Exhibit 10.1
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 1, 1998
By and among
MILLBROOK DISTRIBUTION SERVICES INC.,
THE B. MANISCHEWITZ COMPANY, LLC,
THE LENDERS NAMED HEREIN,
and
THE CHASE MANHATTAN BANK, AS AGENT
and
NATIONSBANK, N.A., AS CO-AGENT
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TABLE OF CONTENTS
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I. DEFINITIONS.................................................................................................2
SECTION 1.01. Certain Defined Terms............................................................2
SECTION 1.02. Accounting Terms................................................................24
II. THE LOANS..................................................................................................25
SECTION 2.01. Term Loan Commitments and Revolving Credit
Commitments.....................................................................25
SECTION 2.02. Loans...........................................................................26
SECTION 2.03. Notice of Loans.................................................................28
SECTION 2.04. Notes; Repayment of Loans.......................................................28
SECTION 2.05. Interest on Loans...............................................................31
SECTION 2.06. Fees............................................................................31
SECTION 2.07. Termination and Reduction of Revolving Credit
Commitments and Term Loan Commitments...........................................32
SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of Interest.........................32
SECTION 2.09. Prepayment of Loans.............................................................33
SECTION 2.10. Reserve Requirements; Change in
Circumstances...................................................................36
SECTION 2.11. Change in Legality..............................................................38
SECTION 2.12. Indemnity.......................................................................39
SECTION 2.13. Pro Rata Treatment; Assumption by and
Delegation of Authority to the Agent............................................40
SECTION 2.14. Sharing of Setoffs..............................................................43
SECTION 2.15. Payments and Computations.......................................................43
SECTION 2.16. Taxes...........................................................................45
SECTION 2.17. Issuance of Letters of Credit...................................................47
SECTION 2.18. Payment of Letters of Credit; Reimbursement.....................................48
SECTION 2.19. Agent's Actions with respect to Letters of Credit...............................50
SECTION 2.20. Letter of Credit Fees...........................................................50
SECTION 2.21. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances.....................................................51
III. COLLATERAL SECURITY........................................................................................51
SECTION 3.01. Security Documents..............................................................51
SECTION 3.02. Filing and Recording............................................................52
IV. REPRESENTATIONS AND WARRANTIES.............................................................................52
SECTION 4.01. Organization, Legal Existence...................................................52
SECTION 4.02. Authorization...................................................................53
SECTION 4.03. Governmental Approvals..........................................................53
SECTION 4.04. Binding Effect..................................................................53
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SECTION 4.05. Material Adverse Change.........................................................53
SECTION 4.06. Litigation; Compliance with Laws; etc...........................................54
SECTION 4.07. Financial Statements............................................................54
SECTION 4.08. Federal Reserve Regulations.....................................................55
SECTION 4.09. Taxes...........................................................................55
SECTION 4.10. Employee Benefit Plans..........................................................56
SECTION 4.11. No Material Misstatements.......................................................58
SECTION 4.12. Investment Company Act; Public Utility
Holding Company Act.............................................................58
SECTION 4.13. Security Interest...............................................................58
SECTION 4.14. Use of Proceeds.................................................................58
SECTION 4.15. Subsidiaries....................................................................58
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks......................................................................58
SECTION 4.17. Solvency........................................................................59
SECTION 4.18. Permits, etc....................................................................60
SECTION 4.19. Compliance with Environmental Laws..............................................60
SECTION 4.20. No Change in Credit Criteria or Collection
Policies........................................................................61
SECTION 4.21. Employee Matters................................................................61
SECTION 4.22. Manischewitz Acquisition........................................................61
SECTION 4.23. Year 2000.......................................................................62
V. CONDITIONS OF CREDIT EVENTS................................................................................62
SECTION 5.01. All Credit Events...............................................................62
SECTION 5.02. First Borrowing.................................................................62
VI. AFFIRMATIVE COVENANTS......................................................................................67
SECTION 6.01. Legal Existence.................................................................67
SECTION 6.02. Businesses and Properties.......................................................67
SECTION 6.03. Insurance.......................................................................68
SECTION 6.04. Taxes...........................................................................68
SECTION 6.05. Financial Statements, Reports, etc..............................................69
SECTION 6.06. Litigation and Other Notices....................................................71
SECTION 6.07. ERISA...........................................................................72
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit.....................................................73
SECTION 6.09. Use of Proceeds.................................................................74
SECTION 6.10. Fiscal Year-End.................................................................74
SECTION 6.11. Further Assurances..............................................................74
SECTION 6.12. Additional Grantors and Guarantors..............................................74
SECTION 6.13. Environmental Laws..............................................................74
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SECTION 6.14. Pay Obligations to Lenders and Perform Other
Covenants.......................................................................76
SECTION 6.15. Maintain Operating Accounts.....................................................77
SECTION 6.16. Interest Rate Protection........................................................77
SECTION 6.17. Landlord Waivers................................................................77
SECTION 6.18. Year 2000.......................................................................77
SECTION 6.19. Lock-Box Accounts...............................................................77
VII. NEGATIVE COVENANTS.........................................................................................77
SECTION 7.01. Liens...........................................................................77
SECTION 7.02. Sale and Lease-Back Transactions................................................79
SECTION 7.03. Indebtedness....................................................................79
SECTION 7.04. Dividends, Distributions and Payments...........................................80
SECTION 7.05. Consolidations, Mergers and Sales of Assets.....................................81
SECTION 7.06. Investments.....................................................................81
SECTION 7.07. Capital Expenditures............................................................82
SECTION 7.08. Debt Service Coverage Ratio.....................................................83
SECTION 7.09. Leverage Ratio; EBITDA; Availability............................................83
SECTION 7.10. Business........................................................................84
SECTION 7.11. Sales of Receivables............................................................84
SECTION 7.12. Use of Proceeds.................................................................84
SECTION 7.13. ERISA...........................................................................84
SECTION 7.14. Accounting Changes..............................................................85
SECTION 7.15. Prepayment or Modification of Indebtedness;
Modification of Charter Documents...............................................85
SECTION 7.16. Transactions with Affiliates....................................................85
SECTION 7.17. Negative Pledges, Etc...........................................................85
SECTION 7.18. Consulting Fees.................................................................85
VIII. EVENTS OF DEFAULT.........................................................................................86
IX. AGENT.....................................................................................................89
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND
OTHER COLLATERAL..........................................................................................94
SECTION 10.01. Collection of Receivables; Management
of Collateral..................................................................94
SECTION 10.02. Receivables Documentation......................................................96
SECTION 10.03. Status of Receivables and Other Collateral.....................................96
SECTION 10.04. Monthly Statement of Account...................................................98
SECTION 10.05. Collateral Custodian...........................................................98
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XI. MISCELLANEOUS...............................................................................................98
SECTION 11.01. Notices........................................................................98
SECTION 11.02. Survival of Agreement..........................................................99
SECTION 11.03. Successors and Assigns; Participations.........................................99
SECTION 11.04. Expenses; Indemnity...........................................................103
SECTION 11.05. Applicable Law................................................................104
SECTION 11.06. Right of Setoff...............................................................104
SECTION 11.07. Payments on Business Days.....................................................105
SECTION 11.08. Waivers; Amendments...........................................................105
SECTION 11.09. Severability..................................................................107
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc...................................107
SECTION 11.11. Confidentiality...............................................................107
SECTION 11.12. Submission to Jurisdiction....................................................108
SECTION 11.13. Counterparts..................................................................108
SECTION 11.14. Headings......................................................................109
EXHIBITS
EXHIBIT A Form of Term Note
EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Pledge Agreement
EXHIBIT E Form of Security Agreement (Millbrook)
EXHIBIT E-1 Form of Security Agreement (Manischewitz)
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Security Agreement - Patents and
Trademarks
EXHIBIT G-1 Form of Security Agreement - Patents, Trademarks and
Copyrights (Manischewitz)
EXHIBIT H Form of Intercompany Indebtedness
SCHEDULES
SCHEDULE 2.01(a) Term Loan Commitments
SCHEDULE 2.01(b) Revolving Credit Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.09 Taxes
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SCHEDULE 4.10 Multi-Employer Plans
SCHEDULE 4.16(a) Title to Properties
SCHEDULE 4.16(c) Ownership of Trademarks
SCHEDULE 4.18 Permits
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 6.05(g) Borrowing Base Certificate
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.06 Investments
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 1, 1998,
by and among MILLBROOK DISTRIBUTION SERVICES INC., a Delaware
corporation ("Millbrook"), THE B. MANISCHEWITZ COMPANY, LLC, a
Delaware limited liability company ("Manischewitz" and,
together with Millbrook, the "Borrowers"), the financial
institutions from time to time party hereto, initially
consisting of those financial institutions listed on Schedules
2.01(a) and 2.01(b) annexed hereto (collectively, the
"Lenders"), THE CHASE MANHATTAN BANK, as administrative and
collateral agent for the Lenders (in such capacity, the
"Agent"), and NATIONSBANK, N.A., as Co-Agent and Documentation
Agent.
The Lenders made Loans available to Millbrook under the
Original Credit Agreement (such term and all other capitalized terms used in
this paragraph having the respective meanings ascribed to such terms above or in
Article I) up to an aggregate principal amount of $99,510,000 in the form of (a)
a Term Loan to Millbrook in an aggregate original principal amount of $9,310,000
and (b) Revolving Credit Loans in an aggregate principal amount not in excess of
$90,200,000 at any time outstanding. All of the proceeds of the Term Loan and a
portion of the proceeds of the Revolving Credit Loans made on the Original
Closing Date were used to partially finance the consideration being paid
pursuant to the Millbrook Acquisition Agreement. The proceeds of Revolving
Credit Loans made prior to the Closing Date were also used by Millbrook for
working capital and other general corporate purposes of Millbrook.
The parties hereto desire to amend and restate the Original
Credit Agreement to provide for, among other things, Manischewitz becoming
jointly and severally liable, as a borrower hereunder, for the Term Loan and the
Revolving Credit Loans. The proceeds of Revolving Credit Loans made after the
Closing Date shall be used for working capital and other general corporate
purposes of the Borrowers. The Grantors will continue to provide Collateral in
accordance with the provisions of this Agreement and the Security Documents. The
Lenders are severally, and not jointly, willing to continue to extend such Loans
to the Borrowers subject to the terms and conditions hereinafter set forth.
Accordingly, the Borrowers, the Lenders, the Agent and the Co-Agent hereby agree
as follows:
I. DEFINITIONS
SECTION 1.01. Certain Defined Terms. For purposes hereof, the
following terms shall have the meanings specified below:
"Adjusted LIBO Rate" shall mean, with respect to any
Eurodollar Loan for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of (i) the
LIBO Rate in effect for such Interest Period and (ii) Statutory Reserves. For
purposes hereof, "Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency, or
supplemental reserves) expressed as a decimal established by the Board and any
other banking authority to which the Agent is subject for Eurocurrency
Liabilities (as defined in Regulation D). Such reserve percentages shall
include, without limitation, those imposed under Regulation D. Eurodollar Loans
shall be deemed to constitute Eurocurrency Liabilities and as such shall be
deemed to be subject to such reserve requirements without benefit of or credit
for proration, exemptions or offsets which may be available from time to time to
any Lender under Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Affiliate" of any person shall mean any other person which,
directly or indirectly, controls or is controlled by or is under common control
with such person. For the purposes of this definition, the term "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract.
"Agent" shall have the meaning assigned to such term in the
preamble to this Agreement except that, solely with respect to the Mortgages,
and the rights and obligations of the mortgagee thereunder, NationsBank, N.A.
shall act as Agent.
"Agreement" shall mean this agreement as originally executed
and as it may from time to time be supplemented or amended pursuant to the
applicable provisions hereof.
"Alternate Base Loan" shall mean a Loan based on the Alternate
Base Rate in accordance with Article II hereof.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1%, and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent at its principal office
in New York City as its prime rate in effect at such time. "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and
(ii) Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such day
shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at
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approximately 10:00 a.m., New York City time, on such day (or, if such day shall
not be a Business Day, on the next preceding Business Day) by the Agent from
three New York City negotiable certificate of deposit dealers of recognized
standing selected by the Agent and whom the Agent regularly utilizes for such
purpose. "Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the maximum reserve percentage (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal, established
by the Board and any other banking authority to which the Agent is subject, for
new negotiable nonpersonal time deposits in dollars of over $100,000 with
maturities approximately equal to three months. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage. "Assessment Rate" shall mean, for any day, the annual
assessment rate (net of refunds and rounded upwards, if necessary, to the next
1/16 of 1%) estimated by the Agent (in good faith, but in no event in excess of
statutory or regulatory maximums) to be payable by the Agent to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in dollars at the Agent's
domestic offices during the current calendar year. "Federal Funds Effective
Rate" shall mean, for any day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent and whom the Agent regularly utilizes
for such purpose. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate, or both, for any
reason, including, the inability or failure of the Agent to obtain sufficient
quotations in accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, of the first sentence
of this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate, respectively.
"Applicable Lending Office" shall mean, with respect to each
Lender, such Lender's Domestic Lending Office in the case of an Alternate Base
Loan and such Lender's Eurodollar Lending Office in the case of a Eurodollar
Loan.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee and accepted by the Agent,
in substantially the form of Exhibit F annexed hereto.
"Availability" shall mean at any time (i) the lesser at such
time of (x) the Total Revolving Credit Commitment and (y) the Borrowing Base,
minus (ii) the sum at such time, without duplication, of (x) the unpaid
principal balance on the Revolving Credit Loans together
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with all reserves established pursuant to this Agreement including, without
limitation, to the extent landlord waivers are not obtained within 60 days of
the Closing Date, a two month rent reserve for all Collateral locations where a
landlord's waiver has not been obtained, Section 2.01, with respect to any
exposure to any Lender pursuant to Section 6.16, and Section 7.01(c) hereof and
(y) the Letter of Credit Usage. The Agent shall notify the Borrowers of all
reserves established pursuant to this Agreement subsequent to the Closing Date
and such reserves shall become effective fifteen days after such notice has been
given in accordance with Section 11.01 hereof.
"▇▇▇▇▇▇▇▇▇" shall mean, collectively, (i) ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, (ii) trusts for the benefit of ▇▇. ▇▇▇▇▇▇▇▇▇ and/or members of his
immediate family and (iii) in the event of the incompetence or death of ▇▇.
▇▇▇▇▇▇▇▇▇, his estate, executor, administrator or other personal representative.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Borrowers" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Borrowing Base" shall have the meaning assigned to such term
in Section 2.01(b) hereof.
"Business Day" shall mean any day, other than a Saturday,
Sunday or legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City, except that, if any
determination of a "Business Day" shall relate to a Eurodollar Loan, the term
"Business Day" shall in addition exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Buy-Out Amount" shall have the meaning assigned to such term
in Sec tion 7.04 hereof.
"Capital Expenditures" shall mean all expenditures with
respect to any fixed assets or improvements, or for replacements, substitutions
or additions thereto, which have a useful life of more than one year, including
the direct or indirect acquisition of such assets.
"Capitalized Lease Obligation" shall mean an obligation to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real and/or personal property which obligation is required to be
classified and accounted for as a capital lease on a balance sheet prepared in
accordance with GAAP, and for purposes hereof the amount of such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.
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"Cash Interest Expense" shall mean, with respect to any person
for any period, the Interest Expense less any amounts payable with respect to
the Rate Agreements of such person for such period less all non-cash items
constituting or otherwise included in the definition of Interest Expense during
such period (including, without limitation, amortization of debt discounts and
payments of interest on Indebtedness by issuance of Indebtedness).
"Change of Control" shall mean any of (i) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of Enterprises to any
person or group of related persons for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (a "Group"), together with any
Affiliates thereof other than to Holdings or a wholly owned subsidiary of
Holdings (or any successor thereto) or to ▇▇▇▇▇▇▇▇▇ or an entity controlled by
▇▇▇▇▇▇▇▇▇, (ii) the approval by the holders of the issued and outstanding
capital stock of Enterprises of any plan or proposal for the liquidation or
dissolution of Enterprises, (iii) any person or Group (other than ▇▇▇▇▇▇▇▇▇)
shall become the owner, directly or indirectly, beneficially or of record, of
shares representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Enterprises, (iv) the
replacement of a majority of the Board of Directors of Enterprises over a
two-year period from the directors who constituted the Board of Directors of
Enterprises at the beginning of such period, and such replacement shall not have
been approved by a vote of at least a majority of the Board of Directors of
Enterprises then still in office who either were members of such Board of
Directors at the beginning of such period or whose election as a member of such
Board of Directors was previously so approved, (v) Enterprises shall cease to
own (directly or indirectly) 100% of all classes of stock of Millbrook or (vi)
Enterprises shall cease to own (directly or indirectly) 100% of the voting
equity interests of Manischewitz.
"Closing Date" shall mean the date of the first borrowing
under this Agreement, but in no event later than May 1, 1998.
"Co-Agent" shall mean NationsBank, N.A. in its capacity as
Co-Agent and Documentation Agent.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all collateral and security as
described in the Security Documents.
"Commitment" shall mean, with respect to each Lender, the sum
of the Term Loan Commitment of such Lender as set forth in Schedule 2.01(a), and
the Revolving Credit Commitment of such Lender as set forth in Schedule 2.01(b),
as each may be adjusted from time to time pursuant to this Agreement including,
without limitation, Section 2.07 hereof.
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"Consolidated" shall mean, in respect of any person, as
applied to any financial or accounting term, such term determined on a
consolidated basis in accordance with GAAP for the person and all consolidated
subsidiaries thereof.
"Contaminant" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under Federal,
state or local environmental, health and safety statutes or regulations or any
other material or substance which constitutes a material health, safety or
environmental hazard to any person or property.
"Credit Event" shall mean each borrowing and each issuance of
a Letter of Credit hereunder.
"Credits" shall mean the Loans and Letters of Credit.
"Cure Loans" shall have the meaning assigned to such term in
Section 2.13(d) hereof.
"Customer" shall mean and include the account debtor or
obligor with respect to any Receivable.
"Debt Service Coverage Ratio" shall mean, with respect to any
person for any period, the ratio of (i) EBITDA for the four most recent
consecutive fiscal quarters ending on or prior to the date of determination
minus Capital Expenditures (including, without limitation, Capitalized Lease
Obligations) made during such period minus all Permitted Dividends and
Distributions made during such period minus federal, state and local income
taxes actually paid in cash during such period to (ii) the sum of (x) the Cash
Interest Expense of such person for the four most recent consecutive fiscal
quarters ending on or prior to the date of determination and (y) the aggregate
Debt Service Expense of such person for such period.
"Debt Service Expense" shall mean, with respect to any person
for any period, the aggregate of regularly scheduled principal payments (other
than a Mandatory Prepayment) of all long-term Indebtedness made in cash by such
person during such period on a Consolidated basis in accordance with GAAP.
"Default" shall mean any event or condition which, with notice
or lapse of time or both, would constitute an Event of Default.
"dollars" or the symbol "$" shall mean lawful currency of the
United States of America.
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"Domestic Lending Office" shall mean, with respect to any
Lender, the office of such Lender specified as its "Domestic Lending Office"
opposite its name in Schedule 2.02 annexed hereto, or such other office of such
Lender as such Lender may from time to time specify to the Borrowers and the
Agent.
"EBITDA" shall mean with respect to any person for any period
of time, the sum of (i) Net Income, (ii) Interest Expense, (iii) depreciation
and amortization, (iv) provision for LIFO adjustment for inventory valuation,
(v) non-cash portion of deferred compensation expenses and other non-cash
charges which reduced Net Income, and (vi) federal, state and local income
taxes, in each case of such person for such period, computed and calculated in
accordance with GAAP.
"Eligible Inventory" shall mean inventory which is, in the
reasonable opinion of the Agent, not obsolete, slow-moving or unmerchantable and
is and at all times shall continue to be reasonably acceptable to the Agent;
provided, however, that Eligible Inventory shall in no event include inventory
which (i) is not located at one of the addresses for locations of Collateral set
forth on Schedule I to the Security Agreement (Millbrook) or Security Agreement
(Manischewitz), as applicable, and with respect to which the Agent has not been
granted and has not perfected a valid, first priority security interest, (ii) is
damaged, (iii) is in-transit or (iv) has been returned or rejected by a Customer
and is not readily available for resale to a Customer. Standards of eligibility
may be fixed and revised from time to time solely by the Agent in the Agent's
exclusive reasonable judgment; provided, that the Agent shall promptly notify
the Borrowers of any change in the standards of eligibility and such change
shall become effective 15 days following the date such notification has been
given in accordance with Section 11.01 hereof. In determining eligibility, the
Agent may, but need not, rely on reports and schedules furnished by the
Borrowers but reliance by the Agent thereon from time to time shall not be
deemed to limit the right of the Agent to revise standards of eligibility at any
time as to both present and future inventory of the Borrowers.
"Eligible Receivables" shall mean Receivables created by a
Borrower arising out of the sale of goods or rendition of services by such
Borrower, which are and at all times shall continue to be reasonably acceptable
to the Agent. Standards of eligibility may be fixed and revised from time to
time solely by the Agent in the Agent's reasonable judgment; provided, that the
Agent shall promptly notify the Borrowers of any change in the standards of
eligibility and such change shall become effective 15 days following the date
such notification has been given in accordance with Section 11.01 hereof. In
general, without limiting the foregoing, a Receivable shall in no event be
deemed to be an Eligible Receivable unless: (a) all payments due on the
Receivable have been invoiced and the underlying goods shipped or services
performed, as the case may be; (b) the payment due on the Receivable is not more
than 90 days past the invoice date (or in the case of Manischewitz, the due
date, if the
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due date is consistent with past practices (subject to field examination
confirmation reasonably satisfactory to the Agent)); (c) the payments due on
more than 50% of all Receivables from the same Customer are less than 90 days
past the invoice date (or in the case of Manischewitz, the due date, if the due
date is consistent with past practices (subject to field examination
confirmation reasonably satisfactory to the Agent)); (d) the Receivable arose
from a completed and bona fide transaction (and with respect to a sale of goods,
a transaction in which title has passed to the Customer) which requires no
further act under any circumstances on the part of the applicable Borrower in
order to cause such Receivable to be payable in full by the Customer; (e) the
Receivable is free and clear of all security interests and Liens of any nature
whatsoever other than any security interest deemed to be held by the applicable
Borrower or any security interest created in favor of the Agent for the benefit
of the Lenders pursuant to the Security Documents or permitted by Section 7.01
hereof; (f) the Receivable constitutes an "account" or "chattel paper" within
the meaning of the Uniform Commercial Code of the state in which the Receivable
is located; (g) the Customer has not asserted that the Receivable, and the
applicable Borrower is not aware that the Receivable, arises out of a ▇▇▇▇ and
hold (except for any such arrangement that would not in accordance with GAAP be
recorded as a sale), consignment or progress billing arrangement or is subject
to any setoff, contra, net-out contract, offset, deduction, dispute, credit,
counterclaim or other defense arising out of the transactions represented by the
Receivables or independently thereof (provided that such Receivable shall only
be ineligible to the extent thereof) and the Customer has finally accepted the
goods from the sale out of which the Receivable arose and has not objected to
its liability thereon or returned, rejected or repossessed any of such goods,
except for complaints made or goods returned in the ordinary course of business
for which, in the case of goods returned, goods of equal or greater value have
been shipped in return; (h) the Receivable arose in the ordinary course of
business of the applicable Borrower; (i) the Customer is not (x) the United
States government or the government of any state or political subdivision
thereof or therein, or any agency or department of any thereof or (y) an
Affiliate of Holdings, Enterprises, a Borrower or any subsidiary of any thereof;
(j) the Customer is a United States person or an obligor in the United States;
(k) the Receivable complies with all material requirements of all applicable
laws and regulations, whether Federal, state or local (including, without
limitation, usury laws and laws, rules and regulations relating to truth in
lending, fair credit billing, fair credit reporting, equal credit opportunity,
fair debt collection practices and privacy); (l) to the knowledge of the
applicable Borrower, the Receivable is in full force and effect and constitutes
a legal, valid and binding obligation of the Customer enforceable in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by general equity principles; (m)
the Receivable is denominated in and provides for payment by the Customer in
dollars; (n) the Receivable has not been and is not required to be charged off
or written off as uncollectible in accordance with GAAP or the customary
business practices of the
-8-
applicable Borrower as then in effect; (o) the Agent on behalf of the Lenders
possesses a valid, perfected first priority security interest in such Receivable
as security for payment of the Obligations; (p) the Receivable is not with
respect to a Customer located in New Jersey, Minnesota, or any other state
denying creditors access to its courts in the absence of a Notice of Business
Activities Report or other similar filing, unless the applicable Borrower has
either qualified as a foreign corporation authorized to transact business in
such state or has filed a Notice of Business Activities Report or similar filing
with the applicable state agency for the then current year; and (q) the Agent is
reasonably satisfied with the credit standing of the Customer in relation to the
amount of credit extended.
"Eligible Manischewitz Inventory" shall mean Eligible
Inventory of Manischewitz comprised solely of raw materials, work-in-progress
(subject to field examination confirmation reasonably satisfactory to the Agent)
and finished goods (but in no event shall include supplies or capitalization
costs).
"Eligible Manischewitz Receivables" shall mean Eligible
Receivables created by Manischewitz, including receipt of royalties from the
licensing of trademarks (subject to field examination confirmation reasonably
satisfactory to the Agent), which are and at all times shall continue to be
reasonably acceptable to the Agent.
"Eligible Millbrook Inventory" shall mean Eligible Inventory
of Millbrook comprised solely of finished goods (but in no event shall include
materials, supplies or capitalization costs).
"Eligible Millbrook Receivables" shall mean Eligible
Receivables created by Millbrook, which are and at all times shall continue to
be reasonably acceptable to the Agent.
"Enterprises" shall mean R.A.B. Enterprises, Inc., a Delaware
corporation, together with its successors and assigns.
"Environmental Claim" shall mean any written notice of
violation, claim, demand, abatement or other order by any governmental authority
or any person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or deed or use restrictions, resulting from or based upon (i)
the existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any Contaminant at, in, by or from any of the properties of
the Borrowers or their subsidiaries, (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Contaminants in connection
with the operation of any of the properties of the Borrowers or their
subsidiaries or (iii) the
-9-
violation, or alleged violation by the Borrowers or any of their subsidiaries,
of any statutes, ordinances, orders, rules, regulations, Permits or licenses of
or from any governmental authority, agency or court relating to environmental
matters connected with any of the properties of the Borrowers or their
subsidiaries, under any applicable Environmental Law.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et
seq.), the Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Oil
Pollution Act of 1990 (33 U.S.C. ss. 2701 et seq.), the Safe Drinking Water Act
(42 U.S.C. ss. 300f, et seq.), the Clear Air Act (42 U.S.C. ss. 7401 et seq.),
the Toxic Substances Control Act, as amended (15 U.S.C. ss. 2601 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.), as such
laws have been and hereafter may be amended or supplemented, and any related or
analogous present or future Federal, state or local, statutes, rules,
regulations, ordinances, licenses, permits and interpretations (having the force
of law, rules or regulations) and orders of regulatory and administrative
bodies.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which together with a Borrower or any subsidiary of a Borrower
would be treated as a single employer under the provisions of Title I or Title
IV of ERISA.
"Eurodollar Lending Office" shall mean, with respect to any
Lender, the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name in Schedule 2.03 annexed hereto (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender as
such Lender may from time to time specify to the Borrowers and the Agent.
"Eurodollar Loan" shall mean a Loan based on the Adjusted LIBO
Rate in accordance with Article II hereof.
"Event of Default" shall have the meaning assigned to such
term in Article VIII hereof.
"Excess Cash Flow" shall mean, with respect to any person for
any period, the amount, if any, by which Net Cash Flow of such person and its
subsidiaries on a Consolidated basis for such period exceeds the sum of (a) the
Debt Service
-10-
Expense of such person and its subsidiaries on a Consolidated basis for such
period plus (b) the aggregate amount of all Permitted Dividends and
Distributions, if any, made during such period.
"Fee Letter" shall mean the letter dated the Closing Date from
The Chase Manhattan Bank to the Borrowers.
"Final Maturity Date" shall mean March 31, 2003.
"FIRREA" shall mean the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended from time to time.
"Fiscal Year" shall mean the fiscal year of each of the
Borrowers, Holdings and Enterprises for accounting purposes which in each case
ends on March 31 of each year.
"Funded Debt" shall mean with respect to any person as of the
date of determination thereof, all Indebtedness of such person and its
subsidiaries on a Consolidated basis outstanding at such time which matures more
than one year after the date of calculation, and any such Indebtedness maturing
within one year from such date of calculation which is renewable or extendable
at the sole option of the obligor without the requirement to satisfy any
conditions to a date more than one year from such date and including in any
event the Revolving Credit Loans.
"GAAP" shall have the meaning assigned to such term in Section
1.02 hereof.
"Grantor" shall mean any Grantor, Pledgor or Debtor, as such
terms are defined in any of the Security Documents.
"Guarantee" shall mean any obligation, evidenced in writing,
contingent or otherwise, of any person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or obligation of any other person in any
manner, whether directly or indirectly, and shall include, without limitation,
any obligation of such person, direct or indirect, to (i) purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
obligation or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness or obligation, (ii) purchase
property, securities or services for the purpose of assuring the owner of such
Indebtedness or obligation of the payment of such Indebtedness or obligation, or
(iii) maintain working capital, equity capital, available cash or other
financial condition of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or obligation; provided, however, that the term
Guarantee shall not include
-11-
(x) endorsements for collection or collections for deposit, in either case in
the ordinary course of business, or (y) security deposits for rental property.
"Guarantor" shall mean any subsidiary of any of the Borrowers
which becomes a guarantor of the Obligations after the date hereof.
"Harrison Property" shall mean the owned real property of
Millbrook located in the City of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ County, Arkansas.
"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of) any Environmental
Law and any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any polychlorinated biphenyls; provided, in the
event that any Environmental Law is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment; and provided, further, to the extent that the
applicable laws of any state establish a meaning for "hazardous material,"
"hazardous substance," "hazardous waste," "solid waste" or "toxic substance"
which is broader than that specified in any Federal Environmental Law, such
broader meaning shall apply.
"Holdings" shall mean R.A.B. Holdings, Inc., a Delaware
corporation, together with its successors and assigns.
"Holdings Transactions" shall mean, collectively, the issuance
by Enterprises of the Senior Notes and the issuance by Holdings of the Interest
Reserve Notes.
"Increased Costs" shall have the meaning assigned to such term
in Section 2.10(d) hereof.
"Indebtedness" shall mean, with respect to any person, without
duplication, (a) all obligations of such person for borrowed money or with
respect to deposits or advances received of any kind, (b) all obligations of
such person evidenced by bonds, debentures, notes or other similar instruments
or upon which interest charges are customarily paid, (c) all obligations of such
person to pay for the deferred purchase price of property or services, except
current accounts payable arising in the ordinary course of business and not
overdue beyond such period as is commercially reasonable for such person's
business, (d) all obligations of such person under conditional sale or other
title retention agreements relating to property purchased by such person and all
Capitalized Lease Obligations, (e) all payment obligations of such person with
respect to interest rate or currency protection agreements, including,
-12-
without limitation, the Rate Agreements, (f) all obligations of such person as
an account party under any letter of credit or in respect of bankers'
acceptances, (g) all obligations of any third party secured by property or
assets of such person (regardless of whether or not such person is liable for
repayment of such obligations), (h) all Guarantees of such person and (i) the
redemption price of all redeemable preferred stock of such person, but only to
the extent that such stock is redeemable at the option of the holder or requires
sinking fund or similar payments at any time prior to the Final Maturity Date.
"Indemnitees" shall have the meaning assigned to such term in
Section 11.04(c) hereof.
"Information" shall have the meaning assigned to such term in
Section 11.11 hereof.
"Interest Expense" shall mean, with respect to any person for
any period, the interest expense of such person during such period determined on
a Consolidated basis in accordance with GAAP, and shall in any event include,
without limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense, (iii) the portion of
any Capitalized Lease Obligation allocable to interest expense, (iv) all fixed
and all calculable dividend payments on preferred stock, and (v) payments of
interest expense in kind.
"Interest Margin" shall mean, with respect to any Loan, the
amount as set forth below as corresponds to the amount of Availability set forth
below, determined on the Closing Date and adjusted thereafter, three (3)
Business Days after the delivery of the applicable borrowing base certificate
and the financial statements for the fiscal periods ending March 31 and
September 30 in each year to the Agent required pursuant to Section 6.05(a) or
(b), as applicable, together with the corresponding compliance certificates
required pursuant to Section 6.05(e), commencing with the financial statements
and certificates for the period ending September 30, 1998, or if the Borrowers
shall fail to timely deliver such statements and certificates for any such
period and until such statements and certificates are delivered, or if a Default
or Event
-13-
of Default shall have occurred and be continuing, then at the highest Interest
Margin provided for herein:
Alternate Base
LIBO Rate Rate Interest Alternate Base
Interest Margin LIBO Rate Margin for Rate Interest
for Revolving Interest Margin Revolving Credit Margin for Term
Credit Eurodollar for Term Alternate Base Alternate Base
Availability Loans Eurodollar Loan Loans Loans
------------ ----------------- --------------- ---------------- --------------
Greater than 1.50% 1.75% 0% 0%
$47,500,000
Equal to or less 1.75% 2.00% 0% 0%
than $47,500,000
but greater than
$35,000,000
Equal to or less 2.00% 2.25% 0% 0.25%
than $35,000,000
but greater than
$22,500,000
$22,500,000 or 2.25% 2.50% 0.25% 0.50%
less
On the Closing Date, the LIBO Rate Interest Margin for Revolving Credit
Eurodollar Loans shall be 1.75% and for Term Eurodollar Loans shall be 2.00%,
and the Alternate Base Rate Interest Margin for Revolving Credit Alternate Base
Loans shall be 0% and for Term Alternate Base Loans shall be 0%; each shall
thereafter be adjusted in accordance with the provisions hereof, commencing
after the delivery of financial statements and certificates for the period
ending September 30, 1998.
"Interest Payment Date" shall mean (i) in the case of an
Alternate Base Loan, the first Business Day of each month, commencing May 1,
1998 (which shall include Alternate Base Loans outstanding under the Original
Credit Agreement and which are being continued and extended under this
Agreement), and (ii) with respect to any Eurodollar Loan (which shall include
Eurodollar Loans outstanding under the Original Credit Agreement and which are
being continued and extended under this Agreement) , the last day of the
Interest Period applicable thereto, and, in addition, in respect of any
Eurodollar Loan of more than three (3) months' duration, each earlier day which
is three (3) months after the first day of such Interest Period.
"Interest Period" shall mean, as to any Eurodollar Loan, the
period commencing on the date of such Eurodollar Loan and ending on the
numerically corresponding day (or, if there is no numerically corresponding day,
on the last day) in the calendar month that is one (1), two (2), three (3) or
six (6) months thereafter, as the Borrowers may elect with respect to its
Eurodollar Loans; provided, however, that (x) if
-14-
an Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, with
respect to Eurodollar Loans, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (y) no Interest Period shall end later than the Final
Maturity Date and (z) interest shall accrue from and including the first day of
an Interest Period to but excluding the last day of such Interest Period.
"Interest Reserve Notes" shall mean Holdings' 13% Senior Notes
due 2008.
"Lender" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Letter of Credit" shall have the meaning assigned to such
term in Section 2.17 hereof.
"Letter of Credit Usage" shall mean at any time, (i) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(ii) the unreimbursed drawings at such time under all such Letters of Credit.
"Leverage Ratio" with respect to any person at the end of any
fiscal quarter shall mean the ratio of (i) Funded Debt as at the date of
determination to (ii) EBITDA of such person for the four (or such lesser number
of quarters as shall have elapsed from the Closing Date) most recent consecutive
fiscal quarters ending on or prior to the date of determination; provided,
however, that for the purposes of this definition, Funded Debt shall not include
the intercompany Indebtedness permitted under Section 7.03(xi).
"LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, (x) the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Agent from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period; and in the event that such rate is
not available at such time for any reason, then the "LIBO Rate" with respect to
such Eurodollar Loan for such Interest Period shall be (y) the rate (rounded
upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by
the principal London office of the Agent in immediately available funds in the
London interbank market at
-15-
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period. Notwithstanding the foregoing, if at any
time neither The Chase Manhattan Bank nor NationsBank, N.A. is the Agent, then
LIBO Rate shall mean the lesser of the rate determined by applying (x) and (y)
above.
"Lien" shall mean, with respect to any asset, (i) any
mortgage, lien, pledge, encumbrance, charge or security interest in or on such
asset, (ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset, (iii) in the case of securities, any purchase option, call or similar
right of a third party (other than the issuer thereof) with respect to such
securities or (iv) any other right of or arrangement with any creditor to have
such creditor's claim satisfied out of such assets, or the proceeds therefrom,
prior to the general creditors of the owner thereof.
"Loan" shall mean the Term Loan or any Revolving Credit Loan.
"Loan Documents" shall mean this Agreement, each Security
Document, each Guarantee executed and delivered at any time with respect to the
Obligations and the Notes.
"Loan Party" shall mean each Borrower, each Grantor, each
Guarantor and each subsidiary thereof.
"Mandatory Prepayment" shall mean an amount equal to 50
percent (50%) of Excess Cash Flow, if any, of the Borrowers and their
Consolidated subsidiaries for the Fiscal Year then ended, but not in excess of
$2,000,000 in any Fiscal Year; provided, however, that solely with respect to
the Fiscal Year ended March 31, 1998, the Mandatory Prepayment shall be
determined by reference to the Excess Cash Flow, if any, of Millbrook and its
Consolidated subsidiaries.
"Manischewitz" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Manischewitz Acquisition" shall mean the acquisition of all
of the membership interests of Manischewitz pursuant to the Manischewitz
Acquisition Agreement.
"Manischewitz Acquisition Agreement" shall mean the Purchase
Agreement dated as of March 3, 1998 by and among Enterprises, MANO Holdings I,
LLC, KBMC Acquisition Company, L.P., MANO Holdings Corporation and the
stockholders of MANO Holdings Corporation, as amended by the First Amendment,
dated as of April 8, 1998 and the Second Amendment dated as of May 1, 1998, to
the Purchase Agreement.
-16-
"Manischewitz Acquisition Documents" shall mean the
Manischewitz Acquisition Agreement and all agreements, documents and instruments
(other than opinions of legal counsel) executed and delivered pursuant thereto
or in connection therewith, in each case as in effect on the Closing Date.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, assets, prospects, operations or financial or other
condition of the Borrowers and their Consolidated subsidiaries, taken as a
whole, (ii) the ability of the Borrowers and their Consolidated subsidiaries,
taken as a whole, to perform or pay the Obligations in accordance with the terms
hereof or of any other Loan Document, (iii) the rights of, or benefits available
to, the Lenders or the Agent under any Loan Document or (iv) the Agent's Lien on
any material portion of the Collateral or the priority of such Lien.
"Millbrook" shall have the meaning assigned to such term in
the preamble to this Agreement.
"Millbrook Acquisition" shall mean the acquisition of all of
the stock of Millbrook pursuant to the Millbrook Acquisition Agreement.
"Millbrook Acquisition Agreement" shall mean the Stock
Purchase Agreement dated as of February 21, 1997 by and between Holdings and
McKesson Corporation, as amended by the Amendment to Stock Purchase Agreement
dated as of March 31, 1997.
"Millbrook Acquisition Documents" shall mean the Millbrook
Acquisition Agreement, the Transitional Services Agreement between Millbrook and
McKesson Corporation, and all agreements, documents and instruments (other than
opinions of legal counsel) executed and delivered pursuant thereto or in
connection therewith, in each case as in effect on the Original Closing Date.
"Mortgage" shall mean the real property mortgage dated as of
the Original Closing Date, and executed by Millbrook in favor of the Agent, for
its own benefit and for the benefit of the Lenders, as amended, modified or
supplemented from time to time.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
-17-
"Net Amount of Eligible Manischewitz Inventory" shall mean, at
any time, without duplication, the aggregate value, computed at the lower of
cost (on a FIFO basis) and current market value, of Eligible Manischewitz
Inventory.
"Net Amount of Eligible Manischewitz Receivables" shall mean
and include at any time, without duplication, the gross amount of Eligible
Manischewitz Receivables at such time less (i) applicable sales, excise or
similar taxes and (ii) returns, discounts, claims (telephonic in the case of
claims to a responsible party of a Loan Party or in writing), credits, rebates
and allowances of any nature at any time issued, owing, granted, outstanding or
available with respect to such Eligible Manischewitz Receivables.
"Net Amount of Eligible Millbrook Inventory" shall mean, at
any time, without duplication, the aggregate value, computed at the lower of
cost (on a FIFO basis) and current market value, of Eligible Millbrook
Inventory.
"Net Amount of Eligible Millbrook Receivables" shall mean and
include at any time, without duplication, the gross amount of Eligible Millbrook
Receivables at such time less (i) applicable sales, excise or similar taxes and
(ii) returns, discounts, claims (telephonic in the case of claims to a
responsible party of a Loan Party or in writing), credits, rebates and
allowances of any nature at any time issued, owing, granted, outstanding or
available with respect to such Eligible Millbrook Receivables.
"Net Cash Flow" shall mean, with respect to any person for any
period, without duplication of addition or subtraction of items, (A) the sum for
such period of (i) Net Income, (ii) depreciation and amortization, (iii) the
change (expressed as a positive number in the event of an increase or a negative
number in the event of a decrease) in deferred tax liabilities, (iv) other
noncash items properly deducted in arriving at Net Income and (v) the change
(expressed as a negative number in the event of an increase or a positive number
in the event of a decrease), if any, in deferred tax assets minus (B) the sum
for such period of (i) all Capital Expenditures during such period (excluding
the cash component of any Capitalized Lease Obligations but including the
financed components of any Capitalized Lease Obligations) and (ii) any principal
payment made during such period as a result of Excess Cash Flow.
"Net Income" shall mean, with respect to any person for any
period, the aggregate income (or loss) of such person for such period which
shall be an amount equal to net revenues and other proper items of income for
such person less the aggregate for such person of any and all items that are
treated as expenses under GAAP, and less Federal, state and local income taxes,
but excluding any extraordinary gains or losses or any gains or losses from the
sale or disposition of assets other than
-18-
in the ordinary course of business, all computed and calculated in accordance
with GAAP.
"Non Pro Rata Loans" shall have the meaning ascribed to such
term in Section 2.13(d) hereof.
"Notes" shall mean the Term Notes and the Revolving Credit
Notes.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of the Borrowers to the Lenders and the Agent arising under this
Agreement and the transactions contemplated hereby, including, without
limitation, administration fees pursuant to the Fee Letter, whether now existing
or hereafter created, direct or indirect, due or not, whether created directly
or acquired by assignment or participation pursuant hereto, including, without
limitation, all obligations, liabilities and Indebtedness of the Borrowers with
respect to cash management accommodations provided by the Agent, the Rate
Agreements (if and to the extent any Lender is a party thereto), the Security
Documents and other Loan Documents, the principal of and interest on the
Revolving Credit Loans, the Term Loan and the payment or performance of all
other obligations, liabilities, and Indebtedness of the Borrowers to the Lenders
and the Agent under the Letters of Credit or under any one or more of the other
Loan Documents, including, without limitation, all fees, costs, expenses and
indemnity obligations hereunder and thereunder.
"Original Closing Date" shall mean March 31, 1997.
"Original Credit Agreement" shall mean the Credit Agreement,
dated as of the Original Closing Date, among Millbrook, the lenders named
therein, NationsBank, N.A. and the Agent, as amended by the Amendment, dated as
of May 16, 1997, to the Credit Agreement.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.16(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any Plan which is subject to the
provisions of Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in
Section 4.18 hereof.
-19-
"Permitted Dividends and Distributions" shall mean the
dividends, distributions and payments permitted to be made pursuant to the
provisions of Section 7.04 hereof.
"Permitted Overadvances" shall mean (i) involuntary
overadvances that may result from time to time due to the fact that any
borrowing formulas set forth in the Loan Documents were unintentionally exceeded
(whether at the time of any Loan or at the time of the issuance of any Letter of
Credit or otherwise) for any reason (other than the Agent's gross negligence or
willful misconduct), including Collateral believed to be eligible in fact being
or becoming ineligible and the return of uncollected checks or other items
applied to the reduction of the Loans, Letters of Credit or other Obligations,
and overadvances made by the Agent without Lenders' consent for up to two weeks
after discovering the unintentional overadvance, provided that the Agent does
not during that period voluntarily increase the amount by which the borrowing
formulas had been exceeded as of the start of that period, and (ii) voluntary
overadvances made by the Agent in its sole discretion which shall (x) not cause
the Obligations to exceed Availability by an amount in excess of $3,000,000 at
any one time outstanding, and (y) not be made on a date which is beyond ten (10)
days after the first voluntary overadvance is made during such overadvance
period, or (z) be with the consent of all Lenders. To the extent any Permitted
Overadvances are made, each Lender shall bear its pro rata (based on its
Revolving Credit Commitment) share thereof.
"person" shall mean any natural person, corporation, business
trust, limited liability company, association, company, joint venture,
partnership or government or any agency or political subdivision thereof.
"Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of any Borrower, any subsidiary of any Borrower thereof or any ERISA
Affiliate.
"Pledge Agreement" shall mean the Amended and Restated
Non-Recourse Pledge Agreement dated as of the Closing Date, amending the Pledge
Agreement dated as of the Original Closing Date, by and between Enterprises and
the Agent, for its own benefit and for the benefit of the Lenders, in
substantially the form of Exhibit D annexed hereto, as amended, modified or
supplemented from time to time.
"Pledged Stock" shall have the meaning assigned to such term
in the Pledge Agreement.
"Rate Agreements" shall have the meaning assigned to such term
in Section 6.16 hereof.
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"Receivables" shall mean and include all of the Borrowers'
accounts, instruments, documents, chattel paper and general intangibles, whether
secured or unsecured, whether now existing or hereafter created or arising out
of the sale of goods or rendition of services, and whether or not specifically
assigned to the Agent for its own benefit and/or the ratable benefit of the
Lenders.
"Register" shall have the meaning assigned to such term in
Section 11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Release" shall mean any releasing, spilling, leaking,
seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any "Threatened Release," as defined in Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind or
nature with respect to any property of the Borrowers or their subsidiaries
(whether such property is owned, leased or subleased), including, without
limitation, with respect to Contaminants and the Release thereof for which a
Borrower or any subsidiary of a Borrower is liable under any Environmental Law.
"Repayment Date" shall have the meaning assigned to such term
in Section 2.04(c) hereof.
"Reportable Event" shall mean a Reportable Event as defined in
Sec tion 4043(b) of ERISA.
"Required Lenders" shall mean Lenders having 51% of the Total
Commitment.
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"Responsible Officer" shall mean, with respect to any person,
any vice president or president, or the chief financial officer or controller,
of such person.
"Revolving Credit Alternate Base Loan" shall mean a Revolving
Credit Loan that is an Alternate Base Loan.
"Revolving Credit Commitment" shall mean, with respect to any
Lender, the Revolving Credit Commitment of such Lender as set forth in Schedule
2.01(b) annexed hereto, as the same may be reduced from time to time pursuant to
this Agreement including, without limitation, Section 2.07 and 2.09 hereof.
"Revolving Credit Commitment Fee" shall have the meaning set
forth in Section 2.06(a) hereof.
"Revolving Credit Eurodollar Loan" shall mean a Revolving
Credit Loan that is a Eurodollar Loan.
"Revolving Credit Loan" shall mean a Revolving Credit Loan
made pursuant to Sections 2.01 and 2.02 hereof.
"Revolving Credit Notes" shall mean the Revolving Credit Notes
of the Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B annexed hereto, as amended, modified or
supplemented from time to time.
"Revolving Credit Termination Date" shall mean the earlier to
occur of (i) March 31, 2002 and (ii) such date as the Revolving Credit Loans
shall otherwise be payable in full and the Revolving Credit Commitment shall
terminate, expire or be canceled in accordance with the terms of this Agreement.
"Security Agreement (Millbrook)" shall mean the Security
Agreement, dated as of the Original Closing Date, between the Grantor(s), as
such term is defined therein, and the Agent, for its own benefit and for the
benefit of the Lenders, in the form of Exhibit E annexed hereto, as amended,
modified or supplemented from time to time, including Schedule 1 to the Security
Agreement which may be amended, modified or supplemented from time to time in
accordance with the terms of the Security Agreement.
"Security Agreement (Manischewitz)" shall mean the Security
Agreement (Manischewitz) dated as of the date hereof, between the Grantor(s), as
such term is defined therein, and the Agent, for its own benefit and for the
benefit of the Lenders, substantially in the form of Exhibit E-1 annexed hereto
as amended, modified or supplemented from time to time.
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"Security Agreement - Patents and Trademarks (Millbrook)"
shall mean the Security Agreement and Mortgage - Patents and Trademarks, dated
as of the Original Closing Date, between the Debtor(s), as such term is defined
therein, and the Agent, for its own benefit and for the benefit of the Lenders,
in the form of Exhibit G annexed hereto, as amended, modified or supplemented
from time to time.
"Security Agreement - Patents and Trademarks (Manischewitz)"
shall mean the Security Agreement and Mortgage - Patents and Trademarks, dated
as of the date hereof, between the Debtor(s), as such term is defined therein,
and the Agent, for its own benefit and for the benefit of the Lenders,
substantially in the form of Exhibit G-1 annexed hereto, as amended, modified or
supplemented from time to time.
"Security Documents" shall mean the Pledge Agreement, the
Security Agreement (Millbrook), the Security Agreement (Manischewitz), the
Security Agreement - Patents and Trademarks (Millbrook), the Security Agreement
- Patents and Trademarks (Manischewitz), the Mortgage and each other agreement
now existing or hereafter entered into by any obligor providing collateral
security for the payment or performance of any Obligations.
"Senior Notes" shall mean Enterprises' 10 1/2% Senior Notes
due 2005.
"Settlement Date" shall have the meaning assigned to such term
in Section 2.15(c) hereof.
"Subordinated Indebtedness" shall mean, with respect to either
Borrower or the Borrowers, Indebtedness other than intercompany Indebtedness
permitted pursuant to Section 7.03(xi) (x) subordinated in right of payment to
such person's monetary obligations under this Agreement upon terms reasonably
satisfactory to and approved in writing by the Agent and (y) after giving effect
to the incurrence thereof, the Leverage Ratio of the Borrowers and their
subsidiaries is not greater than 4.00:1.00.
"subsidiary" shall mean, with respect to any person, any
corporation, association or other business entity of which securities or other
ownership interests representing more than 50% of the ordinary voting power are,
at the time as of which any determination is being made, owned or controlled,
directly or indirectly, by the parent of such person or one or more subsidiaries
of the parent of such person.
"Taxes" shall have the meaning assigned to such term in
Section 2.16(a) hereof.
"Term Alternate Base Loan" shall mean a Term Loan that is an
Alternate Base Loan.
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"Term Eurodollar Loan" shall mean a Term Loan that is a
Eurodollar Loan.
"Term Loan" shall mean the Term Loan made pursuant to the
Original Credit Agreement and as continued pursuant to Sections 2.01 and 2.02.
"Term Loan Commitment" shall mean, with respect to any Lender,
the Term Loan Commitment of such Lender as set forth in Schedule 2.01(a).
"Term Notes" shall mean the Term Notes of the Borrowers,
executed and delivered as provided in Section 2.04, in substantially the form of
Exhibit A hereto, as amended, modified or supplemented from time to time.
"Total Commitment" shall mean the sum of the Lenders' Total
Term Loan Commitment and Total Revolving Credit Commitment, as the same may be
reduced from time to time pursuant to Section 2.07 or Section 2.09 of this
Agreement.
"Total Revolving Credit Commitment" shall mean the sum of the
Lenders' Revolving Credit Commitments, as the same may be reduced from time to
time pursuant to Section 2.07 or Section 2.09 of this Agreement.
"Total Term Loan Commitment" shall mean the sum of the
Lenders' Term Loan Commitments, as the same may be reduced from time to time
pursuant to Section 2.07 or Section 2.09 of this Agreement.
"Transactions" shall have the meaning assigned to such term in
Sec tion 4.02 hereof.
SECTION 1.02. Accounting Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under generally accepted accounting principles in effect from time to time in
the United States applied on a basis consistent with those used in preparing the
financial statements referred to in Section 6.05 hereof ("GAAP"); provided,
however, that each reference in Article VII hereof, or in the definition of any
term used in Article VII hereof, to GAAP shall mean GAAP as in effect on the
date hereof.
II. THE LOANS
SECTION 2.01. Term Loan Commitments and Revolving Credit
Commitments. (a) Subject to the terms and conditions herein set forth, each
Lender, severally and not jointly, agrees to continue the Term Loan made to
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Millbrook on the Original Closing Date, of which $9,310,000 is outstanding on
the Closing Date, (provided, that, from and after the Closing Date, the
Borrowers shall be jointly and severally liable with respect to such Term Loan),
in a principal amount not to exceed the amount of such Lender's Term Loan
Commitment set forth opposite its name in Schedule 2.01(a) hereto.
