EXHIBIT 4.7(A)
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SMITHFIELD FOODS, INC.
--------------------------
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
--------------------------
Dated as of October 31, 1999
$9,852,942 8.41% Series B Senior Secured Notes Due August 1, 2006
$40,000,000 8.34% Series C Senior Secured Notes Due August 1, 2003
$9,000,000 9.80% Series D Senior Secured Notes Due August 1, 2003
$9,250,000 10.75% Series E Senior Secured Notes Due August 1, 2005
$100,000,000 8.52% Series F Senior Secured Notes Due August 1, 2006
$14,000,000 9.85% Series G Senior Secured Notes Due November 1, 2006
$14,779,412 8.41% Series H Senior Secured Notes Due August 1, 2004
Guarantied By:
▇▇▇▇▇▇▇▇ of Smithfield, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
The Smithfield Packing Company, Incorporated
SFFC, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇'▇ Foods, Inc.
▇▇▇▇▇▇▇'▇ realty, Inc.
▇▇▇▇▇▇▇'▇ Realty Partnership
North Side Foods Corp.
▇▇▇▇▇ Meat Group, Inc.
Circle Four Corporation
▇▇▇▇▇'▇ of Carolina, Inc.
▇▇▇▇▇'▇ Farms, LLC
▇▇▇▇▇▇▇'▇ Foods of Virginia, Inc.
Smithfield-▇▇▇▇▇▇▇'▇ Farms
Central Plains Farms, Inc.
Smithfield Packing Real Estate, LLC
▇▇▇▇▇▇ Farms, Inc.
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TABLE OF CONTENTS
PAGE
1. BACKGROUND; AMENDMENT AND RESTATEMENT.................................. 1
1.1 Background........................................................... 1
1.2 Agreement and Consent of Noteholders to Amendment and Restatement;
Waiver; Closing................................................... 2
1.3 Failure of Conditions................................................ 3
1.4 Expenses............................................................. 3
1.5 Collateral; Release.................................................. 4
2. WARRANTIES AND REPRESENTATIONS......................................... 5
2.1 Material Adverse Change.............................................. 5
2.2 Financial Statements; Debt........................................... 5
2.3 Subsidiaries and Affiliates.......................................... 6
2.4 Pending Litigation................................................... 6
2.5 Title to Properties; UCC Matters..................................... 6
2.6 Patents, Trademarks, Licenses, etc................................... 7
2.7 Taxes................................................................ 7
2.8 Full Disclosure...................................................... 8
2.9 Corporate Organization and Authority................................. 8
2.10 Restrictions on Company and Subsidiaries............................. 9
2.11 Compliance with Law.................................................. 10
2.12 Pension Plans........................................................ 10
2.13 Certain Laws......................................................... 12
2.14 Environmental Compliance............................................. 12
2.15 Transaction is Legal and Authorized; Obligations are Enforceable..... 13
2.16 Governmental Consent................................................. 14
2.17 No Defaults.......................................................... 14
2.18 Company and the Guarantors........................................... 14
2.19 Solvency............................................................. 15
2.20 True and Correct Copies.............................................. 15
3. CLOSING CONDITIONS..................................................... 15
3.1 Opinions of Counsel.................................................. 15
3.2 Warranties and Representations True.................................. 15
3.3 No Defaults.......................................................... 16
3.4 Officers' Certificates............................................... 16
3.5 Other Noteholders.................................................... 16
3.6 Expenses............................................................. 16
3.7 Joinder Agreement.................................................... 16
3.8 Consents Under the Revolving Credit Agreements....................... 16
3.9 Transaction Structuring Fee.......................................... 17
3.10 Bladen Real Estate................................................... 17
3.11 Compliance with this Agreement....................................... 17
3.12 Proceedings Satisfactory............................................. 17
4. PAYMENTS............................................................... 18
4.1 Interest Payments.................................................... 18
4.2 Scheduled Required Prepayments....................................... 19
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4.3 Offer to Prepay upon Change in Control............................... 21
4.4 Optional Prepayments................................................. 23
4.5 Notice of Optional Prepayment........................................ 23
4.6 Pro Rata Payments.................................................... 24
4.7 Notation of Notes on Prepayment...................................... 24
4.8 No Other Optional Prepayments........................................ 25
5. REGISTRATION; SUBSTITUTION OF NOTES.................................... 25
5.1 Registration of Notes................................................ 25
5.2 Exchange of Notes.................................................... 25
5.3 Replacement of Notes................................................. 26
5.4 Issuance Taxes....................................................... 26
6. GENERAL COVENANTS...................................................... 26
6.1 Payment of Taxes and Claims.......................................... 26
6.2 Maintenance of Properties and Corporate Existence.................... 27
6.3 Payment of Notes and Maintenance of Office........................... 28
6.4 Current Ratio........................................................ 28
6.5 Consolidated Working Capital......................................... 28
6.6 Funded Debt.......................................................... 29
6.7 Maintenance of Funded Debt........................................... 29
6.8 Fixed Charges Coverage............................................... 29
6.9 Restrictions on Dividends, etc....................................... 30
6.10 Consolidated Tangible Net Worth...................................... 30
6.11 Intentionally Left Blank............................................. 30
6.12 Restricted Payments and Restricted Investments....................... 30
6.13 Liens................................................................ 32
6.14 Merger; Acquisition.................................................. 35
6.15 Transfers of Property; Subsidiary Stock.............................. 36
6.16 Trademark Subsidiaries............................................... 40
6.17 Environmental Compliance............................................. 41
6.18 Line of Business..................................................... 41
6.19 Transactions with Affiliates......................................... 41
6.20 Tax Consolidation.................................................... 42
6.21 ERISA................................................................ 42
6.22 Guaranties........................................................... 44
6.23 Private Offering..................................................... 44
6.24 Covenants Regarding the Bladen County Cogeneration Property.......... 45
7. INFORMATION AS TO COMPANY AND THE GUARANTORS........................... 45
7.1 Financial and Business Information................................... 45
7.2 Officer's Certificates............................................... 49
7.3 Accountants' Report.................................................. 49
7.4 Inspection........................................................... 50
8. EVENTS OF DEFAULT...................................................... 50
8.1 Nature of Events..................................................... 50
8.2 Default Remedies..................................................... 52
8.3 Annulment of Acceleration of Notes................................... 54
9. INTERPRETATION OF THIS AGREEMENT....................................... 55
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9.1 Terms Defined........................................................ 55
9.2 GAAP................................................................. 78
9.3 Directly or Indirectly............................................... 78
9.4 Section Headings, Table of Contents and Construction................. 79
9.5 Governing Law........................................................ 79
10. MISCELLANEOUS......................................................... 79
10.1 Communications...................................................... 79
10.2 Reproduction of Documents........................................... 80
10.3 Survival............................................................ 81
10.4 Successors and Assigns.............................................. 81
10.5 Amendment and Waiver................................................ 81
10.6 Payments, When Received............................................. 83
10.7 Entire Agreement.................................................... 83
10.8 Duplicate Originals, Execution in Counterpart....................... 83
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ANNEXES AND EXHIBITS
Annex 1 - Information as to Noteholders
Annex 2 - Information as to Company and Subsidiaries
Exhibit A1 - Form of 8.41% Series B Senior Secured Note Due August 1, 2006
Exhibit A2 - Form of 8.34% Series C Senior Secured Note Due August 1, 2003
Exhibit A3 - Form of 9.80% Series D Senior Secured Note Due August 1, 2003
Exhibit A4 - Form of 10.75% Series E Senior Secured Note Due August 1, 2005
Exhibit A5 - Form of 8.52% Series F Senior Secured Note Due August 1, 2006
Exhibit A6 - Form of 9.85% Series G Senior Secured Note Due November 1, 2006
Exhibit A7 - Form of 8.41% Series H Senior Secured Note Due August 1, 2004
Exhibit B - Form of Company Counsel's Closing Opinion
Exhibit C - Form of Company Officers' Certificate
Exhibit D1 - Form of Company Secretary's Certificate
Exhibit D2 - Form of Guarantor Secretary's Certificates
Exhibit E - Assumption Agreement
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SMITHFIELD FOODS, INC.
---------------
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
---------------
$9,852,942 8.41% SERIES B SENIOR SECURED NOTES DUE AUGUST 1, 2006
$40,000,000 8.34% SERIES C SENIOR SECURED NOTES DUE AUGUST 1, 2003
$9,000,000 9.80% SERIES D SENIOR SECURED NOTES DUE AUGUST 1, 2003
$9,250,000 10.75% SERIES E SENIOR SECURED NOTES DUE AUGUST 1, 2005
$100,000,000 8.52% SERIES F SENIOR SECURED NOTES DUE AUGUST 1, 2006
$14,000,000 9.85% SERIES G SENIOR SECURED NOTES DUE NOVEMBER 1, 2006
$14,779,412 8.41% SERIES H SENIOR SECURED NOTES DUE AUGUST 1, 2004
Dated as of October 31, 1999
[SEPARATELY ADDRESSED TO EACH OF THE
NOTEHOLDERS LISTED ON ANNEX 1]
Ladies and Gentlemen:
SMITHFIELD FOODS, INC., a Virginia corporation (together with its
successors and assigns, the "COMPANY"), hereby agrees with you as follows:
1. BACKGROUND; AMENDMENT AND RESTATEMENT
1.1 BACKGROUND.
Pursuant to those certain Note Purchase Agreements dated as of July 15,
1996 (collectively, as amended up to, but excluding, the Closing Date, the
"EXISTING NOTE PURCHASE AGREEMENT"), entered into by the Company with each of
the institutions named on Annex 1 hereto (the "NOTEHOLDERS"), the Company has
issued:
(A) $2,825,000 in aggregate principal amount of its six and twenty-
four one-hundredths percent (6.24%) Series A Senior Secured Notes due
November 1, 1998 (the "SERIES A NOTES");
(B) $9,852,942 in aggregate principal amount of its eight and forty-
one one-hundredths percent (8.41%) Series B Senior Secured Notes due August
1, 2006, substantially in the form of Exhibit A1 hereto (the "SERIES B
NOTES");
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(C) $40,000,000 in aggregate principal amount of its eight and thirty-
four one-hundredths percent (8.34%) Series C Senior Secured Notes due
August 1, 2003, substantially in the form of Exhibit A2 hereto (the "SERIES
C NOTES");
(D) $9,000,000 in aggregate principal amount of its nine and eighty
one-hundredths percent (9.80%) Series D Senior Secured Notes due August 1,
2003, substantially in the form of Exhibit A3 hereto (the "SERIES D
NOTES");
(E) $9,250,000 in aggregate principal amount of its ten and seventy-
five one-hundredths percent (10.75%) Series E Senior Secured Notes due
August 1, 2005, substantially in the form of Exhibit A4 hereto (the "SERIES
E NOTES");
(F) $100,000,000 in aggregate principal amount of its eight and fifty-
two one-hundredths percent (8.52%) Series F Senior Secured Notes due August
1, 2006, substantially in the form of Exhibit A5 hereto ("SERIES F NOTES");
(G) $14,000,000 in aggregate principal amount of its nine and eighty-
five one-hundredths percent (9.85%) Series G Senior Secured Notes due
November 1, 2006, substantially in the form of Exhibit A6 hereto (the
"SERIES G NOTES"); and
(H) $14,779,412 in aggregate principal amount of its eight and forty-
one one-hundredths percent (8.41%) Series H Senior Secured Notes due August
1, 2004, substantially in the form of Exhibit A7 hereto (the "SERIES H
NOTES").
The Series A Notes have matured and been paid in full. The Series B Notes,
the Series C Notes, the Series D Notes, the Series E Notes, the Series F Notes,
the Series G Notes and the Series H Notes, including Notes of each such series
delivered from time to time pursuant to this Agreement and the other Note
Purchase Agreements, are herein referred to, individually, as a "NOTE," and
collectively, as the "NOTES."
1.2 AGREEMENT AND CONSENT OF NOTEHOLDERS TO AMENDMENT AND RESTATEMENT;
WAIVER; CLOSING.
(A) AGREEMENT AND CONSENT; WAIVER. Subject to the satisfaction of the
conditions set forth in Section 3, you agree, by execution of this
Agreement, that (i) the Existing Note Purchase Agreement is hereby amended
and restated in the form of this Agreement (ii) the Pre-Closing Events of
Default are deemed not to have occurred and are permanently waived and you
shall have no right to act in respect thereof and (iii) to the extent the
provisions of the Financing Documents
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and this Agreement prohibit the transaction contemplated by the Assumption
Agreement (including section 1.18 of the Packing-Bladen Deed of Trust,
section 3.2 of the Packing Security Agreement and Section 6.15 of this
Agreement), the obligations set forth therein are hereby waived solely for
the purpose of permitting the transaction contemplated by the Assumption
Agreement.
(B) CLOSING DATE. The closing (the "CLOSING") of the transactions
contemplated by this Agreement will be held contemporaneously with the
execution and delivery of this Agreement (the "CLOSING DATE") at the office
of [▇▇▇▇▇▇▇ ▇▇▇▇ LLP, One State Street, Hartford, Connecticut 06103].
(C) OTHER NOTEHOLDERS. Contemporaneously with the execution and
delivery hereof, the Company is entering into a separate Amended and
Restated Note Purchase Agreement identical (except for the name, address
and signature of the Noteholder) hereto (this Agreement and such other
separate Amended and Restated Note Purchase Agreements, collectively, as
may be amended from time to time, the "NOTE PURCHASE AGREEMENTS") with each
other Noteholder.
1.3 FAILURE OF CONDITIONS.
If on the Closing Date the conditions specified in Section 3 to be
fulfilled at the Closing have not been fulfilled, you may thereupon elect to be
relieved of all further obligations under this Agreement, without thereby
waiving any rights you may have by reason of such failure or such
nonfulfillment, the Existing Note Purchase Agreement shall remain in full force
and effect and the waivers set forth in Section 1.2(a) shall be of no force or
effect.
1.4 EXPENSES.
(A) GENERALLY. Whether or not the transactions contemplated by this
Agreement are consummated, the Company will promptly (and in any event
within thirty (30) days of receiving any statement or invoice therefor) pay
all fees, expenses and costs relating hereto, including but not limited to:
(I) the cost of reproducing the Financing Documents;
(II) the fees and disbursements of your special counsel;
(III) the fees and disbursements of the Security Trustee and
its counsel;
(IV) the fees, expenses and costs incurred in complying with
each of the conditions to closing set forth in Section 3;
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(V) all other expenses incurred in connection with the
transactions contemplated by this Agreement; and
(VI) the expenses relating to the consideration, negotiation,
preparation or execution of any amendments, waivers or consents
pursuant to the provisions hereof and of the other Financing
Documents, whether or not any such amendments, waivers or consents are
executed.
(B) COUNSEL. Without limiting the generality of the foregoing, it is
agreed and understood that the Company will pay, at the Closing, the
statement for fees and disbursements of your special counsel presented at
the Closing and the Company will also pay upon receipt of any statement
thereof, each additional statement for fees and disbursements of your
special counsel rendered after the Closing in connection with the issuance
of the Notes or the matters referred to in Section 1.4(a)(vi).
(C) SURVIVAL. The obligations of the Company under this Section 1.4
shall survive the payment or prepayment of the Notes and the termination
hereof.
1.5 COLLATERAL; RELEASE.
The Notes are secured pursuant to and entitled to all of the benefits of
the Security Documents. In the event that at any time after the Closing Date
the Company shall have obtained an Acceptable Rating in respect of its long-
term, senior unsecured debt, the Company may give written notice to each holder
of Notes (which notice shall include copies of the letters to the Company from
▇▇▇▇▇'▇ and Standard & Poor's evidencing that such Acceptable Rating has been in
full force and effect for the one hundred eighty (180) day period immediately
preceding the date of such notice) requesting that the holders of the Notes
direct the Security Trustee to release the Collateral from the security
interests created by the Security Documents on a date specified in such notice
(the "COLLATERAL RELEASE DATE") that is not less than thirty (30) days and not
more than sixty (60) days after the date of such notice. The holders of the
Notes agree to direct the Security Trustee to so release the Collateral,
provided that the Collateral Release Conditions have been satisfied and the
holders of the Notes and the Security Trustee shall have received an officer's
certificate, executed by a Senior Officer and dated the Collateral Release Date,
specifying that at the time of such release and after giving effect thereto,
each of the Collateral Release Conditions are satisfied. Notwithstanding such
release of Collateral, the provisions of Section 6.13 hereof shall continue to
apply on and after the Collateral Release Date.
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2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement, the Company warrants and
represents, as of the Closing Date, as follows:
2.1 MATERIAL ADVERSE CHANGE.
Since May 2, 1999, there has been no change in the business, prospects,
profits, Properties or condition (financial or otherwise) of the Company, except
changes that, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
2.2 FINANCIAL STATEMENTS; DEBT.
(A) FINANCIAL STATEMENTS. The quarterly and annual financial
statements most recently delivered to you pursuant to Section 7.1 of the
Existing Note Purchase Agreement have been prepared in accordance with GAAP
consistently applied and present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
subsidiaries as of such dates and the results of their operations and cash
flows for the periods specified therein. Except as set forth on Part 2.2(a)
of Annex 2, all Subsidiaries were subsidiaries during all of the periods
covered by such financial statements.
(B) DEBT. Part 2.2(b) of Annex 2 lists all Debt of the Company and the
Subsidiaries as of the Closing Date (prior to giving effect to the
transactions contemplated to occur on the Closing Date) which Debt is of an
outstanding amount, in each case, in excess of fifty thousand dollars
($50,000), and provides the following information with respect to each item
of such Debt:
(I) the obligor in respect thereof,
(II) the holder thereof,
(III) the outstanding amount thereof and the interest rate or rates
applicable thereto,
(IV) the portion thereof classified as current in accordance
with GAAP,
(V) the final maturity thereof, and
(VI) the collateral securing such Debt, if any.
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The aggregate amount of Debt of the Company and the Subsidiaries as of the
Closing Date that is not set forth on Part 2.2(b) of Annex 2 does not
exceed two million five hundred thousand dollars ($2,500,000).
2.3 SUBSIDIARIES AND AFFILIATES.
Part 2.3 of Annex 2 states:
(A) the name of each of the Subsidiaries, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by the Company
and each other Subsidiary; and
(B) the name of each of the Affiliates and the nature of the
affiliation.
Each of the Company and the Subsidiaries has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and nonassessable.
2.4 PENDING LITIGATION.
(A) PENDING LITIGATION. There are no proceedings, actions or
investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary in any court or before
any Governmental Authority or arbitration board or tribunal that, in the
aggregate for all such proceedings, actions and investigations, could
reasonably be expected to have a Material Adverse Effect.
(B) NO DEFAULTS. Neither the Company nor any Subsidiary is in default
with respect to any judgment, order, writ, injunction or decree of any
court, Governmental Authority, arbitration board or tribunal that, in the
aggregate for all such defaults, could reasonably be expected to have a
Material Adverse Effect.
