the Pledged Stock and all "Proceeds" (as defined in the Borrower
Pledge Agreement) described therein.
(iii) When the financing statements listed in Schedule II to the
Borrower Pledge Agreement have been filed, the Borrower Pledge Agreement shall
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of the Borrower in the "Pledged LLC Interests" and "Proceeds"
thereof described therein.
(c) Neither the Borrower nor any Subsidiary owns any property, or has
any interest in any property, that is not subject to a fully perfected first
priority Lien on, or security interest in, such property in favor of the Agent,
other than any such property having an aggregate fair market value at any one
time not exceeding $100,000.
7.17 Accuracy and Completeness of Information. (a) All factual
information, reports and other papers and data with respect to the Loan Parties
(other than projections)
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furnished, and all factual statements and representations made, to the Agent or
the Lenders by a Loan Party, or on behalf of a Loan Party, were, at the time the
same were so furnished or made, when taken together with all such other factual
information, reports and other papers and data previously so furnished and all
such other factual statements and representations previously so made, complete
and correct in all material respects, to the extent necessary to give the Agent
and the Lenders true and accurate knowledge of the subject matter thereof in all
material respects, and did not, as of the date so furnished or made, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein not misleading in light of the
circumstances in which the same were made.
(b) All projections with respect to the Loan Parties furnished by or
on behalf of a Loan Party to the Agent or the Lenders were prepared and
presented in good faith by or on behalf of such Loan Party. No fact is known to
a Loan Party which materially and adversely affects or in the future is
reasonably likely (so far as such Loan Party can reasonably foresee) to have a
Material Adverse Effect which has not been set forth in the financial statements
referred to in Section 7.1 or in such information, reports, papers and data or
otherwise disclosed in writing to the Agent or the Lenders prior to the Closing
Date.
7.18 Labor Relations. No Loan Party is engaged in any unfair labor
practice which could reasonably be expected to have a Material Adverse Effect.
There is (a) no unfair labor practice complaint pending or, to the best
knowledge of each Loan Party and each of the Subsidiaries of each Loan Party,
threatened against a Loan Party before the National Labor Relations Board which
could reasonably be expected to have a Material Adverse Effect and no grievance
or arbitration proceeding arising out of or under a collective bargaining
agreement is so pending or threatened; (b) no strike, labor dispute, slowdown or
stoppage pending or, to the best knowledge of each Loan Party, threatened
against a Loan Party; and (c) no union representation question existing with
respect to the employees of a Loan Party and no union organizing activities are
taking place with respect to any thereof.
7.19 Insurance. Each Loan Party has, with respect to its properties
and business, insurance covering the risks, in the amounts, with the deductible
or other retention amounts, and with the carriers, listed on Schedule 7.19,
which insurance meets the requirements of Section 7.5 hereof and Section 5(m) of
the Security Agreements as of the date hereof and the Closing Date.
7.20 ▇▇▇▇▇'▇ Acquisition Documents. (a) Each Lender has received
complete copies in all material respects of each of the ▇▇▇▇▇'▇ Acquisition
Documents (including all exhibits, schedules and disclosure letters referred to
therein or delivered pursuant thereto) and all amendments thereto, waivers
relating thereto and other side letters or agreements affecting the terms
thereof. None of such documents and agreements has been amended or supplemented,
nor have any of the provisions thereof been waived, in any material respect,
except pursuant to a written agreement or instrument which has heretofore been
consented to by the Lenders. Each ▇▇▇▇▇'▇ Acquisition Document has been duly
executed and delivered by each Loan Party which is a party thereto and is in
full force and effect; and the ▇▇▇▇▇'▇
44
Acquisition has been duly consummated in accordance with the terms of the
▇▇▇▇▇'▇ Purchase Agreement. The representations and warranties of each Loan
Party contained in each ▇▇▇▇▇'▇ Acquisition Document to which it is a party is
true and correct in all material respects, and will be true and correct in all
material respects on the Closing Date as if made on and as of the Closing Date,
and each Lender shall be entitled to rely on such representations and warranties
with the same force and effect as if they were incorporated in this Agreement
and made to each Lender directly. To the best knowledge of each Loan Party after
due investigation, the representations and warranties of each party to each
▇▇▇▇▇'▇ Acquisition Document other than a Loan Party contained therein are true
and correct in all material respects and will be true and correct in all
material respect on the Closing Date as if made on and as of the Closing Date.
(b) A schedule of substantially all transaction costs relating to the
▇▇▇▇▇'▇ Acquisition, the entering into of the ▇▇▇▇▇'▇ Purchase Agreement and the
transactions contemplated thereby, including, without limitation, all investment
banking, commitment and attorneys' fees relating thereto (but excluding
transaction costs which are set forth on the Fee Letter) is set forth on
Schedule 7.20. Any costs not invoiced as of the date hereof, consisting solely
of attorney's or accountant's fees and any out-of-pocket expenses of the Loan
Parties, may be based upon, and noted on Schedule 7.20 as, reasonable estimates
thereof.
7.21 Solvency. On the Closing Date, after giving effect to the Roll-
up Transactions, the ▇▇▇▇▇'▇ Acquisition. the refinancing of the Indebtedness of
the Loan Parties set forth on Schedule 10.2A, and the incurrence of all
indebtedness and obligations being incurred on or prior to such date in
connection herewith and therewith, (i) the amount of the "present fair saleable
value" of the assets of the Borrower and of the Borrower and its Subsidiaries,
taken as a whole, will, as of such date, exceed the amount of all "liabilities
of the Borrower and of the Borrower and its Subsidiaries, taken as a whole,
contingent or otherwise", as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (ii) the present fair saleable value of the assets of
the Borrower and of the Borrower and its Subsidiaries, taken as a whole, will,
as of such date, be greater than the amount that will be required to pay the
liabilities of the Borrower and of the Borrower and its Subsidiaries, taken as a
whole, on their respective debts as such debts become absolute and matured,
(iii) neither the Borrower nor the Borrower and its Subsidiaries, taken as a
whole, will have, as of such date, an unreasonably small amount of capital with
which to conduct their respective businesses, and (iv) each of the Borrower and
the Borrower and its Subsidiaries, taken as a whole, will be able to pay their
respective debts as they mature. For purposes of this Section 7.20, "debt" means
"liability on a claim", "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, and (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
7.22 Purpose of Loans. The proceeds of the Term Loans and the Bridge
Loans shall be used by the Borrower to finance a portion of the purchase price
of the ▇▇▇▇▇'▇
45
Acquisition, and to pay a portion of the costs and expenses incurred in
connection therewith. The proceeds of the Revolving Credit Loans and the Letters
of Credit shall be used by the Borrower for working capital purposes in the
ordinary course of business and for general corporate purposes.
