1
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
This AMENDED AND RESTATED NOTE PURCHASE AGREEMENT is made and
entered into as of this 5th day of November, 1996, by and between OUTLOOK GROUP
CORP., formerly known as Outlook Graphics Corp., a Wisconsin corporation
(hereinafter referred to as the "Company"), and the undersigned lender, the
STATE OF WISCONSIN INVESTMENT BOARD, an independent agency of the State of
Wisconsin (hereinafter referred to as the "Board" or "Lender").
SECTION 1. BACKGROUND; AMENDMENT AND RESTATEMENT.
1.1. BACKGROUND.
(a) EXISTING NOTE PURCHASE AGREEMENT AND EXISTING NOTES.
The Company has issued two separate Promissory Notes in the aggregate principal
amount of Fifteen Million Three Hundred Fifty Thousand Dollars ($15,350,000)
(the "Existing Notes"), the first note (the "Existing Firstar Note") having
been issued to Firstar Milwaukee, N.A. (hereinafter referred to as "Firstar")
in the original principal amount of Four Million Three Hundred Fifty Thousand
Dollars ($4,350,000) and the second note (the "Existing Board Note") having
been issued to the Board in the original principal amount of Eleven Million
Dollars ($11,000,000), pursuant to that certain Note Purchase Agreement dated
June 16, 1994 by and among the Company, the Board and Firstar (as heretofore
amended, the "Note Purchase Agreement").
(b) EXISTING COLLATERAL DOCUMENTS AND EXISTING
INTERCREDITOR AGREEMENT. In connection with the execution and delivery of the
Note Purchase Agreement, the following agreements were executed and delivered:
(i) a Guaranty Agreement dated as of June 16,
1994, among Outlook Label Systems, Inc., Outlook Foods, Inc.,
formerly known as Oconomowoc Packaging, Inc. and Outlook
Packaging, Inc. (Wholly-owned Subsidiaries of the Company)
and a Guaranty Agreement dated as of August 1, 1995, from
Barrier Films Corporation (also a Wholly-owned Subsidiary of
the Company) (the "EXISTING GUARANTY AGREEMENTS") as an
inducement for Firstar and the Board to purchase the Existing
Notes and loan the proceeds thereof to the Company;
(ii) an Assignment of Life Insurance Policy as
Collateral dated August 31, 1994 (the "EXISTING ASSIGNMENT"),
pursuant to which the Company assigned to the Board its
interest as policy owner and beneficiary of the life insurance
policy upon the life of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇;
(iii) certain mortgages and security agreements
described on Schedule 1.1(b) hereto dated as of June 16, 1994
or, in the case of the Barrier Films Corporation agreement,
August 1, 1995 (collectively, the "EXISTING MORTGAGES") on all
interests in real property and certain interests in personal
property of the Company and its Subsidiaries in favor of
Firstar and the Board;
(iv) Back-up Subsidiary Promissory Notes from each
of the Subsidiaries, except Barrier, to the Company dated as
of June 16, 1994 (the "EXISTING SUBSIDIARY NOTES"), which were
assigned by the Company to Firstar and the Board pursuant to
Assignments and Powers of Attorney dated as of June 16, 1994
(the "EXISTING ASSIGNMENTS AND POWERS OF ATTORNEY"); and
2
(v) an Intercreditor and Collateral Agency
Agreement dated as of June 16, 1994 (as heretofore amended,
the "EXISTING INTERCREDITOR AGREEMENT"), among M&I Bank Fox
Valley (formerly known as Valley Bank), Firstar, the Board and
Firstar Leasing Services Corporation.
The Agreements described in the foregoing clauses (i) through (vi),
inclusive, are herein collectively referred to as the "EXISTING COLLATERAL
DOCUMENTS."
1.2. AGREEMENT AND CONSENT OF COMPANY TO AMENDMENTS AND
RESTATEMENTS.
(a) AMENDED AND RESTATED NOTE. The Company has
authorized, and (subject to the effectiveness of the agreement and consent of
the Board as provided in Section 1.3) agrees and consents to, the amendment and
restatement in its entirety of the Existing Board Note, as provided for in this
Agreement. The Existing Board Note as so amended and restated, and any notes
delivered in substitution for any such note pursuant to any such provisions,
are hereinafter sometimes referred to, collectively, as the "NOTES" or
individually as the, or a, "NOTE". The Note shall (i) be substituted in the
place of the Existing Board Note (which shall be surrendered to the Company for
cancellation), (ii) be dated and bear interest from September 17, 1996, (iii)
have the terms and conditions herein and therein provided, and (iv) be
substantially in the form of Exhibit A.
(b) AMENDMENTS OF EXISTING COLLATERAL DOCUMENTS. The
Company has authorized, and (subject to the effectiveness of the agreement and
consent of Board as provided in Section 1.3) agrees and consents to,
(i) an Amended and Restated Guaranty Agreement,
replacing the Existing Guaranty Agreements (the "AMENDED AND
RESTATED GUARANTY AGREEMENT"), in the form attached hereto as
Exhibit B;
(ii) a First Amendment to the Existing Assignment
(the "ASSIGNMENT AGREEMENT AMENDMENT"), in the form attached
hereto as Exhibit C;
(iii) a First Amendment to each of the Existing
Mortgages that has not been released prior to the Effective
Date (the "MORTGAGE AMENDMENTS"), in the forms attached hereto
as Exhibit ▇-▇, ▇-▇, and D-3; and
(iv) an Intercreditor Agreement (the "BABC
INTERCREDITOR AGREEMENT"), between BankAmerica Business
Credit, Inc. ("BABC") and the Board, in the form attached
hereto as Exhibit E.
(c) EXISTING DEFAULTS. The Company requests that the
Board waive such Events of Default resulting from violations of Sections
6.8(a), (b), and (c), and 7.1(b) of the Existing Note Agreement by entering
into this Agreement, and amend certain covenants in the Existing Note
Agreement, in exchange for the substitution of the Note described in subsection
(a) above.
1.3. AGREEMENT AND CONSENT OF THE BOARD TO AMENDMENTS AND
RESTATEMENTS. Subject to the satisfaction of the conditions set forth in
Section 3, the Board, by execution of this Agreement, hereby agrees and
consents to the amendment and restatement of the Existing Board Note and the
Existing Note Purchase Agreement and the amendments of the Existing Collateral
Documents.
1.4. SUBSTITUTION OF NOTE ON EFFECTIVE DATE. On the Effective
Date, the Company will deliver to the Board, at the office of Winston & ▇▇▇▇▇▇,
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, a Note, in the form of Exhibit A, in
the aggregate outstanding principal amount of the Existing Note held by the
Board, dated the
-2-
3
Effective Date, 1996, and payable to the Board, against delivery by the Board
of such Existing Board Note to the Company for cancellation. All amounts owing
under, and evidenced by, the Existing Board Note as of the Effective Date shall
continue to be outstanding under, and shall after the Effective Date be
evidenced by, the Board Note, and shall be repayable in accordance with this
Agreement and the Note.
1.5. FAILURE TO DELIVER, FAILURE OF CONDITIONS. If on the Effective
Date the Company fails to tender to the Board the Note to be delivered on such
date, or if the conditions specified in Section 3 to be fulfilled on or before
the Effective Date have not been fulfilled, the Board may thereupon elect to be
relieved of all further obligations hereunder and the consent and agreement of
the Board contemplated by Section 1.3 shall not become effective. In such
event, nothing in this Section 1.5 shall operate to relieve the Company from
any of its obligations under the Existing Note Purchase Agreement, which shall
continue in full force and effect and shall not be modified by this Agreement.
SECTION 2. DEFINITIONS.
2.1. DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings, and the following
definitions shall be equally applicable to both the singular and plural forms
of any of the terms herein defined:
"ADJUSTED NET EARNINGS FROM OPERATIONS" means, with respect to any
fiscal period of the Company and its Subsidiaries, the Company's and its
Subsidiaries' consolidated net income after provision for income taxes for such
fiscal period, as determined in accordance with GAAP and reported on the
Financial Statements for such period, less any and all of the following
included in such net income: (a) gain or loss arising from the sale of a
capital asset; (b) gain arising from any write-up in the book value of any
asset; (c) earnings of any corporation, substantially all the assets of which
have been acquired by any Company or any of its Subsidiaries in any manner, to
the extent realized by such other corporation prior to the date of acquisition;
(d) earnings of any business entity in which the Company or any of its
Subsidiaries has an ownership interest unless (and only to the extent) such
earnings shall actually have been received by the Company or and its
Subsidiary, as applicable, in the form of cash distributions; (e) earnings of
any Person to which assets of the Company or any of its Subsidiaries shall have
been sold, transferred or disposed of, or into which any the Company or any of
its Subsidiaries shall have been merged, or which has been a party with the
Company or any of its Subsidiaries to any consolidation or other form of
reorganization, prior to the date of such transaction; (f) gain arising from
the acquisition of debt or equity securities of the Company or any of its
Subsidiaries or from cancellation or forgiveness of Indebtedness; and (g) gain
arising from extraordinary items, as determined in accordance with GAAP, or
from any other non-recurring transaction.
"ADJUSTED TANGIBLE ASSETS" means the Company's and its Subsidiaries'
consolidated assets except: (a) goodwill; (b) assets of the Company or any of
its Subsidiaries constituting Intercompany Accounts; and (c) fixed assets to
the extent of any write-up in the book value thereof resulting from a
revaluation effective after the Closing Date.
"ADJUSTED TANGIBLE NET WORTH" means, at any date: (a) the book value
(after deducting related depreciation, obsolescence, amortization, valuation,
and other proper reserves as determined in accordance with GAAP) at which the
consolidated Adjusted Tangible Assets would be shown on a consolidated balance
sheet of the Company and its Subsidiaries at such date prepared in accordance
with GAAP less (b) the amount at which the Company's and its Subsidiaries'
consolidated liabilities would be shown on such balance sheet, including as
liabilities all reserves for contingencies and other potential liabilities
which would be shown on such balance sheet or disclosed in the notes thereto.
-3-
4
"AFFILIATE" shall mean any Person (other than a Subsidiary) (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (iii) 5% or more of the Voting Stock (or in the case of a Person
which is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"AGREEMENT" shall mean that certain Note Purchase Agreement, dated as
of June 16, 1994, as amended by this Amended and Restated Note Purchase
Agreement, as the same may be amended, supplemented or modified from time to
time.
"BABC" is defined in subsection 1.2(b).
"BABC DEBT" shall mean the credit facility in the aggregate amount of
$29,870,000 which BABC is extending to the Company and its Subsidiaries
pursuant to the BABC Loan Agreement, including the relending, pursuant to the
terms of the BABC Loan Agreement, of amounts repaid on the revolving loans made
thereunder.
"BABC LOAN AGREEMENT" shall mean the Loan and Security Agreement dated
as of November 5, 1996, among the Company, its Subsidiaries and BABC.
"BUSINESS DAY" shall mean any day except a Saturday, a Sunday, a day
on which banks in the State of Wisconsin are required by law to close or on
which it is customary for banks situated similarly to banks used by the Company
to close, or a day on which agencies of the State of Wisconsin are authorized
or required by law to close.
"CAPITAL EXPENDITURES" means all payments due (whether or not paid)
during a Fiscal Year of the Company in respect of the cost of any fixed asset
or improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including, without limitation, those arising
in connection with the direct or indirect acquisition of such assets by way of
increased product or service charges or offset items or in connection with
Capital Leases.
"CAPITAL LEASE" means any lease of Property by any Borrower or any of
its Subsidiaries that, in accordance with GAAP, should be reflected as a
liability on the consolidated balance sheet of the Borrower and its
Subsidiaries.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or not
incorporated, which is under common control with the Company within the meaning
of Section 414(b) or (c) of the Code.
"CONTINGENT OBLIGATION" shall mean, as to any Person, any guarantee of
Indebtedness or any other obligation of any second Person or any assurance with
respect to the financial condition of any second Person, whether direct,
indirect or contingent, including without limitation, any purchase or
repurchase agreement or other arrangement of whatever nature having the effect
of assuring or holding harmless any third Person against loss with respect to
any obligation of such second Person; provided, however, that the term
Contingent Obligation shall not include (i) endorsements of instruments for
deposit or collection in the ordinary course of business or (ii) any
obligations to reimburse an issuer of a letter of credit to the extent that the
letter of credit assures payment of obligations otherwise constituting
Indebtedness.
-4-
5
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any provision
of any Security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"DEFAULT" shall mean any of the events specified in Section 8 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.
"DISTRIBUTION" means, in respect of any corporation: (a) the payment
or making of any dividend or other distribution of Property in respect of
capital stock or options or warrants in respect of such capital stock of such
corporation, other than distributions in capital stock of the same class; or
(b) the redemption or other acquisition of any capital stock of such
corporation.