2.5 TITLE TO PROPERTIES; UCC MATTERS.
(A) TITLE TO PROPERTIES. The Company and the Subsidiaries have valid
title to all of the Property reflected in the most recent audited
consolidated balance sheet referred to in Section 2.2(a) (except as sold or
otherwise disposed of in the ordinary course of business), except for such
failures to have valid title as are immaterial in the context of such
balance sheet and that, in the aggregate for all such failures, could not
reasonably be expected to have a Material Adverse Effect.
(B) LEASES. All leases necessary for the conduct of the business of
the Company and the Subsidiaries are valid and subsisting and are in
6
full force and effect, except for such failures to be valid and subsisting
that, in the aggregate for all such failures, could not reasonably be
expected to have a Material Adverse Effect.
(C) LIENS. All Property of the Company and the Subsidiaries is free
from Liens not permitted by Section 6.13.
(D) UCC MATTERS. Part 2.5(d) of Annex 2 sets forth with respect to the
Company and each Guarantor:
(I) each name under which such Person conducts or has conducted
all or a portion of its business operations, and
(II) the location of the principal executive office of each such
Person.
Neither the Company nor any Guarantor has changed its name or the name
under which it conducts its business operations within the immediately
preceding period of five (5) years.
2.6 PATENTS, TRADEMARKS, LICENSES, ETC.
Except as set forth on Part 2.6 of Annex 2, each of the Company and the
Subsidiaries owns, possesses or has the right to use all of the patents,
trademarks, service marks, trade names, copyrights and licenses, and rights with
respect thereto, necessary for the present and currently planned future conduct
of its business, without any known conflict with the rights of others. The
Trademark Subsidiaries own all such patents, trademarks, service marks, trade
names, copyrights and licenses. Part 2.6 of Annex 2 sets forth the identity of
each of the Trademark Subsidiaries on the Closing Date.
2.7 TAXES.
(A) RETURNS FILED; TAXES PAID. All tax returns required to be filed by
each of the Company and the Subsidiaries and any other Person with which
the Company or any Subsidiary files or has filed a consolidated return in
any jurisdiction have in fact been filed on a timely basis, and all taxes,
assessments, fees and other governmental charges upon each of the Company
and the Subsidiaries and any such Person, and upon any of their respective
Properties, income or franchises, that are due and payable have been paid.
All liabilities of the Company and the Subsidiaries with respect to federal
income taxes have been finally determined except with respect to the fiscal
years disclosed on Part 2.7 of Annex 2, which are the only fiscal years not
closed by the completion of an audit or the expiration of the statute of
limitations. There is currently in effect no tax sharing, tax allocation or
similar agreement providing for the manner in which tax payments (whether
in respect of federal or state
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income or other taxes) owing by the members of the affiliated group of
which the Company is the "common parent" (as defined in section 1504 of the
IRC) are allocated between any member of such group and any Person other
than the Company or a Subsidiary.
(B) BOOK PROVISIONS ADEQUATE.
(I) The amount of the liability for taxes reflected in the most
recent balance sheet referred to in Section 2.2(a) is an adequate
provision for taxes as of the date of such balance sheet (including,
without limitation, any payment due pursuant to any tax sharing
agreement) as are or may become payable by any one or more of the
Company, any Subsidiary and the other Persons consolidated with the
Company in such financial statements in respect of all tax periods
ending on or prior to such dates.
(II) Neither the Company nor any Subsidiary knows of any proposed
additional tax assessment against it or any such Person that is not
reflected in full in the most recent balance sheet referred to in
Section 2.2(a).
2.8 FULL DISCLOSURE.
The financial statements referred to in Section 2.2(a) do not, nor does any
Financing Document or any written statement furnished by or on behalf of the
Company or any Subsidiary to you in connection with the negotiation or the
closing of the transactions contemplated by this Agreement, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein not misleading when viewed in the aggregate. There
is no fact that the Company has not disclosed to you in writing that has had or,
so far as the Company can now reasonably foresee, could reasonably be expected
to have a Material Adverse Effect.
2.9 CORPORATE ORGANIZATION AND AUTHORITY.
The Company and each Subsidiary:
(A) is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing (to the extent that such
concept is applicable) under the laws of its jurisdiction of organization;
(B) has all legal and corporate, limited liability company or
partnership, as the case may be, power and authority to own and operate its
Properties and to carry on its business as now conducted and as presently
proposed to be conducted;
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(C) has all necessary licenses, certificates and permits to own and
operate its Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have such
licenses, certificates and permits, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect; and
(D) has duly qualified or has been duly licensed, and is authorized to
do business and is in good standing, as a foreign corporation, limited
liability company or foreign partnership, as the case may be, in each state
in the United States of America and in each other jurisdiction where the
failure to be so qualified or licensed and authorized and in good standing,
in the aggregate for all such failures, could reasonably be expected to
have a Material Adverse Effect.
2.10 RESTRICTIONS ON COMPANY AND SUBSIDIARIES.
(A) Neither the Company nor any Subsidiary:
(I) is a party to any contract or agreement, or subject to any
charter, bylaw, partnership agreement or other restriction that, in
the aggregate for all such contracts, agreements, constitutive
documents and other restrictions (assuming that all such contracts and
agreements are performed in accordance with their respective terms),
could reasonably be expected to have a Material Adverse Effect; or
(II) has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its
Property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 6.13.
(B) Neither the Company nor any Guarantor is a party to any contract
or agreement that restricts the right or ability of the Company or such
Subsidiary to incur Debt, other than this Agreement and the agreements
listed in Part 2.10(b) of Annex 2 (none of which restricts the performance
of the Company hereunder or under the Notes and none of which restricts the
guaranty of the Notes by any of the Guarantors under the Joint and Several
Guaranty).
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2.11 COMPLIANCE WITH LAW.
Neither the Company nor any Subsidiary:
(A) is in violation of any law, ordinance, governmental rule or
regulation to which it is subject (including, without limitation, those
relating to zoning and planning, building, subdivision, inland wetland and
environmental and hazardous waste disposal); or
(B) has failed to obtain any license, certificate, permit, franchise
or other governmental authorization necessary to the ownership of its
Property or to the conduct of its business (including, without limitation,
to the extent required, building, zoning, subdivision, traffic and
environmental approvals and certificates of occupancy);
which violations or failures to obtain, in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
2.12 PENSION PLANS.
(A) DISCLOSURE. Part 2.12(a) of Annex 2 identifies all ERISA
Affiliates and all "employee benefit plans" with respect to which the
Company or any "affiliate" of the Company is a "party-in-interest" or in
respect of which the Notes could constitute an "employer security"
("employee benefit plan" and "party-in-interest" have the meanings
specified in section 3 of ERISA and "affiliate" and "employer security"
have the meanings specified in section 407(d) of ERISA).
(B) PROHIBITED TRANSACTIONS. The execution and delivery of this
Agreement will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax
could be imposed pursuant to section 4975(c)(1)(A) through section 4975(D),
inclusive, of the IRC.
(C) RELATIONSHIP OF VESTED BENEFITS TO PENSION PLAN ASSETS. Except as
set forth on Part 2.12(c) of Annex 2, the present value of all benefits,
determined as of the most recent valuation date for such benefits (as
provided in Section 6.21(c)), vested under each Pension Plan does not
exceed the value of the assets of such Pension Plan allocable to such
vested benefits, determined as of the most recent valuation date (as
provided in Section 6.21(c)).
(D) ERISA REQUIREMENTS. Each of the Company and the ERISA
Affiliates:
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(I) has fulfilled all obligations under the minimum funding
standards of ERISA and the IRC with respect to each Pension Plan that
is not a Multiemployer Plan;
(II) is in compliance in all material respects with all other
applicable provisions of ERISA and the IRC with respect to each
Pension Plan and each Multiemployer Plan; and
(III) has not incurred any liability under Title IV of ERISA to the
PBGC (other than in respect of required insurance premiums, all of
which that are due having been paid), with respect to any Pension
Plan, any Multiemployer Plan or any trust established thereunder.
(E) ACCUMULATED FUNDING DEFICIENCY. Except as set forth in Part
2.12(e) of Annex 2, no accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the IRC), whether or not waived,
exists with respect to any Pension Plan.
(F) REPORTABLE EVENTS. No Pension Plan or trust created thereunder has
been terminated, and there have been no "reportable events" (as such term
is defined in section 4043 of ERISA), with respect to any Pension Plan or
trust created thereunder or with respect to any Multiemployer Plan, which
reportable event or events will or could result in the termination of such
Pension Plan or Multiemployer Plan and give rise to a liability of the
Company or any ERISA Affiliate in respect thereof.
(G) MULTIEMPLOYER PLANS. Other than as set forth on Part 2.12(g) of
Annex 2, neither the Company nor any ERISA Affiliate is an employer
required to contribute to any Multiemployer Plan. Neither the Company nor
any ERISA Affiliate has incurred, nor is expected to incur, any withdrawal
liability (that has not previously been fully satisfied) under ERISA with
respect to any Multiemployer Plan, the effect of which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect. No Multiemployer Plans have been terminated under section 4041A of
ERISA, have been placed in reorganization status under Title IV of ERISA,
or have been determined to be "insolvent" (as such term is defined in
section 4245 of ERISA).
(H) MULTIPLE EMPLOYER PENSION PLANS. Neither the Company nor any ERISA
Affiliate is a "contributing sponsor" (as such term is defined in section
4001 of ERISA) in any Multiple Employer Pension Plan and neither the
Company nor any ERISA Affiliate has incurred (without fully satisfying the
same), or reasonably expects to incur, withdrawal liability in respect of
any Multiple Employer Pension Plan, which
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withdrawal liability could reasonably be expected to have a Material
Adverse Effect.
(I) FOREIGN PENSION PLAN. Except as set forth in Part 2.12(i) of Annex
2, no Foreign Pension Plans presently exist and neither the Company nor any
Subsidiary has any present or future obligations in respect of any Foreign
Pension Plan.
2.13 CERTAIN LAWS.
The execution and delivery of this Agreement by the Company and the Joinder
Agreement by the New Guarantors, and the performance under the Financing
Documents by the Company and the Subsidiaries:
(A) is not subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 1935, as
amended, the Transportation Acts, as amended, or the Federal Power Act, as
amended, and
(B) does not violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.
2.14 ENVIRONMENTAL COMPLIANCE.
(A) COMPLIANCE. Except as set forth in Part 2.14(a) of Annex 2,
neither the Company nor any Subsidiary is in violation of any Environmental
Protection Law in effect in any jurisdiction where it currently is doing
business or owns Property, except for such violations that, in the
aggregate for all such violations, could not reasonably be expected to have
a Material Adverse Effect.
(B) LIABILITY. Except as set forth in Part 2.14(b) of Annex 2, neither
the Company nor any Subsidiary is subject to any liability under any
Environmental Protection Law that, in the aggregate for all such
liabilities, could reasonably be expected to have a Material Adverse
Effect.
(C) NOTICES. Except as set forth in Part 2.14(c) of Annex 2, neither
the Company nor any Subsidiary has received any:
(I) notice from any Governmental Authority by which any of its
currently or previously owned or leased Properties has been identified in
any manner by any Governmental Authority as a hazardous substance disposal
or removal site, "Super Fund" clean-up site, or other clean-up site or
candidate for removal or closure pursuant to any Environmental Protection
Law;
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(II) notice of any Lien arising under or in connection with any
Environmental Protection Law that has attached to any revenues of, or
to, any of its currently or previously owned or leased Properties; or
(III) communication from any Governmental Authority concerning any
action or omission by the Company or such Subsidiary in connection
with its currently or previously owned or leased Properties resulting
in the release of any Hazardous Substance or resulting in any
violation of any Environmental Protection Law;
in each case where the effect of which, in the aggregate for all such
notices and communications, could reasonably be expected to have a Material
Adverse Effect.
2.15 TRANSACTION IS LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.
(A) TRANSACTION IS LEGAL AND AUTHORIZED. Each of the execution and
delivery of this Agreement by the Company and the Joinder Agreement by each
of the Guarantors and compliance by the Company and each of the Guarantors
with all of their respective obligations under the Financing Documents:
(I) is within the corporate powers of the Company and each of the
Guarantors;
(II) is legal and does not conflict with, result in any breach in
any of the provisions of, constitute a default under, or result in the
creation of any Lien upon any Property of the Company or any
Subsidiary under the provisions of, any agreement, charter instrument,
bylaw or other instrument to which it is a party or by which it or any
of its Property may be bound; and
(III) does not give rise to a right or option of any other Person
under any agreement or other instrument, which right or option could
reasonably be expected to have a Material Adverse Effect.
(B) OBLIGATIONS ARE ENFORCEABLE. Each of this Agreement and the
Joinder Agreement has been duly authorized by all necessary action on the
part of each Obligor party thereto and has been executed and delivered by
one or more duly authorized officers of each Obligor party thereto, and
each Financing Document constitutes a legal, valid and binding obligation
of each Obligor party thereto, enforceable in
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accordance with its terms, except that the enforceability of the Financing
Documents may be:
(I) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or other similar laws affecting
the enforceability of creditors' rights generally; and
(II) subject to the availability of equitable remedies.
2.16 GOVERNMENTAL CONSENT.
Neither the nature of the Company or any Subsidiary, or of any of their
respective businesses or Properties, nor any relationship between the Company or
any Subsidiary and any other Person, nor any circumstance in connection with the
execution and delivery of this Agreement or the Joinder Agreement, is such as to
require a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority on the part of the Company or any
Guarantor as a condition to the execution and delivery of this Agreement or the
Joinder Agreement.
2.17 NO DEFAULTS.
(A) THE NOTES. No event has occurred and no condition exists that,
upon the execution and delivery of this Agreement (and giving effect to the
waiver set forth in Section 1.2(a)) or the Joinder Agreement, would
constitute a Default or an Event of Default.
(B) CHARTER INSTRUMENTS, OTHER AGREEMENTS. Neither the Company nor any
Subsidiary is in violation in any respect of any term of any charter
instrument, bylaw, partnership agreement or other constitutive document or
instrument. Neither the Company nor any Subsidiary is in violation in any
respect of any term in any agreement or other instrument to which it is a
party or by which it or any of its Property may be bound except for such
violations that, in the aggregate for all such violations, could not
reasonably be expected to have a Material Adverse Effect.
2.18 COMPANY AND THE GUARANTORS.
The Company and the Guarantors are operated as part of one consolidated
business entity and are directly dependent upon each other for and in connection
with their respective business activities and their respective financial
resources. The Company and each of the Original Guarantors received direct
economic and financial benefits from the Debt incurred under the Note Purchase
Agreements by the Company and the incurrence of such Debt was in the best
interests of the Company and each of the Original Guarantors.
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2.19 SOLVENCY.
The fair value of the business and assets of the Company and each Guarantor
will be in excess of the amount that will be required to pay its liabilities
(including, without limitation, contingent, subordinated, unmatured and
unliquidated liabilities on existing debts, as such liabilities may become
absolute and matured), in each case after giving effect to the transactions
contemplated by this Agreement and the Joinder Agreement. Neither the Company
nor any Guarantor, after giving effect to the transactions contemplated by this
Agreement and the Joinder Agreement, will be engaged in any business or
transaction, or about to engage in any business or transaction, for which such
Person has unreasonably small assets or capital (within the meaning of
applicable law, including, without limitation, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code), and neither the Company nor any Guarantor has any intent to
(A) hinder, delay or defraud any entity to which it is, or will
become, on or after the Closing Date, indebted, or
(B) incur debts that would be beyond its ability to pay as they
mature.
2.20 TRUE AND CORRECT COPIES.
The Company has delivered to you or your special counsel true and correct
copies of (a) each Revolving Credit Agreement (including, without limitation,
all schedules and exhibits thereto and all agreements delivered in connection
therewith) of the Company or any Subsidiary in effect on the Closing Date and
(b) the 1999 Note Purchase Agreement.
3. CLOSING CONDITIONS
The effectiveness of this Agreement, as to the parties hereto, is subject
to the following conditions precedent:
3.1 OPINIONS OF COUNSEL.
You shall have received a closing opinion from McGuire, Woods, Battle &
▇▇▇▇▇▇, counsel for the Company and the Subsidiaries, dated the Closing Date,
and substantially in the forms set forth in Exhibit B, and as to such other
matters as you may reasonably request. The Company hereby requests and directs
its counsel to deliver such closing opinion to you and the other Noteholders.
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3.2 WARRANTIES AND REPRESENTATIONS TRUE.
The warranties and representations contained in Section 2 shall be true on
the Closing Date with the same effect as though made on and as of that date.
3.3 NO DEFAULTS.
Except for the Pre-Closing Events of Default, no "Default" or "Event of
Default" (as such terms are defined in the Existing Note Purchase Agreements)
shall exist in respect of the Notes, this Agreement or the Existing Note
Purchase Agreements.
3.4 OFFICERS' CERTIFICATES.
You shall have received:
(A) a certificate dated the Closing Date and signed by the President,
a Vice-President, the Controller, the Treasurer or an Assistant Treasurer
of the Company, substantially in the form of Exhibit C, certifying that the
conditions specified in Section 3.2, Section 3.3 and Section 3.10 have been
fulfilled and that no Default or Event of Default exists on the Closing
Date;
(B) a certificate dated the Closing Date and signed by the Secretary
or an Assistant Secretary of the Company, substantially in the form of
Exhibit D1, with respect to the matters set forth therein; and
(C) separate certificates dated the Closing Date and signed by the
Secretary or an Assistant Secretary of each the New Guarantors,
substantially in the form of Exhibit D2, with respect to the matters set
forth therein.
3.5 OTHER NOTEHOLDERS.
None of the other Noteholders shall have failed to execute and deliver a
Note Purchase Agreement on the Closing Date.
3.6 EXPENSES.
All fees and disbursements required to be paid on or before the Closing
Date pursuant to Section 1.4 shall have been paid in full.
3.7 JOINDER AGREEMENT.
Each of the New Guarantors shall have executed and delivered to you the
Joinder Agreement, in form and substance satisfactory to you and your special
counsel, pursuant to which the New Guarantors shall become Guarantors under the
Joint and Several Guaranty.
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3.8 CONSENTS UNDER THE REVOLVING CREDIT AGREEMENTS.
The Company shall have delivered to you copies of all consents (in form and
substance satisfactory to you and your special counsel) required under the
Revolving Credit Agreements to permit the Company and the Guarantors to enter
into and perform their respective obligations hereunder and under the Joint and
Several Guaranty.
3.9 TRANSACTION STRUCTURING FEE.
The Company shall have paid to each Noteholder a non-refundable transaction
restructuring fee equal to fifteen hundredths of one percent (0.15%) of the
aggregate principal amount of the Notes held by such Noteholder on the Closing
Date.
3.10 BLADEN REAL ESTATE.
Packing LLC shall have executed and delivered (a) the Assumption Agreement,
and (b) such Uniform Commercial Financing Statements as may be necessary or
desirable to evidence the Liens granted by Packing LLC pursuant to the Packing
Security Agreement and the Packing-Bladen Deed of Trust. Packing LLC shall have
provided the Security Trustee with evidence that the title insurance policy
existing with respect to the Property which is the subject of the Packing-Bladen
Deed of Trust is in full force and effect and insures the interest of the owner
and the mortgagee in the manner contemplated by the title insurance policy
originally issued to the Security Trustee with respect to such Property. All
other insurance policies required by the Packing-Bladen Deed of Trust and this
Agreement shall be in full force and effect.