7.23 Environmental Matters. Except as set forth on Schedule 7.23:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain, and have
not previously contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii) could
reasonably be expected to give rise to liability under, any Environmental Law,
except in either case insofar as such violation or liability, or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in all material
respects, with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Borrower or any of its
Subsidiaries (the "Business") which could materially interfere with the
continued operation of the Properties or materially impair the fair saleable
value thereof.
(c) Neither the Borrower nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does the Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened, except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that is or are
reasonably likely to result in the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law. nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law, except insofar as any such
violation or liability referred to in this Section 7.23(d), or any aggregation
thereof, is not reasonably likely to result in the payment of a Material
Environmental Amount.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business, except insofar
as such proceeding, action, decree, order or other requirement, or any
46
aggregation thereof, is not reasonably likely to result in the payment of a
Material Adverse Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could reasonably give rise to liability under
Environmental Laws except insofar as any such violation or liability referred to
in this paragraph, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Initial Extensions of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, immediately prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The Agent shall have received:
(i) this Agreement, executed and delivered by a duly authorized
officer of the Borrower, with a counterpart for each Lender,
(ii) for the account of each Lender having a Term Loan
Commitment, a Term Loan Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(iii) for the account of each Lender having a Bridge Loan
Commitment, a Bridge Loan Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(iv) for the account of each Lender having a Revolving Credit
Commitment, a Revolving Credit Note of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(v) the Borrower Pledge Agreement, executed and delivered by a
duly authorized officer of the Borrower, with a counterpart or a
conformed copy for each Lender,
(vi) the Subsidiaries Guarantee, executed and delivered by a duly
authorized officer of each of the Subsidiaries of the Borrower, with a
counterpart or a conformed copy for each Lender,
(vii) each of the Security Agreements, each executed and
delivered by a duly authorized officer of the party thereto, with a
counterpart or a conformed copy for each Lender,
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(viii) each of the Patent Assignments, each executed and
delivered by a duly authorized officer of the parties thereto, with a
counterpart or a conformed copy for each Lender,
(ix) each of the Trademark Assignments, each executed and
delivered by a duly authorized officer of the parties thereto, with a
counterpart or a conformed copy for each Lender, and
(x) a Bridge Guarantee executed and delivered by each of ▇▇▇▇ and
▇▇▇▇▇.
(b) Related Agreements. The Agent shall have received, with a copy for
each Lender, true and correct copies, certified as to authenticity by the
Borrower, each of the Roll-Up Documents and the ▇▇▇▇▇'▇ Acquisition
Documents, and of such other documents or instruments as may be reasonably
requested by the Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which the
Borrower, or its Subsidiaries may be a party.
(c) Permitted Junior Takeout Securities. The Agent shall have
received, with a copy for each Lender, a written commitment from ▇▇▇▇▇▇▇▇▇
LLC or another financing party satisfactory to the Agent to provide the
financing under the Permitted Junior Takeout Securities on terms and
conditions consistent with the definition of Permitted Junior Takeout
Securities, such commitment to be subject only to completion of definitive
documentation for the Permitted Junior Takeout Securities and to be
otherwise in form and substance acceptable to the Agent.
(d) Concurrent Transactions. (i) The Agent shall have received
evidence satisfactory to it that the Roll-up Transactions shall have been
consummated on or prior to the date of this Agreement in accordance with
the Roll-up Documents.
(ii) The ▇▇▇▇▇'▇ Acquisition shall have been, or shall be
concurrently with the making of the initial Loans, consummated in
accordance with the terms of the ▇▇▇▇▇'▇ Purchase Agreement, without
any amendment, modification or waiver thereof except with the consent
of the Required Lenders, and the Agent shall have received evidence
satisfactory to it to that effect. The Agent shall have received
evidence reasonably satisfactory to it that the aggregate
consideration paid by the Borrower in connection with the ▇▇▇▇▇'▇
Acquisition, together with the transaction costs referred to in
Section 7.20(b), shall not exceed $18,797,549, up to $17,100,467 of
which shall be payable in cash plus an adjustment payable for a
working capital adjustment plus the ▇▇▇▇▇'▇ Subordinated Seller Note.
(iii) All amounts owing under the Existing Financing Documents
shall have been, or shall be concurrently with the making of the
initial Loans, repaid in full, and any Liens created pursuant to the
Existing Financing Documents shall have been or shall, concurrently
with the making of the initial Loans, released, and the Existing
Financing Documents shall terminate and be of no further force and
effect upon such
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repayment; in each case pursuant to such payout letters, Lien
releases, termination statements, mortgage satisfactions and other
documents as the Agent may require, each of which shall be in form and
substance satisfactory to the Agent.
(iv) The Borrower shall have entered into the executive
employment agreements (the "Employment Agreements") and management
incentive plans (the "Incentive Plans") listed on Schedule 8.1(d),
copies of each of which shall have been delivered to the Agent, and
each of which Employment Agreements and Incentive Plans shall be in
form and substance satisfactory to the Agent.
(v) The Borrower shall have executed and delivered the Warrant
Agreement, and the Warrants contemplated thereby shall have been duly
issued to CIBC, for its sole account.
(e) Closing Certificate. The Agent shall have received, with a
counterpart for each Lender, a certificate of each Loan Party, dated the
Closing Date, substantially in the form of Exhibit I-1, or I-2, as
applicable, with appropriate insertions and attachments, satisfactory in
form and substance to the Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of such Loan Party.
(f) Borrowing Base Certificate. The Agent shall have received, with a
counterpart for each Lender, a Borrowing Base Certificate showing the
Borrowing Base as of September 28, 1997, with appropriate insertions and
dated the Closing Date, satisfactory in form and substance to the Agent,
executed by the President or any Vice President of the Borrower.