(b) Subject to the terms and conditions herein set forth, each
Lender, severally and not jointly, agrees to make Revolving Credit Loans to the
Borrowers, at any time and from time to time from the date hereof to the
Revolving Credit Termination Date, in an aggregate principal amount at any time
outstanding not to exceed the amount of such Lender's Revolving Credit
Commitment set forth opposite its name in Schedule 2.01(b) annexed hereto, as
such Revolving Credit Commitment may be reduced from time to time in accordance
with the provisions of this Agreement. Not withstanding the foregoing, the
aggregate principal amount of Revolving Credit Loans outstanding at any time to
the Borrowers shall not exceed (1) the lesser of (A) the Total Revolving Credit
Commitment and (B) an amount equal to the sum of (i) up to eighty-five percent
(85%) of the Net Amount of Eligible Millbrook Receivables, plus (ii) the lesser
of (a) $55,000,000 and (b) up to sixty-five percent (65%) of the Net Amount of
Eligible Millbrook Inventory plus, following the completion by the Agent of the
field examination and site visit of Manischewitz's material locations
(including, without limitation, the Jersey City, New Jersey and Vineland, New
Jersey locations), (iii) a percentage, to be determined by the Agent (in its
sole but reasonable discretion but, in any event, not in excess of 65%)
following such field examination and visit, of the Net Amount of Eligible
Manischewitz Inventory plus (iv) a percentage, to be determined by the Agent (in
its sole but reasonable discretion but, in any event, not in excess of 85%)
following such field examination and visit, of the Net Amount of Eligible
Manischewitz Receivables (this clause (1)(B) referred to herein as the
"Borrowing Base") minus (2) the Letter of Credit Usage at such time (not to
exceed $10,000,000 at any time). The Borrowing Base will be computed monthly and
a compliance certificate from a Responsible Officer of the Borrowers presenting
its computation will be delivered to the Agent in accordance with Section 6.05
hereof.
Subject to the foregoing and within the foregoing limits, the
Borrowers may borrow, repay (or, subject to the provisions of Section 2.09
hereof, prepay) and reborrow Revolving Credit Loans, on and after the date
hereof and prior to the
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Revolving Credit Termination Date, subject to the terms, provisions and
limitations set forth herein, including, without limitation, the requirement
that no Revolving Credit Loan shall be made hereunder if the amount thereof
exceeds the Availability outstanding at such time.
SECTION 2.02. Loans. (a) The Revolving Credit Loans made by
the Lenders on any date shall be in integral multiples of $100,000 (except that
the foregoing limitation shall not be applicable to the extent that the proceeds
of such Loans are disbursed to the Borrowers' controlled disbursement account
maintained with the Agent); provided, however, that the Eurodollar Loans made on
any date shall be in a minimum aggregate principal amount equal to the product
of $500,000 times the number of Lenders on such date.
(b) Loans shall be made ratably by the Lenders in accordance
with their respective Term Loan Commitments or Revolving Credit Commitments, as
the case may be; provided, however, that the failure of any Lender to make any
Loan shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
Lender). The Term Loan shall be continued by the Lenders hereunder against
delivery of Term Notes, payable to the order of the Lenders, as referred to in
Section 2.04. The initial Revolving Credit Loans shall be made by the Lenders
against delivery of Revolving Credit Notes, payable to the order of the Lenders,
as referred to in Section 2.04 hereof.
(c) Each Loan shall be either an Alternate Base Loan or a
Eurodollar Loan as the Borrowers may request pursuant to Section 2.03 hereof.
Each Lender may fulfill its obligations under this Agreement by causing its
Applicable Lending Office to make such Loan; provided, however, that the
exercise of such option shall not affect the obligation of the Borrowers to
repay such Loan in accordance with the terms of the applicable Note. Not more
than six (6) Eurodollar Loans may be outstanding at any one time.
(d) Subject to the provisions of paragraph (e) below, each
Lender has made its Term Loan and shall make Revolving Credit Loans on the
proposed dates thereof by paying the amount required to the Agent in New York,
New York in immediately available funds not later than 2:00 p.m., New York City
time, and the Agent shall as soon as practicable, but in no event later than
3:00 p.m., New York City
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time, credit the amounts so received to the general deposit account of the
Borrowers with the Agent in immediately available funds or, if Loans are not to
be made on such date because any condition precedent to a borrowing herein
specified is not met, return the amounts so received to the respective Lenders.
(e) The Borrowers shall have the right at any time upon prior
irrevocable written, telex or facsimile notice (promptly confirmed in writing)
to the Agent given in the manner and at the times specified in Section 2.03 with
respect to the Loans into which conversion or continuation is to be made, to
convert all or any portion of Eurodollar Loans into Alternate Base Loans, to
convert all or any portion of Alternate Base Loans into Eurodollar Loans
(specifying the Interest Period to be applicable thereto), to convert the
Interest Period with respect to all or any portion of any Eurodollar Loans to
another permissible Interest Period, and to continue all or any portion of any
Eurodollar Loans into a subsequent Interest Period, subject to the terms and
conditions of this Agreement (including the last sentence of Section 2.02(c)
hereof) and to the following:
(i) each conversion or continuation shall be made pro
rata among the Lenders in accordance with the respective
principal amounts of the Loans comprising the conversion or
continuation; and in the case of a conversion or continuation
of fewer than all the Loans, the aggregate principal amount of
Loans converted or continued shall not be less than $100,000
in the case of Alternate Base Loans (except that the foregoing
limitation shall not be applicable to the extent that the
proceeds of such Loans are disbursed to the Borrowers'
controlled disbursement account maintained with the Agent) or
$500,000 times the number of Lenders on such date in the case
of Eurodollar Loans and shall be an integral multiple of
$100,000;
(ii) accrued interest on a Eurodollar Loan (or
portion thereof) being converted shall be paid by the
Borrowers at the time of conversion;
(iii) if any Eurodollar Loan is converted at any time
other than the end of an Interest Period applicable thereto,
the Borrowers shall make such payments associated therewith as
are required pursuant to Section 2.12, if any such payments
are due;
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(iv) any portion of a Revolving Credit Loan which is
subject to an Interest Period ending on a date that is less
than one month prior to the Revolving Credit Termination Date
may not be converted into, or continued as, a Eurodollar Loan
and shall be automatically converted at the end of such
Interest Period into an Alternate Base Loan;
(v) any portion of a Term Eurodollar Loan required to
be paid on any Repayment Date occurring less than one month
after the end of the then current Interest Period applicable
to such Loan, may not be converted into, or continued as, a
Term Eurodollar Loan and shall be automatically converted at
the end of such Interest Period into a Term Alternate Base
Loan; and
(vi) no Default or Event of Default shall have
occurred and be continuing.
The Interest Period applicable to any Eurodollar Loan
resulting from a conversion shall be specified by the Borrowers in the
irrevocable notice of conversion delivered pursuant to this Section; provided,
however, that if no such Interest Period shall be specified, the Borrowers shall
be deemed to have selected an Interest Period of one month's duration. If the
Borrowers shall not have given timely notice to continue any Eurodollar Loan
into a subsequent Interest Period (and shall not otherwise have given notice to
convert such Loan), such Loan (unless repaid or required to be repaid pursuant
to the terms hereof) shall, subject to (iv) and (v) above, automatically be
converted into an Alternate Base Loan. The Agent shall promptly advise the
Lenders of any notice given pursuant to this Section 2.02(e) and of each
Lender's portion of the continuation or conversion hereunder.
SECTION 2.03. Notice of Loans. The Borrowers shall, through a
Responsible Officer of any of the Borrowers, give the Agent irrevocable written,
telex or facsimile notice (promptly confirmed in writing) of each borrowing
(including, without limitation, a conversion as permitted by Section 2.02(e)
hereof) not later than 2:00 p.m., New York City time, (i) three (3) Business
Days before a proposed Eurodollar Loan borrowing or conversion and (ii) one
Business Day before an Alternate Base Loan borrowing or conversion (except that
no such notice will be required, to the extent that the proceeds of such
borrowing are requested to be disbursed to Borrowers' controlled disbursement
account maintained with the Agent). Such notice shall specify (w) whether the
Loans then being requested are to be Alternate Base Loans or Eurodollar Loans,
(x) the date of such borrowing
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(which shall be a Business Day) and amount thereof and (y) if such Loans are to
be Eurodollar Loans, the Interest Period with respect thereto. If no election as
to the type of Loan is specified in any such notice, all such Loans shall be
Alternate Base Loans. If no Interest Period with respect to any Eurodollar Loan
is specified in any such notice, then an Interest Period of one (1) month's
duration shall be deemed to have been selected; subject to the proviso set forth
in the last paragraph of Section 2.02 hereof. The Agent shall promptly advise
the Lenders of any notice given pursuant to this Section 2.03 and of each
Lender's portion of the requested borrowing.
SECTION 2.04. Notes; Repayment of Loans. (a) The Term Loan, as
continued hereunder made by a Lender shall be evidenced by a single Term Note,
duly executed on behalf of the Borrowers, dated the Closing Date, in
substantially the form of Exhibit A annexed hereto, delivered and payable to
such Lender in a principal amount equal to its Term Loan Commitment on such
date. All Revolving Credit Loans made by a Lender to the Borrowers shall be
evidenced by a single Revolving Credit Note, duly executed on behalf of the
Borrowers, dated the Closing Date, in substantially the form of Exhibit B
annexed hereto, delivered and payable to such Lender in a principal amount equal
to its Revolving Credit Commitment on such date. The outstanding balance of each
Revolving Credit Loan, as evidenced by any such Revolving Credit Note, shall
mature and be due and payable on the Revolving Credit Termination Date.
(b) Each Revolving Credit Loan shall bear interest from its
date on the outstanding principal balance thereof, as provided in Section 2.05
hereof.
(c) The aggregate principal amount of the Term Loan as
evidenced by the Term Notes, shall be payable in 20 consecutive quarterly
installments (the date of each such installment, a "Repayment Date") in the
amounts set forth below, and such payments shall be made by the Borrowers to the
Agent and distributed ratably among the Lenders in accordance with their
respective Term Loan Commitments:
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Date Payment
---- -------
June 30, 1998, September 30, 1998, December 31, 1998 and March 31, 1999 203,750
June 30, 1999, September 30, 1999, December 31, 1999 and March 31, 2000 326,250
June 30, 2000, September 30, 2000, December 31, 2000 and March 31, 2001 490,000
June 30, 2001, September 30, 2001, December 31, 2001 and March 31, 2002 490,000
June 30, 2002, September 30, 2002, December 31, 2002 and March 31, 2003 817,500
To the extent not previously paid, the Term Loan shall be due
and payable on the Final Maturity Date. The Term Loan shall bear interest from
its date on the outstanding principal balance thereof, as provided in Section
2.05. All principal payments in respect of the Term Loan shall be accompanied by
accrued interest on the principal amount being repaid to the date of payment. No
scheduled payment of principal in respect of the Term Loan shall be made to the
extent that a lesser principal payment would result in the payment in full of
the outstanding amount of the Term Loan, and such lesser amount is paid.
(d) Each Lender, or the Agent on its behalf, shall, and is
hereby authorized by the Borrowers to, endorse on the schedule attached to the
Term Note or Revolving Credit Note, as applicable, of such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Loan to the
Borrowers from such Lender, as well as the date and amount of each payment and
prepayment with respect thereto; provided, however, that the failure of any
person to make such a notation on a Note shall not affect any obligations of the
Borrowers under such Note. Any such notation shall be conclusive and binding as
to the date and amount of such Loan or portion thereof, or payment or prepayment
of principal or interest thereon, absent manifest error.
(e) Each of the Borrowers shall be jointly and severally
liable with the other Borrower for the Obligations, and each of the Obligations
shall be secured by all of the Collateral. Each of the Borrowers acknowledges
that it is a co-borrower hereunder and is jointly and severally liable under
this Agreement and the other Loan Documents. All Credits extended to either of
the Borrowers or requested by either of the Borrowers shall be deemed to be
Credits extended for the Borrowers, and each of the Borrowers hereby authorizes
the other Borrower to effectuate Credits on its behalf. Notwithstanding anything
to the contrary contained in this Agreement or any of the other Loan Documents,
the Agent and the Lenders shall be entitled to rely upon any request, notice or
other communication received by them from either of the Borrowers on
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behalf of all Borrowers, and shall be entitled to treat their giving of any
notice hereunder to any of the Borrowers as notice to each and all Borrowers.
Each of the Borrowers agrees that the joint and several
liability of the Borrowers provided for in this subsection (e) shall not be
impaired or affected by any modification, supplement, extension or amendment or
any contract or agreement to which the other Borrower(s) may hereafter agree
(other than an agreement signed by the Agent and the Lenders specifically
releasing such liability), nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Agent or any Lender with respect
to any of the Obligations, nor by any other agreements or arrangements
whatsoever with the other Borrower(s) or with any other person, each of the
Borrowers hereby waiving all notice of such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each of the Borrowers is direct as to all of the
Obligations, and may be enforced without requiring the Agent or any Lender first
to resort to any other right, remedy or security. Each of the Borrowers hereby
expressly waives promptness, diligence, notice of acceptance and any other
notice with respect to any of the Obligations, the Notes, this Agreement or any
other Loan Document, other than any notice required by this Agreement or any
other Loan Document and any requirement that the Agent or any Lender protect,
secure, perfect or insure any Lien or any property subject thereto or exhaust
any right or take any action against any of the Borrowers or any other person or
any collateral.
Each of the Borrowers hereby irrevocably subordinates to the
prior payment in full of all Obligations all "claims" (as defined in Section
101(5) of the Bankruptcy Code) to which such Borrower is or would be entitled by
virtue of the provisions of the first paragraph of this subsection (e) or the
performance of such Borrower's obligations thereunder including, without
limitation, any right of subrogation (whether contractual, under Section 509 of
the Bankruptcy Code or otherwise), reimbursement, contribution, exoneration or
similar right, or indemnity, or any right of recourse to security for any of the
Obligations.
SECTION 2.05. Interest on Loans. (a) Subject to the provisions
of Section 2.05(c) and Section 2.08 hereof, each Revolving Credit Alternate Base
Loan and Term Alternate Base Loan shall bear interest at a rate per annum equal
to the Alternate Base Rate plus the applicable Interest Margin.
(b) Subject to the provisions of Section 2.05(c) and Section
2.08 hereof, each Revolving Credit Eurodollar Loan and Term Eurodollar Loan
shall bear interest at a rate per annum equal to the Adjusted LIBO Rate plus the
applicable Interest Margin.
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(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and on the Final Maturity Date. Interest on
each Alternate Base Loan shall be computed based on the number of days elapsed
in a year of 365 days and interest on each Eurodollar Loan shall be computed
based on the number of days elapsed in a year of 360 days. The Agent shall
determine each interest rate applicable to the Loans and shall promptly advise
the Borrowers and the Lenders of the interest rate so determined.
SECTION 2.06. Fees. (a) The Borrowers shall pay each Lender,
through the Agent, (i) on the first Business Day of each January, April, July
and October commencing July 1, 1998, (ii) on the date of any reduction of the
Revolving Credit Commitments pursuant to this Agreement including, without
limitation, Section 2.07 hereof and (iii) on the Revolving Credit Termination
Date, in immediately available funds, a commitment fee (the "Revolving Credit
Commitment Fee") of three-sixteenths of one percent (3/16 of 1%) per annum on
the average daily unused amount of the Revolving Credit Commitment of such
Lender, during the quarter (or shorter period commencing with the date hereof or
ending with the Revolving Credit Termination Date) ending on such date;
provided, however, that with respect to the period April 1, 1998 to the Closing
Date, the Borrowers shall pay each Lender, through the Agent, on July 1, 1998,
the "Revolving Credit Commitment Fee" under the Original Credit Agreement of
one-quarter of one percent (1/4 of 1%) per annum on the average daily unused
amount of such Lender's "Revolving Credit Commitment" under the Original Credit
Agreement during such period. The Revolving Credit Commitment Fee due to each
Lender under this Section 2.06 shall commence to accrue on the date hereof and
cease to accrue on the earlier of (i) the Revolving Credit Termination Date and
(ii) the termination of the Revolving Credit Commitment of such Lender pursuant
to this Agreement including, without limitation, pursuant to Section 2.07
hereof. The Revolving Credit Commitment Fee shall be calculated on the basis of
the actual number of days elapsed in a year of 365 days.
(b) The Borrowers shall pay to the Agent for its own account
the administration fees set forth in the Fee Letter, as and when due.
(c) The Borrowers on the Closing Date shall pay to the Agent
for the ratable benefit of the Lenders a facility fee equal to 0.10% of the
Total Commitment.
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SECTION 2.07. Termination and Reduction of Revolving Credit
Commitments and Term Loan Commitments. (a) Upon at least three (3) Business
Days' prior irrevocable written notice (or facsimile notice promptly confirmed
in writing) to the Agent, the Borrowers may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Total Revolving
Credit Commitment, ratably among the Lenders in accordance with the amounts of
their Revolving Credit Commitments; provided, however, that the Total Revolving
Credit Commitment shall not be reduced at any time to an amount less than the
Revolving Credit Loans outstanding under the Revolving Credit Commitments and
the Letter of Credit Usage at such time; and provided, further, that the
Borrowers shall pay to the Agent for the ratable benefit of the Lenders a
prepayment penalty (x) in the amount of $250,000 if the Borrowers shall
permanently terminate in whole the Total Revolving Credit Commitment during the
period from the Closing Date to and including March 31, 1999 or (y) in the
amount of $100,000 if the event described in (x) above should occur during the
period from April 1, 1999 to and including March 31, 2000. Each permanent
partial reduction of the Total Revolving Credit Commitment shall be in a minimum
of $500,000 or an integral multiple of $100,000.
(b) Simultaneously with any termination or reduction of the
Total Revolving Credit Commitment pursuant to paragraph (a) of this Section
2.07, the Borrowers shall pay to each Lender, through the Agent, the Revolving
Credit Commitment Fee due and owing through and including the date of such
termination or reduction on the amount of the Revolving Credit Commitment of
such Lender so terminated or reduced.
(c) The Revolving Credit Commitment of each Lender shall
automatically and permanently terminate on the Revolving Credit Termination
Date, and all Revolving Credit Loans still outstanding on such date shall be due
and payable in full together with accrued interest thereon.
(d) The Total Term Loan Commitment shall be permanently
reduced by the amount of any repayment or prepayment of the outstanding
principal amount of the Term Loans on the date of any such repayment or
prepayment. In any event, all amounts due and owing under the Total Term Loan
Commitment shall be due and payable on the Final Maturity Date.
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SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of
Interest. (a) If the Borrowers shall default in the payment of the principal of
or interest on any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, the Borrowers shall on demand from time to time pay
interest, to the extent permitted by law, on such defaulted amount outstanding
up to the date of actual payment of such defaulted amount (after as well as
before judgment) at a rate per annum equal to two percent (2%) in excess of the
rates otherwise applicable thereto.
(b) In the event, and on each occasion, that on the day two
(2) Business Days prior to the commencement of any Interest Period for a
Eurodollar Loan the Agent shall have determined that dollar deposits in the
amount of each Eurodollar Loan are not generally available in the London
interbank market, or that the rate at which dollar deposits are being offered
will not reflect adequately and fairly the cost to any Lender of making or
maintaining such Eurodollar Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, the Agent shall as
soon as practicable thereafter give written notice (or facsimile notice promptly
confirmed in writing) of such determination to the Borrowers and the Lenders,
and any request by the Borrowers for the making of a Eurodollar Loan pursuant to
Section 2.03 hereof or conversion or continuation of any Loan into a Eurodollar
Loan pursuant to Section 2.02 hereof shall, until the circumstances giving rise
to such notice no longer exist, be deemed to be a request for an Alternate Base
Loan. When the circumstances giving rise to such notice no longer exist, the
Agent shall as soon as practicable thereafter give written or facsimile notice
(or telephonic notice promptly confirmed by written or facsimile notice) of such
change to the Borrowers and the Lenders. Each determination by the Agent made
hereunder shall be conclusive absent manifest error.
SECTION 2.09. Prepayment of Loans. (a) Subject to the terms
and conditions contained in this Section 2.09 and in Section 2.07 hereof, the
Borrowers shall have the right to prepay any Loan at any time in whole or from
time to time in part (except in the case of a Eurodollar Loan only on the last
day of an Interest Period) without penalty (except as otherwise provided for
herein); provided, however, that each such partial prepayment of a Loan shall be
in an integral multiple of $100,000.
(b) On the date of any termination or reduction of the Total
Revolving Credit Commitment pursuant to Section 2.07(a) hereof or this
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Section 2.09, the Borrowers shall pay or prepay so much of the Revolving Credit
Loans as shall be necessary in order that the Availability equals or exceeds
zero following such termination or reduction. Any prepayments required by this
paragraph (b) shall be applied to outstanding Revolving Credit Alternate Base
Loans up to the full amount thereof before they are applied to outstanding
Revolving Credit Eurodollar Loans; provided, however, that the Borrowers shall
not be required to make any prepayment of any Eurodollar Loan pursuant to this
Section until the last day of the Interest Period with respect thereto so long
as an amount equal to such prepayment is deposited by the Borrowers in an
interest bearing cash collateral account for the benefit of the Borrowers with
the Agent to be held in such account on terms reasonably satisfactory to the
Agent.
(c) The Borrowers shall make prepayments of the Revolving
Credit Loans from time to time such that the Availability equals or exceeds zero
(or so long as Section 7.09(c) shall remain in effect, $10,000,000) at all
times. Any prepayments required by this paragraph (c) shall be applied to
outstanding Revolving Credit Alternate Base Loans up to the full amount thereof
before they are applied to outstanding Revolving Credit Eurodollar Loans;
provided, however, that the Borrowers shall not be required to make any
prepayment of any Eurodollar Loan pursuant to this Section until the last day of
the Interest Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrowers in a cash collateral account with the
Agent to be held in such account on terms reasonably satisfactory to the Agent.
(d) Within three Business Days of the sale or other
disposition of any assets of any Loan Party (excluding sales of inventory in the
ordinary course of business and, subject to Sections 6.02 and 7.05 hereof,
wornout or obsolete assets but only to the extent that the net proceeds realized
are applied within 90 days of any sale or other disposition to purchase other
assets and pending such application or prepayment all such net proceeds are
applied to prepay Revolving Credit Loans), the proceeds received (net of taxes
due and any reasonable expenses of sale) shall be applied as set forth in
paragraph (g) below.
(e) Within 105 days of the end of each Fiscal Year of the
Borrowers, commencing with the Fiscal Year ending March 31, 1998, the Borrowers
shall prepay the Term Loan in an amount equal to the
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Mandatory Prepayment for the Fiscal Year then ended, such prepayment to be
applied as set forth in paragraph (g) below.
(f) (i) Except as provided in clause (ii) below, promptly and
in any event not more than two Business Days following the receipt by the Agent
or a Borrower or any subsidiary of a Borrower of any net proceeds of (x) any
casualty insurance required to be maintained pursuant to Section 6.03 hereof on
account of each separate loss, damage or injury (each, a "Casualty Event") in
excess of $500,000 (or, if there shall be continuing a Default or an Event of
Default, of the full amount of net proceeds) to any asset of such Borrower or
such subsidiary (including, without limitation, any Collateral), or (y) any
business interruption insurance required to be maintained pursuant to Section
6.03 hereof on account of any business interruption event (each, a "BI Event")
in excess of $500,000 (or, if there shall be continuing a Default or Event of
Default, of the full amount of net proceeds), such Borrower or such subsidiary
shall notify the Agent of such receipt in writing or by telephone promptly
confirmed in writing, and not later than two Business Days following receipt by
the Agent or such Borrower or such subsidiary of any such proceeds, there shall
become due and payable a prepayment of the Revolving Credit Loans in an amount
equal to 100% of such proceeds (not in permanent reduction of the Revolving
Credit Commitment).
(ii) In the case of the receipt of net proceeds described in
clause (i) above with respect to a Casualty Event which is greater than
$2,000,000, the Borrowers may elect, by written notice delivered to the
Agent not later than the day on which a prepayment would otherwise be
required under clause (i), to apply all or a portion of such net
proceeds for the purpose of replacing, repairing, restoring, rebuilding
or purchasing comparable tangible assets (referred to herein as a
"Rebuilding"). An election under this clause (ii) shall not be
effective unless: (x) at the time of such election there is continuing
no Default or Event of Default; (y) the Borrowers shall have certified
to the Agent that: (i) the net proceeds of the insurance adjustment
with respect to a Casualty Event, together with other funds available
to the Borrowers, shall be sufficient to complete such proposed
Rebuilding in accordance with all applicable laws, regulations and
ordinances; and (ii) no Default or Event of Default has arisen or will
arise as a result of such Casualty Event or Rebuilding.
(iii) If the amount of net proceeds in question exceeds
$2,000,000 and arises from a Casualty Event involving the premises
subject to the Mortgage and/or machinery and equipment subject to a
Lien in favor of the Agent, then the
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Agent may establish reserves against Availability as determined by the
Agent in its reasonable discretion until any Rebuilding is completed;
and if such Rebuilding has not been commenced within 360 days of the
occurrence of such Casualty Event, then the Borrowers shall apply an
amount equal to such net proceeds to prepay the Term Loan as set forth
in paragraph (g) below.
(iv) If as the result of a Casualty Event which involves the
loss or destruction of Eligible Inventory and as a result thereof the
Borrowers are or would be in Default under Section 2.09(c) hereof, then
the Borrowers may request that for the purpose of computing Eligible
Receivables the Agent permit the sums due from the applicable insurance
carriers to be deemed Eligible Receivables and the Agent may in its
sole discretion do so (determining in its sole discretion the amount
and advance percentage of any such receivable).
(g) When making a prepayment, whether mandatory or otherwise,
pursuant to paragraph (a), (b), (c), (d), (e) or (f)(iii) above, the Borrowers
shall furnish to the Agent, not later than 2:00 p.m. (New York City time) (i)
one (1) Business Day prior to the date of such prepayment of Alternate Base
Loans and (ii) three (3) Business Days prior to the date of such prepayment of
Eurodollar Loans, written, telex or facsimile notice (promptly confirmed in
writing) of prepayment which shall specify the prepayment date and the principal
amount of each Loan (or portion thereof) to be prepaid, which notice shall be
irrevocable and shall commit the Borrowers to prepay such Loan by the amount
stated therein on the date stated therein. All prepayments shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
prepayment. Prepayments made pursuant to paragraph (d) or (e) above shall be
applied as follows: (A) first, to outstanding Term Alternate Base Loans in the
order described in (j) below up to the full amount thereof and then to
outstanding Term Eurodollar Loans in the order described in (j) below up to the
full amount thereof and (B) second, to outstanding Revolving Credit Alternate
Base Loans up to the full amount thereof and then to Revolving Credit Eurodollar
Loans up to the full amount thereof; provided, however, that the Borrowers shall
not be required to make any prepayment of any Term or Revolving Credit
Eurodollar Loan required pursuant to this paragraph until the last day of the
Interest Period with respect thereto so long as an amount equal to such
prepayment is deposited by the Borrowers into an interest bearing cash
collateral account for the benefit of the Borrowers with the Agent to be held in
such account pursuant to terms reasonably satisfactory to the Agent.
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(h) All prepayments of any Eurodollar Loan under this Section
2.09 shall be subject to Section 2.12 hereof.
(i) Except as otherwise expressly provided in this Section
2.09, payments with respect to any paragraph of this Section 2.09 are in
addition to payments made or required to be made under any other paragraph of
this Section 2.09.
(j) All prepayments of the Term Loan under this Section 2.09
shall be applied 50% in the inverse order of the Repayment Dates and 50% ratably
over the remaining Repayment Dates. The amount of the Term Loan prepaid may not
be reborrowed.
SECTION 2.10. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement (or in the case of any assignee of any Lender, the date of assignment)
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall: (i) subject the Agent or any Lender (which shall for the purpose of
this Section 2.10 include any assignee or lending office of the Agent or any
Lender) to any charge, fee, deduction or withholding of any kind or to any tax
with respect to any amount paid or to be paid to either the Agent or any Lender
with respect to any Eurodollar Loans made by such Lender to the Borrowers or
with respect to the obligations of any Lender under Sections 2.17 through 2.20
hereof or under any Letter of Credit (other than (x) taxes imposed on the
overall net income of the Agent or such Lender and (y) franchise taxes imposed
on the Agent or such Lender, in either case by the jurisdiction in which such
Lender or the Agent has its principal office or Applicable Lending Office or any
political subdivision or taxing authority of either thereof); (ii) change the
basis of taxation of payments to any Lender or the Agent of the principal of or
interest on any Eurodollar Loan or any other fees or amounts payable with
respect to any Letter of Credit or otherwise hereunder (other than taxes imposed
on the overall net income of, or franchise taxes imposed on, such Lender or the
Agent by the jurisdiction in which such Lender or the Agent has its principal
office or Applicable Lending Office or by any political subdivision or taxing
authority therein); (iii) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or loans or loan commitments extended by, or Letters of Credit
issued and maintained by, such Lender; or (iv) impose on any Lender or, with
respect to Eurodollar Loans, the London interbank market, any other condition
affecting this Agreement, Letters of Credit issued and maintained by or
Eurodollar Loans made by such Lender; and the result of any of the foregoing
shall be to increase the direct cost to any such Lender of making or maintaining
any Eurodollar Loan or Letter of Credit, or to reduce the amount of any
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payment (whether of principal, interest, fee, compensation or otherwise)
receivable by such Lender or to require such Lender to make any payment in
respect of any Eurodollar Loan or Letter of Credit, then the Borrowers shall pay
to such Lender or the Agent, as the case may be, upon such Lender's or the
Agent's demand, such additional amount or amounts as will compensate such Lender
or the Agent for such additional costs or reduction. The Agent and each Lender
agree to give notice to the Borrowers of any such change in law, regulation,
interpretation or administration with reasonable promptness after becoming
actually aware thereof and of the applicability thereof to the Transactions.
Notwithstanding anything contained herein to the contrary, nothing in clause (i)
or (ii) of this Section 2.10(a) shall be deemed to (x) permit the Agent or any
Lender to recover any amount thereunder which would not be recoverable under
this Agreement or (y) require the Borrowers to make any payment of any amount to
the extent that such payment would duplicate any payment made by the Borrowers
pursuant to this Agreement.
(b) If at any time and from time to time after the date of
this Agreement, any Lender shall determine that the adoption of any applicable
law, rule, regulation or guideline regarding capital adequacy, or any change in
any applicable law, rule, regulation or guideline regarding capital adequacy,
including, without limitation, the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards", or any change in the
interpretation or administration of any thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or admin
istration thereof, or compliance by such Lender (or its lending office) with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or will
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy), then from time to time the Borrowers shall pay to
such Lender such additional amount or amounts as will compensate such Lender for
such reduction. Each Lender agrees to give notice to the Borrowers of any
adoption of, change in, or change in interpretation or administration of, any
such law, rule, regulation or guideline with reasonable promptness after
becoming actually aware thereof and of the applicability thereof to the
Transactions.
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(c) A statement of any Lender or the Agent setting forth such
amount or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Lender (or the Agent) as specified in paragraphs
(a) and (b) above shall be delivered to the Borrowers and shall be conclusive
absent manifest error. The Borrowers shall pay each Lender or the Agent the
amount shown as due on any such statement within ten (10) days after its receipt
of the same.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or any Letter of Credit or
reduction in the rate of return earned on such Lender's capital (collectively,
"Increased Costs"), shall not constitute a waiver of such Lender's or the
Agent's rights to demand compensation for any such Increased Costs; provided,
that if any Lender or the Agent shall fail to demand compensation for any such
Increased Costs within 365 days after such Lender or the Agent has knowledge of
such Increased Costs or the event causing such Increased Costs, then such
failure shall constitute a waiver of such Lender's or the Agent's right to
demand compensation for such Increased Costs and the Borrowers shall have no
obligation to reimburse such Lender or the Agent for such Increased Costs. The
protection under this Section 2.10 shall be available to each Lender and the
Agent regardless of any possible contention of the invalidity or inapplicability
of any law, regulation or other condition which shall give rise to any demand by
such Lender or the Agent for compensation. In the event a Lender or the Agent
challenges the validity or applicability of any law, regulation or other
condition giving rise to a demand for compensation, and the Lender or the Agent
prevails in its challenge, the Lender or the Agent shall reimburse the Borrowers
in an amount equal to the amount paid by the Borrowers to the Lender or the
Agent.
(e) Any Lender claiming any additional amounts payable
pursuant to this Section 2.10 agrees to use reasonable efforts (consistent with
legal and regulatory restrictions) to designate a different Applicable Lending
Office if the making of such a designation would avoid the need for, or reduce
the amount of, any such additional amounts and would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such Lender.
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SECTION 2.11. Change in Legality. (a) Notwithstanding anything
to the contrary herein contained, if any change in any law or regulation or in
the interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations to
make Eurodollar Loans as contemplated hereby, then, by written notice to the
Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter
be made by such Lender hereunder, whereupon the Borrowers
shall be prohibited from requesting Eurodollar Loans from such
Lender hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that all outstanding Eurodollar Loans made
by such Lender be converted to Alternate Base Loans, in which
event (A) all such Eurodollar Loans shall be automatically
converted to Alternate Base Loans as of the effective date of
such notice as provided in paragraph (b) below and (B) all
payments of principal which would otherwise have been applied
to repay the converted Eurodollar Loans shall instead be
applied to repay the Alternate Base Loans resulting from the
conversion of such Eurodollar Loans.
(b) For purposes of Section 2.11(a) hereof, a notice to the
Borrowers by any Lender shall be effective, if lawful, on the last day of the
then current Interest Period or, if there are then two or more current Interest
Periods, on the last day of each such Interest Period, respectively; otherwise,
such notice shall be effective with respect to the Borrowers on the date of
receipt by the Borrowers.
(c) Any Lender claiming any additional amounts payable
pursuant to this Section 2.11 agrees to use reasonable efforts (consistent with
legal and regulatory restrictions) to designate a different Applicable Lending
Office if the making of such a designation would avoid the need for, or reduce
the amount of, any such additional amounts and would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.12. Indemnity. The Borrowers shall indemnify the
Agent and each Lender against any loss or reasonable expense which the Agent or
such Lender may sustain or incur as a consequence of the following events
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(regardless of whether such events occur as a result of the occurrence of an
Event of Default or the exercise of any right or remedy of the Agent or the
Lenders under this Agreement or any Loan Document, or at law): any failure of
the Borrowers to fulfill on the date of any Credit Event in connection with a
Eurodollar Loan the applicable conditions set forth in Article V hereof
applicable to it; any failure of the Borrowers to borrow hereunder after irrevo
cable notice of borrowing pursuant to Section 2.03 hereof has been given; any
payment, prepayment or conversion of a Eurodollar Loan on a date other than the
last day of the relevant Interest Period; or any default in payment or
prepayment of the principal amount of any Eurodollar Loan or any part thereof or
interest accrued thereon, or with respect to any Letter of Credit, in each case
as and when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise). Such loss or reasonable expense shall include, without
limitation, an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal or other amount so paid, prepaid or
converted or not borrowed for the period from the date of such payment,
prepayment or conversion or failure to borrow to, in the case of a Eurodollar
Loan, the last day of the Interest Period for such Eurodollar Loan (or, in the
case of a failure to borrow, the Interest Period for such Eurodollar Loan which
would have commenced on the date of such failure to borrow), at the applicable
rate of interest for such Loan provided for herein over (ii) the amount of
interest (as reasonably determined by such Lender) that would be realized by
such Lender in reemploying the funds so paid, prepaid or converted or not
borrowed for such period or Interest Period, as the case may be. Any such Lender
shall provide to the Borrowers a statement, signed by an officer of such Lender,
explaining any loss or expense and setting forth, if applicable, the computation
pursuant to the preceding sentence, and such statement shall be conclusive
absent manifest error. The Borrowers shall pay such Lender the amount shown as
due on any such statement within ten (10) days after the receipt of the same.
SECTION 2.13. Pro Rata Treatment; Assumption by and Delegation
of Authority to the Agent. (a) Except as permitted under Sections 2.10, 2.11,
2.15(c) and 2.16 hereof, or as described in subsection (d) below each borrowing,
each payment or prepayment of principal of the Notes, each payment of interest
on the Notes, each payment of any fee or other amount payable hereunder and each
reduction of the Total Revolving Credit Commitment and Total Term Loan
Commitment shall be made to the Agent and distributed pro rata among the Lenders
in the proportions that their Revolving Credit
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Commitments bear to the Total Revolving Credit Commitment or that their Term
Loan Commitments bears to the Total Term Loan Commitment, as the case may be.
(b) Notwithstanding the occurrence or continuance of a Default
or Event of Default or other failure of any condition to the making of Loans or
occurrence of other Credit Events hereunder subsequent to the Credit Events on
the Closing Date, unless the Agent shall have been notified in writing by any
Lender in accordance with the provisions of paragraph (c) below prior to the
date of a proposed Credit Event that such Lender will not make the amount that
would constitute its pro rata share of the applicable Credits on such date
available to the Agent, the Agent may assume that such Lender has made such
amount available to the Agent on such date, and the Agent may, in reliance upon
such assumption, make available to the Borrowers a corresponding amount. If such
amount is made available to the Agent on a date after such Credit Event date,
such Lender shall pay to the Agent on demand an amount equal to the product of
(i) the daily average Federal funds rate during such period as quoted by the
Agent, times (ii) the amount of such Lender's pro rata share of such Credits,
times (iii) a fraction the numerator of which is the number of days that elapse
from and including such Credit Event date to the date on which such Lender's pro
rata share of such Credits shall have become immediately available to the Agent
and the denominator of which is 360. A certificate of the Agent submitted to any
Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's pro rata share of
such Credits is not in fact made available to the Agent by such Lender within
three Business Days of such Credit Event date, the Agent shall be entitled to
recover such amount with interest thereon (without duplication of any interest
paid pursuant to Section 2.05) at the rate per annum applicable to the Loans
hereunder, on demand, from the Borrowers.
(c) Unless and until the Agent shall have received notice from
the Required Lenders as to the existence and continuance of a Default, an Event
of Default or some other circumstance which would relieve the Lenders of their
respective obligations to extend Credits hereunder, which notice shall be in
writing and shall be signed by the Required Lenders and shall expressly state
that the Required Lenders do not intend to make available to the Agent such
Lenders' ratable share of Credits extended after the effective date of such
notice, the Agent shall be entitled to continue to make
-43-
the assumptions described in Section 2.13(b) above. After receipt of the notice
described in the preceding sentence, which shall become effective on the third
Business Day after receipt of such notice by the Agent (unless otherwise agreed
by the Agent), the Agent shall be entitled to make the assumptions described in
Section 2.13(b) above as to any Credits as to which it has not received a
written notice to the contrary prior to 11:00 a.m. (New York time) on the
Business Day next preceding the day on which such Credits are to be extended.
The Agent shall not be required to extend any Credits as to which it shall have
received notice by a Lender of such Lender's intention not to make its ratable
portion of such Credits available to the Agent. Any withdrawal of authorization
as described under this Section 2.13(c) shall not affect the validity of any
Credits extended prior to the effectiveness thereof.
(d) In the event that any Lender fails to fund its ratable
portion (based on its Revolving Credit Commitment) of any Revolving Credit Loan
which such Lender is obligated to fund under the terms of this Agreement (the
funded portion of such borrowing being hereinafter referred to as a "Non Pro
Rata Loan"), until the earlier of such Lender's cure of such failure or the
termination of the Total Revolving Credit Commitment, in the Agent's sole
discretion, the proceeds of all amounts thereafter repaid to Agent by the
Borrowers and otherwise required to be applied to such Lender's share of all
other Obligations pursuant to the terms of this Agreement, may be advanced to
the Borrowers by the Agent on behalf of such Lender to cure, in full or in part,
such failure by such Lender, but shall nevertheless be deemed to have been paid
to such Lender in satisfaction of such other Obligations. Notwithstanding
anything in this Agreement to the contrary:
(i) the foregoing provisions to this subsection (d)
shall apply only with respect to the proceeds of payments of
Obligations and shall not affect the conversion or
continuation of Loans pursuant to Section 2.02;
(ii) any such Lender shall be deemed to have cured its
failure to fund at such time as an amount equal to such
Lender's ratable portion (based on its applicable Revolving
Credit Commitment) of the requested principal portion of such
Revolving Credit Loan is fully funded to the Borrowers whether
made by such Lender itself or by operation of the
-44-
terms of this subsection (d) and whether or not the Non Pro
Rata Loan with respect thereto has been converted or
continued;
(iii) amounts advanced to the Borrowers to cure, in full
or in part, any such Lender's failure to fund its Revolving
Credit Loans ("Cure Loans") shall bear interest at the rate
applicable to Alternate Base Loans under Section 2.05 in
effect from time to time, and for all other purposes of this
Agreement shall be treated as if they were Alternate Base
Loans;
(iv) regardless of whether or not an Event of Default
has occurred and is continuing, and notwithstanding the
instructions of the Borrowers as to their desired application,
all repayments of principal which would be applied to the
outstanding Revolving Credit Alternate Base Loans shall be
applied first, ratably to Revolving Credit Alternate Base
Loans constituting Non Pro Rata Loans, second, ratably to
Revolving Credit Alternate Base Loans other than those
constituting Non Pro Rata or Cure Loans and, third, ratably to
Revolving Credit Alternate Base Loans constituting Cure Loans;
(v) for so long as, and until the earlier of any such
Lender's cure of the failure to fund its ratable portion
(based on its applicable Revolving Credit Commitment) of any
Revolving Credit Loan and the termination of the Total
Revolving Credit Commitment, the term "Required Lenders" for
all purposes of this Agreement shall exclude all Lenders whose
failure to fund their ratable portion (based on their
respective applicable Revolving Credit Commitments) of any
Revolving Credit Loan have not been cured; and
(vi) for so long as, and until any such Lender's
failure to fund its ratable portion (based on its applicable
Revolving Credit Commitment) of any Revolving Credit Loan is
cured in accordance with this subsection (d), such Lender
shall not be entitled to any Revolving Credit Commitment Fee
with respect to its Revolving Credit Commitment and such
Lender shall remain liable to the Borrowers for its failure to
fund regardless of such cure.
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SECTION 2.14. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrowers, including, but not limited to, a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, obtain payment (voluntary or involuntary) in respect of a Note or
exposure under the Letter of Credit Usage held by it as a result of which the
unpaid principal portion of the Notes or exposure under the Letter of Credit
Usage held by it shall be proportionately less than the unpaid principal portion
of the Notes or exposure under the Letter of Credit Usage held by any other
Lender, it shall be deemed to have simultaneously purchased from such other
Lender a participation in the Notes and exposure under the Letter of Credit
Usage held by such other Lender, so that the aggregate unpaid principal amount
of the Notes and exposure under the Letter of Credit Usage and participations in
Notes and exposure under the Letter of Credit Usage held by it shall be in the
same proportion to the aggregate unpaid principal amount of all Notes and
exposure under the Letter of Credit Usage then outstanding as the principal
amount of the Notes and exposure under the Letter of Credit Usage held by it
prior to such exercise of banker's lien, setoff or counterclaim was to the
principal amount of all Notes and exposure under the Letter of Credit Usage
outstanding prior to such exercise of banker's lien, setoff or counterclaim;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.14 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustments restored without interest. The Borrowers expressly consent to the
foregoing arrangements and agree that any Lender holding a participation in a
Note or exposure under the Letter of Credit Usage deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrowers to such
Lender as fully as if such Lender held a Note or exposure under the Letter of
Credit Usage in the amount of such participation.
SECTION 2.15. Payments and Computations. (a) The Borrowers
shall make each payment hereunder and under any instrument delivered hereunder
not later than 2:00 p.m. (New York City time) on the day when due in lawful
money of the United States (in freely transferable dollars) to the Agent at its
offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ for the account of
the Lenders, in immediately available funds, without set-off or counterclaim.
Any amounts received after such time on any date may, in
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the discretion of the Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. The Agent
shall distribute any such payments received by it for the account of any other
person to the appropriate recipient promptly following receipt thereof. The
Agent may charge, when due and payable, the Borrowers' account or accounts, as
the case may be, with the Agent for all interest, principal and Revolving Credit
Commitment Fees, letter of credit fees and any administration fee owing to the
Agent or the Lenders on or with respect to this Agreement and/or the Loans and
other Loan Documents. If at any time there is not sufficient availability to
cover any of the payments referred to in the prior sentence, and in any event
upon the occurrence of any Default, the Borrowers shall make any such payments
upon demand.
(b) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by the Agent from the Borrowers and such related payment is not received by the
Agent, then the Agent will be entitled to recover such amount from such Lender
without setoff, counterclaim or deduction of any kind. If the Agent reasonably
determines at any time that any amount received by the Agent under this
Agreement must be returned to the Borrowers or paid to any other person pursuant
to any bankruptcy or solvency law then, notwithstanding any other term or
condition of this Agreement, the Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay to the Agent
on demand any portion of such amount that the Agent has distributed to such
Lender, together with interest at such rate, if any, as the Agent is required to
pay to the Borrowers or such other person, without setoff, counterclaim or
deduction of any kind.
(c) The outstanding principal balance of Revolving Credit
Loans may fluctuate from day to day, through the Agent's disbursement of funds
to, and receipt of funds from, the Borrowers. In order to minimize the frequency
of transfers of funds between the Agent and each Lender, Revolving Credit Loans
and payments may be settled according to the following procedures. On the fourth
Business Day of each week, or more frequently (including daily), if the Agent so
elects (each such day being a "Settlement Date"), the Agent will advise each
Lender by telephone, telex or telecopy of the amount of each such Lender's
actual dollar investment and its ratable portion (based on its applicable
Revolving Credit Commitment) of the outstanding principal balance of Revolving
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Credit Loans as of the close of business on the Business Day immediately
preceding the Settlement Date. In the event that payments are necessary to
adjust the amount of such Lender's actual dollar investment in the outstanding
principal balance of Revolving Credit Loans to such Lender's ratable portion
(based on its applicable Revolving Credit Commitment) of the outstanding
principal balance of Revolving Credit Loans as of any Settlement Date, the party
from which such payment is due will pay the other, in immediately available
funds, by wire transfer to the other's account not later than 2:00 p.m. (New
York time) on the Business Day immediately following the Settlement Date.
Notwithstanding the foregoing, if the Agent so elects, the Agent may require
that each Lender make its ratable portion (based on its applicable Revolving
Credit Commitment) of any requested Revolving Credit Loan available to the Agent
for disbursement on the date of funding applicable to such Revolving Credit Loan
in accordance with Section 2.03 hereof. Notwithstanding these procedures, each
Lender's obligation to fund its portion of each Revolving Credit Loan made by
the Agent to the Borrowers will commence on the date such advance is made by the
Agent.
SECTION 2.16. Taxes. (a) Any and all payments by the Borrowers
hereunder shall be made, in accordance with Section 2.15 hereof, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings in any such case imposed by the
United States or any political subdivision thereof, excluding:
(i) in the case of the Agent and each Lender, (A)
taxes imposed or based on its net income, and franchise or
capital taxes imposed on it, and (B) withholding taxes payable
with respect to payments to the Agent or such Lender under
laws (including, without limitation, any treaty, ruling,
determination or regulation) in effect on the date hereof, but
not any increase in withholding tax resulting from any
subsequent change in such laws (other than withholding with
respect to taxes imposed or based on its net income or with
respect to franchise or capital taxes), and
(ii) taxes (including withholding taxes) imposed by
reason of the failure of the Agent or any Lender, in either
case that is organized outside the United States, to comply
with Section 2.16(f) hereof (or the inaccuracy at any time of
the
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certificates, documents and other evidence delivered
thereunder)
(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrowers
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders or the Agent, (x) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including without limitation deductions applicable to additional sums payable
under this Section 2.16) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (y) the Borrowers shall make such deductions and (z) the Borrowers shall
pay the full amount deducted to the relevant tax authority or other authority in
accordance with applicable law.
(b) In addition, the Borrowers agree to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Lender and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction (except as specified in clauses
(a)(i) and (ii)) on amounts payable under this Section 2.16) paid by such Lender
or the Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender or the
Agent (as the case may be) makes written demand therefor. If any Lender receives
a refund in respect of any Taxes or Other Taxes for which such Lender has
received payment from the Borrowers hereunder, such Lender shall promptly notify
the Borrowers of such refund and such Lender shall promptly repay such refund to
the Borrowers, provided that the Borrowers, upon the request of such Lender,
agree to return such refund (plus any penalties, interest or other charges) to
such Lender in the event such Lender is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes withheld by the Borrowers in respect of any payment to any Lender,
the Borrowers will furnish to the Agent, at its address referred to in Section
11.01 hereof, such certificates, receipts and
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other documents as may be reasonably requested in writing to evidence payment
thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.16 shall
survive the payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States
shall deliver to the Borrowers on the date hereof (or, in the case of an
assignee, on the date of the assignment) and from time to time as required for
renewal under applicable law duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 (or any successor or additional forms), as
appropriate, indicating in each case that such Lender is entitled to receive
payments under this Agreement without any deduction or withholding of any United
States federal income taxes. The Agent (if the Agent is an entity organized
outside the United States) and each Lender that is organized outside the United
States shall promptly notify the Borrowers and the Agent of any change in its
Applicable Lending Office and upon written request of the Borrowers such Lender
or the Agent, as applicable, shall, prior to the immediately following due date
of any payment by the Borrowers or any Guarantor hereunder or under any other
Loan Document, deliver to the Borrowers or such Guarantor, as the case may be
(with copies to the Agent), such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
without limitation Internal Revenue Service Form 4224, Form 1001 and any other
certificate or statement of exemption required by Treasury Regulation Section
1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof, properly
completed and duly executed by such Lender establishing that such payment is (i)
not subject to withholding under the Code because such payment is effectively
connected with the conduct by such Lender of a trade or business in the United
States or (ii) totally exempt from United States tax under a provision of an
applicable tax treaty. The Borrowers shall be entitled to rely on such forms in
their possession until receipt of any revised or successor form pursuant to this
Section 2.16(f). If the Agent or a Lender fails to provide a certificate,
document or other evidence required pursuant to this Section 2.16(f), then (i)
the Borrowers shall be entitled to deduct or withhold on payments to the Agent
or such Lender as a result of such failure, as required by law, and
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(ii) the Borrowers shall not be required to make payments of additional amounts
with respect to such withheld Taxes pursuant to Sec tion 2.16(a) to the extent
such withholding is required solely by reason of the failure of the Agent or
such Lender to provide the necessary certificate, document or other evidence.
(g) Each Lender and the Agent shall use reasonable efforts to
avoid or minimize any amounts which might otherwise be payable pursuant to this
Section 2.16 (including seeking refunds of any amounts that are reasonably
believed not to have been correctly or legally asserted); provided, however,
that such efforts shall not include the taking of any actions by such Lender or
the Agent that would result in any tax, cost or other expense to such Lender or
the Agent (other than a tax, cost or other expense for which such Lender or the
Agent shall have been reimbursed or indemnified by the Borrowers pursuant to
this Agreement or otherwise) or any action which would or might in the
reasonable opinion of such Lender or the Agent have a material adverse effect
upon its business, operations or financial condition or otherwise be
disadvantageous to such Lender or the Agent.
SECTION 2.17. Issuance of Letters of Credit. Upon the request
of the Borrowers, and subject to the conditions set forth in Article V hereof
and such other conditions to the opening of Letters of Credit as the Agent
reasonably requires of its customers generally, the Agent shall from time to
time open commercial and standby letters of credit (each, a "Letter of Credit")
for the account of the Borrowers, the aggregate undrawn amount of all
outstanding Letters of Credit not at any time to exceed $10,000,000; provided,
however, that neither Borrower may request the Agent to open a Letter of Credit
if after giving effect thereto (measured by the face amount of such Letter of
Credit) Availability would be less than zero (or so long as Section 7.09(c)
shall remain in effect, $10,000,000). The issuance of each Letter of Credit
shall be made on at least three Business Days' prior written notice from the
Borrowers to the Agent, at its Domestic Lending Office, which written notice
shall be an application for a Letter of Credit on the Agent's customary form
completed to the reasonable satisfaction of the Agent, together with the
proposed form of the Letter of Credit (which shall be reasonably satisfactory to
the Agent) and such other certificates, documents and other papers and
information as the Agent may reasonably request. The Agent shall not at any time
be obligated to issue any Letter of Credit if such issuance would conflict with
any applicable provisions of law or cause the Agent or any Lender to exceed any
limits imposed by any Lender's Revolving Credit Commitment
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or the Letter of Credit sublimit. The expiration date of any (i) commercial
Letter of Credit shall not be later than 180 days from the date of issuance
thereof and (ii) any standby Letter of Credit shall not be later than 365 days
from the date of issuance thereof, and, in any event, no Letter of Credit shall
have an expiration date later than 30 days prior to the Revolving Credit
Termination Date. The Letters of Credit shall be issued with respect of
transactions occurring in the ordinary course of business of the Borrowers.
SECTION 2.18. Payment of Letters of Credit; Reimbursement.