3.11 COMPLIANCE WITH THIS AGREEMENT.
Each of the Company and the Guarantors shall have performed and complied
with all agreements and conditions contained herein that are required to be
performed or complied with by the Company and the Guarantors on or prior to the
Closing Date, and such performance and compliance shall remain in effect on the
Closing Date.
3.12 PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the transactions contemplated
hereby and all documents and papers relating thereto shall be satisfactory to
you and your special counsel. You and your special counsel shall have received
copies of such documents and papers as you or they may reasonably request in
connection therewith or in connection with your special counsel's closing
opinion, all in form and substance satisfactory to you and your special counsel.
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4. PAYMENTS
4.1 INTEREST PAYMENTS.
Interest shall accrue on the unpaid principal balance of the Notes on the
basis of a 360-day year of twelve 30-day months:
(A) SERIES B NOTES. With respect to the Series B Notes, at the rate of
8.41% per annum and shall be payable to the holders of the Series B Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series B Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal), Make-
Whole Amount, if any, and (to the extent permitted by applicable law) on
any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.41% per annum,
(B) SERIES C NOTES. With respect to the Series C Notes, at the rate of
8.34% per annum and shall be payable to the holders of the Series C Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series C Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal), Make-
Whole Amount, if any, and (to the extent permitted by applicable law) on
any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.34% per annum,
(C) SERIES D NOTES. With respect to the Series D Notes, at the rate of
9.80% per annum and shall be payable to the holders of the Series D Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series D Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal), Make-
Whole Amount, if any, and (to the extent permitted by applicable law) on
any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 11.80% per annum,
(D) SERIES E NOTES. With respect to the Series E Notes, at the rate of
10.75% per annum and shall be payable to the holders of the Series E Notes,
in arrears, quarterly on the first day of February, May,
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August and November in each year, commencing on August 1, 1996, until the
principal amount of the Series E Notes in respect of which such interest
shall have accrued shall become due and payable, and interest shall accrue
on any overdue principal (including any overdue prepayment of principal),
Make-Whole Amount, if any, and (to the extent permitted by applicable law)
on any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 12.75% per annum,
(E) SERIES F NOTES. With respect to the Series F Notes, at the rate of
8.52% per annum and shall be payable to the holders of the Series F Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series F Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal), Make-
Whole Amount, if any, and (to the extent permitted by applicable law) on
any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.52% per annum, and
(F) SERIES G NOTES. With respect to the Series G Notes, at the rate of
9.85% per annum and shall be payable to the holders of the Series G Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on August 1, 1996, until the principal
amount of the Series G Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal), Make-
Whole Amount, if any, and (to the extent permitted by applicable law) on
any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 11.85% per annum, and
(G) SERIES H NOTES. With respect to the Series H Notes, at the rate of
8.41% per annum and shall be payable to the holders of the Series H Notes,
in arrears, quarterly on the first day of February, May, August and
November in each year, commencing on May 1, 2000, until the principal
amount of the Series H Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal), Make-
Whole Amount, if any, and (to the extent permitted by applicable law) on
any overdue installment of interest at a rate equal to the lesser of (i)
the highest rate allowed by applicable law, and (ii) 10.41% per annum.
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4.2 SCHEDULED REQUIRED PREPAYMENTS
(A) SERIES B NOTES. In addition to paying the entire then outstanding
principal amount and the interest due on the Series B Notes on the maturity
date thereof (August 1, 2006), the Company shall prepay, and there shall
become due and payable, seven hundred fifty-eight thousand dollars
($758,000) in aggregate principal amount of the Series B Notes on the first
day of February, May, August and November in each year, commencing on
August 1, 2003 and ending on May 1, 2006, inclusive. Each such prepayment
shall be at one hundred percent (100%) of the amount prepaid, together with
interest accrued thereon to the date of prepayment.
(B) SERIES C NOTES. There shall be no required prepayments in respect
of the Series C Notes. The entire principal amount of the Series C Notes
remaining outstanding on August 1, 2003, together with accrued unpaid
interest thereon, shall be due and payable on such date.
(C) SERIES D NOTES. In addition to paying the entire then outstanding
principal amount and the interest due on the Series D Notes on the maturity
date thereof (August 1, 2003), the Company shall prepay, and there shall
become due and payable, one hundred eighty-seven thousand five hundred
dollars ($187,500) in aggregate principal amount of the Series D Notes on
the first day of February, May, August and November in each year,
commencing on August 1, 1996 and ending on May 1, 2003, inclusive. Each
such prepayment shall be at one hundred percent (100%) of the amount
prepaid, together with interest accrued thereon to the date of prepayment.
(D) SERIES E NOTES. In addition to paying the entire then outstanding
principal amount and the interest due on the Series E Notes on the maturity
date thereof (August 1, 2005), the Company shall prepay, and there shall
become due and payable, two hundred fifty thousand dollars ($250,000) in
aggregate principal amount of the Series E Notes on the first day of
February, May, August and November in each year, commencing on August 1,
1996 and ending on May 1, 2005, inclusive. Each such prepayment shall be at
one hundred percent (100%) of the amount prepaid, together with interest
accrued thereon to the date of prepayment.
(E) SERIES F NOTES. There shall be no required prepayments in respect
of the Series F Notes. The entire principal amount of the Series F Notes
remaining outstanding on August 1, 2006, together with accrued unpaid
interest thereon, shall be due and payable on such date.
(F) SERIES G NOTES. In addition to paying the entire then outstanding
principal amount and the interest due on the Series G Notes on the maturity
date thereof (November 1, 2006), the Company shall
20
prepay, and there shall become due and payable, three hundred thirty-three
thousand three hundred thirty-three and 33/100 dollars ($333,333.33) in
aggregate principal amount of the Series G Notes on the first day of
February, May, August and November in each year, commencing on August 1,
1996 and ending on August 1, 2006, inclusive. Each such prepayment shall be
at one hundred percent (100%) of the amount prepaid, together with interest
accrued thereon to the date of prepayment.
(G) SERIES H NOTES. In addition to paying the entire then outstanding
principal amount and the interest due on the Series H Notes on the maturity
date thereof (August 1, 2004), the Company shall prepay, and there shall
become due and payable, seven million three hundred eighty-nine thousand
seven hundred six dollars ($7,389,706) in aggregate principal amount of the
Series H Notes on August 1, 2002. Such prepayment shall be at one hundred
percent (100%) of the amount prepaid, together with interest accrued
thereon to the date of prepayment.
4.3 OFFER TO PREPAY UPON CHANGE IN CONTROL.
(A) NOTICE AND OFFER. In the event of either
(I) a Change in Control, or
(II) the obtaining of knowledge of a Control Event by any officer
of the Company,
then the Company will, within three (3) Business Days of (x) such Change in
Control or (y) the obtaining of knowledge of such Control Event (including
via the receipt of notice of a Control Event from any holder of Notes), as
the case may be, give written notice of such Change in Control or Control
Event to each holder of Notes and, simultaneously with the sending of such
written notice, give telephonic advice of such Change in Control or Control
Event to an investment officer or other similar representative or agent of
each such holder specified on Annex 1 at the telephone number specified
thereon, or to such other Person at such other telephone number as any
holder of a Note may specify to the Company in writing. In the event of a
Change in Control, such written notice shall contain, and such written
notice shall constitute, an irrevocable offer to prepay all, but not less
than all, of the Notes of each Series held by such holder on a date
specified in such notice (the "CONTROL PREPAYMENT DATE") that is not less
than thirty (30) days and not more than sixty (60) days after the date of
such notice. (If the Control Prepayment Date shall not be specified in
such notice, the
21
Control Prepayment Date shall be the thirtieth (30th) day after the date of such
notice.)
(B) ACCEPTANCE AND PAYMENT. To accept such offered prepayment, a holder of
Notes shall cause a notice of such acceptance (which notice of acceptance may be
in respect of one or more Series of Notes held by such holder, but which notice
need not treat Notes of all Series held by such holder in the same manner) to be
delivered to the Company not later than fourteen (14) days after the date of
receipt by such holder of the written offer of such prepayment. If so accepted,
such offered prepayment shall be due and payable on the Control Prepayment Date.
Such offered prepayment shall be made at one hundred percent (100%) of the
principal amount of such Notes, together with (i) an amount equal to the Make-
Whole Amount, if any, at the time applicable with respect to the principal
amount of the Notes then being prepaid and (ii) interest on the Notes then being
prepaid accrued to the Control Prepayment Date.
(C) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant to this
Section 4.3 will be accompanied by an officer's certificate, executed by a
Senior Officer and dated the date of such offer, specifying:
(I) the Control Prepayment Date;
(II) the principal amount of each Note offered to be prepaid;
(III) the interest to be paid on each such Note, accrued to the
Control Prepayment Date;
(IV) the calculation of an estimated Make-Whole Amount, if any
(assuming the date of prepayment was the date of such notice), due in
connection with such prepayment, accompanied by a copy of the Applicable
H.15 used in determining the Make-Whole Discount Rate in respect thereof;
(V) that the conditions of this Section 4.3 have been
fulfilled; and
(VI) in reasonable detail, the nature and date or proposed
date of the Change in Control.
Contemporaneously with any such prepayment the Company shall deliver to each
holder of Notes a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified prepayment date,
accompanied by a copy of the Applicable H.15 used in determining the Make-Whole
Discount Rate in respect thereof.
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(D) EFFECT OF PREPAYMENTS. Each prepayment of principal of the Notes of any
Series pursuant to this Section 4.3 shall be applied to reduce the principal
amount of the Notes of such Series due on the maturity date of the Notes of such
Series and to reduce each remaining scheduled required prepayment of principal
(if any) applicable to each such Series required by Section 4.2, apportioned on
a ratable basis (based on the principal amount due on each such date) among all
such amounts.
4.4 OPTIONAL PREPAYMENTS.
(A) OPTIONAL PREPAYMENTS. The Company may at any time after the Closing Date
prepay the principal amount of the Notes, in part, in integral multiples of five
million dollars ($5,000,000), or in whole, in each case together with:
(I) an amount equal to the Make-Whole Amount at such time in respect of
the principal amount of the Notes being so prepaid; and
(II) interest on such principal amount then being prepaid accrued to
the prepayment date.
(B) EFFECT OF PREPAYMENTS. Each prepayment of principal of the Notes
pursuant to Section 4.4(a) shall be applied first, to the principal amount of
the Notes of each Series due on the maturity date of the Notes of such Series
and second, to the scheduled required prepayments of principal (if any)
applicable to such Series required by Section 4.2, in the inverse order of the
maturity thereof.
4.5 NOTICE OF OPTIONAL PREPAYMENT.
The Company will give notice of any optional prepayment of the Notes to each
holder of the Notes not less than thirty (30) days or more than sixty (60) days
before the date fixed for prepayment, specifying:
(A) such date;
(B) that such prepayment is being made pursuant to Section 4.4;
(C) the principal amount of such holder's Notes to be prepaid on such
date with respect to each Series of Notes held by such holder;
(D) the interest to be paid on each such Note, accrued to the date
fixed for prepayment; and
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(E) the calculation of an estimated Make-Whole Amount, if any (assuming
the date of prepayment was the date of such notice) due in connection with
such prepayment with respect to each Series of Notes held by such holder,
accompanied by a copy of the Applicable H.15 used in determining the Make-
Whole Discount Rate in respect thereof.
Such notice of prepayment shall also certify all facts that are conditions
precedent to any such prepayment. Notice of prepayment having been so given,
the aggregate principal amount of the Notes specified in such notice, together
with the Make-Whole Amount, if any, and accrued interest thereon shall become
due and payable on the specified prepayment date. Contemporaneously with such
prepayment the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date, accompanied by a copy of the Applicable H.15
used in determining the Make-Whole Discount Rate in respect thereof.
4.6 PRO RATA PAYMENTS.
(A) SCHEDULED REQUIRED PREPAYMENTS. If, at the time of any required
prepayment of the principal of Notes of any Series made pursuant to Section
4.2 there is more than one Note of such Series outstanding, the aggregate
principal amount of such required prepayment shall be allocated among the
Notes of such Series at the time outstanding pro rata in proportion to the
respective unpaid principal amounts of all such outstanding Notes of such
Series.
(B) OPTIONAL PREPAYMENTS. If, at the time of any optional prepayment of
the principal of Notes made pursuant to Section 4.4 there is more than one
Note outstanding, the aggregate principal amount of such optional prepayment
shall be allocated among the Notes at the time outstanding pro rata in
proportion to the respective unpaid principal amounts of all such
outstanding Notes, without regard to the Series of such Notes.
4.7 NOTATION OF NOTES ON PREPAYMENT.
Upon any partial prepayment of a Note, such Note may, at the option of
the holder thereof, be
(A) surrendered to the Company pursuant to Section 5.2 in exchange for
a new Note of the same Series, in a principal amount equal to the principal
amount remaining unpaid on the surrendered Note,
(B) made available to the Company for notation thereon of the portion
of the principal so prepaid, or
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(C) marked by such holder with a notation thereon of the portion of the
principal so prepaid.
In case the entire principal amount of any Note is prepaid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the prepaid principal amount of any Note.
4.8 NO OTHER OPTIONAL PREPAYMENTS.
Except as provided in Section 4.4, the Company may not make any optional
prepayment (whether directly or indirectly by purchase or acquisition) in
respect of the Notes.
5. REGISTRATION; SUBSTITUTION OF NOTES
5.1 REGISTRATION OF NOTES.
The Company will cause to be kept at its office, maintained pursuant to
Section 6.3, a register for the registration and transfer of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in the
register. The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes hereof.
5.2 EXCHANGE OF NOTES.
(A) Upon surrender of any Note at the office of the Company maintained
pursuant to Section 6.3 duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or its
attorney duly authorized in writing, the Company will execute and deliver,
at the Company's expense (except as provided below), new Notes of the same
Series in exchange therefor, in denominations of at least five hundred
thousand dollars ($500,000) (except as may be necessary to reflect any
principal amount not evenly divisible by five hundred thousand dollars
($500,000)), in an aggregate principal amount equal to the unpaid principal
amount of the surrendered Note. Each such new Note shall be payable to such
Person as such holder may request, shall be of the same Series as the
surrendered Note and shall be substantially in the form of the Exhibit in
Exhibit A1 through Exhibit A7 corresponding to the Series of the surrendered
Note. Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the
date of the surrendered Note if no interest shall have been paid thereon.
The Company may require payment of a sum sufficient to cover any stamp or
other issuance tax or governmental charge imposed in respect of any such
transfer of Notes.
25
(B) The Company will pay the cost of delivering to or from such
holder's home office or custodian bank from or to the Company, insured to
the reasonable satisfaction of such holder, the surrendered Note and any
Note issued in substitution or replacement for the surrendered Note.
5.3 REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Note (which
evidence shall be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership (or of ownership by such Institutional
Investor's nominee) and such loss, theft, destruction or mutilation), and
(A) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Company (provided that if the holder of such Note is an
Institutional Investor or a nominee of an Institutional Investor, such
Institutional Investor's own unsecured letter agreement of indemnity shall
be deemed to be satisfactory for such purpose), or
(B) in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense will execute and, within five (5) Business
Days after such receipt, deliver, in lieu thereof, a new Note of the same
Series, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest
shall have been paid thereon.
5.4 ISSUANCE TAXES.
The Company will pay all taxes (if any) due in connection with the execution
and delivery of this Agreement and in connection with any modification,
amendment or waiver of any Financing Document and shall save each holder of
Notes harmless without limitation as to time against any and all liabilities
with respect to all such taxes. The obligations of the Company under this
Section 5.4 shall survive the payment or prepayment of the Notes and the
termination hereof.
6. GENERAL COVENANTS
The Company covenants and agrees that on and after the Closing Date and
thereafter for so long as any of its obligations under the Note Purchase
Agreements and the Notes shall be outstanding:
26
6.1 PAYMENT OF TAXES AND CLAIMS.
The Company shall, and shall cause each Subsidiary to, pay before they
become delinquent,
(A) all taxes, assessments and governmental charges or levies imposed
upon it or its Property, and
(B) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons that, if unpaid, might result
in the creation of a Lien upon its Property,
provided, that items of the foregoing description need not be paid (x) while
being contested in good faith and by appropriate proceedings diligently pursued
as long as adequate book reserves have been established and maintained and exist
with respect thereto, and (y) so long as the title of the Company or the
Subsidiary, as the case may be, to, and its right to use, such Property, is not
materially adversely affected thereby.
6.2 MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE.
The Company shall, and shall cause each Subsidiary to,
(A) PROPERTY -- maintain its Property in good condition, ordinary wear
and tear excepted, and make all necessary renewals, replacements, additions,
betterments and improvements thereto, and, in addition to the foregoing, the
Guarantors shall collectively, during each year, either expend or invest an
aggregate amount equal to at least fifty percent (50%) of Depreciation
determined for the then most recently ended fiscal year of the Company on
repairs, maintenance or capital improvements to the "Improvements" (as such
term is defined in the Deeds of Trust);
(B) INSURANCE -- maintain, with financially sound and reputable
insurers accorded a rating by A.M. Best Company of "A" or better and a size
rating of "XII" or better (or comparable ratings by any comparable successor
rating agency), insurance (including, without limitation, the insurance
required by the Security Documents) with respect to its Property and
business against such casualties and contingencies, of such types
(including, without limitation, insurance with respect to losses arising out
of Property loss or damage, public liability, business interruption,
larceny, workers' compensation, embezzlement or other criminal
misappropriation) and in such amounts as is customary in the case of
corporations of established reputations engaged in the same or a similar
business and similarly situated; provided that the Company and the
Subsidiaries may maintain one or more systems of self-insurance if adequate
reserves are maintained with respect thereto and if such systems are
implemented and operated in a manner consistent with the sound financial
practices of similarly situated corporations of established reputations that
maintain similar systems of self-insurance;
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(C) FINANCIAL RECORDS -- maintain sound accounting policies and an
adequate and effective system of accounts and internal accounting controls
that will safeguard assets, properly record income, expenses and liabilities
and assure the production of proper financial statements in accordance with
GAAP;
(D) CORPORATE EXISTENCE AND RIGHTS -- do or cause to be done all things
necessary
(I) to preserve and keep in full force and effect its existence,
rights and franchises,
(II) to ensure that the Company legally and beneficially owns
eighty-six percent (86%) of the capital stock of each class of ▇▇▇▇▇'▇
and one hundred percent (100%) of the capital stock of each of the
other Guarantors, and
(III) to maintain each Subsidiary as a Subsidiary, except as
otherwise permitted by Section 6.14 and Section 6.15(b); and
(E) COMPLIANCE WITH LAW -- not be in violation of any law, ordinance or
governmental rule or regulation to which it is subject (including, without
limitation, any Environmental Protection Law) and not fail to obtain any
license, permit, franchise or other governmental authorization necessary to
the ownership of its Properties or to the conduct of its business if such
violation or failure to obtain could be reasonably expected to have a
Material Adverse Effect.