(g) Proceedings of the Borrower. The Agent shall have received, with a
counterpart for each Lender, a copy of the resolutions, in form and
substance satisfactory to the Agent, of the Managing Members of the
Borrower authorizing (i) the execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party, (ii) the
borrowings contemplated hereunder and (iii) the granting by it of the Liens
created pursuant to the Borrower Security Documents, certified by the
Secretary or an Assistant Secretary of the Borrower as of the Closing Date,
which certificate shall be in form and substance satisfactory to the Agent
and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(h) Borrower Incumbency Certificate. The Agent shall have received,
with a counterpart for each Lender, a certificate of the Borrower, dated
the Closing Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document satisfactory in form and substance to
the Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of the Borrower.
(i) Proceedings of Subsidiaries. The Agent shall have received, with a
counterpart for each Lender, a copy of the resolutions, in form and
substance satisfactory to the Agent, of the Board of Directors, or Managing
Member, as
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applicable, of each Subsidiary of the Borrower which is a party to a Loan
Document authorizing (i) the execution, delivery and performance of the
Loan Documents to which it is a party and (ii) the granting by it of the
Liens created pursuant to the Subsidiaries Security Documents to which it
is a party, certified by the Secretary or an Assistant Secretary of each
such Subsidiary as of the Closing Date, which certificate shall be in form
and substance satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(j) Subsidiary Incumbency Certificates. The Agent shall have received,
with a counterpart for each Lender, a certificate of each Subsidiary of the
Borrower which is a Loan Party, dated the Closing Date, as to the
incumbency and signature of the officers of such Subsidiaries executing any
Loan Document, satisfactory in form and substance to the Agent, executed by
the President or any Vice President and the Secretary or any Assistant
Secretary of each such Subsidiary.
(k) Governing Documents. The Agent shall have received, with a
counterpart for each Lender, true and complete copies of the operating
agreement or incorporation and by-laws or other Governing Documents of the
Borrower and each Loan Party, certified as of the Closing Date as complete
and correct copies thereof by the Secretary or an Assistant Secretary of
the Borrower and each such Loan Party.
(l) Good Standing Certificates. The Agent shall have received, with a
copy for each Lender, certificates dated as of a recent date from the
Secretary of State or other appropriate authority, evidencing the good
standing of each Loan Party (i) in the jurisdiction of its organization and
(ii) in each other jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires it to qualify as a foreign
Person except, as to this subclause (ii), where the failure to so qualify
could not reasonably be expected to have a Material Adverse Effect.
(m) Consents, Licenses and Approvals. The Agent shall have received,
with a counterpart for each Lender, a certificate of a Responsible Officer
of the Borrower (i) attaching copies of all consents, authorizations and
filings referred to in Section 7.4, and (ii) stating that such consents,
licenses and filings are in full force and effect, and each such consent,
authorization and filing shall be in form and substance satisfactory to the
Agent.
(n) Fees. The Agent shall have received the fees to be received on the
Closing Date referred to in the Fee Letter.
(o) Legal Opinions. The Agent shall have received, with a counterpart
for each Lender, the following executed legal opinions:
(i) the executed legal opinions of Katten, Muchin & Zavis,
counsel to the Borrower and the other Loan Parties, substantially in
the form of Exhibit J-1; and
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(ii) the executed legal opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Ltd.,
counsel to the Borrower and the other Loan Parties, substantially in
the form of Exhibit J-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably
require.
(p) Pledged Stock; Stock Powers; Pledged Interests. The Agent shall
have received:
(i) the certificates representing the shares of stock pledged
pursuant to each of the Borrower Pledge Agreement, together with an
undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof,
(ii) all certificates, if any, representing the limited liability
company interests pledged pursuant to the Borrower Pledge Agreement,
together with an undated power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof, and, if
applicable, an Initial Transaction Statement with respect to each
pledged interest executed by a duly authorized officer of the pledgor
thereof.
Each issuer referred to in the Borrower Pledge Agreement shall have
delivered an acknowledgment of and consent to the Borrower Pledge
Agreement, executed by a duly authorized officer of such Issuer, in
substantially the form appended to the Borrower Pledge Agreement.
(q) Lockbox System. The Agent shall have received evidence
satisfactory to it that the system of lockboxes, collection accounts and
letters of instruction contemplated by the Security Agreements shall have
been established and remains in existence in accordance with the terms of
the Security Agreements.
(r) Actions to Perfect Liens. The Agent shall have received evidence
in form and substance satisfactory to it that all filings, recordings.
registrations and other actions, including, without limitation, the filing
of duly executed financing statements on form UCC-1, necessary or, in the
opinion of the Agent, desirable to perfect the Liens created by the
Security Documents shall have been completed. The Agent shall have
received, with a counterpart for each Lender, the Collateral Certificate of
each Loan Party referred to in each Security Agreement completed and
executed and delivered by a duly authorized officer of such Loan Party.
(s) Lien Searches. The Agent shall have received the results of a
recent search by a Person satisfactory to the Agent, of the Uniform
Commercial Code, judgment and tax lien filings which may have been filed
with respect to personal property of the Borrower and each subsidiary, and
the results of such search shall be satisfactory to the Agent.
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(t) Insurance. The Agent shall have received evidence in form and
substance satisfactory to it that all of the requirements of Section 9.5
hereof and Section 5(m) of the Security Agreements shall have been
satisfied.
(u) Environmental Reports. The Agent shall have received Phase I
environmental reports, prepared by a Person satisfactory to the Agent, and
which such Person shall have confirmed in writing that the Agent and the
Lenders shall be entitled to rely upon, with respect to each of the
Properties, and such environmental reports shall be in form and substance
satisfactory to the Agent.
(v) Landlord Agreements. The Agent shall have received a Landlord
Agreement with respect to each parcel of real property leased by any Loan
Party as of the Closing Date duly executed and delivered on behalf of the
lessee of such real property.