"DOLLARS" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" means with respect to the Company and its Subsidiaries, on a
consolidated basis for any period, Adjusted Net Earnings from Operations, plus
the sum of (i) interest expenses, (ii) income taxes, (iii) depreciation, (iv)
amortization, and (v) other non-cash expenses, each to the extent deducted in
determining the Company's and its Subsidiaries' Adjusted Net Earnings from
Operations for that period, less non-cash income included in the calculation of
Adjusted Net Earnings from Operations for that period.
"EFFECTIVE DATE" shall mean the date upon which the conditions set
forth in subsections 3.1 through 3.6 shall have been satisfied, but not, in any
event, later than November 6, 1996.
"ENVIRONMENTAL LAWS" shall mean any federal, state or local laws
(including statutes, regulations, ordinances or other governmental restrictions
and requirements) relating to the discharge of air pollutants, water pollutants
or process waste water or otherwise relating to the environment or hazardous
substances, whether currently existing or enacted in the future.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may, from time to time, be supplemented or amended.
"EVENT OF DEFAULT" shall mean any of the events specified in Section 8
hereof, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"FINANCIAL STATEMENTS" means, according to the context in which it is
used, the financial statements furnished to the Lender pursuant to Sections 5.1
and 6.2, or any combination thereof.
"FISCAL YEAR" means the Company's and its Subsidiaries' fiscal year
for financial accounting purposes. The current Fiscal Year of the Company and
its Subsidiaries will end on May 31, 1997.
"FIXED CHARGE COVERAGE RATIO" means as to the Company and its
Subsidiaries on a consolidated basis, for any fiscal period, the ratio of
EBITDA to Fixed Charges.
"FIXED CHARGES" means as to the Company and its Subsidiaries on a
consolidated basis, for any fiscal period, the sum of (i) interest expenses
paid or payable in cash, (ii) scheduled installments of principal paid or
payable with respect to Debt for borrowed money and Capital Leases; (iii) that
portion of Capital Expenditures acquired for cash or financed by borrowing on
the Company's or any of its Subsidiaries' general working capital credit
facility or; (iv) income taxes paid or payable in cash.
-5-
6
"FUNDED DEBT" shall mean (i) all Indebtedness having a final or
remaining maturity of one or more than one year from the date of origin thereof
(or which is renewable or extendible at the option of the obligor for a period
or periods more than one year from the date of origin), including all payments
in respect thereof that are required to be made within one year from the date
of any determination of Funded Debt, whether or not included in consolidated
liabilities, and (ii) all Guaranties of such Indebtedness of others, of the
Company and its Subsidiaries on a consolidated basis eliminating Intercompany
Items.
"GAAP" means United States generally accepted accounting principles
consistently applied and maintained throughout the period indicated and, except
changes to prior financial practice mandated by the Financial Accounting
Standard Board or any similar accounting authority of comparable standing,
consistent with the prior financial practice of the Company and any
predecessor. Whenever any accounting term is used herein which is not
otherwise defined, it shall be interpreted in accordance with GAAP.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof, including municipalities of any
kind, and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any corporation or
other entity owned or controlled (through stock or capital ownership or
otherwise) by any of the foregoing.
"GUARANTY" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any Indebtedness, dividend or other obligation, of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (i) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or payment of
such Indebtedness or obligation, or (iii) to lease property or to purchase
Securities or other property or services primarily for the purpose of assuring
the owner of such Indebtedness or obligation of the ability of the primary
obligor to make payment of the Indebtedness or obligation, or (iv) otherwise to
assure the owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof. For the purposes of all computations made
under this Agreement, a Guaranty in respect of any Indebtedness for borrowed
money shall be deemed to be Indebtedness equal to the principal amount of such
Indebtedness for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
"HAZARDOUS SUBSTANCES" shall mean any hazardous or toxic wastes,
chemicals or other substances, the generation, possession or existence of which
is prohibited or governed by any Environmental Laws.
"INDEBTEDNESS" shall mean, all liabilities, obligations and
indebtedness of the Company and each of its Subsidiaries to any Person of any
kind or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, and including, without in any way
limiting the generality of the foregoing: (a) the Company's and each of its
Subsidiaries' liabilities and obligations to trade creditors; (b) all
obligations with respect to payments under the Notes, this Agreement, the BABC
Debt, other loans or Capitalized Leases shown on Schedule 3.1(h); (c) all
obligations and liabilities of any Person secured by any lien on any Company or
any of its Subsidiaries' property, even though the Company and its Subsidiaries
shall not have assumed or become liable for the payment thereof; provided,
however, that all such obligations and liabilities which are limited in
recourse to such property shall be included in Indebtedness only to the extent
of the book value of such property as would be shown on a balance sheet of the
Company and its Subsidiaries prepared in accordance with GAAP; (d) all
obligations or liabilities created or arising under any Capital Lease or
conditional sale or other title retention
-6-
7
agreement with respect to Property used or acquired by the Company or any of
its Subsidiaries, even if the rights and remedies of the lessor, seller or
lender thereunder are limited to repossession of such Property; provided,
however, that all such obligations and liabilities which are limited in
recourse to such property shall be including in Indebtedness only to the extent
of the book value of such property as would be shown on a balance sheet of the
Company and its Subsidiaries prepared in accordance with GAAP; (e) all accrued
pension fund and other employee benefit plan obligations and liabilities; (f)
all obligations and liabilities under any Guaranty; (g) indebtedness arising
under acceptance facilities and the face amount of all letters of credit
(excluding letters of credit used by the Company or any Subsidiary to secure
obligations of that Person to the extent such obligations otherwise constitute
Indebtedness of such Person, and excluding, to the extent necessary to avoid
duplication, letters of credit the Person's obligation to reimburse the issuer
of which is evidenced by a reimbursement agreement, promissory note or other
evidence of indebtedness which otherwise constitutes Indebtedness) issued for
the account of such Person, and without duplication, all drafts drawn
thereunder, and (h) deferred taxes.
"INTERCOMPANY ACCOUNTS" means all assets and liabilities, however
arising, which are due to the Company or any of its Subsidiaries from another
of the Company or any of its Subsidiaries, or which otherwise arise from any
transaction by any Company or any of its Subsidiaries with, any Affiliate.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Amended and
Restated Guaranty Agreement, the Existing Assignment as amended by the
Assignment Agreement Amendment, the Existing Mortgages as Amended by the
Mortgage Amendments, the Existing Subsidiary Notes, and the Existing
Assignments and Powers of Attorney as Amended by the Assignments and Powers of
Attorney Amendment, as amended and any schedule or exhibit thereto; one of the
Loan Documents, a "Loan Document."
"LONG-TERM LEASE" shall mean any lease of real or personal property
(other than a Capital Lease) having an original term, including any period for
which the lease may be renewed or extended at the option of the lessor, of more
than twelve (12) months.
"MAKE WHOLE PREMIUM" shall mean at any time with respect to any
prepayment of the Notes (other than pursuant to Section 4.1), the excess of (a)
the present value of the principal and interest payments on and in respect of
the Notes being prepaid that would otherwise become due and payable discounted
at a rate (computed on the basis of a 360-day year of twelve 30-day months)
which is equal to the Reinvestment Rate over (b) the aggregate principal amount
of the Notes then to be prepaid. To the extent that the Reinvestment Rate at
the time of such prepayment is equal to or greater than the rate of interest
provided in the Notes, the Make Whole Premium is zero. Any calculation of the
Make Whole Premium shall be made by the Company on and as of five Business Days
prior to the date such Make Whole Premium is to be paid and the detailed
calculation shall be delivered to the Noteholders via telecopy or telex on such
date of calculation. In the event of a disagreement as to such calculation the
determination of the Noteholders shall be final absent manifest error.
"MINORITY INTERESTS" shall mean any shares of stock of any class of a
Subsidiary (other than directors' qualifying shares as required by law) that
are not owned by the Company and/or one or more of its Subsidiaries. Minority
Interests shall be valued in accordance with GAAP consistently applied.
"MONTH" shall mean any calendar month.
"NOTEHOLDER" shall mean any Person who owns any Note or any portion
thereof, whether the Lender or its nominees or assigns, such assignment being
subject to the provisions of subsection 10.8 hereof.
"OUTLOOK FOODS EQUIPMENT" means all furniture, fixtures, and
equipment now owned by Outlook Foods, Inc. and listed on Schedule 2.1 hereto,
and all accessions thereto and proceeds thereof.
-7-
8
"OUTLOOK FOODS REAL ESTATE" means the real estate now owned by
Outlook Foods, Inc.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PERSON" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political
subdivision thereof.
"PLAN" shall mean as to any Person any pension plan that is covered by
Title IV of ERISA and in respect of which that Person or a Commonly Controlled
Entity of that Person is an "employer" as defined in Section 3(5) of ERISA.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"REINVESTMENT RATE" shall mean the Treasury Rate plus 0.25%.
"REMEDIAL ACTION" shall mean the clean up, removal or remediation or
other action with respect to any Hazardous Substances.
"RENTALS" means all payments due from the lessee or sublessee under a
lease, including, without limitation, basic rent, percentage rent, property
taxes, utility or maintenance costs, and insurance premiums.
"REPORTABLE EVENT" shall mean any of the events set forth in Section
404(3)(b) of ERISA or the regulations thereunder.
"REQUIREMENT OF LAW" shall mean, as to any Person, the Articles of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"RESPONSIBLE OFFICER" shall mean, as to the Company, the President of
the Company and, with respect to financial matters, the chief financial officer
of the Company.
"SECURED INDEBTEDNESS" shall mean Indebtedness which is secured in any
manner including, without limitation, by way of mortgage, pledge, lien,
encumbrance or charge upon, or security interest in, any property of the
Company or any Subsidiary and in any event shall include Capital Leases.
"SECURITY" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"SPECIFIED CAPITAL EXPENDITURES" means Capital Expenditures relating
to (i) the purchase by the Company of a heidelberg press, provided that the
aggregate consideration paid by the Company in connection therewith shall not
exceed $765,000, (ii) the purchase by the company of a jagerberg sheeter,
provided that the aggregate consideration paid by the Company in connection
therewith shall not exceed $1,500,000, and (iii) the purchase by the Company of
various pieces of equipment previously leased through MetLife Capital and Fleet
Capital, provided that the aggregate consideration paid by the Company in
connection therewith shall not exceed $345,000, and (iv) the purchase by
Outlook Packaging, Inc., of various pieces of equipment previously leased
through MetLife Capital and Fleet Capital, provided that the aggregate
consideration paid by Outlook Packaging, Inc., in connection therewith shall
not exceed $94,000.
-8-
9
"SUBORDINATED FUNDED DEBT" shall mean any unsecured Funded Debt which
shall contain provisions which expressly subordinate its right of payment of
principal and interest to that of any outstanding senior Indebtedness in a
manner satisfactory to the Lender.
"SUBSIDIARY" shall mean, as to any particular parent corporation, any
corporation of which more than 50% (by number of votes) of the Voting Stock
shall be owned by such parent corporation and/or one or more corporations which
are themselves subsidiaries of such parent corporation.
"TREASURY RATE" shall mean at any time with respect to the Notes being
prepaid, the then existing yield to maturity on the United States Treasury
obligations with a maturity (as compiled by and published in the most recently
published issue of the United States Federal Reserve Statistical Release
designated H.15(519) or its successor publication) equal to the remaining
weighted average maturity of the portion of the Notes being prepaid. If no
maturity exactly corresponding to such weighted average maturity shall appear
therein, the United States Treasury obligations with the nearest published
maturity occurring prior thereto and with the nearest published maturity
occurring thereafter shall each be determined and the Treasury Rate shall be
interpolated on a straight-line basis based on the respective yields to
maturity of such obligations. "WEIGHTED AVERAGE MATURITY OF THE NOTES" shall
mean, at any date, the number of years (and fractions thereof) obtained by
dividing the then Dollar-years of the payments on the Notes being prepaid by
the principal amount thereof of the prepayment; and for purposes of this
definition, the term "DOLLAR-YEARS" means, at any date, the total of the
products obtained by multiplying (i) the amount of each payment to be prepaid,
including payment at final maturity, in respect thereof by (ii) the number of
years (including fractions thereof) which will elapse between the date of
prepayment and the date on which such scheduled payment is required to be made.
"VOTING STOCK" shall mean Securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"WHOLLY-OWNED" when used in connection with any Subsidiary shall mean
a Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
borrowed money, other than certain Indebtedness which is permitted under
subsection 8.1 hereof, including any renewals thereof, shall be owned by the
Company and/or one or more of its Wholly-owned Subsidiaries.
SECTION 3. CONDITIONS PRECEDENT.
This Agreement shall become effective upon satisfaction of the
conditions set forth in this Section, and the Lender shall not be required to
exchange the Existing Board Note for the Note hereunder, unless prior to the
Effective Date:
3.1. NOTE AND DOCUMENTS.
(a) NOTE. The Lender shall have received the Amended and
Restated Note, payable to the order of the Lender, conforming to the
requirements hereof and duly executed by Responsible Officers.