6.3 PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.
The Company shall punctually pay, or cause to be paid, the principal of and
interest (and Make-Whole Amount, if any) to become due in respect of, the Notes,
as and when the same shall become due according to the terms hereof and of the
Notes, and shall maintain an office at the address of the Company set forth in
Section 10.1 where notices, presentations and demands in respect hereof and of
the Notes may be made upon it. Such office shall be maintained at such address
until such time as the Company shall notify the holders of the Notes of any
change of location of such office, which shall in any event be located within
the United States of America.
6.4 CURRENT RATIO.
The Company shall not at any time permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.05 to 1.00.
28
6.5 CONSOLIDATED WORKING CAPITAL.
The Company shall not at any time permit Consolidated Working Capital to be
less than Thirty-Five Million Dollars ($35,000,000).
6.6 FUNDED DEBT.
The Company shall not, and shall not permit any Subsidiary to, directly or
indirectly, create, assume, incur or Guaranty or otherwise become or be liable
in respect of any Funded Debt other than:
(A) Funded Debt represented by the Notes;
(B) Funded Debt outstanding on the Closing Date and described on Part
2.2(b) of Annex 2;
(C) Funded Debt of a Wholly-Owned Subsidiary to the Company or to any
other Wholly-Owned Subsidiary;
(D) Funded Debt of the Company to a Wholly-Owned Subsidiary; and
(E) additional Funded Debt of the Company and the Subsidiaries if,
after giving effect thereto and to any concurrent application of the
proceeds of such Funded Debt, (i) Consolidated Funded Debt would not exceed
sixty-five percent (65%) of Consolidated Total Capitalization and (ii)
Consolidated Senior Funded Debt would not exceed fifty-five percent (55%) of
the result of (A) Consolidated Total Capitalization minus (B) Senior
Subordinated Debt.
6.7 MAINTENANCE OF FUNDED DEBT.
(A) CONSOLIDATED FUNDED DEBT. The Company shall not permit Consolidated
Funded Debt, determined as of the end of each fiscal quarter of the Company,
to exceed four hundred percent (400%) of Consolidated EBITDA for the period
of four (4) consecutive fiscal quarters of the Company ended at such time.
(B) CONSOLIDATED SENIOR FUNDED DEBT. The Company shall not permit
Consolidated Senior Funded Debt, determined as of the end of each fiscal
quarter of the Company, to exceed three hundred twenty percent (320%) of
Consolidated EBITDA for the period of four (4) consecutive fiscal quarters
of the Company ended at such time.
6.8 FIXED CHARGES COVERAGE.
The Company shall not at any time permit the ratio of Consolidated Net
Income Available for Fixed Charges (calculated in respect of the period of eight
(8) consecutive fiscal quarters of the Company then most recently ended) to
29
Consolidated Fixed Charges (calculated in respect of such period) to be less
than 1.50 to 1.00.
6.9 RESTRICTIONS ON DIVIDENDS, ETC.
The Company shall not, and shall not permit any Subsidiary to, create or
otherwise cause or suffer to exist or become effective any restriction or
encumbrance (other than statutory, regulatory or common law restrictions) on the
right or power of any Subsidiary to
(A) pay dividends or make any other distributions on such Subsidiary's
stock to the Company or any Subsidiary,
(B) pay any indebtedness owed by such Subsidiary to the Company or any
Subsidiary,
(C) make loans or pay advances to the Company or any Subsidiary, or
(D) transfer any of its Property to the Company or any Guarantor;
provided, however, that a Subsidiary may be subject to restrictions on the
payment of dividends or the making of other distributions on its stock to the
Company or the other Subsidiaries so long as such restrictions permit the
payment of such dividends and the making of such other distributions that are
necessary in order to make any and all payments due (including, without
limitation, any and all amounts due by way of acceleration, required or optional
prepayment or otherwise) in connection with the Notes, the Note Purchase
Agreements and the other Financing Documents, and any and all indebtedness used
to refinance or repay such indebtedness (without increase as to principal amount
or interest rate of such refinancing indebtedness).
6.10 CONSOLIDATED TANGIBLE NET WORTH.
The Company shall not at any time permit Consolidated Tangible Net Worth,
determined at such time, to be less than the sum of
(A) four hundred fifty million dollars ($450,000,000), plus
(B) the sum of the Company Fiscal Year Net Worth Increase Amounts
calculated for all fiscal years of the Company ended on or after the date of
this Agreement.
6.11 INTENTIONALLY LEFT BLANK.
30
6.12 RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(A) LIMITATION ON RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. The
Company shall not, and shall not permit any Subsidiary to, at any time
declare or make or incur any liability to declare or make any Restricted
Payment (other than Restricted Payments comprised solely of Distributions to
the Company or a Wholly-Owned Subsidiary in respect of the capital stock of
a Subsidiary ("PERMITTED DISTRIBUTIONS")) or make or authorize any
Restricted Investment, unless
(I) immediately after giving effect to the proposed Restricted
Payment or Restricted Investment, the aggregate amount of all
Restricted Payments (other than Permitted Distributions) and Restricted
Investments in each case made or authorized after February 1, 2000 does
not exceed the sum of
(A) one hundred million dollars ($100,000,000); plus
(B) fifty percent (50%) of the aggregate Consolidated Net
Income (or, in case such aggregate Consolidated Net Income shall
be a deficit, minus one hundred percent (100%) of such deficit)
for the period commencing on February 1, 2000 and ending on the
date of such proposed transaction; plus
(C) one hundred percent (100%) of the aggregate net cash
proceeds received by the Company after the Closing Date from the
issuance or sale of shares of capital stock of the Company (other
than Mandatorily Redeemable Stock); plus
(D) the market value of (but in any event not exceeding the
Fair Market Value of the assets or stock acquired with) the shares
of capital stock issued by the Company in payment for the stock or
assets of any Person acquired by the Company or any Subsidiary
after the Closing Date in an arm's-length transaction;
(II) immediately prior to, and immediately after giving effect to
the proposed Restricted Payment or Restricted Investment, the Company
would be permitted by Section 6.6(e)(i) and Section 6.6(e)(ii) to incur
at least one dollar ($1.00) of additional Funded Debt owed to a Person
other than a Subsidiary; and
(III) immediately prior to, and immediately after giving effect
to, the proposed Restricted Payment or Restricted Investment, no
Default or Event of Default exists or would exist.
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(B) TIME OF PAYMENT OF DISTRIBUTIONS. The Company shall not, and shall
not permit any Subsidiary to, authorize a Distribution on its capital stock
that is not payable within sixty (60) days of authorization.
(C) SUBSIDIARIES. Each corporation that becomes a Subsidiary after the
Closing Date shall be deemed to have made, at the time it becomes a
Subsidiary, all Restricted Investments of such corporation existing
immediately after it becomes a Subsidiary.
6.13 LIENS.
(A) NEGATIVE PLEDGE. The Company shall not, and shall not permit any
Subsidiary to, cause or permit, or agree or consent to cause or permit in
the future (upon the happening of a contingency or otherwise), any of their
Property, whether now owned or hereafter acquired, to be subject to a Lien
except:
(I) Liens securing taxes, assessments or governmental charges or
levies or the claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons, provided that the
payment thereof is not at the time required by Section 6.1 or by any
provision of the other Financing Documents;
(II) Liens incurred or deposits made in the ordinary course of
business
(A) in connection with workers' compensation, unemployment
insurance, social security and other like laws, and
(B) to secure the performance of letters of credit, bids,
tenders, sales contracts, leases, statutory obligations, surety
and performance bonds (of a type other than set forth in Section
6.13(a)(iii)) and other similar obligations not incurred in
connection with the borrowing of money, the obtaining of advances
or the payment of the deferred purchase price of Property;
(III) Liens
(A) arising from judicial attachments and judgments,
(B) securing appeal bonds, supersedeas bonds, or
32
(C) arising in connection with court proceedings (including,
without limitation, surety bonds and letters of credit or any
other instrument serving a similar purpose),
provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings, and provided
further that the aggregate amount so secured shall not at any time
exceed one million dollars ($1,000,000);
(IV) Liens in the nature of reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other similar title exceptions or encumbrances
affecting real Property, provided that such exceptions and encumbrances
do not in the aggregate materially detract from the value of such
Properties or materially interfere with the use of such Properties in
the ordinary conduct of the owning Person's business;
(V) (A) Liens (of a type other than set forth in Section
6.13(a)(ix)) in existence on the Closing Date, more specifically
described on Part 6.13(a)(v) of Annex 2; and
(B) Liens securing renewals, extensions and refinancings of
Debt secured by the Liens permitted by clause (A) immediately
above, provided that the amount of Debt secured by each such Lien
is not increased in excess of the amount of Debt outstanding on
the date such Lien was originally created, and none of such Liens
is extended to include any additional Property of the Company or
any Subsidiary;
(VI) on or prior to the Collateral Release Date, Liens on the
Collateral
(A) in favor of the Security Trustee for the benefit of the
holders of the Notes that secure obligations under any of the
Financing Documents, and
(B) constituting Permitted Exceptions;
(VII) on or prior to the Collateral Release Date, Liens on
Property other than the Collateral securing Funded Debt (other than
Bank Funded Debt) incurred and permitted to exist in accordance with
the provisions of Sections 6.6 and 6.7;
33
(VIII) Purchase Money Liens, if, after giving effect thereto and
to any concurrent transactions:
(A) each such Purchase Money Lien secures Debt in an amount
not exceeding the cost of acquisition or construction of the
particular Property to which such Debt relates; and
(B) no Default or Event of Default would exist;
(IX) on or prior to the Collateral Release Date, Liens on Property
of the Subsidiaries primarily constituting inventory or accounts that
secure obligations arising under Revolving Credit Agreements of the
Company or any Subsidiary; and
(X) after the Collateral Release Date, Liens securing Debt of the
Company or any Subsidiary, provided that at the time of the incurrence
thereof and after giving effect thereto and to the concurrent
retirement of any other Debt,
(A) the aggregate outstanding principal amount of all Debt of
the Company and the Subsidiaries secured by Liens (including,
without limitation, Liens permitted by Section 6.13(a)(v) and
Section 6.13(a)(viii)) would not exceed fifteen percent (15%) of
Consolidated Tangible Net Worth, determined at such time; and
(B) no Default or Event of Default would exist.
(B) COLLATERAL. Nothing in this Section 6.13 shall be deemed to permit
the Company or any Guarantor to cause or permit, or agree or consent to
cause or permit in the future (upon the happening of a contingency or
otherwise), any of the Collateral, whether now owned or hereafter acquired,
to be subject to a Lien in violation of the terms of the Security Documents.
(C) STOCK. Notwithstanding anything to the contrary in Section 6.13(a),
the Company shall not, and shall not permit any Subsidiary to cause or
permit, or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), any of the capital stock of any
Subsidiary, whether now owned or hereafter acquired, to be subject to a
Lien.
(D) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any Property not
otherwise the subject of a prior perfected Lien in favor of the Security
Trustee shall be subjected to a Lien in violation of this Section 6.13, the
Company shall forthwith make or cause to be made, to the
34
fullest extent permitted by applicable law, provision whereby the Notes
shall be secured equally and ratably with all other obligations secured
thereby pursuant to such agreements and instruments as shall be approved by
the Required Holders, and the Company shall cause to be delivered to each
holder of a Note an opinion of independent counsel to the effect that such
agreements and instruments are enforceable in accordance with their terms,
and in any such case the Notes shall have the benefit, to the full extent
that, and with such priority as, the holders may be entitled thereto under
applicable law, of an equitable Lien on such Property securing the Notes.
Such violation of this Section 6.13 shall constitute an Event of Default
hereunder, whether or not any such provision is made pursuant to this
Section 6.13(d).
(E) FINANCING STATEMENTS. The Company shall not, and shall not permit
any Subsidiary to, sign or file a financing statement under the Uniform
Commercial Code of any jurisdiction that names the Company or such
Subsidiary as debtor, or sign any security agreement authorizing any secured
party thereunder to file any such financing statement, except, in any such
case, a financing statement filed or to be filed to perfect or protect a
security interest that the Company or such Subsidiary is entitled to create,
assume or incur, or permit to exist, under the foregoing provisions of this
Section 6.13 or to evidence for informational purposes a lessor's interest
in Property leased to the Company or any such Subsidiary.
6.14 MERGER; ACQUISITION.
(A) MERGER AND CONSOLIDATION. The Company shall not, and shall not
permit any Subsidiary to, merge with or into, consolidate with, or sell,
lease as lessor, transfer or otherwise dispose of all or substantially all
of its Property to, any other Person or permit any other Person to merge
with or into or consolidate with it (except that a Subsidiary other than a
Guarantor may merge into, consolidate with, or sell, lease, transfer or
otherwise dispose of all or substantially all of its assets to, the Company
or a Wholly-Owned Subsidiary other than a Guarantor); provided that the
foregoing restriction does not apply to the merger or consolidation of the
Company with or into, or the sale, lease, transfer or other disposition by
the Company of all or substantially all of its Property to, another
corporation, if:
(I) the corporation that results from such merger or consolidation
or that purchases, leases, or acquires all or substantially all of such
Property (the "SURVIVING CORPORATION") is organized under the laws of,
and has substantially all of its Property located in, the United States
of America or any jurisdiction thereof;
35
(II) the due and punctual payment of the principal of and Make-
Whole Amount, if any, and interest on all of the Notes, according to
their tenor, and the due and punctual performance and observance of all
the covenants herein and in the other Financing Documents to be
performed and observed by the Company, are expressly assumed by the
Surviving Corporation pursuant to such agreements or instruments as
shall be satisfactory to the Required Holders, and the Company shall
cause to be delivered to each holder of Notes an opinion of independent
counsel (which opinion and counsel are satisfactory to the Required
Holders) to the effect that such agreements and instruments are
enforceable in accordance with their terms;
(III) immediately prior to, and immediately after the consummation
of such transaction, and after giving effect thereto, the Company would
be permitted by Section 6.6(e)(i) and Section 6.6(e)(ii) to incur at
least one dollar ($1.00) of additional Funded Debt owed to a Person
other than a Subsidiary; and
(IV) immediately prior to, and immediately after the consummation
of such transaction, and after giving effect thereto, no Default or
Event of Default exists or would exist.
(B) ACQUISITION OF STOCK. The Company shall not, and shall not permit
any Subsidiary to, acquire any stock of any corporation if upon completion
of such acquisition such corporation would be a Subsidiary, or acquire all
of the assets of, or such of the assets as would permit the transferee to
continue any one or more integral business operations of, any Person unless,
immediately after the consummation of such acquisition, and after giving
effect thereto, no Default or Event of Default exists or would exist under
any provision hereof.
6.15 TRANSFERS OF PROPERTY; SUBSIDIARY STOCK.
(A) TRANSFERS OF PROPERTY. The Company shall not, and shall not permit
any Subsidiary to, sell (including, without limitation, any sale and
subsequent leasing as lessee of such Property), lease as lessor, transfer,
or otherwise dispose of any Property (individually, a "TRANSFER" and
collectively, "TRANSFERS"), except
(I) Transfers of inventory, obsolete or worn-out Property or
excess equipment no longer useful in the business of the Company or
such Subsidiary, in each case in the ordinary course of business of the
Company or such Subsidiary;
(II) Transfers from a Subsidiary to the Company or to any
Guarantor and Transfers from the Company to any Guarantor; and
36
(III) any other Transfer (including a Transfer of Property to any
Person and the concurrent rental or lease of such transferred Property
from such Person) at any time of any Property to a Person, other than
an Affiliate, for an Acceptable Consideration, if each of the following
conditions would be satisfied with respect to such Transfer:
(A) the sum of
(I) the current book value of such Property, plus
(II) the aggregate book value of all other Property of
the Company and the Subsidiaries Transferred (other than in
Transfers referred to in the foregoing clause (i) and clause
(ii) (collectively, "EXCLUDED TRANSFERS")) during the period
beginning on the first day of the then current fiscal year of
the Company and ended immediately prior to the date of such
Transfer,
would not exceed ten percent (10%) of Consolidated Total Assets
determined as at the end of the most recently ended fiscal year of
the Company prior to giving effect to such Transfer,
(B) the sum of
(I) the current book value of such Property, plus
(II) the aggregate book value of all other Property of
the Company and the Subsidiaries Transferred (other than in
Excluded Transfers) during the period commencing on July 31,
1996 and ended at the time of such Transfer,
would not exceed twenty percent (20%) of Consolidated Total Assets
determined as at the end of the most recently ended fiscal year of
the Company prior to giving effect to such Transfer, and
(C) immediately prior to, and immediately after the
consummation of such transaction, and after giving effect thereto,
no Default or Event of Default exists or would exist,
37
provided, that all or any portion of the assets which are the
subject of any Transfer of Property shall be excluded for purposes
of clause (A) and clause (B) of this Section 6.15(a)(iii) if,
within three hundred sixty (360) days after such Transfer, the
entire proceeds of such Transfer (net of ordinary and reasonable
transaction costs and expenses incurred in connection with such
Transfer) are applied by the Company or such Subsidiary to:
(y) the purchase of operating assets of the Company or any
Subsidiary reasonably equal in value to the Property which is the
subject of such Transfer, so long as each such investment shall
not have been included in the calculation of any other exclusion
of any other Transfer proposed to be excluded from the operation
of clause (A) or clause (B) of this Section 6.15(a)(iii), or
(z) an optional prepayment of Notes pursuant to Section 4.4.
Notwithstanding anything to the contrary contained herein, the Company shall
not, and shall not permit any Subsidiary to, sell, lease as lessor, transfer
or otherwise dispose of any of the Collateral except as expressly permitted
by Section 6.15(c). Nothing in this Section 6.15(a) shall be deemed to
permit the Company or any Subsidiary to violate any provisions of Section
6.16.
(B) TRANSFERS OF SUBSIDIARY STOCK. The Company shall not, and shall not
permit any Subsidiary to, Transfer any shares of the capital stock (or any
warrants, rights or options to purchase stock or other Securities
exchangeable for or convertible into capital stock) of a Subsidiary (such
capital stock, warrants, rights, options and other Securities herein called
"SUBSIDIARY STOCK"), nor shall any Subsidiary issue, sell or otherwise
dispose of any shares of its own Subsidiary Stock, provided that the
foregoing restrictions do not apply to:
(I) the issuance by a Subsidiary of shares of its own Subsidiary
Stock to the Company or a Wholly-Owned Subsidiary;
(II) Transfers by the Company or a Subsidiary of shares of
Subsidiary Stock to the Company or a Wholly-Owned Subsidiary;
(III) the issuance by a Subsidiary of directors' qualifying
shares; and
(IV) the Transfer of all of the Subsidiary Stock of a Subsidiary
owned by the Company and the other Subsidiaries if
38
(A) such Transfer satisfies the requirements of Section
6.15(a)(iii);
(B) in connection with such Transfer the entire investment
(whether represented by stock, Debt, claims or otherwise) of the
Company and the other Subsidiaries in such Subsidiary is
Transferred to a Person other than the Company or a Subsidiary not
simultaneously being disposed of;
(C) the Subsidiary being disposed of has no continuing
investment in any other Subsidiary not simultaneously being
disposed of or in the Company; and
(D) immediately prior to, and immediately after the
consummation of such Transfer, and after giving effect thereto, no
Default or Event of Default exists or would exist.