(w) Warehouse Bailment Agreements. The Borrower shall have used its
best efforts to cause the Agent to receive a Warehouse Bailment Agreement
from the operator of each warehouse at which any Loan Party may have any
inventory; provided, however, that if a Warehouse Bailment Agreement has
not been received by the Agent with respect to any such warehouse, the
Borrower shall cause such Warehouse Bailment Agreement to be delivered by
the time specified in Section 9.13.
8.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the extension of
credit requested to be made on such date.
(c) Borrowing Base. In the case of any Revolving Credit Loans
requested to be made, the Agent shall have timely received a Borrowing Base
Certificate for the most recent period for which such Borrowing Base
Certificate is required to be delivered, in accordance with Section 9.2(c).
(d) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, the other Loan Documents and
the ▇▇▇▇▇'▇ Acquisition Documents shall be satisfactory in form and
substance to the Agent, and the Agent shall have received such other
documents and legal opinions in respect of any
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aspect or consequence of the transactions contemplated hereby or thereby as
it shall reasonably request.
Each borrowing by and each Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date thereof that the conditions contained in this Section 8.2 have been
satisfied.
SECTION 9. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments
remain in effect or any amount is owing to any Lender or the Agent hereunder or
under any other Loan Document or any Letter of Credit remains outstanding, the
Borrower shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Subsidiaries to:
9.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related consolidated statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by BDO ▇▇▇▇▇▇▇ LLP or other
independent certified public accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and retained
earnings and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and
(c) as soon as available, but in any event not later than 30 days
after the end of each calendar month, the unaudited consolidated and
consolidating balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such month and the related unaudited
consolidated and consolidating statements of income and retained earnings
and of cash flows of the Borrower and its consolidated Subsidiaries for
such month and the portion of the fiscal year through the end of such
month, setting forth in each case in comparative form the figures for the
previous year, certified by a Responsible Officer as being fairly stated in
all material respects (subject to normal year-end audit adjustments);
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all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
9.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 9.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 9.1(a), (b) and (c), a certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, the
Borrower during such period has observed or performed in all material
respects all of its covenants and other agreements, and satisfied every
material condition, contained in this Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such
Officer has obtained no knowledge of any Default or Event of Default except
as specified in such certificate and (ii) showing in detail the
calculations supporting such Officer's certification of the Borrower's
compliance with the requirements of Section 10.1(a) through 10.1(d) and
Section 10.9;
(c) within fifteen days following the end of each calendar month, a
Borrowing Base Certificate showing the Borrowing Base as of the last day of
such month, and a summary accounts receivable aging, in each case certified
as complete and correct by a Responsible Officer;
(d) not later than thirty days prior to the end of each fiscal year of
the Borrower, a copy of the projections by the Borrower of the operating
budget and cash flow budget of the Borrower and its Subsidiaries for the
succeeding fiscal year, such projections to be accompanied by a certificate
of a Responsible Officer to the effect that such projections have been
prepared in good faith on the basis of sound financial planning practice
and that such Officer has no reason to believe they are incorrect or
misleading in any material respect;
(e) within five days after the same are sent, copies of all financial
statements and reports which the Borrower sends to its members, and within
five days after the same are filed, copies of all financial statements and
reports which the Borrower may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental Authority;
(f) during the month of September in each calendar year, a report of a
reputable insurance broker with respect to the insurance maintained by the
Borrower and its Subsidiaries in accordance with Section 9.5 of this
Agreement and Section 5(m)
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of each Security Agreement, and such supplemental reports as the Agent may
from time to time request; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
9.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or its Subsidiaries, as the case may be.
9.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to Section 10.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, be reasonably expected to have a Material Adverse Effect.
9.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business, which insurance shall name the Agent as lender loss
payee, in the case of property or casualty insurance, and as an additional
insured, in the case of liability insurance, and shall provide for at least 30
days prior written notice to the Agent of any modification or cancellation
thereof; and furnish to each Lender, upon written request, full information as
to the insurance carried.
9.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower and its
Subsidiaries with officers and employees of the Borrower and its Subsidiaries
and with its independent certified public accountants.
9.7 Notices. Promptly give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
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(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries in which the amount involved is $250,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) of the acquisition by any Loan Party of any property or interest
in property (including, without limitation, real property), that is not
subject to a perfected Lien in favor of the Agent pursuant to the Security
Documents;
(e) of the occurrence of any transaction or occurrence referred to in
Section 6.5(c), and the receipt of any Net Proceeds or any insurance
proceeds as a result thereof (whether or not such Net Proceeds or proceeds
are then required to be applied to the repayment of Loans and reduction of
Revolving Credit Commitments as specified in Section 6.5(c));
(f) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan; and
(g) any development or event which could reasonably be expected to
have a Material Adverse Effect
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
9.8 Environmental Laws (a) Comply with, and ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and use its reasonable efforts to ensure
that all tenants and subtenants obtain and comply with and maintain, any and all
material licenses, approvals, notifications, registrations or permits required
by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding
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Environmental Laws except to the extent that the same are being contested in
good faith by appropriate proceedings and the pendency of such proceedings could
not be reasonably expected to have a Material Adverse Effect.
9.9 Changes to Advance Rates, Standards of Eligibility and Reserves.
The Agent shall be entitled to (a) reduce the advance rates, increase the
standards of eligibility and establish or increase any reserves under this
Agreement on ten days' prior written notice to the Borrower, and (b) with the
prior written consent of the Lenders, increase the advance rates, reduce the
standards of eligibility and reduce any reserves under this Agreement, in each
case in its reasonable judgment.
9.10 Periodic Audit of Accounts Receivable and Inventory. The Agent
shall be entitled to perform a periodic due diligence inspection, test and
review of the accounts receivable and inventory of the Borrower and its
Subsidiaries on a mutually convenient Business Day twice during each calendar
year and shall in each case be satisfied in all material respects with the
results thereof; provided however, if the Agent in its reasonable judgment is
not satisfied that the results of any due diligence inspection, test, and review
performed pursuant to this Section 9.10 establish that the Loan Parties' most
recent determination of the Borrowing Base was made in compliance with the
applicable provisions of this Agreement, the Agent shall be entitled to perform
additional due diligence inspections, tests and reviews of such inventory and
accounts receivable on mutually convenient Business Days during the succeeding
twelve-month period until the Agent shall be so satisfied; and provided further,
that upon the occurrence and during the continuation of an Event of Default, the
Agent shall be entitled to perform such additional due diligence inspections,
tests and review of such accounts receivable as any Lender shall deem necessary
or advisable.