Upon the issuance of any Letter of Credit, the Agent shall notify each Lender of
the principal amount, the number, and the expiration date thereof and the amount
of such Lender's participation therein. By the issuance of a Letter of Credit
hereunder and without further action on the part of the Agent or the Lenders,
each Lender hereby accepts from the Agent a participation (which participation
shall be nonrecourse to the Agent) in such Letter of Credit equal to such
Lender's pro rata (based on its Revolving Credit Commitment) share of such
Letter of Credit, effective upon the issuance of such Letter of Credit. Each
Lender hereby absolutely and unconditionally assumes, as primary obligor and not
as a surety, and agrees to pay and discharge, and to indemnify and hold the
Agent harmless from liability in respect of, such Lender's pro rata share of the
amount of any drawing under a Letter of Credit. Each Lender acknowledges and
agrees that its obligation to acquire participations in each Letter of Credit
issued by the Agent and its obligation to make the payments specified herein,
and the right of the Agent to receive the same, in the manner specified herein,
are absolute and unconditional and shall not be affected by any circumstance
whatsoever, including, without limitation, the occurrence and continuance of a
Default or an Event of Default hereunder, and that each such payment shall be
made without any offset, abatement, withholding or reduction whatsoever. The
Agent shall review, on behalf of the Lenders, each draft and any accompanying
documents presented under a Letter of Credit and shall notify each Lender of any
such presentment. Promptly after it shall have ascertained that any draft and
any accompanying documents presented under such Letter of Credit appear on their
face to be in substantial conformity with the terms and conditions of the Letter
of Credit, the Agent shall give telephonic or facsimile notice to the Lenders
and the Borrowers of the receipt and amount of such draft and the date on which
payment thereon will be made, and the Lenders shall, by 11:00 a.m., New York
City time on the date such payment is to be made, pay the amounts required to
the Agent in New York, New York in immediately available funds, and the Agent,
not later than 3:00 p.m. on such day, shall make the appropriate
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payment to the beneficiary of such Letter of Credit; provided, however, the
Agent shall, subject to Availability, finance such payment with an Alternate
Base Loan in an equivalent amount and, to the extent so financed, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting Alternate Base Loan. If in accordance with the prior sentence the
Agent cannot finance such payment because of the lack of Availability and the
Agent shall pay any draft presented under a Letter of Credit, then the Agent, on
behalf of the Lenders, shall charge the general deposit account of the Borrowers
with the Agent for the amount thereof, together with the Agent's customary
overdraft fee in the event the funds available in such account shall not be
sufficient to reimburse the Lenders for such payment and the Borrowers shall not
otherwise have discharged such reimbursement obligation by 2:00 p.m., New York
City time, on the date of such payment. If the Lenders have not been reimbursed
with respect to such drawing as provided above, or if an Alternate Base Loan is
not made as provided above, the Borrowers shall pay to the Agent, for the
account of the Lenders, the amount of the drawing together with interest on such
amount at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 365 days) equal to the rate applicable to Alternate Base
Loans hereunder plus two percent (2%), payable on demand. The obligations of the
Borrowers under this Section 2.18 to reimburse the Lenders and the Agent for all
drawings under Letters of Credit shall be joint and several, absolute,
unconditional and irrevocable and shall be satisfied strictly in accordance with
their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, setoff, defense or other right
which the Borrowers or any other person may at any time have against the
beneficiary under any Letter of Credit, the Agent (other than the defense of
payment in accordance with the terms of this Agreement or a defense based on the
gross negligence or willful misconduct of the Agent) or any other person in
connection with this Agreement or any other transaction;
(c) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; provided
that payment by the Agent under such Letter of Credit against presentment of
such draft or document shall not have constituted gross negligence or willful
misconduct of the Agent;
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(d) payment by the Agent under any Letter of Credit against
presentation of a draft or other document which does not comply with the terms
of such Letter of Credit; provided that such payment shall not have constituted
gross negligence or willful misconduct of the Agent; and
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing; provided that such other circumstance or event
shall not have been the result of gross negligence or willful misconduct of the
Agent.
It is understood that in making any payment under any Letter
of Credit (x) the Agent's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including, without limitation, reliance on the amount of any draft presented
under such Letter of Credit, whether or not the amount due to the beneficiary
equals the amount of such draft and whether or not any document presented
pursuant to such Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever and (y) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, not be deemed willful misconduct or gross
negligence of the Agent.
SECTION 2.19. Agent's Actions with respect to Letters of
Credit. Any Letter of Credit may, in the discretion of the Agent or its
correspondents, be interpreted by them (to the extent not inconsistent with such
Letter of Credit) in accordance with the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce, as adopted or
amended from time to time, or to the extent the foregoing is not applicable, any
other rules, regulations and customs prevailing at the place where any Letter of
Credit is available or the drafts are drawn or negotiated. The Agent and its
correspondents may accept and act upon the name, signature, or act of any party
purporting to be the executor, administrator, receiver, trustee in bankruptcy,
or other legal representative of any party designated in any Letter of Credit in
the place of the name, signature, or act of such party.
SECTION 2.20. Letter of Credit Fees. The Borrowers agree to
pay (i) to the Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at a rate
per annum equal to (x) in the case of a standby Letter of Credit the margin over
the
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Adjusted LIBO Rate applicable to interest on Revolving Credit Eurodollar
Loans and (y) in the case of a commercial Letter of Credit 1/2 of 1% less than
the margin over the Adjusted LIBO Rate applicable to interest on Revolving
Credit Eurodollar Loans, in each case minus 1/4 of 1%, on the average daily
amount of such Lender's pro rata share of the Letter of Credit Usage (excluding
any portion attributable to unreimbursed drawings) during the period from and
including the Closing Date to but excluding the later of the date on which such
Lender's Revolving Credit Commitment terminates and the date on which such
Lender ceases to have any share of the Letter of Credit Usage, and (ii) to the
Agent a fronting fee, which shall accrue at the rate of 1/4% per annum on the
average daily amount of the Letter of Credit Usage (excluding any portion
thereof attributable to unreimbursed drawings) during the period from and
including the Closing Date to but excluding the later of the date of termination
of the Revolving Credit Commitments and the date on which there ceases to be any
Letter of Credit Usage, as well as the Agent's standard fees with respect to the
issuance, amendment, renewal or extension of any Letter of Credit or processing
of drawings thereunder. The Agent will promptly notify the Borrowers of any
change in the Agent's standard fees. Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the first Business Day following each
such period, commencing July 1, 1998; provided that all such fees shall be
payable on the date on which the Revolving Credit Commitment terminates and any
such fees accruing after the date on which the Revolving Credit Commitment
terminates shall be payable on demand. Any other fees payable to the Agent
pursuant to this paragraph shall be payable on demand, and may be charged by the
Agent against the Borrowers' account maintained with the Agent. All
participation fees and fronting fees shall be computed on the basis of a year of
365 days and shall be payable for the actual number of days elapsed (including
the first day but excluding the last day).
SECTION 2.21. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances. (a) Any Lender claiming or expecting to claim any
payment or additional amounts payable pursuant to Section 2.10 or Section 2.16
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Applicable Lending Office if the making of
such a change, in the judgment of such Lender, would avoid the need for or
reduce the amount of any such payment or additional amounts that may thereafter
accrue or avoid the circumstances giving rise to such exercise and would not, in
the sole determination of such Lender, be otherwise disadvantageous to such
Lender.
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(b) In the event that any Lender shall have delivered a notice
or certificate pursuant to Section 2.10 or 2.11, or the Borrowers shall be
required to make additional payments to any Lender under Section 2.16, the
Borrowers shall have the right, at their own expense, upon notice to such Lender
and the Agent, to require such Lender to transfer and assign without recourse
(in accordance with and subject to the restrictions contained in Section 11.03)
all its interests, rights and obligations under this Agreement to one or more
other financial institutions approved by the Agent (which approval shall not be
unreasonably withheld) which shall assume such obligations. A Lender shall not
be required to make any such transfer and assignment unless all Obligations
owing to such Lender, including those pursuant to Sections 2.10, 2.11 and 2.16,
have been paid in full, and no Lender shall be required to make any such
transfer and assignment if prior thereto, as a result of a waiver, the
circumstances entitling the Borrowers to require such transfer and assignment
cease to apply.
III. COLLATERAL SECURITY
SECTION 3.01. Security Documents. The Obligations shall be
secured by the Collateral described in the Security Documents and are entitled
to the benefits thereof. Each Borrower shall duly execute and deliver the
Security Documents to which such Borrower is a party, all consents of third
parties reasonably necessary to permit the effective granting of the Liens
created in such agreements, financing statements pursuant to the Uniform
Commercial Code and other documents, all in form and substance reasonably
satisfactory to the Agent, as may be reasonably required by the Agent to grant
to the Lenders a valid, perfected and enforceable first priority Lien on and
security interest in (subject only to the Liens permitted under Section 7.01
hereof) the Collateral to the extent such Collateral may be perfected by filing.
SECTION 3.02. Filing and Recording. The Borrowers shall, at
their sole cost and expense, cause all instruments and documents given as
evidence of security pursuant to this Agreement to be duly recorded and/or filed
or otherwise perfected in all places necessary, in the reasonable opinion of the
Agent, and take such other actions as the Agent may reasonably request, in order
to perfect and protect the Liens of the Agent and Lenders in the Collateral.
Each of the Borrowers, to the extent permitted
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by law, hereby authorize the Agent to file any financing statement in respect of
any Lien created pursuant to the Security Documents to which it is a party which
may at any time be required or which, in the opinion of the Agent, may at any
time be desirable although the same may have been executed only by the Agent or,
at the option of the Agent, to sign such financing statement on behalf of such
Borrower and file the same, and each of the Borrowers hereby irrevocably
designates the Agent, its agents, representatives and designees as its agent and
attorney-in-fact for this purpose provided that the rights granted to the Agent
in this sentence may only be exercised upon the occurrence and during the
continuance of an Event of Default, or if such financing statement is being
filed to correct an error or omission or if a Borrower has failed to promptly
execute a financing statement prepared by the Agent in accordance with the
Security Documents to which it is a party for the purpose of perfecting its Lien
on Collateral. In the event that any re-recording or refiling thereof (or the
filing of any statements of continuation or assignment of any financing
statement) is required to protect and preserve such Lien, the Borrowers shall,
at the Borrowers' cost and expense, cause the same to be recorded and/or refiled
at the time and in the manner requested by the Agent.
IV. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to each of the Lenders
that both before and after giving effect to the consummation of the Transactions
(including, without limitation, under the Manischewitz Acquisition Documents):
SECTION 4.01. Organization, Legal Existence. Each Borrower and
each of their subsidiaries is a legal entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, has
the requisite power and authority to own its property and assets and to carry on
its business as now conducted and as currently proposed to be conducted and is
qualified to do business in every jurisdiction where such qualification is
required (all such jurisdictions being listed in Schedule 4.01 annexed hereto),
except where the failure to be qualified would not have a Material Adverse
Effect. Each Borrower has the power to execute, deliver and perform its
obligations under this Agreement and the other Loan Documents to which it is a
party, and to borrow hereunder and to execute and deliver the Notes.
SECTION 4.02. Authorization. The execution, delivery and
performance by each Borrower of this Agreement and each of the other Loan
Documents to
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which it is a party, the borrowings hereunder by such Borrower, the execution
and delivery by such Borrower of the Notes, the grant of security interests in
the Collateral created by the Security Documents to which it is a party and, in
the case of Manischewitz, the transactions contemplated to occur under or in
connection with the Manischewitz Acquisition Documents (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate or
limited liability company and, if required, stockholder or member action, as
applicable, and (b) will not (i) violate (A) any provision of law, statute, rule
or regulation or the certificate or articles of incorporation, certificate of
formation or other applicable constitutive documents or the by-laws or operating
agreement, as applicable, of the Borrowers or their subsidiaries, as the case
may be, (B) any order of any court, or any rule, regulation or order of any
other agency of government binding upon the Borrowers, or their subsidiaries, or
(C) any provisions of any material indenture, agreement or other instrument to
which the Borrowers, or their subsidiaries, or any of their respective
properties or assets are or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any material indenture, agreement or other instrument referred to
in (b)(i)(C) above, except to the extent that any such default would not be
reasonably likely to result in a Material Adverse Effect or (iii) result in the
creation or imposition of any Lien of any nature whatsoever (other than in favor
of the Agent, for its own benefit and for the benefit of the Lenders, as
contemplated by this Agreement and the Security Documents) upon any property or
assets of the Borrowers, or their subsidiaries.
SECTION 4.03. Governmental Approvals. No registration or
filing (other than the filings necessary to perfect the Liens created by the
Security Documents) with consent or approval of, or other action by, any
Federal, state or other governmental agency, authority or regulatory body is or
will be required in connection with the Transactions, other than any which have
been made or obtained.
SECTION 4.04. Binding Effect. This Agreement and each of the
other Loan Documents to which it is a party constitutes, and each of the Notes
when duly executed and delivered will constitute, a legal, valid and binding
obligation of each of the Borrowers enforceable in accordance with its terms,
subject (a) as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally, from time to time in effect, and (b) to general
principles of equity.
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SECTION 4.05. Material Adverse Change. Except as set forth in
Schedule 4.05 annexed hereto, there has been no material adverse change in the
business, assets, operations or financial condition of (i) Millbrook and any of
its subsidiaries, taken as a whole, since December 31, 1997 or (ii) Manischewitz
and any of its subsidiaries, taken as a whole, since January 31, 1998.
SECTION 4.06. Litigation; Compliance with Laws; etc. (a)
Except as set forth in Schedule 4.06(a) annexed hereto, there are not any
actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now pending
or, to the knowledge of any Responsible Officer of a Borrower, threatened
against a Borrower or any of the Borrowers' subsidiaries or the businesses,
assets or rights of a Borrower or any of the Borrowers' subsidiaries (i) which
involve any of the Transactions or (ii) as to which it is probable (within the
meaning of Statement of Financial Accounting Standards No. 5) that there will be
an adverse determination and which, if adversely determined, would, individually
or in the aggregate, materially impair the ability of a Borrower to conduct
business substantially as now conducted, or have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.06(b) annexed hereto, no
Borrower or any subsidiary thereof is in violation of any law, or in default
with respect to any judgment, writ, injunction, decree, rule or regulation of
any court or governmental agency or instrumentality which would have a Material
Adverse Effect.
SECTION 4.07. Financial Statements. (a) The Borrowers have
heretofore furnished to the Agent audited consolidated balance sheets and
statements of income and cash flows and statement of members' equity of
Manischewitz dated as of July 31, 1997, July 31, 1996 and July 31, 1995, the
unaudited consolidated balance sheet and related statements of cash flows,
income and changes of members' equity of Manischewitz and for the six month
period ended January 31, 1997 and the six month period ended January 31, 1998.
To the Borrowers' knowledge, such balance sheets and statements of income and
cash flows present fairly the financial condition and results of operations of
Manischewitz as of the dates and for the periods indicated, and such balance
sheets and statements have been prepared in accordance with GAAP, subject to
adjustment (consisting only of normal recurring year-end adjustments) and the
absence of footnotes in the case of any unaudited financial statements.
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(b) The Borrowers have heretofore furnished to the Agent
quarterly, through March 31, 1999, and annual, thereafter through March 31,
2001, projected income statements, balance sheets and cash flows of Holdings,
together with a schedule confirming the ability of the Borrowers to consummate
the Transactions and demonstrating prospective compliance with all financial
covenants contained in this Agreement, such projections disclosing all
assumptions made by the Borrowers in formulating such projections and giving
effect to the Transactions. The projections are based upon reasonable estimates
and assumptions, all of which are reasonable in light of the conditions which
existed at the time the projections were made, have been prepared on the basis
of the assumptions stated therein, and reflect as of the Closing Date the
reasonable estimate of the Borrowers of the results of operations and other
information projected therein.
(c) The Borrowers have heretofore furnished to the Agent a
Consolidated pro forma balance sheet of Holdings as at December 31, 1997 and
which sets forth certain information before and after giving effect to the
Transactions.
SECTION 4.08. Federal Reserve Regulations. (a) No Borrower or
any subsidiary thereof is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation T, U or X thereof. If requested by any
Lender, the Borrowers or any of their subsidiaries shall furnish to such Lender
a statement on Federal Reserve Form U-1 referred to in said Regulation U.
SECTION 4.09. Taxes. Except as set forth in Schedule 4.09,
each Borrower and each subsidiary thereof has filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed by
it, on or prior to the date hereof, other than tax returns in respect of taxes
that (x) are not franchise, capital or income taxes, (y) in the aggregate are
not material
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and (z) would not, if unpaid, result in the imposition of any material Lien on
any material property or assets of the Borrowers or any of their subsidiaries,
taken as a whole. Each Borrower and each subsidiary thereof has paid or caused
to be paid all taxes shown to be due and payable on such filed returns or on any
assessments received by it, other than (i) any taxes or assess ments the
validity of which such Borrower or such subsidiary is contesting in good faith
by appropriate proceedings, and with respect to which such Borrower or such
subsidiary shall, to the extent required by GAAP have set aside on its books
adequate reserves and (ii) taxes other than income, capital or franchise taxes
that in the aggregate are not material and which would not, if unpaid, result in
the imposition of any material Lien on any property or assets of any of the
Borrowers or any of their subsidiaries. Except as set forth in Schedule 4.09, no
Federal income tax returns of any Borrower or any subsidiary thereof has been
audited during the last five years by the United States Internal Revenue Service
and no Borrower or any subsidiary thereof has as of the date hereof requested or
been granted any extension of time to file any Federal, state, local or foreign
income tax return. Except as may be approved by the Agent pursuant to Section
7.04 hereof or as set forth in Schedule 4.09 annexed hereto, no Borrower or any
subsidiary thereof is party to or has any obligation under any tax sharing
agreement.
SECTION 4.10. Employee Benefit Plans. With respect to the
provisions of ERISA:
(i) No Reportable Event has occurred with respect to
any Pension Plan, except for any such Event which would not
result in a Material Adverse Effect.
(ii) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) has occurred
with respect to any Plan subject to Part 4 of Subtitle B of
Title I of ERISA which could result in a Material Adverse
Effect.
(iii) Except as set forth in Schedule 4.10 annexed
hereto, no Borrower or any ERISA Affiliate is now, or has been
during the preceding five years, obligated to contribute to a
Multiemployer Plan. No Borrower or any ERISA Affiliate has (A)
ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA, (B) withdrawn as a
substantial employer so as to become subject to the provisions
of Section 4063 of ERISA, (C) ceased making contributions to
any Pension Plan subject to the provisions
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of Section 4064(a) of ERISA to which any Borrower, any
subsidiary of any Borrower or any ERISA Affiliate made
contributions, (D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of ERISA) or a
"partial withdrawal" (within the meaning of Section 4205 of
ERISA) from a Multiemployer Plan that is a Pension Plan so as
to incur withdrawal liability under Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such
liability under Section 4207 or 4208 of ERISA), or (E) been a
party to any transaction or agreement under which the
provisions of Section 4204 of ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan
has been filed, nor has any Plan been terminated pursuant to
the provisions of Section 4041(e) of ERISA, the termination of
which would have a Material Adverse Effect.
(v) To the knowledge of the Borrowers, the PBGC has
not instituted proceedings to terminate (or appoint a trustee
to administer) a Pension Plan and no event has occurred or
condition exists which might constitute grounds under the
provisions of Section 4042 of ERISA for the termination of (or
the appointment of a trustee to administer) any such Plan.
(vi) The assets of each Pension Plan that is subject
to the provisions of Title I, Subtitle B, Part 3 of ERISA
(other than the Multiemployer Plans) are at least equal to the
present value of the greater of (i) accrued benefits (both
vested and non-vested) under such Plan, or (ii) "benefit
liabilities" (within the meaning of Section 4001(a)(16) of
ERISA) under such Plan, in each case as of the latest
actuarial valuation date for such Plan (determined in
accordance with the same actuarial assumptions and methods as
those used by the Plan's actuary in its valuation of such Plan
as of such valuation date). No such Pension Plan has incurred
any "accumulated funding deficiency" (as defined in Section
412(a) of the Code), whether or not waived.
(vii) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the knowledge
of the Borrowers or any ERISA Affiliate, which could
reasonably be expected to be asserted, against any Plan or the
assets of
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any such Plan and which would result in a Material Adverse
Effect. To the Borrowers' knowledge, no civil or criminal
action brought pursuant to the provisions of Title I, Subtitle
B, Part 5 of ERISA is pending or, to the Borrowers' knowledge,
threatened against any fiduciary or any Plan. None of the
Plans or to the Borrowers' knowledge any fiduciary thereof (in
its capacity as such) has been the direct or indirect subject
of any audit, investigation or examination by any governmental
or quasi-governmental agency.
(viii) All of the Plans comply in all material
respects currently, both as to form and operation, with their
terms and with the provisions of ERISA and, where applicable,
the Code; all necessary governmental approvals for the Plans
have been obtained and a favorable determination as to the
qualification under Section 401(a) of the Code of each of the
Plans which is an employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) has been made by the
Internal Revenue Service and a recognition of exemption from
federal income taxation under Section 501(c) of the Code of
each of the funded employee welfare benefit plans (within the
meaning of Section 3(1) of ERISA) has been made by the
Internal Revenue Service, and nothing has occurred since the
date of each such determination or recognition letter that
would materially adversely affect such qualification.
SECTION 4.11. No Material Misstatements. No information,
report, financial statement (other than the statements referred to in Section
4.07(a) hereof), exhibit or schedule prepared or furnished by or on behalf of
the Borrowers to the Agent or any Lender in connection with any of the
Transactions or this Agreement, the Security Documents, the Notes or any other
Loan Documents or included therein contained or contains any material
misstatement of fact.
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act. No Borrower or any subsidiary thereof is an "investment company" as
defined in, or is otherwise subject to regulation under, the Investment Company
Act of 1940. No Borrower or any subsidiary thereof is a "holding company" as
that term is defined in or is otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935.
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SECTION 4.13. Security Interest. Each of the Security
Documents creates and grants to the Agent, for its own benefit and for the
benefit of the Lenders, a legal and valid security interest in the Collateral
identified therein. Such Collateral is not subject to any other Liens
whatsoever, except Liens permitted by Section 7.01 hereof.
SECTION 4.14. Use of Proceeds. All proceeds of each borrowing
under the Revolving Credit Commitment on the Closing Date, if any, shall be used
to provide for working capital requirements and for general corporate purposes
of the Borrowers. All proceeds of each subsequent borrowing under the Revolving
Credit Commitment after the Closing Date shall be used to provide for working
capital requirements and for general corporate purposes of the Borrowers.
SECTION 4.15. Subsidiaries. As of the Closing Date, the
Borrowers have no subsidiaries.
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks. (a) Except as set forth in Schedule 4.16(a), the Borrowers and each
of their subsidiaries have good title to, or valid leasehold interest in, all of
their respective properties and assets shown on the most recent balance sheet
referred to in Section 4.07(a) hereof and all assets and properties acquired
since the date of such balance sheet, except for such properties as are no
longer used or useful in the conduct of its business or as have been disposed of
in the ordinary course of business, and except for minor defects in title that
do not interfere with the ability of a Borrower or any subsidiary thereof to
conduct its business as now conducted. All such assets and properties are free
and clear of all Liens, other than those permitted by Section 7.01 hereof.
(b) Each Borrower and each of its subsidiaries have complied
with all material obligations under all material leases to which they are a
party and under which they are in occupancy, and all such leases are in full
force and effect and the Borrowers and each of its subsidiaries enjoy peaceful
and undisturbed possession under all such leases.
(c) Except as set forth in Schedule 4.16(c), the Borrowers and
each of their subsidiaries own or control all material trademarks, trademark
rights, trade names, trade name rights, copyrights, patents, patent rights and
licenses which are necessary for the conduct of the business of the Borrowers
and each of their subsidiaries as it is presently engaged. To the Borrowers'
knowledge, no Borrower or any subsidiary thereof is infringing upon or otherwise
acting
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adversely to any of such trademarks, trademark rights, trade names, trade name
rights, copyrights, patent rights or licenses owned by any other person or
persons. There is no claim or action by any such other person pending, or to the
knowledge of any Responsible Officer of the Borrowers or any subsidiary thereof,
threatened, against the Borrowers or any subsidiary thereof with respect to any
of the rights or property referred to in this Section 4.16(c).
SECTION 4.17. Solvency. (a) The present fair salable value of
the assets of each Borrower and its Consolidated subsidiaries is not less than
the amount that will be required to be paid on or in respect of the probable
liability on the existing debts (including contingent liabilities) of such
Borrower and its Consolidated subsidiaries, as they become absolute and mature.
(b) The assets of such Borrower and its Consolidated
subsidiaries do not constitute unreasonably small capital for such Borrower and
its Consolidated subsidiaries to carry out their business as now conducted and
as proposed to be conducted including the capital needs of such Borrower and its
Consolidated subsidiaries, taking into account the particular capital
requirements of the business conducted by such Borrower and its Consolidated
subsidiaries and projected capital requirements and capital availability
thereof.
(c) No Borrower or any subsidiary thereof intends to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be received by such Borrower and any of its
subsidiaries, and of amounts to be payable on or in respect of debt of such
Borrower and any of its subsidiaries).
(d) No Borrower or any subsidiary thereof believes that final
judgments against it in actions for money damages presently pending will be
rendered at a time when, or in an amount such that, it will be unable to satisfy
any such judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered).
SECTION 4.18. Permits, etc. Except as set forth in Schedule
4.18, each Borrower and each of its subsidiaries possess all licenses, permits,
approvals and consents, including, without limitation, all environmental, health
and safety licenses, permits, approvals and consents (collectively, "Permits")
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of all Federal, state and local governmental authorities as required to conduct
properly its business as presently conducted, each such Permit is and will be in
full force and effect, each Borrower and each of its subsidiaries is in
compliance in all material respects with all such Permits, and no event
(including, without limitation, any violation of any law, rule or regulation)
has occurred which allows the revocation or termination of any such Permit or
any restriction thereon, except in each case, where failure, noncompliance,
revocation or termination would not have a Material Adverse Effect.
SECTION 4.19. Compliance with Environmental Laws. Except as
disclosed in Schedule 4.19 hereto: (i) the operations of the Borrowers and their
subsidiaries comply in all material respects with all applicable Environmental
Laws; (ii) the Borrowers and their subsidiaries and all of their present
facilities or operations, as well as to the knowledge of the Borrowers and their
subsidiaries their past facilities or operations, are not subject to any
judicial proceeding or administrative proceeding or any outstanding written
order or agreement with any governmental authority or private party respecting
(a) any Environmental Law, (b) any Remedial Work, or (c) any Environmental
Claims arising from the Release of a Contaminant into the environment; (iii) to
the best of the knowledge of the Borrowers and their subsidiaries, none of their
operations is the subject of any Federal or state investigation evaluating
whether any Remedial Work is needed to respond to a Release of any Contaminant
into the environment in violation of any Environmental Law; (iv) to the
knowledge of the Borrowers, no Borrower or any subsidiary thereof or any
predecessor of any of the Borrowers or any of their subsidiaries has filed any
notice under any Environmental Law indicating past or present treatment,
storage, or disposal of a Hazardous Material or reporting a spill or Release of
a Contaminant into the environment; (v) to the best of the knowledge of the
Borrowers and their subsidiaries, no Borrower or any subsidiary thereof has any
contingent material liability in connection with any Release of any Contaminant
into the environment; (vi) none of the operations of the Borrowers or any of
their subsidiaries involves the generation, transportation, treatment or
disposal of Hazardous Materials; (vii) no Borrower or any subsidiary thereof has
disposed of any Contaminant by placing it in or on the ground or waters of any
premises owned, leased or used by any of them and to the knowledge of the
Borrowers and their subsidiaries neither has any lessee, prior owner, or other
person; (viii) no underground storage tanks or surface impoundments are on any
property of the Borrowers and their subsidiaries; and (ix) to the best of the
knowledge of the Borrowers and their subsidiaries, no Lien in favor of any
governmental authority for (A)
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any liability under any Environmental Law or regulation, or (B) damages arising
from or costs incurred by such governmental authority in response to a Release
of a Contaminant into the environment, has been filed or attached to the
property of the Borrowers and their subsidiaries.
SECTION 4.20. No Change in Credit Criteria or Collection
Policies. There has been no material change in credit criteria or collection
policies concerning account receivables of (i) Millbrook since December 31, 1997
or (ii) Manischewitz since January 31, 1998. To the best of the knowledge of the
Borrowers, without duplication, all Eligible Manischewitz Receivables and all
Eligible Millbrook Receivables are valid, binding and enforceable obligations of
account debtors and are not subject to any claims, defenses or setoffs.
SECTION 4.21. Employee Matters. Except as disclosed in
Schedule 4.21 hereto, (a) no Borrower or any subsidiary thereof or any of such
person's employees is subject to any collective bargaining agreement, (b) to the
knowledge of the Borrowers, no petition for certification or union election is
pending with respect to the employees of the Borrowers or any of their
subsidiaries and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of the Borrowers or
any of their subsidiaries and (c) there are no strikes, slowdowns, work
stoppages or controversies pending or, to the knowledge of the Borrowers
threatened between a Borrower or any of its subsidiaries and their respective
employees, other than employee grievances arising in the ordinary course of
business none of which could have, either individually or in the aggregate, a
Material Adverse Effect.
SECTION 4.22. Manischewitz Acquisition. (a) (i) The execution,
delivery and performance by Enterprises of the Manischewitz Acquisition
Documents have been duly authorized by all necessary action on the part of
Enterprises, (ii) the Manischewitz Acquisition Documents constitute the valid,
binding and enforceable obligation of Enterprises, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and are in full force and effect without
default or waiver of any of the conditions thereunder and (iii) there are no
governmental consents, filings, approvals or notices required to be made or
obtained in connection with the execution, delivery and performance of the
Manischewitz Acquisition Documents except such as have been duly made, obtained
or delivered.
(b) To the best knowledge of Manischewitz, without having made
an independent investigation, each of the representations and warranties made by
the "Sellers" (as defined in the Manischewitz
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Acquisition Agreement) in the Manischewitz Acquisition Documents is true and
correct in all material respects, and to the best knowledge of Manischewitz, the
failure of such representations and warranties to be true and correct would not
have a Material Adverse Effect.
SECTION 4.23. Year 2000. To the best of Borrowers' knowledge,
the cost to the Borrowers of reprogramming and testing of the Borrowers'
computer systems and related equipment to permit proper functioning in and
following the year 2000 (including, without limitation, reprogramming errors)
will not have a Material Adverse Effect.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and extend other
Credits hereunder shall be subject to the following conditions precedent:
SECTION 5.01. All Credit Events. On each date on which a
Credit Event is to occur:
(a) The Agent shall have received a notice of borrowing as
required by Section 2.03 hereof or a request for the issuance of a Letter of
Credit pursuant to Section 2.17 hereof.
(b) The representations and warranties set forth in Article IV
hereof and in the Loan Documents, shall be true and correct in all material
respects with the same effect as though made on and as of such date (except
insofar as such representations and warranties relate expressly to an earlier
date).
(c) The Borrowers shall be in material compliance with all the
terms and provisions contained herein on its part to be observed or performed,
and at the time of and immediately after such Credit Event no Default or Event
of Default shall have occurred and be continuing.
(d) The Agent shall have received a certificate signed by a
Responsible Officer of the Borrowers (i) as to the compliance with (b) and (c)
above and (ii) with respect to each Revolving Credit Loan and each Letter of
Credit, demonstrating that after giving effect thereto Availability is zero (or
so long as Section 7.09(c) shall remain in effect, $10,000,000) or greater.
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SECTION 5.02. First Borrowing. The obligations of the Lenders
in respect of the first Credit Event hereunder is subject to the following
additional conditions precedent:
(a) The Lenders shall have received the favorable written
opinion of counsel for the Borrowers and each of the Guarantors and Grantors,
substantially in the form of Exhibit C hereto, dated the Closing Date, addressed
to the Lenders and satisfactory to the Agent.
(b) The Lenders shall have received (i) a copy of the
certificate or articles of incorporation, certificate of formation or
constitutive documents, in each case as amended to date, of each Borrower,
Grantor and Guarantor, certified as of a recent date by the Secretary of State
or other appropriate official of the state of its organization, and a
certificate as to the good standing of each from such Secretary of State or
other official, in each case dated as of a recent date; (ii) a certificate of
the Secretary of each Borrower, Grantor and Guarantor, dated the Closing Date
and certifying (A) that attached thereto is a true and complete copy of such
person's By-laws or operating agreement, as the case may be, as in effect on the
date of such certificate and at all times since a date prior to the date of the
resolution described in item (B) below, (B) that attached thereto is a true and
complete copy of a resolution adopted by such person's Board of Directors (or
comparable governing body) authorizing the execution, delivery and performance
of this Agreement, the Security Documents, the Notes and the other Loan
Documents, as applicable, and that such resolution has not been modified,
rescinded or amended and is in full force and effect, (C) that such person's
certificate or articles of incorporation or constitutive documents has not been
amended since the date of the last amendment thereto shown on the certificate of
good standing furnished pursuant to (i) above, and (D) as to the incumbency and
specimen signature of each of such person's officers executing this Agreement,
the Notes, each Security Document or any other Loan Document delivered in
connection herewith or therewith, as applicable; (iii) a certificate of another
of such person's officers as to incumbency and signature of its Secretary; and
(iv) such other documents as the Agent or any Lender may reasonably request.
(c) The Agent shall have received a certificate, dated the
Closing Date and signed by a Responsible Officer of the Borrowers, confirming
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compliance with the conditions precedent set forth in paragraphs (b) and (c) of
Section 5.01 hereof and the conditions set forth in this Section 5.02.
(d) Each Lender shall have received its Revolving Credit Note
and Term Note duly executed by the Borrowers (which Notes shall replace the
"Revolving Credit Note" and "Term Note", respectively, issued in connection with
the Original Credit Agreement, such replaced Notes to be returned to the
Borrowers by the Lenders holding same, marked "cancelled" promptly after the
Closing Date), payable to its order and otherwise complying with the provisions
of Section 2.04 hereof.
(e) The Agent shall have received (i) such amendments to or
confirmations (as requested by the Agent) of the Security Documents (including,
without limitation, the Mortgage, together with such endorsements as are
requested by the Agent) existing as of the Closing Date, (ii) such additional
Security Documents (as requested by the Agent) to be executed and delivered in
connection with the Transactions and (iii) certificates (together with undated
stock powers executed in blank) evidencing the Pledged Stock (including, without
limitation, replacement certificates (and stock powers) indicating that
Enterprises is the holder of the Pledged Stock consisting of stock of
Millbrook), each duly executed by the applicable Grantors.
(f) The Agent shall have received certified copies of requests
for copies or information on Form UCC-11 or certificates satisfactory to the
Lenders of a UCC Reporter Service, listing all effective financing statements
which name as debtor Manischewitz and which are filed in the appropriate offices
in the States in which are located the chief executive office and other
operating offices of such person, together with copies of such financing
statements. With respect to any Liens not permitted pursuant to Section 7.01
hereof, the Agent shall have received termination statements in form and
substance reasonably satisfactory to it.
(g) Each document (including, without limitation, each Uniform
Commercial Code financing statement) required by law or requested by the Agent
to be filed, registered or recorded in order to create in favor of the Agent for
its own benefit and for the benefit of the Lenders a first priority perfected
security interest in the Collateral acquired in connection with the Manischewitz
Acquisition
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shall have been properly filed, registered or recorded in each jurisdiction in
which the filing, registration or recordation thereof is so required or
requested. The Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or recordation.
(h) The Agent shall have received the results of a search of
tax and other Liens, and judgments and of the Uniform Commercial Code filings
made with respect to Manischewitz in the jurisdictions in which Manischewitz is
doing business and/or in which any Collateral is located, and in which Uniform
Commercial Code filings have been made against Manischewitz pursuant to
paragraph (g) above.
(i) The Lenders and the Agent shall have received and
determined to be in form and substance satisfactory to them:
(i) evidence that the Borrowers have at least
$35,000,000 of Availability on the Closing Date (after giving
effect to the Transactions and the Holdings Transactions);
(ii) evidence of the compliance by the Borrowers with
Section 6.03 hereof;
(iii) the financial statements described in Section
4.07 hereof;
(iv) internal management prepared financial statements
for Manischewitz for the month ended February 28, 1998;
(v) evidence that the Transactions are in compliance
with all applicable laws and regulations;
(vi) evidence of payment of all fees, costs and
expenses owed to the Agent, the Co-Agent and the Lenders by
the Borrowers under this Agreement, the Fee Letter or
otherwise;
(vii) evidence that all requisite third party consents
(including, without limitation, consents with respect to the
Borrowers and each of the Grantors and
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Guarantors) to the Transactions have been received, except
where the failure to obtain certain consents would not have a
Material Adverse Effect;
(viii) a schedule of all subsidiaries and Affiliates
of the Borrowers and the Guarantors;
(ix) a schedule of all material customer contracts,
supplier contracts, licensing agreements and other material
contracts with respect to Manischewitz;
(x) evidence that there has been no material adverse
change in the business, assets, operations or financial
condition of (x) Millbrook and its subsidiaries since December
31,1997 or (y) Manischewitz and its subsidiaries since January
31, 1998;
(xi) evidence of the repayment in full of exiting
credit arrangements with respect to Manischewitz and the
termination of all commitments to lend thereunder, and the
termination of all security interests securing such
indebtedness as required under paragraph (f) above; and
(xii) a schedule of all pending litigation of the
Borrowers and the Guarantors and evidence that there are no
actions, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or
regulatory authority now pending or threatened in writing
against a Borrower or any subsidiary thereof or any of their
respective businesses, assets or rights which involve any of
the Transactions.
(j) The Agent has received environmental reports and/or
information with respect to real property owned by Manischewitz and has
determined that such reports and/or information is in form and substance
satisfactory to it.
(k) Messrs. ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP,
counsel to the Agent, shall have received payment in full for reasonable legal
fees charged, and all costs and expenses incurred, by such counsel through the
Closing Date in connection with the transactions contemplated under this
Agreement, the Security
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Documents and the other Loan Documents and instruments in connection herewith
and therewith.
(l) The Agent and the Lenders shall have:
(i) received copies of each of the Manischewitz
Acquisition Documents, including all amendments and schedules
thereto;
(ii) received evidence that the Manischewitz
Acquisition Agreement is in full force and effect and all
consents, filings and approvals required by applicable law in
connection therewith shall have been obtained and made; and
(iii) determined that the terms and provisions of all
agreements and documents in connection with the Manischewitz
Acquisition, including without limitation the Manischewitz
Acquisition Documents, are satisfactory in form and substance
and the Agent shall have received such legal opinions,
certificates and copies of necessary governmental filings and
consents as the Agent shall have requested in connection
therewith, and shall have determined to its satisfaction that
the consummation of the Manischewitz Acquisition and other
transactions contemplated by the Manischewitz Acquisition
Documents are in compliance with all applicable laws and
regulations.
(m) The Agent and the Lenders shall have received evidence (i)
of the reincorporation of Millbrook as a Delaware corporation, (ii) that all
Obligations of Millbrook are assumed (to the satisfaction of the Agent) by such
Delaware corporation and (iii) that such transaction did not have a Material
Adverse Effect.
(n) The corporate structure and capitalization of the
Borrowers shall be satisfactory to the Lenders in all respects.
(o) All legal matters in connection with the Transactions
shall be satisfactory to the Agent, the Lenders and their respective counsel in
their sole discretion.
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(p) The Borrowers shall have executed and delivered to the
Agent a disbursement authorization letter with respect to the disbursement of
the proceeds of the Credit Events made on the Closing Date, in form and
substance reasonably satisfactory to the Agent.
(q) The Agent shall have:
(i) received evidence satisfactory to the Agent in
all respects that Enterprises shall have received concurrently
with the execution of this Agreement not less than
$120,000,000 as gross cash proceeds from the issuance of the
Senior Notes; Holdings shall have received not less than
$48,000,000 as gross cash proceeds from the issuance of the
Interest Reserve Notes; and Enterprises shall have utilized
such gross cash proceeds (x) to fund the consideration to be
paid in connection with the Manischewitz Acquisition, to pay
fees and expenses associated therewith and with respect to the
Holdings Transactions and to repay in full the exiting credit
arrangements with respect to Manischewitz and (y) to make a
payment of the Revolving Credit Loans of approximately
$20,400,000 subject to adjustment based upon the determination
and payment of the actual fees and expenses referred to in
clause (x) above; and
(ii) determined that the terms and provisions of all
agreements in connection with each of the Holdings
Transactions, including, without limitation, the Senior Notes
and the Interest Reserve Notes, are reasonably satisfactory in
form and substance and the Agent and Lenders shall have
received such legal opinions, certificates and copies of
necessary governmental filings and consents as the Agent and
the Lenders shall have requested in connection therewith, and
shall have determined to their reasonable satisfaction that
the consummation of each of the Holdings Transactions is in
compliance with all applicable laws and regulations.
(r) The Agent shall have received such other documents as the
Lenders or the Agent or the Agent's counsel shall reasonably deem necessary.
VI. AFFIRMATIVE COVENANTS
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Each of the Borrowers covenants and agrees with each Lender
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Note, any amount under any Letter of Credit or any fee, expense
or other Obligation payable hereunder shall be unpaid, it will, and will cause
each of its subsidiaries and, with respect to Section 6.07 hereof, to:
SECTION 6.01. Legal Existence. Do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence.
SECTION 6.02. Businesses and Properties. At all times, except
as permitted pursuant to Section 7.05 hereof, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect the material
rights, licenses, Permits, franchises, patents, copyrights, trademarks and trade
names material to the conduct of its businesses; maintain and operate such
businesses in the same general manner in which they are presently conducted and
operated; comply with all laws, rules, regulations and governmental orders
(whether Federal, state or local) applicable to the operation of such businesses
whether now in effect or hereafter enacted (including, without limitation, all
applicable laws, rules, regulations and governmental orders relating to public
and employee health and safety and all Environmental Laws) and with any and all
other applicable laws, rules, regulations and governmental orders, the lack of
compliance with which would have a Material Adverse Effect; take all actions
which may be required to obtain, preserve, renew and extend all Permits and
other authorizations which are material to the operation of such businesses; and
at all times maintain, preserve and protect all property material to the conduct
of such businesses and keep such property in good repair (ordinary wear and tear
excepted), working order and condition and from time to time make, or cause to
be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 6.03. Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound insurers, (b) maintain such
other insurance, to such extent and against such risks, including fire and other
risks insured against by extended coverage, as is customary with companies
similarly situated and in the same or similar businesses, provided, however,
that such insurance shall insure the property of the Borrowers against all risk
of physical damage, including, without limitation, loss by fire, explosion,
theft, fraud and such other casualties as may be reasonably satisfactory to the
Agent, but in no event at any time in an amount less than the
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replacement value of the Collateral, (c) maintain in full force and effect
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by the Borrowers or any of their
subsidiaries, in such amount as the Agent shall reasonably deem necessary, (d)
maintain business interruption insurance to such extent as is customary with
companies similarly situated and in the same or similar businesses, and (e)
maintain such other insurance as may be required by law or as may be reasonably
requested by the Agent for purposes of assuring compliance with this Section
6.03. All insurance covering tangible personal property subject to a Lien in
favor of the Agent for its own benefit and for the benefit of the Lenders
granted pursuant to the Security Documents shall provide that, in the case of
each separate loss the full amount of insurance proceeds shall be payable to the
Agent and shall further provide for at least 30 days' prior written notice to
the Agent of the cancellation or substantial modification thereof.
SECTION 6.04. Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or any part thereof; provided, however, that such payment and/or
discharge shall not be required with respect to any such tax, assessment,
governmental charge or levy so long as the validity or amount thereof shall be
contested in good faith by appropriate actions or proceedings and the Borrowers
shall have set aside on their respective books, as applicable, reserves with
respect thereto that are adequate in accordance with GAAP and such contest
operates to suspend collection of the contested tax, assessment, charge, levy or
claim and enforcement of a Lien.
SECTION 6.05. Financial Statements, Reports, etc. Furnish to
the Agent, with copies for each of the Lenders:
(a) within 105 days after the end of each Fiscal Year of the
Borrowers (the 1998 Fiscal Year shall be for Millbrook only), (A) (i)
Consolidated and consolidating balance sheets and Consolidated and consolidating
income statements showing the financial condition of each Borrower and its
subsidiaries as of the close of such Fiscal Year and the results of their
operations during such year, and (ii) a Consolidated statement of shareholders'
or members' equity, as applicable, and a Consolidated and consolidating
statement of
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cash flow, as of the close of such Fiscal Year, comparing such financial
condition and results of operations to such financial condition and results of
operations for the immediately preceding Fiscal Year (the 1998 Fiscal Year shall
be for Millbrook only), all the foregoing financial statements to be audited by
Deloitte & Touche, LLP, or such other independent public accountants reasonably
acceptable to the Agent (which report shall not contain any qualification except
with respect to new accounting principles mandated by the Financial Accounting
Standards Board), and to be in form and substance reasonably acceptable to the
Agent and (B) unaudited combined financial statements, balance sheet and
statement of operations of the Borrowers and their subsidiaries, such financial
statements, balance sheet and statement of operations prepared and certified by
the chief financial officer of Holdings or Enterprises as showing all
eliminations of intercompany accounts and as having been prepared in accordance
with GAAP, other than the inclusion of footnotes;
(b) within 60 days, and after Holdings and Enterprises have
become reporting companies under the Securities Exchange Act of 1934, within 45
days, after the end of each of the first three (3) fiscal quarters of the
Borrowers, commencing with the fiscal quarter ending June 30, 1998, (A) (i)
unaudited condensed Consolidated and consolidating balance sheets and condensed
Consolidated and consolidating income statements showing the financial condition
and results of operations of each Borrower and its subsidiaries as of the end of
each such quarter and (ii) a condensed Consolidated and consolidating statement
of cash flow of each Borrower, in each case for the fiscal quarter just ended
and for the period commencing at the end of the immediately preceding Fiscal
Year (the 1998 Fiscal Year for Millbrook only) and ending with the last day of
such quarter, in each case prepared and certified by a Responsible Officer of
Holdings or Enterprises as presenting fairly in all material respects the
financial condition and results of operations of such Borrower and its
subsidiaries and as having been prepared in accordance with GAAP, in each case
subject to normal year-end adjustments and the absence of footnotes and (B)
unaudited combined financial statements, balance sheet and statement of
operations of the Borrowers and their subsidiaries showing the financial
condition and results of operations of the Borrowers and their subsidiaries on a
combined basis for the fiscal quarter then ended and for the period commencing
at the end of the immediately preceding Fiscal Year (other than the 1998 Fiscal
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Year) and ending with the last day of such quarter and comparing such financial
condition and results of operations to the projections for the applicable period
provided under paragraph (h) below, in each case prepared and certified by the
chief financial officer of Holdings or Enterprises as showing all eliminations
of intercompany transactions and as having been prepared in accordance with
GAAP, in each case subject to normal year-end adjustments and the absence of
footnotes;
(c) within 30 days after the end of each month (commencing, in
the case of Millbrook, with April and, in the case of Manischewitz, May), (i)
unaudited condensed Consolidated and consolidating balance sheets and income
statements showing the financial condition and results of operations of each
Borrower and its subsidiaries as of the end of each such month and (ii) a
condensed Consolidated and consolidating statement of cash flow, in each case
for the month just ended and for the period commencing at the end of the
immediately preceding Fiscal Year and ending with the last day of such month,
and comparing such financial condition and results of operations to the results
for the comparable period during the immediately preceding Fiscal Year (other
than the 1998 Fiscal Year for Manischewitz), prepared and certified by a
Responsible Officer of Holdings or Enterprises as presenting fairly in all
material respects the financial condition and results of operations of such
Borrower and its subsidiaries and as having been prepared in accordance with
GAAP, in each case subject to normal year-end audit adjustments and the absence
of footnotes;
(d) promptly after the same become publicly available, copies
of such registration statements, annual, periodic and other reports, and such
proxy statements and other information, if any, as shall be filed by the
Borrowers or any of their subsidiaries with the Securities and Exchange
Commission pursuant to the requirements of the Securities Act of 1933 or the
Securities Exchange Act of 1934;
(e) concurrently with any delivery under (a) or (b) above, a
certificate of a Responsible Officer of Holdings or Enterprises, certifying that
to the best of his or her knowledge no Default or Event of Default has occurred
(including calculations demonstrating compliance, as of the dates of the
financial statements being furnished, with the covenants set forth in Sections
7.07, 7.08 (including a detailed statement of Permitted Dividends and
Distributions) and 7.09
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hereof) and, if such a Default or Event of Default has occurred, specifying the
nature and extent thereof and any corrective action taken or proposed to be
taken with respect thereto;
(f) within 45 days after any delivery under (a) above, a
management letter prepared by the independent public accountants who reported on
the financial statements delivered under (a) above, with respect to the internal
audit and financial controls of the Borrowers and their subsidiaries;
(g) within 20 days of the end of each fiscal month, an aging
schedule of the Receivables of Millbrook, in the form of the aging schedule of
Receivables dated February 28, 1997 previously furnished to the Agent, and an
aging schedule of Receivables of Manischewitz following the field examination in
a form reasonably satisfactory to the Agent, an accounts payable listing of
Millbrook, in the form previously furnished to the Agent, and an accounts
payable listing of Manischewitz following the field examination in a form
reasonably satisfactory to the Agent, and a certificate substantially in the
form of Schedule 6.05(g) hereto executed by a Responsible Officer of Holdings or
Enterprises, together with an inventory location schedule and a certificate
executed by a Responsible Officer of Holdings or Enterprises demonstrating
compliance as at the end of such month with the Availability requirements;
(h) within 30 days prior to the beginning of each Fiscal Year,
a summary of business plans and financial operation projections (including,
without limitation, with respect to Capital Expenditures) for each Borrower and
its respective subsidiaries and for the Borrowers combined for such Fiscal Year
(including projected quarterly balance sheets, statements of operations and of
cash flow) and annual projections through the following three years (inclusive
of such Fiscal Year) but not exceeding Final Maturity Date prepared by
management and in form, substance and detail (including, without limitation,
significant assumptions) reasonably satisfactory to the Agent;
(i) within four Business Days after the end of each week a
report detailing weekly sales, collections, debit and credit adjustments, in
form reasonably satisfactory to the Agent;
(j) as soon as is reasonably practicable, copies of all
material reports, forms, filings, loan documents and financial information
submitted
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to governmental agencies and/or its shareholders, other than those in the
ordinary course of business;
(k) after obtaining actual knowledge thereof, notice to the
Agent of the breach by any party of any material agreement with a Borrower the
result of which could have a Material Adverse Effect; and
(l) such other information as the Agent or the Co-Agent may
reasonably request.
SECTION 6.06. Litigation and Other Notices. Give the Agent
prompt written notice of the following:
(a) to the extent directed to or served upon a Borrower or any
subsidiary in writing, the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint prohibiting, or
having the effect of prohibit ing, the making of the Loans or occurrence of
other Credit Events, or invalidating, or having the effect of invalidating, any
provision of this Agreement, the Notes or the other Loan Documents, or the
initiation of any litigation or similar proceeding seeking any such injunction,
order, decision or other restraint;
(b) the filing or commencement of any action, suit or
proceeding against a Borrower or any subsidiary thereof, whether at law or in
equity or by or before any court or any Federal, state, municipal or other
governmental agency or authority, (i) which is material and is brought by or on
behalf of any governmental agency or authority, or in which injunctive or other
equitable relief is sought or (ii) as to which it is probable (within the
meaning of Statement of Financial Accounting Standards No. 5) that there will be
an adverse determination and which, if adversely determined, would (A)
reasonably be expected to result in liability of one or more Borrowers or a
subsidiary thereof in an aggregate amount of $1,500,000 or more, not
reimbursable by insurance, or (B) materially impair the right of a Borrower or
any subsidiary thereof to perform its obli gations under this Agreement, any
Note or any other Loan Document to which it is a party;
(c) after obtaining actual knowledge thereof, any continuing
Default or Event of Default, specifying the nature and extent thereof and the
action (if any) which is proposed to be taken with respect thereto; and
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(d) any development in the business or affairs of the
Borrowers and their subsidiaries, taken as a whole, which has had or which is
likely to have, in the reasonable judgment of any Responsible Officer of the
Borrowers, a Material Adverse Effect.
SECTION 6.07. ERISA. (a) Pay and discharge promptly any
liability imposed upon it pursuant to the provisions of Title IV of ERISA;
provided, however, that no Borrower or any ERISA Affiliate shall be required to
pay any such liability if the amount, applicability or validity thereof shall be
diligently contested in good faith by appropriate proceedings, and such person
shall have set aside on its books reserves which, in the opinion of the
independent certified public accountants of such person, are adequate with
respect thereto.
(b) Deliver to the Agent, promptly, and in any event within 15
days, after (i) the occurrence to the knowledge of a Responsible Officer of the
Borrowers of any Reportable Event, a copy of the materials that are filed with
the PBGC, or the materials that would have been required to be filed if the
30-day notice requirement to the PBGC was not waived, (ii) a Borrower or any
ERISA Affiliate or an administrator of any Pension Plan files with participants,
beneficiaries or the PBGC a notice of intent to terminate any such Plan, a copy
of any such notice, (iii) the receipt of notice by the a Borrower or any ERISA
Affiliate or an administrator of any Pension Plan from the PBGC of the PBGC's
intention to terminate any Pension Plan or to appoint a trustee to administer
any such Plan, a copy of such notice, (iv) the filing thereof with the Internal
Revenue Service, copies of each annual report that is filed on Treasury Form
5500 with respect to any Plan, together with certified financial statements (if
any) for the Plan and any actuarial statements on Schedule B to such Form 5500,
(v) a Borrower or any ERISA Affiliate knows or has reason to know of any event
or condition which might constitute grounds under the provisions of Section 4042
of ERISA for the termination of (or the appointment of a trustee to administer)
any Pension Plan, an explanation of such event or condition, (vi) the receipt by
a Borrower or any ERISA Affiliate of an assessment of withdrawal liability under
Section 4201 of ERISA from a Multiemployer Plan, a copy of such assessment,
(vii) a Borrower or any ERISA Affiliate knows or has reason to know of any event
or condition which might cause any one of them to incur a liability under
Section 4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or 4971 of the Code,
an explanation of
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such event or condition, and (viii) a Borrower or any ERISA Affiliate knows or
has reason to know that an application is to be, or has been, made to the
Secretary of the Treasury for a waiver of the minimum funding standard under the
provisions of Section 412 of the Code, a copy of such application, and in each
case described in clauses (i) through (iii) and (v) through (vii) together with
a statement signed by the Responsible Officer of the Borrowers setting forth
details as to such Reportable Event, notice, event or condition and the action
which such Borrower or such ERISA Affiliate proposes to take with respect
thereto.
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit. Maintain financial records in accordance with
accepted financial practices and, upon reasonable notice (which may be
telephonic), which notice shall specify the purpose of such visit which shall be
during normal hours, permit any authorized representative designated by the
Agent or Co-Agent, who may be accompanied by any Lender, to visit with
reasonable frequency and inspect the proper ties and financial records of the
Borrowers and their subsidiaries and to make extracts from such financial
records at Borrowers' expense, and permit the Agent or Co-Agent to discuss the
affairs, finances and condition of the respective Borrowers and their
subsidiaries with the appropriate Responsible Officer and such other officers as
the Borrowers shall deem appropriate and the Borrowers' independent public
accountants, as applicable. The Agent or Co-Agent agrees that it shall schedule
any meeting with any such independent public accountant through the Borrowers
and a Responsible Officer of the Borrowers shall have the right to be present at
any such meeting. At the Borrowers' expense, the Agent and Co-Agent shall have
the right to audit, up to three times per annum (or as often as requested at
Borrowers' expense upon the occurrence and during the continuance of an Event of
Default), the existence and condition of the accounts receivables, inventory,
books and records and other Collateral of the combined Borrowers and their
subsidiaries and to review their compliance with the terms and conditions of
this Agreement and the other Loan Documents.