For purposes of determining the book value of Property constituting
Subsidiary Stock being Transferred as provided in clause (iv) above,
such book value shall be deemed to be the aggregate book value of all
assets of the Subsidiary that shall have issued such Subsidiary Stock.
Nothing in this Section 6.15(b) shall be deemed to permit the Company or any
Subsidiary to (x) sell any shares of capital stock of any Subsidiary in
violation of Section 6.2(d)(ii) or (y) violate any of the provisions of
Section 6.16.
(C) TRANSFERS OF COLLATERAL. The Company shall not, and shall not
permit any Subsidiary to, sell or otherwise Transfer any Property
constituting Collateral, except Transfers for an Acceptable Consideration of
obsolete or worn-out equipment constituting Collateral, or excess equipment
constituting Collateral, in each case that is no longer useful in the
business of the Company or such Subsidiary, if each of the following
conditions would be satisfied with respect to such Transfer:
(I) the sum of
(A) the current book value of such Property, plus
(B) the aggregate book value of all other Property of the
Company and the Subsidiaries Transferred pursuant to this Section
6.15(c) during the period beginning on the first day of the then
current fiscal year of the Company and ended immediately prior to
the date of such Transfer,
39
would not exceed five million dollars ($5,000,000),
(II) the sum of
(A) the current book value of such Property, plus
(B) the aggregate book value of all other Property of the
Company and the Subsidiaries Transferred pursuant to this Section
6.15(c) during the period commencing on July 31, 1996 and ended at
the time of such Transfer,
would not exceed twenty million dollars ($20,000,000) and
(III) immediately prior to, and immediately after the consummation
of such transaction, and after giving effect thereto, no Default or
Event of Default exists or would exist,
provided, that all or any portion of the assets which are the subject of any
Transfer of Property shall be excluded for purposes of clause (i) and clause
(ii) of this Section 6.15(c) if, within three hundred sixty (360) days after
such Transfer, the entire proceeds of such Transfer (net of ordinary and
reasonable transaction costs and expenses incurred in connection with such
Transfer) are applied by the Company or such Subsidiary to:
(y) the purchase of Property of the Company or any Subsidiary
reasonably equal in value or use to the Property which is the
subject of such Transfer, so long as (1) such Property is subject
to a perfected first-priority security interest in favor of the
Security Trustee for the benefit of the holders from time to time
of the Notes, (2) such Property constitutes Collateral and (3)
each such investment shall not have been included in the
calculation of any other exclusion of any other Transfer proposed
to be excluded from the operation of clause (i) or clause (ii) of
this Section 6.15(c), or
(z) an optional prepayment of Notes pursuant to Section 4.4.
The Company acknowledges and agrees that until applied pursuant to this
Section 6.15(c), the net proceeds of any such Transfer of Collateral by the
Company or any Subsidiary shall be held in trust by the Security Trustee
pursuant to the terms of the Security Documents.
6.16 TRADEMARK SUBSIDIARIES.
(A) GENERALLY. The Company shall not, and shall not permit any
Subsidiary other than a Trademark Subsidiary to, own any patents,
40
trademarks, service marks, trade names, copyrights and other similar
licenses and intangibles used or useful in the conduct of the business of
the Company or any Subsidiary.
(B) OWNERSHIP OF TRADEMARK SUBSIDIARIES. The Company (i) shall, at all
times, maintain each Trademark Subsidiary as a Wholly-Owned Subsidiary and
(ii) shall not permit any of the capital stock of any Trademark Subsidiary
to be subject to a Lien.
(C) NO SALE OR MERGER. The Company shall not permit any Trademark
Subsidiary to merge with or into, consolidate with, or sell, lease, transfer
or otherwise dispose of all or substantially all of its Property to, any
other Person other than another Trademark Subsidiary, or permit any other
Person other than a Trademark Subsidiary to merge with or into or
consolidate with it. The Company shall not permit any Trademark Subsidiary
to sell, lease as lessor, license as licensor, transfer or otherwise dispose
of any patents, trademarks, service marks, trade names, copyrights and
licenses.
(D) NO DEBT OR LIENS. The Company shall not permit any Trademark
Subsidiary to cause or permit, or agree or consent to cause or permit in the
future (upon the happening of a contingency or otherwise), any of its
Property, whether now owned or hereafter acquired, to be subject to a Lien.
The Company shall not at any time permit any Trademark Subsidiary to be or
become liable for any Debt or to issue any Mandatorily Redeemable Stock.
6.17 ENVIRONMENTAL COMPLIANCE.
(A) COMPLIANCE. The Company shall, and shall cause each Subsidiary to,
comply with all Environmental Protection Laws in effect in each jurisdiction
where it is doing business and where the failure to comply with which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
(B) LIABILITY. The Company shall not, and shall not permit any
Subsidiary to, permit itself to be subject to any liability under any
Environmental Protection Laws that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(C) ▇▇▇▇▇▇▇. The Company shall cause ▇▇▇▇▇▇▇ to use its best efforts to
comply with all reasonable environmental testing, hazard prevention and
remediation recommendations of its environmental consultants with respect to
the real Property of ▇▇▇▇▇▇▇ identified in the ▇▇▇▇▇▇▇ Mortgage.
41
6.18 LINE OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary to, engage in any
business other than businesses engaged in by the Company and the Subsidiaries on
the Closing Date.
6.19 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any Subsidiary to, enter into
any transaction, including, without limitation, the purchase, sale or exchange
of Property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Company's
or such Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate.
6.20 TAX CONSOLIDATION.
The Company shall not file or consent to the filing of a consolidated tax
return with any Person other than a Subsidiary, or permit the filing of any
consolidated tax return by any Subsidiary with any Person other than the Company
or another Subsidiary.
6.21 ERISA.
(A) COMPLIANCE. The Company shall, and shall cause each ERISA Affiliate
to, at all times with respect to each Pension Plan,
(I) make timely payment of contributions required
(A) to meet the minimum funding standard set forth in ERISA
or the IRC with respect thereto, or
(B) to be paid as provided for by section 515 of ERISA, and
(II) comply with all other applicable provisions of ERISA.
(B) RELATIONSHIP OF VESTED BENEFITS TO PENSION PLAN ASSETS.
(I) The Company shall not at any time permit the present value of
all employee benefits vested under all ▇▇▇▇▇▇▇ Pension Plans to exceed
the assets of such ▇▇▇▇▇▇▇ Pension Plans allocable to such vested
benefits at such time by more than fifty-five million dollars
($55,000,000), in each case determined pursuant to Section 6.21(c).
(II) The Company shall not at any time permit the present value of
all employee benefits vested under all Pension Plans other
42
than ▇▇▇▇▇▇▇ Pension Plans to exceed the assets of all such Pension
Plans other than ▇▇▇▇▇▇▇ Pension Plans allocable to such vested
benefits at such time by more than five percent (5%) of Consolidated
Total Liabilities, in each case determined pursuant to Section 6.21(c).
(C) VALUATIONS. All assumptions and methods used to determine the
actuarial valuation of vested employee benefits under Pension Plans and the
present value of assets of Pension Plans shall be reasonable in the good
faith judgment of the Company and shall comply with all requirements of law.
(D) PROHIBITED ACTIONS. The Company shall not, and shall not permit any
ERISA Affiliate to:
(I) engage in any "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC) or
"reportable event" (as such term is defined in section 4043 of ERISA)
that would result in the imposition of a material tax or penalty;
(II) incur with respect to any Pension Plan any "accumulated
funding deficiency" (as such term is defined in section 302 of ERISA),
whether or not waived;
(III) terminate any Pension Plan in a manner that could result in
(A) the imposition of a Lien on the Property of the Company
or any Subsidiary pursuant to section 4068 of ERISA or
(B) the creation of any liability under section 4062 of
ERISA;
(IV) fail to make any payment required by section 515 of ERISA; or
(V) be an "employer" (as such term is defined in section 3 of
ERISA) required to contribute to any Multiemployer Plan or a
"substantial employer" (as such term is defined in section 4001 of
ERISA) required to contribute to any Multiple Employer Pension Plan if,
at such time, it could reasonably be expected that the Company or any
Subsidiary will incur withdrawal liability in respect of such
Multiemployer Plan and such liability, if incurred, together with the
aggregate amount of all other withdrawal liability as to which there is
a reasonable expectation of incurrence by the
43
Company or any Subsidiary under any one or more Multiemployer Plans,
could reasonably be expected to have a Material Adverse Effect.
(E) FOREIGN PENSION PLANS. To the extent that the Company or any
Subsidiary is subject to any requirements of any Foreign Pension Plan, the
Company shall, and shall cause each such Subsidiary to, comply with such
requirements if the failure to so comply would have, either individually or
in the aggregate, a Material Adverse Effect.
6.22 GUARANTIES.
(A) The Company shall not, and shall not permit any Subsidiary to, be
or become liable in respect of any Guaranty except
(I) Guaranties of Debt which constitutes a part of Consolidated
Funded Debt;
(II) Guaranties of obligations incurred in the ordinary course of
business of the Company and the Subsidiaries;
(III) Guaranties of liabilities which constitute a part of
Consolidated Current Liabilities (including, without limitation,
Guaranties of obligations of the Company and the Subsidiaries under
Revolving Credit Agreements to the extent such Guaranties are not
permitted by clause (i) above); and
(IV) Guaranties of amounts payable with respect to Operating
Rentals constituting a portion of Consolidated Fixed Charges.
(B) Notwithstanding the provisions of clause (a) above, the Company
shall not permit any Subsidiary to
(I) be or become liable for any Guaranty of Debt of the Company,
any other Subsidiary or any Affiliate, or
(II) issue any Mandatorily Redeemable Stock,
in each case unless such Subsidiary enters into an enforceable and
unconditional Guaranty of the obligations of the Company under the Notes,
upon terms and conditions satisfactory to the Required Holders.
Notwithstanding the foregoing, in no event shall the Company or any
Subsidiary be or become liable in respect of any Guaranty if the
indebtedness or other liabilities that are the subject of such Guaranty
would not be permitted pursuant to Section 6.6 or Section 6.7.
44
6.23 PRIVATE OFFERING.
The Company shall not, and shall not permit any Subsidiary or any Person
acting on its behalf to, offer the Notes or any part thereof or any similar
Securities for issuance or sale to, or solicit any offer to acquire any of the
same from, any Person so as to bring the issuance and sale of the Notes within
the provisions of section 5 of the Securities Act.
6.24 COVENANTS REGARDING THE BLADEN COUNTY COGENERATION PROPERTY.
The Company covenants and agrees that, in the event the Company or any
Affiliate shall acquire all or any portion of the Bladen County Cogeneration
Property pursuant to the Bladen County Option Documents or otherwise, the
Company shall, simultaneously with such acquisition, cause the Bladen County
Cogeneration Property (or the Portion thereof) so acquired to be pledged as
additional collateral security for the indebtedness evidenced by the Notes
pursuant to documentation and in a manner that is in all respects satisfactory
to the Required Holders. The Company shall pay any and all fees, costs and
expenses including, without limitation, legal fees and expenses and title
insurance charges and premiums, incurred by the holders of the Notes, the
Security Trustee and the other parties to such transaction.
The Company further covenants and agrees that it shall not, directly or
indirectly, terminate, modify or amend any of the Bladen County Option
Documents, without the prior written consent of the Required Holders.
7. INFORMATION AS TO COMPANY AND THE GUARANTORS
7.1 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes:
(A) COMPANY QUARTERLY STATEMENTS -- as soon as practicable after the
end of each quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such fiscal year), and
in any event within forty-five (45) days thereafter, duplicate copies of:
(I) consolidated and consolidating balance sheets of the Company
and its consolidated subsidiaries, and of the Company and the
Subsidiaries, as at the end of such quarter, and
(II) consolidated and consolidating statements of income and cash
flows of the Company and its consolidated subsidiaries, and of the
Company and the Subsidiaries, for such quarter and (in
45
the case of the second and third quarters) for the portion of the
fiscal year endingwith such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified as complete and correct, subject to
changes resulting from year-end adjustments, by a Senior Financial Officer,
accompanied by the certificate required by Section 7.2;
(B) COMPANY ANNUAL STATEMENTS -- as soon as practicable after the end
of each fiscal year of the Company, and in any event within ninety (90)
days thereafter, duplicate copies of:
(I) a consolidated balance sheet of the Company and its
consolidated subsidiaries, and a consolidating balance sheet of the
Company and each Guarantor, as at the end of such year, and
(II) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its consolidated subsidiaries,
and consolidating statements of income and cash flows of the Company
and each Guarantor, for such year,
setting forth in each case in comparative form the figures for the
immediately preceding fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by
(A) in the case of such consolidated financial statements, an
audit report thereon of independent certified public accountants
of recognized national standing, which opinion shall state,
without qualification, that such financial statements present
fairly, in all material respects, the consolidated financial
position of the companies being reported upon and their
consolidated results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion in
the circumstances,
(B) a certification by a Senior Financial Officer that such
consolidated statements are complete and correct, and
(C) the certificates required by Section 7.2 and Section
7.3;
46
(C) AUDIT REPORTS -- promptly upon receipt thereof, a copy of each
other report submitted to the Company or any Subsidiary by independent
accountants in connection with any management report, special audit report
or comparable analysis prepared by them with respect to the books of the
Company or any Subsidiary;
(D) SEC AND OTHER REPORTS -- promptly upon their becoming available, a
copy of each financial statement, report (including, without limitation,
each Quarterly Report on Form 10-Q, each Annual Report on Form 10-K and each
Current Report on Form 8-K), notice or proxy statement sent by the Company
or any Subsidiary to stockholders generally and of each regular or periodic
report and any registration statement, prospectus or written communication
(other than transmittal letters), and each amendment thereto, in respect
thereof filed by the Company or any Subsidiary with, or received by, such
Person in connection therewith from, the National Association of Securities
Dealers, any securities exchange or the Securities and Exchange Commission
or any successor agency;
(E) ERISA --
(I) promptly (and in any event, within five (5) Business Days)
after any officer of the Company becoming aware of any
(A) "reportable event" (as defined in section 4043 of
ERISA), or
(B) "prohibited transaction" (as defined in section 406 of
ERISA or section 4975 of the IRC),
in connection with any Pension Plan or any trust created thereunder, a
written notice specifying the nature thereof, what action the Company
is taking or proposes to take with respect thereto and, when known,
any action taken by the IRS, the Department of Labor or the PBGC with
respect thereto, and
(II) promptly (and in any event, within five (5) Business Days)
after any officer of the Company becoming aware thereof, written
notice of and, where applicable, a description of
(A) any notice from the PBGC in respect of the commencement
of any proceedings pursuant to section 4042 of ERISA to terminate
any Pension Plan or for the appointment of a trustee to administer
any Pension Plan,
27
(B) any distress termination notice delivered to the PBGC
under section 4041 of ERISA in respect of any Pension Plan, and
any determination of the PBGC in respect thereof,
(C) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA,
(D) any Multiemployer Plan becoming "insolvent" (as defined
in section 4245 of ERISA) under Title IV of ERISA, or
(E) the whole or partial withdrawal of the Company or any
ERISA Affiliate from any Multiemployer Plan and the withdrawal
liability incurred in connection therewith;
(F) ACTIONS, PROCEEDINGS -- promptly after the commencement thereof,
notice of any action or proceeding relating to the Company or any Subsidiary
in any court or before any Governmental Authority or arbitration board or
tribunal as to which there is a reasonable probability of an adverse
determination and that, if adversely determined, would have a Material
Adverse Effect;
(G) CERTAIN ENVIRONMENTAL MATTERS -- prompt written notice of and a
description of any event or circumstance that, had such event or
circumstance occurred or existed prior to the Closing Date, would have been
required to be disclosed as an exception to any statement set forth in
Section 2.14 and a description of the action that the Company is taking or
proposes to take with respect thereto;
(H) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- within five (5) Business
Days of any Senior Officer becoming aware of the existence of any condition
or event that constitutes a Default or an Event of Default, a written notice
specifying the nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;
(I) NOTICE OF CLAIMED DEFAULT -- within five (5) Business Days of any
Senior Officer becoming aware that the holder of any Note, or of any Debt or
any Security of the Company or any Subsidiary, shall have given notice or
taken any other action with respect to a claimed Default, Event of Default,
default or event of default, a written notice specifying the notice given or
action taken by such holder and the nature of the claimed Default, Event of
Default, default or event of default and what action the Company is taking
or proposes to take with respect thereto;
(J) INFORMATION FURNISHED UNDER REVOLVING CREDIT AGREEMENT -- at any
time that at least one Revolving Credit Agreement is
48
in effect, at the same time required thereby, a copy of each item required
to be furnished by the Company or any Subsidiary pursuant thereto;
(K) OTHER CREDITORS -- promptly upon the request of any holder of
Notes, copies of any statement, report or certificate furnished to any
holder of Debt of the Company or any Subsidiary to the extent that the
information contained in such statement, report or certificate has not
already been delivered to each holder of Notes;
(L) RULE 144A -- with reasonable promptness, upon the request of any
holder of Notes, information required to comply with 17 C.F.R. (S)230.144A,
as amended from time to time; and
(M) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information as from time to time may be reasonably requested by
any holder of Notes.
7.2 OFFICER'S CERTIFICATES.
Each set of financial statements delivered to each holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer setting forth:
(A) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 6.4 through Section 6.8,
inclusive, and Section 6.10 through Section 6.15, inclusive, during the
period covered by the income statement then being furnished (including with
respect to each such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the
amounts, ratio or percentage then in existence); and
(B) EVENT OF DEFAULT -- a statement that the signer has reviewed the
relevant terms of the Financing Documents and has made, or caused to be
made, under his or her supervision, a review of the transactions and
conditions of the Company and the Subsidiaries from the beginning of the
accounting period covered by the income statements being delivered
therewith to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition
or event existed or exists, specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes to take
with respect thereto.
49
7.3 ACCOUNTANTS' REPORT.
Each set of annual financial statements delivered pursuant to Section
7.1(b) shall be accompanied by a certificate of the accountants who certify such
financial statements, stating that they have reviewed this Agreement and stating
further, whether, in making their audit, such accountants have become aware of
any condition or event that then constitutes a Default or an Event of Default,
and, if such accountants are aware that any such condition or event then exists,
specifying the nature and period of existence thereof.
7.4 INSPECTION.
The Company shall permit the representatives of each holder of Notes (at
the expense of the Company) to visit and inspect any of the Properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (former and present) (and
by this provision the Company authorizes all such accountants to discuss the
finances and affairs of the Company and the Subsidiaries), all at such
reasonable times and as often as may be reasonably requested.