9.11 Additional Collateral; Additional Guarantors. (a) In the event
that the Borrower or any Subsidiary acquires any property or interest in
property (including, without limitation, real property) other than property made
subject to a Lien permitted under Section 10.3(g), that is not subject to a
perfected Lien in favor of the Agent pursuant to the Security Documents, the
Borrower shall, and shall cause Subsidiary to, take such action (including,
without limitation, the preparation and filing of mortgages or deeds of trust in
form and substance satisfactory to the Agent) as the Agent shall reasonably
request in order to create and/or perfect a Lien in favor of the Agent on such
property.
(b) In the event that the Borrower is permitted to acquire or form any
additional Subsidiary, such Subsidiary shall execute a guarantee and a security
agreement, or supplements to the Subsidiaries Guarantee and the Subsidiaries
Security Agreement, and the Borrower and/or any Subsidiary which is a holder of
any Capital Stock of such Subsidiary shall execute such pledge agreements or
supplements to the Borrower Pledge Agreement, each in form and substance
reasonably satisfactory to the Agent, and shall take such other action as shall
be necessary or advisable (including. without limitation, the execution of
financing statements on form UCC-1) in order to perfect the Liens granted by
such Subsidiary in favor of the Agent for the benefit of the Lenders and to
effect and perfect the pledge of all of the Capital Stock of such Subsidiary in
favor of the Agent for the benefit of the Lenders. Such
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Subsidiary shall thereupon become a Guarantor for all purposes under the Loan
Documents, including, without limitation, Section 9.11(a) of this Agreement. The
Agent shall be entitled to receive legal opinions of one or more counsel to the
Borrower and such Subsidiary addressing such matters as the Agent or its counsel
may reasonably request, including, without limitation, the enforceability of the
guaranty and the security agreement to which such Subsidiary becomes a party and
the pledge of the Capital Stock of such Subsidiary, and the creation, validity
and perfection of the Liens so granted by such Subsidiary and the Borrower
and/or other Subsidiaries to the Agent for the benefit of the Lenders.
9.12 Interest Rate Protection. As promptly as practicable, and in any
event within 60 days after the Closing Date, the Borrower will enter into with
one or more Lenders, and thereafter for a period of not less than three years
will maintain in effect, one or more interest rate protection agreements on such
terms as shall be reasonably satisfactory to the Agent, the effect of which
shall be to fix or limit the interest cost to the Borrower with respect to at
least 50% of the outstanding Term Loans.
9.13 Warehouse Bailment Agreements. As promptly as practicable, and in
any event within 30 days after the Closing Date, the Borrower will deliver to
the Agent a Warehouse Bailment Agreement with respect to each warehouse at which
any Loan Party may have inventory for which a Warehouse Bailment Agreement was
not provided on the Closing Date, duly executed and delivered on behalf of the
operator of such warehouse.
9.14 Key - Person Life Insurance. As promptly as practicable. and in
any event within 30 days following the Closing Date, the Borrower shall have
obtained a policy of "key-person" life insurance, in the amount of $5,000,000,
on each of ▇▇▇▇ and ▇▇▇▇▇, with such carriers and on such terms as are
satisfactory to the Agent. Such policies shall have been assigned to the Agent
for the benefit of the Lenders pursuant to a Borrower Assignment of Life
Insurance.
SECTION 10. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as any of the Commitments
remain in effect or any amount is owing to any Lender or the Agent hereunder or
under any other Loan Document, the Borrower shall not, and (except with respect
to Sections 10.1 or 10.8) shall not permit any of its Subsidiaries to, directly
or indirectly:
10.1 Financial Condition Covenants.
(a) Maintenance of Consolidated EBITDA. Permit Consolidated EBITDA for
any twelve-month period ending on the last day of each month during the periods
set forth below to be less than the following amounts during the following
periods:
Period Amount
------ ------
Closing Date through December 31, 1997 $ 6,300,000
January 1, 1998 through September 30, 1998 6,300,000
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September 30, 1998 through November 30, 1998 8,000,000
November 30, 1998 through December 31, 1998 9,000,000
January 1, 1999 through September 30, 1999 9,000,000
September 30, 1999 through November 30, 1999 10,000,000
November 30, 1999 through December 31, 1999 11,000,000
January 1, 2000 through September 30, 2000 11,000,000
September 30, 2000 through November 30, 2000 11,750,000
November 30, 2000 through December 31, 2000 12,500,000
January 1, 2001 through September 30, 2001 12,500,000
October 1, 2001 through November 30, 2001 13,250,000
November 30, 2001 through December 31, 2001 14,000,000
(b) Indebtedness to EBITDA. Permit the ratio at any date set forth in
the table below of (i) the sum of Consolidated Indebtedness and aggregate the
Available RC Commitments of the Borrower at such date to (ii) Consolidated
EBITDA for the period of four consecutive fiscal quarters ending on or about
such date to be less the ratio set forth opposite such date below:
Date Ratio
---- -----
December 31, 1997 5.8 to 1
March 31, 1998 5.8 to 1
June 30, 1998 5.8 to 1
September 30, 1998 4.6 to 1
December 31, 1998 3.5 to 1
March 31, 1999 3.5 to 1
June 30, 1999 3.5 to 1
September 30, 1999 3.25 to 1
December 31, 1999 3.0 to 1
March 31, 2000 3.0 to 1
June 30, 2000 3.0 to 1
September 30, 2000 2.75 to 1
December 31, 2000 2.5 to 1
March 31, 2001 2.5 to 1
June 30, 2001 2.5 to 1
September 30, 2001 2.25 to 1
December 31, 2001 2.0 to 1
(c) Interest Coverage. Permit the ratio at any date set forth below of
(i) Consolidated EBITDA for the period of four consecutive fiscal quarters
ending on such date minus capital expenditures made during such four-quarter
period to (ii) Consolidated Interest Expense for such four-quarter period to be
less than the ratio set forth below opposite such date:
Date Ratio
---- -----
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December 31, 1997 3.00 to 1
March 31, 1998 3.00 to 1
June 30, 1998 3.00 to 1
September 30, 1998 3.00 to 1
December 31, 1998 3.25 to 1
March 31, 1999 3.25 to 1
June 30, 1999 3.25 to 1
September 30, 1999 3.25 to 1
December 31, 1999 4.00 to 1
March 31, 2000 4.00 to 1
June 30, 2000 4.00 to 1
September 30, 2000 4.00 to 1
December 31, 2000 and thereafter 4.5 to 1
(d) Fixed Charge Coverage. Permit the ratio at any time, commencing
January 1, 1998. of (i) Consolidated EBITDA for any twelve-month period ending
on the last day of each month minus capital expenditures made during such
twelve-month period to (ii) Consolidated Fixed Charges for such twelve-month
period to be less than 1.15 to 1.00.