SECTION 6.09. Use of Proceeds. Use the proceeds of the Credit
Events only for the purposes set forth in Section 4.14 hereof.
SECTION 6.10. Fiscal Year-End. Cause the Fiscal Year of each
of the Borrowers, Holdings and Enterprises to end on March 31 in each year.
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SECTION 6.11. Further Assurances. Promptly execute any and all
further documents and take all further actions which may be required under
applicable law, or which the Agent may reasonably request, to grant, preserve,
protect and perfect the first priority security interest created by the Security
Documents in the Collateral.
SECTION 6.12. Additional Grantors and Guarantors. Promptly
inform the Agent of the creation or acquisition of any subsidiary (subject to
the provisions of Section 7.06 hereof) and cause each subsidiary not in
existence on the date hereof to enter into a Guarantee in form and substance
reasonably satisfactory to the Agent, and to execute the Security Documents, as
applicable, as a Grantor, and cause the direct parent of each such subsidiary to
pledge all of the capital stock of such subsidiary pursuant to the Pledge
Agreement and cause each such subsidiary to pledge its accounts receivable and
all other assets pursuant to the applicable Security Document.
SECTION 6.13. Environmental Laws. (a) Comply, and cause each
of its subsidiaries to comply, with the provisions of all applicable
Environmental Laws, and shall keep its properties and the properties of its
subsidiaries free of any Lien imposed pursuant to any such applicable
Environmental Law unless the failure to so comply would not have a Material
Adverse Effect. No Borrower shall cause or suffer or permit, and shall not
suffer or permit any of its subsidiaries to cause or suffer or permit, the
property of the Borrowers or their subsidiaries to be used for the generation,
production, processing, handling, storage, transporting or disposal of any
Hazardous Material, except for Hazardous Materials used in the ordinary course
of business of the Borrowers and their subsidiaries or in connection with any
investigation or remediation of any property and disclosed to the Agent, in
which case such Hazardous Materials shall be used, stored, generated, treated
and disposed of only in material compliance with applicable Environmental Law.
(b) Supply to the Agent copies of all material submissions by
a Borrower or any subsidiary thereof to any governmental body and of the reports
of all environmental audits and of all other environmental tests, studies or
assessments (including the data derived from any sampling or survey of asbestos,
soil, or subsurface or other materials or conditions) that may be conducted or
performed (by or on behalf of a Borrower or any subsidiary thereof) on or
regarding the properties owned, operated, leased or occupied by a Borrower or
any subsidiary thereof or regarding any conditions that might have been affected
by Hazardous Materials
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on or Released or removed from such properties. The Borrowers shall also permit
and authorize, and shall cause its subsidiaries to permit and authorize, the
consultants, attorneys (subject to any applicable privileges) or other persons
that prepare such submissions or reports or perform such material audits, tests,
studies or assessments to discuss such submissions, reports or audits with the
Agent.
(c) Promptly (and in no event more than five Business Days
after a Borrower has actual knowledge or is otherwise informed of such event)
provide written notice to the Agent upon the happening of any of the following:
(i) a Borrower, any subsidiary of a Borrower, or any
tenant or other occupant of any property of such Borrower or
such subsidiary receives written notice of any claim,
complaint, charge or notice of a violation or potential
violation of any applicable Environmental Law which could have
a Material Adverse Effect;
(ii) there has been a spill or other Release of
Hazardous Materials upon, under or about or affecting any of
the properties owned, operated, leased or occupied by a
Borrower or any subsidiary thereof, in amounts that are
required to be reported under applicable Environmental Law or
Hazardous Materials at levels or in amounts that are required
to be reported, remedied or responded to under applicable
Environmental Law are detected on or in the soil or
groundwater, in each case which could result in a Material
Adverse Effect as to a Borrower or any subsidiary thereof;
(iii) a Borrower or any subsidiary thereof is or may be
liable for any costs of cleaning up or otherwise responding to
a Release of Hazardous Materials which could result in a
Material Adverse Effect;
(iv) any part of the properties owned, operated, leased
or occupied by a Borrower or any subsidiary thereof is or may
be subject to a Lien under any applicable Environmental Law;
or
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(v) a Borrower or any subsidiary thereof undertakes
any material Remedial Work with respect to any Hazardous
Materials.
(d) Without in any way limiting the scope of Section 11.04(c)
and in addition to any obligations thereunder, the Borrowers hereby indemnify
and agree to hold the Agent and the Lenders harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its business
or the business of its subsidiaries pertaining to Hazardous Materials,
including, but not limited to, claims of any governmental body or any third
person arising under any applicable Environmental Law or under tort, contract or
common law incurred by the Agent, Co-Agent or any Lender with respect to any
matter for which the Borrowers are obligated pursuant to this Section 6.13. To
the extent laws of the United States or any applicable state or local law in
which property owned, operated, leased or occupied by a Borrower or any
subsidiary is located provide that a Lien upon such property of such Borrower or
such subsidiary may be obtained for the removal of Hazardous Materials which
have been or may be Released, no later than sixty days after notice that a
Release has occurred is given by the Agent to such Borrower or such subsidiary,
such Borrower or such subsidiary shall deliver to the Agent a report issued by a
qualified third party engineer assessing the existence and extent of any
Hazardous Materials located upon or beneath the specified property. To the
extent any Hazardous Materials located therein or thereunder either subject the
property to Lien or require removal to safeguard the health of any persons, the
removal thereof shall be an affirmative covenant of the Borrowers hereunder.
(e) In the event that any Remedial Work is required to be
performed by a Borrower or any subsidiary under any applicable Environmental
Law, any judicial order, or by any governmental entity, such Borrower or such
subsidiary shall commence all such Remedial Work at or prior to the time
required therefor under such Environmental Law or applicable judicial orders and
thereafter diligently prosecute to completion all such Remedial Work in
accordance with and within the time allowed under such applicable Environmental
Laws or judicial orders except where the failure to timely complete such
Remedial Work would not have a Material Adverse Effect.
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SECTION 6.14. Pay Obligations to Lenders and Perform Other
Covenants. (a) Make full and timely payment of the Obligations, whether now
existing or hereafter arising, (b) duly comply with all the terms and covenants
contained in this Agreement (including, without limitation, the borrowing
limitations and mandatory prepayments in accordance with Article II hereof) and
in each of the other Loan Documents, all at the times and places and in the
manner set forth therein, and (c) except for the filing of continuation
statements and the making of other filings by the Agent as secured party or
assignee, at all times take all actions reasonably necessary to maintain the
Liens and security interests provided for under or pursuant to this Agreement
and the Security Documents as valid and perfected first Liens on the property
intended to be covered thereby (subject only to Liens expressly permitted
hereunder) and supply all information to the Agent reasonably necessary for such
maintenance.
SECTION 6.15. Maintain Operating Accounts. Maintain operating
accounts and cash management arrangements with the Agent or Co-Agent and, to the
extent maintained with other financial institutions, enter into arrangements in
form and substance reasonably satisfactory to the Agent. Notwithstanding the
foregoing, the Borrowers may maintain operating and other accounts where the
aggregate of deposits does not exceed $500,000 and payroll accounts without
regard to such arrangements.
SECTION 6.16. Interest Rate Protection. Maintain the existing
interest rate cap arrangement (the "Rate Agreement"), which Rate Agreement
covers a notional principal amount of at least $50,000,000 and has a term ending
three (3) years from the Original Closing Date.
SECTION 6.17. Landlord Waivers. For 60 days from the Closing
Date, use its best efforts to obtain landlord waivers in form and substance
reasonably acceptable to the Agent from the owner of each leased property
containing a material portion of the Collateral acquired pursuant to the
Manischewitz Acquisition.
SECTION 6.18. Year 2000. Take all actions necessary to permit
the proper functioning, in and following the year 2000, of (i) the Borrowers'
computer systems and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which Borrowers' systems
interface and which are within the control of the Borrowers) and the testing of
all such systems and equipment, as so programmed, unless the failure to take
such actions would not have a Material Adverse Effect.
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SECTION 6.19. Lock-Box Accounts. Within 75 days of the Closing
Date, establish lock-box accounts at The Chase Manhattan Bank, another Lender or
another financial institution (subject to a tri-party agreement satisfactory to
the Agent) for the collection of all remittances on Receivables attributable to
Manischewitz. All such remittances shall be applied as set forth in Section
10.01 of this Agreement.
VII. NEGATIVE COVENANTS
Each of the Borrowers covenants and agrees with each Lender
that, so long as this Agreement shall remain in effect or the principal of or
interest on any Note, any amount under any Letter of Credit, or any fee, expense
or other Obligation payable hereunder shall be unpaid, it will not and will not
cause or permit any of its subsidiaries and, in the case of Section 7.13 hereof,
to, either directly or indirectly:
SECTION 7.01. Liens. Incur, create, assume or permit to exist
any Lien on any of its property or assets (including the stock of any direct or
indirect subsidiary), whether owned at the date hereof or hereafter acquired, or
assign or convey any rights to or security interests in any future revenues,
except:
(a) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security benefits (not
including any lien described in Section 412(m) of the Code);
(b) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens, incurred
in good faith in the ordinary course of business and securing obligations which
are not overdue for a period of more than 30 days or which are being contested
in good faith by appropriate proceedings as to which the applicable Borrower or
subsidiary, as the case may be, shall, to the extent required by GAAP, have set
aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being contested
in good faith in compliance with Section 6.04;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of property
or minor irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances
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incurred, created, assumed or permitted to exist and arising by, through or
under a landlord or owner of the leased property, with or without consent of the
lessee) which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of its
business;
(e) Liens upon any real or personal property acquired through
the purchase, improvement or lease by a Borrower or any subsidiary thereof which
are created or incurred contemporaneously with such acquisition to secure or
provide for the finance or payment of any part of the purchase price of,
improvement of or lease payments on, such property (but no other amounts and not
in excess of the purchase price or lease payments); provided, however, that any
such Lien shall not apply to any other property of the Borrowers or any of their
subsidiaries and in the case of real property shall be on a non-recourse basis;
and provided, further, that after giving effect to such purchase, improvement or
lease, compliance is maintained with Section 7.07 hereof;
(f) Liens under the Rate Agreements in favor of any Lender;
(g) Liens existing on the date of this Agreement and set forth
in Sched ule 7.01 annexed hereto but not the extension, renewal or refunding of
the Indebtedness secured thereby;
(h) Liens created in favor of the Agent for its own benefit
and for the benefit of the Lenders;
(i) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of like
nature, incurred as an incident to and in the ordinary course of business;
(j) Liens that arise automatically under Environmental Laws,
provided that the Borrowers are in compliance with Section 6.13 and such Lien
would not have a Material Adverse Effect;
(k) Liens on any property or assets of a Borrower or any
subsidiary thereof in connection with consignments, licenses and leases arising
in the ordinary course of business and consistent with past practices; or
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(l) Liens on the ▇▇▇▇▇▇▇▇ Property to secure Indebtedness used
for the purpose of reducing Revolving Credit Loans not on a permanent basis (but
not in excess of 80% of the then appraised value); provided, however, that any
such Lien shall not apply to any other property of a Borrower or any subsidiary
thereof; and provided, further, that after giving effect to any such Lien no
Default or Event of Default shall have occurred.
SECTION 7.02. Sale and Lease-Back Transactions. Except for a
transaction economically equivalent to that permitted pursuant to Section
7.01(l), and subject to the same restrictions, enter into any arrangement,
directly or indirectly, with any person whereby a Borrower or any subsidiary
thereof shall sell or transfer any property, real or personal, and used or
useful in its business, whether now owned or hereafter acquired, and thereafter
rent or lease such property or other property which such Borrower or such
subsidiary intends to use for substantially the same purpose or purposes as the
property being sold or transferred.
SECTION 7.03. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness other than (i) Indebtedness secured by Liens permitted
under Section 7.01, (ii) Indebtedness (including, without limitation,
Guarantees) existing on the date hereof and listed in Schedule 7.03 annexed
hereto, but not the extension, renewal or refunding thereof, (iii) Indebtedness
incurred hereunder, (iv) Indebtedness to trade creditors incurred in the
ordinary course of business, (v) Guarantees constituting the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, (vi) Guarantees of the Obligations, (vii) purchase money Indebtedness
to the extent permitted by Sections 7.01(e) and 7.07 hereof, (viii) Subordinated
Indebtedness, (ix) Indebtedness under the Rate Agreements, (x) unsecured
Guarantees by the Borrowers of the Senior Notes, including the extension,
renewal or refunding thereof, but not the increase thereof and (xi) intercompany
Indebtedness of the Borrowers to Enterprises in the form of Exhibit H hereto,
which Indebtedness is represented by an instrument that is pledged to the Agent
(for the benefit of itself and the Lenders) pursuant to a Security Document and
is subordinated to the prior payment in full of the Obligations and which is
otherwise upon terms and conditions reasonably satisfactory to the Agent.
SECTION 7.04. Dividends, Distributions and Payments. Declare
or pay, directly and indirectly, any cash dividends or make any other
distribution, whether in cash, property, securities or a combination thereof,
with respect to (whether by reduc tion of capital or otherwise) any shares of
its capital stock or directly or indirectly redeem, purchase, retire or
otherwise
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acquire for value (or permit any subsidiary to purchase or acquire) any shares
of any class of its capital stock or set aside any amount for any such purpose
except that (x) Millbrook may make distributions required under the Transitional
Services Agreement as part of the Millbrook Acquisition Documents, (y) the
Borrowers may make distributions or dividends or payments representing interest
on the intercompany Indebtedness permitted pursuant to Section 7.03(xi) hereof
to Enterprises from time to time (i) in an aggregate amount not to exceed the
amount of interest paid or due to be paid to the holders of the Senior Notes as
of such time and (ii) after November 1, 2001, in an aggregate amount not to
exceed the amount of interest paid or due to be paid to the holders of the
Interest Reserve Notes as of such time, provided that no Default or Event of
Default shall have occurred and be continuing at the time of the making of such
distribution or distributions or payments or would result therefrom and (z) make
distributions to Enterprises so that Enterprises can make distributions to
Holdings to (i) pay taxes actually paid by Holdings and attributable to the
taxable income of the Borrowers and their subsidiaries or pursuant to any tax
sharing arrangements approved by the Agent, (ii) pay for reasonable services
rendered by Holdings to the Borrowers at commercially reasonable rates, (iii)
reimburse Holdings for out-of-pocket expenses and other expenses incurred in
connection with services rendered by Holdings to the Borrowers, (iv) repurchase
shares of common stock of Holdings held by members of management of the
Borrowers not to exceed the Buy-Out Amount in any Fiscal Year (provided that
after giving effect to any such payment no Default or Event of Default would
occur and be continuing), (v) pay the reasonable salaries of employees of
Holdings providing reasonable services as referred to in (ii) above to the
Borrowers or any subsidiary and (vi) pay reasonable costs or administrative
expenses attendant to the registration of the Senior Notes and Interest Reserve
Notes with the Securities and Exchange Commission and being a reporting company
under the Securities Exchange Act of 1934. For purposes hereof, the term
"Buy-Out Amount" shall mean an amount equal to 10% of the retained earnings of
Holdings less accumulated and unpaid dividends on Holdings Series A Preferred
Stock.
SECTION 7.05. Consolidations, Mergers and Sales of Assets.
Consolidate with or merge into any other person, or sell, lease, transfer or
assign to any persons or otherwise dispose of (whether in one transaction or a
series of transactions) any material portion of its assets (whether now owned or
hereafter acquired), or sell any of its inventory other than in the normal
course of business, or permit another person to merge into it, or acquire all or
substantially all the capital stock or assets of any other person except for
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(x) sales of wornout or obsolete assets provided that the proceeds realized are
applied in accordance with Section 2.09(d) hereof, (y) if at any time thereof
and immediately after giving effect thereto no Default or Event of Default shall
have occurred and be continuing (i) the merger of any subsidiary into a Borrower
in a transaction in which such Borrower is the surviving person and no person
other than such Borrower or a subsidiary receives any consideration and (ii) the
merger or consolidation of any subsidiary with any other subsidiary in a
transaction in which no other person other than a Borrower or a subsidiary
receives any consideration and (z) if at the time thereof and immediately after
giving effect thereto, no Default or Event of Default shall have occurred and be
continuing (and subject to the provisions of Section 6.12 hereof), the transfer
by the Borrowers to a newly formed or acquired subsidiary of a Borrower of all
or substantially all of the intellectual property owned by the Borrowers.
SECTION 7.06. Investments. Own, purchase or acquire any stock,
obligations, assets (not in the ordinary course of business) or securities of,
or any interest in, or make any capital contribution or loan or advance to, any
other person, or make any other investments, except:
(a) certificates of deposit in dollars of any commercial banks
registered to do business in any state of the United States (i) having capital
and surplus in excess of $1,000,000,000 and (ii) whose long-term debt rating is
at least investment grade as determined by either Standard & Poor's Ratings
Group or ▇▇▇▇▇'▇ Investors Service, Inc.;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith and credit
of the United States;
(c) investments in money market mutual funds having assets in
excess of $2,500,000,000;
(d) commercial paper at the time of acquisition having the
highest rating obtainable from either Standard & Poor's Ratings Group or ▇▇▇▇▇'▇
Investors Service, Inc.;
(e) federally tax exempt securities rated A or better by
either Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc.;
(f) rebate advances to Customers in the ordinary course of
business;
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(g) loans or advances by a Borrower or any subsidiary to
employees, including for relocation of employees, in the ordinary course of
business not to exceed $250,000 in an aggregate principal amount at any time
outstanding;
(h) stock issued by customers or third party obligors in
payment of monetary obligations due and payable to a Borrower (subject to the
pledge of such property pursuant to the applicable Security Document);
(i) other investments having an aggregate cost at any time not
in excess of $3,000,000 in the aggregate during the term of this Agreement for
joint ventures in the ordinary course of business; and
(j) other investments owned on the date hereof as set forth on
Schedule 7.06 annexed hereto; and
(k) subject to the provisions of Section 6.12 hereof,
investment in the stock of a subsidiary of a Borrower formed or acquired for the
sole purpose of owning the intellectual property assets now or hereafter owned
by the Borrowers.
provided that, in each case mentioned in (a), (b), (d) and (e) above, such
obligations shall mature not more than one year from the date of acquisition
thereof.
SECTION 7.07. Capital Expenditures. Permit the aggregate
amount of payments made for Capital Expenditures (other than Capital
Expenditures made with proceeds of insurance as permitted pursuant to Section
2.09(f) or sales of assets as permitted pursuant to exception (x) of Section
7.05), including Capitalized Lease Obligations and Indebtedness secured by
Liens permitted under Section 7.01(e) hereof, in each of the periods indicated
below to exceed the following amounts for Millbrook and its Consolidated
subsidiaries with respect to the Fiscal Year ended March 31, 1998 and for the
Borrowers and their subsidiaries for each period thereafter:
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Period Maximum Amount
------ --------------
Fiscal Year ended March 31, 1998 $5,000,000
Fiscal Year ending March 31, 1999 9,000,000
Fiscal Year ending March 31, 2000 8,500,000
Fiscal Year ending March 31, 2001 7,000,000
For each Fiscal Year 7,000,000
thereafter
; provided, however, that amounts not expended in any Fiscal Year that could
have been so spent in accordance with the schedule above may be carried forward
and spent during the immediately subsequent two Fiscal Years.
SECTION 7.08. Debt Service Coverage Ratio. Permit the Debt
Service Coverage Ratio of the Borrowers and their subsidiaries to be less than
(i) 0.65:1.00 at March 31, 1999 (which for Manischewitz shall be a period of
eleven months) and June 30, 1999, (ii) 0.75:1.00 at September 30,1999 and at
▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) 1.00:1.00 at March 31, 2000, June 30, 2000, September
30, 2000 and December 31, 2000 and (iv) 1.05:1.00 at the end of each fiscal
quarter thereafter.
SECTION 7.09. Leverage Ratio; EBITDA; Availability. (a)
Leverage Ratio. Permit the Leverage Ratio of the Borrowers and their
subsidiaries at the end of each fiscal quarter indicated below to be greater
than the ratio indicated below:
Fiscal Quarter Ending Ratio
--------------------- -----
March 31, 1999, June 30, 1999, September 30, 1999 and
December 31, 1999 5.50:1.00
March 31, 2000 and each fiscal quarter thereafter 4.50:1.00
(b) EBITDA. Permit EBITDA of the Borrowers and their
subsidiaries for the periods set forth below to be less than the respective
amounts set forth below opposite such periods:
Period Minimum EBITDA
------ --------------
One quarter period ending June 30, 1998 $1,500,000
Two quarter period ending September 30, 1998 $3,000,000
Three quarter period ending December 31, 1998 $7,000,000
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For the purposes of this Section 7.09(b), the periods referred
to above shall begin on April 1, 1998 with respect to Millbrook and May 1, 1998
with respect to Manischewitz.
(c) Availability. Until the earlier to occur of (i) the first
fiscal quarter ending on or after June 30, 1999 for which the Debt Service
Coverage Ratio of the Borrowers and their subsidiaries is equal to or greater
than 1.25:1.00 and (ii) the delivery of the financial statements required
pursuant to Section 6.05(a) hereof for the period ending March 31, 2000,
together with the corresponding applicable borrowing base certificate and
compliance certificate required pursuant to Section 6.05(e) hereof, permit
Availability to be less than $10,000,000 at any time. Notwithstanding the
foregoing, if a Default or Event of Default exists at the earlier to occur of
the events described in clauses (i) and (ii) above, then until such Default or
Event of Default is either cured or waived, the Borrowers shall not permit
Availability to be less than $10,000,000.
SECTION 7.10. Business. Alter the nature of its business as
operated on the date of this Agreement in any material respect.
SECTION 7.11. Sales of Receivables. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory notes,
drafts or trade acceptances or other rights to receive payment held by it, with
or without recourse, except (i) for the purpose of collection or settlement in
the ordinary course of business; (ii) the sale of any such accounts to the
Agent, or (iii) so long as no Default or Event of Default has occurred and is
continuing, the sale or disposition of such account receivables, promissory
notes, drafts or trade acceptances which do not constitute Eligible Receivables
at a discount for an amount in cash, provided that the Borrowers shall notify
the Agent in advance of such sale or disposition, such sale or disposition shall
not constitute a sale of all or a substantial part of the assets of the
Borrowers and their subsidiaries, taken as a whole and the proceeds realized are
applied as a prepayment on outstanding Revolving Credit Loans.
SECTION 7.12. Use of Proceeds. Permit the proceeds of any
Credit Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation T, U or X of the Board, or for any purpose other
than those set forth in Section 4.14 hereof.
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SECTION 7.13. ERISA. (a) Engage in any transaction in
connection with which a Borrower or any ERISA Affiliate could be subject to
either a material civil penalty assessed pursuant to the provisions of Section
502 of ERISA or a material tax imposed under the provisions of Section 4975 of
the Code.
(b) Terminate any Pension Plan in a "distress termination"
under Sec tion 4041 of ERISA, or take any other action which could result in a
material liability of a Borrower or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of amounts which, under the
provisions of any Plan, a Borrower or any ERISA Affiliate is required to pay as
contributions thereto, or, with respect to any Pension Plan, permit to exist any
material "accumulated funding deficiency" (within the meaning of Section 302 of
ERISA and Section 412 of the Code), whether or not waived, with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the
provision of security under Section 307 of ERISA or Section 401(a)(29) of the
Code.
SECTION 7.14. Accounting Changes. Make any change in their
accounting treatment or financial reporting practices except as required or
permitted by GAAP and with the consent of the Agent which consent will not be
unreasonably withheld or delayed.
SECTION 7.15. Prepayment or Modification of Indebtedness;
Modification of Charter Documents. (a) Directly or indirectly prepay, redeem,
purchase or retire any Indebtedness, including, without limitation, any
Subordinated Indebtedness, other than Indebtedness incurred hereunder.
(b) Modify, amend or otherwise alter the terms and provisions
of any Subordinated Indebtedness.
(c) Modify, amend or otherwise alter the terms and provisions
of any intercompany Indebtedness permitted pursuant to Section 7.03(xi) hereof
in a manner adverse to the Agent or the Lenders.
(d) Modify, amend or alter their certificates or articles of
incorporation in a manner which would have a Material Adverse Effect.
SECTION 7.16. Transactions with Affiliates. Except as
otherwise specifically set forth in this Agreement, directly or indirectly
purchase, acquire or lease any
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property from, or sell, transfer or lease any property to, or enter into any
other transaction with, any stockholder, Affiliate or agent of a Borrower,
except at prices and on terms not less favorable to it than that which would
have been obtained in an arm's-length transaction with a non-affiliated third
party.
SECTION 7.17. Negative Pledges, Etc. Enter into any agreement
(other than this Agreement or any other Loan Document) which (a) prohibits the
creation or assumption of any Lien upon any of the Collateral, including,
without limitation, any hereafter acquired property, or (b) specifically
prohibits the amendment or other modification of this Agreement or any other
Loan Document.
SECTION 7.18. Consulting Fees. Pay any management, consulting
or similar fees of any kind to Holdings, or any Affiliate or subsidiary of
Holdings except $400,000 in any Fiscal Year and so long as that both before and
after giving effect to the payment of any such fees no Default or Event of
Default would exist.
VIII. EVENTS OF DEFAULT.
In case of the happening of any of the following events
(herein called "Events of Default"):
(a) any representation or warranty made in connection with
this Agreement, any of the Security Documents, the Notes or other Loan Documents
or any Credit Events hereunder or made in any report, certificate, financial
statement or other instrument (other than projections delivered pursuant to
Section 6.05(h) in accordance with the terms thereof) furnished pursuant to any
Loan Document, shall prove to have been false or misleading in any material
respect when made;
(b) default shall be made in the payment of any principal of
any Note when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Note, or any fee or any other amount payable hereunder (other than an amount
referred to in paragraph (b) above), or under the Notes, Letters of Credit, or
any other Loan Document or in connection with
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any other Credit Event when and as the same shall become due and payable;
(d) default shall be made in the due observance or performance
of (i) any covenant, condition or agreement to be observed or performed on the
part of any Loan Party pursuant to the terms of Sections 6.01, 6.02, 6.03, 6.05,
6.06(c), 6.08 (with respect to inspection, visitation and audits), 6.09, 6.10,
6.11, 6.12, 6.14 (as to payment of Obligations in accordance with this
Agreement), 6.15 and 6.16 of Article VI or Article VII (other than Section 7.13
(except subparagraph (b) thereof)) hereof, any of the Notes, any of the Security
Documents or any other Loan Document or (ii) any other terms of this Agreement
(other than as specified in (a), (b), (c) or (d)(i) above) and such default with
respect to any such other terms shall continue unremedied for a period of the
earlier of (i) 30 days after a Responsible Officer of the Borrowers, any
subsidiary or Holdings first has actual knowledge thereof and (ii) 30 days after
notice thereof from the Agent to the Borrowers;
(e) a Borrower or any material subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code or any other Federal, state or foreign
bankruptcy, insolvency, liquidation or similar law, (ii) consent to the
institution of, or fail to contravene in a timely and appropriate manner, any
such proceeding or the filing of any such petition, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator or similar
official for a Borrower or any material subsidiary or for a substantial part of
its property and assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they become due or (vii)
take corporate action for the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of a Borrower or any material subsidiary, or of a
substantial part of the property and assets of any of a Borrower or any material
subsidiary, under Title 11 of the United States Code or any other Federal state
or foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for a Borrower or
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any material subsidiary or for a substantial part of the property and assets of
any of a Borrower or any material subsidiary or (iii) the winding-up or
liquidation of a Borrower or any material subsidiary; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall continue unstayed and in effect for 30
days;
(g) default shall be made with respect to any Indebtedness or
obligations under a Capitalized Lease of a Borrower or any material subsidiary
(excluding Indebtedness outstanding hereunder) which either individually or
taken together with other Indebtedness as to which a default has occurred shall
exceed $1,000,000 if the effect of any such default shall be to accelerate, or
to permit the holder or obligee of any such Indebtedness or obligations under a
Capitalized Lease (or any trustee on behalf of such holder or obligee) at its
option to accelerate, the maturity of such Indebtedness or obligations under a
Capitalized Lease;
(h) (i) a Reportable Event shall have occurred with respect to
a Pension Plan, (ii) the filing by any Loan Party, any ERISA Affiliate, or an
administrator of any Plan of a notice of intent to terminate such a Plan in a
"distress termination" under the provisions of Section 4041 of ERISA, (iii) the
receipt of notice by any Loan Party, any ERISA Affiliate, or an administrator of
a Plan that the PBGC has instituted proceedings to terminate (or appoint a
trustee to administer) such a Pension Plan, (iv) any other event or condition
exists which might, in the reasonable opinion of the Agent, constitute grounds
under the provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any Pension Plan by the PBGC, (v) a
Pension Plan shall fail to maintain the minimum funding standard required by
Section 412 of the Code for any plan year or a waiver of such standard is sought
or granted under the provisions of Section 412(d) of the Code, (vi) any Loan
Party or any ERISA Affiliate has incurred, or is likely to incur, a liability
under the provisions of Section 4062, 4063, 4064 or 4201 of ERISA, (vii) any
Loan Party or any ERISA Affiliate fails to pay the full amount of an installment
required under Section 412(m) of the Code, (viii) the occurrence of any other
event or condition with respect to any Plan which would constitute an event of
default under any other agreement entered into by any Loan Party or any ERISA
Affili ate, and in each case in clauses (i) through (viii) of this subsection
(h), such event or condition, together with all other such events or conditions,
if any, could
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subject any Loan Party or any ERISA Affiliate to any taxes, penalties or other
liabilities which, in each case, in the reasonable opinion of the Agent, could
reasonably be expected to have a Material Adverse Effect on the financial
condition of any Loan Party or any ERISA Affiliate;
(i) any Loan Party or any ERISA Affiliate (i) shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred any
material withdrawal liability to such Multiemployer Plan, (ii) does not have
reasonable grounds for contesting such withdrawal liability and is not in fact
contesting such withdrawal liability in a timely and appropriate manner, and
(iii) the amount of such withdrawal liability reasonably could be expected to
result in a Material Adverse Effect;
(j) a judgment (non-reimbursable by insurance policies of a
Borrower or any material subsidiary or any other Affiliate or indemnified by
McKesson Corporation pursuant to the Millbrook Acquisition Agreement or KBMC
Acquisition, L.P. pursuant to the Manischewitz Acquisition Agreement) or decree
for the payment of money, a fine or penalty which when taken together with all
other such judgments, decrees, fines and penalties shall exceed $1,500,000 shall
be rendered by a court or arbitration panel against a Borrower or any material
subsidiary and (i) shall remain undischarged or unbonded for a period of 45
consecutive days during which the execution of such judgment, decree, fine or
penalty shall not have been stayed effectively or (ii) any judgment creditor or
other person shall legally commence actions to collect on or enforce such
judgment, decree, fine or penalty;
(k) this Agreement, any Note, any of the Security Documents,
any Guarantee or other Loan Documents shall for any reason cease to be, or shall
be asserted by any Loan Party not to be, a legal, valid and binding obligation
of any Loan Party, enforceable in accordance with its terms, or the security
interest or Lien purported to be created by any of the Security Documents shall
for any reason cease to be, or be asserted by any Loan Party not to be, a valid,
first priority perfected security interest in any Collateral (except to the
extent otherwise permitted under this Agreement or any of the Security Documents
but not as a result of any actions, or inactions, of any Loan Party);
(l) a Change of Control shall occur; or
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(m) any material damage to, or loss, theft or destruction of,
any material Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty
which causes, for more than thirty (30) consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities at any facility of a
Loan Party if any such event or circumstance would have a Material Adverse
Effect;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Agent may, and upon the written request of the Required Lenders shall, by
written notice (or facsimile notice promptly confirmed in writing) to the
Borrowers, take any or all of the following actions at the same or different
times: (i) terminate forthwith all or any portion of the Total Commitment and
the obligations of the Lenders to issue Letters of Credit hereunder; (ii)
declare the Notes and any amounts then owing to the Lenders on account of
drawings under any Letters of Credit to be forthwith due and payable, and (iii)
require that the Borrowers remit to the Agent cash collateral in an amount equal
to the aggregate undrawn amount of all outstanding Letters of Credit at such
time, such cash collateral to be held by the Agent for its own benefit and the
benefit of the Lenders in a cash collateral account on terms and conditions
satisfactory to the Agent, whereupon the principal of such Notes, together with
accrued interest and fees thereon and any amounts then owing to the Lenders on
account of drawings under any Letters of Credit and other liabilities of the
Borrowers accrued hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by the Borrowers, anything
contained herein or in the Notes to the contrary notwithstanding; provided,
however, that with respect to a default described in paragraph (e) or (f) above,
the Total Commitment and the obligation of the Lenders to issue Letters of
Credit shall automatically terminate and the principal of the Notes, together
with accrued interest and fees thereon and any amounts then owing to the Lenders
on account of drawings under any Letters of Credit and any other liabilities of
the Borrowers accrued hereunder shall automatically become due and payable, both
as to principal and interest, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrowers,
anything contained herein or in the Notes to the contrary notwithstanding.
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IX. AGENT
In order to expedite the transactions contemplated by this
Agreement, The Chase Manhattan Bank (or NationsBank, N.A. solely with respect to
the Mortgages and the rights and obligations of the mortgagee thereunder) is
hereby appointed to act as Agent on behalf of the Lenders. Each of the Lenders
and each subsequent holder of any Note or issuer of any Letter of Credit by its
acceptance thereof, irrevocably authorizes the Agent to take such action on its
behalf and to exercise such powers hereunder and under the Security Documents
and other Loan Documents as are specifically delegated to or required of the
Agent by the terms hereof and the terms thereof together with such actions and
powers as are reasonably incidental thereto. Neither the Agent nor any of its
directors, officers, employees or agents shall be liable as such for any action
taken or omitted to be taken by it or them hereunder or under any of the
Security Documents and other Loan Documents or in connection herewith or
therewith (a) at the request or with the approval of the Required Lenders (or,
if otherwise specifically required hereunder or thereunder, the consent of all
the Lenders) or (b) in the absence of its or their own gross negligence or
willful misconduct. Nothing in the foregoing sentence shall limit or affect the
Agent's obligations and liability to the Borrowers hereunder.
The Agent is hereby expressly authorized on behalf of the
Lenders, without hereby limiting any implied authority, (a) to receive on behalf
of each of the Lenders any payment of principal of or interest on the Notes
outstanding hereunder and all other amounts accrued hereunder which are paid to
the Agent, and promptly to distribute to each Lender its proper share of all
payments so received, (b) to distribute to each Lender copies of all notices,
agreements and other material as provided for in this Agreement or in the
Security Documents and other Loan Documents as received by such Agent and (c) to
take all actions with respect to this Agreement and the Security Documents and
other Loan Documents as are specifically delegated to the Agent.
In the event that (a) the Borrowers fail to pay when due the
principal of or interest on any Note, any amount payable under any Letter of
Credit, or any fee payable hereunder or (b) the Agent receives written notice of
the occurrence of a Default or an Event of Default (the Agent being deemed not
to have knowledge of any Default or Event of Default unless and until written
notice thereof is given to the Agent by a Borrower or a Lender), the Agent
within a reasonable time shall give written notice thereof to the Lenders, and
shall take such action with respect to such Event of Default or other condition
or event as it shall be directed to take by the Required Lenders; provided,
however, that, unless and until the Agent shall have received such directions,
the Agent may take such action or refrain from taking such action hereunder or
under the Security Documents or other Loan Documents with respect to a Default
or Event of Default as it shall deem advisable in the best interests of the
Lenders.
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The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genuineness,
validity or due execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other Loan
Documents or any other agreements on the part of the Borrowers and, without
limiting the generality of the foregoing, the Agent shall, in the absence of
knowledge to the contrary, be entitled to accept any certificate furnished
pursuant to this Agreement or any of the other Loan Documents as conclusive
evidence of the facts stated therein and shall be entitled to rely on any note,
notice, consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good faith to be genuine
and correct and to have been signed or sent by the proper person or persons. It
is understood and agreed that the Agent may exercise its rights and powers under
other agreements and instruments to which it is or may be a party, and engage in
other transactions with the Borrowers, as though it were not Agent of the
Lenders hereunder.
The Agent shall promptly give notice to the Lenders of the
receipt or sending of any notice, schedule, report, projection, financial
statement or other document or information pursuant to this Agreement or any of
the other Loan Documents and shall promptly forward a copy thereof to each
Lender.
Neither the Agent nor any of its directors, officers,
employees or agents shall have any responsibility to the Borrowers on account of
the failure or delay in performance or breach by any Lender other than the Agent
of any of its obligations hereunder or to any Lender on account of the failure
of or delay in performance or breach by any other Lender or the Borrowers of any
of their respective obligations hereunder or in connection herewith.
The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other Loan
Documents and any action taken or suffered in good faith by it in accordance
with the opinion of such counsel shall be full justification and protection to
it. The Agent may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.
The Agent and the Borrowers may deem and treat the payee of
any Note as the holder thereof until written notice of transfer shall have been
delivered as provided herein by such payee to the Agent and the Borrowers.
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With respect to the Loans made hereunder, the Notes issued to
it and any other Credit Event applicable to it, the Agent in its individual
capacity and not as an Agent shall have the same rights, powers and duties
hereunder and under any other agreement executed in connection herewith as any
other Lender and may exercise the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrowers or other affiliate thereof as
if it were not the Agent. Each of the Lenders hereby acknowledges that the Agent
and/or one or more Affiliates of the Agent may at any time and from time to time
be a holder of equity interests in a Loan Party.
Each Lender agrees (i) to reimburse the Agent in the amount of
such Lender's pro rata share (based on its Commitment hereunder) of any expenses
incurred for its own benefit and for the benefit of the Lenders by the Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, not reimbursed by the Borrowers and
(ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of its pro rata share,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as the Agent or any of them in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any action
taken or omitted by it or any of them under this Agreement or any of the other
Loan Documents, to the extent not reimbursed by the Borrowers; provided,
however, that no Lender shall be liable to the Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgment, suits,
costs, expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent or any of its directors, officers, employees or agents.
With respect to the release of Collateral, the Lenders hereby
irrevocably authorize the Agent, at its option and in its discretion, to release
any Lien granted to or held by the Agent upon any property covered by this
Agreement or the other Loan Documents (i) upon termination of the Total
Commitments and payment and satisfaction of all Obligations; (ii) constituting
property being sold or disposed of in compliance with the provisions of this
Agreement (and the Agent may rely in good faith conclusively on any such
certificate, without further inquiry); or (iii) constituting property leased to
a Borrower or any subsidiary under a lease which has expired or been terminated
in a transaction permitted under this Agreement or is about to expire and which
has not been, and is not intended by such Borrower or such subsidiary to be,
renewed or extended; provided, however, that (x) the Agent shall not be required
to execute any release on terms which, in the Agent's opinion, would expose the
Agent to liability or create any obligation or entail any consequence other than
the release of such Liens without recourse or warranty, and (y) such release
shall not in any manner discharge, affect or impair the Obligations or any Liens
upon (or obligations of any
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Loan Party, in respect of), all interests retained by any Loan Party, including
(without limitation) the proceeds of any sale, all of which shall continue to
constitute part of the property covered by this Agreement or the Loan Documents.
With respect to perfecting the Lenders' security interest in
Collateral which, in accordance with Article 9 of the Uniform Commercial Code in
any applicable jurisdiction or other applicable laws, can be perfected only by
possession, each Lender hereby appoints each other Lender for the purpose of
perfecting such interest. Should any Lender (other than the Agent) obtain
possession of any such Collateral, such Lender shall notify the Agent and the
Agent shall notify the Borrowers, and, promptly upon the Agent's request, shall
deliver such Collateral to the Agent or in accordance with the Agent's
instructions. Each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any Loan Document or to realize
upon any Collateral for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by the Agent.
In the event that a petition seeking relief under Title 11 of
the United States Code or any other Federal, state or foreign bankruptcy,
insolvency, liquidation or similar law is filed by or against any Loan Party,
the Agent is authorized to file a proof of claim on behalf of itself and the
Lenders in such proceeding for the total amount of Obligations owed by such Loan
Party. With respect to any such proof of claim which the Agent may file, each
Lender acknowledges that without reliance on such proof of claim, such Lender
shall make its own evaluation as to whether an individual proof of claim must be
filed in respect of such Obligations owed to such Lender and, if so, take the
steps necessary to prepare and timely file such individual claim.
Each Lender acknowledges that it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and any other Loan Document to which such
Lender is party. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document, any related agreement or any document furnished
hereunder.
Subject to the appointment and acceptance of a successor Agent
as provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Co-Agent shall have the right to
become the Agent and if the Co-Agent shall decline to exercise such right then
the Required Lenders shall have the right to appoint a successor Agent, with the
consent of the Borrowers which shall not be unreasonably withheld or delayed (it
being agreed that
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any Lender at such time which is a commercial bank having a combined capital and
surplus of at least $500,000,000 or an affiliate of such a bank shall be deemed
acceptable to the Borrowers and that the Borrowers' unwillingness to consent to
the appointment of a person who is neither a Lender nor commercial bank at such
time shall not be deemed unreasonable); provided, however, that no consent of
the Borrowers shall be required if a Default or an Event of Default has occurred
and is continuing. If no successor Agent shall have been so appointed and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank with an office (or an
affiliate with an office) in New York, New York, having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor bank, such successor shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations hereunder and under each of the other Loan Documents. After any
Agent's resignation hereunder, the provisions of this Article shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Agent.
The Lenders hereby acknowledge that the Agent shall be under
no duty to take any discretionary action permitted to be taken by the Agent
pursuant to the provisions of this Agreement or any of the other Loan Documents
unless it shall be requested in writing to do so by the Required Lenders. The
Lenders hereby further acknowledge that the Agent is not acting as the fiduciary
of, or the trustee for, any of the Lenders and except as expressly set forth
herein, the Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information communicated to the Agent by or
relating to the Borrowers or any of their subsidiaries.
X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND OTHER COLLATERAL
SECTION 10.01. Collection of Receivables; Management of
Collateral. (a) Each Borrower will, at its own cost and expense, (i) arrange for
remittances on Receivables to be made directly to lockboxes reasonably approved
by the Agent, and (ii) promptly deposit all payments received by such Borrower
on account of Receivables, whether in the form of cash, checks, notes, drafts,
bills of exchange, money orders or otherwise, in one or more accounts designated
by the Agent in precisely the form received (but with any endorsements of such
Borrower necessary for deposit or collection), subject to withdrawal by the
Agent only, as hereinafter provided, and until such payments are deposited, such
payments shall be deemed to be held in trust by such Borrower for and as the
Lenders' property and shall not
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be commingled with such Borrower's other funds. All remittances and payments
that are deposited in accordance with the foregoing will be applied by the Agent
to immediately reduce the outstanding balance of the Revolving Credit Loans,
subject to final collection in cash of the item deposited and subject to the
assessment of a two day collection charge.
Upon the occurrence and continuance of an Event of Default,
the Agent may send a notice of assignment and/or notice of the Agent's security
interest to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral, and thereafter the Agent shall have the
sole right to collect the Receivables and/or take possession of the Collateral
and the books and records relating thereto. No Borrower shall, without the
Agent's prior written consent, grant any extension of the time of payment of any
Receivable, compromise or settle any Receivable for less than the full amount
thereof, release, in whole or in part, any person or property liable for the
payment thereof, or allow any credit or discount whatsoever thereon except,
prior to the occurrence and continuance of an Event of Default, as permitted by
Section 10.03 hereof.
(b) (i) Each Borrower hereby constitutes the Agent or the
Agent's designee as such Borrower's attorney-in-fact with power to endorse such
Borrower's name upon any notes, acceptances, checks, drafts, money orders or
other evidences of payment or Collateral that may come into its possession; to
sign such Borrower's name on any invoice or ▇▇▇▇ of lading relating to any
Receivables, drafts against Customers, assignments and verifications of
Receivables and notices to Customers; to send verifications of Receivables; upon
the occurrence and continuance of an Event of Default, to notify the Postal
Service authorities to change the address for delivery of mail addressed to such
Borrower to such address as the Agent may designate; and to do all other acts
and things necessary to carry out this Agreement; provided that the Agent or the
Agent's designee may not act as such Borrower's attorney-in-fact until an Event
of Default has occurred and is continuing. All acts of said attorney or designee
are hereby ratified and approved, except for those constituting gross negligence
or willful misconduct, and said attorney or designee shall not be liable for any
acts of omission or commission, for any error of judgment or for any mistake of
fact or law, provided that the Agent or its designee shall not be relieved of
liability to the extent it is determined by a final judicial decision that its
act, error or mistake constituted gross negligence or willful misconduct. This
power of attorney being coupled with an interest
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is irrevocable until all of the Obligations are paid in full and this Agreement
and the Total Commitment is terminated.
(ii) The Agent, without notice to or consent of the
Borrowers, upon the occurrence and during the continuance of an Event of
Default, (A) may ▇▇▇ upon or otherwise collect, extend the time of payment of,
or compromise or settle for cash, credit or otherwise upon any terms, any of the
Receivables or any securities, instruments or insurance applicable thereto
and/or release the obligor thereon; (B) is authorized and empowered to accept
the return of the goods represented by any of the Receivables; and (C) shall
have the right to receive, endorse, assign and/or deliver in its name or the
name of the applicable Borrower any and all checks, drafts and other instruments
for the payment of money relating to the Receivables, and each Borrower hereby
waives notice of presentment, protest and non-payment of any instrument so
endorsed.
(c) Nothing herein contained shall be construed to constitute
a Borrower as agent of the Agent for any purpose whatsoever, and the Agent shall
not be responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof (except to the extent it is determined by a
final judicial decision that the Agent's or a Lender's act or omission
constituted gross negligence or willful misconduct). The Agent and the Lenders
shall not, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof or for any damage resulting therefrom (except to the
extent it is determined by a final judicial decision that the Agent's or such
Lender's error, omission or delay constituted gross negligence or willful
misconduct). The Agent and the Lenders do not, by anything herein or in any
assignment or otherwise, assume the Borrowers' obligations under any contract or
agreement assigned to the Agent or the Lenders, and the Agent and the Lenders
shall not be responsible in any way for the performance by the applicable
Borrower of any of the terms and conditions thereof.
(d) If any of the Receivables includes a charge for any tax
payable to any governmental tax authority, the Agent is hereby authorized (but
in no event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for the account of the applicable Borrower and to charge the
Borrowers' account therefor. The Borrowers shall notify the Agent if any
Receivables include any tax
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due to any such taxing authority and, in the absence of such notice, the Agent
shall have the right to retain the full proceeds of such Receivables and shall
not be liable for any taxes that may be due from the applicable Borrower by
reason of the sale and delivery creating such Receivables.
SECTION 10.02. Receivables Documentation. The Borrowers will,
in addition to the monthly Receivables aging delivered pursuant to this
Agreement, at such intervals as the Agent may reasonably require, furnish such
further schedules and/or information as the Agent may reasonably require
relating to the Receivables, including, upon the occurrence and during the
continuance of an Event of Default, sales invoices. The items to be provided
under this Section 10.02 are to be in form satisfac tory to the Agent and are to
be executed and delivered to the Agent from time to time solely for its
convenience in maintaining records of the Collateral; the Borrowers' failure to
give any of such items to the Agent shall not affect, terminate, modify or
otherwise limit the Agent's Lien or security interest in the Collateral.
SECTION 10.03. Status of Receivables and Other Collateral.
Each Borrower covenants, represents and warrants that: (a) it shall be the sole
owner, free and clear of all Liens except in favor of the Agent or otherwise
permitted hereunder, of and fully authorized to sell, transfer, pledge and/or
grant a security interest in each and every item of said Collateral owned by it;
(b) it will not seek to qualify, or maintain the qualification of, a Receivable
as an Eligible Receivable unless such Receivable shall be a good and valid
account representing an undisputed bona fide indebtedness incurred or an amount
indisputably owed by the Customer therein named, for a fixed sum as set forth in
the invoice relating thereto with respect to an absolute sale and delivery upon
the specified terms of goods sold by such Borrower, or work, labor and/or
services theretofore rendered by such Borrower; (c) it will not seek to qualify,
or maintain the qualification of, a Receivable as an Eligible Receivable unless
such Receivable which it seeks to so qualify is not subject to any defense,
offset, counterclaim, discount or allowance (as of the time of its creation)
except as may be stated in the invoice relating thereto or discounts and
allowances as may be customary in such Borrower's business; (d) none of the
transactions underlying or giving rise to any Eligible Receivable shall violate
any applicable state or federal laws or regulations, and all documents relating
to any Eligible Receivable shall be legally sufficient under such laws or
regulations and shall be legally enforceable in accordance with their terms; (e)
it will not seek to qualify, or maintain the qualification of, a Receivable as
an Eligible Receivable unless to the best of its knowledge,
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each Customer, guarantor or endorser with respect to such Receivable is solvent
and will continue to be fully able to pay all Eligible Receivables on which it
is obligated in full when due; (f) it will not seek to qualify, or maintain the
qualification of, a Receivable as an Eligible Receivable unless all documents
and agreements relating to such Receivable shall be true and correct and in all
respects what they purport to be; (g) it will not seek to qualify, or maintain
the qualification of, a Receivable as an Eligible Receivable unless to the best
of its knowledge, all signatures and endorsements that appear on all documents
and agreements relating to such Receivable shall be genuine and all signatories
and endorsers with respect thereto shall have full capacity to contract; (h) it
shall maintain books and records pertaining to the Collateral in such detail,
form and scope as the Agent shall require; (i) it will not seek to qualify, or
maintain the qualification of, a Receivable as an Eligible Receivable unless it
shall have immediately notified the Agent as to any accounts arising out of
contracts with the United States or any department, agency or instrumentality
thereof, and shall have executed any instruments and taken any steps required by
the Agent in order that all monies due or to become due under any such contract
shall be assigned to the Agent and notice thereof given to the United States
Government under the Federal Assignment of Claims Act; (j) it will, immediately
upon learning thereof, report to the Agent any material loss or destruction of,
or substantial damage to, any of the Collateral, and any other matters affecting
the value, enforceability or collectability of any of the Collateral; (k) if any
amount payable under or in connection with any Receivable is evidenced by a
promissory note or other instrument, as such terms are defined in the Uniform
Commercial Code, such promissory note or instrument shall be immediately
pledged, endorsed, assigned and delivered to the Agent as additional collateral;
(l) it shall not re-date any invoice or sale or make sales on extended dating
beyond that customary in the industry; (m) it shall conduct a cycle count of its
inventory at such intervals as the Agent may reasonably request and promptly
supply the Agent with a copy of such counts accompanied by a report of the value
(based on the lower of cost (on a FIFO basis) or market value) of such
inventory; and (n) it is not nor shall it be entitled to pledge the Lenders'
credit on any purchases or for any purpose whatsoever.
SECTION 10.04. Monthly Statement of Account. The Agent shall
render to the Borrowers each month a statement of the Borrowers' account or
accounts, as the case may be, which shall constitute an account stated and shall
be deemed to be correct and accepted by and be binding upon the Borrowers unless
the Agent receives a written statement of the Borrowers'
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exceptions within 30 days after such statement was rendered to the Borrowers.
SECTION 10.05. Collateral Custodian. Upon the occurrence and
continuance of an Event of Default, the Agent may at any time and from time to
time employ and maintain in the premises of the Borrowers a custodian selected
by the Agent who shall have full authority to do all acts necessary to protect
the Agent's and Lenders' interests and to report to the Agent thereon. The
Borrowers hereby agree to cooperate with any such custodian and to do whatever
the Agent may reasonably request to preserve the Collateral. All costs and
expenses incurred by the Agent by reason of the employment of the custodian
shall be charged to the Borrowers' account and added to the Obligations.
XI. MISCELLANEOUS
SECTION 11.01. Notices. All notices, demands, consents,
requests, instructions and other communications to be given or delivered or
permitted under or by reason of the provisions of this Agreement will be in
writing and shall be deemed to be delivered and received by the intended
recipient as follows: (a) if personally delivered, on the Business Day of such
delivery (as evidenced by the receipt of the personal delivery service), (b) if
mailed certified or registered mail return receipt requested (with all postage
prepaid), four (4) Business Days after the date set forth on the return receipt,
(c) if delivered by overnight courier (with all charges having been prepaid), on
the Business Day of such delivery (as evidenced by the receipt of the overnight
courier service of recognized standing), or (d) if delivered by facsimile
transmission, on the Business Day of such delivery if sent by 6:00 p.m. in the
time zone of the recipient, or if sent after that time, on the next succeeding
Business Day (as evidenced by the printed confirmation of delivery generated by
the sending party's telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this Section
11.01), or the refusal to accept same, the notice shall be deemed received on
the Business Day the notice is sent (as evidenced by the affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable:
(a) if to the Borrowers, Guarantors, or Grantors, at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile No.:
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(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman and Chief
Executive Officer, with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Facsimile No.: (212)
704-6288, Attention: ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; and
(b) if to the Agent, at The Chase Manhattan Bank, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇,
Attention: Millbrook Account Executive, with a copy to Kaye, Scholer, LLP, et
al., at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Facsimile No.: (212)
836-8689, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.; and
(c) if to any Lender, at the address set forth below its name
in Schedule 2.01 annexed hereto.