(b) MORTGAGE AMENDMENTS. The Lender shall have received
the Mortgage Amendments, executed by the Company or its Subsidiaries, as
applicable, each in such form as is acceptable to the Lender.
(c) ASSIGNMENT AGREEMENT AMENDMENT. The Lender shall
have received the Assignment Agreement Amendment executed by the Company, in
such form as is acceptable to the Lender.
-9-
10
(d) SUBSIDIARY GUARANTIES. The Lender shall have
received an Amended and Restated Guaranty Agreement, executed by all of the
Company's Subsidiaries in favor of the Lender, in such form as is acceptable to
the Lender.
(e) BARRIER SUBSIDIARY NOTE AND ASSIGNMENT. The Lender
shall have received a Subsidiary Promissory Note in the form of the, Existing
Subsidiary Notes, executed by Barrier, and an Assignment and Power of Attorney
from the Company to Lender in the form of the Existing Assignment as amended by
the Assignment Agreement Amendment.
(f) INTERCREDITOR AGREEMENT. The Lender shall have
entered into an Intercreditor Agreement with BABC in form and substance
acceptable to the Lender.
(g) LEGAL OPINIONS. The Company shall have delivered to
the Lender an opinion of counsel for the Company and its Subsidiaries, dated as
of the Effective Date, addressed to the Lender, in form satisfactory to the
Lender and covering the matters set forth in Exhibit F and such other matters
as the Lender may require.
(h) CERTIFICATE OF FUNDED DEBT, LONG-TERM LEASES, SECURED
INDEBTEDNESS AND CONTINGENT OBLIGATIONS. The Company shall have delivered to
the Lender a certificate, in the form of Schedule 3.1(h) and satisfactory to
the Lender, dated the Effective Date and signed by a Responsible Officer,
certifying as to all Funded Debt, Long-Term Leases, Secured Indebtedness and
Contingent Obligations as of the date thereof (including such as is expected to
be established substantially contemporaneously with the loans hereunder, and
including the loans hereunder), the amount of the debt, the names of all
lenders and the names of the respective borrowers and, as to Secured
Indebtedness, the location of any and all collateral securing each item of
Secured Indebtedness, including leased property, and, as to each Long Term
Lease, the aggregate Rentals payable thereunder, and reflecting all information
both on a consolidated basis and for the Company and each Subsidiary.
(i) OFFICER'S CERTIFICATE. The Company shall have
delivered to the Lender a certificate of the Secretary of the Company and a
certificate of the Secretary or Assistant Secretary of each Subsidiary, dated
the date of the Note, as to: (i) the incumbency and signature of the officers
of the Company or Subsidiary signing this Agreement, the Note, and any other
Loan Documents, (ii) the adoption and continued effect of resolutions of the
Board of Directors of the Company or Subsidiary authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents, and
(iii) the accuracy of a copy of the Articles of Incorporation and By-laws of
the Company or Subsidiary attached thereto.
(j) MISCELLANEOUS DOCUMENTS. The Lender shall have
received such other documents and instruments as the Lender shall reasonably
deem necessary in connection with the purchase of the Note by the Lender as
contemplated hereunder including, but not limited to the environmental
assessments described in subsection 5.19, and any consents, waivers, approvals,
authorizations, registrations, filings and notifications which are required for
the making of the loan contemplated hereby.
3.2. BABC LOAN. The Company and its Subsidiaries shall entered
into, and satisfied each condition of closing specified in Section 11 of, the
BABC Loan Agreement. The BABC Loan Agreement shall be in a form satisfactory
to Lender, and the Lender shall have received copies of the BABC Loan Agreement
and the other Loan Documents described therein.
3.3. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company herein, in any Loan Document, or in any
certificate, document, financial statement or other statement delivered
hereunder are true as of the Effective Date to the same extent as if made on
and as of such date.
-10-
11
3.4 INSURANCE. The Company shall have purchased all insurance
required to be maintained by the Company and its Subsidiaries as provided in
subsection 6.7 hereof and the Lender shall have received a certificate dated as
of the Effective Date and in form satisfactory to the Lender of the President
of the Company certifying that all of the insurance policies are in full force
as of the Effective Date.
3.5 APPRAISALS. The Lender shall have received written reports of
appraisals of the Company's and its Subsidiaries' equipment real estate
performed by independent appraisers acceptable to the Lender and on a basis
satisfactory to the Lender, and stating a fair market value of the real estate
and an orderly liquidation value of the equipment satisfactory to the Lender.
3.6 PAYMENT OF FEES AND EXPENSES. The Company and its
Subsidiaries shall have paid all fees and expenses of the Lender's outside
counsel and all other fees and expenses of the Lender incurred in connection
with any of the Loan Documents and the transactions contemplated thereby.
3.7. ADDITIONAL MATTERS. All other documents and legal matters in
connection with the transaction contemplated by this Agreement and the other
Loan Documents, including without limitation the evidence of the Company's and
its Subsidiaries' title to their property and the absence of any liens except
liens permitted under the terms of the Loan Documents, are satisfactory in form
and substance to the Lender and the Lender's counsel.
3.8. SATISFACTORY PROCEEDINGS. All proceedings taken in connection
with the transactions contemplated by this Agreement, and all documents
necessary to the consummation thereof, shall be satisfactory in form and
substance to the Lender and its counsel, and the Lender shall have received a
copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
SECTION 4. PREPAYMENT OF NOTES.
4.1. REQUIRED PREPAYMENTS. The Company agrees that:
(a) On the sixteenth day of each March, June, September and
December of each year, commencing March 16, 1997 and ending June 16, 2004,
inclusive, (the dates for required prepayments for the Notes are herein called
"Fixed Payment Dates"), it will prepay and apply and there shall become due and
payable an amount on the principal indebtedness evidenced by the Notes as shown
on the Schedule of Principal Payments, Schedule 4.1, attached; and
(b) It will, promptly upon receipt thereof, prepay and apply on
the principal indebtedness evidenced by the Notes the net proceeds of the sale
of the Outlook Foods Real Estate and, if sold in a single transaction or series
of related transactions, the Outlook Foods Equipment.
No premium shall be payable in connection with any required prepayment made
pursuant to this subsection 4.1. Any payment of less than all of the Notes
pursuant to the provisions of paragraph (b) of this subsection 4.1, or
subsection 4.2, shall not relieve the Company of the obligation to make
required payments or prepayments on the Notes in accordance with the terms of
paragraph (a) of this subsection 4.1.
4.2. OPTIONAL PREPAYMENTS. The Company may not prepay the
outstanding Notes, in whole or in part, without the consent of the Noteholders,
which consent may be withheld in the sole discretion of the Noteholders, except
as follows:
-11-
12
(a) required prepayments as provided under subsection 4.1;
(b) prepayments made solely from the proceeds of the
contemporaneous issuance of the Company's common stock, which, upon compliance
with the provisions of this Section 4, may be made beginning June 16, 1997; and
(c) other prepayments which, upon compliance with the provisions
of this Section 4, may be made after June 16, 1999.
For all prepayments made pursuant to paragraphs (b) and (c) of this subsection
4.2, the Company shall, upon compliance with subsection 4.3, have the privilege
of prepaying the outstanding Notes, either in whole or in part on any date (but
if in part then in units of $100,000 or an integral multiple of $10,000 in
excess thereof), providing that the Company shall pay, together with the
principal prepayment, interest accrued through the date of the prepayment, and
a premium equal to the applicable Make Whole Premium on the principal amount to
be so prepaid. Prepayments made pursuant to paragraphs (b) and (c) shall not
relieve the Company from its obligation to make the required prepayments
provided under subsection 4.1.
4.3. NOTICE OF PREPAYMENTS. The Company will give notice of any
prepayment of the Notes (other than the prepayments required by subsection
4.1(a)) to the Noteholders thereof not less than 30 days nor more than 60 days
before the date fixed for such optional prepayment specifying (i) such date,
(ii) the section of this Agreement under which the prepayment is to be made,
(iii) the principal amount of the Noteholder's Note to be prepaid on such date,
and (iv) the estimated premium, if any, and accrued interest applicable to the
prepayment. Such notice of prepayment shall also certify all facts which are
conditions precedent to any such prepayment. Principal specified in such
notice, together with the premium, if any, and accrued interest thereon shall
become due and payable on the prepayment date.
4.4. DIRECT PAYMENT. Notwithstanding anything to the contrary in
this Agreement or the Notes, in the case of any Note owned by Lender, or by a
Noteholder who has given written notice to the Company requesting that the
provisions of this Section shall apply, the Company will promptly and
punctually pay when due the principal thereof and premium, if any, and interest
thereon, without any presentment thereof, directly to such Lender or Noteholder
or such subsequent holder at the address of such Lender or Noteholder set forth
in Schedule 4.4 or at such other address as such Lender or Noteholder or such
subsequent holder may from time to time designate in writing to the Company or,
if a bank account is designated for such Lender or Noteholder on Schedule 4.4
hereto or in any written notice to the Company from such Lender or Noteholder
or any such subsequent holder, the Company will make such payments by wire
transfer, no later than 11:00 a.m. Central time on the day of payment, of
immediately available funds to such bank account, marked for attention as
indicated, or in such other manner or to such other account of such Lender or
Noteholder or such holder in any bank in the United States as the Lender or
Noteholder or any such subsequent holder may from time to time direct in
writing. The holder of any Note to which this Section applies agrees that in
the event it shall sell or transfer any such Note (other than the sale of
participations in the Note) (i) it will, prior to the delivery of such Note
(unless it has already done so), make a notation thereon of all principal, if
any, prepaid on such Note and will also note thereon the date to which interest
has been paid on such Note, and (ii) it will promptly notify the Company of the
name and address of the transferee of any Note so transferred. With respect to
the Notes to which this Section applies, the Company shall be entitled to
presume conclusively that the original or such subsequent institutional holder
as shall have requested the provisions hereof to apply to its Note remains the
holder of such Note until (y) the Company shall have received notice of the
transfer of such Note, and of the name and address of the transferee, or (z)
such Note shall have been presented to the Company as evidence of the transfer.
-12-
13
4.5. PAYMENTS DUE ON SATURDAYS, SUNDAYS, AND HOLIDAYS. In any case
where any interest payment date on the Notes or the date fixed for any other
payment of any Note or exchange of any Note shall be other than a Business Day,
then such payment or exchange shall not be made on such date but shall be made
on the preceding Business Day.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and to
exchange the Existing Board Note for the Note, and in recognition of the fact
that the Lender is acting in reliance thereupon, the Company hereby covenants,
represents and warrants to the Lender that:
5.1. FINANCIAL CONDITION. The consolidated financial statements of
the Company and its Subsidiaries for the period ended May 31, 1996, and for
each interim period thereafter, and the filings made with the Securities and
Exchange Commission since June 16, 1994 and as are listed on Schedule 5.1(i)
attached hereto, copies of all of which have heretofore been furnished to the
Lender, are complete and correct and present fairly the financial condition of
the Company as of such date. The financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except, with respect to the
interim statements, for the usual year-end adjustments). As of the date
thereof, neither the Company nor any Subsidiary has any material Contingent
Obligation, Indebtedness, contingent liability or liability for taxes,
long-term leases or unusual forward or long-term commitment, which is not
reflected on Schedule 3.1(h) attached hereto. As of the date hereof, neither
the Company nor any Subsidiary has any investment of the type contemplated by
subsection 7.7(b) or (f) in any company which is not reflected on Schedule
5.1(ii) attached hereto.
5.2. NO CHANGE. Except as disclosed on Schedule 5.2, since August
31, 1996, there has been no material adverse change in the business,
operations, assets, Property, prospects or financial condition of the Company
or any of its Subsidiaries, and there has been no fire, explosion, labor
dispute, storm, act of God, accident or other casualty which has had a material
adverse effect upon the business, operations, assets, Property, prospects or
financial condition of the Company or any of its Subsidiaries.
5.3. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. The Company and
each of its Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has the
corporate power and authority and the legal right to own and operate its
Property, to lease the Property it operates and to conduct the business in
which it is currently engaged. The Company and each of its Subsidiaries is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification, and is in compliance with
all Requirements of Law, except such noncompliances which individually and in
the aggregate would not have a material adverse effect on the business,
property, finances or prospects of the Company or its Subsidiaries.
5.4. CORPORATE POWER; ENFORCEABLE OBLIGATIONS. The Company and
each of its Subsidiaries has the corporate power and the authority to enter
into, deliver, issue and perform all of its obligations under all Loan
Documents. The Company has the corporate power and the authority to borrow
under this Agreement. The Loan Documents when duly executed and delivered on
behalf of the Company and its Subsidiaries will constitute, legal, valid and
binding obligations of the Company and its Subsidiaries enforceable against the
Company and its Subsidiaries in accordance with their terms.