10.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement and the other
Loan Documents;
(b) Indebtedness in respect of the Permitted Junior Takeout
Securities, provided that the Net Proceeds thereof have been applied as
required under Section 6.4(c) to repay in full the Bridge Loans and all
accrued and unpaid interest thereon;
(c) Indebtedness of the Borrower to any Subsidiary Guarantor and of
any Subsidiary Guarantor to the Borrower or any other Subsidiary Guarantor;
(d) Indebtedness of the Borrower and any of itS Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) in an aggregate principal amount
not exceeding as to the Borrower and its Subsidiaries $100,000 at any time
outstanding; and
(e) Indebtedness outstanding on the date hereof and listed on Schedule
10.2B and, prior to the Closing Date, Indebtedness outstanding on the date
hereof and listed on Schedule 10.2A.
10.3 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
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(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 10.3,
securing indebtedness permitted by Section 10.2(e), provided that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased, and
provided, further, that none of the Liens set forth on part A of Schedule
10.3 may remain outstanding after the Closing Date;
(g) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by Section 10.2(c) incurred to finance the acquisition of fixed
or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness, (iii) the amount of
Indebtedness secured thereby is not increased and (iv) the principal amount
of Indebtedness secured by any such Lien shall at no time exceed 100% of
the original purchase price of such property of such property at the time
it was acquired; and
(h) Liens created pursuant to the Security Documents.
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10.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 10.4B and, prior to the Closing Date, Guarantee Obligations in
existence on the date hereof and listed on Schedule 10.4A;
(b) Guarantee Obligations in respect of the undrawn portion of the
face amount of Letters of Credit; and
(c) the Subsidiaries Guarantee.
10.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation); and
(b) any wholly owned Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or any other wholly owned Subsidiary of the
Borrower.
10.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of or other interests in such Subsidiary's Capital Stock to any
Person other than the Borrower or any wholly owned Subsidiary of the Borrower,
except:
(a) the sale or other disposition of obsolete or worn out property in
the ordinary course of business; provided that the Net Proceeds of each
such transaction are applied to the prepayment of the Loans as provided in
Section 6.5(c);
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof; and
(d) as permitted by Section 10.5(b).
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10.7 Limitation on Leases. Permit Consolidated Lease Expense for any
fiscal year of the Borrower to exceed $700,000.
10.8 Limitation on Dividends. Declare or pay any dividend on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares or interests of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary; provided, however that, the Borrower may make the distributions
to its members on the dates and in the amounts specified in Section 4.4 of the
Borrower's Operating Agreement (as in effect on the date hereof), so long as (a)
the Borrower is and was during the entire period of such quarter a partnership
for Federal income tax purposes that is not taxed as an association taxable as a
corporation pursuant to Section 7701 of the Code or as a corporation pursuant to
Section 7704 of the Code, (b) solely with respect to any such distribution to
▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, no Default or Event of Default has occurred and is
continuing under Sections 11(a) or (f) of this Agreement at the time of such
distribution to Messrs. ▇▇▇▇, ▇▇▇▇▇ or ▇▇▇▇▇, and (c) at least five Business
Days prior to the making of any such distribution, the Borrower shall (i) notify
each Lender of the amount and date of the proposed distribution and the
aggregate amount of all distributions previously made pursuant to this proviso
in respect of such calendar quarter, and provide a statement from the chief
financial officer of the Borrower setting forth in reasonable detail a
calculation of the amount of such distributions under such Section 4.4 of such
Operating Agreement.
10.9 Limitation on Capital Expenditures. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any expenditure
in respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations), except for
expenditures in the ordinary course of business not exceeding, in the aggregate
for the Borrower and its Subsidiaries (a) $150,000 during the period beginning
on the Closing Date and ending December 31, 1997; (b) $1,000,000 during fiscal
year of the Borrower ending on the Friday closest to December 31, 1998; and (c)
$600,000 during each fiscal year of the Borrower thereafter.
10.10 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) the ▇▇▇▇▇'▇ Acquisition;
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(d) loans pursuant to Section 5(b) of the Agreement, dated as of
October 7, 1997, between the Borrower, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ Trust dated
February 14, 1989, ▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇▇▇ Trust dated March 9, 1989, as
amended prior to the date hereof, in an aggregate amount not to exceed
$120,000; and
(e) investments by the Borrower in Subsidiary Guarantors and
investments by such Subsidiary Guarantors in the Borrower and in other
Subsidiary Guarantors.
10.11 Limitation on Optional Payments and Modifications of Certain
Agreements. (a) Make any optional payment or prepayment on or redemption or
purchase of any Indebtedness (other than the Loans), (b) amend, modify or
change, or consent or agree to any amendment, modification or change to any of
the terms of any such Indebtedness (other than any such amendment, modification
or change which would extend the maturity or reduce the amount of any payment of
principal thereof or which would reduce the rate or extend the date for payment
of interest thereon), or (c) amend, modify or change the terms of, or consent or
otherwise agree to any amendment, modification or change to the terms of, or
waive or otherwise relinquish any rights or causes of action under or arising
out of, any ▇▇▇▇▇'▇ Acquisition Document, any Employment Agreement, any
Incentive Plan, any Landlord's Agreement or any Warehouse Bailment Agreement.