SECTION 11.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrowers herein and in
the certificates or other instruments prepared or delivered in connection with
this Agreement, any of the Security Documents, any Guarantee or any other Loan
Document, shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans and the execution and delivery to
the Lenders of the Notes and the occurrence of any other Credit Event and shall
continue in full force and effect as long as the principal of or any accrued
interest on the Notes or any other fee or amount payable under the Notes or this
Agreement or any other Loan Document is outstanding and unpaid and so long as
the Total Commitment has not been terminated.
SECTION 11.03. Successors and Assigns; Participations. (a)
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and permitted assigns of
such party; and all covenants, promises and agreements by or on behalf of any
Loan Party, any subsidiary of any thereof, the Agent or the Lenders, that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and permitted assigns. Without limiting the generality of
the foregoing, the Borrowers specifically confirm that any Lender may at any
time and from time to time pledge or otherwise grant a security interest in any
Loan or any Note (or any part thereof) to any Federal Reserve Bank. No Borrower
may assign or transfer any of its rights or obligations hereunder without the
written consent of all the Lenders.
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(b) Each Lender, with the consent of the Borrowers (not to be
unreasonably withheld) and the Agent, may sell participations to one or more
banks or financial institutions in all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Revolving Credit Commitment or Term Loan Commitment) and the
Loans owing to it and undrawn Letters of Credit and the Notes held by it);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Revolving Credit Commitment and Term Loan
Commitment) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the banks or financial institutions buying participations shall be
entitled to the cost protection provisions contained in Sections 2.10, 2.12 and
2.16 hereof, but only to the extent any of such Sections would be available to
the Lender which sold such participation, and (iv) the Borrowers, the Agent, the
Co-Agent, Holdings and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; provided, further, however, that such Lender
shall retain the sole right and responsibility to enforce the obligations of the
Loan Parties relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this
Agreement, or any of the other Loan Documents, other than amendments,
modifications or waivers with respect to decreasing any fees payable hereunder
or the amount of principal or the rate of interest payable on the Loans, or
extending the dates fixed for any payment of principal of or interest on, the
Loans or increasing or extending the Commitments or the release of all
Collateral.
(c) Each Lender may assign, to any one or more banks or other
financial institutions with the prior written consent of the Borrowers (not to
be unreasonably withheld) and with the prior written consent of the Agent (not
to be unreasonably withheld), all or a portion of its interests, rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Revolving Credit Commitment or Term
Loan Commitment and the same portion of the Loans and undrawn Letters of Credit
at the time owing to it and the Note or Notes held by it), provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all of the assigning Lender's rights and obligations under this
Agreement, which shall include the
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same percentage interest in the Loans, Letters of Credit and Notes, (ii) the
amount of the Revolving Credit Commitment or Term Loan Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Agent) shall be in a minimum principal amount of $5,000,000 in
the aggregate for the Revolving Credit Commitment and Term Loan Commitment of
such Lender and the amount of the Revolving Credit Commitment and Term Loan
Commitment of such Lender shall not be less than $10,000,000 or shall be zero,
(iii) the Agents shall hold Commitments at least equal to the Commitments held
by any other Lender (but in no event shall either be required to hold more than
$20,000,000) except that upon the occurrence and during the continuance of an
Event of Default, any Lender shall be permitted to assign its Commitments
without restriction, (iv) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance, together with any Note subject to
such assignment and a processing and recordation fee of $3,000 and (v) the
Assignee, if it shall not be a Lender, shall deliver to the Agent an
Administrative Questionnaire in the form provided to such Assignee by the Agent.
Upon such execution, delivery, acceptance and recording and after receipt of the
written consent of the Agent, from and after the effective date specified in
each Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (x) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and under the other Loan
Documents and (y) the Lender which is assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 2.10, 2.12, 2.16 and 11.04,
as well as any fees accrued for its account hereunder and not yet paid).
(d) By executing and delivering an Assignment and Acceptance,
the Lender which is assignor thereunder and the assignee thereunder confirm to,
and agree with, each other and the other parties hereto as follows: (i) other
than the representation and warranty that it is
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the legal and beneficial owner of the interest being assigned thereunder free
and clear of any adverse claim, and that its Commitment and the outstanding
balance of its Loans and participations in Letters of Credit, in each case
without giving effect to assignments thereof which have not become effective,
are as set forth in such Assignment and Acceptance, such Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, perfection,
genuineness, sufficiency or value of this Agreement, the other Loan Documents or
any Collateral with respect thereto or any other instrument or document
furnished pursuant hereto or thereto; (ii) such Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of any Loan Party or the performance or observance by any Loan Party
of any of their respective obligations under this Agreement, any Guarantees or
any of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and Acceptance and confirms
that it has received a copy of this Agreement, any Guarantees and of the other
Loan Documents, together with copies of financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such Lender or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as the Agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in
Section 11.01 hereof a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Lenders and
the Revolving Credit Commitment or Term Loan
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Commitment, as the case may be, of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrowers, the
Agent and the Lenders may treat each person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrowers or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee together with any Note or Notes subject
to such assignment, any processing and recordation fee and, if required, an
Administrative Questionnaire and the written consent to such assignment, the
Agent shall, if such Assignment and Acceptance has been completed and is
precisely in the form of Exhibit F annexed hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Lenders and the Borrowers. Within
five (5) Business Days after receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Agent in exchange for each surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to its portion of the Term Loan Commitment and/or Revolving Credit
Commitment, as the case may be, assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained any Term Loan Commitment or
Revolving Credit Commitment hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Term Loan Commitment and/or Revolving
Credit Commitment, as the case may be, retained by it hereunder. Such new Note
or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, or, with respect to the Term
Notes, the principal amount of the Term Notes outstanding at such time as
evidenced by the Term Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit A or Exhibit B, as the case may be. Notes surrendered to the Borrowers
shall be canceled by the Borrowers.
(g) Notwithstanding any other provision herein, any Lender
may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 11.03, disclose
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to the assignee or participant or proposed assignee or participant, any
information, including, without limitation, any Information, relating to the
Borrowers furnished to such Lender by or on behalf of the Borrowers in
connection with this Agreement; provided, however, that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any confidential
Information relating to the Borrowers received from such Lender to the extent
set forth in Section 11.11 hereof.
SECTION 11.04. Expenses; Indemnity. (a) The Borrowers agree to
pay all reasonable out-of-pocket expenses incurred by the Agent and Co-Agent in
connection with the preparation of this Agreement and the other Loan Documents,
including, without limitation, the initial field examinations and appraisal (or
other appraisals upon the occurrence and continuance of an Event of Default) and
reasonable field examination fees (as provided in Section 6.08), or with any
amendments, modifications, waivers, extensions, renewals, renegotiations or
"workouts" of the provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or, after the occurrence of a Default
or an Event of Default, incurred by the Agent, Co-Agent or any of the Lenders in
connection with the enforcement or protection of its rights in connection with
this Agreement or any of the other Loan Documents or with the Loans made or the
Notes or Letters of Credit issued hereunder, or in connection with any pending
or threatened action, proceeding, or investigation relating to the foregoing,
including, but not limited to, the reasonable fees and disbursements of counsel
for the Agent and Co-Agent and ongoing up to three yearly field examination
expenses and charges, and, in connection with such enforcement or protection,
the reasonable fees and disbursements of counsel for the Lenders. The Borrowers
further indemnify the Lenders from and agrees to hold them harmless against any
documentary taxes, assessments or charges made by any governmental authority by
reason of the execution and delivery of this Agreement or the Notes.
(b) The Borrowers indemnify the Agent and each Lender and
their respective directors, officers, employees and agents against, and agree to
hold the Agent, each Lender and each such person harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees and expenses, incurred by or asserted against the Lender or any
such person arising out of, in any way connected with, or as a result of (i) the
use of any of the proceeds of the Loans, (ii) this Agreement,
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the Guarantees, any of the Security Documents, the Millbrook Acquisition
Documents, the Manischewitz Acquisition Documents or the other documents
contemplated hereby or thereby, (iii) the performance by the parties hereto and
thereto of their respective obligations hereunder and thereunder (including but
not limited to the making of the Total Commitment) and consummation of the
transactions contemplated hereby and thereby, (iv) breach of any representation
or warranty by a Loan Party, or (v) any claim, litigation, investigation or
proceedings relating to any of the foregoing (other than those relating to
matters solely and exclusively between and among the Agent, Co-Agent and the
Lenders), whether or not the Agent, any Lender or any such person is a party
thereto; provided, however, that such indemnity shall not, as to the Agent or
any Lender, apply to any such losses, claims, damages, liabilities or related
expenses to the extent that they result from the gross negligence or willful
misconduct of the Agent or any Lender.
(c) The Borrowers indemnify, and agree to defend and hold
harmless the Agent and the Lenders and their respective officers, directors,
shareholders, agents and employees (collectively, the "Indemnitees") from and
against any loss, cost, damage, liability, lien, deficiency, fine, penalty or
expense (including, without limitation, reasonable attorneys' fees and
reasonable expenses for investigation, removal, cleanup and remedial costs and
modification costs incurred to permit, continue or resume normal operations of
any property or assets or business of a Borrower or any subsidiary thereof)
arising from a violation of, or failure to comply with any Environmental Law by
a Borrower or any subsidiary and to remove any Lien arising therefrom, except to
the extent caused by the gross negligence or willful misconduct of any
Indemnitee, which any of the Indemnitees may incur or which may be claimed or
recorded against any of the Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or the Notes, or any investigation made by or on
behalf of the Agent or any Lender. All amounts due under this Section 11.04
shall be payable on written demand therefor.
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SECTION 11.05. Applicable Law. THIS AGREEMENT AND THE NOTES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION 11.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, upon the request of the Required Lenders each
Lender shall and is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrowers against any and all of the obligations of the Borrowers
now or hereafter existing under this Agreement and the Notes held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or the Notes and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Agent and the Borrowers
after any such setoff and application made by such Lender, but the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which may be
available to such Lender.
SECTION 11.07. Payments on Business Days. (a) Should the
principal of or interest on the Notes or any fee or other amount payable
hereunder become due and payable on other than a Business Day, payment in
respect thereof may be made on the next succeeding Business Day (except as
otherwise specified in the definition of "Interest Period"), and such extension
of time shall in such case be included in computing interest, if any, in
connection with such payment.
(b) All payments by the Borrowers hereunder and all Loans made
by the Lenders hereunder shall be made in lawful money of the United States of
America in immediately available funds at the office of the Agent set forth in
Section 11.01 hereof.
SECTION 11.08. Waivers; Amendments. (a) No failure or delay of
any Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power, except as otherwise expressly provided in Section 2.21
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hereof. The rights and remedies of the Lenders hereunder are cumulative and not
exclusive of any rights or remedies which they may otherwise have. No waiver of
any provision of this Agreement or the Notes nor consent to any departure by the
Borrowers therefrom shall in any event be effective unless the same shall be
authorized as provided in paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on the Borrowers in any case shall entitle them to
any other or further notice or demand in similar or other circumstances. Each
holder of any of the Notes shall be bound by any amendment, modification, waiver
or consent authorized as provided herein, whether or not such Note shall have
been marked to indicate such amendment, modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders; provided,
however, that no such agreement shall (i) change the principal amount of, or
extend or advance the maturity of or the dates for the payment of principal of
or interest on, any Note or reduce the rate of interest on any Note, or decrease
any fees payable pro rata to the Lenders or postpone the payment thereof, (ii)
change the Revolving Credit Commitment or Term Loan Commitment of any Lender or
increase the aggregate of such Commitments, increase any percentage contained in
the definition of Borrowing Base, make overadvances other than Permitted
Overadvances, or amend or modify the provisions of this Section, Section 2.06,
Section 2.13, Section 4.14 or Section 11.04 hereof or the definition of
"Required Lenders," (iii) release any material portion of Collateral or share or
subordinate any Lien priority or (iv) release any Guarantee of the Obligations,
in each case without the prior written consent of each Lender affected thereby
and provided, further, however, that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Agent under this Agreement or the
other Loan Documents without the written consent of the Agent. Each Lender shall
be bound by any modification or amendment authorized by this Section regardless
of whether its Notes shall be marked to make reference thereto, and any consent
by any Lender pursuant to this Section shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall be so marked.
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(c) In the event that the Borrowers request, with respect to
this Agreement or any other Loan Document, an amendment, modification or waiver
and such amendment, modification or waiver would require the unanimous consent
of all of the Lenders in accordance with Section 11.08(b) above, and such
amendment, modification or waiver is agreed to in writing by the Borrowers and
the Required Lenders but not by all of the Lenders, then notwithstanding
anything to the contrary in Section 11.08(b) above, with the written consent of
the Borrowers and such Required Lenders, the Borrowers and Required Lenders may,
but shall not be obligated to, amend this Agreement without the consent of the
Lender or Lenders who did not agree to the proposed amendment, modification or
waiver (the "Minority Lenders") solely to provide for (i) the termination of the
Revolving Credit Commitment and Term Loan Commitment of each Minority Lender,
(ii) the assignment in accordance with Section 11.03 hereof to one or more
persons of each Minority Lender's interests, rights and obligations under this
Agreement (including, without limitation, all of such Minority Lender's
Revolving Credit Commitment and Term Loan Commitment as well as its portion of
all outstanding Loans and the Note or Notes held by such Minority Lender) and
the other Loan Documents and/or an increase in the Revolving Credit Commitment
and Term Loan Commitment of one or more Required Lenders, in each case so that
after giving effect thereto the Total Revolving Credit Commitment and Total Term
Loan Commitment shall be in the same amounts as prior to the events described in
this paragraph, (iii) the repayment to the Minority Lenders in full of all Loans
outstanding and accrued interest thereon at the time of the assignment and/or
increase in Commitments described in clause (ii) above with the proceeds of
Loans made by such persons who are to become Lenders by assignment or with the
proceeds of Loans made by Required Lenders who have agreed to increase their
Revolving Credit Commitment and/or Term Loan Commitment, (iv) the payment to the
Minority Lenders by the Borrowers of all fees and other compensation due and
owing such Minority Lenders under the terms of this Agreement and the other Loan
Documents and (v) such other modifications as the Required Lenders and Borrowers
shall deem necessary in order to effect the changes specified in clauses (i)
through (iv) hereof.
SECTION 11.09. Severability. In the event any one or more of
the provisions contained in this Agreement or in the Notes should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of
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the remaining provisions contained herein or therein shall not in any way be
affected or impaired thereby.
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc.
(a) This Agreement, the Notes and the other Loan Documents constitute the entire
contract between the parties hereto relative to the subject matter hereof. Any
previous agreement among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan Documents. Except as
expressly provided herein or in the Notes or the Loan Documents (other than this
Agreement), nothing in this Agreement, the Notes or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, the Notes or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby
waives any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this
Agreement, the Notes, any of the other Loan Documents or the Transactions.
(c) Except as prohibited by law, each party hereto hereby
waives any right it may have to claim or recover in any litigation referred to
in paragraph (b) of this Section 11.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that no representative,
agent or attorney of any Lender has represented, expressly or otherwise, that
such Lender would not, in the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that it has been induced to enter into this
Agreement, the Notes or the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications herein.
SECTION 11.11. Confidentiality. The Agent and the Lenders
agree to keep confidential (and to cause their respective officers, directors,
employees, agents and representatives to keep confidential) all information,
materials and documents furnished to the Agent or any Lender (the
"Information"). Notwithstanding the foregoing, the Agent and each Lender shall
be permitted to disclose Information (i) to such of its officers, directors,
employees, agents and representatives as need to know such Information in
connection with its participation in any of the Transactions or the
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administration of this Agreement or the other Loan Documents; (ii) to the extent
required by applicable laws and regulations or by any subpoena or similar legal
process, or requested by any governmental agency or authority (in any which case
prompt notice prior to disclosure will be provided to the Borrowers to the
extent not prohibited by law); (iii) to the extent such Information (A) becomes
publicly available other than as a result of a breach of this Agreement, (B)
becomes available to the Agent or such Lender on a non-confidential basis from a
source other than a Loan Party or any of their respective subsidiaries who was
to the actual knowledge of the disclosing party not bound by a confidentiality
arrangement in favor of the Borrowers or (C) was available to the Agent or such
Lender on a non-confidential basis prior to its disclosure to the Agent or such
Lender by a Loan Party or any of their respective subsidiaries; (iv) to the
extent any Loan Party or any of their respective subsidiaries shall have
consented to such disclosure in writing; (v) in connection with the sale of any
Collateral pursuant to the provisions of any of the other Loan Documents; or
(vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12. Submission to Jurisdiction. (a) Any legal
action or proceeding with respect to this Agreement or the Notes or any other
Loan Document may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, each Loan Party hereby accepts for
itself and in respect of its property, generally and unconditionally, the
personal jurisdiction of the aforesaid courts.
(b) Each Borrower and each Loan Party hereby irrevocably
waive, in connection with any such action or proceeding, any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which they may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(c) Each Borrower and each Loan Party hereby irrevocably
consent to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to each such person, as the case may be, at its
address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to
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commence legal proceedings or otherwise proceed against any Loan Party in any
other jurisdiction.
SECTION 11.13. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when
taken together shall constitute but one contract, and shall become effective
when copies hereof which, when taken together, bear the signatures of each of
the parties hereto shall be delivered to the Agent.
SECTION 11.14. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Borrowers, the Agent, Co-Agent and the
Lenders have caused this Agreement to be duly executed by their respective autho
rized officers as of the day and year first above written.
MILLBROOK DISTRIBUTION SERVICES INC.
By:___________________________________________
Name:
Title:
THE B. MANISCHEWITZ COMPANY, LLC
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its managing member
______________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Lender
and as Agent
By:___________________________________________
Name:
Title:
NATIONSBANK, N.A.
as Lender and Co-Agent
By:___________________________________________
Name:
Title:
[Signature Page to Amended and Restated Credit Agreement]
SANWA BUSINESS CREDIT CORPORATION
By:__________________________________
Name:
Title:
FLEET NATIONAL BANK
By:__________________________________
Name:
Title:
LASALLE BUSINESS CREDIT CORPORATION
By:__________________________________
Name:
Title:
[Signature Page to Amended and Restated Credit Agreement]
SCHEDULE 2.01(a)
TERM LOAN COMMITMENTS
---------------------
Term Loan Percentage of Total
Lender Commitment Term Loan Commitment
------ ---------- --------------------
The Chase Manhattan Bank $1,862,000 20%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Millbrook Account Officer
NationsBank, N.A. $1,862,000 20%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Millbrook Account Executive
Sanwa Business Credit Corporation $1,862,000 20%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fleet National Bank $1,862,000 20%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (508) 831-2430
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LaSalle Business Credit Corporation $1,862,000 20%
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 2.01(b)
Revolving Credit Commitments
----------------------------
Revolving Percentage of
Credit Total Revolving
Lender Commitment Credit Commitment
------ ---------- -----------------
The Chase Manhattan Bank $18,040,000 20%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Millbrook Account Officer
NationsBank, N.A. $18,040,000 20%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Millbrook Account Executive
Sanwa Business Credit Corporation $18,040,000 20%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fleet National Bank $18,040,000 20%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (508) 831-2430
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LaSalle Business Credit Corporation $18,040,000 20%
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 2.02
Domestic Lending Offices
------------------------
Lender Domestic Lending Office
------ -----------------------
The Chase Manhattan Bank The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Millbrook Account Officer
NationsBank, N.A. NationsBank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Millbrook Account Executive
Sanwa Business Credit
Corporation ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fleet National Bank ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LaSalle Business Credit
Corporation ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 2.03
Eurodollar Lending Offices
--------------------------
Lender Eurodollar Lending Office
------ -------------------------
The Chase Manhattan Bank ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Millbrook Account Officer
NationsBank, N.A. NationsBank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Millbrook Account Executive
Sanwa Business Credit
Corporation ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fleet National Bank ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LaSalle Business Credit
Corporation ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 6.05(g)
INVENTORY DESIGNATION
---------------------
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Gentlemen:
We certify, represent to you and agree with you as follows:
1) As of , the value of our inventories was as follows:
-------------
(DATE)
------------------------
(a) Raw materials and/or parts |
purchased from others $ | % =
-------- --- --
(b) ______________ $ | % =
-------- --- --
(c) Manufacture and shipping |
supplies $ | % =
-------- --- --
(d) Work in process $ | % =
-------- --- --
(e) Consigned Goods w/ letter $ | % =
-------- --- --
(f) Finished goods held for |
sale to customers $ | % =
-------- --- --
Total $ | % =
-------- --- --
(Loan
| Value)
-------
and/or as shown on attached schedule(s) or paper(s).
2) Such figures are taken from our inventory records, kept in accordance with
generally accepted accounting principles and used in our business or, if so
indicated, taken from a physical inventory. Such figures are at the lower
of cost or market (unless otherwise indicated), with appropriate allowances
for slow moving, returned or second quality goods. This certificate and
agreement is mailed to you upon the understanding that you will rely upon
it in making or continuing loans to us under the Amended and Restated
Credit Agreement dated as of ____, 199__ (as amended, modified or
supplemented from time to time, the "Credit Agreement," the terms defined
therein being used herein as therein defined) among the undersigned, the
Lenders named therein and The Chase Manhattan Bank, as Agent, and/or
advances upon our receivables, or in otherwise extending credit to us.
3) We confirm that the agreements, warranties and representations contained in
such Credit Agreement apply to all such inventories. We hereby pledge and
consign to you, grant you a continuing
general lien upon and designate as subject to your continuing general lien
and security interest all of said inventories, confirming any lien
statements or security agreements given you in respect to same.
4) Your lien and security interest shall attach to such inventories through
all stages of manufacture to and including the finished product, to all
accounts receivable or other proceeds resulting from the sale thereof, to
any merchandise returned to us, and to all inventories acquired by us from
time to time in the future, whether in substitution for or in addition to
this merchandise.
5) Such inventories are located at the following addresses:
Dated: _____________, 19__ [BORROWER]
By:____________________________
Name:
Title:
-2-
SCHEDULE 6.05(k)
Separate Certificates will be prepared for Millbrook and Manischewitz. Then a
combined will be prepared. For Credits to be granted Availability on a combined
basis must exceed zero or so long as Section 7.09(c) is in effect, $10,000,000.
BORROWING BASE CERTIFICATE
--------------------------
TO: The Chase Manhattan Bank, Asset Based Operation
Date________________
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SUBJECT:
______________________________________________________
Borrowing Base Certificate #_________________
We hereby certify the following information:
I. ACCOUNTS RECEIVABLE:
Accounts Receivable as of the
date of the last submitted certificate $_____________
Add: Sales $_____________
Less: Collections $_____________
Less: Adjustments to A/R $_____________
Accounts Receivable as of / / $_____________
-----
Accounts Receivable Aging as of / /
-----
Total A/R Current 31-60 61-90 Over 90
--------- ------- ----- ----- -------
Gross Accounts Receivable as of / / $
------ ----------
Less: Ineligibles.
-----------
Past invoice date Receivables 90 Days $ ( )
-----------
Receivables from Subsidiaries/Affiliates $ ( )
-----------
Cross-aged Receivables at 50% $ ( )
-----------
Foreign Receivables not under L/C's $ ( )
-----------
Credits, Chargebacks and Disputes $ ( )
-----------
Pre-▇▇▇▇ reserve $ ( )
-----------
Unbilled or ▇▇▇▇ and Hold Contras, Offsets, etc. $ ( )
------------
Rebate Allowances $ ( )
------------
C.O.D. $ ( )
------------
Other $ ( )
Total Ineligibles $( )
-----------
B. Net Accounts Receivables $
-----------
Availability at %(subject to revision) $ $
---- ----------- -----------
II. INVENTORY
Gross Inventory $
Less: Ineligibles $
------------
Foreign Inventory $ ( )
------------
Slow Moving $ ( )
------------
Inactive or Obsolete $ ( )
------------
In-Transit $ ( )
------------
Returned or Damaged $ ( )
------------
Inventory off Premise
(and not under landlord waiver) $ ( )
------------
Sales lag adjustments $ ( )
------------
Discontinued $ ( )
------------
Outlet Store Inventory $ ( )
------------
Other $ ( )
------------
Total Ineligibles $ ( )
------------
Net Inventory $
------------
Lesser of (i) Availability at % or
----
(ii) (the cap amount) $
------------
TOTAL A/R AND INVENTORY AVAILABILITY (1+2) = (A)
$
--------------
Total Loans Outstanding (3)
$
--------------
-2-
Total Letters of Credit (4) $
------------
Amount Requested for Borrowing or Repayment (5)
$
--------------
Total Revolving Credit Exposure (3+4+/5) + (B)
$
--------------
EXCESS AVAILABILITY (A - B)
$
--------------
-3-
Comments or Other Information:
The undersigned hereby represents and warrants that this is a correct statement
regarding the status of accounts receivable and inventory assigned to The Chase
Manhattan Bank, as Agent, and that the figures set forth herein are completely
accurate. The undersigned further warrants and represents that the Borrower is
in complete compliance with all the terms and conditions contained in the
agreements between us. The undersigned further understands that your loans to
the Borrower will be based upon your reliance on the information contained
herein.
[BORROWER]
By:______________________________
Name:
Title:
ATTEST:
--------------------------- ------------------------------
------
(Title) (Title)
EXHIBIT A
FORM OF TERM NOTE
$__________ New York, New York
March 31, 1997
as amended and restated May 1, 1998
FOR VALUE RECEIVED, the undersigned, MILLBROOK DISTRIBUTION
SERVICES INC., a Delaware corporation ("Millbrook"), and THE B. MANISCHEWITZ
COMPANY, LLC, a Delaware limited liability company ("Manischewitz" and
collectively with Millbrook, the "Makers"), jointly and severally, hereby
promise to pay to the order of ____________ (the "Lender"), at the office of THE
CHASE MANHATTAN BANK (the "Agent"), at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, in
installments and as otherwise provided in Section 2.04 of the Amended and
Restated Credit Agreement dated as of May 1, 1998, by and among the Makers, the
Lenders named therein, the Agent and NationsBank, N.A., as Co-Agent (as the same
may be amended, modified or supplemented from time to time in accordance with
its terms, the "Amended Credit Agreement") the principal sum of
___________________ DOLLARS ($__________), in lawful money of the United States
of America in immediately available funds, and to pay interest from the date
thereof on the principal amount hereof from time to time outstanding, in like
funds, at said office, at a rate or rates per annum and, in each case, payable
on such dates as determined pursuant to the terms of the Amended Credit
Agreement.
The Makers promise to pay interest, on demand, on any overdue
principal and fees and, to the extent permitted by law, overdue interest from
their due dates at a rate or rates determined pursuant to the terms of the
Amended Credit Agreement.
The Makers hereby waive diligence, presentment, demand,
protest and notice of any kind whatsoever. The non-exercise by the holder of any
of its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Term Note and all payments
and prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be endorsed by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof, or otherwise recorded by such holder in
its internal records; provided, however, that the failure of the holder hereof
to make such a notation or any error in such a notation shall not in any manner
affect the obligations of the Makers to make payments of principal and interest
in accordance with the terms of this Term Note and the Amended Credit Agreement.
This Term Note is the Term Note referred to in the Amended
Credit Agreement (and is secured by the Collateral referred to therein) which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and for the
amendment or waiver of certain provisions of the Amended Credit Agreement, all
upon the terms and conditions therein specified. This Term Note replaces the
"Term Note" issued to the Lender pursuant to the Credit Agreement, dated as of
March 31, 1997, by and among Millbrook, the Lenders named therein, the Agent and
the Co-Agent (as amended by Amendment to Credit Agreement, dated as of May 16,
1997, by and among Millbrook, the Lenders named therein, the Agent and the
Co-Agent). The Makers agree to pay interest on the "Term Note" that this Term
Note replaces which was accrued and outstanding on such replaced Note on the
next Interest Payment Date. Such accrued and outstanding interest shall be
payable in accordance with the terms and conditions of the Amended Credit
Agreement. THIS TERM NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CHOICE OF LAW DOCTRINE, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MILLBROOK DISTRIBUTION SERVICES INC.
By: _____________________________________
Name:
Title:
THE B. MANISCHEWITZ COMPANY, LLC
By:______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
2
Loans and Payment
-----------------
Unpaid
Name of Payment Principal
Amount and ------- Balance of Person Making
Date Type of Loan Principal Interest Note Notation
---- ------------ --------- -------- ---------- --------------
3
EXHIBIT B
FORM OF REVOLVING CREDIT NOTE
$_____________ New York, New York
March 31, 1997
as amended and restated May 1, 1998
FOR VALUE RECEIVED, the undersigned, MILLBROOK DISTRIBUTION
SERVICES INC., a Delaware corporation ("Millbrook"), and THE B. MANISCHEWITZ
COMPANY, LLC, a Delaware limited liability company ("Manischewitz" and
collectively with Millbrook, the "Makers"), jointly and severally, hereby
promise to pay to the order of _____________ (the "Lender"), at the office of
THE CHASE MANHATTAN BANK (the "Agent"), at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
on the Revolving Credit Termination Date, (as defined in the Amended and
Restated Credit Agreement, dated as of May 1, 1998, by and among the Makers, the
Lenders named therein, the Agent and NationsBank, N.A., as Co-Agent (as the same
may be amended, modified or supplemented from time to time in accordance with
its terms, the "Amended Credit Agreement")) or earlier as provided for in the
Credit Agreement, the lesser of the principal sum of [insert amount of Lender's
Revolving Credit Commitment] ($______________) and the aggregate unpaid
principal amount of all Revolving Credit Loans to the Makers from the Lender
pursuant to the terms of the Amended Credit Agreement, in lawful money of the
United States of America in immediately available funds, and to pay interest
from the date thereof on the principal amount hereof from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and, in
each case, payable on such dates as determined pursuant to the terms of the
Amended Credit Agreement.
The Makers promise to pay interest, on demand, on any overdue
principal and fees and, to the extent permitted by applicable law, overdue
interest from their due dates at a rate or rates determined pursuant to the
terms of the Amended Credit Agreement.
The Makers hereby waive diligence, presentment, demand,
protest and notice of any kind whatsoever. The non-exercise by the holder of any
of its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Revolving Credit Note and all
payments and prepayments of the principal hereof and interest hereon and the
respective dates thereof shall be endorsed by the holder hereof on the schedule
attached hereto and made a part hereof, or on a continuation thereof which shall
be attached hereto and made a part hereof, or otherwise recorded by such holder
in its internal records; provided, however, that the failure of the holder
hereof to make such a notation or any error in such a notation shall not in any
manner affect the obligation of the Makers to make payments of principal and
interest in accordance with the terms of this Revolving Credit Note and the
Amended Credit Agreement.
This Revolving Credit Note is the Revolving Credit Note
referred to in the Amended Credit Agreement (and is secured by the Collateral
referred to therein), which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Amended
Credit Agreement, all upon the terms and conditions therein specified. This
Revolving Note replaces the "Revolving Note" issued to the Lender pursuant to
the Credit Agreement, dated as of March 31, 1997, by and among Millbrook, the
Lenders named therein, the Agent and the Co-Agent (as amended by Amendment to
Credit Agreement, dated as of May 16, 1997, by and among Millbrook, the Lenders
named therein, the Agent and the Co-Agent). The Makers agree to pay interest on
the "Revolving Note" that this Revolving Note replaces which was accrued and
outstanding on such replaced Note on the next Interest Payment Date. Such
accrued and outstanding interest shall be payable in accordance with the terms
and conditions of the Amended Credit Agreement. THIS REVOLVING CREDIT NOTE SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CHOICE OF LAW DOCTRINE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
MILLBROOK DISTRIBUTION SERVICES INC.
By: _____________________________________
Name:
Title:
THE B. MANISCHEWITZ COMPANY, LLC
By: _____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
2
Loans and Payment
-----------------
Unpaid Name of
Amount Principal Person
and Type Payments Balance Making
Date of Loan Principal Interest of Note Notation
---- -------- ------------------ --------- --------
3
Exhibit C
[▇▇▇▇▇▇ ▇▇▇▇▇▇ Flattau & Klimpl, LLP Letterhead]
May 1, 1998
To each of the Lenders listed
on Schedule 1 attached hereto
Re: Millbrook Distribution Services Inc./The B. Manischewitz Company, LLC
---------------------------------------------------------------------
Dear Sirs:
We have acted as counsel to (i) Millbrook Distribution Services Inc., a
Delaware corporation ("Millbrook") and The B. Manischewitz Company, LLC, a
Delaware limited liability company ("Manischewitz" and, together with Millbrook,
the "Borrower"), in connection with the negotiation, execution and delivery of
the Amended and Restated Credit Agreement dated as of May 1, 1998 (the "Credit
Agreement"), by and among the Borrower, the lenders named therein (the
"Lenders"), The Chase Manhattan Bank, as Agent (the "Agent"), and NationsBank,
N.A., as Co-Agent, and (ii) R.A.B. Enterprises, Inc., a Delaware corporation
("Enterprises"), in connection with the negotiation, execution and delivery of
the Amended and Restated Non-Recourse Pledge Agreement and Irrevocable Proxy
dated as of May 1, 1998 (the "Pledge Agreement"), by and between Enterprises and
the Agent, for the benefit of the Lenders.
This opinion is provided to the Lenders as required pursuant to Section
5.02(a) of the Credit Agreement. This opinion is rendered solely for the
information of the addressees and no one else is entitled to rely upon it.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Credit Agreement.
We have examined originals or copies of the Credit Agreement, the
Notes, the Pledge Agreement, the Security Agreement (Millbrook), the Security
Agreement (Manischewitz), the Security Agreement - Patents and Trademarks and
the Security Agreement - Patents and Trademarks (Manischewitz) (collectively,
the "Loan Documents"). We also have examined certificates respecting the good
standing of each of Millbrook, Manischewitz and Enterprises from the Secretary
of State of the State of Delaware dated May 1, 1998, April 7, 1998 and April 30,
1998, respectively, the certificates of incorporation of each of Millbrook and
Enterprises and certificate of formation of
Manischewitz and all amendments thereto filed through the date hereof, with the
Secretary of State of the State of Delaware, the by-laws of each of Millbrook
and Enterprises and the operating agreement of Manischewitz, each as amended to
date, records of proceedings of the Board of Directors of each of Millbrook and
Enterprises and of the Board of Managers of Manischewitz during or by which
resolutions were adopted relating to matters covered by this opinion, and
certificates as to certain factual matters of officers of Millbrook,
Manischewitz and Enterprises. In conducting our examination, we have assumed the
genuineness of all signatures other than those of the officers of Millbrook,
Manischewitz and Enterprises at the closing, the legal capacity of all
individual signatories, the accuracy of all documents submitted to us as
originals and the conformity to originals of all documents submitted to us as
certified or reproduced copies. In addition, we have assumed the accuracy of,
and without independent investigation have relied upon, the representations,
warranties and other information contained in the items we examined.
Where reference is made in this opinion to matters within our
knowledge, or to facts and circumstances known to us, such reference means the
actual knowledge of those attorneys within the firm who have given substantive
attention to the Loan Documents, or who otherwise regularly provide services to
Millbrook, Manischewitz and Enterprises, in each case without, however,
independent investigation of any matter except as otherwise expressly noted
herein. Please be advised that Millbrook, Manischewitz and Enterprises are also
represented by other attorneys, and that we do not represent Millbrook,
Manischewitz or Enterprises with respect to all matters.
We express no opinion respecting the Loan Documents and the Special
Power of Attorney, or any right, power, privilege, remedy or interest intended
to be created thereunder, insofar as: (a) any of the rights, powers, privileges,
remedies and interests of a party thereunder may be limited (i) by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or other laws
affecting any rights, powers, privileges, remedies and interests of creditors
generally, (ii) by rules or principles of equity affecting the enforcement of
obligations generally, whether at law, in equity or otherwise, or (iii) by the
exercise of the discretionary powers of any court or other authority before
which may be brought any proceeding seeking equitable or other remedies,
including, without limitation, specific performance, injunctive relief and
indemnification; (b) the rights, powers, privileges, remedies and interests of
any party under any Loan Document or applicable law may be exercised or
otherwise enforced in bad faith or a commercially unreasonable manner; and (c)
any term or provision of the Loan Documents which purportedly permits a party to
exercise or otherwise enforce powers and privileges and pursue rights and
remedies in a manner impermissible under or otherwise inconsistent with
applicable laws or public policy from time to time in effect, including, without
limitation, exculpations and indemnifications, waivers, powers of attorney and
collateral disposition, and non-judicial remedies.
We have not examined title to any asset or property or the books,
records and files of the Borrowers, which may include invoices, bills of sale
and other documents that may evidence the purchase, ownership or disposition of
any Collateral, nor have we examined any item of inventory, equipment or other
tangible assets constituting part of any of the Collateral. We have assumed that
any Collateral (i) exists, (ii) is owned and possessed by Millbrook,
Manischewitz or Enterprises, as
-2-
applicable, (iii) is located where represented and conforms to the descriptions
in the Loan Documents, and (iv) to the extent consisting of accounts receivable,
contractual rights and other intangibles, is collectible and enforceable in
accordance with its terms and is assignable. We express no opinion whatsoever as
to matters pertaining to title, zoning, land use regulations or environmental
laws.
Searches respecting Uniform Commercial Code financing statements, tax
liens and judgments (to the extent filed with the listed officials) filed
against Manischewitz were made with the officials in the jurisdictions listed in
Schedule 2 hereto through the indicated search dates, each by an independent
firm not under our control or supervision (collectively, the "Searches"). Our
opinions respecting priorities (but only insofar as a security in the Collateral
of Manischewitz may be perfected by filing a financing statement in an office
listed in Schedule 3) and the existence or absence of judgments, security
interests and other liens and encumbrances are based solely upon the Searches,
certificates of officers of Manischewitz, and the representations and warranties
of Manischewitz as to factual matters in the Loan Documents. Please note that
the Searches reveal Uniform Commercial Code financing statements on Form UCC-1
indicating existing and competing security interests in the assets and
properties of Manischewitz, which financing statements are listed on Schedule 4
hereto.
Our opinions respecting the validity or enforceability of any Loan
Document to the extent it pertains to, or respecting, the creation, perfection
and priority of, security interests in the personal assets and properties
described in the Credit Agreement and other Loan Documents are limited to assets
and properties in which security interests are governed by and perfectible under
the NYUCC by the filing of financing statements or possession (collectively, the
"Collateral"). To the extent the Collateral consists of instruments and
certificated investment securities, we have assumed their due endorsement and
delivery to the Agent and its possession of them on the date of this opinion,
and that neither the Agent nor any Lender has any notice or knowledge of any
adverse claim with respect thereto. To the extent the Collateral may be
perfected under the NYUCC by the filing of financing statements, we have assumed
that the financing statements have been duly and timely filed in all relevant
jurisdictions as of the date of this opinion. To the extent the Collateral
consists of payments, distributions or other monies received or to be received
from or in respect of other Collateral perfected as described above, we express
no opinion to the extent that (i) such payments, distributions and monies do not
constitute identifiable proceeds under Section 9-306 of the NYUCC, (ii) cash
proceeds have been either commingled or deposited, or (iii) the Agent has not
permanently perfected its security interests in such Collateral by possession or
filing (as described above) within the applicable period of temporary perfection
of such proceeds. Please note, however, that various recent decisions have
determined that dividends, interest and similar payments may not be "proceeds"
under the NYUCC. Please note that we have assumed the NYUCC and other applicable
laws of New York are the same as those of Florida, New Jersey and Pennsylvania.
Furthermore, we have relied solely on the Searches and the representations of
Manischewitz in the Loan Documents as to the existence of competing security
interests, and we have assumed that the Searches would disclose no further
security interests if updated through the date of this opinion. Our opinion
respecting the "first priority" of such security interests means that as of the
date of this opinion (i) the filings or deliveries perfecting those interests
appear to be first in time and (ii) those interests therefor are entitled to the
corresponding benefits of Section 9-312(5), (6) or (7) of the NYUCC, as
applicable.
-3-
This opinion letter is limited to the date hereof and we do not in any
event undertake to advise you of any facts or circumstances occurring or coming
to our attention subsequent to the date hereof. Whenever any opinion of ours
refers to or includes the performance of any obligation or the issuance of any
instrument or certificate after the date hereof, it is based on our assumption
that all relevant facts and circumstances will be the same at such future time
as we believe them to be on the date hereof and no changes will have occurred in
any of the Loan Documents, other relevant documents or applicable law.
We call to your attention to the fact that we are counsel admitted to
practice in the State of New York, and we do not express any opinion with
respect to the applicable laws, or the effect or applicability of the laws, of
any jurisdiction other than those of the State of New York, the United States of
America and the General Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that:
1. Each of Millbrook, Manischewitz and Enterprises (a) is a duly
organized and validly existing corporation or limited liability company (in the
case of Manischewitz), in good standing under the laws of the jurisdiction of
its organization, (b) has the power and authority to own its properties and to
transact the business in which it is engaged or currently proposes to be
engaged, and (c) based solely on representations of Millbrook, Manischewitz and
Enterprises, is qualified to do business (as known to us to be currently
conducted or presently contemplated) in each jurisdiction where the nature of
its business or its ownership or use of its property requires such
qualification, except where the failure to so qualify would not have a Material
Adverse Effect.
2. Each of Millbrook, Manischewitz and Enterprises has the power to
execute, deliver and carry out the terms and provisions of each of the Loan
Documents to which it is a party and has taken or caused to be taken all
necessary action to authorize the execution, delivery and performance of each of
the Loan Documents to which it is a party.
3. Neither the execution and delivery by each of Millbrook,
Manischewitz and Enterprises of the Loan Documents to which each is a party, nor
compliance with any of the provisions thereof, will violate any law or
regulation, including, without limitation, Regulations T, U and X of the Board
of Governors of the Federal Reserve System, or any order or decree of any court
or governmental instrumentality, of which we have knowledge, or will conflict
with, or result in the breach of, or constitute a default under, any indenture,
mortgage, deed of trust, agreement or other instrument, of which we have
knowledge, to which Millbrook, Manischewitz or Enterprises is signatory or by
which any of them might be bound, or result in the creation or imposition of any
Lien upon any of the properties or assets of Millbrook, Manischewitz or
Enterprises, except in favor of the Agent, or violate any provision of any of
the organizational documents of Millbrook, Manischewitz or Enterprises.
4. To our knowledge and except as set forth in Schedule 4.06(a) to the
Credit Agreement, there are no actions, suits or proceedings pending or
threatened against or affecting Millbrook,
-4-
Manischewitz or Enterprises before any court, arbitrator or governmental or
administrative body or agency which would have a Material Adverse Effect.
5. No action of, or filing with, any governmental or public body or
authority, except for the filings referred to in paragraphs 10 and 11 hereof, is
required to authorize, or is otherwise required in connection with, the
execution, delivery and performance by each of Millbrook, Manischewitz or
Enterprises of the Loan Documents to which each is a party.
6. Each of the Loan Documents to which Millbrook, Manischewitz or
Enterprises is a party has been duly executed and delivered by Millbrook,
Manischewitz and Enterprises, as the case may be.
7. Each of the Loan Documents constitutes the legal, valid and binding
obligations of each of Millbrook, Manischewitz and Enterprises, as the case may
be, to the extent each is a party thereto, enforceable against each of them in
accordance with its terms.
8. Neither Millbrook, Manischewitz or Enterprises is (a) a "holding
company," an "affiliate" of a "holding company" or a "subsidiary company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended, or
(b) an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
9. Assuming, in the case of the Pledged Stock and the Pledged Debt (as
defined in the Pledge Agreement), that the Agent, the Co-Agent and the Lenders
were without notice of any adverse claim, the Agent has possession of the
certificate representing the Pledged Stock and the promissory notes evidencing
the Pledged Debt and such certificate and each of the promissory notes are
indorsed to the Agent or in blank, the Pledge Agreement creates a valid
perfected first priority security interest in favor of the Agent in the Pledged
Stock and the Pledged Debt.
10. The Security Agreement (Manischewitz) creates a valid security
interest in the Collateral (as such term is defined in the Security Agreement
(Manischewitz)) covered thereby in favor of the Agent, and when the financing
statements covering such Collateral have been duly filed pursuant to the Uniform
Commercial Code in the jurisdictions listed on Schedule 3 hereto, such security
interest will be perfected.
11. The Security Agreement - Patents and Trademarks (Manischewitz) (the
"IP Security Agreement") creates in favor of the Agent a valid security interest
in all of the right, title and interest of Manischewitz in the Trademarks listed
and described in Schedule A to the IP Security Agreement (the "Trademarks"), and
when the financing statements covering such Collateral have been duly filed
pursuant to the Uniform Commercial Code in the jurisdictions listed on Schedule
3 hereto, and the Assignment of Trademarks (as each such term is defined in the
IP Security Agreement) has been duly filed in the United States Patent and
Trademark Office, such security interest in the Trademarks
-5-
will be perfected. The Special Power of Attorney granted by the Borrower to the
Agent is enforceable according to its terms.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇ FLATTAU & KLIMPL, LLP
-6-
Schedule 1
----------
LENDERS
-------
The Chase Manhattan Bank, as Agent and Lender
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Millbrook Account Officer
NationsBank, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Millbrook Account Executive
Sanwa Business Credit Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fleet National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
LaSalle Business Credit Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
Schedule 2
----------
FINANCING STATEMENTS, TAX LIENS AND JUDGMENT SEARCH
---------------------------------------------------
ILLINOIS
Secretary of State: No Financing Statements as of 2/6/98.
▇▇▇▇ County: Two Financing Statements as of 2/3/98.
NEW JERSEY
Secretary of State: Six Financing Statements as of 12/18/97
▇▇▇▇▇▇ County: Three Financing Statements as of 2/19/98.
Cumberland County: Three Financing Statements as of 2/9/98
Schedule 3
----------
UCC-1 Filing Jurisdictions
--------------------------
1. Secretary of State, Florida
2. Secretary of State, New Jersey
3. Secretary of State, New York
4. Kings County, New York
5. Queens County, New York
6. Suffolk County, New York
7. Secretary of the Commonwealth, Pennsylvania
8. York County Prothonotary, Pennsylvania
Schedule 4
----------
EXISTING LIENS
--------------
UCC SEARCH
THE B. MANISCHEWITZ COMPANY, LLC
JUDGMENTS
SUITS TAX TYPE DATE
JURISDICTION DEBTOR SECURED PARTY ASSIGNEE LIENS OF UCC FILED
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ County The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
-Illinois Company, LLC New York Branch
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ County The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
-Illinois Company, LLC New York Branch
------------------------------------------------------------------------------------------------------------------------------
Secretary of State The B. Manischewitz AT&T Credit UCC-1 7-8-94
-New Jersey Company Corporation
------------------------------------------------------------------------------------------------------------------------------
Secretary of State The B. Manischewitz Crown Credit Co. UCC-1 6-6-96
-New Jersey Company
------------------------------------------------------------------------------------------------------------------------------
JURISDICTION FILE NO. DESCRIPTION
-------------------------------------------------------------------------------------------------
▇▇▇▇ County 96U06839* General Security
-Illinois
-------------------------------------------------------------------------------------------------
▇▇▇▇ County 96U06840* Intellectual Property
-Illinois
-------------------------------------------------------------------------------------------------
Secretary of State 1580525 System 25 Integrated leased under Lease No. E405957,
-New Jersey and all attachments, accessories, additions,
substitutions, products, replacements and rentals
and proceeds therefrom (including insurance
proceeds).
-------------------------------------------------------------------------------------------------
Secretary of State 1702543 (1) Reconditioned Crown Lift Truck Model 45RRTT-240
-New Jersey Serial #H-13425
(1) new Deka Battery Modal ▇▇-▇▇▇-▇▇ Serial #3672CF
(1) Used Exide Charger Model 3TN18-865 Serial
#HR25396 2-2
-------------------------------------------------------------------------------------------------
*To be released at Closing
Schedule 4
----------
EXISTING LIENS
--------------
UCC SEARCH
JUDGMENTS
SUITS TAX TYPE DATE
JURISDICTION DEBTOR SECURED PARTY ASSIGNEE LIENS OF UCC FILED
------------------------------------------------------------------------------------------------------------------------------
Secretary of State The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
-New Jersey Company, LLC New York Branch
------------------------------------------------------------------------------------------------------------------------------
Secretary of State The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
-New Jersey Company, LLC New York Branch
------------------------------------------------------------------------------------------------------------------------------
JURISDICTION FILE NO. DESCRIPTION
--------------------------------------------------------------------------------------------------
Secretary of State 1702377* Each and every receivable; all inventory; all books,
-New Jersey records, ledgers, print-outs, file materials; all
equipment; all intangibles; all insurance policies;
all pension plan reversions; any and all property of
every name and nature; all documents; all proceeds
--------------------------------------------------------------------------------------------------
Secretary of State 1702380* Patents; Trademarks; Copyrights; License agreements &
-New Jersey covenants not to ▇▇▇ with any other party with
respect to any Patent; the entire good will of
Debtor's business other general intangibles; All
proceeds.
--------------------------------------------------------------------------------------------------
*To be released at Closing
Schedule 4
----------
EXISTING LIENS
--------------
UCC SEARCH
JUDGMENTS
SUITS TAX TYPE DATE
JURISDICTION DEBTOR SECURED PARTY ASSIGNEE LIENS OF UCC FILED
------------------------------------------------------------------------------------------------------------------------------
Secretary of State The B. Manischewitz Banque Indosuez, UCC-1 6-6-96
-New Jersey Company, LLC New York Branch
------------------------------------------------------------------------------------------------------------------------------
Secretary of State The B. Manischewitz Banque Indosuez, UCC-1 6-6-96
-New Jersey Company, LLC New York Branch
------------------------------------------------------------------------------------------------------------------------------
JURISDICTION FILE NO. DESCRIPTION
--------------------------------------------------------------------------------------------
Secretary of State 1702825* Any & all present estates or interest of Debtor in
-New Jersey the land;
Any & all permits, certificates, approvals &
authorizations; any and all interest of Debtor in all
machinery; apparatus, equipment, fittings, fixtures,
improvements & articles of personal property of every
kind & nature, etc.
--------------------------------------------------------------------------------------------
Secretary of State 1702828* Any & all present estates or interest of Debtor in
-New Jersey the land; The tenant's interest & estate in the
Mortgaged Lease; Any & all estates or interests of
Debtor in the buildings; Any & all permits,
certificates, approvals & authorizations; Any & all
interest of Debtor in all machinery, apparatus,
equipment, fittings, fixtures; All debtor's right,
title & interest as landlord; All general intangibles
& Contract rights; etc.
--------------------------------------------------------------------------------------------
*To be released at Closing
Schedule 4
----------
EXISTING LIENS
--------------
UCC SEARCH
JUDGMENTS
SUITS TAX TYPE DATE
JURISDICTION DEBTOR SECURED PARTY ASSIGNEE LIENS OF UCC FILED
------------------------------------------------------------------------------------------------------------------------------
Cumberland The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
County Company, LLC New York Branch
-New Jersey
------------------------------------------------------------------------------------------------------------------------------
Cumberland The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
County Company, LLC New York Branch
-New Jersey
------------------------------------------------------------------------------------------------------------------------------
Cumberland The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
County Company, LLC New York Branch
-New Jersey
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ County The B. Manischewitz Banque Indosuez, UCC-1 6-18-96
-New Jersey Company, LLC New York Branch
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ County The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
-New Jersey Company, LLC New York
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ County The B. Manischewitz Banque Indosuez, UCC-1 6-5-96
-New Jersey Company, LLC New York
JURISDICTION FILE NO. DESCRIPTION
--------------------------------------------------------------------------------------------
Cumberland 31157* Fee Mortgage
County
-New Jersey
--------------------------------------------------------------------------------------------
Cumberland 31146* General Security
County
-New Jersey
--------------------------------------------------------------------------------------------
Cumberland 31145* Intellectual Property
County
-New Jersey
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ County 976* Fee/Leasehold Mortgage
-New Jersey
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ County 881* General Security
New Jersey
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ County 880* Intellectual Property
-New Jersey
--------------------------------------------------------------------------------------------
*To be released at Closing
Schedule 4
----------
EXISTING LIENS
--------------
UCC SEARCH
Prepared by: __________________
Reviewed by: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ __________________
Signed by: ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ __________________
EXHIBIT D
AMENDED AND RESTATED
NON-RECOURSE PLEDGE AGREEMENT
AND IRREVOCABLE PROXY
AMENDED AND RESTATED PLEDGE AGREEMENT dated as of May 1, 1998
(this "Agreement"), by and between R.A.B. ENTERPRISES, INC., a Delaware
corporation (the "Grantor") and The Chase Manhattan Bank, a New York banking
corporation, as agent (the "Agent") for the benefit of (i) the lenders (the
"Lenders") named in Schedules 2.01(a) and 2.01(b) of the Amended and Restated
Credit Agreement dated as of the date hereof, by and among Millbrook
Distribution Services Inc., a Delaware corporation ("Millbrook"), The B.
Manischewitz Company, LLC, a Delaware limited liability company ("Manischewitz",
each of Millbrook and Manischewitz a "Borrower" and, collectively, the
"Borrowers"), the Lenders, the Agent and NationsBank, N.A., as Co-Agent (the
"Co-Agent") (as amended, modified or supplemented from time to time in
accordance with its terms, the "Amended Credit Agreement") and (ii) for itself
as issuer of the Letters of Credit.
A. The Agent, the Co-Agent and the Lenders have agreed to
extend Loans and certain other financial accommodations including, without
limitation, the issuance of Letters of Credit to the Borrowers pursuant to, and
subject to the terms and conditions of, the Amended Credit Agreement. The
obligation of the Lenders to extend such Loans and of the Agent to issue Letters
of Credit under the Amended Credit Agreement is conditioned on the execution and
delivery by the Grantor of a pledge agreement in the form hereof to secure on a
nonrecourse basis the following (collectively, the "Secured Obligations"): all
Obligations (such Obligations to include, without limitation, the due and
punctual payment and performance of (a) the principal of and interest on the
Loans (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss. 362(a), and interest that, but for the filing of a petition in
bankruptcy with respect to the Borrowers, would accrue on such obligations,
whether or not a claim is allowed against the Borrowers for such interest in the
related bankruptcy proceeding), pursuant to the irrevocable proxy granted
herein, when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, (b) Indebtedness at any time and from
time to time under the Letters of Credit, (c) all obligations of the Grantor at
any time and from time to time under this Pledge Agreement and (d) all other
obligations of the Borrowers at any time and from time to time under the Amended
Credit Agreement and the other Loan Documents).