8. EVENTS OF DEFAULT
8.1 NATURE OF EVENTS.
An "EVENT OF DEFAULT" shall exist if any of the following occurs and is
continuing:
(A) PRINCIPAL AND MAKE-WHOLE AMOUNT PAYMENTS -- the Company shall fail
to make any payment of principal or Make-Whole Amount on any Note on or
before the date such payment is due; or
(B) INTEREST PAYMENTS -- the Company shall fail to make any payment of
interest on any Note on or before the date such payment is due; or
(C) WARRANTIES OR REPRESENTATIONS -- any warranty, representation or
other material statement by or on behalf of the Company or any Subsidiary
contained herein or in any instrument furnished in compliance with or in
reference hereto or any of the other Financing Documents shall have been
false or misleading when made or deemed made; or
(D) PARTICULAR COVENANT DEFAULTS -- the Company or any Subsidiary
shall fail to perform or observe any covenant contained in Section 6.4
through Section 6.18, inclusive, Section 6.20, Section 6.22, Section 7.1(h)
or Section 7.1(i); or
50
(E) OTHER DEFAULTS -- the Company or any Subsidiary shall fail to
comply with any other provision hereof, and such failure continues for more
than thirty (30) days after such failure shall first become known to any
officer of the Company; or
(F) DEFAULT ON DEBT OR OTHER SECURITY --
(I) the Company or any Subsidiary shall fail to make any payment
on any Debt when due;
(II) any event shall occur or any condition shall exist in
respect of any Debt or any Security of the Company or any Subsidiary,
or under any agreement securing or relating to such Debt or Security,
that immediately or with the passage of time or the giving of notice
or both:
(A) causes (or permits any one or more of the holders
thereof or a trustee therefor to cause) such Debt or Security, or
a portion thereof, to become due prior to its stated maturity or
prior to its regularly scheduled date or dates of payment;
(B) permits any one or more of the holders thereof or a
trustee therefor to elect any of the directors on the Board of
Directors of the Company or such Subsidiary; or
(C) permits any one or more of the holders thereof or a
trustee therefor to require the Company or any Subsidiary to
repurchase such Debt or Security from such holder;
provided that the aggregate amount of all obligations in respect of
all such Debt and Securities referred to in this clause (f) exceeds at
such time ten million dollars ($10,000,000); or
(III) an "Event of Default" shall have occurred under, and as
defined in, any of the other Financing Documents and be continuing; or
(G) INVOLUNTARY BANKRUPTCY PROCEEDINGS --
(I) a receiver, liquidator, custodian or trustee of the Company
or any Subsidiary, or of all or any of the Collateral or any material
Property of the Company or any Subsidiary, shall be appointed by court
order and such order remains in effect for more than thirty (30) days;
or an order for relief shall be entered with
51
respect to the Company or any Subsidiary, or the Company or any
Subsidiary, shall be adjudicated insolvent;
(II) any of the Collateral or any material Property of the
Company or any Subsidiary shall be sequestered by court order and such
order remains in effect for more than thirty (30) days; or
(III) a petition shall be filed against the Company or any
Subsidiary under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect, and shall not be
dismissed within thirty (30) days after such filing; or
(H) VOLUNTARY PETITIONS -- the Company or any Subsidiary shall file a
petition in voluntary bankruptcy or seeking relief under any provision of
any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or shall consent to the filing of any petition against
it under any such law; or
(I) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. -- the Company or any
Subsidiary shall make an assignment for the benefit of its creditors, or
shall admit in writing its inability, or shall fail, to pay its debts
generally as they become due, or shall consent to the appointment of a
receiver, liquidator or trustee of the Company or any Subsidiary or of all
or any part of the Property of them; or
(J) UNDISCHARGED FINAL JUDGMENTS -- final judgment or judgments for
the payment of money aggregating in excess of two million five hundred
thousand dollars ($2,500,000) is or are outstanding against one or more of
the Company and the Subsidiaries and any one of such judgments shall have
been outstanding for more than thirty (30) days from the date of its entry
and shall not have been discharged in full or stayed; or
(K) CERTAIN OBLIGATIONS -- the undertakings of any Guarantor under the
Joint and Several Guaranty shall at any time cease to constitute the legal,
valid and binding obligation of such Guarantor, or any Guarantor or any
Person acting by or on behalf of any Guarantor shall deny or disaffirm such
Guarantor's obligations under the Joint and Several Guaranty or any
undertaking of the Company hereunder shall at any time cease to constitute
the legal, valid and binding obligation of the Company, enforceable against
the Company.
If any action, condition, event or other matter would, at any time, constitute
an Event of Default under any provision of this Section 8.1, then an Event of
Default shall exist, regardless of whether the same or a similar action,
52
condition, event or other matter is addressed in a different provision of this
Section 8.1 and would not constitute an Event of Default at such time under such
different provision.
8.2 DEFAULT REMEDIES.
(A) ACCELERATION ON EVENT OF DEFAULT. If an Event of Default
specified in clause (g), (h) or (i) of Section 8.1 shall exist, all of the
Notes at the time outstanding shall automatically become immediately due
and payable together with interest accrued thereon and, to the extent
permitted by law, the Make-Whole Amount at such time with respect to the
principal amount of such Notes, and all other amounts due under the
Financing Documents, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and, if any other Event of
Default shall exist, the holder or holders of at least thirty-five percent
(35%) in principal amount of the Notes then outstanding (exclusive of Notes
then owned by any one or more of the Company, any Subsidiary and any
Affiliate) may exercise any right, power or remedy permitted to such holder
or holders by law, and shall have, in particular, without limiting the
generality of the foregoing, the right to declare the entire principal of,
and all interest accrued on, all the Notes then outstanding to be, and such
Notes shall thereupon become, forthwith due and payable, without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, and the Company shall forthwith pay to the holder
or holders of all the Notes then outstanding the entire principal of, and
interest accrued on, the Notes and, to the extent permitted by law, the
Make-Whole Amount at such time with respect to such principal amount of the
Notes.
(B) ACCELERATION ON PAYMENT DEFAULT. During the existence of an Event
of Default described in Section 8.1(a) or Section 8.1(b), and irrespective
of whether the Notes then outstanding shall have been declared to be due
and payable pursuant to Section 8.2(a), any holder of Notes who or that
shall have not consented to any waiver with respect to such Event of
Default may, at its option, by notice in writing to the Company, declare
the Notes then held by such holder to be, and such Notes shall thereupon
become, forthwith due and payable together with all interest accrued
thereon, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and the Company shall
forthwith pay to such holder the entire principal of and interest accrued
on such Notes and, to the extent permitted by law, the Make-Whole Amount at
such time with respect to such principal amount of the Notes and all other
amounts due under the Financing Documents.
53
(C) VALUABLE RIGHTS. The Company acknowledges, and the parties hereto
agree, that the right of each holder to maintain its investment in the
Notes free from repayment by the Company (except as herein specifically
provided for) is a valuable right and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes of any Series
are prepaid or are accelerated as a result of an Event of Default is
intended to provide compensation for the deprivation of such right under
such circumstances.
(D) OTHER REMEDIES. During the existence of an Event of Default and
irrespective of whether the Notes then outstanding shall have been declared
to be due and payable pursuant to Section 8.2(a) or Section 8.2(b) and
irrespective of whether any holder of Notes then outstanding shall
otherwise have pursued or be pursuing any other rights or remedies, but
subject to the terms and conditions of the Trust Agreement, any holder of
Notes may proceed to protect and enforce its rights hereunder, under such
Notes and under the other Financing Documents by exercising such remedies
as are available to such holder in respect thereof under applicable law,
either by suit in equity or by action at law, or both, whether for specific
performance of any agreement contained herein or in aid of the exercise of
any power granted herein, provided that the maturity of such holder's Notes
may be accelerated only in accordance with Section 8.2(a) and Section
8.2(b).
(E) NONWAIVER AND EXPENSES. No course of dealing on the part of any
holder of Notes nor any delay or failure on the part of any holder of Notes
to exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies. If the Company shall
fail to pay when due any principal of, or Make-Whole Amount or interest on,
any Note, or shall fail to comply with any other provision of the Financing
Documents, the Company shall pay to each holder of Notes, to the extent
permitted by law, such further amounts as shall be sufficient to cover the
costs and expenses, including but not limited to reasonable attorneys'
fees, incurred by such holder in collecting any sums due on such Notes or
in otherwise assessing, analyzing or enforcing any rights or remedies that
are or may be available to it.
8.3 ANNULMENT OF ACCELERATION OF NOTES.
If a declaration is made pursuant to Section 8.2(a), then and in every such
case, the holders of sixty-six percent (66%) in aggregate principal amount of
the Notes then outstanding (exclusive of Notes then owned by any one or more of
the Company, any Subsidiary and any Affiliate) may, by written instrument filed
with the Company, rescind and annul such declaration, and
54
the consequences thereof, provided that at the time such declaration is annulled
and rescinded:
(A) no judgment or decree shall have been entered for the payment of
any moneys due on or pursuant hereto or the Notes;
(B) all arrears of interest upon all the Notes and all other sums
payable hereunder and under the Notes (except any principal of, or interest
or Make-Whole Amount on, the Notes that shall have become due and payable
by reason of such declaration under Section 8.2(a)) shall have been duly
paid; and
(C) each and every other Default and Event of Default shall have been
waived pursuant to Section 10.5 or otherwise made good or cured; and
provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereon.
9. INTERPRETATION OF THIS AGREEMENT
9.1 TERMS DEFINED.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section following such term:
ACCEPTABLE BANK - means any commercial bank
(A) that is organized under the laws of the United States or any
state thereof,
(B) that has capital, surplus and undivided profits aggregating
at least five hundred million dollars ($500,000,000), and
(C) whose long-term unsecured debt obligations (or the long-term
unsecured debt obligations of the bank holding company owning all of
the capital stock of such bank) shall be rated "A3" or higher by
Moody's or "A-" or higher by Standard & Poor's (or comparable ratings
by any comparable successor agency).
ACCEPTABLE CONSIDERATION -- means, with respect to any Transfer of any
Property of the Company or any Subsidiary, cash consideration, promissory
notes or such other consideration (or any combination of the foregoing) as
is, in each case, determined by the Board of Directors of the Company or
such Subsidiary, in its good faith opinion, to be in the best interests of
the Company and to reflect the Fair Market Value of such Property.
55
ACCEPTABLE RATING -- means a rating of at least Baa2 by Moody's and,
in addition, a rating of at least BBB by Standard & Poor's.
AFFILIATE -- means, at any time, a Person (other than a Subsidiary)
(A) that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Company,
(B) that beneficially owns or holds five percent (5%) or more of
any class of the Voting Stock of the Company, or
(C) five percent (5%) or more of the Voting Stock (or in the case
of a Person that is not a corporation, five percent (5%) or more of
the equity interest) of which is beneficially owned or held by the
Company or a Subsidiary,
at such time.
As used in this definition:
Control -- means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by
contract or otherwise.
AGREEMENT, THIS -- means this agreement, as it may be amended or
restated from time to time.
APPLICABLE H.15 -- means, at any time, United States Federal Reserve
Statistical Release H.15(519) or its successor publication most recently
published and available to the public at such time, or if no such successor
publication is available, then any other source of current information in
respect of interest rates on securities of the United States of America
that is generally available and, in the sole judgment of the Required
Holders, provides information reasonably comparable to the H.15(519)
report.
ASSUMPTION AGREEMENT - means that certain Assumption Agreement
pursuant to which Packing LLC agrees to assume the obligations of, and
become a party to, the Packing-Bladen Deed of Trust and the Packing
Security Agreement in the form of Exhibit E attached hereto to be recorded
in the Land Records of Bladen County, North Carolina immediately following
the recordation of the deed or other instrument of transfer of the Property
which is the subject thereof from Packing to Packing LLC.
56
BANK FUNDED DEBT AMOUNT -- means, at any time, the smallest average
daily principal amount of all Debt of the Company and the Subsidiaries
under all Revolving Credit Agreements of the Company and the Subsidiaries
which is outstanding during any period of thirty (30) consecutive days
selected by the Company falling within the three hundred sixty-five (365)
day period ending at such time.
BLADEN COUNTY COGENERATION PROPERTY -- means that certain piece or
parcel of land located in Hollow Township, Bladen County, North Carolina,
together with a certain twenty-five (25) foot right of way easement, which
property is more particularly described in that certain Deed made and
entered into on or around July 16, 1997, by and between The Smithfield
Packing Company, Incorporated, as grantor and party of the first part, and
United Supply of America, as grantee and party of the second part, together
with any and all buildings, structures, improvements, fixtures, equipment,
machinery and other property now or hereafter affixed to, located on,
within or beneath, or used in connection with said property.
BLADEN COUNTY OPTION DOCUMENTS -- means that certain Steam Purchase
and Sales Agreement dated July 16, 1997, between United Supply of America,
as supplier, and The Smithfield Packing Company, Incorporated, as
purchaser, together with that certain Memorandum of Option to Purchase made
and executed by United Supply of America in connection therewith or any
other instruments and agreements pursuant to which The Smithfield Packing
Company, Incorporated, or its successors and assigns, may acquire all or
any portion of the Bladen County Cogeneration Property.
BOARD OF DIRECTORS -- means, at any time with respect to any Person,
the board of directors of such Person, or any committee thereof which, in
the instance, shall have the lawful power to exercise the power and
authority of such board of directors.
▇▇▇▇▇'▇ -- means ▇▇▇▇▇'▇ of Carolina, Inc., a North Carolina
corporation, and its successors and assigns.
BUSINESS DAY -- means
(A) with respect to any payment to be made to the holder of any
Note under any of the Financing Documents, a day other than a
Saturday, a Sunday or a day on which the bank designated by such
holder to receive for such holder's account payments on such Note is
required by law (other than a general banking moratorium or holiday
for a period exceeding four (4) consecutive days) to be closed, and
57
(B) for all other purposes, a day other than a Saturday, a Sunday
or a day on which the national banks located in New York City, New
York, are required by law (other than a general banking moratorium or
holiday for a period exceeding four (4) consecutive days) to be
closed.
CAPITAL LEASE -- means a lease with respect to which the lessee is
required to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP, or for which the amount of the asset and
the liability thereunder, as if so capitalized, should be disclosed in a
note to such balance sheet.
CAPITAL LEASE OBLIGATION -- means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease that would appear as a liability on a balance
sheet of such Person prepared in accordance with GAAP.
CHANGE IN CONTROL -- means the acquisition at any time after the
Closing Date by any Person or group of related Persons of beneficial
ownership of more than fifty percent (50%) of the Voting Stock of the
Company outstanding (excluding for such purpose Persons who own shares
through any employee benefit plan of the Company or any trust in connection
therewith) at such time.
CLOSING -- Section 1.2(b).
CLOSING DATE -- Section 1.2(b).
COLLATERAL -- shall have the meaning assigned to such term in the
Trust Agreement.
COLLATERAL RELEASE CONDITIONS -- means, at any time:
(A) the Acceptable Rating is in full force and effect, not having
been withdrawn by Moody's or Standard & Poor's;
(B) any and all Liens on Property of the Company or any Guarantor
securing Debt incurred under or pursuant to each Revolving Credit
Agreement of the Company or any Subsidiary have been released or will
be released on or prior to the Collateral Release Date;
(C) the aggregate principal amount of all Debt of the Company and
the Subsidiaries secured by Liens permitted solely by Section
6.13(a)(x) does not exceed fifteen percent (15%) of Consolidated
Tangible Net Worth, determined at such time;
58
(D) the Company and the holders of the Notes shall have entered
into an amendment to the Note Purchase Agreements, in form and
substance satisfactory to all holders of the Notes, which provides for
an amendment to the covenants set forth in Section 6.4 through 6.15,
inclusive, such that the Company's obligations concerning its
financial condition and results of operations are established in a
manner which, if complied with, would result in the Company at all
times maintaining an Acceptable Rating for its long term, senior
unsecured debt; and
(E) no Default or Event of Default exists;
in each case as of such time.
COLLATERAL RELEASE DATE -- Section 1.5.
COMPANY -- has the meaning specified in the introductory sentence.
COMPANY FISCAL YEAR NET WORTH INCREASE AMOUNT -- means, for any fiscal
year of the Company, the greater of
(I) fifty percent (50%) of Consolidated Net Income for such
fiscal year and
(II) zero dollars ($0).
CONSOLIDATED CURRENT ASSETS -- means, at any time, the aggregate
amount at which the current assets of the Company and the Subsidiaries
would be shown on a consolidated balance sheet for such Persons at such
time.
CONSOLIDATED CURRENT LIABILITIES -- means, at any time, the aggregate
amount of current liabilities of the Company and the Subsidiaries as would
be shown on a consolidated balance sheet for such Persons at such time
including, without limitation, all liabilities of the Company and the
Subsidiaries under the Revolving Credit Facilities (other than the Bank
Funded Debt Amount) at such time.
CONSOLIDATED EBITDA -- means, with respect to any fiscal period, the
sum of
(A) Consolidated Net Income, plus
(B) the aggregate amount of all interest expense, depreciation,
amortization and income taxes,
59
(to the extent, and only to the extent, that such aggregate amount was
deducted in the computation of Consolidated Net Income), in each case
accrued for such period by the Company.
CONSOLIDATED FIXED CHARGES -- means, with respect to any fiscal
period, the sum of
(A) the amount payable in respect of such fiscal period with
respect to interest due on, or with respect to, Debt (including,
without limitation, the Notes) owing by or guaranteed by any one or
more of the Company and the Subsidiaries and including, without
limitation, amortization of debt discount and expense and imputed
interest in respect of Capital Lease Obligations of the Company and
the Subsidiaries, plus
(B) the amount payable in respect of such fiscal period with
respect to Operating Rentals payable by any one or more of the Company
and the Subsidiaries,
determined on a consolidated basis for the Company and the Subsidiaries for
such period.
CONSOLIDATED FUNDED DEBT -- means, at any time, the aggregate amount
of Funded Debt of the Company and the Subsidiaries, determined on a
consolidated basis for such Persons at such time.
CONSOLIDATED INTANGIBLE ASSETS -- means, at any time, the aggregate
amount of Intangible Assets of the Company and the Subsidiaries, determined
on a consolidated basis at such time.
CONSOLIDATED NET INCOME -- means, with respect to any fiscal period,
net earnings (or loss) after income taxes of the Company and the
Subsidiaries determined on a consolidated basis for such Persons for such
period, provided there shall be excluded:
(A) any net income or gain (or net loss) during such period from
any extraordinary items, and
(B) the income (or loss) of any Person (other than a Subsidiary)
in which the Company or any Subsidiary has an ownership interest,
except to the extent that any such income has been actually received
by the Company or such Subsidiary in the form of cash dividends or
similar cash distributions.
CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES -- means, with
respect to any fiscal period, the sum of
60
(A) Consolidated Net Income, plus
(B) the aggregate amount of
(I) income taxes, and
(II) Consolidated Fixed Charges,
(to the extent, and only to the extent, that such aggregate amount was
reflected in the computation of Consolidated Net Income),
in each case accrued for such period by the Company and the Subsidiaries,
determined on a consolidated basis for such Persons.
CONSOLIDATED SENIOR FUNDED DEBT -- means, at any time, the result of
(a) Consolidated Funded Debt at such time minus (b) Senior Subordinated
Debt at such time.
CONSOLIDATED SHAREHOLDERS' EQUITY -- means, at any time, the aggregate
amount of shareholders' equity of the Company and the Subsidiaries as would
be shown on a consolidated balance sheet of such Persons at such time.
CONSOLIDATED TANGIBLE NET WORTH -- means, at any time, the result of
(a) Consolidated Shareholders' Equity, minus
(b) Consolidated Intangible Assets,
determined in each case at such time.
CONSOLIDATED TOTAL ASSETS -- means, at any time, the aggregate amount
at which all assets of the Company and the Subsidiaries would be shown on a
consolidated balance sheet for such Persons at such time.
CONSOLIDATED TOTAL CAPITALIZATION -- means, at any time, the sum of
(a) Consolidated Shareholders' Equity, plus
(b) Consolidated Funded Debt,
determined in each case at such time.
CONSOLIDATED TOTAL LIABILITIES -- means, at any time, the aggregate
amount at which all liabilities of the Company and the Subsidiaries
(including, without limitation, (a) all Guaranties of Debt by
61
such Persons and (b) all amounts attributable to Mandatorily Redeemable Stock of
the Company and the Subsidiaries to the extent that such Mandatorily Redeemable
Stock is redeemable within one year of such time) would be shown on a
consolidated balance sheet for such Persons at such time.
CONSOLIDATED WORKING CAPITAL -- means, at any time, the result of
(A) Consolidated Current Assets, minus
(B) Consolidated Current Liabilities,
determined in each case at such time.
CONTROL EVENT -- means
(A) the execution by the Company, any Subsidiary or any Affiliate
of any letter of intent with respect to any proposed transaction or
event or series of transactions or events that, individually or in the
aggregate, could reasonably be expected to result in a Change in
Control,
(B) the execution of any written agreement that, when fully
performed by the parties thereto, would result in a Change in Control,
or
(C) the making of any written offer by any Person to the holders
of Voting Stock of the Company which offer, if accepted by the
requisite number of such holders, would result in a Change in Control.
CONTROL PREPAYMENT DATE -- Section 4.3(a).
CREDIT FACILITY -- means that certain Credit Agreement among the
Company, certain of the Subsidiaries, The Chase Manhattan Bank as administrative
agent and the lenders party thereto, providing for an aggregate amount of up to
six hundred fifty million dollars ($650,000,000) in loans to the Company, as
amended from time to time.
DEBT -- means, at any time, with respect to any Person, without
duplication:
(A) all obligations of such Person for borrowed money (including,
without limitation, all obligations of such Person evidenced by any
debenture, bond, note, commercial paper or Security, but also
including all such obligations for borrowed money not so evidenced);
62
(B) all obligations of such Person to pay the deferred purchase
price of Property or services, all conditional sale obligations of such
Person and all obligations of such Person under any title retention
agreements, provided that accounts payable incurred in the ordinary course
of business of such Person shall be excluded from this clause (b);
(C) all Capital Lease Obligations of such Person;
(D) all obligations for borrowed money secured by any Lien
existing on Property owned by such Person (whether or not such obligations
have been assumed by such Person or recourse in respect thereof is available
against such Person); and
(E) any Guaranty of such Person of any obligation or liability of
another Person of a type described in any of clause (a) through clause
(d), inclusive, of this definition.
Debt of a Person shall include all obligations of such Person of the character
described in clause (a) through clause (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
DEEDS OF TRUST -- means, collectively, the Packing-Smithfield Deed of
Trust, the Packing-Bladen Deed of Trust, the ▇▇▇▇▇▇▇▇-Smithfield Deed of Trust
and the ▇▇▇▇▇▇▇ Mortgage.
DEFAULT -- means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.
DEPRECIATION -- means, for any fiscal year of the Company, the
aggregate amount of depreciation attributable to the "Improvements" (as such
term is defined in the Deeds of Trust) which would be included in the total
amount of depreciation that would be shown on a statement of income prepared in
respect of the Company and the Subsidiaries on a consolidated basis for such
fiscal year.
DISTRIBUTION -- means
(A) any dividend or other distribution, direct or indirect, on
account of capital stock of the Company or any Subsidiary (except
dividends payable solely in shares of capital stock other than
Mandatorily Redeemable Stock of the Company or such Subsidiary), and
63
(B) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any capital stock of the Company or any
Subsidiary, or of any warrants, rights or other options to acquire any
shares of such capital stock.
ENVIRONMENTAL INDEMNIFICATION AGREEMENT -- means, collectively, the
environmental indemnification agreements, dated as of July 15, 1996, as amended
from time to time, entered into by the Company with each of Packing, ▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇, to and for the benefit of the Security Trustee and the holders of
the Notes.
ENVIRONMENTAL PROTECTION LAW -- means any federal, state, county,
regional or local law, statute, or regulation (including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Superfund Amendments and
Reauthorization Act, all amendments to any of the foregoing and all rules and
regulations issued in connection therewith) enacted in connection with or
relating to the protection or regulation of the environment, including, without
limitation, those laws, statutes, and regulations regulating the disposal,
removal, production, storing, refining, handling, transferring, processing, or
transporting of Hazardous Substances, and any regulations, issued or promulgated
in connection with such statutes by any Governmental Authority and any orders,
decrees or judgments issued by any court of competent jurisdiction in connection
with any of the foregoing.
ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
ERISA AFFILIATE -- means any corporation or trade or business that
(I) is a member of the same controlled group of corporations
(within the meaning of section 414(b) of the IRC) as the Company, or
(II) is under common control (within the meaning of section
414(c) of the IRC) with the Company.
EVENT OF DEFAULT -- Section 8.1.
EXCLUDED TRANSFERS -- Section 6.15(a)(iii).
EXISTING NOTE PURCHASE AGREEMENT -- Section 1.1.
FAIR MARKET VALUE -- means, at any time, with respect to any Property,
the sale value of such Property that would be realized in an arm's-length
sale at such time between an informed and willing buyer,
64
and an informed and willing seller, under no compulsion to buy or sell,
respectively.
FINANCING DOCUMENTS -- means the Note Purchase Agreements, the Notes,
the Joint and Several Guaranty, the Joinder Agreement, the Security Documents,
the Intercreditor Agreement, the Environmental Indemnification Agreement and the
other agreements and instruments to be executed pursuant to the terms of each of
such Financing Documents, as each may be amended from time to time.
FOREIGN PENSION PLAN -- means any plan, fund or other similar program
(A) established or maintained outside of the United States of
America by any one or more of the Company or the Subsidiaries
primarily for the benefit of the employees (substantially all of whom
are aliens not residing in the United States of America) of the
Company or such Subsidiaries which plan, fund or other similar program
provides for retirement income for such employees or results in a
deferral of income for such employees in contemplation of retirement,
and
(B) not otherwise subject to ERISA.
FUNDED DEBT -- means, at any time, with respect to any Person, without
duplication:
(A) all Debt of such Person (including, without limitation, the
current portion thereof) that by its terms or by the terms of any
instrument or agreement relating thereto matures, or that is otherwise
payable or unpaid, more than one (1) year from, or is directly or
indirectly renewable or extendible at the option of such Person to a
date more than one (1) year (including, without limitation, an option
of the debtor under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of more than one
(1) year) from, the date of the creation of such Debt (notwithstanding
that such Debt may be under certain contingencies payable on demand or
within one (1) year after such date of creation), provided, however,
that, with respect to the Company and the Subsidiaries, such Debt
shall include, without duplication, only the Bank Funded Debt Amount
and no other portion of any Debt outstanding under the Credit
Facility;
(B) all Capital Lease Obligations of such Person; and
65
(C) all Debt of such Person of the type specified in clause (e)
of the definition of "Debt," provided that such Debt of such Person is
in respect of or in support of Funded Debt of another Person.
GAAP -- means generally accepted accounting principles as set forth
from time to time in the statements, opinions and pronouncements of the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such statements, opinions and pronouncements of such other entities
as shall be approved by a significant segment of the accounting profession in
the United States of America.
GOVERNMENTAL AUTHORITY -- means
(A) the government of
(I) the United States of America and any state or other
political subdivision thereof, or
(II) any jurisdiction (A) in which the Company or any
Subsidiary conducts all or any part of its business or (B) that
asserts jurisdiction over the conduct of the affairs or
Properties of the Company or any Subsidiary, or
(B) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
GUARANTOR -- means each of the Original Guarantors, each of the New
Guarantors and each other Person that becomes a "Guarantor" pursuant to the
Joint and Several Guaranty.
GUARANTY -- means, with respect to any Person (for the purposes of
this definition, the "SUBJECT GUARANTOR"), any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (the "PRIMARY
OBLIGOR") in any manner (including, without limitation, obligations that arise
as a matter of law or otherwise as a result of such Person's status as a general
partner in a partnership or a holder of equity or other Property interest in a
corporation, partnership, limited liability company or other business operation
commonly referred to as a "joint venture"), whether directly or indirectly,
including (without limitation) obligations incurred through an agreement,
contingent or otherwise, by the Subject Guarantor:
26
(A) to purchase such indebtedness or obligation or any Property
or assets constituting security therefor;
(B) to advance or supply funds
(I) for the purpose of payment of such indebtedness or
obligation, or
(II) to maintain working capital or other balance sheet
condition or any income statement condition of the Primary
Obligor or otherwise to advance or make available funds for
the purchase or payment of such indebtedness or obligation;
(C) to lease Property or to purchase Securities or other Property
or services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the Primary Obligor to
make payment of the indebtedness or obligation; or
(D) otherwise to assure the owner of the indebtedness or
obligation of the Primary Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty, in connection with
any computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the Subject Guarantor.
▇▇▇▇▇▇▇▇ -- means ▇▇▇▇▇▇▇▇ of Smithfield, Ltd., a Delaware
corporation, together with its successors and assigns.
▇▇▇▇▇▇▇▇ SECURITY AGREEMENT -- means the Security Agreement, dated as
of July 15, 1996, as amended from time to time, between ▇▇▇▇▇▇▇▇ and the
Security Trustee, pursuant to which ▇▇▇▇▇▇▇▇ has granted a first-priority lien
on and a security interest in certain personal property of ▇▇▇▇▇▇▇▇ to the
Security Trustee for the benefit of the holders of the Notes.
▇▇▇▇▇▇▇▇-SMITHFIELD DEED OF TRUST -- means the Amended, Restated and
Consolidated Deed of Trust, Security Agreement and Assignment of Rents and
Leases, dated as of July 15, 1996, as amended from time to time, by ▇▇▇▇▇▇▇▇ in
favor of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as trustees, for the benefit of
the Security Trustee.
▇▇▇▇▇▇▇▇-SMITHFIELD PROPERTY -- means the real Property of ▇▇▇▇▇▇▇▇
identified in the ▇▇▇▇▇▇▇▇-Smithfield Deed of Trust.
67
HAZARDOUS SUBSTANCES -- means any and all pollutants, contaminants,
toxic or hazardous wastes or any other substances that might pose a hazard to
health or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage,
or filtration of which is or shall be restricted, prohibited or penalized by any
applicable law (including, without limitation, asbestos, radon gas, urea
formaldehyde foam insulation, polychlorinated biphenyls, radioactive materials,
petroleum and petroleum derivatives and by-products).
INSTITUTIONAL INVESTOR -- means the Noteholders, any affiliate of any
of the Noteholders, and any holder of Notes that is an "accredited
investor" as defined in Section 2(15) of the Securities Act.
INTANGIBLE ASSETS - means, with respect to any Person at any time, the
following:
(A) patents, copyrights, trademarks, trade names, service marks,
brand names, franchises, goodwill, experimental expenses and other
similar intangibles;
(B) deferred assets (other than prepaid taxes, prepaid insurance,
prepaid contract payments, prepaid license fees and other prepaid
expenses which are refundable);
(C) unamortized debt discount and expense; and
(D) all other Property which would be considered to be intangible
under GAAP.
INTERCREDITOR AGREEMENT -- means the Intercreditor Agreement, dated as
of July 15, 1996, as amended from time to time, among the Company, ▇▇▇▇▇▇▇▇,
Packing, SFFC, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, ▇▇▇▇▇'▇ and the Secured Parties (as
defined therein).
INVESTMENT -- means any investment, made in cash or by delivery of
Property, by the Company or any Subsidiary:
(A) in any Person, whether by acquisition of stock, indebtedness
or other obligation or Security, or by loan, Guaranty, advance,
capital contribution or otherwise; or
(B) in any Property.
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IRC -- means the Internal Revenue Code of 1986, together with all
rules and regulations promulgated pursuant thereto, as amended from time to
time.
IRS -- means the Internal Revenue Service and any successor agency.
JOINDER AGREEMENT -- means the Joinder Agreement, dated as of the
Closing Date, entered into by each of the Guarantors, relating to the Joint
and Several Guaranty.
JOINT AND SEVERAL GUARANTY -- means the Joint and Several Guaranty,
dated as of July 15, 1996, entered into by the Original Guarantors, as amended
by the Joinder Agreement and as further amended or restated from time to time.
LIEN -- means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, deed of trust,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to give
any of the foregoing. The term "Lien" includes reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property. For the purposes of this
definition, each of the Company and the Subsidiaries is deemed to be the owner
of any Property that it shall have acquired or holds subject to a conditional
sale agreement, Capital Lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for security
purposes, and such retention or vesting is deemed a Lien. The term "Lien" does
not include negative pledge clauses in agreements relating to the borrowing of
money.
MAKE-WHOLE AMOUNT -- means, at any time, with respect to a principal
amount of Notes being prepaid (in whole or in part) or accelerated, the
greater of
(A) Zero Dollars ($0), and
(B) the remainder of
(I) the sum of the present values of the then remaining
scheduled payments of principal and interest that
69
would be payable but for the prepayment or acceleration of such
principal amount of Notes being prepaid or accelerated, minus
(II) the sum of
(A) the aggregate principal amount of the Notes so
prepaid or accelerated, plus
(B) interest on such principal amount accrued during
the period beginning on the most nearly preceding scheduled
interest payment date preceding prepayment or acceleration
and ending on the date such principal amount was prepaid or
accelerated.
In determining such present values, a discount rate equal to the Make-Whole
Discount Rate at such time with respect to such principal amount of Notes being
prepaid or accelerated divided by four (4), and a discount period of three (3)
months of thirty (30) days each shall be used.
MAKE-WHOLE DISCOUNT RATE -- means, at any time, with respect to a
principal amount of Notes being prepaid or accelerated,
(A) the per annum percentage rate (rounded to the nearest three
decimal places) equal to
(I) the annual yield to maturity at such time of the United
States Treasury obligation listed in the then Applicable H.15 for
the most recently available day in such Applicable H.15 with a
Treasury Constant Maturity (as such term is defined in such
Applicable H.15) equal to the Weighted Average Life to Maturity
of the principal amount of the Notes then being prepaid or
accelerated, or, if no such United States Treasury obligation is
so listed, then
(II) the annual yield to maturity at such time determined by
interpolating between
(A) the annual yield to maturity of the United States
Treasury obligations listed in such Applicable H.15 with a
Treasury Constant Maturity (as such term is defined in such
Applicable H.15) most nearly equal to and less than the
Weighted Average Life to Maturity of the principal amount of
Notes then being prepaid or accelerated, and
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(B) the annual yield to maturity of the United States
Treasury obligations listed in such Applicable H.15 with a
Treasury Constant Maturity (as such term is defined in such
Applicable H.15) most nearly equal to and greater than the
Weighted Average Life to Maturity of the principal amount of
Notes then being prepaid or accelerated, plus
(B) fifty one-hundredths percent (0.50%) per annum.
As used in this definition:
Remaining Dollar-Years -- at any time with respect to any
indebtedness for borrowed money means the product obtained by
(a) multiplying
(i) the amount of each then remaining required
principal payment (including repayment of principal at final
maturity) of such borrowing unpaid immediately prior to such
time, by
(ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such time and the date
each such required principal payment is due, and
(b) calculating the sum of the products obtained in the
preceding subsection (a).
Weighted Average Life to Maturity -- at any time with respect to
any indebtedness for borrowed money means the number of years obtained by
dividing the then Remaining Dollar-Years of such indebtedness at such time
by the then outstanding principal amount of such indebtedness.
MANDATORILY REDEEMABLE STOCK -- means, with respect to any Person, each
share of such Person's capital stock to the extent that it is (a) redeemable,
payable or required to be purchased or otherwise retired or extinguished, or
convertible into Debt of such Person (i) at a fixed or determinable date,
whether by operation of a sinking fund or otherwise, (ii) at the option of any
Person other than such Person or (iii) upon the occurrence of a condition not
solely within the control of such Person, such as redemption required to be made
out of future earnings or (b) convertible into other Mandatorily Redeemable
Stock of such Person.
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MATERIAL ADVERSE EFFECT -- means, with respect to any event or
circumstance (either individually or in the aggregate with all other events and
circumstances), an effect caused thereby or resulting therefrom that would be
materially adverse as to, or in respect of
(A) the business, prospects, profits, Properties or condition
(financial or otherwise) of the Company (individually) or the Company
and the Subsidiaries (taken as a whole),
(B) the ability of the Company to perform its obligations set
forth herein and in the Notes or the ability of any Guarantor to
perform its obligations under the Joint and Several Guaranty, or
(C) any of the rights or remedies of the holders of the Notes
under any Financing Document or the enforceability of any Financing
Document against the Company or any Guarantor.
MOODY'S -- means ▇▇▇▇▇'▇ Investors Service, Inc.
▇▇▇▇▇▇▇ -- means ▇▇▇▇ ▇▇▇▇▇▇▇ & Co., a Delaware corporation, and its
successors and assigns.
▇▇▇▇▇▇▇ MORTGAGE -- means the Mortgage, Security Agreement and
Assignment of Rents and Leases, dated as of July 15, 1996, as amended from
time to time, by ▇▇▇▇▇▇▇ in favor of the Security Trustee.
▇▇▇▇▇▇▇ PENSION PLANS -- means, collectively, the defined benefit
Pension Plan administered for salaried employees of ▇▇▇▇▇▇▇ and the defined
benefit Pension Plan administered for hourly employees of ▇▇▇▇▇▇▇, in each case
as maintained on the Closing Date by ▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ SECURITY AGREEMENT -- means the Security Agreement, dated as
of July 15, 1996, as amended from time to time, between ▇▇▇▇▇▇▇ and the Security
Trustee, pursuant to which ▇▇▇▇▇▇▇ has granted a first-priority lien on and a
security interest in certain personal property of ▇▇▇▇▇▇▇ to the Security
Trustee for the benefit of the holders of the Notes.
MULTIEMPLOYER PLAN -- means any multiemployer plan (as defined in
Section 3(37) of ERISA) in respect of which the Company or any ERISA Affiliate
is an "employer" (as such term is defined in Section 3(5) of ERISA).
MULTIPLE EMPLOYER PENSION PLAN -- means any employee benefit plan
within the meaning of Section 3(3) of ERISA (other than a Multiemployer Plan),
subject to Title IV of ERISA, to which the Company or any ERISA Affiliate and an
employer (as such term is defined in
72
Section 3 of ERISA) other than an ERISA Affiliate or the Company contribute.
NEW GUARANTORS -- means each of ▇▇▇▇▇▇▇'▇ Foods, Inc., ▇▇▇▇▇▇▇'▇
Realty, Inc., ▇▇▇▇▇▇▇'▇ Realty Partnership, North Side Foods Corp., ▇▇▇▇▇ Meat
Group, Inc., Circle Four Corporation, ▇▇▇▇▇'▇ Farms, LLC, ▇▇▇▇▇▇▇'▇ Foods of
Virginia, Inc., Smithfield-▇▇▇▇▇▇▇'▇ Farms, Central Plains Farms, Inc., Packing
LLC and ▇▇▇▇▇▇ Farms, Inc.