-13-
14
5.5. NO LEGAL BAR. No consent or authorization of, filing with, or
other act by or in respect of any Governmental Authority, is required in
connection with the Company's activities in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents. The execution, delivery and performance
of the Loan Documents by the Company and each Subsidiary, prospective
borrowings hereunder and the use of the proceeds thereof, (i) have been duly
authorized by all necessary corporate action, (ii) will not require any consent
or approval of the Company's or any Subsidiary's stockholders, (iii) will not
violate any Requirement of Law or any Contractual Obligation of the Company or
any of its Subsidiaries which has not been waived, and (iv) will not result in,
or require, the creation or imposition of any Lien, other than pursuant to the
Loan Documents, on any of their Properties or revenues pursuant to any
Requirement of Law or Contractual Obligation.
5.6. NO LITIGATION. Except as disclosed in Schedule 5.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Company,
threatened by or against the Company or any of its Subsidiaries or against any
of its or their respective Properties or revenues.
5.7. NO DEFAULT. Neither the Company nor any of its Subsidiaries
is in default under or with respect to any Contractual Obligation, the
noncompliance with which could be materially adverse to the business,
operations, assets, Property, prospects or financial condition of the Company
or any of its Subsidiaries, or which could have a material adverse effect upon
the ability of the Company to perform its obligations under the Loan Documents.
No event which has not been waived in writing and which would constitute, or
which but for the requirement that notice be given or time elapse or both would
constitute, a Default or Event of Default has occurred and is continuing.
5.8. PROPERTY; LIENS. None of the assets of the Company or any of
its Subsidiaries is subject to any Lien, except as permitted in subsection 7.2
hereof.
5.9. NO BURDENSOME RESTRICTIONS. No Contractual Obligation of the
Company or any of its Subsidiaries and no Requirement of Law has a material
adverse effect upon, or insofar as the Company may reasonably foresee may have
such an effect upon the business, operations, assets, Property, prospects or
financial condition of the Company or any of its Subsidiaries.
5.10. TAXES. The Company and each of its Subsidiaries have filed
all tax returns required to be filed and paid all taxes shown thereon to be
due, including interest and penalties, or provided adequate reserves for
payment thereof. The Company and each of its Subsidiaries have paid, or
provided adequate reserves for, all taxes, including interest and penalties,
shown to be due on any assessments made against it or any of its Property and
all other taxes, fees and other charges imposed on it or its Property by any
Governmental Authority. Neither the Company nor any of its Subsidiaries has
any outstanding unpaid tax liabilities (except for taxes which are currently
accruing from its current operations and ownership of Property, which are not
delinquent) and no tax deficiencies have been proposed or assessed against it.
All federal income tax returns of the Company have been examined and reported
on or closed by applicable statute and satisfied for all Fiscal Years up to and
including the Fiscal Year ending in 1992, and all taxes shown on any such
return for any such Fiscal Year, together with any adjustments arising out of
any examination of such return, have been paid. The state income tax returns
of the Company for the Fiscal Year 1991 has been audited, amended returns for
such year have been filed, and all additional taxes shown on such return for
such Fiscal Year have been paid.
5.11. ERISA. Except as set forth on attached Schedule 5.11, neither
the Company nor any Commonly Controlled Entity has been an "employer," as
defined in Section 3(5) of ERISA, in respect of any defined benefit plan, and
is not a member of a group of Commonly Controlled Entities; and its aggregate
conditional obligation if it were to withdraw from the multiemployer plans
shown on Schedule 5.11 is not more than $500,000.
-14-
15
5.12. INVESTMENT COMPANY ACT. Neither the Company nor any
Subsidiary is an "investment company" or company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
5.13. MARGIN REGULATIONS. The Company is not engaged, principally
or as one of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under the applicable
regulations of the Federal Reserve Board as now and from time to time hereafter
in effect.
5.14. SUBSIDIARIES AND AFFILIATES. The Company has no Subsidiaries
or Affiliates and does not own shares or other interests in any business,
including notes receivable from other businesses, other than those shown on
Schedules 5.14 and 5.1(ii), and the amounts of the ownership interest and the
location of the operations of the Subsidiaries disclosed on Schedules 5.14 and
5.1(ii) are accurate and complete as of the Effective Date.
5.15. NO MISSTATEMENTS. No information, exhibit or report furnished
by the Company or any Subsidiary to the Lender in connection with the
negotiation of, or pursuant to, any of the Loan Documents contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein not misleading.
5.16. PROTECTED RIGHTS. The Company and each of its Subsidiaries
possess adequate trademarks, tradenames, copyrights, patents, permits, service
marks and licenses, or rights thereto, for the present and planned future
conduct of its business substantially as it is now conducted without any known
conflict with the rights of others which might result in a material adverse
effect on the Company or any of its Subsidiaries.
5.17. LEASES. Neither the Company nor any of its Subsidiaries is a
party to any leases which are not disclosed on Schedule 3.1(h) attached hereto.
5.18. PARTNERSHIPS AND JOINT VENTURES. Neither the Company nor any
of its Subsidiaries is a party to any partnership or joint venture which is not
disclosed in its financial statements for the Fiscal Year ended May 31, 1996,
or which have not otherwise been disclosed in writing to the Lender.
5.19. ENVIRONMENTAL REGULATIONS. There exists no uncorrected
violation by the Company or any Subsidiary of any Environmental Laws. Except
in accordance with Environmental Laws and in the course of the regular business
of the Company and its Subsidiaries, the Company and each Subsidiary does not
and will not generate or have in its possession Hazardous Substances. Except
as described in Schedule 5.19 attached hereto, neither the Company nor any
Subsidiary is subject to any judgment, decree, order or citation, or a party to
(or threatened with) any litigation or administrative proceeding, which asserts
that the Company or Subsidiary (i) violated any Environmental Laws; (ii) is
required to take Remedial Action; or (iii) is required to pay all or a portion
of the cost of any Remedial Action, as a potentially responsible party. Except
in accordance with Environmental Laws and in the course of the regular business
of the Company and Subsidiaries, there are not now, nor to the Company's
knowledge after reasonable investigation have there ever been, any Hazardous
Substances (or tanks or other facilities for the storage of Hazardous
Substances) stored, deposited, recycled or disposed of on, under or at any real
estate owned or occupied by the Company or any Subsidiary during the periods
that the Company or Subsidiary owned or occupied such real estate, which if
present on the property or in soils or ground water, could require Remedial
Action. To the Company's knowledge, there are no proposed or pending changes
in Environmental Laws which would materially adversely affect the Company or
any Subsidiary or their businesses, and there are no conditions existing
currently or likely to exist during the term of this loan which would subject
the Company or any Subsidiary to Remedial Action or other material liability.
The Company and each Subsidiary has all permits, licenses and approvals
required under Environmental Laws.
-15-
16
The Company has furnished to the Lender copies of an environmental assessment,
survey, or report with regard to each property owned by Company or any of its
Subsidiaries.
5.20. OSHA REGULATIONS. Except for the matters disclosed on
Schedule 5.20, the Company and each of its Subsidiaries are, and have been for
a period of one year prior to the Effective Date, in full compliance with all
Requirements of Law relating to occupational safety and health in the
respective jurisdictions where the Company or any of its Subsidiaries is
presently doing business or conducting operations, except for immaterial
instances of non- compliance which do not in the aggregate impair any
operations of the Company or its subsidiaries or their ownership of any
Property, and the Company has no notice or knowledge of any open investigation
or inquiry concerning the same.
5.21. SEC REGULATIONS. The execution of this Agreement and the
issuance, sale and delivery of the Note to the Lender are exempt transactions
under the Securities Act of 1933, and no registration under that Act is
required.
5.22. NO CONFLICTS. To the best of the Company's knowledge no
member of the Board, nor any Board employee has a direct or indirect economic
interest in the Company or its property or contracts, except such interests as
are generally owned by members of the public and which were acquired in
transactions unrelated to the issuance of the Existing Board Note or the Note,
nor will any member of the Board or Board employee receive, directly or
indirectly, anything of economic value for his or her private benefit from the
Company or anyone acting on its behalf in connection with the investment made
pursuant to this Agreement.
SECTION 6. AFFIRMATIVE COVENANTS.
The Company hereby agrees that, from and after the Closing Date and
continuing so long as any amount remains unpaid on the Notes, the Company shall
and shall cause each of its Subsidiaries to:
6.1. FINANCIAL REPORTS. Keep true and proper books of record and
account in which full and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of the Company or
such Subsidiary, and reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP consistently
maintained.
6.2. FINANCIAL STATEMENTS. Furnish to the Noteholders:
(a) MONTHLY STATEMENTS. As soon as available and in any
event within 30 days after the end of each month of each Fiscal Year, copies
of:
(i) consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the close of such month
setting forth in comparative form the amount for the end of the
preceding Fiscal Year,
(ii) consolidated and consolidating statements of
income and retained earnings of the Company and its Subsidiaries for
such monthly period and for the portion of the Fiscal Year ending with
such month, setting forth in comparative form the amount for the
corresponding periods of the preceding Fiscal Year, and
(iii) consolidated statements of cash flow of the
Company and its Subsidiaries for the portion of the Fiscal Year ending
with such month, setting forth in comparative form the amount of the
corresponding period of the preceding Fiscal Year,
-16-
17
all in reasonable detail and certified as complete and correct, by a
Responsible Officer;
(b) QUARTERLY STATEMENTS. As soon as available and in
any event within 45 days after the end of each quarter (except the last) of
each Fiscal Year, copies of:
(i) consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the close of such quarter
setting forth in comparative form the amount for the end of the
preceding Fiscal Year,
(ii) consolidated and consolidating statements of
income and retained earnings of the Company and its Subsidiaries for
such quarterly period and for the portion of the Fiscal Year ending
with such quarter, setting forth in comparative form the amount for
the corresponding periods of the preceding Fiscal Year, and
(iii) consolidated statements of cash flow of the
Company and its Subsidiaries for the portion of the Fiscal Year ending
with such quarter, setting forth in comparative form the amount of the
corresponding period of the preceding Fiscal Year,
all in reasonable detail and certified as complete and correct, by a
Responsible Officer;
(c) ANNUAL STATEMENTS. As soon as available and in any
event within 90 days after the close of each Fiscal Year of the Company, copies
of:
(i) consolidated and consolidating balance sheets
of the Company and its Subsidiaries as of the close of such Fiscal
Year,
(ii) consolidated and consolidating statements of
income and retained earnings of the Company and its Subsidiaries for
such Fiscal Year, and
(iii) consolidated statements of cash flow of the
Company and its Subsidiaries for such Fiscal Year,
in each case setting forth in comparative form the consolidated and
consolidating, where applicable, figures for the preceding Fiscal Year, all in
reasonable detail and accompanied, with respect to the consolidated figures
only, by an opinion thereon (which shall not be qualified by reasons of any
limitation as to the scope of the audit or otherwise) of Coopers & ▇▇▇▇▇▇▇, or
any of the following firms of independent certified public accountants selected
by the Company: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., Deloitte & Touche, Ernst & Young, Peat
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., or Price Waterhouse & Co., or of such other firm of
independent public accountants of recognized national standing selected by the
Company and approved by the Noteholders, to the effect that the consolidated
financial statements have been prepared in accordance with GAAP consistently
applied and present fairly the financial condition of the Company and its
Subsidiaries and that the examination of such accountants in connection with
such financial statements has been made in accordance with generally accepted
auditing standards and accordingly, includes such tests of the accounting
records and such other auditing procedures as were considered necessary in the
circumstances;
(d) ACCOUNTANT'S CERTIFICATES. Simultaneously with the
delivery of the audited statements required by subparagraph (c) hereof, copies
of a certificate of said accountants stating that, in making the examination
necessary for their review of the financial affairs of the Company and its
Subsidiaries for such Fiscal Year, nothing came to their attention that caused
them to believe that either the Company or any Subsidiary
-17-
18
failed to comply with the terms, covenants, provisions or conditions of this
Agreement insofar as they relate to accounting matters;
(e) OFFICER'S CERTIFICATES. Within the periods provided
in paragraphs (a) through (c) above, a certificate of a Responsible Officer
stating that he has reviewed the provisions of this Agreement and setting
forth: (i) the information and computations (in sufficient detail) required in
order to establish whether the Company was in compliance with the requirements
of subsections 6.8, 7.13, and 7.14 at the end of the period covered by the
financial statements then being furnished, (ii) whether there existed as of the
date of such financial statements and whether, to the best of his knowledge,
there exists on the date of the certificate or existed at any time during the
period covered by such financial statements any Default or Event of Default
and, if any such condition or event exists on the date of the certificate,
specifying the nature and period of existence thereof and the action the
Company is taking and proposes to take with respect thereto, (iii) that all of
the insurance policies required under subsection 6.7 and referenced under
subsection 6.2(g) are in full force and effect, and (iv) that the Company and
its Subsidiaries are in compliance with all environmental representations
referenced under subsection 5.19;
(f) REPORT OF INVESTMENTS IN NON-SUBSIDIARIES. As soon
as available and in any event within forty-five (45) days after the end of
each quarterly fiscal period of each Fiscal Year, a report of a Responsible
Officer setting forth: (i) a listing, substantially in the form of Schedule
5.1(ii), Investments in Non-Subsidiaries, attached hereto, reflecting
information applicable as of the end of such fiscal period, including an
estimate of the fair market value of each such investment as of such date; and
(ii) whether or not the Company has any notice or knowledge that there has been
any material adverse change since the previous quarterly report in the value of
each such investment or in the finances or prospects of the company in which
such investment is made;
(g) AUDIT REPORTS. Promptly upon receipt thereof, copies
of all audit reports submitted to the Company or its Subsidiaries by
independent accountants in connection with any interim or special audits of the
books of the Company or any Subsidiary made by such accountants;
(h) INSURANCE CERTIFICATE. As soon as available and in
any event within ninety (90) days after the end of each Fiscal Year, copies of
a certificate of the President of the Company certifying that the Company's
coverage meets the requirements of subsection 6.7;
(i) SEC AND OTHER REPORTS. Promptly upon their becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Company to stockholders generally and of each regular or
periodic report, and any registration statement, prospectus, offering circular,
offering memoranda or similar materials relating to any public or private
offering of securities of the Company filed by the Company or any Subsidiary
with any securities exchange or the Securities and Exchange Commission or any
successor agency, and copies of any orders in any proceedings to which the
Company or any of its Subsidiaries is a party, issued by any Governmental
Authority having jurisdiction over the Company or any of its Subsidiaries which
have a material adverse effect on the operations of the Company or any of its
Subsidiaries, including, without limitation, notice of any "accumulated funding
deficiency", or prohibited transaction under Sections 302 of ERISA or Section
4975 of the Code, respectively, and notice of a change in the firm of
independent certified public accountants engaged by the Company;
(j) NOTICE OF LIENS. Promptly upon the occurrence
thereof, notice of the incurrence of a lien permitted under subsection 7.2
where the Indebtedness secured, or the value of the property encumbered,
exceeds $500,000.
-18-
19
(k) MANAGEMENT LETTER. Promptly, and in any event within
30 days of the receipt thereof, copies of any management letter received from
the independent certified accountants retained by the Company; and
(l) REQUESTED INFORMATION. With reasonable promptness,
such additional information as the Noteholders may reasonably request
concerning the Company and/or any of its Subsidiaries in order to enable the
Lender to determine whether the covenants, terms and provisions of the Loan
Documents have been complied with by the Company;
(m) RIGHT OF INSPECTION. Without limiting the foregoing,
the Company will permit each Noteholder (or such Persons as a Noteholder may
designate) to visit and inspect any of the properties of the Company or any
Subsidiary, to examine all their books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers, management
employees, and independent public accountants (and by this provision the
Company authorized said accountants to discuss with the Noteholder, at the
Noteholder's expense, the finances and affairs of the Company and its
Subsidiaries) all at such reasonable times, upon reasonable notice, and as
often as may be reasonably requested, provided that such visitations and
inspections are conducted in a manner that is reasonably non-disruptive to the
business and operations of the Company and its Subsidiaries. The Company shall
not be required to pay or reimburse the Noteholders for expenses which the
Noteholders may incur in connection with any such visitation or inspection.
6.3. TAXES, CLAIMS FOR LABOR AND MATERIALS, COMPLIANCE WITH LAWS,
HAZARDOUS SUBSTANCES. Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all lawful
taxes, assessments and governmental charges or levies imposed upon the Company
or any Subsidiary, respectively, or upon or in respect of all or any part of
the property or business of the Company or such Subsidiary, all trade accounts
payable in accordance with usual and customary business terms as negotiated by
the Company or Subsidiary with their suppliers, and all claims for work, labor
or materials, which if unpaid might become a lien or charge upon any property
of the Company or such Subsidiary; provided the Company or such Subsidiary
shall not be required to pay any such tax, assessment, charge, levy, account
payable or claim if (i) the validity, applicability or amount thereof is being
contested in good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any property of the Company or such
Subsidiary or any material interference with the use thereof by the Company or
such Subsidiary, and (ii) the Company or such Subsidiary shall set aside on its
books, adequate reserves with respect thereto. The Company will promptly
comply and will cause each Subsidiary to comply with all applicable laws,
ordinances or governmental rules and regulations to which it is subject,
including without limitation, the Occupational Safety and Health Act of 1970,
except where such non-compliance is not material in nature, and ERISA. Except
in accordance with Environmental Laws and in the course of the regular business
of the Company and its Subsidiaries, the Company and each Subsidiary does not
and will not generate or have in its possession Hazardous Substances. The
Company and each Subsidiary will timely comply with all applicable
Environmental Laws; and provide all Noteholders, immediately upon receipt,
copies of any correspondence, notice, complaint, order or other document from
any source asserting or alleging any circumstance or condition which requires
or may require a financial contribution by the Company or Remedial Action or
other response by or on the part of the Company under Environmental Laws, or
which seeks damages or civil, criminal or punitive penalties from the Company
for an alleged violation of Environmental Laws.
6.4. MAINTENANCE OF CORPORATE EXISTENCE. Preserve, renew and keep
in full force and effect its corporate existence and all licenses and permits
necessary to the proper conduct of its business, provided that the foregoing
shall not prevent any transaction permitted by subsection 7.3.
-19-
20
6.5. NATURE OF BUSINESS. Continue to engage in business of the
same general type as now conducted by it and not engage in any business if, as
a result, the general nature of the business, taken on a consolidated basis,
which would then be engaged in by the Company and its Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Company and its Subsidiaries on the Effective Date; continue to operate Outlook
Foods, Inc. substantially as now operated until November 30, 1998 unless its
assets are sold earlier; and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business; comply with all Contractual Obligations and Requirements of Law
except (unless unqualified compliance is required elsewhere herein) to the
extent that the failure to comply therewith could not, in the aggregate, have a
material adverse effect upon the business, operations, assets, Property,
prospects or financial condition of the Company or any of its Subsidiaries, or
could result in the creation or imposition of any Lien against any of its
Properties.
6.6. MAINTENANCE OF PROPERTIES. Maintain, preserve and keep its
Properties which are used or useful, as reasonably determined by the Company,
in the conduct of its business (whether owned in fee or a leasehold interest)
in good repair and working order and from time to time will make all necessary
repairs, replacements, renewals, additions, betterments and improvements
thereto so that at all times the efficiency thereof shall be maintained.
6.7. INSURANCE. Maintain, with financially sound and reputable
insurers, adequate insurance with respect to its properties and business
against such casualties and contingencies, of such types (including, without
limitation, fire and casualty, with extended coverage, public liability,
worker's compensation, products liability and boiler insurance) and in such
amounts and with such co-insurance as is customary in the case of corporations
of established reputation engaged in the same or a similar business and
similarly situated, and in any event adequate to provide coverage of all
insurable assets. The policies for such insurance shall name the Noteholders,
as lender's loss payee, as its interest may appear, and shall contain a
provision whereby they cannot be canceled except after thirty (30) days'
written notice to the Noteholders. The Company hereby agrees that, in the
event it or any Subsidiary fails to pay or cause to be paid the premium on any
such insurance at least seven (7) days before expiration, the Noteholders may
do so, give notice to the Company, and be reimbursed by the Company therefor.
6.8. FINANCIAL COVENANTS.
(a) Maintain Adjusted Tangible Net Worth of not less than
the following amounts during the following periods:
Amount Period
------ ------
$33,000,000 From and including the last day of the fiscal quarter ended
in November, 1996 to but excluding the last day of the fiscal
quarter ended in February, 1997
$34,000,000 Thereafter from and including the last day of the fiscal
quarter ended in February, 1997 to but excluding the last day
of the fiscal quarter ended in May, 1997
$35,000,000 Thereafter from and including the last day of the fiscal
quarter ended in May, 1997 to but excluding the last day of
the fiscal quarter ended in August, 1997
-20-
21
$36,000,000 Thereafter from and including the last day of the fiscal
quarter ended in August, 1997 to but excluding the last day
of the fiscal quarter ended in November, 1997
$36,500,000 Thereafter from and including the last day of the fiscal
quarter ended in November, 1997 to but excluding the last day
of the fiscal quarter ended in February, 1998
$37,500,000 Thereafter from and including the last day of the fiscal
quarter ended in February, 1998 to but excluding the last day
of the fiscal quarter ended in May, 1998
$38,500,000 Thereafter from and including the last day of the fiscal
quarter ended in May, 1998 to but excluding the last day of
the fiscal quarter ended in August, 1998
$39,500,000 Thereafter from and including the last day of the fiscal
quarter ended in August, 1998 to but excluding the last day
of the fiscal quarter ended in November, 1998
$41,000,000 Thereafter from and including the last day of the fiscal
quarter ended in November, 1998 to but excluding the last day
of the fiscal quarter ended in February, 1999
$42,500,000 Thereafter from and including the last day of the fiscal
quarter ended in February, 1999 to but excluding the last day
of the fiscal quarter ended in May, 1999
$43,500,000 Thereafter from and including the last day of the fiscal
quarter ended in May, 1999 to but excluding the last day of
the fiscal quarter ended in August, 1999
$43,500,000 plus Thereafter from and including the last day $1,250,000 for of
the fiscal quarter then last ended to but each fiscal quarter
excluding the last day of the immediately ending after the succeeding
fiscal quarter ended fiscal quarter ended in August, 1999, and prior
to the date of
-21-
22
determination
(b) DEBT RATIO. Maintain a ratio of Indebtedness to
Adjusted Tangible Net Worth during the following periods of not more than the
following ratios:
Ratio Fiscal Quarter Ended
----- --------------------
1.60 to 1.0 From and including the last day of the fiscal quarter ended
in November, 1996 to but excluding the last day of the fiscal
quarter ended in February, 1997
1.50 to 1.0 Thereafter from and including the last day of the fiscal
quarter ended in February, 1997 to but excluding the last day
of the fiscal quarter ended in May, 1997
1.40 to 1.0 Thereafter from and including the last day of the fiscal
quarter ended in May, 1997 to but excluding the last day of
the fiscal quarter ended in November, 1997
1.30 to 1.0 Thereafter from and including the last day of the fiscal
quarter ended in November, 1997 to but excluding the last day
of the fiscal quarter ended in May, 1998
1.20 to 1.0 Thereafter from and including the last day of the fiscal
quarter ended in May, 1998 to but excluding the last day of
the fiscal quarter ended in November, 1998
1.10 to 1.0 Thereafter from and including the last day of the fiscal
quarter ended in November, 1998 to but excluding the last day
of the fiscal quarter ended in May, 1999
1.00 to 1.0 Thereafter
(c) FIXED CHARGE COVERAGE RATIO. Maintain a Fixed Charge
Coverage Ratio, (i) for the fiscal quarter ended November 30, 1996, of not less
than .90 to 1.0, (ii) for the two consecutive fiscal quarters (taken as one
accounting period) ended February 28, 1997, of not less than 1.10 to 1.0, (iii)
for the three consecutive fiscal quarters (taken as one accounting period)
ended May 31, 1997, of not less than 1.20 to 1.0, and (iv) for any period of
four consecutive fiscal quarters (in each case taken as one accounting period)
ended on each date set forth below to be not less than the ratio set forth
opposite such date below:
Ratio Fiscal Quarter Ended
----- --------------------
1.25 to 1.0 August 31, and November 30, 1997
-22-
23
1.20 to 1.0 February 28, 1998 and each fiscal quarter thereafter
6.9. NOTICE OF DEFAULT. Within ten (10) days after any Responsible
Officer of the Company becomes aware of any condition or event which
constitutes an Event of Default hereunder, or which after notice or lapse of
time or both, would constitute such an Event of Default, give written notice to
the Noteholders of the existence of such condition or event, specifying the
nature and period of existence thereof and specifying what action the Company
proposes to take with respect thereto.
6.10. ADDITIONAL NOTICES. Within ten (10) days of when such first
becomes known to any Responsible Officer of the Company, give notice to the
Lender:
(a) of any default or event of default under any
Contractual Obligation of the Company or any of its Subsidiaries, the
noncompliance with which could have a material adverse effect upon the
business, operations, assets, Property, prospects or financial condition of the
Company or any of its Subsidiaries or could result in the creation or
imposition of any Lien against any of its Properties;
(b) of any litigation, investigation or proceeding which
may exist at any time between the Company, or any of its Subsidiaries, and any
Governmental Authority, and which, if adversely determined, could have a
material adverse effect upon the business, operations, assets, Property,
prospects or financial condition of the Company or any of its Subsidiaries;
(c) of any litigation or proceeding affecting the
Company, any of its Subsidiaries or the Property of any of them, in which the
amount involved is $500,000 or more and not covered by insurance or in which
injunctive or similar relief is sought;
(d) of the following events, as soon as possible and in
any event within 30 days after the Company knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event with respect
to any Plan with respect to which the Company or any of its Subsidiaries is an
employer; or (ii) the institution of proceedings or the taking or expected
taking of any other action by the PBGC or the Company or any Commonly
Controlled Entity to terminate, withdraw or partially withdraw from any such
Plan and with respect to a Multiemployer Plan (as that term is defined in
Section 4001(a)(3) of ERISA), the reorganization or insolvency of such a Plan,
and in addition to such notice, deliver to the Lender whichever of the
following may be applicable: (A) a certificate of a Responsible Officer setting
forth details as to such Reportable Event and the action that the Company or
Commonly Controlled Entity proposes to take with respect thereto, together with
a copy of any notice of such Reportable Event that may be required to be filed
with the PBGC, or (B) any notice delivered by the PBGC evidencing its intent to
institute such proceedings or any notice to the PBGC that such Plan is to be
terminated, as the case may be.
6.11. BOARD'S PARTICIPATION IN ADDITIONAL LONG-TERM DEBT. If the
Company or any Subsidiary hereafter determines to create or incur Indebtedness
for borrowed money in amounts of $3,000,000 or more and providing for repayment
over a period of seven (7) years or more, provided that the incurrence of such
Indebtedness is permitted under subsection 7.1, the Company or the Subsidiary
shall notify the Lender in writing of the amount of such proposed Indebtedness
and the Lender shall have an opportunity:
(a) to present the terms on which the Lender would be
willing to lend such funds; and
(b) discuss such terms with representatives of the
Company. The Company and each Subsidiary agree that neither the Company nor
any Subsidiary will enter into any binding commitment for such borrowing until
thirty (30) days after the notice required hereby has been given and
thereafter, if the funds are available from the Lender on terms and conditions
which are substantially similar to those on funds available
-23-
24
from other sources, to borrow such funds from the Lender, and if they are not
willing to provide funds on substantially similar terms, then the funds may be
obtained from whatever sources and on whatever terms Company or Subsidiary may
in its sole discretion determine.
6.12. PAYMENT OF NOTES. Duly pay the Notes strictly in accordance
with its terms and without any set-offs or modifications of any kind.
SECTION 7. NEGATIVE COVENANTS
The Company hereby agrees that, so long as the Notes remains
outstanding and unpaid or any amount is owed to Lender or any Noteholder
hereunder:
7.1. LIMITATION ON INDEBTEDNESS. The Company will not, and will
not permit any Subsidiary to, create, incur, assume or become or remain liable
with respect to any Indebtedness other than:
(a) Indebtedness outstanding on the date hereof, as
reflected in the certificate with respect thereto delivered pursuant to
subsection 3.1(h) hereof;
(b) additional secured Funded Debt, if secured by liens
permitted under subsection 7.2(f), provided that the aggregate amount of all
such additional debt and additional debt incurred under the subsection 7.1(c)
hereof shall not exceed $250,000;
(c) additional unsecured Funded Debt, provided that such
unsecured Funded Debt is incurred for the purchase of assets, is furnished by
the seller of such assets and that such purchase otherwise conforms to the
requirements of subsection 7.2(f), provided that the aggregate amount of all
such additional debt and additional debt incurred under the subsection 7.1(b)
hereof shall not exceed $250,000;
(d) accounts payable for goods and services purchased in
the ordinary course of business, provided that such accounts payable are not
overdue (unless they are being contested in good faith by appropriate
proceedings);
(e) with regard to the Company only, additional
Subordinated Funded Debt;
(f) Indebtedness incurred pursuant to interest rate swaps
or other financial transactions reasonably structured solely for the purposes
of hedging interest rate risk, provided that such swaps or other transactions
are reasonably intended for hedging the interest rate risk of the Company or
Subsidiaries, and are in the amount and of the type reasonably necessary for
such hedging;
(g) renewals, extensions and refundings by the borrower
thereon of any of the Indebtedness permitted above, but the foregoing shall not
be deemed to permit any increase in the interest rate, fees payable with
respect to, or principal amount of, acceleration of the rate of repayment of
principal or redemption of, the granting of any additional collateral security
for, or the making of more restrictive covenants or defaults in connection
with, any such Indebtedness being renewed, extended or refunded; and
(h) the BABC Debt and amendments, modifications,
renewals, extensions, refinancings, and refundings thereof, including an
increase in the amount available under the revolving loans thereunder to a
maximum aggregate amount available of $27,900,000, but the foregoing shall not
be deemed to permit any increase in the interest rate, rate of fees payable
with respect to, or, except as specifically provided, principal amount of,
acceleration of the rate of repayment of principal or redemption of, the
granting of any additional
-24-
25
equipment or additional categories of collateral as security for, or the making
of more restrictive covenants or defaults in connection with, any such BABC
Debt being amended, modified, renewed, extended, refinanced, or refunded, and
further provided that any such transaction shall meet the requirements of
subsection 7.12 provided, in each case, that the incurrence of any additional
Funded Debt will not cause Funded Debt to exceed the debt ratio limit provided
in subsection 6.8(b) and that such additional Funded Debt will not result in
any Default or Event of Default on the date of such incurrence and immediately
after taking into account the incurrence of that Funded Debt.
Notwithstanding the foregoing, the Company shall not have Indebtedness
outstanding to any Subsidiary, and no Subsidiary shall have Indebtedness
outstanding to the Company or any Subsidiary other than itself unless, in
either case, the Indebtedness is fully subordinated, both as to collateral, if
any, and as to payment, to the repayment in full of all interest, principal and
premium on the Notes in form satisfactory to the Noteholders.
7.2. LIMITATION ON LIENS. The Company will not, and will not
permit any Subsidiary to, create or incur, or suffer to be incurred or to
exist, any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind on its or their property or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or upon any shares of stock
or evidence of Indebtedness of a Subsidiary, or transfer any property for the
purpose of subjecting the same to the payment of obligations in priority to the
payment of its or their general creditors, or acquire or agree to acquire, or
permit any Subsidiary to acquire, any property or assets upon conditional sales
agreements or other title retention devices, nor enter into any sale-leaseback
transactions, except:
(a) liens for property taxes and assessments or
governmental charges or levies and liens securing claims or demands of
mechanics and materialmen, provided that payment thereof is not at the time
required by subsection 6.3;
(b) liens of or resulting from any judgment or award, the
time for the appeal or petition for rehearing of which shall not have expired,
or in respect of which the Company or a Subsidiary shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or a proceeding for review shall
have been secured;
(c) liens for taxes, assessments or governmental charges,
and liens incident to construction, which are either not delinquent or are
being contested in good faith by the Company or a Subsidiary by appropriate
proceedings which will prevent foreclosure of such liens, and against which
adequate reserves have been provided; and easements, restrictions, minor title
irregularities and similar matters which are shown on the title policies and
which have no adverse effect as a practical matter upon the ownership and use
of the affected property by the Company or any Subsidiary;
(d) liens or deposits in connection with worker's
compensation or other insurance or to secure customs' duties, public or
statutory obligations in lieu of surety, stay or appeal bonds, or to secure
performance of contracts or bids (other than contracts for the payment of
borrowed money), or deposits required by law or governmental regulations or by
any court order, decree, judgment or rule as a condition to the transaction of
business or the exercise of any right, privilege or license; or other liens or
deposits of a like nature made in the ordinary course of business;
(e) mortgages, conditional sale contracts, security
interests or other arrangements for the retention of title (including Capital
Leases) existing on the Effective Date and shown on Schedule 3.1(h), securing
Indebtedness of the Company or any Subsidiary outstanding on such date, or
renewals, extensions and refundings thereof which are permitted under
subsection 7.1;
-25-
26
(f) mortgages, conditional sale contracts, security
interests or other arrangements for the retention of title (including Capital
Leases) incurred after the date hereof given to secure the payment of the
purchase price incurred in connection with the acquisition or construction of
fixed assets useful and intended to be used in carrying on the business of the
Company or a Subsidiary, including liens existing on such fixed assets at the
time of acquisition thereof or at the time of acquisition by the Company or a
Subsidiary of any business entity then owning such fixed assets, whether or not
such existing liens were given to secure the payment of the purchase price of
the fixed assets to which they attach so long as they were not incurred,
extended or renewed in contemplation of such acquisition, provided that (i) the
lien or charge shall attach solely to the property acquired or purchased, (ii)
at the time of acquisition of such fixed assets, the aggregate amount remaining
unpaid on all Indebtedness secured by liens on such fixed assets whether or not
assumed by the Company or a Subsidiary shall not exceed an amount equal to the
total purchase price (provided that such purchase price bears a reasonable
relationship to the fair market value of such fixed assets at the time of
acquisition, as determined in good faith by the chief executive officer of the
Company, and (iii) immediately after taking into account such additional
Indebtedness, the requirements of subsection 6.8(b) are not violated;
(g) liens contemplated by the BABC Loan Agreement as
security for the BABC Debt and liens securing any credit facilities replacing
the BABC Debt, meeting the requirements of subsection 7.1(h), and secured by
the same categories of collateral (subject to Lender's prior lien on Outlook
Foods Equipment to the extent then still in existence); and
(h) liens required by this Agreement as security for the
Notes.
7.3. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
(a) The Company will not, and will not permit any
Subsidiary to (i) consolidate with or be a party to a merger with any other
corporation or (ii) sell, lease or otherwise dispose of all or any substantial
part (as defined below) of the assets of the Company and its Subsidiaries,
provided, however, if both before and immediately after the transaction, no
Event of Default under this Agreement has occurred which has not been cured or
waived:
(i) any Subsidiary may merge or consolidate with
or into the Company or any Wholly-owned Subsidiary so long as in any
merger or consolidation involving the Company, the Company shall be
the surviving or continuing corporation;
(ii) any Subsidiary may sell, lease or otherwise
dispose of all or any substantial part of its assets to the Company or
any Wholly-owned Subsidiary; and
(iii) the Company or any Subsidiary may sell or
factor any receivable for fair value and without recourse in the
ordinary course of business.
(b) The Company will not permit any Subsidiary to issue
or sell any shares of stock of any class (including as "stock" for the purposes
of this subsection 7.3, any warrants, rights or options to purchase or
otherwise acquire stock or other Securities exchangeable for or convertible
into stock) of such Subsidiary to any Person other than the Company or a
Wholly-owned Subsidiary.
(c) The Company will not sell, transfer or otherwise
dispose of any shares of stock in any Subsidiary (except to qualify directors)
or any Indebtedness of any Subsidiary, and will not permit any Subsidiary to
sell, transfer or otherwise dispose of (except to the Company or a Wholly-owned
Subsidiary) any shares of stock or any Indebtedness of any other Subsidiary.
-26-
27
(d) Notwithstanding the above, the Company and its
Subsidiaries may sell assets, other than real estate or Outlook Foods
Equipment, in any twelve-month period with an aggregate value (including assets
disposed of in such twelve-month period in transactions not involving a
substantial part (as defined below) of the assets of the Company and its
Subsidiaries) of up to $200,000, as shown by the appraisals furnished pursuant
to subsection 3.5, provided that:
(i) the assets sold did not constitute some or
all of the essential assets used in the production of ten percent
(10%) or more of the Adjusted Net Income from Operations for the
four-quarter period then most recently completed; and
(ii) the greater of (x) the fair market value of
the assets, as determined by a contemporaneous appraisal satisfactory
to the Lender, or (y) seventy-five percent (75%) of the net proceeds
generated from the sale of assets are used to repay outstanding Funded
Debt, and, with respect to real estate, or any other asset upon which
there is not, or is not permitted, a lien securing Funded Debt which
is prior to the lien securing the Notes, the Company shall use such
proceeds to first repay amounts outstanding under the Notes prior to
repaying any other outstanding Funded Debt.
(e) Notwithstanding the above, Outlook Foods, Inc. may
sell the Outlook Foods Real Estate and the Outlook Foods Equipment, for cash
and at prices no less than the fair market value of real estate or the orderly
liquidation value of equipment, each as shown by the appraisals furnished
pursuant to subsection 3.5, or upon such other terms and conditions agreeable
to Lender, and provided that the proceeds shall be applied to prepay the Notes
pursuant to subsection 4.1(b), and Barrier Films Corporation may sell its
assets upon terms and conditions agreeable to Lender, and, alternatively,
Outlook Foods, Inc. or Barrier Films Corporation may be divested by the Company
in transactions that would be substantially equivalent to such asset
dispositions, including with respect to the approval of the Lender and the
application of proceeds.
As used in this subsection 7.3, a sale, lease or other
disposition of assets shall be deemed to be a "substantial part" of the assets
of the Company and its Subsidiaries only if the value of such assets, as shown
by the appraisals furnished pursuant to subsection 3.5, exceeds $50,000 per
transaction or group of related transactions. Where the sale, lease or
disposition is of other than a substantial part of the assets of the Company
and its Subsidiaries, and is not of Outlook Foods Equipment or Outlook Foods
Real Estate, the Company may dispose of such assets without the consent of the
Noteholders and without being required to use the proceeds to repay any
outstanding Funded Debt.
7.4. GUARANTIES. Except as permitted under the Intercreditor
Agreement, the Company will not and will not permit any Subsidiary to become or
be liable in respect to any Guaranty except Guaranties by the Company or a
Subsidiary of Indebtedness of the Company or a Subsidiary.
7.5. TRANSACTION WITH AFFILIATES, OFFICERS. Except as provided in
subsection 7.7(b), the Company will not, and will not permit any Subsidiary to,
enter into or be a party to, any transaction or arrangement with any Affiliate
(including without limitation, the purchase from, sale to or exchange of
property with, or the rendering of any service by or for, any Affiliate),
except in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Subsidiary's business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate. The
Company will not permit any officer, including all persons related to such
officer, of the Company, a Subsidiary, or an Affiliate, or any Affiliate to
incur Indebtedness to the Company or a Subsidiary if the aggregate of all such
Indebtedness for such officer and all persons related to such officer would
thereby exceed $100,000.
-27-
28
7.6. COMPLIANCE WITH ERISA. The Company will not, and will not
permit any Subsidiary to, (a) terminate any Plan if such termination results in
any material liability to the PBGC, (b) engage in any "prohibited transaction"
(as defined in ERISA and the Code) if such transaction involves a Plan and
could result in a material liability for an excise tax or civil penalty in
connection therewith, or (c) incur or suffer to exist any material "accumulated
funding deficiency" (as defined in ERISA), whether or not waived, involving any
condition which creates a material risk that the Company will incur a material
liability to the PBGC by reason of any termination of any such Plan.
7.7. INVESTMENTS. The Company will not, and will not permit any
Subsidiary to, make any investments in or loans, advances or extensions of
credit to, any Person, except:
(a) investments, loans and advances by the Company and
its Subsidiaries in and to Subsidiaries, including any investment in a
corporation which, after giving effect to such investment, will become a
Subsidiary;
(b) investments,other than investments permitted under
subsection (a), (c), (d), (e), (f) or (g) hereof, outstanding on the Effective
Date, and shown on Schedule 5.1(ii) attached hereto;
(c) investments in commercial paper maturing in 180 days
or less from the date of issuance, or municipal obligations, at least
seventy-five percent (75%) of which at the time of acquisition by the Company
or any Subsidiary, is accorded the highest rating by Standard & Poor's
Corporation, ▇▇▇▇▇'▇ Investors Services, Inc. or other nationally recognized
credit rating agency of similar standing, and the remainder of which may be in
regional, unrated commercial paper, provided that a maximum of $200,000 of such
unrated paper may be of any single issuer;
(d) investments in direct obligations of the United
States of America, or any agency thereof, maturing in nine (9) months or less
from the date of acquisition thereof, provided that such obligations may mature
in more than nine (9) months from the date of acquisition thereof if they are
acquired for the purpose of a sinking, reserve, liquidity or similar fund, in
such form as is customary or consistent with the lender's usual practices or as
may be reasonably required under the circumstances, for outstanding
Indebtedness, and have maturities equal to or less than the expected holding
period of the investment by the sinking, reserve, liquidity or similar fund;
(e) investments in savings accounts with, or certificates
of deposit maturing within one year from the date of origin and issued by, a
bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $100,000,000;
(f) loans or advances in the usual and ordinary course of
business to officers, directors and employees for expenses (including moving
expenses related to a transfer) incidental to carrying on the business of the
Company or any Subsidiary provided such loans or advances are permitted under
subsection 7.5; and
(g) receivables arising from the sale of goods and
services in the ordinary course of business of the Company and its Subsidiaries
due within 90 days, but not in any case credit to customers intended to enable,
or in fact used by, customers to finance their accounts receivable.
In valuing any investments, loans and advances for the purpose
of applying the limitations set forth in this subsection 7.7, such investments,
loans and advances shall be taken at the original cost thereof, without
allowance for any subsequent write-offs or appreciation or depreciation
therein, but less any amount repaid or recovered on account of capital or
principal.
-28-
29
For purposes of this subsection 7.7, at any time when a
corporation becomes a Subsidiary, all investments of such corporation at such
time shall be deemed to have been made by such corporation, as a Subsidiary, at
such time.
7.8. MARGIN STOCK. The Company will not, directly or indirectly,
use the proceeds of the loan evidenced by the Existing Board Note and the Note
to purchase or carry any margin stock (within the meaning of the applicable
regulations of the Federal Reserve Board), to extend credit to others for the
purpose of purchasing or carrying margin stock, or to undertake any other
activity inconsistent with the Federal Reserve Board's regulations. If
requested by Lender, a statement in conformity with the requirements of the
applicable Federal Reserve Board form shall be provided by the Company to the
Lender.
7.9. OBLIGATION UNCONDITIONAL. Except as otherwise expressly
provided, neither this Agreement nor the Notes shall terminate, nor shall
Company have any right to terminate this Agreement or the Notes or be entitled
to abatement, suspension, deferment or reduction of any payments which Company
is obligated to pay hereunder, nor shall the obligations of Company be affected
by reason of any insolvency, bankruptcy, reorganization or similar proceedings
by or against Company, any breach, default, or misrepresentation by Lender or
any holder of the Notes at any time or invalidity or unenforceability, in whole
or in part, of this Agreement or the Notes or any other infirmity herein or
therein, or any lack of power or authority of any party to this Agreement, it
being the intention of the parties hereto that the obligations of Company shall
be absolute and unconditional and shall be separate and independent covenants
and agreements and shall continue unaffected unless and until the covenants
have been terminated pursuant to an express provision of this Agreement. The
Company shall not transfer nor allow the assumption of the obligations
represented by this Agreement or the Notes, whether with or without the Company
purportedly being released from its obligations hereunder or thereunder and, in
the event of any purported transfer or assumption the holders of the Notes may
look to the transferee or assumer without thereby releasing or waiving any
rights against the Company.
7.10. SALE AND LEASEBACK TRANSACTIONS. The Company will not, and
will not permit any Subsidiary to, directly or indirectly, enter into any
arrangement with any Person providing for the Company or any Subsidiary to
lease or rent property that the Company or any Subsidiary has or will sell or
otherwise transfer to such Person, except that the Company and Outlook
Packaging, Inc., may effect a sale to and lease from General Electric Capital
Corporation of certain equipment described on Schedule 7.10 (the "GECC
Transaction") pursuant to documents which are in form and substance
satisfactory to Lender and fully executed originals of which shall be furnished
to Lender prior to the date of consummation of such transaction.
7.11. MISCELLANEOUS NEGATIVE COVENANTS. The Company will not, and
will not permit any Subsidiary to:
(a) Change its Fiscal Year; or
(b) Change its auditors from those described in
subsection 6.2(c).
7.12 BABC DEBT. The Company will not, and will not permit any
Subsidiary to (a) prepay (other than in connection with a refinancing permitted
under the terms of this Agreement), or, in the case of any revolving credit or
similar credit facility, reduce the amount available for draw (other than
mandatory prepayment in accord with the BABC Loan Agreement or by sales of
inventory in the ordinary course of business and collection of accounts
receivable) under, the BABC Debt; or, (b) amend or modify any document
evidencing or supporting the BABC Debt if the effect of such amendment or
modification is to (i) increase the rate of interest or fees payable with
respect thereto; (ii) change the dates on which any payments are due thereunder
other than to extend such dates; (iii) make more restrictive the covenants or
defaults contained therein; (iv) accelerate the date for payment or redemption,
of any such debt; or (v) grant any lien to secure the
-29-
30
payment thereof other than liens in effect or contemplated on the date hereof;
provided that prepayments of Funded Debt may be made as required or permitted
by subsection 7.3(d)(ii). Repayment of any revolving credit facility under
circumstances where the available amount committed by the lender thereof is not
reduced shall not be considered a prepayment for this purpose.
7.13 CAPITAL EXPENDITURES. The Company will not, and will not
permit any Subsidiary to, make or incur any Capital Expenditure if, after
giving effect thereto, the aggregate amount of all Capital Expenditures (other
than Specified Capital Expenditures) by Company and its Subsidiaries on a
consolidated basis would exceed the following respective amounts in the
following respective Fiscal Years:
CapEx Limit Fiscal Year
----------- -----------
$2,200,000 1997
$3,000,000 1998
$4,000,000 1999 and each Fiscal Year thereafter
7.14 OPERATING LEASE OBLIGATIONS. The Company will not, and will
not permit any Subsidiary to, enter into any lease of real or personal property
as lessee or sublessee (other than Capital Leases), if, after giving effect
thereto, the aggregate amount of Rentals payable by the Company and its
Subsidiaries in any Fiscal year in respect of such lease and all other such
leases would exceed (such amount being referred to herein as "Permitted
Rentals") (x) prior to the consummation of the GECC Transaction $4,214,000 for
the 1997 Fiscal Year, $4,428,000 for the 1998 Fiscal Year, and $4, 628,000 for
each Fiscal Year thereafter, and (y) after the consummation of the GECC
Transaction, $3,600,000 for the 1997 Fiscal Year, $3,200,000 for the 1998 Fiscal
Year, and $3,400,000 for each Fiscal Year thereafter. The term "Rentals" means
all payments due from the lessee or sublessee under a lease, including, without
limitation, basic rent, percentage rent, property taxes, utility or maintenance
costs, and insurance premiums.
7.15 DISTRIBUTIONS; CAPITAL CHANGES. The Company will not, and
will not permit any Subsidiary to, (a) directly or indirectly declare or make,
or incur any liability to make, any Distribution, except Distributions to the
Company by a Wholly-Owned Subsidiary; or (b) make any change in its capital
structure which could adversely affect the repayment of the Notes.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
8.1. EVENTS OF DEFAULT. Any one or more of the following shall
constitute an "Event of Default" as the term is used herein:
(a) The Company shall fail to make the payment of
interest on the Notes within five (5) Business Days of the date when the same
shall have become due; or
(b) The Company shall fail to make any prepayment
required under subsection 4.1(a) on the Notes within five (5) Business Days of
the date such payment shall be due as provided in subsection 4.1(a); or
(c) The Company shall fail to make any other payment of
the principal of the Notes or the premium thereon at the expressed or any
accelerated maturity date or at any date fixed for prepayment; or
(d) Except as described in Schedule 8.1(d), attached,
default or the happening of any event shall occur, which default or event has
not been waived in writing, under any indenture, agreement, or other
-30-
31
instrument under which any Indebtedness of the Company or any Subsidiary for
borrowed money or any other lease agreement may be issued and such default or
event shall continue for a period time sufficient to permit the acceleration of
the maturity of Indebtedness of the Company or any Subsidiary outstanding
thereunder or any other lease agreement in any case in an amount in excess of
$500,000, or any Event of Default shall occur and be continuing under the BABC
Loan Agreement; or
(e) Default shall occur in the observance or performance
of the provisions set forth in sections 6.2, 6.7, 6.8 or 7.1 through 7.15 of
this Agreement; or
(f) Default shall occur in the observance or performance
of any other provision of this Agreement or any of the other Loan Documents
which is not remedied within 30 days after notice thereof to the Company by a
holder of the Notes or 30 days after the Company first obtains knowledge
thereof, the Company has informed the Noteholders and the Noteholders have
confirmed to the Company that such an event would constitute a Default if not
remedied, whichever is sooner; or
(g) If any representation or warranty made by the Company
herein, or made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and delivery of the
Existing Board Note, the Note or furnished by the Company pursuant thereto or
hereto, is untrue in any material respect as of the date of the issuance or
making thereof; or
(h) A custodian, trustee or receiver is appointed for the
Company or any Subsidiary or for the major part of the property of either and
is not discharged within 30 days after such appointment; or
(i) Final judgment or judgments for the payment of money
aggregating in excess of $500,000 is or are outstanding against the Company or
any Subsidiary or against any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of 60 days from the date of its entry; or
(j) The Company or any Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company or any Subsidiary
causes or suffers an order for relief to be entered with respect to it under
applicable Federal bankruptcy law or applies for or consents to the appointment
of a custodian, trustee or receiver for the Company or such Subsidiary or for
the major part of the property or either; or
(k) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar
law or laws for the relief of debtors, are instituted by or against the Company
or any Subsidiary and, if instituted against the Company or any Subsidiary, are
consented to or are not dismissed within 60 days after such institution; or
(l) The Company ceases to own all of the issued and
outstanding capital stock of each Subsidiary (except as permitted in Section
7.3(e)) or any person or group of persons (within the meaning of the Securities
Exchange Act of 1934) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities Exchange Commission) of 30%
or more of the outstanding capital stock of the Company.
8.2. NOTICE TO HOLDER. When any Default or Event of Default
described in the foregoing subsection 8.1 has occurred, or if any holder of the
Notes or of any other evidence of Indebtedness of the Company gives any notice
to the Company or a Subsidiary or takes any other action with respect to a
claimed default of which the Company or a Subsidiary is aware, the Company
agrees to give notice within three business days of such
-31-
32
event to all holders of the Notes then outstanding, such notice to be in
writing and sent by registered or certified mail or by telegram.
8.3. ACCELERATION OF MATURITIES. When any Event of Default
described in paragraph (a) through (i), inclusive, or paragraph (l), of
subsection 8.1 has happened and is continuing, together, all Noteholders who
hold one or more Notes whereby each holds 25% or more of the principal amount
of Notes at the time outstanding may jointly, by notice in writing sent by
registered or certified mail to the Company, declare the entire principal and
all interest accrued on all Notes to be, and all Notes shall thereupon become,
forthwith due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived. When any Event
of Default described in paragraph (j) or (k) of subsection 8.1 has occurred,
then the Notes shall immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the holders of the Notes the entire principal and interest accrued on the Notes
and, to the extent permitted by law, the amount which would be payable if the
Company then had elected to prepay the Notes at a premium pursuant to
subsection 4.2. No course of dealing on the part of any Noteholder nor any
delay or failure on the part of any Noteholder to exercise any right,
including, without limitation, the acceptance of a partial payment, shall
operate as a waiver of such right or otherwise prejudice such holder's rights,
powers and remedies. The Company further agrees, to the extent permitted by
law, to pay to the holder of the Notes all costs and expenses before and after
judgment incurred by such holder in the collection of the Notes upon any
default hereunder or thereon, including reasonable compensation to such
holder's or holders' attorneys for all services rendered in connection
therewith.
8.4. RESCISSION OF ACCELERATION. The provisions of subsection 8.3
are subject to the condition that if the principal of and accrued interest on
the Notes have been declared immediately due and payable by reason of the
occurrence of any Event of Default described in paragraphs (a) through (i),
inclusive, and paragraph (l), of subsection 8.1, the holders of 66-2/3% in
aggregate principal amount of the Notes then outstanding may, by written
instrument filed with the Company, rescind and annul such declaration and the
consequences thereof, provided that at the time such declaration is annulled
and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes or all
other sums payable under the Notes and under this Agreement (except any
principal, interest or premium on the Notes which has become due and payable
solely by reason of such declaration under subsection 8.3) shall have been duly
paid; and
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to subsection 9.1;
and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 9. AMENDMENTS, WAIVERS AND CONSENTS.
9.1. CONSENT REQUIRED. Any term, covenant or condition of this
Agreement may, with the consent of the Company, be amended or compliance
therewith may be waived (either generally or in a particular instance and
either retroactively or prospectively), if the Company shall have obtained the
consent in writing of the holders of at least 83% in aggregate principal amount
of outstanding Notes; provided that without the written
-32-
33
consent of the holders of all of the Notes then outstanding, no such waiver,
modification, alteration or amendment shall be effective (i) which will extend
the time of payment (including any prepayment required by subsection 4.1(a)) of
the principal of or the interest on any Note or reduce the principal amount
thereof or change the rate of interest thereon, or (ii) which will change any
of the provisions with respect to optional prepayments, or (iii) which will
change the percentage of holders of the Notes required to consent to any such
amendment, alteration or modification or any of the provisions of this Section
9 or Section 8.
9.2. EFFECT OF AMENDMENT OR WAIVER. Any such amendment or waiver
shall apply equally to all of the holders of the Notes and shall be binding
upon them, upon each future holder of any Note and upon the Company, whether or
not such Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
SECTION 10. MISCELLANEOUS.
10.1. REGISTERED NOTES. The Company shall cause to be kept at its
principal office a register for the registration and transfer of the Notes
(hereinafter called the "Note Register"), and the Company will register or
transfer or cause to be registered or transferred, as hereinafter provided and
under such reasonable regulations as it may prescribe, the Notes issued
pursuant to this Agreement.
At any time and from time to time the registered holder of any Note
which has been duly registered as hereinabove provided may transfer such Note
upon surrender thereof at the principal office of the Company duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or its attorney duly authorized in writing.
The Person in whose name the registered Note shall be registered shall
be deemed and treated as the owner and holder thereof for all purposes of this
Agreement. Payment of or on account of the principal, premium, if any, and
interest on the registered Note shall be made to or upon the written order of
such registered holder.
10.2. EXCHANGE OF NOTES. At any time, and from time to time, upon
not less than ten days' notice to that effect given by the holder of the Note
initially delivered or of any Note substituted therefor pursuant to subsection
10.3, this subsection 10.2 or subsection 10.3, and, upon surrender of such Note
at its office, the Company will deliver in exchange therefor, without expense
to the holder, except as set forth below, Notes in registered form for the same
aggregate principal amount as the then unpaid principal amount of the Note so
surrendered, in the denomination of $250,000 or any amount in excess thereof as
such holder shall specify, dated as of the date to which interest has been paid
on the Note so surrendered or, if such surrender is prior to the payment of any
interest thereon, then dated as of the date of issue, payable to such Person or
Persons as may be designated by such holder, and otherwise of the same form and
tenor as the Note so surrendered for exchange. The Company may require the
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed upon such exchange or transfer.
10.3. LOSS, THEFT, ETC. OF NOTES. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
any Note, and in the case of any such loss, theft or destruction upon delivery
of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will make and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note. If the Lender or any subsequent institutional
holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or
-33-
34
destruction and of its ownership of the Note at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
10.4. EXPENSES, STAMP TAX INDEMNITY. Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to
pay directly all of the Lender's out-of-pocket expenses in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby, including but not limited to the reasonable charges and
disbursements of Lender's counsel, duplicating and printing costs, and charges
for shipping the Note, adequately insured, to the Lender at its main office or
at such other place as it may designate, and so long as the Lender holds the
Note, all such expenses relating to any amendment, waivers or consents pursuant
to the provisions hereof. The Company also agrees that it will pay and save
the Lender harmless against any and all liability with respect to stamp and
other taxes, if any, which may be payable or which may be determined to be
payable in connection with the execution and delivery of this Agreement or the
Note, whether or not any Note is then outstanding. The Company agrees to
protect and indemnify the Lender against any liability for any and all
brokerage fees and commissions payable or claimed to be payable to any Person
in connection with the transactions contemplated by this Agreement.
10.5. REPRESENTATIONS OF THE LENDER. The Lender represents, and in
entering into this Agreement the Company understands, that it is acquiring the
Note for the purpose of investment and not with a view to the resale or
distribution thereof, and that it has no present intention of selling,
negotiating or otherwise disposing of the Note other than the possible sale of
participations in the Note; provided that the disposition of its property shall
at all times be and remain within its control.
To the best of the Board's knowledge, no employee of the Board with
any direct responsibility for this transaction has a direct or indirect
economic interest in the Company or its property or contracts, except such
interests as are generally owned by members of the public and which were
acquired in transactions unrelated to the issuance of the Note, nor will such
employees receive, directly or indirectly, anything of economic value for his
or her private benefit from the Company or anyone acting on its behalf in
connection with the transaction contemplated by this Agreement. With respect
to information which is furnished to or obtained by the Board pursuant to
subsection 6.2(k), the Board shall use its best efforts and follow its usual
procedures to see that such information is not used by the Board in transacting
in any Security of the Company other than the Note, and that such information
is held in confidence unless or until the same has been publicly disclosed (by
a Person other than the Board), provided that the Board may disclose such
information as may be required by law.
10.6. POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No delay
or failure on the part of any holder of the Notes in the exercise of any power
or right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies of the
holders of the Notes are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to Section 10 of this Agreement, shall extend to or affect
any obligation or right not expressly waived or consented to.
10.7. NOTICES. All communications provided for hereunder shall be
in writing and, if to the Lender, delivered or mailed by registered or
certified mail or recognized national overnight express delivery service
addressed to the Lender at its address appearing on Schedule 4.4 to this
Agreement or such other address as it or any subsequent holder of the Notes may
designate to the Company in writing, provided that the Company may deliver
routine financial statements and SEC filings by regular mail, and if to the
Company, delivered or mailed by registered or certified mail or recognized
national overnight express delivery service to the Company at Outlook Group
Corp., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
CFO, or
-34-
35
to such other address as the Company may in writing designate to the Lender or
to a subsequent holder of the Notes.
10.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Company and its successors and assigns and shall inure to the Lender
benefit and to the benefit of their successors and assigns, including each
successive holder or holders of the Notes. If any subsequent holder of the
Notes shall have presented the same to the Company for inspection, accompanied
by a written designation of the address to which notice in respect of such
holder is to be given, then wherever
-35-
36
in this Agreement it is provided that notice shall be given to the holder of
the Notes, the notice in respect of the Note so presented shall be addressed to
such holder at the address so given.
10.9. SURVIVAL OF COVENANTS AND REPRESENTATIONS. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Amended and Restated Note.
10.10. SEVERABILITY. Should any part of this Agreement for any reason
be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of this Agreement without including therein
any such part, parts, or portion which may, for any reason, be hereafter
declared invalid.
10.11. GOVERNING LAW. This Agreement and the Notes issued and sold
hereunder shall be governed by and construed in accordance with Wisconsin law.
10.12. CAPTIONS. The descriptive headings of the various Sections or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
The execution hereof by the Lender shall constitute a contract for the
uses and purposes hereinabove set forth, and this Agreement may be executed in
any number of counterparts, each executed counterpart constituting an original
but all together only one agreement.
COMPANY: OUTLOOK GROUP CORP.
By:
----------------------------------
Name:
-----------------------------
Its:
------------------------------
LENDER: STATE OF WISCONSIN INVESTMENT BOARD
By:
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Investment Director -
Private Placements
-36-
37
Attachments to Amended and Restated Note Purchase Agreement
Schedule 1.1(b) - Schedule of Existing Mortgages Securing State of Wisconsin Investment Board Note
Schedule 2.1 - Outlook Foods Equipment
Schedule 3.1(h) - Certificate of Funded Debt, Secured Indebtedness, Long-Term Leases, and Contingent
Obligations
Schedule 4.1 - Schedule of Principal Payments
Schedule 4.4 - Lender Information
Schedule 5.1(i) - SEC Filings
Schedule 5.1(ii) - Investments in Non-Subsidiaries
Schedule 5.2 - Changes to Business
Schedule 5.6 - Litigation
Schedule 5.11 - ERISA
Schedule 5.14 - Information as to Company, Subsidiaries and Affiliates
Schedule 5.19 - Environmental Disclosures
Schedule 5.20 - OSHA
Schedule 7.10 - GECC Sale and Leaseback Equipment
Schedule 8.1(d) - Defaults
Exhibit A - Form of Amended and Restated Note
Exhibit B - Form of Amended and Restated Guaranty Agreement
Exhibit C - Form of Assignment Agreement Amendment
Exhibit D-1, D-2, Form of Mortgage Amendments
and D-3
Exhibit E - Form of Intercreditor Agreement Amendment
Exhibit F - Form Opinion of Company's Counsel
-37-
38
SCHEDULE 4.1
SCHEDULE OF PRINCIPAL PAYMENTS
BOARD NOTE: DATE AMOUNT
---- ------
[S] [C]
December 16, 1996 $ 0 .00
March 16, 1997 183,333.50
June 16, 1997 183,333.50
September 16, 1997 183,333.50
December 16, 1997 183,333.50
March 16, 1998 183,333.50
June 16, 1998 183,333.50
September 16, 1998 358,333.50
December 16, 1998 358,333.50
March 16, 1999 358,333.50
June 16, 1999 358,333.50
September 16, 1999 383,333.50
December 16, 1999 383,333.50
March 16, 2000 383,333.50
June 16, 2000 383,333.50
September 16, 2000 433,833.50
December 16, 2000 433,833.50
March 16, 2001 433,833.50
June 16, 2001 433,833.50
September 16, 2001 433,833.50
December 16, 2001 433,833.50
March 16, 2002 433,833.50
June 16, 2002 433,833.50
September 16, 2002 433,833.50
December 16, 2002 433,833.50
March 16, 2003 433,833.50
June 16, 2003 433,833.50
September 16, 2003 433,833.50
December 16, 2003 433,833.50
March 16, 2004 433,833.50
June 16, 2004 196,226.99