B. Capitalized terms used herein and not defined herein shall
have the respective meanings assigned to such terms in the Amended Credit
Agreement.
Accordingly, the Grantor and the Agent hereby agree as
follows:
1. Pledge. (a) As security for the payment in full of the
Secured Obligations, the Grantor hereby transfers, grants, bargains, sells,
conveys, hypothecates, pledges, sets over, endorses over, and delivers unto the
Agent, and grants, on a non-recourse basis, to the Agent, for its own benefit
and for the benefit of the Lenders, a security interest in (a) the shares of
capital stock of Millbrook listed in Schedule I annexed hereto next to the
Grantor's name (the "Initial Pledged Stock") and any additional shares of common
stock of Millbrook obtained in the future by the Grantor (collectively, the
Initial Pledged Stock together with all such additional shares pledged in the
future, the "Pledged Stock"), (b) all instruments of indebtedness (whether now
existing or hereinafter arising) by Millbrook or Manischewitz which name the
Grantor as payee thereunder (the "Pledged Debt") and (c) subject to Section 5
below, all proceeds of the Pledged Stock and Pledged Debt, including, without
limitation, all cash, securities or other property at any time and from time to
time receivable or otherwise distributed in respect of or in exchange for any of
or all such Pledged Stock (the items referred to in clauses (a) through (c)
being collectively called the "Collateral"). Upon delivery to the Agent, any
securities, other than debt securities, now or hereafter included in the
Collateral including, without limitation, the Pledged Stock (the "Pledged
Securities") shall be accompanied by undated stock powers duly executed in blank
or other instruments of transfer reasonably satisfactory to the Agent and by
such other instruments and documents as the Agent may reasonably request. Each
delivery of Pledged Securities shall be accompanied by a schedule showing a
description of the securities theretofore and then being pledged hereunder,
which schedule shall be attached hereto as Schedule I and made a part hereof.
Each schedule so delivered shall supersede any prior schedules so delivered.
(b) It is understood and agreed that it is the intention of
the foregoing that this Agreement is a non-recourse obligation and that the
Agent's rights to recover against the Grantor with respect to the Secured
Obligations (including, without limitation the Agent's reasonable fees and
out-of-pocket expenses pursuant to Section 14 hereof) shall be strictly limited
to the Collateral only, and the Agent and the Co-Agent shall have no rights or
remedies against, or recourse to, the Grantor with respect to any of the Secured
Obligations.
2. Delivery of Collateral. The Grantor agrees to deliver
promptly or cause to be delivered to the Agent any and all Pledged Securities,
and any and all certi ficates or other instruments or documents representing any
of the Collateral (together with any necessary endorsement).
3. Representations, Warranties and Covenants. The Grantor
hereby represents, warrants and covenants to and with the Agent that:
(a) the Grantor (i) is and will at all times continue to be
the direct owner, beneficially and of record, of the Pledged Stock and the payee
of the Pledged Debt that it is pledging hereunder except for the delivery and
endorsement over of the Collateral to the Agent as contemplated hereunder, (ii)
holds the Collateral that it is
2
pledging hereunder free and clear of all Liens of every kind and nature, except
for the Lien in favor of the Agent granted pursuant to this Agreement, and the
Pledged Stock is subject to no options to purchase or any similar or other
rights of any person, (iii) except as permitted under the Amended Credit
Agreement, will make no assignment, pledge, hypothecation or transfer of, or
create any security interest in, the Collateral including, without limitation,
by virtue of becoming bound by any agreement which restricts in any manner the
rights of any present or future holder of any Pledged Stock with respect
thereto, and (iv) subject to Section 5 below, will cause any and all Collateral,
whether for value paid by the Grantor or otherwise, to be forthwith deposited
with the Agent and pledged or assigned hereunder;
(b) the Grantor (i) has the authority to pledge the Collateral
it is pledging hereunder in the manner hereby done or contemplated, and (ii)
will defend its title or interest thereto or therein against any and all
attachments, Liens, claims or other impediments of any nature, however arising,
of all persons whomsoever;
(c) no consent or approval of any governmental body or
regulatory authority or any securities exchange is necessary to the validity of
the pledge effected hereby;
(d) by virtue of the execution and delivery by the Grantor of
this Agreement, when the certificates, instruments or other documents
representing or evidencing the Collateral are delivered to the Agent in
accordance with this Agreement, the Agent will obtain a valid and perfected
first Lien upon and security interest in such Collateral as security for the
repayment of the Secured Obligations, prior to all other Liens thereon or
therein;
(e) the pledge effected hereby is effective to vest in the
Agent the rights of the Agent in the Collateral as set forth herein; and
(f) all of the Initial Pledged Stock has been duly authorized
and validly issued and as at the date hereof, the Initial Pledged Stock
constitutes all of the issued and outstanding shares of capital stock of
Millbrook listed on Schedule I annexed hereto.
All representations, warranties and covenants of the Grantor contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement until the termination of this Agreement pursuant to Section 15 hereof.
4. Registration in Nominee Name; Denominations. Upon the
occurrence and during the continuance of an Event of Default, the Agent shall
(i) have the right (in its sole and absolute discretion with prior notice to the
Grantor) to transfer to or to register the Pledged Stock in its own name or the
name of its nominee, and (ii) at all times have the right to exchange the
certificates representing Pledged Stock for
3
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
5. Voting Rights; Dividends; etc. (a) Unless and until an
Event of Default shall have occurred and be continuing:
(i) The Grantor shall be entitled to exercise any and all
voting and/or consensual rights and powers accruing to an owner of Pledged
Securities or any part thereof for any purpose not inconsistent with the terms
of this Agreement and the Amended Credit Agreement provided that such action
would not adversely affect the rights inuring to the Agent or the Lenders under
this Agreement or the Amended Credit Agreement or adversely affect the rights
and remedies of the Agent or the Lenders under this Agreement or the Amended
Credit Agreement or the ability of the Agent or the Lenders to exercise the
same.
(ii) The Agent shall execute and deliver to the Grantor, or
cause to be executed and delivered to the Grantor, all such proxies, powers of
attorney, and other instruments as the Grantor may reasonably request for the
purpose of enabling the Grantor to exercise the voting and/or consensual rights
and powers which they are entitled to exercise pursuant to subparagraph (i)
above.
(iii) The Grantor shall be entitled to receive and retain
any and all cash dividends paid on the Pledged Stock only to the extent that
such cash dividends are permitted by, and otherwise paid in accordance with the
terms and conditions of, the Amended Credit Agreement and applicable laws. Any
and all
a. noncash dividends,
b. stock or dividends paid or payable in cash or otherwise
in connection with a partial or total liquidation or dissolution, and
c. instruments, securities, other distributions in
property, return of capital, capital surplus or paid-in surplus or other
distributions made on or in respect of Pledged Stock (other than dividends
permitted by this Section 5(a)(iii)), whether paid or payable in cash or
otherwise, whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the Borrowers of any Pledged Stock or
received in exchange for Pledged Stock or any part thereof, or in redemption
thereof, as a result of any merger, consolidation, acquisition or other exchange
of assets to which the Borrowers is or may be a party or otherwise shall be and
become part of the Collateral, and, if received by the Grantor, shall not be
commingled by the Grantor with any of its other funds or property but shall be
held separate and apart therefrom, shall be held in trust for the benefit of the
Agent and the Lenders and shall be forthwith delivered to the Agent in the same
form as so received (with any necessary endorsement).
4
(b) Upon the occurrence and during the continuance of an Event
of Default, all rights of the Grantor to receive any dividends, stock,
instruments, securities and other distributions which the Grantor is authorized
to receive pursuant to paragraph (a)(iii) of this Section 5 shall cease, and all
such rights shall thereupon become vested in the Agent, which shall have the
sole and exclusive right and authority to receive and retain such dividends. All
dividends which are received by the Grantor contrary to the provisions of this
Section 5(b) shall be received in trust for the benefit of the Agent, shall be
segregated from other property or funds of the Grantor and shall be forthwith
delivered to the Agent as Collateral in the same form as so received (with any
necessary endorsement). Any and all money and other property paid over to or
received by the Agent pursuant to the provisions of this Section 5(b) shall be
retained by the Agent in an account to be established by the Agent upon receipt
of such money or other property and shall be applied in accordance with the
provisions of Section 9 hereof.
(c) Upon the occurrence and during the continuance of an Event
of Default, all rights of the Grantor to exercise the voting and consensual
rights and powers which it is entitled to exercise pursuant to Section 5(a)(i)
shall cease pursuant to the irrevocable proxy granted herein, and all such
rights shall thereupon become vested in the Agent, which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers.
(d) As long as the Amended Credit Agreement remains in effect
and until all of the Secured Obligations have been paid fully and indefeasibly,
any payments made in respect of the Pledged Debt (other than interest, so long
as no Default or Event of Default has occurred and is continuing) shall be and
become part of the Collateral, and, if received by the Grantor, shall not be
commingled by the Grantor with any of its other funds or property but shall be
held separate and apart therefrom, shall be held in trust for the benefit of the
Agent and the Lenders and shall be forthwith delivered to the Agent in the same
form as so received to be held as part of the Collateral hereunder.
(e) In order to permit the Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
5(c) and to receive all dividends and other distributions which it may be
entitled to receive under Section 5(a)(iii) or Section 5(b), the Grantor shall
promptly execute and deliver (or cause to be executed and delivered) to the
Agent all such proxies, dividend payment orders and other instruments as the
Agent may from time to time reasonably request.
Without limiting the effect of the foregoing, the Grantor does
hereby constitute and appoint the Agent as its proxy, effective upon the
occurrence and during the continuance of an Event of Default, to exercise all
rights, benefits, privileges and powers accruing to the Grantor, as owner of the
Pledged Securities, including, without limitation, giving or withholding
consent, calling and attending shareholders' meetings to be held from time to
time with full power to vote and act for and in the name, place and
5
stead of the Grantor and in the same manner, to the same extent, and with the
same effect that the Grantor would if personally present at such meetings,
giving to the Agent full power of substitution and revocation, which proxy shall
be effective, automatically and without the necessity of any action (including
any transfer of any Pledged Stock on the record books of the issuer thereof) by
any person (including the issuer of the Pledged Stock or any officer or agent
thereof).
THIS PROXY IS IRREVOCABLE
Any proxy or proxies heretofore given by the Grantor to any
person or persons whatsoever are hereby revoked. This proxy shall continue in
full force and effect until such time as all Secured Obligations are paid and
satisfied in full in accordance with the terms of the Amended Credit Agreement.
6. Issuance of Additional Stock. The Grantor agrees that it
will cause Millbrook not to issue any common stock or other securities
convertible into common stock, whether in addition to, by stock dividend or
other distribution upon, or in substitution for, the Pledged Securities.
7. Intentionally Omitted.
8. Remedies upon Event of Default. If an Event of Default
shall have occurred and be continuing, the Agent may sell or otherwise dispose
of all or any part of the Collateral, at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Agent shall deem appropriate. Any such sale or
disposition shall be conducted and shall conform to the standards of commercial
reasonableness as provided in Section 9-504(3) of the Uniform Commercial Code as
in effect in the State of New York to the extent applicable to such sale or
disposition. Each such purchaser at any such sale shall hold the property sold
absolutely, free from any claim or right on the part of the Grantor, and the
Grantor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and appraisal which the Grantor now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted.
The Agent shall give the Grantor 10 days' written notice
(which the Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the Uniform Commercial Code as in effect in New York) of the Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale at
a broker's board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary business hours
and at such place or places as the Agent may fix and state in the notice (if
any) of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the Agent
may (in its sole and
6
absolute discretion) determine. The Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public sale made pursuant to this Section 8, the
Agent may bid for or purchase, free (to the extent permitted by applicable law)
from any right of redemption, stay or appraisal on the part of the Grantor (all
said rights being also hereby waived and released to the extent permitted by
applicable law), with respect to the Collateral or any part thereof offered for
sale and the Agent may make payment on account thereof by using any claim then
due and payable to the Agent or any Lender from the Grantor as a credit against
the purchase price, and the Agent may, upon compliance with the terms of sale,
hold, retain and dispose of such property without further accountability to the
Grantor therefor. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the Agent
shall be free to carry out such sale and purchase pursuant to such agreement,
and the Grantor shall not be entitled to the return of the Collateral or any
portion thereof subject thereto, notwithstanding the fact that after the Agent
shall have entered into such an agreement all Events of Default shall have been
remedied and the Secured Obligations paid in full. As an alternative to
exercising the power of sale herein conferred upon it, the Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
9. Application of Proceeds of Sale. The proceeds of any sale
of Collateral, as well as any Collateral consisting of cash, shall be applied by
the Agent as follows:
FIRST, to the payment of all reasonable costs and
out-of-pocket expenses incurred by the Agent in connection with such collection
or sale or otherwise in connection with this Agreement or any of the Secured
Obligations, including, but not limited to, all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all advances
made by the Agent hereunder on behalf of the Grantor or to protect and preserve
the Collateral and any other reasonable out-of-pocket costs or expenses incurred
in connection with the exercise of any right or remedy hereunder;
7
SECOND, to the Agent to reimburse the Agent for that portion
of the payments, if any, made by it with respect to Letters of Credit for which
a Lender, as a participant in such Letter of Credit pursuant to Section 2.18 of
the Amended Credit Agreement, failed to pay its pro rata share thereof as
required pursuant to such Section 2.18;
THIRD, to the Agent to be held as cash collateral to the
extent of undrawn amounts, if any, of outstanding Letters of Credit;
FOURTH, to the payment in full of principal and interest in
respect of any Loans outstanding (pro rata as among the Lenders in accordance
with the amounts of the Loans made by them pursuant to the Amended Credit
Agreement);
FIFTH, pro rata to the payment in full of all Secured
Obligations (other than those referred to above) owed to the Lenders (pro rata
as among the Lenders in accordance with their respective Commitments); and
SIXTH, to the Grantor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
10. Agent Appointed Attorney-in-Fact. The Grantor hereby
appoints the Agent its attorney-in-fact, effective upon the occurrence and
continuance of an Event of Default, for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any instrument
which the Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Agent's name or in the name of the Grantor,
to ask for, demand, ▇▇▇ for, collect, receive receipt and give acquittance for
any and all moneys due or to become due and under and by virtue of any
Collateral, to endorse checks, drafts, orders and other instruments for the
payment of money payable to the Grantor representing any interest or dividend,
or other distribution payable in respect of the Collateral or any part thereof
or on account thereof and to give full discharge for the same, to settle,
compromise, prosecute or defend any action, claim or proceeding with respect
thereto, and to sell, assign, endorse, pledge, transfer and make any agreement
respecting, or otherwise deal with, the same; provided, however, that nothing
herein contained shall be construed as requiring or obligating the Agent to make
any commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Agent. The Agent may present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken by the Agent or omitted to be taken with respect to
the Collateral or any part thereof shall give rise to any defense, counterclaim
or offset in favor of the Grantor or to any claim or action against the Agent or
the Lenders in the absence of the gross negligence or wilful misconduct of the
Agent or the Lenders.
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11. No Waiver. No failure on the part of the Agent to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy by the Agent preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Agent and the Lenders shall not be deemed to have waived any rights
hereunder or under any other agreement or instrument unless such waiver shall be
in writing and signed by such parties.
12. Intentionally Omitted.
13. Security Interest Absolute. All rights of the Agent
hereunder, the grant of a security interest in the Collateral and all
obligations of the Grantor hereunder, shall be absolute and unconditional
irrespective of (i) any lack of validity or enforceability of the Amended Credit
Agreement, any agreement with respect to any of the Secured Obligations or any
other agreement or instrument relating to any of the foregoing (other than as
resulting from the Agent's gross negligence or willful misconduct), (ii) any
change in time, manner or place of payment of, or in any other term of, all or
any of the Secured Obligations, or any other amendment or waiver of or any
consent to any departure from the Amended Credit Agreement or any other
agreement or instrument, (iii) any exchange, release or nonperfection of any
other collateral, or any release or amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Secured Obligations or (iv)
any other circumstance which might otherwise constitute a defense available to,
or a discharge of, the Grantor in respect of the Secured Obligations or in
respect of this Agreement.
14. Agent's Fees and Expenses. The Grantor shall be obligated
to, upon demand, pay to the Agent the amount of any and all reasonable
out-of-pocket expenses, including the reasonable fees and expenses of its
counsel and of any experts or agents which the Agent may incur in connection
with (i) the custody or preservation of (after the occurrence and continuance of
an Event of Default), or the sale of, collection from, or other realization
upon, any of the Collateral in accordance herewith, (ii) the exercise or
enforcement of any of the rights of the Agent hereunder in accordance herewith
or (iii) the failure by the Grantor to perform or observe any of the provisions
hereof. In addition, the Grantor indemnifies, and holds the Agent and the
Lenders harmless from and against any and all liability incurred by the Agent or
the Lenders hereunder or in connection herewith, unless such liability shall be
due to the gross negligence or wilful misconduct of the Agent or the Lenders, as
the case may be. Any such amounts payable as provided hereunder or thereunder
shall be additional Secured Obligations secured hereby and by the other Security
Documents.
15. Termination. This Agreement shall terminate upon the
earlier to occur of (a) the date when the Grantor shall make (x) a capital
contribution to the Borrowers in the form of paid-in-capital or for capital
stock or other equity of the Borrowers on terms reasonably satisfactory to the
Agent, or (y) an advance or loan to
9
the Borrowers on a subordinated basis to the extent permitted by the Amended
Credit Agreement (or any combination of the foregoing), in an aggregate amount
of not less than $10,000,000; and (b) the date when (w) all the Secured
Obligations have been fully and indefeasibly paid in cash, (x) the Lenders have
no further commitment to make any Loans under the Amended Credit Agreement, (y)
the Agent shall have no further obligation to issue any Letters of Credit, and
(z) the Lenders have no further obligation to extend financial accommodations
under the Rate Agreements, if applicable, at which time the Agent shall reassign
and deliver to the Grantor, or to such person or persons as the Grantor shall
designate, against receipt, such of the Collateral (if any) as shall not have
been sold or otherwise still be held by it hereunder, together with appropriate
instruments of reassignment and release; provided, however, that all indemnities
of the Grantor contained in this Agreement shall survive, and remain operative
and in full force and effect regardless of, the termination of this Agreement.
Any such reassignment shall be without recourse to or warranty by the Agent and
at the expense of the Grantor.
16. Notices. All communications and notices hereunder shall be
in writing and given as provided in the Amended Credit Agreement.
17. Further Assurances. The Grantor agrees to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Agent may at any time reasonably
request in connection with the administration and enforcement of this Agreement
or with respect to the Collateral or any part thereof or in order better to
assure and confirm unto the Agent its rights and remedies hereunder.
18. Binding Agreement; Assignments. This Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Grantor shall not be permitted to assign this Agreement or any
interest herein or in the Collateral, or any part thereof, or otherwise pledge,
encumber or grant any option with respect to the Collateral, or any part
thereof, or any cash or property held by the Agent as Collateral under this
Agreement, and except that the Agent may not assign its rights hereunder, except
in connection with a resignation of the Agent and the appointment of a
substitute Agent in the manner permitted by the Amended Credit Agreement.
19. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (EXCEPT
CONFLICTS OF LAWS PRINCIPLES THEREOF), EXCEPT AS REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
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20. Amended Credit Agreement. In the event of any
inconsistency or conflict between the terms and provisions of the Amended Credit
Agreement and the terms and provisions of this Agreement, or with respect to any
payment provisions which could be construed as requiring duplicative payments,
the terms and provisions of the Amended Credit Agreement shall control. Nothing
herein shall require the Grantor to make a duplicate payment if the payment is
otherwise provided for in any other Loan Document.
21. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.
22. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Agreement shall
be effective when a counterpart which bears the signature of the Grantor shall
have been delivered to the Agent.
23. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or be taken into
consideration in interpreting, this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Pledge Agreement as of the day and year first above written.
R.A.B. ENTERPRISES, INC.
By:_________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By:_________________________________
Name:
Title:
12
SCHEDULE I
to Pledge Agreement
GRANTOR: R.A.B. ENTERPRISES, INC.
Percentage
Stock of
Certificate Number Outstanding
Stock Issuer Class of Stock No(s). Par Value of Shares Shares
------------ -------------- ----------- --------- --------- ---------
Millbrook Distribution Common 2 $0.01 1,000 100%
Services Inc.
Description of Pledged Debt
Original
Description of Maturity Principal
Obligation Issuer Obligation Date Amount
----------------- ---------- ---- ------
Millbrook Distribution Subordinated November 1, 2005 $21,300,000
Services Inc. Promissory Note
The B. Manischewitz Subordinated November 1, 2005 $38,800,000
Company, LLC Promissory Note
13
EXHIBIT E
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of March 31, 1997 (this
"Agreement"), by and among MILLBROOK DISTRIBUTION SERVICES INC., an Indiana
corporation (the "Grantor"), and The Chase Manhattan Bank, a New York banking
corporation, as agent ("Agent") for the benefit of (i) the lenders (the
"Lenders") named in Schedules 2.01(a) and 2.01(b) of the Credit Agreement dated
as of the date hereof, among the Grantor, the Agent, NationsBank, N.A., as
co-agent (the "Co-Agent"), and the Lenders (as amended, modified or supplemented
from time to time in accordance with its terms, the "Credit Agreement"), and
(ii) itself as issuer of the Letters of Credit and party to the Rate Agreements,
if applicable.
The Agent, the Co-Agent and the Lenders have agreed to extend
Loans and certain other financial accommodations, including, without limitation,
the issuance of Letters of Credit to the Grantor pursuant to, and subject to the
terms and conditions of, the Credit Agreement. The obligation of the Lenders to
extend such Loans and of the Agent to issue the Letters of Credit under the
Credit Agreement and of any Lender to extend financial accommodations under the
Rate Agreements, if applicable, is conditioned on the execution and delivery by
the Grantor of a security agreement in the form hereof to secure the following
(collectively, the "Secured Obligations"): all Obligations (such Obligations to
include, without limitation, the due and punctual payment and performance of (a)
all obligations to a Lender, if any, at any time and from time to time under the
Rate Agreements, (b) the principal of and interest on the Loans (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a), and
interest that, but for the filing of a petition in bankruptcy with respect to
the Grantor, would accrue on such obligations, whether or not a claim is allowed
against the Grantor for such interest in the related bankruptcy proceeding),
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (c) Indebtedness at any time and from time to
time under the Letters of Credit, (d) all obligations of the Grantor at any time
and from time to time under this Agreement and (e) all other obligations of the
Grantor at any time and from time to time under the Credit Agreement and the
other Loan Documents).
Accordingly, the Grantor and the Agent hereby agree as
follows:
1. Definitions of Terms Used Herein. All capitalized terms
used herein and not defined herein shall have the respective meanings assigned
to such terms in the Credit Agreement. As used herein, the following terms shall
have the following meanings:
(a) "Accounts Receivable" shall mean (i) all of the
Grantor's present and future accounts, general intangibles, chattel paper and
instruments, as
such terms are defined in the Uniform Commercial Code as in effect in the State
of New York ("NYUCC"), (ii) all moneys, securities and other property and the
proceeds thereof, now or hereafter held or received by, or in transit to, the
Agent from or for the Grantor, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all of the deposits (general or
special) of the Grantor, balances, sums and credits with, and all of the
Grantor's claims against the Agent at any time existing; (iii) all of the
Grantor's right, title and interest, and all of the Grantor's rights, remedies,
security and Liens, in, to and in respect of any accounts receivable, including,
without limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to accounts
receivable, deposits or other security for the obligation of any account debtor,
and credit and other insurance, (iv) all of the Grantor's right, title and
interest in, to and in respect of all goods relating to, or which by sale have
resulted in, accounts receivable, including, without limitation, all goods
described in invoices or other documents or instruments with respect to, or
otherwise representing or evidencing, any account receivable, and all returned,
reclaimed or repossessed goods.
(b) "Collateral" shall mean all (i) Accounts Receivable,
(ii) Documents, (iii) Equipment, (iv) General Intangibles, (v) Inventory and
(vi) Proceeds.
(c) "Documents" shall mean all instruments, files, records,
ledger sheets and documents covering or relating to any of the Collateral.
(d) "Equipment" shall mean all of the Grantor's right,
title and interest in and to machinery, equipment, furniture and fixtures and
all attachments, accessories and equipment now or hereafter owned or acquired in
the Grantor's business or used therein, and all substitutions and replacements
thereof, wherever located, whether now owned or hereafter acquired by the
Grantor.
(e) "General Intangibles" shall mean all of the Grantor's
right, title and interest in and to present and future general intangibles of
every kind and description, including, without limitation, patents, patent
applications, trade names and trademarks and the goodwill of the business, if
any, symbolized thereby, and Federal, State and local tax refund claims of all
kinds.
(f) "Inventory" shall mean all of the Grantor's right,
title and interest in and to raw materials, work in process, finished goods,
merchandise and all other inventory (as such term is defined in the NYUCC),
excluding inventory held on consignment, whether now owned or hereafter
acquired, and all wrapping, packaging, advertising and shipping materials, any
documents relating thereto and all returned, reclaimed or repossessed goods.
(g) "Proceeds" shall mean any consideration received from
the sale, exchange, lease or other disposition of any asset or property which
constitutes Collateral, any other value received as a consequence of the
possession of any
2
Collateral and any payment received from any insurer or other person or entity
as a result of the destruction, loss, theft or other involuntary conversion of
whatever nature of any asset or property that constitutes Collateral, and shall
include, without limitation, all cash and negotiable instruments received or
held by any of the Lenders pursuant to any lockbox or similar arrangement in
favor of the Agent or the Co-Agent relating to the payment of Accounts
Receivable.
2. Security Interests. As security for the payment or
performance, as the case may be, of the Secured Obligations, the Grantor hereby
grants to the Agent, its successors and its assigns, for its own benefit and for
the pro rata benefit of the Lenders, their successors and their assigns, a
security interest in the Collateral (the "Security Interest").
3. Further Assurances. The Grantor agrees, at its expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Agent may from time
to time reasonably request for the assuring and preserving of the Security
Interest and the rights and remedies created hereby. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be promptly
pledged and delivered to the Agent, duly endorsed in a manner reasonably
satisfactory to the Agent. The Grantor agrees promptly to notify promptly the
Agent of any change in its corporate name or in the location of its chief
executive office, its chief place of business or the office where it keeps its
records relating to the Accounts Receivable owned by it and the location of any
Collateral. The Grantor agrees promptly to notify the Agent if any material
portion of the Collateral is damaged or destroyed.
4. Taxes; Encumbrances. At its option, the Agent may discharge
past due taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral and not permitted under the Credit Agreement
unless it is being contested by the Grantor to the extent permitted by the
Credit Agreement, and may pay for the maintenance and preservation of the
Collateral to the extent the Grantor fails to do so as required by the Credit
Agreement. The Grantor agrees to reimburse the Agent on written demand for any
payment made or any expense incurred by it pursuant to the foregoing
authorization; provided, however, that nothing in this Section 5 shall be
interpreted as excusing the Grantor from the performance of any covenants or
other promises with respect to taxes, liens, security interests or other
encumbrances and maintenance as set forth herein or in the Credit Agreement.
5. Assignment of Security Interest. If at any time the Grantor
shall take and perfect a security interest in any property of an account debtor
or any other person to secure payment and performance of an Account Receivable,
the Grantor shall promptly assign such security interest to the Agent as part of
the Collateral hereunder. Such assignment need not be filed of public record
unless necessary to continue the perfected status of the security interest
against creditors of and transferees from the account debtor or other person
granting the security interest.
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6. Representations and Warranties. The Grantor represents and
warrants to the Agent that:
(a) Title and Authority. It has (i) rights in and good and
valid title to the Collateral in which it is granting the Security Interest and
(ii) the requisite power and authority to grant to the Agent the Security
Interest in the Grantor's interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
(b) Filing. Fully executed Uniform Commercial Code
financing statements containing a description of the Collateral shall have been,
or shall be delivered to the Agent in a form such that they can be, filed of
record in every govern mental, municipal or other office in every jurisdiction
in which any portion of the Collateral is located necessary to publish notice of
and protect the validity of and to establish a valid, legal and perfected
security interest in favor of the Agent in respect of the Collateral, excluding
goods in transit and other goods temporarily not in the possession of the
Grantor (such as goods in transfer depots), in which a security interest may be
perfected by filing under the Uniform Commercial Code in the United States and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of Uniform Commercial Code continuation statements.
(c) Validity of Security Interest. The Security Interest
constitutes a valid and legal security interest in all of the Collateral for
payment and performance of the Secured Obligations, except as otherwise
permitted under the Credit Agreement and, upon filing of the Uniform Commercial
Code financing statements, will constitute a perfected security interest with
respect to that portion of the Collateral for which perfection may be
accomplished by filing a financing statement under the Uniform Commercial Code.
(d) Information Regarding Names. It has disclosed in
writing to the Agent any trade names used to identify it in its business or in
the ownership of its properties.
(e) Absence of Other Liens. The Collateral is owned by it
free and clear of any Lien of any nature whatsoever, except as granted pursuant
to this Agreement and as permitted by the Credit Agreement, and, except as
provided by paragraph (b) of this Section 7, no financing statement has been
filed, under the Uni form Commercial Code as in effect in any state or
otherwise, covering any Collateral except as indicated on Schedule 7.01 to the
Credit Agreement.
(f) Survival of Representations and Warranties. All
representations and warranties of the Grantor contained in this Agreement shall
survive
4
the execution, delivery and performance of this Agreement until the termination
of this Agreement pursuant to Section 28.
7. Records of Collateral. The Grantor agrees at all times to
keep or cause to be kept in all material respects accurate and complete
accounting records with respect to the Collateral, including, but not limited
to, a record of all payments and proceeds received. In addition, the Grantor
will provide the Agent with such further schedules and/or information respecting
the Collateral as the Agent may reasonably request in writing.
8. Intentionally Omitted.
9. Protection of Security. The Grantor shall, at its own cost
and expense, take any and all actions reasonably necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Agent in such Collateral, and the priority thereof (subject to limitations on
priority which resulted from the Agent's gross negligence or willful
misconduct), against any adverse Lien of any nature whatsoever except for Liens
permitted pursuant to Section 7.01 of the Credit Agreement, and except that
Grantor shall have no obligation to perfect a lien on vehicles unless and until
a Default shall have occurred.
10. Continuing Obligations of the Grantor. The Grantor shall
remain liable to observe and perform in all material respects all the conditions
and obligations to be observed and performed by it under each contract,
agreement, interest or obligation relating to the Collateral, all in accordance
with the terms and conditions thereof, and shall indemnify and hold harmless the
Agent and the Lenders from any and all such liabilities.
11. Use and Disposition of Collateral. Except as permitted by
the Credit Agreement, the Grantor shall not make or permit to be made any
assignment, pledge or hypothecation of the Collateral, or grant any security
interest in the Collateral except for the Security Interest. The Grantor shall
not make or permit to be made any transfer of any Collateral, except Inventory
in the ordinary course of business and disposition of vehicles in the ordinary
course of business and as otherwise permitted by the Credit Agreement, and the
Grantor shall remain at all times in possession of the Collateral other than
transfers to the Agent pursuant to the provisions hereof and as otherwise
provided in this Agreement or the Credit Agreement.
12. Limitation on Modifications of Accounts Receivable. Except
as permitted by Section 7.11 of the Credit Agreement, the Grantor will not,
without the Agent's prior written consent (which consent (prior to the
occurrence and continuance of an Event of Default) will not be unreasonably
withheld or delayed), grant any extension of the time of payment of any of its
Accounts Receivable, compromise, compound or settle the same for less than the
full amount thereof, release, in whole or in part, any person liable for the
payment thereof, or allow any credit or discount whatsoever thereon other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business.
5
13. Collections. The Agent shall have the right, as the true
and lawful agent of the Grantor, with power of substitution for the Grantors and
in the Grantor's name, the Agent's name or otherwise, for the use and benefit of
the Agent and the Lenders, (i) to endorse the Grantor's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral that may come into its possession for deposit or collection in
Grantor's accounts with the Agent; (ii) to sign the name of the Grantor on any
invoice or ▇▇▇▇ of lading relating to any of the Collateral, drafts against
Customers, assignments and verifications of Accounts Receivable and notices to
Customers that may come into its possession; (iii) to send verifications based
on a form acceptable to both Grantor and Secured Party of Accounts Receivable to
any Customer; and (iv) upon the occurrence and during the continuance of an
Event of Default, (A) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences or
instruments of payment relating to the Collateral or any part thereof, and the
Grantor hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed, (B) to demand, collect, receive payment of, give receipt
for, extend the time of payment of and give discharges and releases of all or
any of the Collateral and/or release the Obligor thereon, (C) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect or otherwise realize on all or any of
the Collateral or to enforce any rights in respect of any Collateral, (D) to
settle, compromise, compound, adjust or defend any actions, suits or proceedings
relating to or pertaining to all or any of the Collateral, (E) to notify, or to
require the Grantor to notify, the account debtors obligated on any or all of
the Accounts Receivable to make payment thereof directly to the Agent, (F) to
notify the Postal Service authorities to change the address for delivery of mail
addressed to the Grantor to such address as the Agent may designate, (G) to
accept the return of goods represented by any of the Accounts Receivable, and
(H) to use, sell, assign, transfer, pledge, make any agreement with respect to
or otherwise deal with all or any of the Collateral, and to do all other acts
and things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Agent were the absolute owner of the Collateral for all
purposes; provided, however, that nothing herein contained shall be construed as
requiring or obligating the Agent or any Lender to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received by the
Agent or such Lender or to present or file any claim or notice, or to take any
action with respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby, and no action
taken by the Agent or any Lender or omitted to be taken with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of the Grantor or to any claim or action against the Agent or
any Lender in the absence of the gross negligence or willful misconduct of the
Agent or such Lender. It is understood and agreed that the appointment of the
Agent as the agent of the Grantor for the purposes set forth above in this
Section 14 is coupled with an interest and is irrevocable. The provisions of
this Section 14 shall in no event relieve the Grantor of any of its obligations
hereunder or under the Credit Agreement with respect to the Collateral or any
part thereof or impose any obligation on the Agent or any Lender to proceed in
any particular manner with respect to the Collateral or any part thereof, or in
any way limit the exercise by the Agent or any Lender of any other or
6
further right which it may have on the date of this Agreement or hereafter,
whether hereunder or by law or otherwise.
14. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, the Grantor agrees to deliver each item of
Collateral to the Agent on demand, and it is agreed that the Agent shall have
the right to take any or all of the following actions at the same or different
times: with or without legal process and with or without previous notice or
demand for performance, to take possession of the Collateral and without
liability for trespass (except for actual damage caused by the Agent's gross
negligence or willful misconduct) to enter any premises where the Collateral may
be located for the purpose of taking possession of or removing the Collateral
and, generally, to exercise any and all rights afforded to a secured party
under, and subject to its obligations contained in, the Uniform Commercial Code
as in effect in any state or other applicable law. Without limiting the
generality of the foregoing, the Grantor agrees that the Agent shall have the
right, subject to applicable law, to sell or otherwise dispose of all or any
part of the Collateral, at public or private sale or at any broker's board or on
any securities exchange, for cash, upon credit or for future delivery as the
Agent shall deem appropriate. Each such purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of the
Grantor, and the Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and appraisal which the Grantor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.
The Agent shall give the Grantor 10 days' written notice
(which the Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the NYUCC) of the Agent's intention to make any sale of Collateral.
Such notice, in the case of a public sale, shall state the time and place for
such sale. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix and
state in the notice (if any) of such sale. Any such sale shall be conducted and
conform to the standards of commercial reasonableness as provided in Section
9-504(3) of the NYUCC to the extent such section is applicable to such sale. At
any such sale, the Collateral, or portion thereof, to be sold may be sold in one
lot as an entirety or in separate parcels, as the Agent may (in its sole and
absolute discretion) determine. The Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public sale made pursuant to this Section 15, the
Agent may bid for or purchase,
7
free (to the extent permitted by applicable law) from any right of redemption,
stay or appraisal on the part of the Grantor (all said rights being also hereby
waived and released to the extent permitted by law), with respect to the
Collateral or any part thereof offered for sale and the Agent may make payment
on account thereof by using any claim then due and payable to the Agent or any
Lender from the Grantor as a credit against the purchase price, and the Agent
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to the Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Agent shall be free to carry out such
sale and purchase pursuant to such agreement, and the Grantor shall not be
entitled to the return of the Collateral or any portion thereof subject thereto,
notwith standing the fact that after the Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Secured
Obligations paid in full and/or the Total Commitment shall have been terminated.
To the extent permitted by applicable law, the Grantor shall remain liable for
any deficiency. As an alternative to exercising the power of sale herein
conferred upon it, the Agent may proceed by a suit or suits at law or in equity
to foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.
15. Application of Proceeds. The proceeds of any collection or
sale of Collateral, as well as any Collateral consisting of cash, shall be
applied by the Agent as follows:
FIRST, to the payment of all reasonable costs and
out-of-pocket expenses incurred by the Agent in connection with such collection
or sale or otherwise in connection with this Agreement or any of the Secured
Obligations, including, but not limited to, all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all advances
made by the Agent hereunder on behalf of the Grantor and any other reasonable
out-of-pocket costs or expenses incurred in connection with the exercise of any
right or remedy hereunder;
SECOND, to the Agent to reimburse the Agent for that
portion of the payments, if any, made by it with respect to Letters of Credit
for which a Lender, as a participant in such Letter of Credit pursuant to
Section 2.18 of the Credit Agreement, failed to pay its pro rata share thereof
as required pursuant to such Section 2.18;
THIRD, to the Agent to be held as cash collateral to the
extent of the undrawn amounts, if any, of outstanding Letters of Credit;
FOURTH, pro rata to the payment in full of (i) principal
and interest in respect of any Loans outstanding (pro rata as among the Lenders
in accordance with the amounts of the Loans made by them pursuant to the Credit
Agreement) and (ii) all unpaid monetary obligations of the Grantor to any Lender
under the Rate Agreements, if applicable;
8
FIFTH, pro rata to the payment in full of all Secured
Obligations (other than those referred to above) owed to the Lenders (pro rata
as among the Lenders in accordance with their respective Commitments); and
SIXTH, to the Grantor, its successors and assigns, or as a
court of competent jurisdiction may otherwise direct.
Upon any sale of the Collateral by the Agent (including, without limitation,
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Agent or such officer or be
answerable in any way for the misapplication thereof.
16. Locations of Collateral; Place of Business. (a) The
Grantor hereby represents and warrants that all the Collateral is located at the
locations listed on Schedule I hereto and that its federal employer
identification number is as set forth on said Schedule. The Grantor agrees not
to establish, or permit to be established, any other location for Collateral
unless all filings under the Uniform Commercial Code as in effect in any state
or otherwise which are required by this Agreement or the Credit Agreement to be
made with respect to the Collateral have been made and the Agent has a valid,
legal and perfected first priority security interest in the Collateral.
(b) The Grantor confirms that its chief executive office is
located as indicated on Schedule I hereto. The Grantor agrees not to change, or
permit to be changed, the location of its chief executive office unless all
filings under the Uniform Commercial Code or otherwise which are required by
this Agreement or the Credit Agreement to be made have been made and the Agent
has a valid, legal and perfected first priority security interest.
17. Security Interest Absolute. All rights of the Agent
hereunder, the Security Interest, and all obligations of the Grantor hereunder,
shall be absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document or any other
agreement with respect to any of the Secured Obligations (other than as
resulting from the Agent's gross negligence or willful misconduct), (ii) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Secured Obligations, or any other amendment or waiver of or
consent to any departure from the Credit Agreement or any other Loan Document,
(iii) any exchange, release or nonperfection of any other Collateral, or any
release or amendment or waiver of or consent to or departure from any guarantee,
for all or any of the Secured Obligations, or (iv) any other circumstance which
might otherwise constitute a defense available to, or discharge of, the Grantor,
any of the Guarantors or any other obligor in respect of the Secured Obligations
or in respect of this Agreement.
18. No Waiver. No failure on the part of the Agent to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver
9
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Agent preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Agent and the Lenders shall not be deemed to have waived any rights hereunder or
under any other agreement or instrument unless such waiver shall be in writing
and signed by such parties.
19. Agent Appointed Attorney-in-Fact. The Grantor hereby
appoints the Agent the attorney-in-fact of the Grantor, which appointment shall
be effective upon the occurrence and continuance of an Event of Default, solely
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument which the Agent may deem reasonably
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest.
20. Agent's Fees and Expenses. The Grantor shall be obligated
to, upon demand, pay to the Agent the amount of any and all reasonable
out-of-pocket expenses, including the reasonable fees and expenses of its
counsel and of any experts or agents which the Agent may incur in connection
with (i) the custody or preservation of (in each case upon the occurrence and
during the continuance of an Event of Default), or the sale of, collection from,
or other realization upon, any of the Collateral in accordance herewith or (ii)
the exercise or enforcement of any of the rights of the Agent hereunder in
accordance herewith. In addition, the Grantor indemnifies and holds the Agent
and the Lenders harmless from and against any and all liability incurred by the
Agent or the Lenders hereunder or in connection herewith, unless such liability
shall be due to the gross negligence or willful misconduct of the Agent or the
Lenders, as the case may be. Any such amounts payable as provided hereunder or
thereunder shall be additional Secured Obligations secured hereby and by the
other Security Documents.
21. Binding Agreement; Assignments. This Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Grantor shall not be permitted to assign this Agreement or any
interest herein or in the Collateral, or any part thereof, or any cash or
property held by the Agent as Collateral under this Agreement, except as
contemplated by this Agreement or the Credit Agreement, and except that the
Agent may not assign its rights hereunder except in connection with a
resignation of the Agent and appointment of a substitute Agent in the manner
permitted by the Credit Agreement.
22. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
10
23. Notices. All communications and notices hereunder shall be
in writing and given as provided in the Credit Agreement.
24. Credit Agreement. In the event of any inconsistency or
conflict between the terms and provisions of the Credit Agreement and the terms
and provisions of this Agreement, or with respect to any payment provisions
which could be construed as requiring duplicative payments, the terms and
provisions of the Credit Agreement shall control. Nothing herein shall require
the Grantor to make a duplicate payment if the payment is otherwise provided for
in any other Loan Document.
25. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable the
remaining provisions contained herein shall not in any way be affected or
impaired.
26. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
27. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Agreement shall
be effective when a counterpart which bears the signature of the Grantor shall
have been delivered to the Agent.
28. Termination. This Agreement and the Security Interest
shall terminate when (a) all the Secured Obligations have been fully and
indefeasibly paid in cash, (b) the Lenders have no further commitment to make
any Loans under the Credit Agreement, (c) the Agent shall have no further
obligation to issue any Letters of Credit, and (d) the Lenders (or any of them)
have no further obligation to extend financial accommodations under the Rate
Agreements, if applicable, at which time the Agent shall (i) return to the
Grantor any Collateral in the Agent's possession free and clear of any Liens
created in favor of the Agent and (ii) execute and deliver to the Grantor all
Uniform Commercial Code termination statements and similar documents (in form
and substance reasonably satisfactory to the Grantor) which the Grantor shall
reasonably request in order to evidence and effect such termination; provided,
however, that all indemnities of the Grantor contained in this Agreement shall
survive, and remain operative and in full force and effect regardless of, the
termination of this Agreement.
11
IN WITNESS WHEREOF, the parties hereto have duly executed this
Security Agreement as of the day and year first above written.
MILLBROOK DISTRIBUTION SERVICES INC.
By: _____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By: _____________________________________
Name:
Title:
13
SCHEDULE I to the
Security Agreement
Locations of Collateral
-----------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Sunset Bluff subdivision
Harrison, Arkansas
Contiguous to Arkansas State Highway 43
Harrison, Arkansas
Cottonwood Road
Harrison, Arkansas
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Chief Executive Office of the Grantor
-------------------------------------
▇.▇. ▇▇▇ ▇▇ - Route ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Trade names of the Grantor
--------------------------
Federal Employer Identification Number of the Grantor
-----------------------------------------------------
▇▇-▇▇▇-▇▇▇▇
EXHIBIT E-1
SECURITY AGREEMENT
SECURITY AGREEMENT dated as of May 1, 1998 (this "Agreement"),
by and among THE B. MANISCHEWITZ COMPANY, LLC, a Delaware limited liability
company (the "Grantor"), and The Chase Manhattan Bank, a New York banking
corporation, as agent ("Agent") for the benefit of (i) the lenders (the
"Lenders") named in Schedules 2.01(a) and 2.01(b) of the Amended and Restated
Credit Agreement dated as of the date hereof, by and among the Grantor,
Millbrook Distribution Services Inc., the Agent, NationsBank, N.A., as co-agent
(the "Co-Agent"), and the Lenders (as amended, modified or supplemented from
time to time in accordance with its terms, the "Credit Agreement"), and (ii)
itself as issuer of the Letters of Credit.
The Agent, the Co-Agent and the Lenders have agreed to extend
Loans and certain other financial accommodations, including, without limitation,
the issuance of Letters of Credit to the Grantor pursuant to, and subject to the
terms and conditions of, the Credit Agreement. The obligation of the Lenders to
extend such Loans and of the Agent to issue the Letters of Credit under the
Credit Agreement is conditioned on the execution and delivery by the Grantor of
a security agreement in the form hereof to secure the following (collectively,
the "Secured Obligations"): all Obligations (such Obligations to include,
without limitation, the due and punctual payment and performance of (a) the
principal of and interest on the Loans (including the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a), and interest that, but for
the filing of a petition in bankruptcy with respect to the Grantor, would accrue
on such obligations, whether or not a claim is allowed against the Grantor for
such interest in the related bankruptcy proceeding), when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (b) Indebtedness at any time and from time to time under the Letters
of Credit, (c) all obligations of the Grantor at any time and from time to time
under this Agreement and (d) all other obligations of the Grantor at any time
and from time to time under the Credit Agreement and the other Loan Documents).
Accordingly, the Grantor and the Agent hereby agree as
follows:
1. Definitions of Terms Used Herein. All capitalized terms
used herein and not defined herein shall have the respective meanings assigned
to such terms in the Credit Agreement. As used herein, the following terms shall
have the following meanings:
(a) "Accounts Receivable" shall mean (i) all of the
Grantor's present and future accounts, general intangibles, chattel paper and
instruments, as such terms are defined in the Uniform Commercial Code as in
effect in the State of New York ("NYUCC"), (ii) all moneys, securities and other
property and the proceeds thereof, now or hereafter held or received by, or in
transit to, the Agent from or for the
Grantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all of the deposits (general or special) of the Grantor,
balances, sums and credits with, and all of the Grantor's claims against the
Agent at any time existing; (iii) all of the Grantor's right, title and
interest, and all of the Grantor's rights, remedies, security and Liens, in, to
and in respect of any accounts receivable, including, without limitation, rights
of stoppage in transit, replevin, repossession and reclamation and other rights
and remedies of an unpaid vendor, lienor or secured party, guaranties or other
contracts of suretyship with respect to accounts receivable, deposits or other
security for the obligation of any account debtor, and credit and other
insurance, (iv) all of the Grantor's right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in, accounts
receivable, including, without limitation, all goods described in invoices or
other documents or instruments with respect to, or otherwise representing or
evidencing, any account receivable, and all returned, reclaimed or repossessed
goods.
(b) "Collateral" shall mean all (i) Accounts Receivable,
(ii) Documents, (iii) General Intangibles, (iv) Inventory and (v) Proceeds.
(c) "Documents" shall mean all instruments, files, records,
ledger sheets and documents covering or relating to any of the Collateral.
(d) "General Intangibles" shall mean all of the Grantor's
right, title and interest in and to present and future general intangibles of
every kind and description, including, without limitation, patents, patent
applications, trade names and trademarks and the goodwill of the business, if
any, symbolized thereby, and Federal, State and local tax refund claims of all
kinds.
(e) "Inventory" shall mean all of the Grantor's right,
title and interest in and to raw materials, work in process, finished goods,
merchandise and all other inventory (as such term is defined in the NYUCC),
excluding inventory held on consignment, whether now owned or hereafter
acquired, and all wrapping, packaging, advertising and shipping materials, any
documents relating thereto and all returned, reclaimed or repossessed goods.
(f) "Proceeds" shall mean any consideration received from
the sale, exchange or other disposition of any asset or property which
constitutes Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include, without limitation, all cash and
negotiable instruments received or held by any of the Lenders pursuant to any
lockbox or similar arrangement in favor of the Agent or the Co-Agent relating to
the payment of Accounts Receivable.
2. Security Interests. As security for the payment or
performance, as the case may be, of the Secured Obligations, the Grantor hereby
grants to the Agent,
2
its successors and its assigns, for its own benefit and for the pro rata benefit
of the Lenders, their successors and their assigns, a security interest in the
Collateral (the "Security Interest").
3. Further Assurances. The Grantor agrees, at its expense, to
execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Agent may from time
to time reasonably request for the assuring and preserving of the Security
Interest and the rights and remedies created hereby. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be promptly
pledged and delivered to the Agent, duly endorsed in a manner reasonably
satisfactory to the Agent. The Grantor agrees promptly to notify promptly the
Agent of any change in its corporate name or in the location of its chief
executive office, its chief place of business or the office where it keeps its
records relating to the Accounts Receivable owned by it and the location of any
Collateral. The Grantor agrees promptly to notify the Agent if any material
portion of the Collateral is damaged or destroyed.
4. Taxes; Encumbrances. At its option, the Agent may discharge
past due taxes, liens, security interests or other encumbrances at any time
levied or placed on the Collateral and not permitted under the Credit Agreement
unless it is being contested by the Grantor to the extent permitted by the
Credit Agreement, and may pay for the maintenance and preservation of the
Collateral to the extent the Grantor fails to do so as required by the Credit
Agreement. The Grantor agrees to reimburse the Agent on written demand for any
payment made or any expense incurred by it pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4 shall be
interpreted as excusing the Grantor from the performance of any covenants or
other promises with respect to taxes, liens, security interests or other
encumbrances and maintenance as set forth herein or in the Credit Agreement.
5. Assignment of Security Interest. If at any time the Grantor
shall take and perfect a security interest in any property of an account debtor
or any other person to secure payment and performance of an Account Receivable,
the Grantor shall promptly assign such security interest to the Agent as part of
the Collateral hereunder. Such assignment need not be filed of public record
unless necessary to continue the perfected status of the security interest
against creditors of and transferees from the account debtor or other person
granting the security interest.
6. Representations and Warranties. The Grantor represents and
warrants to the Agent that:
(a) Title and Authority. It has (i) rights in and good and
valid title to the Collateral in which it is granting the Security Interest and
(ii) the requisite power and authority to grant to the Agent the Security
Interest in the Grantor's interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in
3
accordance with the terms of this Agreement, without the consent or approval of
any other person other than any consent or approval which has been obtained.
(b) Filing. Fully executed Uniform Commercial Code
financing statements containing a description of the Collateral shall have been,
or shall be delivered to the Agent in a form such that they can be, filed of
record in every govern mental, municipal or other office in every jurisdiction
in which any portion of the Collateral is located necessary to publish notice of
and protect the validity of and to establish a valid, legal and perfected
security interest in favor of the Agent in respect of the Collateral, excluding
goods in transit and other goods temporarily not in the possession of the
Grantor (such as goods in transfer depots), in which a security interest may be
perfected by filing under the Uniform Commercial Code in the United States and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of Uniform Commercial Code continuation statements.
(c) Validity of Security Interest. The Security Interest
constitutes a valid and legal security interest in all of the Collateral for
payment and performance of the Secured Obligations, except as otherwise
permitted under the Credit Agreement and, upon filing of the Uniform Commercial
Code financing statements, will constitute a perfected security interest with
respect to that portion of the Collateral for which perfection may be
accomplished by filing a financing statement under the Uniform Commercial Code.
(d) Information Regarding Names. It has disclosed in
writing to the Agent any trade names used to identify it in its business or in
the ownership of its properties.
(e) Absence of Other Liens. The Collateral is owned by it
free and clear of any Lien of any nature whatsoever, except as granted pursuant
to this Agreement and as permitted by the Credit Agreement, and, except as
provided by paragraph (b) of this Section 6, no financing statement has been
filed, under the Uni form Commercial Code as in effect in any state or
otherwise, covering any Collateral except as indicated on Schedule 7.01 to the
Credit Agreement.
(f) Survival of Representations and Warranties. All
representations and warranties of the Grantor contained in this Agreement shall
survive the execution, delivery and performance of this Agreement until the
termination of this Agreement pursuant to Section 28.
7. Records of Collateral. The Grantor agrees at all times to
keep or cause to be kept in all material respects accurate and complete
accounting records with respect to the Collateral, including, but not limited
to, a record of all payments and proceeds received. In addition, the Grantor
will provide the Agent with such further
4
schedules and/or information respecting the Collateral as the Agent may
reasonably request in writing.
8. Intentionally Omitted.
9. Protection of Security. The Grantor shall, at its own cost
and expense, take any and all actions reasonably necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Agent in such Collateral, and the priority thereof (subject to limitations on
priority which resulted from the Agent's gross negligence or willful
misconduct), against any adverse Lien of any nature whatsoever except for Liens
permitted pursuant to Section 7.01 of the Credit Agreement, and except that
Grantor shall have no obligation to perfect a lien on vehicles unless and until
a Default shall have occurred.
10. Continuing Obligations of the Grantor. The Grantor shall
remain liable to observe and perform in all material respects all the conditions
and obligations to be observed and performed by it under each contract,
agreement, interest or obligation relating to the Collateral, all in accordance
with the terms and conditions thereof, and shall indemnify and hold harmless the
Agent and the Lenders from any and all such liabilities.
11. Use and Disposition of Collateral. Except as permitted by
the Credit Agreement, the Grantor shall not make or permit to be made any
assignment, pledge or hypothecation of the Collateral, or grant any security
interest in the Collateral except for the Security Interest. The Grantor shall
not make or permit to be made any transfer of any Collateral, except Inventory
in the ordinary course of business and disposition of vehicles in the ordinary
course of business and as otherwise permitted by the Credit Agreement, and the
Grantor shall remain at all times in possession of the Collateral other than
transfers to the Agent pursuant to the provisions hereof and as otherwise
provided in this Agreement or the Credit Agreement.
12. Limitation on Modifications of Accounts Receivable. Except
as permitted by Section 7.11 of the Credit Agreement, the Grantor will not,
without the Agent's prior written consent (which consent (prior to the
occurrence and continuance of an Event of Default) will not be unreasonably
withheld or delayed), grant any extension of the time of payment of any of its
Accounts Receivable, compromise, compound or settle the same for less than the
full amount thereof, release, in whole or in part, any person liable for the
payment thereof, or allow any credit or discount whatsoever thereon other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business.
13. Collections. The Agent shall have the right, as the true
and lawful agent of the Grantor, with power of substitution for the Grantors and
in the Grantor's name, the Agent's name or otherwise, for the use and benefit of
the Agent and the Lenders, (i) to endorse the Grantor's name upon any notes,
acceptances, checks, drafts, money orders or other evidences of payment or
Collateral that may come into its
5
possession for deposit or collection in Grantor's accounts with the Agent; (ii)
to sign the name of the Grantor on any invoice or ▇▇▇▇ of lading relating to any
of the Collateral, drafts against Customers, assignments and verifications of
Accounts Receivable and notices to Customers that may come into its possession;
(iii) to send verifications based on a form acceptable to both Grantor and Agent
of Accounts Receivable to any Customer; and (iv) upon the occurrence and during
the continuance of an Event of Default, (A) to receive, endorse, assign and/or
deliver any and all notes, acceptances, checks, drafts, money orders or other
evidences or instruments of payment relating to the Collateral or any part
thereof, and the Grantor hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed, (B) to demand, collect, receive
payment of, give receipt for, extend the time of payment of and give discharges
and releases of all or any of the Collateral and/or release the Obligor thereon,
(C) to commence and prosecute any and all suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect or otherwise
realize on all or any of the Collateral or to enforce any rights in respect of
any Collateral, (D) to settle, compromise, compound, adjust or defend any
actions, suits or proceedings relating to or pertaining to all or any of the
Collateral, (E) to notify, or to require the Grantor to notify, the account
debtors obligated on any or all of the Accounts Receivable to make payment
thereof directly to the Agent, (F) to notify the Postal Service authorities to
change the address for delivery of mail addressed to the Grantor to such address
as the Agent may designate, (G) to accept the return of goods represented by any
of the Accounts Receivable, and (H) to use, sell, assign, transfer, pledge, make
any agreement with respect to or otherwise deal with all or any of the
Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though the Agent were the
absolute owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or obligating the Agent
or any Lender to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Agent or such Lender or to present or
file any claim or notice, or to take any action with respect to the Collateral
or any part thereof or the moneys due or to become due in respect thereof or any
property covered thereby, and no action taken by the Agent or any Lender or
omitted to be taken with respect to the Collateral or any part thereof shall
give rise to any defense, counterclaim or offset in favor of the Grantor or to
any claim or action against the Agent or any Lender in the absence of the gross
negligence or willful misconduct of the Agent or such Lender. It is understood
and agreed that the appointment of the Agent as the agent of the Grantor for the
purposes set forth above in this Section 13 is coupled with an interest and is
irrevocable. The provisions of this Section 13 shall in no event relieve the
Grantor of any of its obligations hereunder or under the Credit Agreement with
respect to the Collateral or any part thereof or impose any obligation on the
Agent or any Lender to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the Agent or
any Lender of any other or further right which it may have on the date of this
Agreement or hereafter, whether hereunder or by law or otherwise.
14. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, the Grantor agrees to deliver each item of
6
Collateral to the Agent on demand, and it is agreed that the Agent shall have
the right to take any or all of the following actions at the same or different
times: with or without legal process and with or without previous notice or
demand for performance, to take possession of the Collateral and without
liability for trespass (except for actual damage caused by the Agent's gross
negligence or willful misconduct) to enter any premises where the Collateral may
be located for the purpose of taking possession of or removing the Collateral
and, generally, to exercise any and all rights afforded to a secured party
under, and subject to its obligations contained in, the Uniform Commercial Code
as in effect in any state or other applicable law. Without limiting the
generality of the foregoing, the Grantor agrees that the Agent shall have the
right, subject to applicable law, to sell or otherwise dispose of all or any
part of the Collateral, at public or private sale or at any broker's board or on
any securities exchange, for cash, upon credit or for future delivery as the
Agent shall deem appropriate. Each such purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of the
Grantor, and the Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and appraisal which the Grantor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.
The Agent shall give the Grantor 10 days' written notice
(which the Grantor agrees is reasonable notice within the meaning of Section
9-504(3) of the NYUCC) of the Agent's intention to make any sale of Collateral.
Such notice, in the case of a public sale, shall state the time and place for
such sale. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix and
state in the notice (if any) of such sale. Any such sale shall be conducted and
conform to the standards of commercial reasonableness as provided in Section
9-504(3) of the NYUCC to the extent such section is applicable to such sale. At
any such sale, the Collateral, or portion thereof, to be sold may be sold in one
lot as an entirety or in separate parcels, as the Agent may (in its sole and
absolute discretion) determine. The Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public sale made pursuant to this Section 14, the
Agent may bid for or purchase, free (to the extent permitted by applicable law)
from any right of redemption, stay or appraisal on the part of the Grantor (all
said rights being also hereby waived and released to the extent permitted by
law), with respect to the Collateral or any part thereof offered for sale and
the Agent may make payment on account thereof by using any claim then due and
payable to the Agent or any Lender from the Grantor as a credit
7
against the purchase price, and the Agent may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to the Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Agent shall be free to carry out such sale and purchase pursuant to such
agreement, and the Grantor shall not be entitled to the return of the Collateral
or any portion thereof subject thereto, notwith standing the fact that after the
Agent shall have entered into such an agreement all Events of Default shall have
been remedied and the Secured Obligations paid in full and/or the Total
Commitment shall have been terminated. To the extent permitted by applicable
law, the Grantor shall remain liable for any deficiency. As an alternative to
exercising the power of sale herein conferred upon it, the Agent may proceed by
a suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.
15. Application of Proceeds. The proceeds of any collection or
sale of Collateral, as well as any Collateral consisting of cash, shall be
applied by the Agent as follows:
FIRST, to the payment of all reasonable costs and
out-of-pocket expenses incurred by the Agent in connection with such collection
or sale or otherwise in connection with this Agreement or any of the Secured
Obligations, including, but not limited to, all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all advances
made by the Agent hereunder on behalf of the Grantor and any other reasonable
out-of-pocket costs or expenses incurred in connection with the exercise of any
right or remedy hereunder;
SECOND, to the Agent to reimburse the Agent for that
portion of the payments, if any, made by it with respect to Letters of Credit
for which a Lender, as a participant in such Letter of Credit pursuant to
Section 2.18 of the Credit Agreement, failed to pay its pro rata share thereof
as required pursuant to such Section 2.18;
THIRD, to the Agent to be held as cash collateral to the
extent of the undrawn amounts, if any, of outstanding Letters of Credit;
FOURTH, to the payment in full of principal and interest in
respect of any Loans outstanding (pro rata as among the Lenders in accordance
with the amounts of the Loans made by them pursuant to the Credit Agreement);
FIFTH, pro rata to the payment in full of all Secured
Obligations (other than those referred to above) owed to the Lenders (pro rata
as among the Lenders in accordance with their respective Commitments); and
SIXTH, to the Grantor, its successors and assigns, or as a
court of competent jurisdiction may otherwise direct.
8
Upon any sale of the Collateral by the Agent (including, without limitation,
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Agent or such officer or be
answerable in any way for the misapplication thereof.
16. Locations of Collateral; Place of Business. The Grantor
hereby represents and warrants that all the Collateral is located at the
locations listed on Schedule I hereto and that its federal employer
identification number is as set forth on said Schedule. The Grantor agrees not
to establish, or permit to be established, any other location for Collateral
unless all filings under the Uniform Commercial Code as in effect in any state
or otherwise which are required by this Agreement or the Credit Agreement to be
made with respect to the Collateral have been made and the Agent has a valid,
legal and perfected first priority security interest in the Collateral.
(a) The Grantor confirms that its chief executive office is
located as indicated on Schedule I hereto. The Grantor agrees not to change, or
permit to be changed, the location of its chief executive office unless all
filings under the Uniform Commercial Code or otherwise which are required by
this Agreement or the Credit Agreement to be made have been made and the Agent
has a valid, legal and perfected first priority security interest.
17. Security Interest Absolute. All rights of the Agent
hereunder, the Security Interest, and all obligations of the Grantor hereunder,
shall be absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document or any other
agreement with respect to any of the Secured Obligations (other than as
resulting from the Agent's gross negligence or willful misconduct), (ii) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Secured Obligations, or any other amendment or waiver of or
consent to any departure from the Credit Agreement or any other Loan Document,
(iii) any exchange, release or nonperfection of any other Collateral, or any
release or amendment or waiver of or consent to or departure from any guarantee,
for all or any of the Secured Obligations, or (iv) any other circumstance which
might otherwise constitute a defense available to, or discharge of, the Grantor,
any of the Guarantors or any other obligor in respect of the Secured Obligations
or in respect of this Agreement.
18. No Waiver. No failure on the part of the Agent to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy by the Agent preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Agent and the Lenders shall not be deemed to have waived any rights
hereunder or under any other agreement or instrument unless such waiver shall be
in writing and signed by such parties.
9
19. Agent Appointed Attorney-in-Fact. The Grantor hereby
appoints the Agent the attorney-in-fact of the Grantor, which appointment shall
be effective upon the occurrence and continuance of an Event of Default, solely
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument which the Agent may deem reasonably
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest.
20. Agent's Fees and Expenses. The Grantor shall be obligated
to, upon demand, pay to the Agent the amount of any and all reasonable
out-of-pocket expenses, including the reasonable fees and expenses of its
counsel and of any experts or agents which the Agent may incur in connection
with (i) the custody or preservation of (in each case upon the occurrence and
during the continuance of an Event of Default), or the sale of, collection from,
or other realization upon, any of the Collateral in accordance herewith or (ii)
the exercise or enforcement of any of the rights of the Agent hereunder in
accordance herewith. In addition, the Grantor indemnifies and holds the Agent
and the Lenders harmless from and against any and all liability incurred by the
Agent or the Lenders hereunder or in connection herewith, unless such liability
shall be due to the gross negligence or willful misconduct of the Agent or the
Lenders, as the case may be. Any such amounts payable as provided hereunder or
thereunder shall be additional Secured Obligations secured hereby and by the
other Security Documents.
21. Binding Agreement; Assignments. This Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Grantor shall not be permitted to assign this Agreement or any
interest herein or in the Collateral, or any part thereof, or any cash or
property held by the Agent as Collateral under this Agreement, except as
contemplated by this Agreement or the Credit Agreement, and except that the
Agent may not assign its rights hereunder except in connection with a
resignation of the Agent and appointment of a substitute Agent in the manner
permitted by the Credit Agreement.
22. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
23. Notices. All communications and notices hereunder shall be
in writing and given as provided in the Credit Agreement.
24. Credit Agreement. In the event of any inconsistency or
conflict between the terms and provisions of the Credit Agreement and the terms
and provisions of this Agreement, or with respect to any payment provisions
which could be
10
construed as requiring duplicative payments, the terms and provisions of the
Credit Agreement shall control. Nothing herein shall require the Grantor to make
a duplicate payment if the payment is otherwise provided for in any other Loan
Document.
25. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable the
remaining provisions contained herein shall not in any way be affected or
impaired.
26. Section Headings. Section headings used herein are for
convenience only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
27. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Agreement shall
be effective when a counterpart which bears the signature of the Grantor shall
have been delivered to the Agent.
28. Termination. This Agreement and the Security Interest
shall terminate when (a) all the Secured Obligations have been fully and
indefeasibly paid in cash, (b) the Lenders have no further commitment to make
any Loans under the Credit Agreement and (c) the Agent shall have no further
obligation to issue any Letters of Credit, at which time the Agent shall (i)
return to the Grantor any Collateral in the Agent's possession free and clear of
any Liens created in favor of the Agent and (ii) execute and deliver to the
Grantor all Uniform Commercial Code termination statements and similar documents
(in form and substance reasonably satisfactory to the Grantor) which the Grantor
shall reasonably request in order to evidence and effect such termination;
provided, however, that all indemnities of the Grantor contained in this
Agreement shall survive, and remain operative and in full force and effect
regardless of, the termination of this Agreement.
[Remainder of Page Intentionally Left Blank]
11
IN WITNESS WHEREOF, the parties hereto have duly executed this
Security Agreement as of the day and year first above written.
THE B. MANISCHEWITZ COMPANY, LLC
By: _________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
THE CHASE MANHATTAN BANK, as Agent
By: _________________________________________
Name:
Title:
[Signature Page to Security Agreement]
SCHEDULE I to the
Security Agreement
Federal Employer Identification Number of the Grantor
-----------------------------------------------------
▇▇-▇▇▇▇▇▇▇
Chief Executive Office of the Grantor
-------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Trade names of the Grantor
--------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Manischewitz
Locations of Collateral
-----------------------
Average
Monthly
Warehouse Address County Inv. $ Value
--------- ------- ------ ------------
▇▇▇▇▇▇ Storage ▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ Cumberland $3,000,000
U.S. Cold Storage ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ Dade $25,000
Seaboard Warehouse Terminals ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ Dade $55,000
T & T Freezer Northwest Blvd., Vineland, NJ Cumberland $275,000
Accern Warehouse ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ $450,000
National Distribution - Kearny ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ $500,000
National Distribution - Vineland ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ Cumberland $375,000
Safeway Freezer Storage ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ Cumberland $150,000
Dependable Egg ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Kings $53,850
▇▇▇▇▇ Foods Products ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Bergen $205,000
▇▇▇▇▇▇▇▇ Biscuit ▇▇▇▇▇▇▇ & ▇▇▇ ▇▇▇., ▇▇▇▇, ▇▇ ▇▇▇▇▇ Berks $38,500
Field Container ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Wicomico $65,000
Carousel Foods ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Suffolk $5,000
Standard Folding Cartons ▇▇▇▇ ▇▇. & ▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ Queens $47,000
11370
▇▇▇▇▇▇ & Sons Inc. ▇▇-▇▇ ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇, Bergen $40,000
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ $3,000
14
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Credit
Agreement, dated as of May 1, 1998 (as amended, modified or supplemented from
time to time, the "Amended Credit Agreement"), by and among Millbrook
Distribution Services Inc., a Delaware corporation ("Millbrook"), The B.
Manischewitz Company, LLC ("Manischewitz" and, collectively with Millbrook, the
"Borrowers"), the lenders named therein (collectively, the "Lenders"), The Chase
Manhattan Bank, as agent for the Lenders (in such capacity, the "Agent"), and
NationsBank, N.A., as co-agent for the Lenders. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to such terms
in the Amended Credit Agreement.
1. The Assignor hereby sells and assigns, without recourse, to
the Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date as set forth on the second
page hereof, the interests set forth on the second page hereof (the "Assigned
Interests") in the Assignor's rights and obligations under the Amended Credit
Agreement, including, without limitation, the interests set forth on the second
page hereof in the Revolving Credit Commitment and/or Term Loan Commitment of
the Assignor on the Effective Date (as hereinafter defined) and/or the interests
set forth on the second page hereof in the Revolving Credit Loans, Letters of
Credit and/or Term Loan owing to the Assignor outstanding on the Effective Date,
together with unpaid interest accrued on the assigned Loans to the Effective
Date and the amount, if any, set forth on the second page hereof of the fees
accrued to the Effective Date for the account of the Assignor. Each of the
Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 11.03(d) of the
Amended Credit Agreement, a copy of which has been received by each such party.
From and after the Effective Date, (i) the Assignee shall be a party to and be
bound by the provisions of the Amended Credit Agreement and, to the extent of
the interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and under the other Loan Documents and (ii)
the Assignor shall, to the extent of the interests assigned by this Assignment
and Acceptance, relinquish its rights and be released from its obligations under
the Amended Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
Agent together with (i) the Notes evidencing the Loans included in the Assigned
Interests, (ii) if the Assignee is organized under the laws of a jurisdiction
outside the United States, the forms specified in Section 2.16(f) of the Amended
Credit Agreement, duly completed and executed by such Assignee, (iii) if the
Assignee is not already a Lender under the Amended Credit Agreement, an
Administrative Questionnaire in the form annexed hereto and (iv) a processing
and recordation fee of $3,000.
3. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than five Business
Days after the Date of Assignment):
Percentage Assigned of
Facility/Commitment (set
forth, to at least four
decimals, as a percentage of
the Facility and the aggregate
Commitments of all Lenders
Facility Principal Amount Assigned thereunder)
-------- ------------------------- -------------------------------
Term Loan Commitment
Assigned: $ %
Revolving Credit
Commitment Assigned: $ %
Term Loan:
Revolving Credit Loans:
Participation in Letters
of Credit:
Fees Assigned (if any):
The terms set forth above are hereby Accepted:
agreed to:
____________________, as Assignor THE CHASE MANHATTAN BANK
By:____________________________ By:____________________________
Name: Name:
Title: Title:
____________________, as Assignee MILLBROOK DISTRIBUTION SERVICES
INC.
By:____________________________
Name:
Title:
2
THE B. MANISCHEWITZ COMPANY, LLC
By:___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
Administrative Questionnaire
Millbrook Distribution Services Inc.
The B. Manischewitz Company, LLC
$99,510,000 Term Loan and Revolving Credit Agreement
NOTE TO PARTICIPANTS: PLEASE FORWARD THIS COMPLETED FORM AS
SOON AS POSSIBLE TO THE CHASE MANHATTAN
BANK, VIA TELECOPIER TO (212) ________.
PLEASE TYPE ALL INFORMATION.
AGENT: The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
CONTACTS: (212) ________ Syndications
--------
(212) ________ Structured
Finance
OPERATIONAL CONTACT: (212) ________
-------------------
TELECOPIER: (212) ________
----------
Full Legal Name of Your
Institution: ________________________________________________
Exact Name of Signing Officer: ________________________________________________
Title of Signing Officer: ________________________________________________
Business Address for Delivery of
Execution Copies of Credit
Agreement. (Please do not use
P.O. box address; hand deliveries
cannot be made.): ________________________________________________
________________________________________________
Signing Officer's Phone No.: ________________________________________________
Alternate Officer Contact: ________________________________________________
2
Alternate Officer's Phone No.: ________________________________________________
PRIMARY CONTACT INFORMATION
These contacts are for critical notification (drawdowns, repayments, rate
setting, etc.)
Institution's Name: ________________________________________________
Address: ________________________________________________
Primary Contact: ________________________________________________
Title and Department: ________________________________________________
Phone Number: ________________________________________________
Primary Telecopier: ________________________________________________
Alternate Telecopier: ________________________________________________
ALTERNATE CONTACT INFORMATION
Alternate Contact: ________________________________________________
Title and Department: ________________________________________________
Phone Number: ________________________________________________
Primary Telecopier: ________________________________________________
Alternate Telecopier: ________________________________________________
GENERAL OPERATIONAL INFORMATION
Wire Instructions to Your Bank Name: ____________________________________
Institution: Dept.: ____________________________________
ABA #: ____________________________________
A/C #: ____________________________________
Attn: ____________________________________
Ref: ____________________________________
3
Telex Information: Contact Name: _________________________________
Number: _________________________________
Answerback: _________________________________
If any changes are made to the above information, please notify by telecopier to
_______________ at (212) ________.
Movement of Funds: To us: Wire Fed Funds to:
The Chase Manhattan Bank
______________________
______________________
New York, New York
Attn: _______________
Reference: Millbrook Distribution Services Inc.
The B. Manischewitz Company, LLC
4
EXHIBIT G
SECURITY AGREEMENT AND MORTGAGE -
PATENTS AND TRADEMARKS
AGREEMENT made this 31st day of March, 1997 (this "Agreement")
by and between MILLBROOK DISTRIBUTION SERVICES INC., an Indiana corporation
("Debtor") having an office at ▇.▇. ▇▇▇ ▇▇ - Route ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and THE CHASE MANHATTAN BANK, a New York banking
corporation having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as
agent (referred to herein as the "Secured Party") for the benefit of (i) the
lenders (the "Lenders") named in Schedules 2.01(a) and 2.01(b) of the Credit
Agreement dated as of the date hereof, among the Debtor, the Lenders, the
Secured Party and NationsBank, N.A., as co-agent (the "Co-Agent") (as amended,
modified or supplemented from time to time in accordance with its terms, the
"Credit Agreement") and (ii) for itself as issuer of the Letters of Credit and
party to the Rate Agreements, if applicable.
A. Debtor has adopted the terms and designs described in
Schedule A annexed hereto and made a part hereof.
B. Debtor is the owner and holder of the patents listed on
Schedule B hereto.
C. The Secured Party, the Co-Agent and the Lenders have agreed
to extend Loans and certain other financial accommodations including, without
limitation, the issuance of Letters of Credit to the Debtor pursuant to, and
subject to the terms and conditions of, the Credit Agreement. The obligation of
the Lenders to extend such Loans and of the Secured Party to issue Letters of
Credit under the Credit Agreement and of any Lender to extend financial
accommodations under the Rate Agreements, if applicable, is conditioned on the
execution and delivery by the Debtor of a security agreement in the form hereof
to secure the following (the "Secured Obligations"): all Obligations (such
Obligations to include, without limitation, the due and punctual payment and
performance of (a) all obligations to a Lender, if any, at any time and from
time to time under the Rate Agreements, (b) the principal of and interest on the
Loans (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. ss. 362(a), and interest that, but for the filing of a petition in
bankruptcy with respect to the Debtor, would accrue on such obligations, whether
or not a claim is allowed against the Debtor for such interest in the related
bankruptcy proceeding), when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise, (c) Indebtedness at any
time and from time to time under the Letters of Credit, (d) all obligations of
the Debtor at any time and from time to time under this security agreement and
(e) all other obligations of the Debtor at any time and from time to time under
the Credit Agreement and the other Loan Documents).
NOW, THEREFORE, IT IS AGREED that, as security for the full
and prompt payment and performance of the Secured Obligations, Debtor does
hereby mortgage to and pledge with the Secured Party for its own benefit and the
benefit of the Lenders, and grant to the Secured Party a security interest in,
all of its right, title and interest in and to (i) each of the Trademarks (as
hereinafter defined), and the goodwill of the business symbolized by each of the
Trademarks, and each of the registrations described in Schedule A; (ii) each of
the Patents (as hereinafter defined) and each of the registrations listed on
Schedule B hereto; (iii) the right (but not the obligation) to register claims
under any state or federal law or regulation or any law or regulation of any
foreign country and to apply for, renew and extend the Trademarks or Patents;
(iv) the right (but not the obligation) to ▇▇▇ or bring opposition or
cancellation proceedings in the name of the Debtor or in the name of the Secured
Party or otherwise for past, present and future infringements of the Trademarks
or Patents and all rights (but not obligations) corresponding thereto in the
United States and any foreign country; and (v) any and all proceeds of the
foregoing (collectively, the "Collateral").
1. Terms defined in the Credit Agreement and not otherwise
defined herein, shall have the meaning set forth in the Credit Agreement. As
used in this Agreement, unless the context otherwise requires:
"Patents" shall mean (i) all letters patent of the United
States or any other country, all right, title and interest therein and thereto,
and all registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by Debtor, including, but not limited
to, those described in Schedule B annexed hereto and made a part hereof, and
(ii) all reissues, continuations, continuations-in-part, extensions or
divisionals thereof and all licenses thereof.
"Trademarks" shall mean (i) all trademarks, trade names,
trade styles, service marks, prints and labels on which said trademarks, trade
names, trade styles and service marks have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all right, title and interest therein and thereto, and all
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by Debtor, including, but not limited
to, those described in Schedule A annexed hereto and made a part hereof, and
(ii) all reissues, extensions or renewals thereof and all licenses thereof.
2
2. Debtor hereby represents, warrants, covenants and agrees as
follows:
(a) Debtor has the sole, full and clear title to the
registered U.S. Trademarks set forth on Schedule A annexed hereto and such
registrations are valid and subsisting and in full force and effect.
(b) Debtor will perform all acts and execute all documents,
including, without limitation, assignments for security in form suitable for
filing with the United States Patent and Trademark Office, substantially in the
forms of Exhibits 1 and 2 hereof, respectively, reasonably requested by the
Secured Party at any time to evidence, perfect, maintain, record and enforce the
Secured Party's security interest in the Collateral and Debtor hereby authorizes
the Secured Party to execute and file one or more financing statements (and
similar documents) or copies thereof or of this Security Agreement with respect
to the Collateral signed only by the Secured Party.
(c) Debtor (either itself or through licensees) will maintain
the Trademarks in full force free from any claim of abandonment for nonuse and
Debtor will not (and will not permit any licensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark may become invalidated.
(d) Debtor is the sole registered owner of each of the Patents
shown on Schedule B hereto and the registrations thereof are valid and in full
force and effect. None of the Patents has been abandoned or dedicated, and,
except to the extent that the Secured Party, upon prior written notice by
Debtor, shall consent, Debtor will not do any act, or omit to do any act,
whereby the Patents may become abandoned or dedicated unless such abandonment or
declaration would not have a Material Adverse Affect and in any event shall
notify the Secured Party immediately if it knows of any reason or has reason to
know that any application or registration may become abandoned or dedicated.
(e) The Debtor shall be obligated to, upon demand, pay to the
Secured Party the amount of any and all reasonable out-of-pocket expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Secured Party may incur in connection with (i) the custody or
preservation of (after the occurrence and continuance of an Event of Default),
or the sale of, collection from, or other realization upon, any of the
Collateral in accordance herewith, or (ii) the exercise or enforcement of any of
the rights of the Secured Party hereunder in accordance herewith. In addition,
the Debtor indemnifies and holds the Secured Party and the Lenders harmless from
and against any and all liability incurred by the Secured Party or the Lenders
hereunder or in connection herewith, unless such liability shall be due to the
gross negligence or willful misconduct of the Secured Party or the Lenders, as
the case may be. Any such amounts payable as provided hereunder or thereunder
shall be additional Secured Obligations secured hereby and by the other Security
Documents.
3
(f) In no event shall Debtor, either itself or through any
agent, employee, licensee or designee, (i) file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency of the United States, any State
thereof, any other country or any political subdivision thereof or (ii) file any
assignment of any patent or trademark, which Debtor may acquire from a third
party, with the United States Patent and Trademark Office or any similar office
or agency of the United States, any State thereof, any other country or any
political subdivision thereof, unless Debtor shall, on or prior to the date of
such filing, notify the Secured Party thereof, and, upon the written request of
the Secured Party, execute and deliver any and all assignments, agreements,
instruments, documents and papers as the Secured Party may reasonably request to
evidence the Secured Party's interest in such Patent or Trademark and the
goodwill and general intangibles of Debtor relating thereto or represented
thereby, and Debtor hereby appoints the Secured Party its attorney-in-fact,
which appointment shall be effective upon the occurrence and continuance of an
Event of Default, to execute and file all such writings for the foregoing
purposes, all reasonable acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until the
Secured Obligations are paid in full.
(g) Debtor has the right and power to make the assignment and
to grant the security interest herein granted; and the Collateral is not now,
and at all times hereafter will not be, subject to any liens, mortgages,
assignments, security interests or encumbrances of any nature whatsoever, except
in favor of the Secured Party and as permitted in the Credit Agreement, and to
the best knowledge of Debtor none of the Collateral is subject to any claim.
(h) Except to the extent that Secured Party, upon prior
written notice from Debtor, shall consent, and except as set forth in the Credit
Agreement, Debtor will not assign, sell, mortgage, lease, transfer, pledge,
hypothecate, grant a security interest in or lien upon, encumber, grant an
exclusive or non-exclusive license, or otherwise dispose of any of the
Collateral, and nothing in this Agreement shall be deemed a consent by the
Secured Party to any such action except as expressly permitted herein or in the
Credit Agreement.
(i) As of the date hereof neither Debtor nor any subsidiary
thereof owns any Patents or Trademarks or has any Patents or Trademarks
registered in, or the subject of pending applications in, the United States
Patent and Trademark Office or any similar office or agency of the United
States, any State thereof, any other country or any political subdivision
thereof, other than those described in Schedules A and B hereto.
(j) Debtor will take all necessary steps in any proceeding
before the United States Patent and Trademark Office or any similar office or
agency of the United States, any State thereof, any other country or any
political subdivision thereof, to maintain each application and registration of
the Trademarks and Patents, including, without limitation, filing of renewals,
affidavits of use, affidavits of incontestability and
4
opposition, interference and cancellation proceedings (except to the extent that
dedication, abandonment or invalidation is permitted under paragraphs 2(c) and
2(d) hereof).
(k) Debtor assumes all responsibility and liability arising
from the use of the Trademarks, and Debtor hereby indemnifies and holds Secured
Party harmless from and against any claim, suit, loss, damage or expense
(including reasonable attorneys' fees) arising out of any alleged defect in any
product promoted, distributed or sold by Debtor (or any affiliate or subsidiary
thereof) in connection with any Trademark or out of the manufacture, promotion,
labeling, sale or advertisement of any such product by Debtor (or any affiliate
or subsidiary thereof). Debtor agrees that Secured Party does not assume, and
shall have no responsibility for, the payment of any sums due or to become due
under any agreement or contract included in the Collateral or the performance of
any obligations to be performed under or with respect to any such agreement or
contract by Debtor, and Debtor hereby agrees to indemnify and hold the Secured
Party harmless with respect to any and all claims by any person relating
thereto.
(l) Subject to Debtor's right to contest as provided in the
Credit Agreement, Secured Party may, in its sole discretion, pay any amount or
do any act required of Debtor hereunder or requested by Secured Party to
preserve, defend, protect, maintain, record or enforce Debtor's obligations
contained herein, the Secured Obligations, the Collateral, or the right, title
and interest granted Secured Party herein. In the event Secured Party makes a
payment pursuant to this subparagraph, such payment shall be deemed an advance
by Secured Party to Debtor and shall be payable on demand , and if not paid,
shall constitute an Alternate Base Rate Loan.
(m) Debtor agrees that if it, or any affiliate or subsidiary
thereof, learns of any use by any person of any term or design likely to cause
confusion with any Trademark, it shall promptly notify Secured Party of such use
and, if requested by Secured Party, shall join with Secured Party, at its
expense, in such action as Secured Party, in its reasonable discretion may deem
advisable for the protection of Secured Party's interest in and to such
Trademarks (except to the extent abandonment of such Trademark may be permitted
under Paragraph 2(c) and 2(d)).
(n) All licenses of its Trademarks and Patents which Debtor
has granted to third parties are set forth in Schedule C hereto.
(o) This Agreement assigns and, when this Agreement has been
filed and recorded with the United States Patent and Trademark Office and
financing statements describing the Collateral have been filed with the filing
offices set forth on Schedule D hereto, this Agreement will create a valid and
perfected first priority security interest in the Collateral, securing the
payment of the Secured Obligations.
(p) If Debtor shall obtain rights to any new Trademarks or
Patents, the provisions of this Agreement shall automatically apply thereto.
Debtor shall promptly
5
notify Secured Party in writing of any rights to any new Trademarks or Patents
acquired by Debtor after the date hereof and of any registrations issued or
applications for registration made after the date hereof. Concurrently with the
filing of an application for registration for any Trademarks or Patents, Debtor
shall execute, deliver and record in all places where this Agreement is recorded
an appropriate agreement, substantially in the form hereof, with appropriate
insertions, or an amendment to this Agreement, in form and substance reasonably
satisfactory to the Secured Party, pursuant to which Debtor shall assign and
grant a security interest to the extent of its interest in such registration as
provided herein to the Secured Party.
3. Upon the occurrence and during the continuance of an Event
of Default, in addition to all other rights and remedies of the Secured Party,
whether under law, the Credit Agreement or otherwise, all such rights and
remedies being cumulative, not exclusive and enforceable alternatively,
successively or concurrently, without (except as provided herein) notice to, or
consent by, Debtor, the Secured Party shall have the following rights and
remedies: (a) subject to any existing license of the Trademarks and Patents
which Debtor has granted to third parties and which is set forth in Schedule C
hereto, the Secured Party may, at any time and from time to time, upon 10 days'
prior notice to Debtor, license, whether general, special or otherwise, and
whether on an exclusive or nonexclusive basis, any of the Patents or Trademarks,
throughout the world for such term or terms, on such conditions, and in such
manner, as the Secured Party shall in its sole discretion determine; (b) the
Secured Party may (without assuming any obligations or liability thereunder),
at any time, enforce (and shall have the exclusive right to enforce) against any
licensee or sublicensee all rights and remedies of Debtor in, to and under any
one or more license agreements with respect to the Collateral, and take or
refrain from taking any action under any thereof, and Debtor hereby releases the
Secured Party from, and agrees to hold the Secured Party free and harmless from
and against any claims arising out of, any action taken or omitted to be taken
with respect to any such license agreement, except for damages caused by Secured
Party's gross negligence or willful misconduct; (c) the Secured Party may, at
any time and from time to time, upon 10 days' prior written notice to Debtor,
assign, sell, or otherwise dispose of, the Collateral or any of it, either with
or without special or other conditions or stipulations, with power to buy the
Collateral or any part of it, and with power also to execute assurances, and do
all other acts and things for completing the assignment, sale or disposition
which the Secured Party shall, in its sole discretion, deem reasonably
appropriate or proper, and provided that such assignment, sale or disposition
conforms to the standards of commercial reasonableness as provided in the
Uniform Commercial Code to the extent applicable thereto; (d) with respect to
any Patents or Trademarks that are the subject of any action taken pursuant to
this ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ shall not make any further use of such Patents or
Trademarks or any ▇▇▇▇ similar thereto for any purpose; and (e) in addition to
the foregoing, in order to implement the assignment, sale or other disposal of
any of the Collateral pursuant to subparagraph 3(c) hereof, the Secured Party
may, at any time, pursuant to the authority granted in the Powers of Attorney
described in paragraph 4 hereof (such authority becoming effective on the
occurrence or continuation as hereinabove provided of an Event of Default),
execute and deliver on behalf of Debtor, one or more instruments of
6
assignment of the Patents or Trademarks (or any application or registration
thereof), in form suitable for filing, recording or registration in any country.
Debtor agrees to pay when due all reasonable costs incurred in any such transfer
of the Patents or Trademarks, including any taxes, fees and reasonable
attorneys' fees, and all such costs shall be added to the Secured Obligations.
The Secured Party may apply the proceeds actually received from any such
license, assignment, sale or other disposition to the reasonable costs and
out-of-pocket expenses thereof, including, without limitation, reasonable
attorneys' fees and all other expenses which may be reasonably incurred by the
Secured Party, and then to the Secured Obligations, in such order as to
principal or interest as the Secured Party may desire; and Debtor shall remain
liable and will pay the Secured Party on demand any deficiency remaining,
together with interest thereon at a rate equal to the highest rate then payable
on the Secured Obligations and the balance of any expenses unpaid. Nothing
herein contained shall be construed as requiring the Secured Party to take any
such action at any time.
The proceeds of any sale of Collateral, as well as any
Collateral consisting of cash, shall be applied by the Secured Party as follows:
FIRST, to the payment of all reasonable costs and
out-of-pocket expenses incurred by the Secured Party in connection with such
sale or otherwise in connection with this Agreement or any of the Secured
Obligations, including, but not limited to, all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all advances
made by the Secured Party hereunder on behalf of the Debtor and any other
reasonable out-of-pocket costs or expenses incurred in connection with the
exercise of any right or remedy hereunder;
SECOND, to the Secured Party to reimburse the Secured Party
for that portion of the payments, if any, made by it with respect to Letters of
Credit for which a Lender, as a participant in such Letter of Credit pursuant to
Section 2.18 of the Credit Agreement, failed to pay its pro rata share thereof
as required pursuant to such Section 2.18;
THIRD, to the Secured Party to be held as cash collateral to
the extent of the undrawn amount, if any, or outstanding Letters of Credit;
FOURTH, pro rata to the payment in full of (i) principal and
interest in respect of any Loans outstanding (pro rata as among the Lenders in
accordance with the amounts of the Loans made by them pursuant to the Credit
Agreement) and (ii) all unpaid monetary obligations of the Debtor to any Lender
under a Rate Agreement, if applicable;
FIFTH, pro rata to the payment in full of all Secured
Obligations (other than those referred to above) owed to the Lenders (pro rata
as among the Lenders in accordance with their respective Commitments); and
7
SIXTH, to the Debtor, its successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
4. Concurrently with the execution and delivery hereof, Debtor
is executing and delivering to the Secured Party, in the form of Exhibit 3
hereto, five originals of a Power of Attorney for the implementation of the
assignment, sale or other disposal of the Trademarks and Patents pursuant to
paragraphs 3(d) and (e) hereof and Debtor hereby releases the Secured Party from
any claims, causes of action and demands at any time arising out of or with
respect to any actions taken or omitted to be taken by the Secured Party under
the powers of attorney granted herein, other than actions taken or omitted to be
taken through the gross negligence or willful misconduct of the Secured Party.
5. All rights of the Secured Party hereunder, the security
interest granted to the Secured Party hereunder, and all obligations of the
Debtor hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document or any other agreement with respect to any of the Secured Obligations
other than as resulting from the Agent's gross negligence or willful misconduct,
(ii) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Secured Obligations, or any other amendment or waiver of
or consent to any departure from the Credit Agreement or any other Loan
Document, (iii) any exchange, release or nonperfection of any other Collateral,
or any release or amendment or waiver of or consent to or departure from any
guarantee, for all or any of the Secured Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to, or
discharge of, the Debtor, any of the Guarantors or any other obligor in respect
of the Secured Obligations or in respect of this Agreement.
6. No failure on the part of the Secured Party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Secured Party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Secured Party and the Lenders shall not be deemed to have waived any
rights hereunder or under any other agreement or instrument unless such waiver
shall be in writing and signed by such parties.
7. This Agreement, and the terms, covenants and conditions
hereof, shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that the Debtor shall not be
permitted to assign this Agreement or any interest herein or in the Collateral,
or any part thereof, or any cash or property held by the Secured Party as
Collateral under this Agreement, except as contemplated by this Agreement or the
Credit Agreement. The Agent may not assign its rights hereunder, except in
connection with a resignation of the Agent and the appointment of a substitute
Agent in the manner permitted by the Credit Agreement.
8
8. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
9. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement.
10. In the event of any inconsistency or conflict between the
terms and provisions of the Credit Agreement and the terms and provisions of
this Agreement, or with respect to any payment provisions which could be
construed as requiring duplicative payments, the terms and provisions of the
Credit Agreement shall control. Nothing herein shall require the Debtor to make
a duplicate payment if the payment is otherwise provided for in any other Loan
Document.
11. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable the remaining
provisions contained herein shall not in any way be affected or impaired.
12. Section headings used herein are for convenience only and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
13. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart which bears the signature of the Debtor shall have
been delivered to the Secured Party.
14. This Agreement and the security interest granted hereunder
shall terminate when (a) all the Secured Obligations have been fully and
indefeasibly paid in cash, (b) the Lenders have no further commitment to make
any Loans under the Credit Agreement, (c) the Secured Party shall have no
further obligation to issue any Letters of Credit, and (d) the Lenders (or any
of them) have no further obligation to extend financial accommodations under the
Rate Agreements, if applicable, at which time the Secured Party shall execute
and deliver to the Debtor all Uniform Commercial Code termination statements,
terminations of assignment and similar documents (in form and substance
reasonably satisfactory to the Debtor) which the Debtor shall reasonably request
to evidence such termination and release the security interest granted hereunder
free and clear of any Liens created in favor of the Agent; provided, however,
that all indemnities of the Debtor contained in this Agreement shall survive,
and remain operative and in full force and effect regardless of, the termination
of this Agreement.
9
IN WITNESS WHEREOF, Debtor and the Secured Party have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MILLBROOK DISTRIBUTION SERVICES INC.
By: ________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent
By: ________________________________
Name:
Title:
Schedule A to Security Agreement
--------------------------------
TRADEMARKS
----------
APPLICATIONS
------------
---------------------------------------------------------------------------------------------
Trademark Filing Date Serial Number
--------- ----------- -------------
MILLBROOK RETAIL SOLUTIONS October 7, 1996 75/177,885
& Design
---------------------------------------------------------------------------------------------
FEDERAL TRADEMARKS
------------------
------------------------------------------------------------------------------------------------------
Trademark Registration Date Registration Number
--------- ----------------- -------------------
CARRIAGE TRADE November 26, 1963 760,818
HAND HANDLER January 27, 1987 1,426,619
CANINE FAIR April 7, 1987 1,435,562
FELINE FAIR April 7, 1987 1,435,563
VALU STAR July 4, 1989 1,546,008
EDUCATOR May 8,1990 1,595,624
BRIGHT IDEA September 3, 1991 1,655,219
EDUCATOR & Des December 17, 1991 1,668,703
BEER CHASERS September 15,1992 1,716,233
SPACE SMART September 7, 1993 1,791,801
MILLBROOK MERCHANDISING December 24, 1996 2,025,274
FOR EXCELLENCE & Design
------------------------------------------------------------------------------------------------------
STATE REGISTRATIONS
-------------------
-----------------------------------------------------------------------------------------------------------
Trademark State Registration Date Registration Number
--------- ----- ----------------- -------------------
EDUCATOR Massachusetts October 15, 1975 26,516/51,790
BEER CHASERS Massachusetts October 15, 1975 26,515/51,791
▇▇▇▇▇'▇ DISCOUNT Massachusetts January 2, 1996 52,097
-----------------------------------------------------------------------------------------------------------
UNREGISTERED TRADEMARKS
-----------------------
COMMON LAW
------------
Trademark
---------
RIGHTSOURCE
HI-Z
------------
TRADENAMES
----------
----------------------------------------------------------------------------------------
Type Name Place
---- ---- -----
Assumed Name ▇▇▇▇▇'▇ CLOSE OUT ▇▇▇▇▇▇▇ County, Arkansas
----------------------------------------------------------------------------------------
Schedule B to Security Agreement
--------------------------------
PATENTS
-------
Title Date Issued Patent No.
----- ----------- ----------
Schedule C to Security Agreement
--------------------------------
LICENSES
--------
Schedule D to Security Agreement
--------------------------------
FILING OFFICES
--------------
Exhibit 1 to
Security Agreement
ASSIGNMENT FOR SECURITY
-----------------------
(PATENTS)
---------
WHEREAS, Millbrook Distribution Services Inc., an Indiana
corporation (herein referred to as "Assignor"), owns the letters patent, and/or
applications for letters patent, of the United States, more particularly
described on Schedule 1-A annexed hereto as part hereof (the "Patents");
WHEREAS, Assignor is obligated to The Chase Manhattan Bank, a
New York banking corporation, as agent (referred to herein as the "Assignee")
for the benefit of (i) the lenders (the "Lenders") named in Schedules 2.01(a)
and 2.01(b) of the Credit Agreement dated as of the date hereof, among the
Assignor, the Lenders, the Assignee and NationsBank, N.A., as co-agent (as
amended, modified or supplemented from time to time in accordance with its
terms, the "Credit Agreement") and (ii) for itself as issuer of the Letters of
Credit and party to the Rate Agreements, if applicable, and Assignor has entered
into a Security Agreement and Mortgage-Patents and Trademarks dated the date
hereof (the "Agreement") in favor of Assignee; and
WHEREAS, pursuant to the Agreement, Assignor has assigned to
Assignee, and granted to Assignee a security interest in all right, title and
interest of Assignor in and to the Patents, together with any reissue,
continuation, con tinuation-in-part or extension thereof (the "Collateral"), to
secure the prompt payment, performance and observance of the Secured
Obligations, as defined in the Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, Assignor does hereby further assign unto
Assignee and grant to Assignee a security interest in the Collateral to secure
the prompt payment, performance and observance of the Secured Obligations.
Assignor does hereby further acknowledge and affirm that the
rights and remedies of Assignee with respect to the assignment of, security
interest in and mortgage on the Collateral made and granted hereby are more
fully set forth in the Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
Assignee's address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be
duly executed by its officer thereunto duly authorized as of the ____ day of
March, 1997.
MILLBROOK DISTRIBUTION SERVICES INC.
By: ________________________________
Name: _________________________
Title: _________________________
2
SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY
---------------------------------------
PATENTS
-------
Title Date Issued Patent No.
----- ----------- ----------
3
Exhibit 2 to
Security Agreement
ASSIGNMENT FOR SECURITY
-----------------------
(TRADEMARKS)
------------
WHEREAS, Millbrook Distribution Services Inc., an Indiana
corporation (herein referred to as "Assignor"), has adopted, used and is using
the trademarks listed on the annexed Schedule 2-A, which trademarks are
registered in the United States Patent and Trademark Office (the "Trademarks");
WHEREAS, Assignor is obligated to The Chase Manhattan Bank, a
New York banking corporation, as agent (referred to herein as the "Assignee")
for the benefit of (i) the lenders (the "Lenders") named in Schedules 2.01(a)
and 2.01(b) of the Credit Agreement dated as of the date hereof, among the
Assignor, the Lender, the Assignee and NationsBank, N.A., as Co-Agent (as
amended, modified or supplemented from time to time in accordance with its
terms, the "Credit Agreement") and (ii) for itself as issuer of the Letters of
Credit and party to the Rate Agreements, if applicable, and Assignor has entered
into a Security Agreement and Mortgage-Patents and Trademarks dated the date
hereof (the "Agreement") in favor of Assignee; and
WHEREAS, pursuant to the Agreement, Assignor has assigned to
Assignee and granted to Assignee a security interest in all right, title and
interest of Assignor in and to the Trademarks, together with the goodwill of the
business symbolized by the Trademarks and the applications and registrations
thereof, and all proceeds thereof (the "Collateral"), to secure the payment,
performance and observance of the Secured Obligations, as defined in the
Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, Assignor does hereby further assign unto
Assignee and grant to Assignee a security interest in, and mortgage on, the
Collateral to secure the prompt payment, performance and observance of the
Secured Obligations.
Assignor does hereby further acknowledge and affirm that the
rights and remedies of Assignee with respect to the assignment of, security
interest in the Collat eral made and granted hereby are more fully set forth in
the Agreement, the terms and provisions of which are hereby incorporated herein
by reference as if fully set forth herein.
Assignee's address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be
duly executed by its officer thereunto duly authorized as of the ____ day of
March, 1997.
MILLBROOK DISTRIBUTION SERVICES INC.
By: ________________________________
Name: _________________________
Title: _________________________
2
SCHEDULE 2-A TO ASSIGNMENT FOR SECURITY
---------------------------------------
TRADEMARKS
----------
APPLICATIONS
------------
Trademark Filing Date Serial No.
--------- ----------- ----------
MILLWOOD RETAIL October 7, 1996 75/177,885
SOLUTIONS & design
FEDERAL TRADEMARKS
------------------
---------------------------------------------------------------------------------------------------------------
Trademark Registration Date Registration Number
--------- ----------------- -------------------
CARRIAGE TRADE November 26, 1963 760,818
HAND HANDLER January 27, 1987 1,426,619
CANINE FAIR April 7, 1987 1,435,562
FELINE FAIR April 7, 1987 1,435,563
VALU STAR July 4, 1989 1,546,008
EDUCATOR May 8, 1990 1,595,624
BRIGHT IDEA September 3, 1991 1,655,219
EDUCATOR & Des December 17, 1991 1,668,703
BEER CHASERS September 15, 1992 1,716,233
SPACE SMART September 7, 1993 1,791,801
MILLBROOK MERCHANDISING December 24, 1996 2,025,274
FOR EXCELLENCE & Design
---------------------------------------------------------------------------------------------------------------
3
Exhibit 3 to
Security Agreement
SPECIAL POWER OF ATTORNEY
-------------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT Millbrook Distribution
Services Inc., an Indiana corporation with its principal office at ▇.▇. ▇▇▇ ▇▇,
▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
called "Assignor") hereby appoints and constitutes The Chase Manhattan Bank, a
New York banking corporation, as agent (referred to herein as the "Assignee")
for the benefit of (i) the lenders (the "Lenders") named in Schedules 2.01(a)
and 2.01(b) of the Credit Agreement dated as of the date hereof, among the
Assignor, the Lenders, the Assignee and NationsBank, N.A., as Co-Agent (as
amended, modified or supplemented from time to time in accordance with its
terms, the "Credit Agreement") and (ii) for itself as issuer of the Letters of
Credit and party to the Rate Agreements, if applicable, its true and lawful
attorney, with full power of substitution, and with full power and authority to
perform the following acts on behalf of Assignor:
1. For the purpose of assigning, selling, licensing
or otherwise disposing of all right, title and interest of
Assignor in and to any letters patent of the United States or
any other country or political subdivision thereof, and all
registrations, recordings, reissues, continuations,
continuations-in-part and extensions thereof, and all pending
applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other
formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of
assignment or other papers necessary or reasonably advisable
to effect such purpose;
2. For the purpose of assigning, selling, licensing
or otherwise disposing of all right, title and interest of
Assignor in and to any trademarks, trade names, trade styles
and service marks, and all registrations, recordings,
reissues, extensions and renewals thereof, and all pending
applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other
formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of
assignment
or other papers necessary or reasonably advisable to effect
such purpose;
3. To execute any and all documents, statements,
certificates or other papers necessary or reasonably advisable
in order to obtain the purposes described above as Assignee
may in its sole discretion determine.
This power of attorney is made pursuant to a Security
Agreement and Mortgage - Patents and Trademarks, dated the date hereof, between
Assignor and Assignee and takes effect solely for the purposes of paragraphs
3(d) and (e) thereof and is subject to the conditions thereof and may not be
revoked until the payment in full of all "Secured Obligations" as defined in
such Security Agreement and Mortgage.
Dated: __________, 1997
MILLBROOK DISTRIBUTION SERVICES INC.
By: ________________________________
Name: __________________________
Title: _________________________
▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of ___________, 1997, before me personally
appeared ___________________________, to me known, who, being by me duly sworn,
did depose and say that he resides at _________________________________________
and that he is ________________________ of Millbrook Distribution Services Inc.,
the corporation described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said instrument
is such corporate seal; that it was affixed pursuant to authority of the Board
of Directors of said corporation, and that he signed his name thereto pursuant
to such authority.
____________________________________
Notary Public
3
EXHIBIT G-1
SECURITY AGREEMENT AND MORTGAGE -
PATENTS AND TRADEMARKS
AGREEMENT made as of this 1st day of May, 1998 (this
"Agreement") by and between THE B. MANISCHEWITZ COMPANY, LLC, a Delaware limited
liability company ("Debtor") having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, and THE CHASE MANHATTAN BANK, a New York banking corporation
having an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as agent
(referred to herein as the "Secured Party") for the benefit of (i) the lenders
(the "Lenders") named in Schedules 2.01(a) and 2.01(b) of the Amended and
Restated Credit Agreement dated as of the date hereof, by and among the Debtor,
Millbrook Distribution Services Inc., the Lenders, the Secured Party and
NationsBank, N.A., as co-agent (the "Co-Agent") (as amended, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement") and (ii) for itself as issuer of the Letters of Credit.
A. Debtor has adopted the terms and designs described in
Schedule A annexed hereto and made a part hereof.
B. Debtor is the owner and holder of the patents listed on
Schedule B hereto.
C. The Secured Party, the Co-Agent and the Lenders have agreed
to extend Loans and certain other financial accommodations including, without
limitation, the issuance of Letters of Credit to the Debtor pursuant to, and
subject to the terms and conditions of, the Credit Agreement. The obligation of
the Lenders to extend such Loans and of the Secured Party to issue Letters of
Credit under the Credit Agreement is conditioned on the execution and delivery
by the Debtor of a security agreement in the form hereof to secure the following
(the "Secured Obligations"): all Obligations (such Obligations to include,
without limitation, the due and punctual payment and performance of (a) the
principal of and interest on the Loans (including the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a), and interest that, but for
the filing of a petition in bankruptcy with respect to the Debtor, would accrue
on such obligations, whether or not a claim is allowed against the Debtor for
such interest in the related bankruptcy proceeding), when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (b) Indebtedness at any time and from time to time under the Letters
of Credit, (c) all obligations of the Debtor at any time and from time to time
under this security agreement and (d) all other obligations of the Debtor at any
time and from time to time under the Credit Agreement and the other Loan
Documents).
NOW, THEREFORE, IT IS AGREED that, as security for the full
and prompt payment and performance of the Secured Obligations, Debtor does
hereby mortgage to and pledge with the Secured Party for its own benefit and the
benefit of the
Lenders, and grant to the Secured Party a security interest in, all of its
right, title and interest in and to (i) each of the Trademarks (as hereinafter
defined), and the goodwill of the business symbolized by each of the Trademarks,
and each of the registrations described in Schedule A; (ii) each of the Patents
(as hereinafter defined) and each of the registrations listed on Schedule B
hereto; (iii) the right (but not the obligation) to register claims under any
state or federal law or regulation or any law or regulation of any foreign
country and to apply for, renew and extend the Trademarks or Patents, (iv) the
right (but not the obligation) to ▇▇▇ or bring opposition or cancellation
proceedings in the name of the Debtor or in the name of the Secured Party or
otherwise for past, present and future infringements of the Trademarks or
Patents and all rights (but not obligations) corresponding thereto in the United
States and any foreign country; and (v) any and all proceeds of the foregoing
(collectively, the "Collateral").
1. Terms defined in the Credit Agreement and not otherwise
defined herein, shall have the meaning set forth in the Credit Agreement. As
used in this Agreement, unless the context otherwise requires:
"Patents" shall mean (i) all letters patent of the
United States or any other country, all right, title and interest therein and
thereto, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, all whether now owned or hereafter acquired by Debtor, including, but
not limited to, those described in Schedule B annexed hereto and made a part
hereof, and (ii) all reissues, continuations, continuations-in-part, extensions
or divisionals thereof and all licenses thereof.
"Trademarks" shall mean (i) all trademarks, trade
names, trade styles, service marks, prints and labels on which said trademarks,
trade names, trade styles and service marks have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all right, title and interest therein and thereto, and all
registrations and recordings thereof, including, without limitation,
applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof, or any other country or any political subdivision thereof, all
whether now owned or hereafter acquired by Debtor, including, but not limited
to, those described in Schedule A annexed hereto and made a part hereof, and
(ii) all reissues, extensions or renewals thereof and all licenses thereof.
2. Debtor hereby represents, warrants, covenants and agrees as
follows:
(a) Debtor has the sole, full and clear title to the
registered U.S. Trademarks set forth on Schedule A annexed hereto and such
registrations are valid and subsisting and in full force and effect.
2
(b) Debtor will perform all acts and execute all documents,
including, without limitation, assignments for security in form suitable for
filing with the United States Patent and Trademark Office, substantially in the
forms of Exhibits 1 and 2 hereof, respectively, reasonably requested by the
Secured Party at any time to evidence, perfect, maintain, record and enforce the
Secured Party's security interest in the Collateral and Debtor hereby authorizes
the Secured Party to execute and file one or more financing statements (and
similar documents) or copies thereof or of this Security Agreement with respect
to the Collateral signed only by the Secured Party.
(c) Debtor (either itself or through licensees) will maintain
the Trademarks in full force free from any claim of abandonment for nonuse and
Debtor will not (and will not permit any licensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark may become invalidated.
(d) Debtor is the sole registered owner of each of the Patents
shown on Schedule B hereto and the registrations thereof are valid and in full
force and effect. None of the Patents has been abandoned or dedicated, and,
except to the extent that the Secured Party, upon prior written notice by
Debtor, shall consent, Debtor will not do any act, or omit to do any act,
whereby the Patents may become abandoned or dedicated unless such abandonment or
declaration would not have a Material Adverse Affect and in any event shall
notify the Secured Party immediately if it knows of any reason or has reason to
know that any application or registration may become abandoned or dedicated.
(e) The Debtor shall be obligated to, upon demand, pay to the
Secured Party the amount of any and all reasonable out-of-pocket expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Secured Party may incur in connection with (i) the custody or
preservation of (after the occurrence and continuance of an Event of Default),
or the sale of, collection from, or other realization upon, any of the
Collateral in accordance herewith, or (ii) the exercise or enforcement of any of
the rights of the Secured Party hereunder in accordance herewith. In addition,
the Debtor indemnifies and holds the Secured Party and the Lenders harmless from
and against any and all liability incurred by the Secured Party or the Lenders
hereunder or in connection herewith, unless such liability shall be due to the
gross negligence or willful misconduct of the Secured Party or the Lenders, as
the case may be. Any such amounts payable as provided hereunder or thereunder
shall be additional Secured Obligations secured hereby and by the other Security
Documents.
(f) In no event shall Debtor, either itself or through any
agent, employee, licensee or designee, (i) file an application for the
registration of any Patent, Trademark or Copyright with the United States Patent
and Trademark Office or any similar office or agency of the United States, any
State thereof, any other country or any political subdivision thereof or (ii)
file any assignment of any patent or trademark, which Debtor may acquire from a
third party, with the United States Patent and Trademark Office or any similar
office or agency of the United States, any State thereof, any other country or
any political subdivision thereof, unless Debtor shall, on or prior to the date
of
3
such filing, notify the Secured Party thereof, and, upon the written request of
the Secured Party, execute and deliver any and all assignments, agreements,
instruments, documents and papers as the Secured Party may reasonably request to
evidence the Secured Party's interest in such Patent or Trademark and the
goodwill and general intangibles of Debtor relating thereto or represented
thereby, and Debtor hereby appoints the Secured Party its attorney-in-fact,
which appointment shall be effective upon the occurrence and continuance of an
Event of Default, to execute and file all such writings for the foregoing
purposes, all reasonable acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable until the
Secured Obligations are paid in full.
(g) Debtor has the right and power to make the assignment and
to grant the security interest herein granted; and the Collateral is not now,
and at all times hereafter will not be, subject to any liens, mortgages,
assignments, security interests or encumbrances of any nature whatsoever, except
in favor of the Secured Party and as permitted in the Credit Agreement, and to
the best knowledge of Debtor none of the Collateral is subject to any claim.
(h) Except as set forth in Section 7.05(z) of the Credit
Agreement, Debtor will not assign, sell, mortgage, lease, transfer, pledge,
hypothecate, grant a security interest in or lien upon, encumber, grant an
exclusive or non-exclusive license, or otherwise dispose of any of the
Collateral, and nothing in this Agreement shall be deemed a consent by the
Secured Party to any such action except as expressly permitted herein or in the
Credit Agreement.
(i) As of the date hereof neither Debtor nor any subsidiary
thereof owns any Patents, Trademarks or Copyrights or has any Patents,
Trademarks or Copyrights registered in, or the subject of pending applications
in, the United States Patent and Trademark Office or any similar office or
agency of the United States, any State thereof, any other country or any
political subdivision thereof, other than those described in Schedules A and B
hereto.
(j) Debtor will take all necessary steps in any proceeding
before the United States Patent and Trademark Office or any similar office or
agency of the United States, any State thereof, any other country or any
political subdivision thereof, to maintain each application and registration of
the Trademarks and Patents, including, without limitation, filing of renewals,
affidavits of use, affidavits of incontestability and opposition, interference
and cancellation proceedings (except to the extent that dedication, abandonment
or invalidation is permitted under paragraphs 2(c), 2(d) and 2(e) hereof).
(k) Debtor assumes all responsibility and liability arising
from the use of the Trademarks, and Debtor hereby indemnifies and holds Secured
Party harmless from and against any claim, suit, loss, damage or expense
(including reasonable attorneys' fees) arising out of any alleged defect in any
product promoted, distributed or sold by Debtor (or any affiliate or subsidiary
thereof) in connection with any Trademark
4
or out of the manufacture, promotion, labeling, sale or advertisement of any
such product by Debtor (or any affiliate or subsidiary thereof). Debtor agrees
that Secured Party does not assume, and shall have no responsibility for, the
payment of any sums due or to become due under any agreement or contract
included in the Collateral or the performance of any obligations to be performed
under or with respect to any such agreement or contract by Debtor, and Debtor
hereby agrees to indemnify and hold the Secured Party harmless with respect to
any and all claims by any person relating thereto.
(l) Subject to Debtor's right to contest as provided in the
Credit Agreement, Secured Party may, in its sole discretion, pay any amount or
do any act required of Debtor hereunder or requested by Secured Party to
preserve, defend, protect, maintain, record or enforce Debtor's obligations
contained herein, the Secured Obligations, the Collateral, or the right, title
and interest granted Secured Party herein. In the event Secured Party makes a
payment pursuant to this subparagraph, such payment shall be deemed an advance
by Secured Party to Debtor and shall be payable on demand, and if not paid,
shall constitute an Alternate Base Rate Loan.
(m) Debtor agrees that if it, or any affiliate or subsidiary
thereof, learns of any use by any person of any term or design likely to cause
confusion with any Trademark, it shall promptly notify Secured Party of such use
and, if requested by Secured Party, shall join with Secured Party, at its
expense, in such action as Secured Party, in its reasonable discretion may deem
advisable for the protection of Secured Party's interest in and to such
Trademarks (except to the extent abandonment of such Trademark may be permitted
under Paragraph 2(c) and 2(d)).
(n) All licenses of its Trademarks and Patents which Debtor
has granted to third parties are set forth in Schedule C hereto.
(o) This Agreement assigns and, when this Agreement has been
filed and recorded with the United States Patent and Trademark Office and
financing statements describing the Collateral have been filed with the filing
offices set forth on Schedule D hereto, this Agreement will create a valid and
perfected first priority security interest in the Collateral, securing the
payment of the Secured Obligations.
(p) If Debtor shall obtain rights to any new Trademarks,
Patents or Copyrights, the provisions of this Agreement shall automatically
apply thereto. Debtor shall promptly notify Secured Party in writing of any
rights to any new Trademarks or Patents acquired by Debtor after the date hereof
and of any registrations issued or applications for registration made after the
date hereof. Concurrently with the filing of an application for registration for
any Trademarks or Patents, Debtor shall execute, deliver and record in all
places where this Agreement is recorded an appropriate agreement, substantially
in the form hereof, with appropriate insertions, or an amendment to this
Agreement, in form and substance reasonably satisfactory to the Secured Party,
pursuant to which Debtor shall assign and grant a security interest to the
extent of its interest in such registration as provided herein to the Secured
Party.
5
3. Upon the occurrence and during the continuance of an Event
of Default, in addition to all other rights and remedies of the Secured Party,
whether under law, the Credit Agreement or otherwise, all such rights and
remedies being cumulative, not exclusive and enforceable alternatively,
successively or concurrently, without (except as provided herein) notice to, or
consent by, Debtor, the Secured Party shall have the following rights and
remedies: (a) subject to any existing license of the Trademarks or Patents which
Debtor has granted to third parties and which is set forth in Schedule C hereto,
the Secured Party may, at any time and from time to time, upon 10 days' prior
notice to Debtor, license, whether general, special or otherwise, and whether on
an exclusive or nonexclusive basis, any of the Patents or Trademarks, throughout
the world for such term or terms, on such conditions, and in such manner, as the
Secured Party shall in its sole discretion determine; (b) the Secured Party may
(without assuming any obligations or liability thereunder), at any time, enforce
(and shall have the exclusive right to enforce) against any licensee or
sublicensee all rights and remedies of Debtor in, to and under any one or more
license agreements with respect to the Collateral, and take or refrain from
taking any action under any thereof, and Debtor hereby releases the Secured
Party from, and agrees to hold the Secured Party free and harmless from and
against any claims arising out of, any action taken or omitted to be taken with
respect to any such license agreement, except for damages caused by Secured
Party's gross negligence or willful misconduct; (c) the Secured Party may, at
any time and from time to time, upon 10 days' prior written notice to Debtor,
assign, sell, or otherwise dispose of, the Collateral or any of it, either with
or without special or other conditions or stipulations, with power to buy the
Collateral or any part of it, and with power also to execute assurances, and do
all other acts and things for completing the assignment, sale or disposition
which the Secured Party shall, in its sole discretion, deem reasonably
appropriate or proper, and provided that such assignment, sale or disposition
conforms to the standards of commercial reasonableness as provided in the
Uniform Commercial Code to the extent applicable thereto; (d) with respect to
any Patents or Trademarks that are the subject of any action taken pursuant to
this ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇ shall not make any further use of such Patents or
Trademarks or any ▇▇▇▇ similar thereto for any purpose; and (e) in addition to
the foregoing, in order to implement the assignment, sale or other disposal of
any of the Collateral pursuant to subparagraph 3(c) hereof, the Secured Party
may, at any time, pursuant to the authority granted in the Powers of Attorney
described in paragraph 4 hereof (such authority becoming effective on the
occurrence or continuation as herein above provided of an Event of Default),
execute and deliver on behalf of Debtor, one or more instruments of assignment
of the Patents or Trademarks (or any application or registration thereof), in
form suitable for filing, recording or registration in any country. Debtor
agrees to pay when due all reasonable costs incurred in any such transfer of the
Patents or Trademarks, including any taxes, fees and reasonable attorneys' fees,
and all such costs shall be added to the Secured Obligations. The Secured Party
may apply the proceeds actually received from any such license, assignment, sale
or other disposition to the reasonable costs and out-of-pocket expenses thereof,
including, without limitation, reasonable attorneys' fees and all other expenses
which may be reasonably incurred by the Secured Party, and then to the Secured
Obligations, in such order as to
6
principal or interest as the Secured Party may desire; and Debtor shall remain
liable and will pay the Secured Party on demand any deficiency remaining,
together with interest thereon at a rate equal to the highest rate then payable
on the Secured Obligations and the balance of any expenses unpaid. Nothing
herein contained shall be construed as requiring the Secured Party to take any
such action at any time.
The proceeds of any sale of Collateral, as well as any
Collateral consisting of cash, shall be applied by the Secured Party as follows:
FIRST, to the payment of all reasonable costs and
out-of-pocket expenses incurred by the Secured Party in connection with such
sale or otherwise in connection with this Agreement or any of the Secured
Obligations, including, but not limited to, all court costs and the reasonable
fees and expenses of its agents and legal counsel, the repayment of all advances
made by the Secured Party hereunder on behalf of the Debtor and any other
reasonable out-of-pocket costs or expenses incurred in connection with the
exercise of any right or remedy hereunder;
SECOND, to the Secured Party to reimburse the Secured Party
for that portion of the payments, if any, made by it with respect to Letters of
Credit for which a Lender, as a participant in such Letter of Credit pursuant to
Section 2.18 of the Credit Agreement, failed to pay its pro rata share thereof
as required pursuant to such Section 2.18;
THIRD, to the Secured Party to be held as cash collateral to
the extent of the undrawn amount, if any, or outstanding Letters of Credit;
FOURTH, to the payment in full of principal and interest in
respect of any Loans outstanding (pro rata as among the Lenders in accordance
with the amounts of the Loans made by them pursuant to the Credit Agreement);
FIFTH, pro rata to the payment in full of all Secured
Obligations (other than those referred to above) owed to the Lenders (pro rata
as among the Lenders in accordance with their respective Commitments); and
SIXTH, to the Debtor, its successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
4. Concurrently with the execution and delivery hereof, Debtor
is executing and delivering to the Secured Party, in the form of Exhibit 3
hereto, five originals of a Power of Attorney for the implementation of the
assignment, sale or other disposal of the Trademarks and Patents pursuant to
paragraph 2(d) hereof and Debtor hereby releases the Secured Party from any
claims, causes of action and demands at any time arising out of or with respect
to any actions taken or omitted to be taken by the Secured Party under the
powers of attorney granted herein, other than actions taken or omitted to be
taken through the gross negligence or willful misconduct of the Secured Party.
7
5. All rights of the Secured Party hereunder, the security
interest granted to the Secured Party hereunder, and all obligations of the
Debtor hereunder, shall be absolute and unconditional irrespective of (i) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document or any other agreement with respect to any of the Secured Obligations
other than as resulting from the Agent's gross negligence or willful misconduct,
(ii) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Secured Obligations, or any other amendment or waiver of
or consent to any departure from the Credit Agreement or any other Loan
Document, (iii) any exchange, release or nonperfection of any other Collateral,
or any release or amendment or waiver of or consent to or departure from any
guarantee, for all or any of the Secured Obligations, or (iv) any other
circumstance which might otherwise constitute a defense available to, or
discharge of, the Debtor, any of the Guarantors or any other obligor in respect
of the Secured Obligations or in respect of this Agreement.
6. No failure on the part of the Secured Party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Secured Party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Secured Party and the Lenders shall not be deemed to have waived any
rights hereunder or under any other agreement or instrument unless such waiver
shall be in writing and signed by such parties.
7. This Agreement, and the terms, covenants and conditions
hereof, shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that the Debtor shall not be
permitted to assign this Agreement or any interest herein or in the Collateral,
or any part thereof, or any cash or property held by the Secured Party as
Collateral under this Agreement, except as contemplated by this Agreement or the
Credit Agreement. The Agent may not assign its rights hereunder, except in
connection with a resignation of the Agent and the appointment of a substitute
Agent in the manner permitted by the Credit Agreement.
8. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
8
9. All communications and notices hereunder shall be in
writing and given as provided in the Credit Agreement.
10. In the event of any inconsistency or conflict between the
terms and provisions of the Credit Agreement and the terms and provisions of
this Agreement, or with respect to any payment provisions which could be
construed as requiring duplicative payments, the terms and provisions of the
Credit Agreement shall control. Nothing herein shall require the Debtor to make
a duplicate payment if the payment is otherwise provided for in any other Loan
Document.
11. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable the remaining
provisions contained herein shall not in any way be affected or impaired.
12. Section headings used herein are for convenience only and
are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
13. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart which bears the signature of the Debtor shall have
been delivered to the Secured Party.
14. This Agreement and the security interest granted hereunder
shall terminate when (a) all the Secured Obligations have been fully and
indefeasibly paid in cash, (b) the Lenders have no further commitment to make
any Loans under the Credit Agreement, and (c) the Secured Party shall have no
further obligation to issue any Letters of Credit, at which time the Secured
Party shall execute and deliver to the Debtor all Uniform Commercial Code
termination statements, terminations of assignment and similar documents (in
form and substance reasonably satisfactory to the Debtor) which the Debtor shall
reasonably request to evidence such termination and release the security
interest granted hereunder free and clear of any Liens created in favor of the
Agent; provided, however, that all indemnities of the Debtor contained in this
Agreement shall survive, and remain operative and in full force and effect
regardless of, the termination of this Agreement.
[Remainder of Page Intentionally Left Blank]
9
IN WITNESS WHEREOF, Debtor and the Secured Party have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
THE B. MANISCHEWITZ COMPANY, LLC
By: _________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
THE CHASE MANHATTAN BANK, as Agent
By: _________________________________________
Name: ___________________________________
Title: __________________________________
[Signature Page to Security Agreement and Mortgage - Patents and Trademarks]
Schedule A to Security Agreement
--------------------------------
TRADEMARKS
----------
APPLICATIONS
------------
================================================================================
Trademark Filing Date Serial Number
================================================================================
================================================================================
FEDERAL TRADEMARKS
------------------
================================================================================
Trademark Registration Date Registration Number
================================================================================
================================================================================
STATE REGISTRATIONS
-------------------
================================================================================
Trademark State Registration Date Registration Number
================================================================================
================================================================================
UNREGISTERED TRADEMARKS
-----------------------
COMMON LAW
===============
===============
===============
TRADENAMES
================================================================================
Type Name Place
================================================================================
================================================================================
Schedule B to Security Agreement
--------------------------------
PATENTS
-------
Title Date Issued Patent No.
----- ----------- ----------
None.
Schedule C to Security Agreement
--------------------------------
LICENSES
--------
1. License Agreement dated January 22, 1981 between Frank's Beverages
and Manischewitz, as amended on February 20, 1990.
2. Agreement dated January 23, 1962 between Manischewitz and Bakers
Franchise Corporation, as assigned to Franchise Brands, Inc., as amended by
letters dated July 11, 1963, December 5, 1963, June 9, 1965, December 14, 1966,
January 9, 1967, August 13, 1969, July 24, 1972 and June 27, 1978.
3. Agreement dated December 9, 1986 with the Union of Orthodox Jewish
Congregation of America (unexecuted).
4. Agreement dated October 23, 1986 between Manischewitz and
Canandaigua Wine Company, Inc., as amended May 19, 1988.
5. Agreement dated April 3, 1944 between Manischewitz Food Products,
Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ and Monarch Wine Company, Inc., as
supplemented December 30, 1948.
6. Agreement dated December 30, 1948 between Manischewitz and Monarch
Wine Company, Inc., as supplemented December 2, 1953, January 12, 1962, August
12, 1963, November 27, 1964 and January 16, 1985.
7. Consent and Assignment dated October 23, 1986 between Manischewitz,
Canandaigua Wine Company, Inc. and Monarch Wine Company, Inc.
8. Purchase, License and Sublicense Agreement dated May 30, 1980 among
▇▇▇▇▇▇▇ Matzoh Products, Inc., ▇▇▇▇▇ Food Products, Inc. and Manischewitz, as
amended October 31, 1983 and March 20, 1990.
9. Agreement dated January 8, 1992 between Manischewitz and Bartons.
10. Agreement dated October 20, 1976 between Manischewitz and Block and
▇▇▇▇▇▇▇▇▇▇▇▇.
11. Manufacturing Agreement dated as of January 25, 1993 between
Manischewitz and ▇▇▇▇▇ & ▇▇▇▇▇▇ Inc.
Schedule D to Security Agreement
--------------------------------
FILING OFFICES
--------------
United States Patent and Trademark Office
Exhibit 1 to
Security Agreement
ASSIGNMENT FOR SECURITY
-----------------------
(PATENTS)
-------
WHEREAS, The B. Manischewitz Company, LLC, a Delaware limited
liability company (herein referred to as "Assignor"), owns the letters patent,
and/or applications for letters patent, of the United States, more particularly
described on Schedule 1-A annexed hereto as part hereof (the "Patents");
WHEREAS, Assignor is obligated to The Chase Manhattan Bank, a
New York banking corporation, as agent (referred to herein as the "Assignee")
for the benefit of (i) the lenders (the "Lenders") named in Schedules 2.01(a)
and 2.01(b) of the Amended and Restated Credit Agreement dated as of the date
hereof, by and among the Assignor, Millbrook Distribution Services Inc., the
Lenders, the Assignee and NationsBank, N.A., as co-agent (as amended, modified
or supplemented from time to time in accordance with its terms, the "Credit
Agreement") and (ii) for itself as issuer of the Letters of Credit and Assignor
has entered into a Security Agreement and Mortgage-Patents, Trademarks and
Copyrights dated the date hereof (the "Agreement") in favor of Assignee; and
WHEREAS, pursuant to the Agreement, Assignor has assigned to
Assignee, and granted to Assignee a security interest in all right, title and
interest of Assignor in and to the Patents, together with any reissue,
continuation, continuation-in-part or extension thereof (the "Collateral"), to
secure the prompt payment, performance and observance of the Secured
Obligations, as defined in the Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, Assignor does hereby further assign unto
Assignee and grant to Assignee a security interest in the Collateral to secure
the prompt payment, performance and observance of the Secured Obligations.
Assignor does hereby further acknowledge and affirm that the
rights and remedies of Assignee with respect to the assignment of, security
interest in and mortgage on the Collateral made and granted hereby are more
fully set forth in the Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
Assignee's address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be
duly executed by its officer thereunto duly authorized as of the 1st day of May,
1998.
THE B. MANISCHEWITZ COMPANY, LLC
By:_________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
2
SCHEDULE 1-A TO ASSIGNMENT FOR SECURITY
---------------------------------------
PATENTS
-------
Title Date Issued Patent No.
----- ----------- ----------
3
Exhibit 2 to
Security Agreement
ASSIGNMENT FOR SECURITY
-----------------------
(TRADEMARKS)
----------
WHEREAS, The B. Manischewitz Company, LLC, a Delaware limited
liability company (herein referred to as "Assignor"), has adopted, used and is
using the trademarks listed on the annexed Schedule 2-A, which trademarks are
registered in the United States Patent and Trademark Office (the "Trademarks");
WHEREAS, Assignor is obligated to The Chase Manhattan Bank, a
New York banking corporation, as agent (referred to herein as the "Assignee")
for the benefit of (i) the lenders (the "Lenders") named in Schedules 2.01(a)
and 2.01(b) of the Amended and Restated Credit Agreement dated as of the date
hereof, by and among the Assignor, Millbrook Distribution Services Inc., the
Lender, the Assignee and NationsBank, N.A., as Co-Agent (as amended, modified or
supplemented from time to time in accordance with its terms, the "Credit
Agreement") and (ii) for itself as issuer of the Letters of Credit and Assignor
has entered into a Security Agreement and Mortgage-Patents, Trademarks and
Copyrights dated the date hereof (the "Agreement") in favor of Assignee; and
WHEREAS, pursuant to the Agreement, Assignor has assigned to
Assignee and granted to Assignee a security interest in all right, title and
interest of Assignor in and to the Trademarks, together with the goodwill of the
business symbolized by the Trademarks and the applications and registrations
thereof, and all proceeds thereof (the "Collateral"), to secure the payment,
performance and observance of the Secured Obligations, as defined in the
Agreement;
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged, Assignor does hereby further assign unto
Assignee and grant to Assignee a security interest in the Collateral to secure
the prompt payment, performance and observance of the Secured Obligations.
Assignor does hereby further acknowledge and affirm that the
rights and remedies of Assignee with respect to the assignment of, security
interest in the Collat eral made and granted hereby are more fully set forth in
the Agreement, the terms and provisions of which are hereby incorporated herein
by reference as if fully set forth herein.
Assignee's address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be
duly executed by its officer thereunto duly authorized as of the 1st day of May,
1998.
THE B. MANISCHEWITZ COMPANY, LLC
By:_________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
2
SCHEDULE 2-A TO ASSIGNMENT FOR SECURITY
---------------------------------------
TRADEMARKS
----------
APPLICATIONS
------------
Trademark Filing Date Serial No.
--------- ----------- ----------
FEDERAL TRADEMARKS
------------------
================================================================================
Trademark Registration Date Registration Number
================================================================================
================================================================================
3
Exhibit 3 to
Security Agreement
SPECIAL POWER OF ATTORNEY
-------------------------
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, THAT The B. Manischewitz
Company, LLC, a Delaware limited liability company with its principal office at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter called "Assignor")
hereby appoints and constitutes The Chase Manhattan Bank, a New York banking
corporation, as agent (referred to herein as the "Assignee") for the benefit of
(i) the lenders (the "Lenders") named in Schedules 2.01(a) and 2.01(b) of the
Amended and Restated Credit Agreement dated as of the date hereof, by and among
the Assignor, Millbrook Distribution Services Inc., the Lenders, the Assignee
and NationsBank, N.A., as Co-Agent (as amended, modified or supplemented from
time to time in accordance with its terms, the "Credit Agreement") and (ii) for
itself as issuer of the Letters of Credit its true and lawful attorney, with
full power of substitution, and with full power and authority to perform the
following acts on behalf of Assignor:
1. For the purpose of assigning, selling, licensing
or otherwise disposing of all right, title and interest of
Assignor in and to any letters patent of the United States or
any other country or political subdivision thereof, and all
registrations, recordings, reissues, continuations,
continuations-in-part and extensions thereof, and all pending
applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other
formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of
assignment or other papers necessary or reasonably advisable
to effect such purpose;
2. For the purpose of assigning, selling, licensing
or otherwise disposing of all right, title and interest of
Assignor in and to any trademarks, trade names, trade styles
and service marks, and all registrations, recordings,
reissues, extensions and renewals thereof, and all pending
applications therefor, and for the purpose of the recording,
registering and filing of, or accomplishing any other
formality with respect to, the foregoing, to execute and
deliver any and all agreements, documents, instruments of
assignment
or other papers necessary or reasonably advisable to effect
such purpose; and
3. To execute any and all documents, sta tements,
certificates or other papers necessary or reasonably advisable
in order to obtain the purposes described above as Assignee
may in its sole discretion determine.
This power of attorney is made pursuant to a Security
Agreement and Mortgage - Patents and Trademarks, dated the date hereof, between
Assignor and Assignee and takes effect solely for the purposes of paragraphs
2(d) thereof and is subject to the conditions thereof and may not be revoked
until the payment in full of all "Secured Obligations" as defined in such
Security Agreement and Mortgage.
Dated: __________, 199_
THE B. MANISCHEWITZ COMPANY, LLC
By:_________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its Managing Member
2
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this _____ day of ____________, 1998, before me personally
appeared _________________, to me known, who, being by me duly sworn, did depose
and say that he resides at _____________________________________________________
and that he is _____________________ of The B. Manischewitz Company, LLC, the
limited liability company described in and which executed the foregoing
instrument; that he knows the seal of said limited liability company; that the
seal affixed to said instrument is such company seal; that it was affixed
pursuant to authority of the Board of Managers of said limited liability
company, and that he signed his name thereto pursuant to such authority.
________________________________
Notary Public
3
EXHIBIT H
SUBORDINATED PROMISSORY NOTE
$21,3000,000.00 As of May 1, 1998
New York, New York
1. Obligation.
1.1. FOR VALUE RECEIVED, the undersigned, MILLBROOK DISTRIBUTION
SERVICES INC,. a Delaware corporation (the "Payor"), having its executive office
and principal place of business at ▇.▇. ▇▇▇ ▇▇ - ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, hereby promises to pay to R.A.B.
ENTERPRISES, INC., a Delaware corporation (together with its successors and
assigns, the "Payee"), at its office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, the principal sum of [ ] ($_______) payable, together with all
unpaid and accrued interest, as set forth in this promissory note (as the same
may be supplemented, modified, amended, restated or replaced from time to time
in the manner provided herein, the "Note").
1.2. The Payor shall repay, and this Note shall mature and the
outstanding principal amount thereof will become due and payable on [November 1,
2005] (the "Maturity Date").
2. Interest.
2.1. The unpaid principal amount shall bear interest equal to 12.5% per
annum.
2.2. Interest shall be payable semiannually on May 1 and November 1 of
each year, commencing on November 1, 1998, and in full on the Maturity Date (or
on any such earlier date of payment of this Note is prepaid as hereinafter
provided).
2.3. If payment on the principal amount hereof and interest accrued
thereon is not made when due and payable, at the Maturity Date or upon
acceleration, then interest shall accrue on such unpaid amount, to the extent
permitted by law, from the Maturity Date at the rate then in effect plus 2.00%
per annum.
2.4. In no event shall the Payee be entitled to receive interest,
however characterized and including other consideration received in connection
with this Note, at an effective rate in excess of the maximum rate permitted by
law. If a court of competent jurisdiction determines that such amounts paid or
agreed to be paid by the Payor in connection with this Note causes the effective
interest rate on this Note to exceed the maximum rate permitted by law, such
interest or other consideration shall automatically be reduced to a rate that
results in an effective interest rate under
this Note equal to the maximum rate permitted by law over the term hereof, and,
in such event, the Payee shall either apply to the reduction of the unpaid
principal balance of this Note any amounts received by it deemed to constitute
excessive interest or refund such excess to Payor.
3. Events of Default: Remedies. If any of the following events (any
such event, an "Event of Default") shall occur and be continuing, subject to the
subordination provisions in Section 4 hereto:
3.1. the Payor shall fail to make any payment of principal of or
interest on this Note within thirty (30) days after such payment is due;
3.2. an event of default occurs and is continuing under any
indebtedness for borrowed money of the Payor, which default has resulted in the
acceleration of such indebtedness prior to its expressed maturity and the
principal amount of such indebtedness, together with the principal amount of any
other such indebtedness the maturity of which has been so accelerated and has
not been paid, aggregates at least Two Million Dollars ($2,000,000);
3.3. a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Payor and
shall remain unpaid or shall not be released, discharged, dismissed, stayed or
fully bonded for a period of at least sixty (60) days and are not insured
against (after giving effect to customary deductibles), provided that the
aggregate of all such judgments exceeds Two Thousand Dollars ($2,000,000);
3.4. the Payor shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect, the
"Bankruptcy Code") or (iv) file a petition seeking to take advantage of any
bankruptcy, insolvency, moratorium, reorganization or other similar law
affecting the enforcement of creditors' rights generally; or
3.5. a court of competent jurisdiction enters an order or decree under
the Bankruptcy Code, seeking (i) the liquidation, reorganization, moratorium,
dissolution, winding up, or composition or readjustment of the Payor's debts,
(ii) the appointment of a trustee, receiver, custodian or liquidator of the
Payor or of all or any substantial part of its assets, or (iii) relief in
respect of the Payor in an involuntary case, and such order or decree described
in clause (i), (ii) or (iii) of this Section 3.5 shall continue undismissed or
unstayed and in effect, for a period of sixty (60) days;
then, subject to Section 4.3 hereto, (i) upon the occurrence and during the
continuance of any Event of Default described in Section 3.4 or 3.5, the unpaid
principal amount of this Note, together with the interest accrued thereon (which
interest shall be deemed matured), and all other amounts payable by the Payor
hereunder, shall automatically become immediately due and payable, without
presentment, demand, protest, notice of intention to accelerate, notice of
acceleration, or other
- 2 -
requirements of any kind, all of which are hereby expressly waived by the Payor,
or (ii) during the continuance of any other Event of Default, the Payee may
declare the entire unpaid principal amount of this Note to be, and the same
shall forthwith become, due and payable, together with the interest accrued
thereon (which interest shall be deemed matured) and all other amounts payable
hereunder, without presentment, demand, protest, notice of intention to
accelerate, notice of acceleration, or other requirements of any kind, all of
which are hereby expressly waived by the Payor.
4. Subordination.
4.1. All obligations of the Payor for principal, interest and other
amounts payable hereunder (collectively, the "Subordinated Obligations") shall
be subordinate and junior in right of payment to all liabilities and obligations
of the Payor in connection with the Amended and Restated Credit Agreement, dated
as of May l, 1998 (the "Credit Agreement"), by and among the Payor, The Chase
Manhattan Bank, as administrative agent and collateral agent, and NationsBank,
N.A., as co-agent (the "Senior Debt"), and the holder of this Note, by
acceptance hereof, agrees to be bound by the provisions of this Section 4.
4.2. The Payor hereby agrees that payment of principal and interest in
respect of this Note shall be junior and subordinate and subject in right of
payment to all Senior Debt.
4.3. Unless and until all Senior Debt shall have been paid in full, the
Payor will not make, and the holder of this Note shall not demand, accept or
receive any direct or indirect payment (in cash, property, by set-off or
otherwise) of or on account of any Subordinated Obligations and no such payment
shall be due; provided, however, that if and so long as no Senior Event of
Default (as hereinafter defined) exists or would exist after giving effect to
such payment (unless such Senior Event of Default has been cured or waived by
the holders of Senior Debt), nothing contained in this Section 4.3 shall prevent
the Payor from making or the holder of this Note from accepting and receiving,
any payment of interest on account of the Subordinated Obligations. Unless and
until all Senior Debt shall be paid in full, no holder of this Note will
commence any proceeding against the Payor under, or join with any creditor in
any such proceeding under, any bankruptcy, reorganization, readjustment of debt,
arrangement of debt, receivership, liquidation or insolvency law or statute of
any state government, unless the holder or holders of Senior Debt shall also
join in or consent to the bringing of such proceeding. "Senior Event of Default"
shall mean any default by the Payor in the payment when due of any Senior Debt
or any default under any Senior Debt which constitutes an event of default
permitting the holder or holders of Senior Debt to cause such Senior Debt to
cause the same to become due prior to its stated maturity.
4.4. No payment or distribution of any character, whether in cash,
securities or other property, to which the holder of this Note would have been
entitled except for the provisions of this Section 4 and which shall have been
made to or for the account of the holders of the Senior Debt shall, as among the
Payor and its creditors (other than the holders of such Senior Debt) and the
holder of this Note, be deemed to be a payment or distribution by the Payor to
or for the account of the holders of such Senior Debt, and from and after the
payment in full of all such Senior Debt, the
- 3 -
holders of this Note shall be subrogated to all rights of the holders of such
Senior Debt to receive payments or distributions of cash, securities or other
property applicable to such Senior Debt until all Subordinated Obligations shall
be paid in full.
4.5. The provisions of this Section 4 are solely for the purpose of
defining the relative rights of the holders of the Senior Debt, on the one hand,
and the holder of this Note, on the other hand, and the provisions of this
Section 4 may be enforced by any holder of the Senior Debt directly against the
holder of this Note and the Payor. No holder of Senior Debt shall be prejudiced
in the right to enforce subordination of this Note by any act or failure to act
by the Payor or anyone in custody of its assets or property. Nothing herein
shall impair, as between the Payor and the holder of this Note, the obligation
of the Payor, which is unconditional and absolute, to pay to the holder of this
Note the principal of and interest on this Note as and when the same shall
become due in accordance with the terms hereof, as the case may be, nor shall
anything herein prevent the holder of this Note from exercising all remedies
otherwise permitted by applicable law upon default under this Note, subject,
however, to the provisions of this Note and the rights of any holder of Senior
Debt under this Section 4.
4.6. Upon any payment or distribution of assets of the Payor referred
to in this Section 4, the holder of this Note shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which any
dissolution, winding up, liquidation or reorganization proceeding affecting the
affairs of the Payor is pending or upon a certificate of the liquidating trustee
or agent or other person making any payment or distribution to the holder of
this Note for the purpose of ascertaining the persons entitled to participate in
such payment or distribution, the holder or holders of the Senior Debt and other
indebtedness of the Payor, the amount thereof or payable thereon, the amount
paid or distributed thereon and all other facts pertinent thereto or to this
Section 4.
4.7. If any payment, distribution or security or the proceeds of any
thereof, shall be collected or received by the holder of this Note in
contravention of any of the terms of this Section 4 and prior to the payment in
full of the Senior Debt thereunder at the time outstanding, the holder hereof
will hold in trust for, and forthwith deliver such payment, distribution,
security or proceeds, to the extent necessary to pay all the Senior Debt in full
to, the holder or holders of such Senior Debt. If at the time any payment,
distribution, security or proceeds is delivered to any holder of the Senior Debt
pursuant to this Section 4 and the Senior Debt then due and payable is less than
the amount of such payment, distribution, security or proceeds, only the amount
so due and payable shall be applied to the payment of Senior Debt, and such
excess shall be applied to the payment of amounts of principal of or interest
then due and payable on this Note.
4.8. The Payor shall give prompt notice to the holder of this Note, on
the one hand, and the holder or holders of the Senior Debt, on the other, of any
notice, presentation or demand received by the Payor from the holder of Senior
Debt or the holder of this Note, respectively, as the case may be, provided
that, any failure to provide such notice shall not prejudice or impair any right
of any holder of the Senior Debt to enforce the provisions of this Section 4.
- 4 -
4.9. The Payee understands and agrees that the obligations of the Payor
hereunder are fully subordinated to all obligations of the Payor owing under the
Credit Agreement and the Senior Debt and the Payee shall have no recourse to any
assets or property of the Payor hereunder and further agrees that in the event
of any assignment for the benefit of creditors, marshalling of assets,
dissolution, winding up or liquidation of the Payor, whether voluntary or
involuntary, in bankruptcy or insolvency or other similar proceedings, the
obligations of the Payor to pay principal and interest on this Note shall remain
fully subordinated.
5. Miscellaneous.
5.1. Lost, Etc. Notes. Upon receipt by the Payor of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Note,
and (in case of loss, theft or destruction) of indemnity of security in form
satisfactory to it, or, if mutilated, upon surrender of this Note for
cancellation, the Payor will issue and deliver in lieu of such Note a new Note,
of like tenor in a like unpaid principal amount, dated so that there will be no
loss of interest on such lost, stolen, destroyed or mutilated Note.
Notwithstanding the foregoing provisions of this Section 5.1, if this Note is
lost, stolen or destroyed, then the written statement of the Payee as to such
loss, theft or destruction shall be accepted as satisfactory evidence thereof,
and no indemnity or security shall be required as a condition to the execution
and delivery by the Payor of a new Note in lieu of such Note (or as a condition
to the payment thereof, if due and payable) other than the Payee's unsecured
written agreement to indemnify the Payor.
5.2. No Waiver; Remedies Cumulative. No failure on the part of the
Payee to exercise, and no delay in exercising any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by the Payee of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
5.3. Amendments. No amendment, modification or waiver of any provision
of this Note nor consent to any departure by the Payor therefrom shall be
effective unless the same shall be in writing and signed by the Payee and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
5.4. Successors and Assigns. This Note shall be binding upon
the Payor and its successors and assigns and the terms hereof shall inure to the
benefit of the Payee and its successors and assigns. The Payee shall not assign
its rights or obligations hereunder without the prior written consent of the
Payor.
5.5. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the state of New York without giving effect to the
provisions thereof governing conflict of law principles.
- 5 -
5.6. Severability. The provisions of this Note are severable, and if
any provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Note in any jurisdiction.
5.7. Jurisdiction. The Payor hereby irrevocably consents to the
jurisdiction of any New York State or federal court located in New York, New
York over any action or proceeding arising out of any dispute between the Payor
and the Payee.
MILLBROOK DISTRIBUTION SERVICES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
- 6 -
[Page 662 to 666 to Come]
SCHEDULE 4.01
QUALIFIED JURISDICTIONS
MILLBROOK DISTRIBUTION SERVICES INC.
Alabama Maryland Pennsylvania
Arizona Massachusetts Rhode Island
Arkansas Michigan South Carolina
California Minnesota South Dakota
Colorado Mississippi Tennessee
Connecticut Missouri Texas
Delaware* Montana Utah
District of Columbia Nebraska Vermont
Florida Nevada Virginia
Georgia New Hampshire Washington
Idaho New Jersey West Virginia
Illinois New Mexico Wisconsin
Indiana** New York Wyoming
Iowa Noth Carolina
Kansas North Dakota
Kentucky Ohio
Louisiana Oklahoma
Maine Oregon
THE B. MANISCHEWITZ COMPANY, LLC
Delaware*
New Jersey
*state of formation
** application for the certificate of authority to do business has been filed
SCHEDULE 4.05
MATERIAL ADVERSE CHANGE
MILLBROOK DISTRIBUTION SERVICES INC.
None
THE B. MANISCHEWITZ COMPANY, LLC
None
[SCHEDULE 4.06(a) to Come]
SCHEDULE 4.06(b)
COMPLIANCE WITH LAWS
MILLBROOK DISTRIBUTION SERVICES INC.
1. See Schedule 4.06(a).
2. The information contained on Schedules 4.06(a) and 4.19 is incorporated
herein by reference.
THE B. MANISCHEWITZ COMPANY, LLC
1. The information contained on Schedules 4.06(a) and 4.19 is incorporated
herein by reference.
SCHEDULE 4.09
TAXES
MILLBROOK DISTRIBUTION SERVICES INC.
1. Any taxes for which Millbrook may be liable and which are for a period
prior to and including the acquisition date of Millbrook by Holdings
are the responsibility of McKesson Corporation, and are not included in
this Schedule 4.09. Any audits for periods prior to and including the
acquisition date may be controlled by McKesson Corporation, Millbrook
or jointly at the direction of McKesson Corporation.
State Sales Tax
2. Kentucky has notified the Borrower of an intent to conduct a sales tax
audit in November 1998 for the period October 1, 1994 through September
30, 1998.
3. Tennessee has notified the Borrower of an intent to conduct a sales tax
audit for the period January 1, 1995 through December 31, 1997.
4. Virginia is currently conducting a sales tax audit for the period April
1, 1995 through March 31, 1998. No findings have been communicated to
date.
State Income/Franchise
6. Returns on Extension:
Ohio Franchise Tax -- Fiscal Year ended 3/31/98
Alabama Franchise Tax -- Calender Year ended 12/31/97
THE B. MANISCHEWITZ COMPANY, LLC
1. Manischewitz has not filed separate tax returns. MANO Holdings
Corporation filed its 1991, 1992, 1994 and 1995 New Jersey Corporate
Business Tax Returns late. Although no extensions were granted, all
four returns were filed on February 29, 1996.
[SCHEDULE 4.10 To 4.18 To Come]
SCHEDULE 4.19
ENVIRONMENTAL LAW COMPLIANCE
MILLBROOK DISTRIBUTION SERVICES INC.
1. In a letter dated January 18, 1996, the State of Arkansas Department
of Pollution Control and Ecology (the "Department") notified the
Company of its determination that "facilities similar to your company
should be covered under the general storm water permit." The Department
enclosed a form Notice of Intent for "your facility" (presumably the
Company's Harrison facility), and requested that the form be completed
and submitted to the Department by March 15, 1996. A completed form was
not submitted; however, the Company's attorney has submitted a response
stating that the Company believes it has no discharges of storm water
associated with industrial activity.
2. On two occasions in 1995-1996 the Company exceeded the exempt volume
of hazardous waste generation (cleaning solvent).
3. The Company is the defendant in the Corrected Consent Decree entered
September 24, 1992, by the United States District Court for the Western
District of Arkansas Harrison Division in United States of America v.
Mass Merchandisers, Inc. (the "Decree"). The Decree concerns the
Arkwood, Inc. Superfund Site in Omaha, Arkansas, which was formerly
leased by the Company. The soils remedy was completed in 1995, leaving
only monitoring off area springs and possible groundwater remediation
if natural attenuation does not occur. The Company and R.A.B. Holdings,
Inc. are indemnified by McKesson Corporation for this matter.
4. There are 4 underground storage tanks ("USTs") at the Harrison,
Arkansas site and 5 USTs at the Leicester site.
5. In August 1994, the Occupation Safety and Health Administration
("OSHA") published final asbestos rules which revise certain
requirements that existed in two OSHA standards issued in June 1986
(one governing general industry asbestos exposure, and the other,
construction workplaces). One new requirement is that building owners
and lessees with workplaces in a building (collectively, "facility
owners") must identify the presence, location, and quantity of known
asbestos containing materials or, in buildings constructed before 1981,
"presumed" asbestos containing materials. All pre-1981 thermal system
insulation, sprayed or troweled on surfacing materials, and resilient
flooring material is presumed to be asbestos containing unless an
industrial hygienist or person of similar skill determines that it is
asbestos-free. The Company leases facilities constructed before 1981
and has not had such a determination made by an industrial hygienist or
performed such asbestos compliance activities.
THE B. MANISCHEWITZ COMPANY, LLC
1. The information contained in the following environmental reports is
incorporated herein by reference:
Environmental Compliance Audit for Jersey City facility dated May 8,
1995; Phase I Environmental Site Assessment for Jersey City facility
dated May 26, 1994; Enviro-Science Phase I Assessment for Vineland
facility dated May 26, 1994; New Jersey DEP Notification of Historical
Discharge dated November 13, 1995; Enviro-Science Past Uses of Property
dated June 13, 1994; and ▇▇▇▇▇▇▇ Environmental, Inc. Phase I Assessment
for Vacant Warehouse Building (4038-4048 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇) dated August 20, 1997.
2. From time to time during renovations and maintenance, asbestos
contained in the Owned Real Property and Leased Real Property has been
disturbed in such a manner as to require remediation, which remediation
has been performed. In August 1994, the Occupation Safety and Health
Administration ("OSHA") published final asbestos rules which revise
certain requirements that existed in two OSHA standards issued in June
1986 (one governing general industry asbestos exposure, and the other,
construction workplaces). One new requirement is that building owners
and lessees with workplaces in a building (collectively, "facility
owners") must identify the presence, location, and quantity of known
asbestos containing materials or, in buildings constructed before 1981,
"presumed" asbestos containing materials. All pre-1981 thermal system
insulation, sprayed or troweled on surfacing materials, and resilient
flooring material is presumed to be asbestos containing unless an
industrial hygienist or person of similar skill determines that it is
asbestos-free. The Company leases facilities constructed before 1981
and has not had such a determination made by an industrial hygienist or
performed such asbestos compliance activities.
3. Manischewitz's Jersey City, NJ facility is located on property formerly
occupied, in part, by an iron foundry, brass foundry, brass works, and
metal shop. These operations may have caused the release of hazardous
materials in or from such facility.
-2-
[Page 678 to 680 To Come - Pl. Check with CS]
ANNEX A
Page 1 of 6
DEBTOR JURISDICTION UCC FINANCING STATEMENTS
------ ------------ ------------------------
Millbrook Distribution Secretary of Secured Party: General Electric Company
Services State, Alabama GE Lighting, Mgr. Credit Administration
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Amendment: Debtor's name and address
changed
File Date: 3/3/97
File Number: A043637
Collateral: Inventory consisting of lamps and
light bulbs, lighting fixtures, wiring devices,
batteries, portable lighting products,
accessories and parts; accounts receivable,
chattel paper, and any other right to the
payment of money and security therefor, now
or hereafter arising from the sale,
consignment or other transfer by Debtor of
the foregoing inventory; and proceeds of the
foregoing.
Original File Date: 4/5/82
File Number: A043637R
Amendment: Debtor's name, Secured Party's
address and collateral description amended
File Date: 7/27/94 File Number: A043637
Amendment: Name of Debtor and Secured
Party changed
File Date: 4/14/92 File Number: A043657
Continuation:
File Date: 1/27/92 File Number: A043637
Continuation:
File Date: 11/24/86 File Number: A043637R
Millbrook Distribution ▇▇▇▇▇ County, Secured Party: ▇▇▇▇▇▇▇▇ Photo- Graphic,
Service Arkansas Inc.
▇.▇.▇▇▇ 790 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇
Hwy. 43 ▇▇▇▇▇▇ Ind. 66103
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ File Date: 9/26/94 File Number: 94-1378
Collateral: Consigned graphic arts and
materials
ANNEX A
Page 2 of 6
DEBTOR JURISDICTION UCC FINANCING STATEMENTS
------ ------------ ------------------------
Millbrook Distribution Secretary of Secured Party: General Electric Company
Services Inc State, Arkansas GE Lighting, Mgr. Credit Administration
Route 56 (▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Memorial Highway) Amendment: Debtor's name and address
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ changed
File Date: 1/6/97 File Number: 164720
Original Date: 12/6/74 File Number: 164720
Collateral: Inventory consisting of lamps and
light bulbs, lighting fixtures, wiring devices,
batteries, portable light products, accessories
and parts; accounts receivable, chattel paper,
and any other right to the payment of money
and security therefor, now or hereafter
arising from the sale, consignment or other
transfer by Debtor of the foregoing
inventory; and proceeds of the foregoing.
Continuation:
File Date: 10/27/94 File Number: 164720
Amendment: Debtor's name changed;
secured party's name and address changed;
collateral description amended.
File Date: 7/28/94 File Number: 164720
Amendment: Debtor's and secured party's
name and address changed.
File Date: 3/27/92 File Number: 164720
Continuation:
File Date: 7/25/89 File Number: 164720
Continuation:
File Date: 7/25/84 File Number: 164720
Continuation:
File Date: 11/14/79 File Number: 164720
ANNEX A
Page 3 of 6
DEBTOR JURISDICTION UCC FINANCING STATEMENTS
------ ------------ ------------------------
Millbrook Distribution ▇▇▇▇▇ County, Secured Party: General Electric Company
Services Inc. Arkansas GE Lighting Mgr. Credit Administration
Route 56 (▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Memorial Highway) Amendment: Debtor's name and address
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ changed.
File Date: 12/30/96 File Number: 13827
Original File Date: 12/6/74 File Number:
13827
Collateral: Inventory consisting of lamps and
light bulbs, lighting fixtures, wiring devices,
batteries, portable lighting products,
accessories and parts; accounts receivable,
chattel paper, and any other right to the
payment of money and security therefor, now
or hereafter arising from the sale,
consignment or other transfer by Debtor of
the foregoing inventory; and proceeds of the
foregoing.
Continuation:
File Date: 10/27/94 File Number: 13827
Amendment: Debtor's name changed;
Secured Party's address changed, collateral
description amended.
File Date: 7/27/94 File Number: 13827
Amendment: Debtor's and Secured Party's
name and address changed.
File Date: 3/19/92 File Number: 13827
Continuations:
File Date: 8/4/89 File Number: 13827
File Date: 7/23/84 File Number: 13827
File Date: 11/13/79 File Number: 13827
ANNEX A
Page 4 of 6
DEBTOR JURISDICTION UCC FINANCING STATEMENTS
------ ------------ ------------------------
Millbrook Distribution Secretary of Secured Party: General Electric Company
Services Inc State, GE Lighting, Mgr. Credit Administration
Route 56 (▇▇▇▇▇▇▇ Massachusetts ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Memorial Hwy) Amendment: Debtor's and Secured Party's
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ name and address changed
File Date: 12/27/96 File Number: 438878
Original File Date: 3/10/90 File Number:
944358
Collateral: Inventory consisting of
lamps and light bulbs, lighting
fixtures, wiring devices, batteries,
portable lighting products, accessories
and parts; accounts receivable, chattel
paper, and any other right to the
payment of money and security therefor,
now or hereafter arising from the sale,
consignment or other transfer by Debtor
of the foregoing inventory; and proceeds
of the foregoing.
ANNEX A
Page 5 of 6
DEBTOR JURISDICTION UCC FINANCING STATEMENTS
------ ------------ ------------------------
Millbrook Distribution Secretary of Secured Party: General Electric Company
Services Inc. State, North GE Lighting, Mgr Credit Administration
Route 56 (▇▇▇▇▇▇▇ Carolina ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Memorial Highway) Amendment: Debtor's name and address
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ changed.
File Date: 12/31/96 File Number: 001412887
Collateral: Inventory consisting of lamps and
light bulbs, lighting fixtures, wiring devices,
batteries, portable lighting products,
accessories and parts; accounts receivable,
chattel paper, and any other right to the
payment of money and security therefor, now
or hereafter arising from the sale,
consignment or other transfer by Debtor of
the foregoing inventory; and proceeds of the
foregoing.
Original File Date: 8/27/90 File Number:
0709408
Continuation:
File Date: 5/18/95 File Number: 1227182
Amendment: debtor's name changed,
Secured Party's address changed, collateral
description amended
File Date: 7/28/94 File Number: 1131034
Amendment: Debtor's name changed
File Date: 3/20/92 File Number: 0872779
ANNEX A
Page 6 of 6
DEBTOR JURISDICTION UCC FINANCING STATEMENTS
------ ------------ ------------------------
Millbrook Distribution Pitt County,
Services Inc North Carolina Secured Party: General Electric Company,
Route 56 (▇▇▇▇▇▇▇ ▇▇ Lighting, Mgr. Credit Administration
Memorial Highway) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Amendment: Debtor's name and address
changed
File Date: 12/30/96 File Number: 963699
Collateral: Inventory consisting of lamps and
light bulbs, lighting fixtures, wiring devices,
batteries, portable lighting products,
accessories and parts; accounts receivable,
chattel paper, and any other right to the
payment of money and security therefor, now
or hereafter arising from the sale,
consignment or other transfer by Debtor of
the foregoing inventory; and proceeds of the
foregoing.
Original File Date: 8/27/90 File Number:
902012
Continuation:
File Date: 5/19/95 File Number: 951605
Amendment: Debtor's name and Secured
Party's address changed, collateral
description amended
File Date: 7/29/94 File Number: 94-2044
Amendment: Debtor's name changed
File Date: 3/20/92 File Number: 920645