10.12 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
10.13 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
10.14 Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Borrower to end on a day other than the Friday closest to December 31.
10.15 Limitation on Negative Pledge Clauses. Enter into with any
Person any agreement, other than (a) this Agreement, (b) the Permitted Junior
Takeout Securities and (c) any industrial revenue bonds, purchase money
mortgages or Financing Leases permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the assets financed
thereby), which prohibits or limits the ability of the Borrower or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired.
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10.16 Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement.
10.17 Governing Documents. Amend its certificate of formation,
operating agreement, (except to increase the number of authorized units of
membership interests), partnership agreement or other Governing Documents,
without the prior written consent of the Required Lenders, which shall not be
unreasonably withheld or delayed.
10.18 Limitation on Subsidiary Formation. Form any Subsidiaries
unless, immediately upon the formation of such Subsidiary, all requirements of
Section 9.11 shall have been satisfied.
10.19 Limitation on Securities Issuances. (a) Permit any Subsidiary to
issue any shares or interests of Capital Stock, except such shares or interests
as constitute either (i) "certificated securities" (as defined in (S)8-102 of
the Uniform Commercial Code as in effect in the State of New York on the date
hereof (the "New York UCC")) or (ii) which constitute "general intangibles" as
defined in (S)9-106 of the Uniform Commercial Code as in effect in the
jurisdiction of such Subsidiary's organization (the "State of Formation UCC")
and, if such jurisdiction has adopted Revised Article 8 of the Uniform
Commercial Code (1994 Version) promulgated by The American Law institute and the
National Conference of Commissioners on Uniform State Laws and do not constitute
"securities" pursuant to (S)8-103(c) of the State of Formation UCC and in either
such case are pledged to the Agent pursuant to the Borrower Pledge Agreement or
(b) issue, or permit any Subsidiary to issue, any shares of preferred stock or
other preferred equity interests.
SECTION 11. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation or any interest on any Loan, or any other amount
payable hereunder or under the other Loan Documents or the Fee Letter,
beyond the period of grace, not to exceed three business days from the date
due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
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(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 10, Section
5 of the Borrower Pledge Agreement, and Section 5 of any Security
Agreement; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied or waived for a period of 30 days; or
(e) The Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation, beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created, if the aggregate amount
of the Indebtedness and/or Guarantee Obligations in respect of which such
default or defaults shall have occurred is at least $500,000; or (ii)
default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of
which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of
such Guarantee Obligation (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable; or
(f) (i) The Borrower or any of itS Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any of its Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any of its Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Borrower or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 30 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the
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acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or
any of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance) of $250,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or the Borrower or any other Loan Party which
is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby other
than a partial or full release in accordance with the terms thereof; or
(j) The Subsidiaries Guarantee shall cease, for any reason, to be in
full force and effect or any Guarantor shall so assert; or
(k) (i) ▇▇▇▇ and ▇▇▇▇▇ and/or members of their respective Family
Groups shall at any time cease to own, collectively, at least 45% of the
issued and outstanding Capital stock of the Borrower, or (ii) any Person or
"group" (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended) (other than members of the Borrower owing
more than 20% of the membership interests of the Borrower as of the date
hereof) (A) shall have acquired beneficial ownership of 20% or more of any
outstanding class of Capital Stock of the Borrower or (B) shall obtain the
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power (whether or not exercised) to direct or cause the direction of the
management and policies of the Borrower, whether by contract or otherwise,
or (ii) the Managing Members of the Borrower shall not consist of ▇▇▇▇;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Borrower. automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Agent may, or upon the request of the Required
Lenders, the Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Agent may, or upon the
request of the Required Lenders, the Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement (including, without limitation, all amounts
of L/C Obligations, whether or not the beneficiaries of the then outstanding
Letters of Credit shall have presented the documents required thereunder) to be
due and payable forthwith, whereupon the same shall immediately become due and
payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants to the Agent, for the benefit of the Issuing Bank and the L/C
Participants, a security interest in such cash collateral to secure all
obligations of the Borrower under this Agreement and the other Loan Documents.
Amounts held in such cash collateral account shall be applied by the Agent to
the payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the Notes. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
Notes shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower. The Borrower shall execute and
deliver to the Agent, for the account of the Issuing Bank and the L/C
Participants, such further documents and instruments as the Agent may request to
evidence the creation and perfection of the within security interest in such
cash collateral account.
Except as expressly provided above in this Section and elsewhere in
this Agreement and the other Loan Documents, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
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SECTION 12. THE AGENT
12.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision tO the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
12.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
12.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower or any other Loan Party),
independent accountants and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent. The Agent
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shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
12.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower or any other Loan Party, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the other Loan Parties and
made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrower. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder or under the other Loan Documents, the Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Borrower or any
other Loan Party which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the
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obligation of the Borrower to do so), ratably according to their respective
Credit Exposure Percentages in effect on the date on which indemnification is
sought, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Loans) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's gross negligence or willful misconduct. The agreements in this
Section shall survive the payment of the Loans and all other amounts payable
hereunder.
12.8 Agent in Its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower and the other Loan Parties as though the Agent were
not the Agent hereunder and under the other Loan Documents. With respect to the
Loans made by it and with respect to any Letter of Credit issued or participated
in by it, the Agent shall have the same rights and powers under this Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Agent, and the terms "Lender" and "Lenders" shall include the
Agent in its individual capacity.
12.9 Successor Agent. The Agent may resign as Agent upon 10 days'
notice to the Lenders and the Borrower. If the Agent shall resign as Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower, whereupon such successor
agent shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Loans. After
any retiring Agent's resignation as Agent, the provisions of this Section 10
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
otherwise modified except in accordance with the provisions of this Section
13.1. The Required Lenders may, or, with the written consent of the Required
Lenders, the Agent may, from time to time, (a) enter into with the Borrower
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
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other Loan Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders or the Agent, as the case may be, may specify in such
instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any Loan
or of any installment thereof, or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof or
increase the amount or extend the expiration date of any Lender's Commitments,
in each case without the consent of each Lender affected thereby, or (ii) amend,
modify or waive any provision of this Section 13.1 or reduce the percentage
specified in the definition of Required Lenders or Majority Lenders, or consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents or release all or
substantially all of the Collateral or release all or substantially all of the
Guarantors from their obligations under the Subsidiaries Guarantee, in each case
without the written consent of each of the Lenders directly affected thereby, or
(iii) amend, modify or waive any provision of Section 12 without the written
consent of the then Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Agent and all future holders of the Loans.