1999 NOTE PURCHASE AGREEMENT -- means, collectively, the separate Note
Purchase Agreements, dated as of October 27, 1999, as amended up to and
including the Closing Date, between the Company and each of the purchasers named
on Annex 1 thereto.
NOTE -- Section 1.1.
NOTE PURCHASE AGREEMENTS -- Section 1.2(c).
NOTEHOLDER -- means the Persons listed as holders of Notes on Annex 1
hereto.
OBLIGORS --means the Company and the Guarantors.
OPERATING LEASE -- means any lease other than a Capital Lease.
OPERATING RENTALS -- means, at any time, all fixed and contingent
payments (other than amounts constituting the purchase price payable by the
lessee to acquire title to the Property which is the subject of a lease) that
the lessee is required to make by the terms of any Operating Lease.
ORIGINAL GUARANTORS -- means each of ▇▇▇▇▇▇▇▇ of Smithfield, Ltd.,
▇▇▇▇▇▇▇, The Smithfield Packing Company, Incorporated, SFFC, Inc., ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Incorporated and ▇▇▇▇▇'▇.
PACKING - means The Smithfield Packing Company, Incorporated, a
Virginia corporation, together with its successors and assigns.
PACKING LLC - means Smithfield Packing Real Estate, LLC, a Delaware
limited liability company, and a Wholly-Owned Subsidiary.
PACKING SECURITY AGREEMENT -- means the Security Agreement, dated as
of July 15, 1996, as amended from time to time, between ▇▇▇▇▇▇▇▇ and the
Security Trustee, pursuant to which ▇▇▇▇▇▇▇▇ has granted a first-priority lien
on and a security interest in certain personal property of ▇▇▇▇▇▇▇▇ to the
Security Trustee for the benefit of the holders
73
of the Notes, and as assumed by Packing LLC pursuant to the Assumption
Agreement.
PACKING-BLADEN DEED OF TRUST - means the Amended and Restated Deed of
Trust, Security Agreement and Assignment of Rents and Leases, dated as of July
15, 1996, as amended from time to time, by Packing in favor of The Fidelity
Company, as trustee, for the benefit of the Security Trustee, as assumed by
Packing LLC pursuant to the Assumption Agreement.
PACKING-SMITHFIELD DEED OF TRUST -- means the Amended, Restated and
Consolidated Deed of Trust, Security Agreement and Assignment of Rents and
Leases, dated as of July 15, 1996, as amended from time to time, by Packing in
favor of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇, as trustees, for the benefit of
the Security Trustee..
PBGC - means the Pension Benefit Guaranty Corporation and any successor
corporation or governmental agency.
PENSION PLAN -- means, at any time, any "employee pension benefit
plan" (as such term is defined in Section 3(2) of ERISA) maintained at such time
by the Company or any ERISA Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan, but including, without limitation
any Multiple Employer Pension Plan.
PERMITTED DISTRIBUTIONS -- Section 6.12(a).
PERMITTED EXCEPTIONS -- means each of the items constituting a
"Permitted Exception" in each of the Deeds of Trust.
PERSON -- means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
PRE-CLOSING EVENTS OF DEFAULT -- means any Event of Default which may
have occurred on or after the date hereof and prior to the Closing Date which
shall have resulted from a failure by the Company to perform its obligations
under Section 6.11 or Section 6.12 of the Existing Note Purchase Agreement.
PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
74
PURCHASE MONEY LIEN -- means:
(A) a Lien held by any Person (whether or not the seller of such
Property) on tangible Property (or a group of related items of Property
the substantial portion of which are tangible) acquired or constructed
by the Company or any Subsidiary, which Lien secures all or a portion
of the related purchase price or construction costs of such Property,
provided that such Lien
(I) is created contemporaneously with, or within one hundred
eighty (180) days of, such acquisition or construction,
(II) encumbers only Property purchased or constructed after
the Closing Date and acquired with the proceeds of the Debt
secured thereby, and
(III) is not thereafter extended to any other Property; and
(B) any Lien existing on Property of any corporation at the time
it becomes a Subsidiary, provided that
(I) no such Lien shall extend to or cover any Property other
than the Property subject to such Lien at the time of any such
transaction, and
(II) such Lien was not created in contemplation of any such
transaction.
REQUIRED HOLDERS -- means, at any time, the holder or holders of at
least sixty-six and two-thirds percent (66-2/3%) in principal amount of the
Notes at the time outstanding (exclusive of Notes then owned by any one or more
of the Company, any Subsidiary or any Affiliate), without regard to Series of
such outstanding Notes.
RESTRICTED INVESTMENTS -- means, at any time, all Investments except
the following:
(A) Investments in existence on the Closing Date and described on
Part 9.1(RI) of Annex 2;
(B) Investments in certificates of deposit, repurchase agreements
and banker's acceptances issued by an Acceptable Bank, provided that
such obligations mature within one (1) year from the date of
acquisition thereof;
75
(C) Investments in commercial paper that (i) is rated either "P-
1" or higher by ▇▇▇▇▇'▇ or "A-1" or higher by Standard & Poor's (or
comparable ratings by any comparable successor agency) and (ii) mature
not more than two hundred seventy (270) days from the date of creation
thereof;
(D) Investments in direct obligations of the United States of
America, or any agency thereof, or obligations unconditionally
guaranteed by the United States of America, provided that such
obligations mature within one (1) year from the date of acquisition
thereof;
(E) Investments in Property to be used in the ordinary course of
business of the Company and the Subsidiaries;
(F) Investments in one or more Subsidiaries or in any corporation
that concurrently with such Investment becomes a Subsidiary; and
(G) Investments in one or more joint ventures that are engaged in
the businesses engaged in by the Company and the Subsidiaries on the
Closing Date, provided that the Company and/or one or more of the
Subsidiaries maintains significant control over the business
operations of such joint venture.
RESTRICTED PAYMENT -- means
(A) any Distribution, and
(B) any Subordinated Payment.
REVOLVING CREDIT AGREEMENT -- means, with respect to the Company or
any Subsidiary, a credit or loan agreement to which the Company or such
Subsidiary is a party and pursuant to which the Company or such Subsidiary is
entitled to obtain working capital loans or other loans from the commercial bank
or commercial banks party thereto, and shall include, without limitation, the
Credit Facility.
SECURITIES ACT -- means the Securities Act of 1933, as amended.
SECURITY -- means "security" as defined by Section 2(1) of the
Securities Act.
SECURITY AGREEMENTS -- means, collectively, the Packing Security
Agreement, the ▇▇▇▇▇▇▇▇ Security Agreement and the ▇▇▇▇▇▇▇ Security Agreement.
76
SECURITY DOCUMENTS -- means the Trust Agreement, the Deeds of Trust,
the Security Agreements, the SFFC Pledge Agreement and the other agreements and
instruments executed or required to be executed pursuant to the terms of each of
such Security Documents, as each may be amended from time to time.
SECURITY TRUSTEE -- shall have the meaning assigned to such term in
the Trust Agreement.
SENIOR FINANCIAL OFFICER -- means the chief financial officer, the
principal accounting officer, the controller or the treasurer of the
Company.
SENIOR OFFICER -- means the chairman of the Board of Directors, the
chief executive officer, the chief operating officer, the president, the chief
financial officer, the general counsel or any vice president of the Company.
SENIOR SUBORDINATED DEBT -- means, at any time, the aggregate
principal amount of the Company's Senior Subordinated Notes due 2008 outstanding
at such time and any additional Debt of the Company outstanding at such time
which has subordination provisions and other terms and conditions acceptable to
the Required Holders.
SERIES -- means a series of Notes.
SERIES A NOTES -- Section 1.1(a).
SERIES B NOTES -- Section 1.1(b).
SERIES C NOTES -- Section 1.1(c).
SERIES D NOTES -- Section 1.1(d).
SERIES E NOTES -- Section 1.1(e).
SERIES F NOTES -- Section 1.1(f).
SERIES G NOTES -- Section 1.1(g).
SERIES H NOTES -- Section 1.1(h).
SFFC -- means SFFC, Inc. a Delaware corporation, and its successors
and assigns.
SFFC PLEDGE AGREEMENT -- means the Note Pledge Agreement, dated as of
July 15, 1996, as amended from time to time, between SFFC and the Security
Trustee.
77
STANDARD & POOR'S -- means Standard & Poor's Ratings Group, a division
of ▇▇▇▇▇▇-▇▇▇▇, Inc.
SUBORDINATED PAYMENT -- means payments of interest on, or payments or
prepayments of principal of, or the setting apart of money for a sinking or
other analogous fund for the purchase, redemption, retirement or other
acquisition of any principal or interest on (a) Debt of the Company (including,
without limitation, Senior Subordinated Debt) or any Guarantor which is
subordinate or junior in right of payment or otherwise to the Debt evidenced by
the Notes or the Joint and Several Guaranty or (b) Debt owing to any Affiliate.
SUBSIDIARY -- means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
SUBSIDIARY STOCK -- Section 6.15(b).
SURVIVING CORPORATION -- Section 6.14(a)(i).
TRADEMARK SUBSIDIARY -- means a Subsidiary that has no material assets
other than:
(A) patents, trademarks, service marks, trade names, copyrights
and other similar licenses and intangibles used or useful in the
conduct of the business of the Company or any Subsidiary;
(B) intercompany obligations in its favor obtained in respect of
the granting of rights to the Company and the other Subsidiaries with
respect to the patents, trademarks, service marks, trade names,
copyrights and other similar licenses and intangibles held by it; and
(C) in the case of SF Investments, Inc, certain other assets
(including, without limitation, the capital stock of Smithfield
78
Companies, Inc.) that are material but in any event whose primary
assets are of the type described in clauses (a) and (b) above.
TRANSFER -- Section 6.15(a).
TRUST AGREEMENT -- means the Trust Agreement, dated as of July
15, 1996, as amended from time to time, among the Company, Gwaltney,
Morrell, Packing, SFFC, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, ▇▇▇▇▇'▇, the Bank
(as defined therein) and the Security Trustee.
VOTING STOCK -- means capital stock of any class or classes of a
corporation having power under ordinary circumstances to vote for the
election of members of the board of directors, or Persons performing
similar functions (irrespective of whether or not at the time stock of
any of the class or classes shall have or might have special voting
power or rights by reason of the happening of any contingency).
WHOLLY-OWNED SUBSIDIARY -- means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity Securities (except
directors' qualifying shares) and voting Securities of which are owned
by any one or more of the Company and the other Wholly-Owned
Subsidiaries at such time.
9.2 GAAP.
Where the character or amount of any asset or liability or item of
income or expense, or any consolidation or other accounting computation is
required to be made for any purpose hereunder, it shall be done in accordance
with GAAP as in effect on the date of, or at the end of the period covered by,
the financial statements from which such asset, liability, item of income, or
item of expense, is derived, or, in the case of any such computation, as in
effect on the date as of which such computation is required to be determined,
provided, that if any term defined herein includes or excludes amounts, items or
concepts that would not be included in or excluded from such term if such term
were defined with reference solely to GAAP, such term will be deemed to include
or exclude such amounts, items or concepts as set forth herein.
9.3 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person,
or that such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.
79
9.4 SECTION HEADINGS, TABLE OF CONTENTS AND CONSTRUCTION.
The titles of the Sections and the Table of Contents appear as a matter
of convenience only, do not constitute a part hereof and shall not affect the
construction hereof. The words "herein," "hereof," "hereunder" and "hereto"
refer to this Agreement as a whole and not to any particular Section or other
subdivision. Unless otherwise specified, references to Sections are to Sections
of this Agreement, references to Annexes are to Annexes to this Agreement,
references to Attachments are to Attachments to this Agreement and references to
Exhibits are to Exhibits to this Agreement. Each covenant contained herein shall
be construed (absent an express contrary provision herein) as being independent
of each other covenant contained herein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
9.5 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, INTERNAL VIRGINIA LAW, EXCLUDING CHOICE-OF-LAW
PROVISIONS OF SUCH COMMONWEALTH THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN SUCH COMMONWEALTH.
10. MISCELLANEOUS
10.1 COMMUNICATIONS.
(A) METHOD; ADDRESS. All communications hereunder or under
the Notes shall be in writing and sent by telecopy with receipt thereof
confirmed, or by registered or certified mail with return receipt
requested (postage prepaid), or by overnight courier, and shall be
addressed,
(I) if to the Company,
Smithfield Foods, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. C. ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the Company shall have furnished in
writing to all holders of the Notes at the time outstanding,
(II) if to any Guarantor
c/o Smithfield Foods, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. C. ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
80
or at such other address as such Guarantor shall have furnished in
writing to all holders of the Notes at the time outstanding,
(III) if to any of the holders of the Notes,
(A) if such holders are the Noteholders, at their respective
addresses set forth on Annex 1, and further including any parties
referred to on Annex 1 that are required to receive notices in
addition to such holders of the Notes, and
(B) if such holders are not the Noteholders, at their
respective addresses set forth in the register for the
registration and transfer of Notes maintained pursuant to Section
5.1,
or to any such party at such other address as such party may designate
by notice duly given in accordance with this Section 10.1 to the
Company and the Guarantors (which other address shall be entered in
such register).
(B) WHEN GIVEN. Any communication so addressed and deposited in the
United States mail, postage prepaid, by registered or certified mail (in
each case, with return receipt requested) shall be deemed to be received on
the third (3rd) succeeding Business Day after the day of such deposit (not
including the date of such deposit). Any communication so addressed and
delivered otherwise shall be deemed to be received when actually received
at the address of the addressee.
10.2 REPRODUCTION OF DOCUMENTS.
This Agreement and the other Financing Documents, and all documents
relating hereto and thereto, including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by you at the closing of your purchase of the Notes (except the Notes
themselves) and (c) financial statements, certificates and other information
previously or hereafter furnished to you or any other holder of Notes, may be
reproduced by any holder of Notes by any photographic, photostatic, microfilm,
micro-card, miniature photographic, digital or other similar process and each
holder of Notes may destroy any original document so reproduced. The Company and
the Guarantors agree and stipulate that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such holder of Notes in the regular course of
81
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
10.3 SURVIVAL.
All warranties, representations, certifications and covenants made by
the Company and the Guarantors herein and in the other Financing Documents or in
any certificate or other instrument delivered by the Company or the Guarantors
or on their behalf pursuant to any of the Financing Documents shall be
considered to have been relied upon by you and shall survive the delivery to you
of the Notes regardless of any investigation made by you or on your behalf. All
statements in any such certificate or other instrument shall constitute
warranties and representations by the Company and the Guarantors hereunder.
10.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder, whether or not an express assignment to
such holder of rights hereunder shall have been made by you or your successor or
assign.
10.5 AMENDMENT AND WAIVER.
(A) REQUIREMENTS. This Agreement may be amended, and the
observance of any term hereof may be waived, with (and only with) the
written consent of the Company and the Required Holders; provided that
no such amendment or waiver of any of the provisions of Section 1
through Section 4 hereof, inclusive, shall be effective as to any holder
of Notes unless consented to by such holder in writing; and provided
further that no such amendment or waiver shall, without the written
consent of the holders of all Notes (exclusive of Notes held by the
Company or any Subsidiary) at the time outstanding,
(I) subject to Section 8.2, change the amount or time of any
prepayment or payment of principal or Make-Whole Amount or the
rate or time of payment of interest,
(II) amend Section 8,
(III) amend this Section 10.5, or
(IV) release any Guarantor from its obligations set forth in
the Joint and Several Guaranty.
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The holder of any Note may specify that any such written consent executed by it
shall be effective only with respect to a portion of the Notes held by it (in
which case it shall specify, by dollar amount, the aggregate principal amount of
Notes with respect to which such consent shall be effective) and in the event of
any such specification such holder shall be deemed to have executed such written
consent only with respect to the portion of the Notes so specified.
(B) SOLICITATION OF NOTEHOLDERS.
(I) SOLICITATION. The Company will not negotiate with any
holder of the Notes with respect to a material matter, nor will it solicit,
request or negotiate in writing with respect to any proposed waiver or
amendment of any of the provisions hereof or the Notes or any other
Financing Document, unless each holder of the Notes (irrespective of the
amount of Notes then owned by it) shall be informed thereof by the Company
with sufficient information to enable it to make an informed decision with
respect thereto. Executed or true and correct copies of any waiver or
consent effected pursuant to the provisions of this Section 10.5 shall be
delivered by the Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been executed and delivered
by all holders of outstanding Notes required to consent or agree to such
waiver or consent.
(II) PAYMENT. The Company shall not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by
any holder of Notes of any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to the holders
of all Notes then outstanding.
(III) SCOPE OF CONSENT. Any consent made pursuant to this
Section 10.5 by a holder of Notes that has transferred or has agreed to
transfer its Notes to the Company, any Subsidiary or any Affiliate and has
provided or has agreed to provide such written consent as a condition to
such transfer shall be void and of no force and effect except solely as to
such holder, and any amendments effected or waivers granted or to be
effected or granted that would not have been or would not be so effected or
granted but for such consent (and the consents of all other holders of
Notes that were acquired under the same or similar conditions) shall be
void and of no force and effect, retroactive to the date such
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amendment or waiver initially took or takes effect, except solely as
to such holder.
(C) BINDING EFFECT. Except as provided in Section 10.5(b), any
amendment or waiver consented to as provided in this Section 10.5 shall
apply equally to all holders of Notes and shall be binding upon them and
upon each future holder of any Note and upon the Company whether or not
such Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon.
10.6 PAYMENTS, WHEN RECEIVED.
(A) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with
respect to, any Note shall fall due on a day other than a Business Day,
then such payment shall be made on the first Business Day following the day
on which such payment shall have so fallen due; provided that if all or any
portion of such payment shall consist of a payment of interest, for
purposes of calculating such interest, such payment shall be deemed to have
been originally due on such first following Business Day, and such interest
shall accrue and be payable to (but not including) the actual date of
payment.
(B) PAYMENTS, WHEN RECEIVED. Any payment actually received by you
before 11:00 a.m., New York time, by federal funds wire transfer on any
Business Day, shall be deemed to have been received by you on such day. Any
payment actually received by you at or after 11:00 a.m., New York time, by
federal funds wire transfer on any Business Day, shall be deemed to have
been received on the next following Business Day. All payments received by
you on a day other than a Business Day, or in a manner other than by
federal funds wire transfer, shall be deemed to have been received by you
on the Business Day such amounts actually become available to you prior to
11:00 a.m., New York time.
10.7 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the terms
hereof and is a complete and exclusive statement of those terms.
10.8 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties, each
of which shall be an original but all of which together shall constitute one and
the same instrument. This Agreement may be executed in one or more counterparts
and shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which,
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collectively, show execution by each party hereto shall constitute one
duplicate original.
[REMAINDER OF PAGE INTENTIONALLY BLANK; NEXT PAGE IS SIGNATURE PAGE.]
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If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding among us in
accordance with its terms.
Very truly yours,
SMITHFIELD FOODS, INC.
By
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Name:
Title:
ACCEPTED:
[NAME OF NOTEHOLDER]
By
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Name:
Title
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