In the case of any waiver, the Borrower, the Lenders and the Agent shall be
restored to their former positions and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereon.
13.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three Business Days after
being deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been electronically confirmed,
addressed as follows in the case of the Borrower and the Agent, and as set forth
in Schedule 1.0 in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto:
The Borrower: Diversified Food Group, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Agent: Canadian Imperial Bank of Commerce
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to Section 2.3, 3.3, 4.3, 4.5, 6.2, 6.4 or 6.8(b) shall not be
effective until received.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
13.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, fees and disbursements of counsel to
the Agent, (b) to pay or reimburse each Lender and the Agent for all its costs
and expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Agent, (c) to pay, indemnify, and hold each Lender and the
Agent harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Agent harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents, the ▇▇▇▇▇'▇
Acquisition Documents, the ▇▇▇▇▇'▇ Acquisition, or the use of the proceeds of
the Loans in connection with the ▇▇▇▇▇'▇ Acquisition and the other transactions
contemplated by the ▇▇▇▇▇'▇ Acquisition Documents and this Agreement and any
such other documents,
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including, without limitation, any of the foregoing relating to the violation
of, noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower, any of its Subsidiaries, or any of the
Properties (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder to
the Agent or any Lender with respect to indemnified liabilities arising from (i)
the gross negligence or willful misconduct of the Agent or any such Lender or
(ii) legal proceedings commenced against the Agent or any such Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor solely in its capacity as such.
The agreements in this Section shall survive repayment of the Loans and all
other amounts payable hereunder.
13.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Agent and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial lending
or investment business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("Participants") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 13.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 6.10, 6.11, and 6.12 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 6.11, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
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(c) Any Lender may, in the ordinary course of its commercial lending
or investment business and in accordance with applicable law, at any time and
from time to time assign to any other Lender or any affiliate or Related Fund
thereof or, with the consent of the Borrower and the Agent (which shall not be
unreasonably withheld), to an additional bank or financial institution (an
"Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit K, with appropriate completions (an
"Assignment and Acceptance"), executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender or an affiliate
thereof, by the Borrower and the Agent) and delivered to the Agent for its
acceptance and recording in the Register, provided that, in the case of any such
assignment to an additional bank or financial institution, if such assignment is
of less than all of the rights and obligations of the assigning Lender, the sum
of the aggregate principal amount of the Loans, the aggregate amount of the L/C
Obligations and the aggregate amount of the unused Revolving Credit Commitments
being assigned and, the sum of the aggregate principal amount of the Loans, the
aggregate amount of the L/C Obligations and the aggregate amount of the unused
Revolving Credit Commitments remaining with the assigning Lender are each not
less than $5,000,000 (or such lesser amount as may be agreed to by the Agent and
the Borrower). Upon such execution, delivery, acceptance and recording, from and
after the effective date determined pursuant to such Assignment and Acceptance,
(x) the Assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with Commitments as set forth therein, and (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto). Notwithstanding any provision of this
paragraph (c) and paragraph (e) of this Section, unless requested by the
Assignee and/or the assigning Lender, new Notes shall not be required to be
executed and delivered by the Borrower, for any assignment which occurs at any
time when any Event of Default shall have occurred and be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent referred to in Section 13.2 a copy of each Assignment and
Acceptance delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Lenders and the Commitments of, and principal
amounts of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may (and, in the case of any Loan or other
obligation hereunder not evidenced by a Note, shall) treat each Person whose
name is recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement and the other
Loan Documents, notwithstanding any notice to the contrary. Any assignment of
any Loan or other obligation hereunder not evidenced by a Note shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
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(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Agent) together
with payment to the Agent of a registration and processing fee of $3,500, the
Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Assignee (each, a "Transferee") and any prospective Transferee subject to the
provisions of Section 13.15, any and all financial information in such Lender's
possession concerning the Borrower and its Affiliates which has been delivered
to such Lender by or on behalf of the Borrower pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and its
Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve
Bank, in accordance with applicable law.
13.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
shall at any time receive any payment of all or part of its Loans or the
Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 11(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans or
the Reimbursement Obligations owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan or the Reimbursement
Obligations owing to it, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Borrower agrees that each Lender so purchasing a portion of
another Lender's Loan may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by
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acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of the Borrower. Each Lender
agrees promptly to notify the Borrower and the Agent after any such set-off and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
13.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission of signature pages hereto), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Agent.
13.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
tO the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
13.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THe LAW OF THE STATE OF NEW YORK.
13.12 Submission To Jurisdiction; Waivers. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York. the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
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(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower at its address set forth in Section 13.2 or at such other address
of which the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
(c) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, or punitive damages.
13.13 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between
the Borrower and the other Loan Parties, on one hand, and Agent and
Lenders, on the other hand, in connection herewith or therewith is solely
that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrower and the Lenders.
13.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
13.15 Confidentiality. Each Lender agrees to keep confidential all
non-public written information provided to it by any Loan Party pursuant to this
Agreement or any other Loan Document that is designated by such Loan Party in
writing as confidential; provided that nothing herein shall prevent any Lender
from disclosing any such information (i) to the Agent or any other Lender, (ii)
to any Transferee which agrees in writing prior to such disclosure to comply
with the provisions of this Section 13.15, (iii) to its employees, directors,
agents, attorneys, accountants and other professional advisors, (iv) upon the
request or demand of any examiner or other Governmental Authority having
jurisdiction over such Lender, (v) in response to any order of any court or
other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other
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than in breach of this Agreement, or (vii) in connection with the exercise of
any remedy hereunder.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
DIVERSIFIED FOOD GROUP, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent and as a Lender
By:
-------------------------------------
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
DIVERSIFIED FOOD GROUP, L.L.C.
By:
-------------------------------------
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Agent and as a Lender
By: /s/
-------------------------------------
Title: