Exhibit 10.32
LOAN AGREEMENT
By and between
NORTH ATLANTIC TRADING COMPANY, INC.
as Borrower
and
NATIONAL TOBACCO COMPANY, L.P.
NORTH ATLANTIC OPERATING COMPANY, INC.
NATIONAL TOBACCO FINANCE CORPORATION
as Existing Subsidiaries and Guarantors
and
BANK ONE, KENTUCKY, NA
as Agent Bank
and
BANK ONE, KENTUCKY, NA
as a Bank
dated as of December 29, 2000
TABLE OF CONTENTS
LOAN AGREEMENT.....................................................................................................1
PRELIMINARY STATEMENT..............................................................................................1
SECTION 1 DEFINITIONS AND CROSS REFERENCE.........................................................................2
SECTION 2 REVOLVING CREDIT FACILITY...............................................................................4
2.1 Revolving Loan Commitments, Revolving Credit Loans............................................4
2.2 Interest on the Revolving Credit Loans........................................................4
2.3 Fees..........................................................................................4
2.4 Prepayments and Payments; Reductions in Revolving Loan Commitments............................4
2.5 Use of Proceeds...............................................................................4
2.6 Letters of Credit.............................................................................4
SECTION 3 TERM LOANS4
3.1 Principal of the Term Loans...................................................................4
3.2 Interest on the Term Loans....................................................................4
3.3 Prepayments and Payments; Reductions in Term Loans Commitments................................4
3.4 Use of Proceeds...............................................................................4
SECTION 4 SPECIAL PROVISIONS GOVERNING LIBOR LOANS................................................................4
4.1 Determination of LIBOR........................................................................4
4.2 Inability to Determine LIBOR..................................................................4
4.3 Illegality or Impracticability of LIBOR Loans.................................................4
4.4 Compensation For Breakage or Non-Commencement of Interest Periods.............................4
4.5 Booking of LIBOR Loans........................................................................4
4.6 Assumptions Concerning Funding of LIBOR Loans.................................................4
4.7 LIBOR Loans After Event of Default............................................................4
SECTION 5 CLOSING CONDITIONS......................................................................................4
5.1 Initial Closing Conditions....................................................................4
5.2 Conditions to All Revolving Credit Loans and Letters of Credit................................4
SECTION 6 REPRESENTATIONS AND WARRANTIES..........................................................................4
6.1 Organization, Standing, etc, of the Borrower and the Subsidiaries.............................4
6.2 Qualification.................................................................................4
6.3 Use of Proceeds...............................................................................4
6.4 Intellectual Property.........................................................................4
6.5 Disclosure; Solvency..........................................................................4
6.6 Tax Returns and Payments......................................................................4
6.7 Funded Debt; Financial Information............................................................4
6.8 Title to Properties; Liens; Leases............................................................4
6.9 Litigation, etc...............................................................................4
6.10 Authorization; Compliance With Other Instruments, Laws, etc...................................4
6.11 Enforceability................................................................................4
6.12 Governmental Consent..........................................................................4
6.13 Environmental Matters.........................................................................4
SECTION 7 AFFIRMATIVE COVENANTS...................................................................................4
7.1 Corporate Existence and Good Standing.........................................................4
7.2 Money Obligations, Payment of Taxes, ERISA, etc...............................................4
7.3 Financial Statements and Reports..............................................................4
7.4 Financial Records; Inspection.................................................................4
7.5 Maintenance of Properties, etc................................................................4
7.6 Permits, Certificates, Leases, Licenses.......................................................4
7.7 Notice........................................................................................4
7.8 Payment of Obligations........................................................................4
7.9 Environmental Matters.........................................................................4
7.10 Insurance.....................................................................................4
7.11 Preferred Stock and Senior Notes..............................................................4
7.12 Agreements with Bollore Technologies S.A......................................................4
7.13 Principal Management..........................................................................4
7.14 Creation of New Subsidiaries After the Closing Date...........................................4
SECTION 8 NEGATIVE COVENANTS......................................................................................4
8.1 Mergers, Acquisitions and Other Extraordinary Events..........................................4
8.2 Indebtedness, Guaranties, etc.................................................................4
8.3 Use of Assets.................................................................................4
8.4 Mortgages, Liens, Encumbrances, Security Interests, Assignments, etc..........................4
8.5 Nature of Businesses..........................................................................4
8.6 Fixed Charge Coverage Ratio...................................................................4
8.7 Interest Rate Agreements......................................................................4
8.8 Senior Notes..................................................................................4
SECTION 9 EVENTS OF DEFAULT; ACCELERATION.........................................................................4
9.1 Events of Default.............................................................................4
SECTION 10 REMEDIES UPON DEFAULT, ETC..............................................................................4
10.1 Defaults......................................................................................4
10.2 Offset........................................................................................4
10.3 Rights Cumulative.............................................................................4
10.4 Payment of Costs and Expenses.................................................................4
SECTION 11 THE AGENT BANK..........................................................................................4
11.1 Appointment...................................................................................4
11.2 Delegation of Duties..........................................................................4
11.3 Nature of Duties; Independent Credit Investigation............................................4
11.4 Actions in Discretion of the Agent Bank;: Instructions from the Banks.........................4
11.5 Reimbursement and Indemnification of the Agent Bank and the Banks by the Borrower.............4
11.6 Exculpatory Provisions........................................................................4
11.7 Reimbursement and Indemnification of the Agent Bank by the Banks..............................4
11.8 Reliance by the Agent Bank....................................................................4
11.9 Notice of Default.............................................................................4
11.10 The Banks in Their Individual Capacities......................................................4
11.11 Holders of Revolving Credit Notes and the Term Notes..........................................4
11.12 Equalization of the Banks.....................................................................4
11.13 Successor Agent Bank..........................................................................4
11.14 Calculations..................................................................................4
11.15 Withholding Tax...............................................................................4
11.16 Beneficiaries.................................................................................4
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SECTION 12 ASSIGNMENTS AND PARTICIPATIONS..........................................................................4
SECTION 13 INDEMNITY 4
SECTION 14 INCREASED COSTS; TAXES; CAPITAL ADEQUACY................................................................4
14.1 Compensation for Increased Costs and Taxes....................................................4
14.2 Withholding of Taxes..........................................................................4
14.3 Capital Adequacy Adjustment...................................................................4
14.4 Banks' Obligation to Mitigate.................................................................4
SECTION 15 NOTICES 4
SECTION 16 MISCELLANEOUS...........................................................................................4
16.1 Ratable Sharing...............................................................................4
16.2 Waiver........................................................................................4
16.3 Survival of Representations and Warranties....................................................4
16.4 Invalidity....................................................................................4
16.5 Assignment....................................................................................4
16.6 Governing Law.................................................................................4
16.7 Section Headings..............................................................................4
16.8 Entire Agreement..............................................................................4
16.9 Time of the Essence...........................................................................4
16.10 Modifications.................................................................................4
16.11 CONSENT TO JURISDICTION.......................................................................4
16.12 JURY WAIVER...................................................................................4
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LIST OF SCHEDULES
Schedule 1.1 List of the Banks
Schedule 1.2 List of the Existing Subsidiaries
Schedule 2.1 Schedule of Revolving Loan Commitments and Revolving
Credit Facility Pro Rata Shares of the Banks
Schedule 3.1 Schedule of Term Loan Commitments and Term Loan Pro
Rata Shares of the Banks
Schedule 6.2A Information on North Atlantic Trading Company, Inc.
Schedule 6.2B Information on National Tobacco Company, L.P.
Schedule 6.2C Information on North Atlantic Operating Company, Inc.
Schedule 6.2D Information on National Tobacco Finance Corporation
Schedule 8.4. Schedule of Permitted Liens on Assets
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Loan Agreement"), is made and entered into
as of the 29th day of December, 2000, by and among (i) BANK ONE, KENTUCKY, NA, a
national banking association with an office and place of business in Louisville,
Kentucky, as agent bank on behalf of the Banks defined herein ("the Agent Bank")
(Bank One, Kentucky, NA may also be referred to as a "Bank"); (ii) the BANKS
identified on Schedule 1.1 hereto (each a "Bank" and collectively, the "Banks");
(iii) NORTH ATLANTIC TRADING COMPANY, INC., a Delaware corporation with its
principal office and place of business and registered office in New York, New
York (the "Borrower") and (iv) the SUBSIDIARIES identified on Schedule 1.2
hereto (each an "Existing Subsidiary" and collectively, the "Existing
Subsidiaries").
P R E L I M I N A R Y S T A T E M E N T:
A. The Borrower desires to obtain from the Banks a revolving line of
credit in the principal amount of Ten Million Dollars ($10,000,000) (as defined
in Section 1 hereof, the "Revolving Credit Facility").
B. The Borrower desires to obtain from the Banks a commitment to
issue standby letters of credit for the account of the Borrower in an aggregate
outstanding amount of up to Ten Million Dollars ($10,000,000) at any one time,
as a subfacility under the Revolving Credit Facility (as defined in Section 1
hereof, the "Letter of Credit Subfacility").
C. The Borrower desires to obtain from the Banks a term loan or term
loans in the principal amount of Twenty Five Million Dollars ($25,000,000.00)
(the "Term Loans").
D. The Banks desire to establish the Revolving Credit Facility, the
Letter of Credit Subfacility and the Term Loans in favor of the Borrower, in
each case upon the terms and conditions set forth herein.
E. The Existing Subsidiaries are wholly owned subsidiaries of the
Borrower. The Existing Subsidiaries will benefit from the extension of the
Revolving Credit Facility, the Letter of Credit Subfacility, and the Term Loans
because such extensions of credit will enable the Existing Subsidiaries to have
available and to draw from time to time credit that would not otherwise be
available to the Existing Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the mutuality, receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS AND CROSS REFERENCE
Certain terms used in this Loan Agreement are defined in this Section
1; other terms are defined elsewhere in this Loan Agreement.
1.1 "Accounts Receivable" means all (a) rights to payment for any
goods sold or services performed, whether such right to payment exists on the
date of this Loan Agreement or is created hereafter, and whenever and wherever
acquired, and whether or not such right to payment is evidenced by any document,
instrument or chattel paper, and all claims against common carriers for goods
and Inventory lost in transit; and (b) the proceeds or products of any of the
foregoing. The term "Accounts Receivable" includes the term "account" as defined
in Uniform Commercial Code 9-106. The amount of an Account Receivable shall be
the amount of the receivable net of all discounts.
1.2 "Advance" means with respect to the Borrower, each and every
advance of proceeds under the Term Loans, the Revolving Credit Facility or the
Letter of Credit Subfacility, directly or indirectly, to the Borrower,
regardless of whether such advance is accounted for under GAAP as an extension
of credit, a contribution of capital or otherwise.
1.3 "Affiliate" means, as applied to any Person, (i) any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person, (ii) any other Person that, directly or indirectly, owns or
controls, whether beneficially or as a trustee, guardian or other fiduciary, 10%
or more of the stock having ordinary voting power in the election of directors
of such Person, or (iii) each of such Person's directors and officers appointed
by the board of directors of such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
1.4 "Agent Bank" has the meaning assigned to that term in the
introduction to this Loan Agreement.
1.5 "And/or" means one or the other or both, or any one or more or
all, of the things or persons or parties in connection with which the
conjunction is used.
1.6 "Applicable LIBOR Margin" means two and 35/100 percent (2.35%)
per annum, with respect to LIBOR Loans.
1.7 "Applicable Prime Rate Margin" means 50/100 percent (0.50%) per
annum, with respect to Prime Rate Loans.
1.8 "Applicable Letter of Credit Percentage" means two and 35/100
percent (2.35%) per annum.
1.9 "Applicable Commitment Fee Percentage" has the meaning set forth
in Section 2.3B hereof.
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1.10 "Application and Agreement for Letter of Credit" means the
document substantially in the form of Exhibit C annexed hereto, with appropriate
insertions and deletions, with respect to the proposed issuance or amendment of
a Letter of Credit.
1.11 "Authorized Officer" means the President, the Financial Officer
and any other officer of the Borrower, who, by the Articles of Incorporation,
Bylaws or Resolutions of the board of directors of the Borrower, is authorized
to execute and deliver this Loan Agreement and the other Loan Documents on
behalf of the Borrower.
1.12 "Banks" has the meaning assigned to that term in the
introduction to this Loan Agreement.
1.13 "Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy" as now and hereafter in effect, or any successor statute.
1.14 "Borrower" means the Person identified as "Borrower" in the
Introduction to this Loan Agreement.
1.15 "Borrower's Loan Accounts" means the accounts respectively on
the books of the Banks in which will be recorded Loans made by the Banks to the
Borrower, payments made on such Loans and other appropriate debits and credits
as provided by this Loan Agreement.
1.16 "Business Combination" means any acquisition or merger, whether
accounted for under GAAP as a purchase or pooling of interests and regardless of
whether the value of the consideration paid or received is comprised of cash,
assets, common stock, preferred stock, partnership interests, limited liability
company or limited liability partnership interests.
1.17 "Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of the Commonwealth of Kentucky or
is a day on which banking institutions located in the Commonwealth of Kentucky
are authorized or required by law or other governmental action to close.
1.18 "Capital Lease" as applied to any Person means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
1.19 "Change in Control" means (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Borrower and its Subsidiaries; or (ii) a
majority of the board of directors of the Borrower or of any direct or indirect
holding company thereof shall consist of Persons who either were not directors
of the Borrower as of the Closing Date or who were not nominated for election as
a director by at least two directors who held such positions as of the Closing
Date; or (iii) the acquisition by any Person or group of related Persons (other
than the Management Group) for purposes of Section 13(d) of the Exchange Act, or
the power, directly or indirectly, to vote or direct the voting of securities
having more than 50% of the ordinary voting power for the election of directors
of the Borrower or of any direct or indirect holding company thereof.
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1.20 "Closing Date" means December 29, 2000.
1.21 "Closing Fees" means the Closing Fees described in Section 2.3A
hereof.
1.22 "Companies" means the Borrower and the Existing Subsidiaries.
1.23 "Compliance Certificate" means a certificate substantially in
the form of Exhibit H annexed hereto, to be delivered by the Borrower to the
Agent Bank pursuant to Section 7.3E hereof.
1.24 "Consolidated Adjusted EBITDA" means, for any period,
Consolidated EBITDA plus non-cash expenses less Consolidated Capital
Expenditures, all as determined on a consolidated basis in accordance with GAAP.
1.25 "Consolidated Capital Expenditures" means, for any period, the
aggregate of all cash expenditures including all amounts expended or capitalized
under Capital Leases (but excluding any amount representing capitalized
interest) by the Borrower and its Subsidiaries during that period that, in
conformity with GAAP, are or are required to be included in the property, plant
or equipment reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries.
1.26 "Consolidated EBIT" means, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary losses less (B) the
amount for such period of gains on sales of assets (excluding sales in the
ordinary course of business)) and other extraordinary gains, all as determined
on a consolidated basis in accordance with GAAP.
1.27 "Consolidated EBITDA" means, for any period, (i) Consolidated
EBIT, (ii) depreciation expense and (iii) amortization expense, all as
determined on a consolidated basis in accordance with GAAP.
1.28 "Consolidated Interest Expense" means, for any period, (i) total
interest expense (including that attributable to Capital leases in accordance
with GAAP) of the Borrower and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
less (ii) interest income of the Borrower and its Subsidiaries on a consolidated
basis.
1.29 "Consolidated Net Income" means for any period, the net income
(or loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in conformity with GAAP,
plus all net non-cash charges, and less all net non-cash gains, included in
determining such net income (or loss) to the extent relating to inventory LIFO
reserves, provided that there shall be excluded from the calculation thereof
(without duplication) (i) the income (or loss) of any Person (other than
4
Subsidiaries of the Borrower) in which any other Person (other than the Borrower
or any of its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to the Borrower or any
of its Subsidiaries by such Person during such period, (ii) the income (or loss)
of any Person accrued prior to the date it becomes a Subsidiary of the Borrower
or is merged into or consolidated with the Borrower or any of its Subsidiaries
or that Person's assets are acquired by the Borrower or any of its Subsidiaries
and (iii) the income of any Subsidiary of the Borrower to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary.
1.30 "Contingent Obligations" means, with respect to the Borrower and
the Subsidiaries, any direct or indirect liability, contingent or otherwise
(excluding all transactions which, on a consolidated basis under GAAP, should be
eliminated) of the Borrower and the Subsidiaries, (i) with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another
if the primary purpose or intent thereof by the Borrower and the Subsidiaries is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holder of such obligation
will be protected (in whole or in part) against loss in respect thereof, or (ii)
under any letter of credit issued for the account of the Borrower and the
Subsidiaries or for which the Borrower and the Subsidiaries are otherwise liable
for reimbursement thereof, or (iii) under interest rate swap agreements,
interest rate collar agreements or other similar arrangements providing interest
rate protection. Contingent Obligations shall include, without limitation, (a)
the direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by the Borrower and the Subsidiaries of the
obligation of another, and (b) any liability of the Borrower and the
Subsidiaries for the obligations of another through any agreement (contingent or
otherwise) (1) to purchase, repurchase, or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (2) to maintain the solvency of any balance sheet
item, level of income or financial condition of another, or (3) to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, in the case of any agreement described
under subclauses (1), (2) or (3) of this sentence if the primary purpose or
intent thereof is as described in clause (i) of the preceding sentence. The
amount of any Contingent Obligation, as at any time of determination, shall be
equal to the amount of the obligation so guaranteed or otherwise supported at
such time of determination which amount shall be deemed to be the amount of such
obligation guaranteed, as reasonably estimated by the Borrower, if such amount
cannot be specifically determined at the time of determination.
1.31 "Covered Tax" means any Tax that is not an Excluded Tax.
1.32 "Default Rate" means, for any Loan, the Prime Rate plus two
percent (2.00%).
5
1.33 "Dollars" or "$" means lawful currency of the United States of
America.
1.34 "Environmental Audit" has the meaning set forth in Section 5.1R
hereof.
1.35 "Environmental Complaint" means any complaint, order, directive,
claim, citation or notice by any governmental authority or any other Person
described in Section 6.13E hereof.
1.36 "Equipment" means, when used with respect to any Person, all of
the following, whether owned or held on the date of this Agreement or acquired
thereafter: the equipment, machinery, furniture and leasehold improvements,
owned by such Person, used or intended for use by such Person in the conduct of
such Person's business, but excluding all motor vehicles with respect to which
any jurisdiction has issued a certificate of title. Some of the Equipment in
existence on the date of this Agreement may be more particularly described on
any UCC-1 financing statement executed in favor of the Agent Bank in connection
with this Agreement or one of the other Loan Documents, and in one or more
Exhibits referenced in one or more Schedules to this Agreement or one of the
other Loan Documents.
1.37 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
1.38 "Events of Default" means the occurrence or happening of any of
the matters set forth in Section 9 hereof.
1.39 "Excluded Tax" means any of the following taxes, levies,
imposts, duties, deductions, withholdings or charges, and all liabilities with
respect thereto: (i) Taxes imposed on the net income of any Bank or a Tax
Transferee (including without limitation branch profits taxes, minimum taxes and
taxes computed under alternative methods, at least one of which is based on net
income) (collectively referred to as "net income taxes") by (A) the United
States of America, (B) the jurisdiction under the laws of which such Bank or Tax
Transferee is organized or any political subdivision thereof, or (C) the
jurisdiction of such Bank's or Tax Transferee's applicable lending office or any
political subdivision thereof, or (D) any jurisdiction in which such Bank or Tax
Transferee is doing business, (ii) any Taxes to the extent that they are in
effect and would apply to a payment to any Bank as of the Closing Date, or as of
the date such Person becomes a Bank, in the case of any assignee pursuant to
Section 12 hereof, (iii) any Taxes that are in effect and would apply to a
payment to a Tax Transferee as of the date of acquisition of any portion of the
Revolving Credit Loans by such Tax Transferee or the date of the change of
lending office of such Tax Transferee, as the case may be (provided however that
a Person shall not be considered a Tax Transferee for purposes of this clause
(iii) as a result of a change of its lending office or the taking of any other
steps pursuant to Section 14.4 hereof), (iv) any Taxes to the extent of any
credit or other Tax benefit available to any Bank or Tax Transferee, as
applicable, as a result thereof, or (v) any Taxes that would not have been
imposed but for the failure by any Bank or Tax Transferee, as applicable, to
provide and keep current any certification or other documentation required to
qualify for an exemption from or reduced rate of any Tax.
1.40 "Existing Studies" has the meaning set forth in Section 5.1P.
6
1.41 "Federal Funds Effective Rate" for any day means the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates on
overnight Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, if such Federal
Reserve Bank (or its successor) does not announce such rate on any day, the
"Federal Funds Effective Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
1.42 "Financial Officer" means the chief financial officer of the
Borrower or other officer who is the highest ranking officer with responsibility
for the financial affairs of the Borrower.
1.43 "Fiscal Quarter" means a fiscal quarter of the Borrower and the
Subsidiaries. The Fiscal Quarters of the Borrower and the Subsidiaries will be
reported as of on the last day of each March, June, September and December of
each calendar year.
1.44 "Fiscal Year" means a fiscal year of the Borrower and the
Subsidiaries. The Borrower's current Fiscal Year ends on the last day of
December of each calendar year.
1.45 "Fixed Charge Coverage Ratio" means the ratio set forth in
Section 8.6 hereof.
1.46 "Funded Debt" means, with respect to the Borrower and the
Subsidiaries on a consolidated basis in accordance with GAAP, (i) all
indebtedness for borrowed money, including, without limitation, all Revolving
Credit Loans, all Term Loans and all reimbursement obligations in respect of all
letters of credit, including the Letters of Credit, (ii) that portion of
obligations with respect to capital leases which is properly classified as a
liability on a balance sheet in conformity with GAAP, (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for all or any part of
the deferred purchase price of property or services which purchase price is (y)
due more than twelve (12) months from the date of incurrence of the obligation
in respect thereof, or (z) evidenced by a note or similar written instrument,
but excluding trade payables incurred in the ordinary course of business, (v)
all indebtedness secured by any lien on any property or asset owned by the
Borrower and the Subsidiaries regardless of whether the indebtedness secured
thereby shall have been assumed by the Borrower and the Subsidiaries or is
non-recourse to the credit of the Borrower and the Subsidiaries but only to the
extent of the fair market value of any such property or assets, and (vi) all
other Contingent Obligations of the Borrower and the Subsidiaries not otherwise
included in clauses (i) through (v) of this Section.
1.47 "Funding Date" means the date of the funding of a Revolving
Credit Loan.
1.48 "GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the statements and
7
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, as applied in accordance with Sections 1.98 and 7.3
hereof.
1.49 "General Intangibles" shall mean all of the personal property
(including things in action) of a Person, other than goods, accounts, chattel
paper, commercial tort claims, deposit accounts, documents, goods, instruments
investment property, letter of credit rights, letters of credit, money and oil,
gas or other minerals before extraction (all as defined in the Uniform
Commercial Code), whether such personal property is owned by such Person on the
date of this Agreement, or is acquired thereafter, and (a) shall include, but
not be limited to, all existing and future rents, late charges, penalties, fees,
interest, royalties, rights, claims, benefits and proceeds in, under or to any
leases, franchise agreements, insurance policies (whether held and/or maintained
by such Person or otherwise), mailing and customer lists, choses in action,
books, records, patents and patent applications, copyrights, trademarks, service
marks, logos, trade or business names, trade secrets, inventions, processes and
all other intellectual property, sales contracts, licenses, permits, tax and all
other types of refunds, returned and unearned insurance premiums, claims,
product designs, plans, drawings, business and/or technical data, computer
programs, computer tapes and software, catalogs, blueprints, contract rights,
judgments, goodwill, payment intangibles, (b) all rights, applications,
continuations, renewals, substitutions, improvements, modifications and
extensions in any manner related thereto, and (c) all proceeds and products
thereof, and all of a Person's rights as an unpaid vendor, lienor, lessor, or
assignee, including stoppage in transit, replevin or reclamation. The term
"General Intangible" includes "general intangible" as defined in Uniform
Commercial Code 9-106.
1.50 "Guaranty Agreement" means the Guaranty Agreement entered into
by each of the Subsidiaries and the Agent Bank.
1.51 "Hazardous Discharge" means any event described in Section 6.13D
hereof.
1.52 "Hazardous Materials" means any and al substances, chemicals or
wastes (including, without limitation, asbestos, polychlorinated biphenyls
("PCBs") and petroleum) that are designated or defined (either by inclusion in a
list of materials or by reference to exhibited characteristics) as hazardous,
toxic or dangerous, or as a pollutant or contaminant in any of the Relevant
Environmental Laws.
1.53 "Interest Payment Date" means, (i) with respect to each Prime
Rate Loan, the last day of each calendar quarter during which such Prime Rate
Loan is outstanding in whole or in part, (ii) with respect to each LIBOR Loan,
the ninetieth (90th) day of the Interest Period applicable to such LIBOR Loan,
and/or the last day of the Interest Period applicable to such LIBOR Loan,
whichever is earlier, and (iii) with respect to all Revolving Credit Loans and
the Term Loans, the date of maturity thereof.
1.54 "Interest Period" means any interest period applicable to a
LIBOR Loan, as determined pursuant to Section 2.2B hereof with respect to the
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Revolving Credit Loans that are LIBOR Loans and as determined pursuant to
Section 3.2B hereof with respect to the Term Loans that are LIBOR Loans.
1.55 "Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement.
1.56 "Interest Rate Determination Date" means each date for
calculating the LIBOR for purposes of determining the interest rate in respect
of an Interest Period. The Interest Rate Determination Date shall be the date
which is two (2) Business Days prior to the related Interest Period for a LIBOR
Loan.
1.57 "Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended to the date hereof and from time to time hereafter.
1.58 "Inventory" means all of the following, whether owned or held on
the date of this Agreement or acquired thereafter: All goods held for sale or
lease; all goods to be furnished under contracts of service, and after so
furnishing them; all raw materials, work in process or materials used or
consumed in business, and all goods returned to or repossessed by their seller.
1.59 "Letters of Credit" means all standby letters of credit or
similar instruments issued by the Agent Bank for the account of the Borrower
pursuant to Section 2.6 of the Loan Agreement for the purpose of securing the
performance, payment, deposit or surety obligations of the Borrower or a
Subsidiary of the Borrower.
1.60 "Letter of Credit Subfacility" means the commitment of the Agent
Bank, to issue Letters of Credit for the account of the Borrower or a Subsidiary
of the Borrower up to an aggregate amount at any one time outstanding of Ten
Million Dollars ($10,000,000). The Letter of Credit Subfacility is a sublimit of
the Revolving Credit Facility.
1.61 "Letter of Credit Fee" has the meaning assigned to that term in
Section 2.6F(i) hereof.
1.62 "Letter of Credit Fronting Fee" has the meaning assigned to that
term in Section 2.6F(v) hereof.
1.63 "Letter of Credit Usage" means, as at any date, the sum of (i)
the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding, plus (ii)
the aggregate amount of all drawings under all Letters of Credit honored by the
Agent Bank and not theretofore reimbursed by the Borrower to the Agent Bank,
whether by virtue of the Banks making a Revolving Credit Loan to the Borrower to
enable the Borrower to reimburse the Agent Bank for such drawing or otherwise.
1.64 "LIBOR Loan" means any advance or any part of the principal of
any Revolving Credit Loan or Term Loan for which the Borrower has properly
selected an Interest Period and which is to bear interest at LIBOR plus the
Applicable LIBOR Margin.
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1.65 "LIBOR" means, for a particular LIBOR Loan for a particular
Interest Period, the annual rate of interest determined by the Agent Bank in
accordance with its usual procedures (which determination shall be conclusive
absent manifest error) (rounded, if necessary, to the nearest 1/16 of 1%) to be
the "offered" Eurodollar rate as of 11:00 a.m. London time two Business Days
preceding the first day of the Interest Period for such LIBOR Loan for deposits
in immediately available funds in United States dollars for delivery on the
first day of such Interest Period for an amount substantially equal to the
principal amount of that LIBOR Loan and for a period approximately equal to such
Interest Period, as shown on the TeleRate Service or as published by a
comparable interest rate reporting service selected by the Agent Bank.
1.66 "Loan" means a Revolving Credit Loan or a Term Loan.
1.67 "Loan Agreement" means this Loan Agreement as further amended,
supplemented or otherwise modified from time to time.
1.68 "Loan Documents" means this Loan Agreement, the Revolving Credit
Notes, the Term Notes, each Application and Agreement for Letter of Credit, the
Pledge Agreement, the Security Agreement, the Mortgages and all other
agreements, documents and instruments now or hereafter evidencing and/or
pertaining to this Loan Agreement and/or the other Obligations, and as may be
further amended, supplemented or otherwise modified from time to time.
1.69 "Majority Banks" shall have the meaning set forth in Section
16.10 hereof.
1.70 "Management Group" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇ and
any other member of the senior management of the Borrower.
1.71 "Material Adverse Effect" means a material adverse effect on the
business, property, assets, liabilities or condition (financial or otherwise) of
the Borrower and the Subsidiaries taken as a whole.
1.72 "Mortgaged Properties" means all the real property, personal
property and fixtures encumbered by the Mortgage.
1.73 "Mortgage" means the Mortgage, Assignment of Rents and Leases
and Fixture Filing from National Tobacco Company, L.P., as mortgagor, in favor
of the Agent Bank on behalf of all of the Banks, as mortgagee, encumbering the
Mortgaged Properties.
1.74 "Notice of Conversion/Continuation" means the Notice in the form
of Exhibit D annexed hereto with respect to the conversion and/or continuation
of the interest rate(s) applicable to the Revolving Credit Loans, as set forth
in Section 2.2D hereof, and with respect to the conversion and/or continuation
of the interest rate applicable to the Term Loans, as set forth in Section 3.2D
hereof.
1.75 "Obligations" means, collectively, (i) the entire unpaid
principal balance of and all interest now accrued or hereafter to accrue on the
Revolving Credit Notes, (ii) the entire unpaid principal balance of and all
interest now accrued or hereafter to accrue on the Term Notes, (iii) the
10
obligation of the Borrower to reimburse the Agent Bank for all drafts honored by
the Agent Bank under Letters of Credit together with accrued interest thereon,
(iv) the performance of all of the covenants, agreements and obligations of the
Borrower and the Subsidiaries hereunder and under the other Loan Documents, and
(v) all other liabilities, obligations, covenants and duties owing by the
Borrower and the Subsidiaries to any Bank arising under or pursuant to this Loan
Agreement or the other Loan Documents of any kind or nature, present or future,
and whether or not evidenced by any note, guaranty or other instrument. The term
"Obligations" includes, without limitation, all interest, charges, expenses,
reasonable attorneys' fees and any other sums chargeable to the Borrower and the
Subsidiaries under this Loan Agreement and/or any other Loan Document.
1.76 "Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
other entity or group, institution, party or government, whether federal, state,
county, city, municipal or other, or any agency or division thereof.
1.77 "Pledge Agreement" means that certain Pledge Agreement in the
form of Exhibit G hereto, dated as of the date of this Agreement, between the
Borrower and the Agent Bank, for the benefit of the Banks.
1.78 "Prime Rate" means a rate per annum equal to the prime rate of
interest announced from time to time by the Agent Bank or its parent (which is
not necessarily the lowest rate charged to any customer), changing when as said
prime rate changes.
1.79 "Prime Rate Loan" means Loans bearing interest at rates
determined with reference to the Prime Rate, as the same may change from time to
time, as provided in Section 2.2A with respect to Revolving Credit Loans that
are Prime Rate Loans, and as provided in Section 3.2A with respect to Term Loans
that are Prime Rate Loans.
1.80 "Real Property" means, collectively, the real property and
improvements thereon described in Exhibit I.
1.81 "Relevant Environment Laws" means any and all federal, state and
local laws, codes, ordinances, rules, regulations, reported and publicly
available orders, reported judicial determinations, and reported and publicly
available decisions of an executive body or any governmental and
quasi-governmental entity, whether in the past, the present or the future,
pertaining to health, safety or the environment in effect in any and all
jurisdictions in which the Borrower is or at any time may be doing business, or
where the Real Property is located. The Relevant Environmental Laws shall
include, but shall not be limited to, the following: (1) the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sections
9601, et seq.; the Superfund Amendments and Reauthorization Act, Public Law
99-949, 100 Stat. 1613; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq.; the National Environmental Policy Act, 42 U.S.C. Section
4321; the Safe Drinking Water Act, 42 U.S.C. Sections 300F, et seq.; the Toxic
Substances Control act, 15 U.S.C. Section 2601; the Hazardous Materials
11
Transportation Act, 49 U.S.C. Section 1801; the Federal Water Pollution Control
Act, 33 U.S.C. Sections 1251, et seq.; the Clean Air Act, 42 U.S.C. Section
7401, et seq.; and the regulations promulgated in connection therewith; (2) EPA
regulations pertaining to asbestos (including 29 C.F.R. Sections 1910.1001 and
1926.58); and any state and local laws and regulations pertaining to Hazardous
Materials and/or asbestos.
1.82 "Request for Revolving Credit Loan" means the Request in the
form of Exhibit E annexed hereto with respect to a proposed Revolving Credit
Loan to be delivered by the Borrower to the Agent Bank pursuant to Section ▇.▇▇
hereof.
1.83 "Revolving Credit Facility" means the revolving line of credit
established by the Banks in favor of the Borrower in the principal amount of Ten
Million Dollars ($10,000,000) pursuant to which the Borrower may obtain
Revolving Credit Loans from the Banks and/or Letters of Credit from the Agent
Bank during the term of the Revolving Credit Facility upon the terms and
conditions set forth in this Loan Agreement. The Revolving Credit Facility
includes as a sublimit the Letter of Credit Subfacility. All references to the
"aggregate principal balance of the Revolving Credit Loans outstanding" or
similar phrases in this Loan Agreement or in the Revolving Credit Notes shall
mean, as of the date of determination thereof, the sum of (i) the entire
aggregate outstanding principal balance of all Revolving Credit Loans made by
the Banks pursuant to this Loan Agreement and (ii) the then existing Letter of
Credit Usage.
1.84 "Revolving Credit Facility Commitment Fees" has the meaning set
forth in Section 2.3C hereof.
1.85 "Revolving Credit Facility Pro Rata Shares" means, with respect
to each Revolving Loan Commitment of each Bank, the percentage set forth
opposite that Bank's name on Schedule 2.1 annexed hereto; provided that Schedule
2.1 shall be amended and each Bank's Revolving Credit Facility Pro Rata Share
shall be adjusted from time to time to give effect to the addition or removal of
any Bank as provided herein or by assignment pursuant to Section 12 hereof.
1.86 "Revolving Credit Loans" means advances of principal of the
Revolving Credit Facility made pursuant to Section 2 hereof by the Banks to the
Borrower from time to time pursuant to, and subject to the terms and conditions
set forth in, this Loan Agreement to support the working capital needs of the
Borrower and for the other purposes described in Section 2.5A hereof.
1.87 "Revolving Credit Notes" means that certain Revolving Credit
Note (or those certain Revolving Credit Notes) dated of even date with this Loan
Agreement, made by the Borrower, payable to the order of Bank One, and in the
face principal amount of Ten Million Dollars ($10,000,000), a form of which is
annexed to this Loan Agreement as Exhibit A-1, as the same may hereafter be
amended, modified, renewed, replaced and/or restated from time to time and each
future Revolving Credit Notes, if any, made by the Borrower pursuant to the
Revolving Credit Facility.
1.88 "Revolving Loan Commitments" means each Bank's commitment to
maintain or make Revolving Credit Loans and/or to issue Letters of Credit as set
forth in Section 2.1 hereof.
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1.89 "Revolving Loan Commitment Termination Date" means the Revolving
Loan Commitment Termination Date then in effect, which shall be the earliest of
(i) December 31, 2002, (ii) the date as of which the Obligations shall have
become immediately due and payable pursuant to Section 9 of the Loan Agreement
and (iii) the date on which all of the Obligations are paid in full (including,
without limitation, the repayment, expiration, termination or cash
collateralization of Letters of Credit pursuant to this Loan Agreement) and the
Revolving Loan Commitments are reduced to zero and cancelled.
1.90 "Security Agreement" means any of the Security Agreement dated
as of the date hereof entered into between the Agent Bank and the Borrower and
the Subsidiaries, for the benefit of the Banks, as the same may hereafter be
amended, modified, renewed, replaced and/or restated from time to time, whether
entered into as of the Closing Date, or subsequent thereto, substantially in the
form of Exhibit F annexed hereto.
1.91 "Senior Notes" means the Borrower's 11% Senior Notes due 2004.
1.92 "Subsidiary" means (i) any corporation of which more than 50% of
the outstanding Voting Stock is at the time owned by the Borrower or by one or
more of its Subsidiaries, and (ii) any Person controlled by the Borrower or by
one or more of its Subsidiaries, whether by virtue of voting interest, other
beneficial interest or by voting agreement, contract, proxy or otherwise;
provided, however, that as of the Closing Date International Flavors and
Technologies, Inc. shall not be considered as a "Subsidiary" for purposes of
this Agreement, subject to the provisions of Section 7.14 hereof.
1.93 "Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, governmental fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed, levied,
collected, withheld or assessed; provided that "Tax on the overall net income"
of a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or, in the case of any
Bank, its lending office) is located on all or part of the net income, profits
or gains of that Person (whether worldwide, or only insofar as such income,
profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise).
1.94 "Tax Transferee" means any Person who acquires any interest in
the Revolving Credit Loans (whether or not by operation of law) or the office to
which any Bank has transferred its Revolving Credit Loans for purposes of
determining where such Bank's Revolving Credit Loans are made, accounted for or
booked.
1.95 "Term Loans" means the term loans in the principal amount of up
to Twenty Five Million Dollars ($25,000,000.00) made by the Banks to the
Borrower pursuant to this Loan Agreement.
1.96 "Term Loan Maturity Date" means the earliest of (i) December 31,
2002, (ii) the date as of which the Obligations shall have become immediately
due and payable pursuant to Section 9 of the Loan Agreement, (iii) the date on
which all of the Obligations are paid in full (including, without limitation,
the repayment, expiration, termination or cash collateralization of Letters of
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Credit pursuant to this Loan Agreement) and the Revolving Loan Commitments are
reduced to zero and cancelled and (iv) any date on which a principal product
line of the Borrower or the Subsidiaries is sold to a third party, unless the
Agent Bank has agreed in writing to extend the maturity of the Term Loans on
terms mutually agreeable to the Agent Bank, the Banks and the Borrower.
1.97 "Term Loan Pro Rata Shares" means, with respect to each Bank's
share of the Term Loans, the percentage set forth opposite that Bank's name on
Schedule 3.1 annexed hereto; provided that Schedule 3.1 shall be amended and
each Bank's Term Loan Pro Rata Share shall be adjusted from time to time to give
effect to the addition or removal of any Bank as provided herein or by
assignment pursuant to Section 12 hereof.
1.98 "Term Notes" means, that certain Term Note (or those certain
Term Notes) payable to the order of Bank One, and in the face principal amount
of Twenty Five Million Dollars ($25,000,000), a form of which is annexed to this
Loan Agreement as Exhibit B-1, as the same may hereafter be amended, modified,
renewed, replaced and/or restated from time to time and any other term
promissory note executed by the Borrower in connection with this Loan Agreement.
1.99 "Total Utilization of Revolving Loan Commitments" means, as at
any date of determination thereof, the sum of (i) the aggregate principal amount
of all outstanding Revolving Credit Loans and (ii) the Letter of Credit Usage.
1.100 "Uniform Commercial Code" means the Uniform Commercial Code in
effect in the State of New York.
1.101 "Voting Stock" means the shares of capital stock or other
securities of the Borrower entitled to vote generally in the election of the
directors of the Borrower.
1.102 Accounting Terms and Financial Information.
A. Accounting Terms. For purposes of this Loan Agreement,
all accounting terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Agent Bank hereunder shall (unless otherwise disclosed to the Agent Bank in
writing at the time of delivery thereof in the manner described in paragraph B
of this Section) be prepared in accordance with GAAP applied on a basis
consistent with GAAP as applied in the preparation of the latest financial
statements furnished to the Agent Bank hereunder.
B. Accounting Variances. The Borrower, for itself and the
Subsidiaries, shall deliver to the Agent Bank at the same time as the delivery
of any annual or quarterly financial statement under Section 7.3 hereof, (i) a
description in reasonable detail of any variation between the application of
accounting principles employed in the preparation of such statement and the
application of accounting principles employed in the preparation of the next
preceding annual or quarterly financial statements (which variation materially
affects the presentation of the financial position or results of operations of
the Borrower and the Subsidiaries on a consolidated basis in accordance with
14
GAAP) and (ii) reasonable estimates of the difference between such statements
arising as a consequence thereof.
1.103 Other Definitional Provisions. Any reference in this Loan
Agreement (i) to a Section, an Annex, a Schedule or an Exhibit is a reference to
a section hereof, an annex hereto, a schedule hereto or an exhibit hereto,
respectively; and (ii) to a subsection or a clause is, unless otherwise stated,
a reference to a subsection or a clause of the Section or subsection in which
the reference appears. In this Loan Agreement the singular includes the plural
and the plural the singular; "hereof," "herein," "hereto," "hereunder" and the
like mean and refer to this Loan Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include the other genders; references to statutes are
to be construed as including all statutory provisions consolidating, amending or
replacing the statute referred to; references to "writing" include printing,
typing, lithography and other means of reproducing words in a tangible visible
form; the words "including", "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
supplements, assignments and other modifications thereto, but only to the extent
such modifications are not prohibited by the terms of this Loan Agreement, and
references to Persons include their respective permitted successors and assigns
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons.
SECTION 2
REVOLVING CREDIT FACILITY
Subject to the terms and conditions of this Loan Agreement, the Banks
hereby establish the Revolving Credit Facility in favor of the Borrower in the
principal amount of Ten Million Dollars ($10,000,000). Pursuant to the Revolving
Credit Facility, the Borrower may obtain Revolving Credit Loans and/or Letters
of Credit pursuant to, and subject to the terms and conditions set forth in,
this Loan Agreement for the purposes set forth in Sections 2.4A and 2.5 hereof.
The Revolving Credit Facility is subject to the following terms and conditions:
2.1 Revolving Loan Commitments, Revolving Credit Loans.
A. Revolving Loan Commitments. Each Bank severally agrees,
subject to the limitations set forth below with respect to the maximum amount of
Revolving Credit Loans permitted to be outstanding from time to time, to lend to
the Borrower from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate amount not
exceeding its Revolving Credit Facility Pro Rata Share of the aggregate
Revolving Loan Commitments. The amount of each Bank's Revolving Loan Commitment
is set forth opposite its name on Schedule 2.1 annexed to this Loan Agreement
and the aggregate amount of the Revolving Loan Commitments is Ten Million
Dollars ($10,000,000). Each Bank's Revolving Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all Revolving Credit Loans shall
be paid in full no later than that date. Amounts borrowed under this Section
▇.▇▇ may be repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
15
Anything contained in this Loan Agreement to the contrary
notwithstanding, the Revolving Credit Loans and the Revolving Loan Commitments
shall be subject to the following limitations:
(i) The Letter of Credit Subfacility is a sublimit under
the Revolving Credit Facility. The amount otherwise available for borrowing
under the Revolving Loan Commitments as of the time of determination thereof
(other than to reimburse the Agent Bank for the amount of any drawings under any
Letters of Credit honored by the Agent Bank and not theretofore reimbursed by
the Borrower) shall be reduced by an amount equal to the Letter of Credit Usage
as of such time of determination; and
(ii) The Total Utilization of Revolving Loan Commitments
shall not exceed the then-applicable aggregate Revolving Loan Commitments.
B. Term of Revolving Loan Commitments. The Revolving Loan
Commitments shall become effective immediately as of the Closing Date, and as of
the Closing Date, the Borrower may obtain Revolving Credit Loans Credit subject
to the terms and conditions contained herein. The Revolving Loan Commitments
shall continue in effect until the Revolving Loan Commitment Termination Date,
unless sooner terminated by the Banks upon the occurrence and during the
continuation of an Event of Default. The Revolving Loan Commitment Termination
Date may only be extended by the unanimous written consent of all of the Banks
in their sole and absolute discretion. If any Bank elects not to extend the
Revolving Loan Commitment Termination Date, such Bank shall notify the Borrower
and the other Banks thereof. In the event any Bank elects not to extend the
Revolving Loan Commitment Termination Date, the Revolving Loan Commitments shall
terminate, and the entire unpaid principal balance of and all accrued and unpaid
interest on the Revolving Credit Loans and the Letters of Credit shall be
respectively due and payable in full to the Banks on the Revolving Loan
Commitment Termination Date, subject at all times to the Banks' absolute right
to terminate the Revolving Loan Commitments upon the occurrence and during the
continuation of an Event of Default. Upon termination of the Revolving Loan
Commitments by the Banks upon the occurrence and during the continuation of an
Event of Default, or by the Borrower at any time in its sole and absolute
discretion, the entire unpaid principal balance of and all accrued and unpaid
interest on the Revolving Credit Loans and the Letters of Credit shall be
respectively due and payable in full to the Banks. The termination of the
Revolving Loan Commitments, for whatever reason, shall not in any way release or
relieve the Borrower from its obligations incurred hereunder or in connection
herewith or under the Revolving Credit Notes, the Applications and Agreements
For Letters of Credit, the Term Notes or the other Loan Documents and the
provisions hereof and of the Revolving Credit Notes, the Applications and
Agreements For Letters of Credit, the Term Notes and the other Loan Documents
shall continue in full force and effect until the Revolving Credit Notes, the
Applications and Agreements For Letters of Credit, the Term Notes, and all other
Obligations have been respectively paid in full to the Banks.
C. Borrowing Mechanics For Revolving Credit Loans Made to
the Borrower. Revolving Credit Loans made to the Borrower on any Funding Date
shall be in an aggregate minimum amount of (i) One Hundred Thousand Dollars
16
($100,000) and integral multiples of Fifty Thousand Dollars ($50,000) in excess
of that amount in the case of Prime Rate Loans, and (ii) Three Hundred Thousand
Dollars ($300,000) and integral multiples of One Hundred Thousand Dollars
($100,000) in excess of that amount in the case of LIBOR Loans. Whenever the
Borrower desires that the Banks make a Revolving Credit Loan to the Borrower,
the Borrower shall deliver to the Agent Bank a Request For Revolving Credit Loan
no later than 12:00 noon (Louisville, Kentucky time) at least three (3) Business
Days in advance of the proposed Funding Date in the case of a LIBOR Loan and on
the proposed Funding Date in the case of a Prime Rate Loan. The Request For
Revolving Credit Loan shall be in the form of Exhibit E annexed hereto and shall
specify (i) the proposed Funding Date, (ii) the amount of the Revolving Credit
Loan, (iii) whether the Revolving Credit Loan shall be a Prime Rate Loan or a
LIBOR Loan, (iv) in the case of any Revolving Credit Loan requested to be made
as a LIBOR Loan, the initial Interest Period applicable thereto, and (v) that
the amount of the proposed Revolving Credit Loan will not (a) cause the Total
Utilization of Revolving Loan Commitments to exceed the aggregate Revolving Loan
Commitments. Revolving Credit Loans made to the Borrower may be continued as or
converted into Prime Rate Loans or LIBOR Loans in the manner provided in Section
2.2D hereof. In lieu of delivering the above described Request For Revolving
Credit Loan, the Borrower may give the Agent Bank telephonic notice by the
required time of the requested Revolving Credit Loan under this Section ▇.▇▇;
provided that such notice shall be promptly confirmed in writing by delivery of
a Request For Revolving Credit Loan to the Agent Bank on or before the
applicable Funding Date.
No Bank shall incur any liability to the Borrower in acting upon any
telephonic notice referred to above which the Agent Bank believes in good faith
to have been given by a duly Authorized Officer or other Person authorized to
borrow on behalf of the Borrower or for otherwise acting in good faith under
this Section ▇.▇▇ and, upon funding of any Revolving Credit Loan by the Banks in
accordance with this Loan Agreement pursuant to any telephonic notice, the
Borrower shall have effected such Revolving Credit Loan hereunder.
Except as provided in Sections 4.2, 4.3 and 4.7 hereof, a Request For
Revolving Credit Loan for a LIBOR Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and the Borrower shall be bound to obtain the LIBOR Loan in accordance
therewith.
D. Disbursement of Revolving Credit Loans to the Borrower.
All Revolving Credit Loans made to the Borrower under this Loan Agreement shall
be made by the Banks simultaneously and proportionately in accordance with their
respective Revolving Credit Facility Pro Rata Shares, it being understood that
no Bank shall be responsible for any default by the other Bank in funding its
Revolving Credit Facility Pro Rata Share of a Revolving Credit Loan requested
hereunder by the Borrower, nor shall the Revolving Loan Commitment of any Bank
be increased or decreased as a result of the default by the other Bank in
funding its Revolving Credit Facility Pro Rata Share of a Revolving Credit Loan
requested hereunder by the Borrower. Each Bank shall make its Revolving Credit
Facility Pro Rata Share of each Revolving Credit Loan to be made to the Borrower
available to the Agent Bank, in same day funds, at the office of the Agent Bank
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ not later than 1:00
P.M. (Louisville, Kentucky time) on the Funding Date. Except with respect to the
reimbursement to the Agent Bank for a drawing under a Letter of Credit issued by
17
the Agent Bank as provided in Section 2.6 hereof, upon satisfaction or waiver of
the conditions precedent specified in Section 5.1 in the case of the initial
Revolving Credit Loan on the initial Funding Date and Section 5.2 in the case of
a Revolving Credit Loan on any subsequent Funding Date, the Agent Bank shall
make the proceeds of each Revolving Credit Loan requested by the Borrower
available to the Borrower on the Funding Date by causing an amount of same day
funds equal to the proceeds of the Banks' respective Revolving Credit Facility
Pro Rata Shares of such Revolving Credit Loan received by the Agent Bank at its
office located at the address set forth in the preceding sentence to be credited
to the Borrower's Loan Account maintained at such office of the Agent Bank or
wired to an account designated by the Borrower. All Revolving Credit Loans shall
be respectively paid in full to the Banks on the Revolving Loan Commitment
Termination Date.
Nothing in this Section 2.1D shall be deemed to relieve any Bank from
its obligation to fulfill its Revolving Loan Commitment hereunder or to
prejudice any rights that the Borrower may have against any Bank as a result of
any default by such Bank hereunder.
E. Records. Each Bank shall record the Revolving Credit
Loans made to the Borrower from time to time and each repayment or prepayment in
respect of the principal amount of such Revolving Credit Loans in the Bank's
electronic records. Any such recordation in accordance with the terms of this
Loan Agreement shall be conclusive and binding on the Borrower absent manifest
error; provided, the failure to make any such recordation, or any error in such
recordation, shall not affect the Borrower's obligation to repay all Revolving
Credit Loans to the Banks in accordance with this Loan Agreement and the
Revolving Credit Notes.
F. Borrower's Loan Accounts. Each Bank shall enter all
Revolving Credit Loans made to the Borrower as debits in the Borrower's Loan
Account maintained with such Bank. Each Bank shall also record in the Borrower's
Loan Account maintained with such Bank in accordance with customary accounting
practice all other charges, expenses and other items properly chargeable to the
Borrower; all payments made by the Borrower on account of the Revolving Credit
Loans made by such Bank; and other appropriate debits and credits. The debit
balance of the Borrower's Loan Account maintained with such Bank shall reflect
the unpaid principal balance of the Revolving Credit Loans from time to time
maintained with such Bank. At least once each month the Agent Bank shall render
a statement of account for the Borrower's Loan Account maintained with the Agent
Bank and the other Banks, which statement shall be considered correct and
accepted by the Borrower and conclusively binding upon the Borrower in the
absence of manifest error unless the Borrower notifies the Agent Bank to the
contrary within ninety (90) days from the receipt of said statement by the
Borrower.
2.2 Interest on the Revolving Credit Loans.
A. Rates of Interest. Subject to the provisions of Section
2.2E, Section 4 and Section 14 hereof, each Revolving Credit Loan shall bear
interest on the unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) at (i) the Prime Rate plus the
Applicable Prime Rate Margin or (ii) LIBOR plus the Applicable LIBOR Margin, as
the case may be. The applicable interest rate mode with respect to Revolving
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Credit Loans shall be selected by the Borrower initially at the time a Request
For Revolving Credit Loan is delivered to the Agent Bank pursuant to Section
2.1C hereof. The interest rate with respect to any Revolving Credit Loan may be
changed by the Borrower from time to time pursuant to Section 2.2D hereof. If on
any day a Revolving Credit Loan is outstanding with respect to which notice has
not been delivered to the Agent Bank or the Banks in accordance with the terms
of this Loan Agreement specifying the applicable interest rate, then, that
Revolving Credit Loan shall bear interest as follows:
(i) at the current LIBOR plus the Applicable LIBOR Margin
for successive Interest Periods equal in length to the immediately ended
Interest Period, unless the length of any new Interest Period would extend
beyond the Revolving Loan Commitment Termination Date;
(ii) at the current LIBOR plus the Applicable LIBOR Margin
for a one month Interest Period, unless the length of such one month Interest
Period would extend beyond the Revolving Loan Commitment Termination Date; or
(iii) at the Prime Rate plus the Applicable Prime Rate
Margin, if either Interest Period referenced in (i) and (ii) would extend beyond
the Revolving Loan Commitment Termination Date.
B. Interest Periods for LIBOR Loans. In connection with
each LIBOR Loan, the Borrower may, pursuant to the applicable Request For
Revolving Credit Loan, select the Interest Period to be applicable to such LIBOR
Loan, which Interest Period shall be at the Borrower's option either a one, two,
three or six month period. The following provisions are applicable to Interest
Periods generally:
(i) the initial Interest Period for any LIBOR Loan shall
commence on the Funding Date of such LIBOR Loan, in the case of a Revolving
Credit Loan initially made as a LIBOR Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Revolving Credit
Loan converted to a LIBOR Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a LIBOR Loan continued as such pursuant to Notice of
Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(iv) any Interest Period of a LIBOR Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (iii) of this Section 2.2B, end on the last
Business Day of such calendar month;
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(v) no Interest Period shall extend beyond the Revolving
Loan Commitment Termination Date.
C. Interest Payments. Subject to the provisions of Section
2.2E hereof, interest shall be payable on the Revolving Credit Loans as follows:
(i) interest on each Prime Rate Loan shall be payable in
arrears on and to the last day of each calendar quarter, and at maturity
(including final maturity); and
(ii) interest on each LIBOR Loan shall be payable in
arrears on and to the ninetieth (90th) day during each Interest Period
applicable to that LIBOR Loan, the last day of each Interest Period applicable
to that LIBOR Loan, and upon any prepayment or repayment of that LIBOR Loan (to
the extent accrued on the amount being prepaid or repaid) and at maturity
(including final maturity).
D. Conversion or Continuation of Interest Rate Modes.
Subject to the provisions of Section 2.4 hereof, the Borrower shall have the
option (i) at any time to convert all or any part of outstanding Revolving
Credit Loans bearing interest as Prime Rate Loans to Revolving Credit Loans
bearing interest as LIBOR Loans; and (ii) upon the expiration of any Interest
Period applicable to a Revolving Credit Loan bearing interest as a LIBOR Loan,
(a) to continue all or any portion of such Loan as a LIBOR Loan, with the
succeeding Interest Period of such continued LIBOR Loan to commence on the most
recent Interest Payment Date thereof or (b) to convert all or any part of such
Loan to a Prime Rate Loan.
The Borrower shall deliver a Notice of Conversion/Continuation to the
Agent Bank no later than 12:00 noon (Louisville, Kentucky time) at least three
(3) Business Days in advance of the proposed conversion/continuation date. A
Notice of Conversion/ Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount of
the Revolving Credit Loan to be converted/continued, (iii) the nature of the
proposed conversion/continuation, (iv) in the case of a conversion to, or
continuation of, a LIBOR Loan, the requested Interest Period, and (v) in the
case of a conversion to, or a continuation of, a LIBOR Loan or a Prime Rate
Loan, that no Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation, the Borrower
may give the Agent Bank telephonic notice by the required time of any proposed
conversion/continuation under this section 2.2D; provided that such notice shall
be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to the Agent Bank on or before the proposed
conversion/continuation date.
The Banks shall not incur any liability to the Borrower in acting
upon any telephonic notice referred to above that the Agent Bank believes in
good faith to have been given by a duly Authorized Officer or other Person
authorized to act on behalf of the Borrower or for otherwise acting in good
faith under this Section 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Revolving
Credit Loans in accordance with this Loan Agreement pursuant to any such
telephonic notice, the Borrower shall have effected a conversion or
continuation, as the case may be, hereunder.
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Except as otherwise provided in Sections 4.2, 4.3 and 4.7 hereof, a
Notice of Conversion/Continuation for conversion to, or continuation of, a LIBOR
Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after
the related Interest Rate Determination Date and the Borrower shall be bound to
effect a conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal payments on the
Revolving Credit Loans not paid when due and, to the extent permitted by
applicable law, any interest payments on the Revolving Credit Loans or any fees
or other amounts owed by the Borrower hereunder not paid when due, in each case
whether at stated maturity, by notice of prepayment, by acceleration or
otherwise, shall thereafter bear interest (including post-petition interest in
any proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable on demand at a rate equal to the Default Rate. Payment or acceptance of
the increased rates of interest provided for in this Section 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of the
Banks.
F. Computation of Interest. Interest on Revolving Credit
Loans bearing interest as LIBOR Loans or as Prime Rate Loans shall be computed
on the basis of a 360-day year, in each case for the actual number of days
elapsed in the period during which it accrues. In computing interest on any
Revolving Credit Loan, the date of the making of such Revolving Credit Loan or
the first day of an Interest Period applicable to such Revolving Credit Loan, as
the case may be, shall be included, and the date of payment of such Revolving
Credit Loan or the expiration date of an Interest Period applicable to such
Revolving Credit Loan or, with respect to a Revolving Credit Loan being
converted to a LIBOR Loan or a Prime Rate Loan, the date of conversion of such
Revolving Credit Loan to such LIBOR Loan or a Prime Rate Loan shall be excluded;
provided that if a Revolving Credit Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Revolving Credit Loan.
G. Limitation on LIBOR Loan Tranches. At no time shall the
number of Revolving Credit Loans bearing interest as LIBOR Loans outstanding at
any time outstanding exceed three (3).
2.3 Fees.
A. Closing Fees and Expenses. The Borrower agrees to pay to
the Agent Bank on the Closing Date, Closing Fees in the total amount of $35,000.
Pursuant to this Section 2.3A hereof, the Borrower also agrees to pay to the
Agent Bank on the Closing Date the reasonable fees and expenses of the Agent
Bank's counsel in negotiating, drafting and closing this Loan Agreement, the
Loan Documents and related documents.
B Commitment Fee. The Borrower agrees to pay to the Agent
Bank, for the benefit of the Banks in proportion to their respective Revolving
Credit Facility Pro Rata Shares, commitment fees (the "Revolving Credit Facility
Commitment Fees") for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date, equal to the average
of the daily excess of the Revolving Loan Commitments over the aggregate
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outstanding principal amount of Revolving Credit Loans and the Letter of Credit
Usage multiplied by one half of one percent (0.50%) (the "Applicable Commitment
Fee Percentage"). The Revolving Credit Facility Commitment Fees shall be
calculated on the basis of a 360-day year and the actual number of days elapsed
and shall be payable quarterly in arrears on the last day of each Fiscal
Quarter, commencing on the first such date to occur after the Closing Date, and
on the Revolving Loan Commitment Termination Date. The Borrower shall have no
liability to any Bank for any Revolving Credit Facility Commitment Fees paid to
the Agent Bank which the Agent Bank does not properly remit to such Bank, and
such Bank's sole remedy in respect thereof shall be against the Agent Bank.
2.4 Prepayments and Payments; Reductions in Revolving Loan
Commitments.
A. Voluntary Prepayments. The Borrower may, upon not less
than one (1) Business Day prior written or telephonic notice confirmed in
writing to the Agent Bank, at any time and from time to time, prepay any
Revolving Credit Loans in whole or in part in an aggregate minimum amount of One
Hundred Thousand Dollars ($100,000) and integral multiples of Twenty Five
Thousand Dollars ($25,000) in excess of that amount; provided however that in
the event that the Borrower prepays a LIBOR Loan pursuant to this Section 2.4A
on a date that is other than the expiration date of the Interest Period
applicable thereto, the Borrower shall compensate the Banks in accordance with
the provisions of Section 4.4 hereof. If the Borrower has given notice of
prepayment as aforesaid, the principal amount of the Revolving Credit Loans
specified in such notice shall become due and payable on the prepayment date
specified therein. All prepayments of principal of the Revolving Credit Loans
shall be accompanied by the payment of accrued interest on the principal amount
being prepaid and shall be applied to the payment of interest before application
to principal. All prepayments of the Revolving Credit Loans shall be applied
first to Prime Rate Loans to the full extent thereof and then shall be applied
to LIBOR Loans, in each case in a manner which minimizes the amount of any
payments required to be made by the Borrower pursuant to Section 4.4 hereof.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments of principal,
interest and fees hereunder and under the Revolving Credit Notes by the Borrower
shall be made without defense, setoff and counterclaim and in same day funds and
delivered to the Agent Bank not later than 12:00 noon (Louisville, Kentucky
time) on the date due at its office located in Louisville, Kentucky; funds
received by the Agent Bank after that time shall be deemed to have been paid by
the Borrower on the next succeeding Business Day.
(ii) Payments to be Made on Business Days. Whenever any
payment to be made hereunder or under the Revolving Credit Notes shall be due on
a day that is not a Business Day, such payment shall be made on the next
succeeding Business Day (unless no further Business Day occurs in such month, in
which case payment shall be made on the Business Day immediately preceding) and
such extension or reduction of time shall be included in the computation of the
payment of interest hereunder or under the Revolving Credit Notes or of the
Revolving Credit Facility Commitment Fees, as the case may be.
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2.5 Use of Proceeds.
A. Revolving Credit Loans. The proceeds of the Revolving
Credit Loans shall be used by the Borrower to fund their working capital needs,
to repay or purchase existing indebtedness or preferred stock (and cancel
existing letters of credit, if any) and for all businesses incidental to or
related to the businesses of the Borrower herein described.
B. Margin Regulations. No portion of the proceeds of any
Revolving Credit Loans under this Loan Agreement shall be used by the Borrower
in any manner which might cause the making of the Revolving Credit Loans or the
application of the proceeds thereof to violate Regulation G, Regulation U,
Regulation T, or Regulation X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board or to violate the Securities and
Exchange Act of 1934, in each case as in effect on the date or dates of the
making of any such Revolving Credit Loan and such use of the proceeds thereof.
If requested by the Banks, the Borrower shall execute and deliver to the Banks a
completed Federal Reserve Form U-1.
2.6 Letters of Credit.
A. Letters of Credit. Subject to the terms and conditions
of this Loan Agreement and in reliance upon the representations and warranties
of the Borrower and the Subsidiaries set forth herein, the Borrower may request,
in accordance with the provisions of this Section 2.6A, that on and after the
Closing Date, the Agent Bank issue Letters of Credit for the account of the
Borrower denominated in Dollars. Issuances of Letters of Credit shall be subject
to the following limitations:
(i) The Borrower may not request that the Agent Bank issue
any Letter of Credit if, after giving effect to such issuance, (x) the total
Letter of Credit Usage would exceed Ten Million Dollars ($10,000,000), or (y)
the Total Utilization of Revolving Loan Commitments would exceed the Revolving
Loan Commitments.
(ii) In no event shall the Agent Bank issue, reissue, amend
or permit the extension of: (y) any Letter of Credit having an expiration date
later than the Revolving Loan Commitment Termination Date in effect at the time
of issuance, reissuance, amendment or extension (automatic or otherwise)
thereof; or (z) subject to the foregoing clause (y), any Letter of Credit having
an expiration date more than one year after its date of issuance; provided that
subject to the foregoing clause (y), this clause (z) shall not prevent the Agent
Bank from agreeing that a Letter of Credit will automatically be extended
annually for one or more periods each not to exceed one year if the Agent Bank
does not cancel such extension, subject to the Banks extending the Revolving
Loan Commitment Termination Date.
It shall be a condition precedent to the issuance of any Letter of
Credit in accordance with the provisions of this Section 2.6 that each condition
set forth in Sections 5.1 and 5.2A and 5.2B of this Loan Agreement shall have
been satisfied.
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Immediately upon the issuance of each Letter of Credit, each Bank
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Agent Bank a participation in such Letter of Credit and drawings thereunder in
an amount equal to such Bank's Revolving Credit Facility Pro Rata Share of the
maximum amount which is or at any time may become available to be drawn
thereunder.
Each Letter of Credit shall provide that it shall be subject to the
Uniform Customs and Practice of Documentary Credits (1993 Revision),
International Chamber of Commerce Brochure No. 500, or any successor thereto.
Each Letter of Credit may provide that the Agent Bank may (but shall not be
required to) pay the beneficiary thereof upon the occurrence of an Event of
Default and the acceleration of the maturity of the Revolving Credit Loans or,
if payment is not then due to the beneficiary, provide for the deposit of funds
in an account to secure payment to the beneficiary and that any funds so
deposited shall be paid to the beneficiary of the Letter of Credit if conditions
to such payment are satisfied or returned to the Agent Bank for distribution to
the Banks (or, if all Obligations shall have been indefeasibly paid in full, to
the Borrower) if no payment to the beneficiary has been made and thirty (30)
days after the final date available for drawings under the Letter of Credit has
passed. Each payment or deposit of funds by the Agent Bank as provided in this
paragraph shall be treated for all purposes of this Loan Agreement as a drawing
duly honored by the Agent Bank under the related Letter of Credit.
B. Notice of Issuance. Whenever the Borrower desires the
issuance of a Letter of Credit, the Borrower shall deliver to the Agent Bank an
Application and Agreement for Letter of Credit in the form of Exhibit C annexed
hereto no later than 12:00 noon (Louisville, Kentucky time) at least three (3)
Business Days, or in each case such shorter period as may be agreed to by the
Agent Bank in any particular instance, in advance of the proposed date of
issuance. The Application and Agreement for Letter of Credit shall specify (i)
the proposed date of issuance (which shall be a Business Day under the laws of
the Commonwealth of Kentucky), (ii) the face amount of the Letter of Credit,
(iii) the expiration date of the Letter of Credit, (iv) the name and address of
the beneficiary of the Letter of Credit, and (v) a summary of the purpose and
contemplated terms of the Letter of Credit. Prior to the date of issuance of any
Letter of Credit, the Borrower shall specify a precise description of the
documents and the proposed text of any certificate to be presented by the
beneficiary under such Letter of Credit which, if presented by the beneficiary
prior to the expiration date of the Letter of Credit, would require the Agent
Bank to make payment under the Letter of Credit; provided that the Agent Bank,
in its sole reasonable judgment, may require changes in any such documents and
certificates; provided further that no Letter of Credit shall require payment
against a conforming draft to be made thereunder on the same Business Day (under
the laws of the Commonwealth of Kentucky) that such draft is presented if such
presentation is made after 12:00 noon (Louisville, Kentucky time) on such
Business Day. In determining whether to pay under any Letter of Credit, the
Agent Bank shall be responsible only to determine that the documents and
certificates required to be delivered under that Letter of Credit have been
delivered and that they comply on their face with the requirements of that
Letter of Credit; provided, further, nothing contained in this Section 2.6B
shall be deemed to prejudice the right of the Borrower to recover from the Agent
Bank in respect of any amounts paid by the Agent Bank under any Letter of Credit
24
in the event that it is determined by a court of competent jurisdiction that the
payment with respect to such Letter of Credit by the Agent Bank constituted
gross negligence or willful misconduct on the part of the Agent Bank.
C. Delivery of Copies of Letters of Credit and Letter of
Credit Amendments. The Agent Bank shall, promptly after the issuance of each
Letter of Credit, or any amendment or cancellation thereto, furnish to the Banks
a copy of such Letter of Credit or of such amendment or cancellation, as the
case may be, together with, in the case of the issuance of any Letter of Credit,
the amount of its risk participation therein, which shall be such Bank's
Revolving Credit Facility Pro Rata Share of the stated amount of such Letter of
Credit.
D. Payment of Amounts Drawn Under Letters of Credit. In the
event of any drawing under any Letter of Credit by the beneficiary thereof, the
Agent Bank shall promptly notify the Borrower and the Banks of such drawing, and
the Borrower shall reimburse the Agent Bank on the date on which such drawing is
honored in an amount in same day funds equal to the amount of such drawing. The
Borrower shall have the right to obtain a Revolving Credit Loan (subject to the
limitations set forth in Section ▇.▇▇ hereof and in the absence of any Event of
Default hereunder) in an amount sufficient to repay in full any such drawing
honored by the Agent Bank under a Letter of Credit.
E. Payment by Banks with Respect to Letters of Credit. In
the event that the Borrower shall fail to reimburse the Agent Bank as provided
in Section 2.6D hereof in an amount equal to the amount of any drawing honored
by the Agent Bank under a Letter of Credit issued by the Agent Bank, the Agent
Bank shall promptly notify each of the other Banks of the unreimbursed amount of
such drawing and of each Bank's participation therein, which participation shall
be equal to such Bank's Revolving Credit Facility Pro Rata Share of the
unreimbursed amount of such drawing. Each Bank shall make available to the Agent
Bank an amount equal to its participation in same day funds, at the offices of
the Agent Bank located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ not
later than 1:00 P.M. (Louisville, Kentucky time) on the Business Day (under the
laws of Commonwealth of Kentucky) after the date notified by the Agent Bank, and
each such amount so made available by each Bank will be deemed a Revolving
Credit Loan made by such Bank to the Borrower under this Loan Agreement as of
the date such amount is so made available to the Agent Bank. In the event that
any Bank fails to make available to the Agent Bank the amount of such Bank's
participation in such Letter of Credit as provided in this Section 2.6E, the
Agent Bank shall be entitled to recover such amount on demand from such Bank
together with interest at the customary rate set by the Agent Bank for the
correction of errors among banks for three (3) Business Days and thereafter at
the Federal Funds Effective Rate. Nothing in this Section 2.6 shall be deemed to
prejudice the right of any Bank to recover from the Agent Bank any amounts made
available by such Bank to the Agent Bank pursuant to this Section 2.6E in the
event that it is determined by a court of competent jurisdiction that the
payment made by the Agent Bank with respect to a Letter of Credit in respect of
which reimbursement was made by such Bank constituted gross negligence or
willful misconduct on the part of the Agent Bank. The Agent Bank shall
distribute to each other Bank, to the extent that it has paid all amounts
payable by it under this Section 2.6E with respect to any Letter of Credit
issued by the Agent Bank, such Bank's Revolving Credit Facility Pro Rata Share
of all payments received by the Agent Bank from the Borrower in reimbursement of
drawings honored by the Agent Bank under such Letter of Credit, as the case may
25
be, when such payments are received. Notwithstanding anything to the contrary
herein, each Bank shall have a direct right to reimbursement of such amounts
from the Borrower, subject to the procedures for reimbursing such Bank set forth
in this Section 2.6.
F. Compensation. The Borrower agrees to pay, without
duplication, the following amounts to the Agent Bank with respect to each such
Letter of Credit issued by the Agent Bank for the account of the Borrower:
(i) With respect to each Letter of Credit, a letter of
credit fee (the "Letter of Credit Fee") payable to the Agent Bank for the
account of the Banks (and to be shared by the Banks pro rata in accordance with
their respective Revolving Credit Facility Pro Rata Shares) equal to the
Applicable Letter of Credit Percentage multiplied by the maximum amount
available from time to time to be drawn under such Letter of Credit. The Letter
of Credit Fee, as based on the Applicable Letter of Credit Percentage, shall be
payable quarterly in advance beginning on the date of issuance of such Letter of
Credit and quarterly in advance beginning on the date, if such should occur, of
each renewal or extension of such Letter of Credit;
(ii) with respect to drawings made under any Letter of
Credit, interest, payable in immediately available funds to the Agent Bank on
demand, on the amount paid by the Agent Bank in respect of each such drawing
from the date of the drawing through the date such amount is reimbursed by the
Borrower at a variable rate equal to the Prime Rate;
(iii) with respect to the issuance, amendment or transfer
of each Letter of Credit and each drawing made thereunder, documentary and
processing charges payable to the Agent Bank in accordance with the Agent Bank's
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be;
(iv) promptly upon receipt by the Agent Bank of the amount
described in subdivisions (ii) and (iii) of this Section 2.6F, the Agent Bank
shall distribute to each Bank its Revolving Credit Facility Pro Rata Share of
such amount.
(v) With respect to each Letter of Credit, a letter of
credit fronting fee (the "Letter of Credit Fronting Fee") payable to the Agent
Bank for its own account, in the amount of one eighth of one percent (0.125%)
per annum multiplied by the aggregate face amount of Letters of Credit
outstanding during a Fiscal Quarter, plus other customary charges, if any,
payable quarterly in advance.
G. Obligations Absolute; Indemnification, Nature of the
Agent Bank's Duties. Subject to the right of the Borrower and the Banks to seek
damages in the event that a court of competent jurisdiction determines that the
Agent Bank acted in bad faith and/or committed gross negligence or willful
misconduct in honoring any draft presented under any Letter of Credit issued by
the Agent Bank, the obligation of the Borrower to reimburse the Agent Bank for
drawings made under such Letter of Credit and the obligation of the Banks under
Section 2.6E hereof to reimburse the Agent Bank in accordance with their
Revolving Credit Facility Pro Rata Shares for drawings made under such Letter of
Credit shall be unconditional and irrevocable and shall be paid strictly in
26
accordance with the terms of this Loan Agreement under all circumstances
including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of such Letter
of Credit;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower may have at any time against a beneficiary or any
transferee of such Letter of Credit (or any Persons for whom any such transferee
may be acting), the Agent Bank, any Bank or any other Person, whether in
connection with this Loan Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between the Borrower
and the beneficiary for which such Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under such Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the Agent Bank under such Letter of Credit
against presentation of a demand, draft or certificate or other document which
does not comply with the terms of such Letter of Credit;
(v) any other circumstance or happening whatsoever, which
is similar to any of the foregoing; or
(vi) the fact that an Event of Default under this Loan
Agreement shall have occurred and be continuing.
In addition to amounts payable as elsewhere provided in this Section
2, the Borrower hereby agrees to protect, indemnify, pay and save the Agent Bank
harmless from and against any all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees), which the
Agent Bank may incur or be subject to as a consequence, direct or indirect, of
(i) the issuance of the Letters of Credit, other than as a result of bad faith,
gross negligence or willful misconduct of the Agent Bank as determined by a
court of competent jurisdiction, or (ii) the failure of the Agent Bank to honor
a drawing under any Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority.
As between the Borrower and the Agent Bank, the Borrower assumes all
risks of the acts and omissions of, or misuse of the Letters of Credit issued by
the Agent Bank for the account of the Borrower by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, the Agent Bank shall not be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of the Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of any such
27
Letter of Credit to comply fully with conditions required in order to draw upon
such Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any such Letter of Credit
or of the proceeds thereof; (vii) for the misapplication by the beneficiary of
any such Letter of Credit of the proceeds of any drawing under such Letter of
Credit; and (viii) for any consequences arising from causes beyond the control
of the Agent Bank, including, without limitation, any act or omission, whether
rightful or wrongful, of any present or future government agency or authority.
None of the above shall affect, impair, or prevent the vesting of any of the
Agent Bank's rights or powers hereunder; provided however, that the Agent Bank
shall be responsible for any payment the Agent Bank makes under any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit in the event such
payment constitutes bad faith, gross negligence or willful misconduct of the
Agent Bank as determined by a court of competent jurisdiction.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Agent Bank
under or in connection with the Letters of Credit issued by it or the related
certificates, if taken or omitted in good faith and without bad faith, gross
negligence or willful misconduct, shall not put the Agent Bank under any
resulting liability to the Borrower or the Banks.
Notwithstanding anything to the contrary contained in this Section
2.6, the Borrower shall have no obligation to indemnify the Agent Bank in
respect of any liability incurred by the Agent Bank arising out of the bad
faith, gross negligence or willful misconduct of the Agent Bank, as determined
by a court of competent jurisdiction, or out of the wrongful dishonor by the
Agent Bank of proper demand for payment made under the Letters of Credit issued
by it.
H. Computation of Interest. Interest payable pursuant to
this Section 2.6 shall be computed on the basis of a 360-day year and the actual
number of days elapsed in the period during which it accrues.
I. Amendments. The Borrower may request that the Agent Bank
enter into one or more amendments of any Letter of Credit issued by the Agent
Bank for the account of the Borrower by delivering to the Agent Bank an
Application and Agreement For Letter of Credit specifying (i) the proposed date
of the amendment, and (ii) the requested amendment. The Agent Bank shall be
entitled to enter into amendments with respect to the Letters of Credit issued
by it; provided however that any such amendment extending the expiry date,
changing the Letter of Credit Fee, or increasing the stated amount of any Letter
of Credit shall only be permitted if the Agent Bank would be permitted to issue
a new Letter of Credit having such an expiry date, different Letter of Credit
Fee, or stated amount under this Section 2.6 on the date of the amendment.
J. Additional Payments. If by reason of (i) any change in
applicable law, regulation, rule, decree or regulatory requirement or any change
in the interpretation or application by any judicial or regulatory authority of
any law, regulation, rule, decree or regulatory requirement or (ii) compliance
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by the Agent Bank with any direction, request or requirement (whether or not
having the force of law) of any governmental or monetary authority including,
without limitation, Regulation D:
(a) any reserve, deposit or similar requirement is or shall
be applicable, imposed or modified in respect of any Letter of Credit issued by
the Agent Bank; or
(b) there shall be imposed on the Agent Bank any other
condition regarding this Section 2.6 or any Letter of Credit;
and the result of the foregoing is to directly or indirectly increase the cost
to the Agent Bank of issuing, making or maintaining any Letter of Credit, or to
reduce the amount receivable in respect thereof by the Agent Bank (other than an
increase in cost or reduction in amounts receivable as consequence of any Tax,
which shall be governed by the provisions of Section 4 hereof), then and in any
such case the Agent Bank may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify the
Borrower, and the Borrower shall pay on demand such amounts as the Agent Bank
may specify to be necessary to compensate the Agent Bank for such additional
cost or reduced receipt, together with interest on such amount from ten (10)
days after the date of such demand until payment in full thereof at a rate equal
at all times to the Prime Rate. The determination by the Agent Bank of any
amount due pursuant to this Section 2.6J as set forth in a certificate setting
forth the calculation thereof, plus such backup detail as may be reasonably
requested by Borrower, shall, in the absence of manifest or demonstrable error,
be final and conclusive and binding on the Borrower.
SECTION 3
TERM LOANS
Subject to the terms and conditions of this Loan Agreement, the Banks
hereby agree to make the Term Loans to the Borrower in the principal amount of
Twenty Five Million Dollars ($25,000,000.00).
3.1 Principal of the Term Loans.
A. Disbursement of Principal; Term Loan Pro Rata Shares.
The principal of the Term Loans shall be disbursed by the Agent Bank to the
Borrower on the Closing Date. The respective Term Loan Pro Rata Shares of each
Bank are set forth in Schedule 3.1 hereof.
B. Repayment. The entire unpaid principal balance of the
Term Loans shall be paid in eight (8) equal quarterly installments of Three
Million One Hundred Twenty Five Thousand Dollars ($3,125,000) each, plus accrued
interest, over a term of two (2) years beginning with the Fiscal Quarter ending
March 31, 2001, and on the last day of each Fiscal Quarter thereafter through
and including December 31, 2002. All unpaid principal and interest shall be due
and payable on December 31, 2002. The obligation of the Borrower to repay the
Term Loans together with accrued interest thereon is evidenced by the Term
Notes.
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C. Records. Each Bank shall record its Term Loan Pro Rata
Share of the Term Loans and each repayment or prepayment in respect of the
principal amount of the Term Loans in such Bank's electronic records. Any such
recordation in accordance with the terms of this Loan Agreement shall be
conclusive and binding on the Borrower absent manifest error; provided, the
failure to make any such recordation, or any error in such recordation, shall
not affect the Borrower's obligation to repay the Term Loans to the Banks in
accordance with this Loan Agreement and the Term Notes.
3.2 Interest on the Term Loans.
A. Rates of Interest. Subject to the provisions of Section
3.2E, Section 4 and Section 14 hereof, each Term Loan shall bear interest on the
unpaid principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at (i) the Prime Rate plus the Applicable Prime Rate
Margin or (ii) LIBOR plus the Applicable LIBOR Margin, as the case may be. The
initial applicable mode of interest rate with respect to Term Loans shall be
selected by the Borrower on the Closing Date. The interest rate with respect to
any Term Loan may be changed by the Borrower thereafter from time to time
pursuant to Section 3.2D hereof. If on any day a Term Loan is outstanding with
respect to which notice has not been delivered to the Agent Bank or the Banks in
accordance with the terms of this Loan Agreement specifying the applicable
interest rate, then, that Term Loan shall bear interest as follows:
(i) at the current LIBOR plus the Applicable LIBOR Margin
for successive Interest Periods equal in length to the immediately ended
Interest Period, unless the length of any new Interest Period would extend
beyond the Term Loan Maturity Date;
(ii) at the current LIBOR plus the Applicable LIBOR Margin
for a one month Interest Period, unless the length of such one month Interest
Period would extend beyond the Term Loan Maturity Date; or
(iii) at the Prime Rate plus the Applicable Prime Rate
Margin, if either Interest Period referenced in (i) and (ii) would extend beyond
the Term Loan Maturity Date.
B. Interest Periods for LIBOR Loans. In connection with
each Tranche of a Term Loan that is to be a LIBOR Loan, the Borrower may,
pursuant to the applicable Notice of Conversion/Continuation, select the
Interest Period to be applicable to such LIBOR Loan, which Interest Period shall
be at the Borrower's option either a one (1), two (2), three (3) or six (6)
month period. The following provisions are applicable to Interest Periods
generally:
(i) the initial Interest Period for any LIBOR Loan shall
commence on the Funding Date of such LIBOR Loan, in the case of a Term Loan
initially made as a LIBOR Loan, or on the date specified in the applicable
Notice of Conversion/Continuation, in the case of a Term Loan converted to a
LIBOR Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a LIBOR Loan continued as such pursuant to Notice of
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Conversion/Continuation, each successive Interest Period shall commence on the
day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would otherwise
expire on a day that is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day; provided further that such extension or
reduction of time shall be included in the computation of the payment of
interest hereunder or under the Term Notes;
(iv) any Interest Period of a LIBOR Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (iii) of this Section 3.2B, end on the last
Business Day of such calendar month; and
(v) no Interest Period shall extend beyond the Term Loan
Maturity Date.
C. Interest Payments. Subject to the provisions of Section
3.2E hereof, (i) to the extent a Term Loan bears interest at the Prime Rate plus
the Applicable Prime Rate Margin, interest shall be payable on such Term Loan in
arrears on and to the last day of each calendar quarter and at maturity, and
(ii) to the extent a Term Loan bears interest at LIBOR plus the Applicable LIBOR
Margin, interest shall be payable on such Term Loan in arrears on and to the
ninetieth (90th) day of the Interest Period applicable to such Term Loan and/or
on the last day of such Interest Period applicable to such Term Loan.
D. Conversion or Continuation. Subject to the provisions of
Section 3.3 hereof, the Borrower shall have the option (i) to convert at any
time all or any part of outstanding Term Loans bearing interest as Prime Rate
Loans to Term Loans bearing interest as LIBOR Loans, and (ii) upon the
expiration of any Interest Period applicable to a LIBOR Loan, (a) to continue
all or any portion of such Loan as a LIBOR Loan, with the succeeding Interest
Period of such continued LIBOR Loan to commence on the most recent Interest
Payment Date thereof or (b) to convert all or part of such Loan to a Term Loan
bearing interest as a Prime Rate Loan.
The Borrower shall deliver a Notice of Conversion/Continuation to the
Agent Bank no later than 12:00 noon (Louisville, Kentucky time) at least three
(3) Business Days in advance of the proposed conversion/continuation date. A
Notice of Conversion/ Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount of
the Term Loan to be converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or continuation
of, a LIBOR Loan, the requested Interest Period, and (v) in the case of a
conversion to, or a continuation of, a LIBOR Loan or a Prime Rate Loan, that no
Event of Default has occurred and is continuing. In lieu of delivering the
above-described Notice of Conversion/Continuation, the Borrower may give the
Agent Bank telephonic notice by the required time of any proposed
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conversion/continuation under this section 3.2D; provided that such notice shall
be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to the Agent Bank on or before the proposed
conversion/continuation date.
The Banks shall not incur any liability to the Borrower in acting
upon any telephonic notice referred to above that the Agent Bank believes in
good faith to have been given by a duly Authorized Officer or other Person
authorized to act on behalf of the Borrower or for otherwise acting in good
faith under this Section 3.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Term
Loans in accordance with this Loan Agreement pursuant to any such telephonic
notice, the Borrower shall have effected a conversion or continuation, as the
case may be, hereunder.
Except as otherwise provided in Sections 4.2, 4.3 and 4.7 hereof, a
Notice of Conversion/Continuation for conversion to, or continuation of, a LIBOR
Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after
the related Interest Rate Determination Date and the Borrower shall be bound to
effect a conversion or continuation in accordance therewith.
E. Post-Maturity Interest. Any principal of the Term Loans
not paid when due and, to the extent permitted by applicable law, any accrued
interest on the Term Loans or any fees or other amounts owed by the Borrower
hereunder not paid when due, in each case whether at stated maturity, by notice
of prepayment, by acceleration or otherwise, shall thereafter bear interest
(including post-petition interest in any proceeding under the Bankruptcy Code or
other applicable bankruptcy laws) payable on demand at a rate equal to the
Default Rate. Payment or acceptance of the increased rates of interest provided
for in this Section 3.2E is not a permitted alternative to timely payment and
shall not constitute a waiver of any Event of Default or otherwise prejudice or
limit any rights or remedies of the Banks.
F. Computation of Interest. Interest on Term Loans bearing
interest as LIBOR Loans or as Prime Rate Loans shall be computed on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Term Loan, the date of the
making of such Term Loan or the first day of an Interest Period applicable to
such Term Loan, as the case may be, shall be included, and the date of payment
of such Term Loan or the expiration date of an Interest Period applicable to
such Term Loan or, with respect to a Term Loan being converted to a LIBOR Loan
or a Prime Rate Loan, the date of conversion of such Term Loan to such LIBOR
Loan or a Prime Rate Loan shall be excluded; provided that if a Term Loan is
repaid on the same day on which it is made, one day's interest shall be paid on
that Term Loan.
G. Limitation on LIBOR Loan Tranches. At no time shall the
number of Term Loans bearing interest as LIBOR Loans outstanding at any time
outstanding exceed five (5).
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3.3 Prepayments and Payments; Reductions in Term Loans Commitments.
A. Voluntary Prepayments. The Borrower may, upon not less
than one (1) Business Day prior written or telephonic notice confirmed in
writing to the Agent Bank, at any time and from time to time, prepay any Term
Loans in whole or in part in an aggregate minimum amount of One Hundred Thousand
Dollars ($100,000) and integral multiples of Twenty Five Thousand Dollars
($25,000) in excess of that amount; provided however that in the event that the
Borrower prepays a LIBOR Loan pursuant to this Section 3.3A on a date that is
other than the expiration date of the Interest Period applicable thereto, the
Borrower shall compensate the Banks in accordance with the provisions of Section
4.4 hereof. If the Borrower has given notice of prepayment as aforesaid, the
principal amount of the Term Loans specified in such notice shall become due and
payable on the prepayment date specified therein. All prepayments of principal
of the Term Loans shall be accompanied by the payment of accrued interest on the
principal amount being prepaid and shall be applied to the payment of interest
before application to principal. All prepayments of the Term Loans shall be
applied first to Prime Rate Loans to the full extent thereof and then shall be
applied to LIBOR Loans, in each case in a manner which minimizes the amount of
any payments required to be made by the Borrower pursuant to Section 4.4 hereof.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments of principal,
interest and fees hereunder and under the Term Notes by the Borrower shall be
made without defense, setoff and counterclaim and in same day funds and
delivered to the Agent Bank not later than 12:00 noon (Louisville, Kentucky
time) on the date due at its office located in Louisville, Kentucky; funds
received by the Agent Bank after that time shall be deemed to have been paid by
the Borrower on the next succeeding Business Day.
(ii) Payments to be Made on Business Days. Whenever any
payment to be made hereunder or under the Term Notes shall be stated due on a
day that is not a Business Day, such payment shall be made on the next
succeeding Business Day (unless no further Business Day occurs in such month, in
which case payment shall be made on the Business Day immediately preceding) and
such extension or reduction of time shall be included in the computation of the
payment of interest hereunder or under the Term Notes.
3.4 Use of Proceeds.
A. Term Loans. The principal of the Term Loans shall be
used exclusively for the repayment of existing indebtedness of the Borrower.
B. Margin Regulations. No portion of the principal of the
Term Loans shall be used by the Borrower in any manner which might cause the
making of the Term Loans or the application of the proceeds thereof to violate
Regulation G, Regulation U, Regulation T, or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
33
to violate the Securities and Exchange Act of 1934, in each case as in effect on
the date or dates of each Term Loan. If requested by the Banks, the Borrower
shall execute and deliver to the Banks a completed Federal Reserve Form U-1.
SECTION 4
SPECIAL PROVISIONS GOVERNING LIBOR LOANS
Notwithstanding any other provision of this Loan Agreement to the
contrary, the following provisions shall govern with respect to LIBOR Loans as
to the matters covered:
4.1 Determination of LIBOR. As soon as practicable after 12:00 noon
Louisville, Kentucky time on each Interest Rate Determination Date applicable to
the particular LIBOR Loan, the Agent Bank shall furnish to the Borrower a quote
of the LIBOR to apply to the particular LIBOR Loan. The Agent Bank will in
addition confirm to the Borrower in writing the actual LIBOR prior to the
funding of the particular LIBOR Loan, and the determination of each LIBOR by the
Agent Bank, provided that the Agent Bank shall have determined the LIBOR in good
faith, shall be final, conclusive and binding upon both the Borrower and the
Banks in the absence of manifest or demonstrable error and shall apply to the
particular LIBOR Loan for the applicable Interest Period.
4.2 Inability to Determine LIBOR. In the event that the Agent Bank
shall have determined in good faith (which determination shall be final and
conclusive and binding upon the Borrower), on any Interest Rate Determination
Date or Funding Date with respect to any LIBOR Loans, that by reason of
circumstances occurring after the date of this Loan Agreement affecting the
London interbank market, adequate and fair means do not exist for ascertaining
the interest rate applicable to such LIBOR Loans on the basis provided for in
the definition of LIBOR, the Agent Bank shall on such date give notice (by
telecopy or by telephone confirmed in writing) to the Borrower and the Banks of
such determination, whereupon (i) no Revolving Credit Loans or Term Loans may be
made as, or converted to, LIBOR Loans until such time as the Agent Bank notifies
the Borrower and the Banks that the circumstances giving rise to such notice no
longer exist; and (ii) any Request for Revolving Credit Loan or Notice of
Conversion/ Continuation given by the Borrower with respect to the Revolving
Credit Loans or Term Loans in respect of which such determination was made shall
be deemed to be rescinded by the Borrower, and any Request for Revolving Credit
Loan or Notice of Conversion/Continuation given by the Borrower with respect to
the Revolving Credit Loans or Term Loans in respect of which such determination
was made shall be deemed to be a request to make Prime Rate Loans.
4.3 Illegality or Impracticability of LIBOR Loans. In the event that
on any date any Bank shall have determined in good faith (which determination
shall be final and conclusive and binding upon the parties hereto but shall be
made only after consultation with the Borrower) that the making, maintaining or
continuation of its LIBOR Loans (i) has become unlawful as a result of
compliance by such Bank in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Bank material hardship, as a result of
34
contingencies occurring after the date of this Loan Agreement which materially
and adversely affect the London interbank market, then such Bank shall on that
day give notice (by telecopy or by telephone confirmed in writing) to the
Borrower and the other Banks of such determination. Thereafter, (a) the
obligation of the Banks to make Revolving Credit Loans and Term Loans as, or to
convert Revolving Credit Loans or Term Loans to, LIBOR Loans shall be suspended
until such notice shall be withdrawn by the particular Bank, (b) to the extent
such determination by the particular Bank relates to a LIBOR Loan then being
requested by the Borrower pursuant to a Request for Revolving Credit Loan or
Notice of Conversion/Continuation, the Banks shall make such LIBOR Loan as (or
convert such LIBOR Loan to, as the case may be) a Prime Rate Loan, and (c) the
Banks' obligation to maintain their outstanding LIBOR Loans, as the case may be
(the "Affected Loans"), shall be terminated at the earlier to occur of the
expiration of the Interest Periods then in effect with respect to the Affected
Loans or when required by law, and the Affected Loans shall automatically
convert into Prime Rate Loans on the date of such termination.
4.4 Compensation For Breakage or Non-Commencement of Interest
Periods. The Borrower shall compensate the Banks, upon written request by the
Banks (which request shall set forth the basis for requesting such amounts), for
all reasonable losses, expenses and liabilities (including, without limitation,
any interest paid by the Banks to lenders of funds borrowed by them to make or
carry the LIBOR Loans and any reasonable loss, expense or liability sustained by
the Banks in connection with the liquidation or re-employment of such funds)
which the Banks may sustain: (i) if for any reason (other than a default by the
Banks or the conversion of the Borrower's Request for Revolving Credit Loan or
Notice of Conversion/Continuation with respect to Revolving Credit Loans or Term
Loans from a request to make LIBOR Loans into a request to make Prime Rate Loans
pursuant to Sections 4.2 or 4.3 hereof) a borrowing of any LIBOR Loan does not
occur on a date specified therefor in a Request for Revolving Credit Loan or
Notice of Conversion/Continuation with respect to Revolving Credit Loans or Term
Loans or a telephonic request for borrowing, or a conversion to or continuation
of any LIBOR Loan does not occur on a date specified therefor in a Request for
Revolving Credit Loan or Notice of Conversion/Continuation or a telephonic
request for conversion or continuation, (ii) if any prepayment or conversion of
any of the LIBOR Loans occurs on a date that is not the last day of the Interest
Period applicable to that LIBOR Loan, (iii) if any prepayment of any of the
LIBOR Loans is not made on any date specified in a notice of prepayment given by
the Borrower, or (iv) as a consequence of any other default by the Borrower to
repay the LIBOR Loans when required by the terms of this Loan Agreement. The
Banks shall deliver to the Borrower a certificate setting forth the calculation
of the compensation claimed to be due to the Banks within thirty (30) days after
the occurrence of the event giving rise to such claim for compensation, which
calculations shall be binding upon the Borrower in the absence of manifest or
demonstrable error.
4.5 Booking of LIBOR Loans. Each Bank may make, carry or transfer its
Revolving Credit Facility Pro Rata Share and Term Loan Pro Rata Share of LIBOR
Loans at, to, or for the account of any of its branch offices or the office of
an Affiliate of such Bank; provided however that if any transfer of a Bank's
Revolving Credit Pro Rata Share or Term Loan Pro Rata Share of LIBOR Loans from
the office where such Bank's Revolving Credit Facility Pro Rata Share and Term
Loan Pro Rata Share of LIBOR Loans originated shall increase the cost to the
Borrower of such LIBOR Loans, such transfer may occur only if required (i) by
the introduction of or any change (including, without limitation, any change by
35
way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (ii) to comply with any guideline or
request from any central bank or other governmental authority or
quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not such guideline or request shall have the
force of law).
4.6 Assumptions Concerning Funding of LIBOR Loans. The calculation of
all amounts payable to the Banks under this Section 4 and under Section 14.1
hereof shall be made as though each Bank had actually funded each LIBOR Loan
through the purchase of a deposit bearing interest at the rate obtained pursuant
to the definition of LIBOR in an amount equal to such Bank's Revolving Credit
Facility Pro Rata Share (or Term Loan Pro Rata Share in the case of Term Loans
bearing interest as LIBOR Loans) of the amount of such LIBOR Loan and having a
maturity comparable to the relevant Interest Period and through the transfer of
such deposit from an offshore office of such Bank to a domestic office of such
Bank in the United States of America; provided however that each Bank may fund
its Revolving Credit Facility Pro Rata Share or Term Loan Pro Rata Share of the
LIBOR Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this Section
4 and under Section 14.1 hereof.
4.7 LIBOR Loans After Event of Default. After the occurrence and
during the continuation of an Event of Default, (i) the Borrower may not elect
to have Revolving Credit Loans or Term Loans made or maintained as, or converted
to, LIBOR Loans after the expiration of any Interest Period then in effect for
such Loans, (ii) any Request for Revolving Credit Loan or Notice of
Conversion/Continuation given by the Borrower with respect to a requested
borrowing or conversion/continuation, as applicable, that has not yet occurred
shall be deemed to be rescinded by the Borrower, and (iii) all LIBOR Loans shall
thereupon bear interest at the Default Rate until the Event of Default is cured
or the Revolving Credit Loans and Term Loans are paid in full to the Banks and
the Revolving Loan Commitments have expired or have been terminated by the
Borrower or the Banks.
SECTION 5
CLOSING CONDITIONS
The establishment of the Revolving Credit Facility by the Banks in
favor of the Borrower, the obtaining of Revolving Credit Loans and/or Letters of
Credit by the Borrower thereunder, and the obtaining of the Term Loans by the
Borrower is subject to the satisfaction of all of the following conditions:
5.1 Initial Closing Conditions. The obligation of the Banks to make
the initial Revolving Credit Loans and the Term Loans to the Borrower is subject
to the condition that, in addition to the satisfaction of the conditions
precedent specified in Section 5.2 hereof, as of the Closing Date, the Banks
shall have received the following from the Borrower, dated the Closing Date or
such other date as shall be acceptable to the Banks:
A. Loan Agreement. This Loan Agreement, duly executed and
delivered by the Borrower and the Existing Subsidiaries.
36
B. Revolving Credit Note(s). The Revolving Credit Note(s),
duly executed and delivered by the Borrower.
C. Term Note(s). The Term Note(s), duly executed and
delivered by the Borrower.
D. Guaranty Agreement. The Guaranty Agreement, duly and
respectively executed and delivered by each of the Existing Subsidiaries,
jointly and severally guarantying the obligations of the Borrower.
E. Security Agreement. The Security Agreement, duly and
respectively executed and delivered by each of the Borrower and the Existing
Subsidiaries, granting to the Agent Bank, for the benefit of the Banks, a
security interest in all of the assets of the Borrower and the Existing
Subsidiaries.
F. UCC-1 Financing Statements. UCC-1 financing statements,
duly and respectively executed and delivered by each of the Borrower and the
Existing Subsidiaries, which, upon filing in the proper UCC filing offices, will
perfect the Banks' security interest in all of the business assets of the
Borrower and the Existing Subsidiaries which can be perfected through filing of
a UCC-1 statement.
G. Pledge Agreement. The Pledge Agreement, duly executed
and delivered by the Borrower, together with the stock certificates evidencing
all of the issued and outstanding shares of common stock of the Existing
Subsidiaries owned by the Borrower and executed blank stock powers appended
thereto.
H. Mortgage. The Mortgage, duly and respectively executed
and delivered by National Tobacco Company, L.P., granting to the granting to the
Agent Bank, for the benefit of the Banks, a mortgage on the real property,
personal property and fixtures described therein.
▇. ▇▇▇▇▇▇▇▇▇ Leaf Acknowledgement Agreement. An
Acknowledgement Agreement, duly and respectively executed and delivered by
National Tobacco Company, L.P., Lancaster Leaf and the Agent Bank, under which
Lancaster Leaf acknowledges the Agent Bank's first lien security interest in all
tobacco product of the Borrower and the Existing Subsidiaries delivered to
Lancaster Leaf.
J. UCC-1 Financing Statements of Lancaster Leaf. UCC-1
financing statements, duly executed and delivered by Lancaster Leaf, as debtor,
and the Agent Bank, as secured party.
K. Opinion of Counsel. A written opinion of counsel on
behalf of the Borrower and the Existing Subsidiaries, in form and substance
satisfactory to the Banks.
L. Certificate of Secretary of the Borrower. A Certificate
of the Secretary or Assistant Secretary of the Borrower (i) certifying as to the
authenticity, completeness and accuracy of, and attaching copies of, (a) the
Articles of Incorporation and By-Laws of the Borrower, and (b) Resolutions of
37
the board of directors of the Borrower authorizing the Borrower's execution,
delivery and performance of the Loan Documents to which the Borrower is a party,
and (ii) certifying the names and true signatures of the officers of the
Borrower authorized to execute and deliver the Loan Documents to which the
Borrower is party, on behalf of the Borrower.
M. Certificate of Secretary of each Existing Subsidiary. A
Certificate of the Secretary or Assistant Secretary of each Existing Subsidiary
(i) certifying as to the authenticity, completeness and accuracy of, and
attaching copies of, (a) the Articles of Incorporation and By-Laws (or
Certificate of Formation and Partnership Agreement, as applicable) of each
Existing Subsidiary, and (b) Resolutions of the board of directors of each
Existing Subsidiary authorizing the execution, delivery and performance of the
Loan Documents to which each Existing Subsidiary is a party by each Existing
Subsidiary, and (ii) certifying the names and true signatures of the officers of
each Existing Subsidiary authorized to execute and deliver the Loan Documents to
which each Existing Subsidiary is a party on behalf of each Existing Subsidiary.
N. Insurance Certificates. The certificates of insurance
required by Section 7.10 of this Agreement.
O. Title Insurance Policies. Title insurance policies with
respect to the Real Property, in standard ATLA form, in favor of the Agent Bank
as mortgagee, issued by title insurance companies acceptable to the Agent Bank.
Each policy of title insurance shall (i) be in an amount not less than the
appraised value of the real property and improvements which the respective
Mortgage secures, and (ii) insure that the Mortgage on such property is valid
and (iii) insure that such property is free from all liens and encumbrances,
other than liens and encumbrances acceptable to the Agent Bank.
P. Appraisals. Appraisals with respect to the Real Property
and the Equipment of the Borrower and Existing Subsidiaries, dated no earlier
than April 24, 1996, in form satisfactory to the Agent Bank. The Agent Bank
acknowledges its receipt and approval of such appraisals.
Q. Environmental Audits. Copies of any and all
environmental reports, studies, audits and similar documentation with respect to
the condition of the Mortgaged Properties which is in the possession or the
constructive possession of the Borrower (the "Existing Studies"). The Agent Bank
shall have an opportunity to review the Existing Studies, and if in the Agent
Bank's discretion it is in any manner unsatisfied with the form or content of
the Existing Studies, the Agent Bank shall have the right to require an
environmental site assessment(s) and/or audit(s) (singularly or collectively, as
appropriate, the "Environmental Audit") of the Mortgaged Property or properties
in question. With respect to the Environmental Audit, the Borrower shall select
an appropriate environmental professional from the Agent Bank's approved list
(the "Auditor") to perform the Environmental Audit. The Borrower shall be
responsible for arranging the Environmental Audit with the Auditor, and the
Environmental Audit shall be performed at the sole cost and expense of the
Borrower. The Agent Bank acknowledges its receipt and approval of such
Environmental Audit.
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R. Other Documents. Such other documents as the Banks may
reasonably request.
S. No Material Adverse Change. There shall have occurred no
material adverse change in the financial condition, assets, nature of assets or
operations of the Borrower and the Existing Subsidiaries from December 6, 2000
through the Closing Date.
T. Financial Projections. The Agent Bank shall have
received three years of financial projections for the Borrower and the Existing
Subsidiaries, satisfactory to the Agent Bank. The Agent Bank acknowledges its
receipt and approval of such financial projections.
5.2 Conditions to All Revolving Credit Loans and Letters of Credit .
The obligation of the Banks to make each Revolving Credit Loan on each Funding
Date and to issue, through the Agent Bank, each Letter of Credit, is in each
case subject to the following additional conditions precedent:
A. Request for Revolving Credit Loan. The Agent Bank shall
have received with respect to each Revolving Credit Loan, in accordance with the
provisions of Section ▇.▇▇ of this Loan Agreement, an originally executed
Request For Revolving Credit Loan, in the form of Exhibit E hereto, in each case
signed by an Authorized Officer of the Borrower.
B . Letters of Credit. The Agent Bank shall have received
with respect to each Letter of Credit, in accordance with the provisions of
Section 2.6B of this Loan Agreement, an originally executed Application and
Agreement For Letter of Credit relating to such Letter of Credit, in each case
signed by an Authorized Officer of the Borrower.
C. General Conditions. As of the Funding Date of any
Revolving Credit Loan or the date of issuance or extension of the stated
expiration date of any Letter of Credit:
(i) The representations and warranties contained herein
shall be true and correct in all material respects on and as of that date to the
same extent as though made on and as of that date;
(ii) No event shall have occurred and be continuing or
would result from the funding of the Revolving Credit Loan contemplated by such
Request For Revolving Credit Loan or the issuance or extension of the stated
expiration date of such Letter of Credit contemplated by such Application and
Agreement For Letter of Credit, which would constitute an Event of Default;
(iii) The Borrower shall have performed in all material
respects all agreements and satisfied all conditions which this Loan Agreement
and the other Loan Documents provide shall be performed by it on or before such
date;
39
(iv) No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain the Banks from
making that Revolving Credit Loan or issuing, through the Agent Bank, that
Letter of Credit;
(v) There shall not be pending or, to the knowledge of the
Borrower threatened, any action, suit, proceeding or arbitration or, to the
knowledge of the Borrower, any governmental investigation pending or threatened,
against or affecting the Borrower or the Subsidiaries or any property of the
Borrower or the Subsidiaries seeking damages in excess of $1,000,000 in the
aggregate, which has not been disclosed by the Borrower pursuant to Section 6.9
hereof or which prior to (a) the making of the last preceding Revolving Credit
Loan (or, in the case of the initial Revolving Credit Loan made hereunder, prior
to the execution of this Loan Agreement) or (b) the issuing of the most recent
Letter of Credit (or in the case of the initial Letter of Credit issued
hereunder, prior to the execution of this Loan Agreement) or the most recent
extension of the stated maturity date of any Letter of Credit, prior to the
execution of this Loan Agreement, if determined adversely, would have a Material
Adverse Effect. Further, there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental investigation or
arbitration so disclosed, which, in either event, in the opinion of the Banks,
could reasonably be expected to have a Material Adverse Effect on the financial
condition of the Borrower and the Subsidiaries on a consolidated basis. No
injunction or other restraining order shall have been issued and no hearing to
cause an injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to enjoin or
otherwise prevent the consummation of this Loan Agreement or the making of the
Revolving Credit Loans, the making of the Term Loans, the issuing or extension
of the respective stated expiration dates of the Letters of Credit hereunder;
and
(vi) As of the Funding Date of any Revolving Credit Loan or
the date of issuance or extension of the stated expiration date of any Letter of
Credit, the Agent Bank shall have received such other documentation as it may
reasonably request.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Borrower and the Subsidiaries represent and warrant to the Banks
as follows, which representations and warranties shall be deemed to be
continuing representations and warranties until the Revolving Credit Notes and
the other obligations have been respectively paid in full to the Banks, and
which representations and warranties shall survive the execution and delivery of
this Loan Agreement:
6.1 Organization, Standing, etc, of the Borrower and the
Subsidiaries. The Borrower is a corporation duly organized and validly existing
under the laws of the State of Delaware. National Tobacco Company, L.P., is a
limited partnership duly organized and validly existing under the laws of the
State of Delaware. North Atlantic Operating Company. Inc. is a corporation duly
organized and validly existing under the laws of the State of Delaware. National
Tobacco Finance Corporation is a corporation duly organized and validly existing
40
under the laws of the State of Delaware. The Borrower and each of the
Subsidiaries respectively has all requisite power and authority to own and
operate its properties, to carry on its businesses as now conducted and proposed
to be conducted, and to execute and deliver this Loan Agreement and the other
Loan Documents to which it is a party and to carry out the terms hereof and
thereof. The Borrower has delivered to the Agent Bank a true and complete copy
of its Certificate of Incorporation and By-Laws and the Certificate of
Incorporation and By-Laws of each of the Subsidiaries as in effect on the date
hereof.
6.2 Qualification. The Borrower and each Existing Subsidiary is
presently qualified to transact business as a foreign corporation in each
jurisdiction where a failure to so qualify would have a Material Adverse Effect
upon the business or operations of the Borrower or the Existing Subsidiaries.
6.3 Use of Proceeds. The uses of the proceeds of the Revolving Credit
Loans and the Term Loans and the uses of the Letters of Credit by the Borrower
and the Subsidiaries are and will continue to be legal and proper corporate uses
duly authorized by the board of directors of each of the Borrower and the
Subsidiaries, and such uses are consistent with all applicable laws and statutes
as in effect as of the date hereof and in accordance with the provisions of this
Agreement.
6.4 Intellectual Property. To the best of the Borrower's knowledge,
the Borrower and the Subsidiaries own or possess adequate assets, licenses,
patents, patent applications, copyrights, trademarks, trademark applications,
trade names, franchises, consents, authorizations and service marks and rights
with respect to the foregoing necessary for the conduct of their businesses as
presently conducted and as proposed to be conducted, without any known conflict
with the rights of others.
6.5 Disclosure; Solvency. Neither this Loan Agreement nor any other
document furnished to the Banks by or on behalf of the Borrower and the
Subsidiaries in connection with the Revolving Credit Facility and/or the Term
Loans and/or the other Obligations taken as a whole contains any statement of
any material fact which is untrue or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact known to the Borrower and the Subsidiaries which materially adversely
affects the business, operations, affairs or condition of the Borrower and the
Subsidiaries or any of their properties which has not been set forth in this
Loan Agreement or in the other documents furnished to the Banks by or on behalf
of the Borrower and the Subsidiaries in connection with the Revolving Credit
Facility, the Term Loans and the other Obligations. The Borrower and the
Subsidiaries, on a consolidated basis in accordance with GAAP, are currently
solvent; and neither the issuance and delivery of the Revolving Credit Notes,
the Term Notes and the Guaranty Agreement to the Banks, nor the obtaining of the
Letters of Credit, nor the performance of the transactions contemplated
hereunder or thereunder, will render the Borrower or the Subsidiaries, on a
consolidated basis in accordance with GAAP, insolvent, inadequately capitalized
to undertake the transactions contemplated hereunder or to undertake the
businesses in which they are presently engaged or about to engage or render the
Borrower and the Subsidiaries, on a consolidated basis, unable to pay their
debts as they become due; neither the Borrower nor any Existing Subsidiary is
contemplating either the filing of a petition by them or the commencement of a
41
case by them under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of their property; and the Borrower has no
knowledge of any Person contemplating the filing of any such petition or
commencement of any such case against the Borrower or the Subsidiaries.
6.6 Tax Returns and Payments. To the best of the Borrower's knowledge
after due inquiry, the Borrower and the Subsidiaries have filed all tax returns
required by law to be filed by them and have paid all taxes, assessments and
other governmental charges levied upon their properties, assets, income and
franchises, other than those not yet delinquent and those, not substantial in
aggregate amount, being or about to be contested as provided in Section 7.2A
hereof. The charges, accruals and reserves on the books of the Borrower and the
Subsidiaries, on a consolidated basis, in respect of their taxes are adequate,
in the opinion of the Borrower. The Borrower and the Subsidiaries know of no
material unpaid assessment for additional taxes.
6.7 Funded Debt; Financial Information. As of the date of this Loan
Agreement, and without regard to the transactions contemplated hereunder, there
is no outstanding Funded Debt of the Borrower and the Subsidiaries in respect of
borrowed money, capital leases or the deferred purchase price of property,
existing guaranties issued by the Borrower and the Subsidiaries, or existing
liens and security interests encumbering the assets of the Borrower and the
Subsidiaries, other than as disclosed in the most recent annual and quarterly
financial statements of the Borrower delivered to the Banks or on Schedule 6.7
attached hereto and made a part hereof. The financial information contained in
such financial statements is true and complete in all material respects. There
has been no material adverse change in the financial condition of the Borrower
and the Subsidiaries since the date of such financial statements.
6.8 Title to Properties; Liens; Leases. The Borrower and each
Existing Subsidiary have good and marketable title to all of their properties
and assets and none of such properties or assets is subject to any mortgage,
pledge, or security interest, or any material lien, charge or encumbrance other
than as described in Section 8.4 hereof and other than statutory landlord liens.
The Borrower and the Subsidiaries enjoy quiet possession under all leases to
which they are party as lessee, and all of such leases are to the best knowledge
of the Borrower and the Subsidiaries, after due inquiry, validly existing and in
full force and effect, and, to the best knowledge of the Borrower and the
Subsidiaries, after due inquiry, neither the lessor nor the Borrower or the
Subsidiaries as lessee is in default under any of such leases.
6.9 Litigation, etc. Except as previously disclosed in public filings
and in discussions with the Agent Bank, there is no action, proceeding or
investigation pending or, to the best knowledge of the Borrower and the
Subsidiaries, threatened (or any basis therefor known to the Borrower and the
Subsidiaries) (i) which questions the validity of this Loan Agreement, the
Revolving Credit Notes, the Term Notes, the Guaranty Agreements or the other
Loan Documents or any action taken or to be taken pursuant hereto or thereto,
(ii) which is not fully covered by insurance other than any applicable
deductible, or (iii) which might result, either in any case or in the aggregate,
in any material adverse change in the businesses, operations, affairs or
condition of the Borrower and the Subsidiaries or in any of their material
properties or assets or in any material liability on the part of the Borrower
and the Subsidiaries.
42
6.10 Authorization; Compliance With Other Instruments, Laws, etc. The
execution, delivery and performance of this Loan Agreement, the Revolving Credit
Notes, the Term Notes, the Guaranty Agreements and the other Loan Documents to
which the Borrower or the Subsidiaries are a party have been duly authorized by
all necessary corporate action on the part of the Borrower and the Subsidiaries,
will not result in any violation of or be in conflict with or constitute a
default under any term of the Articles of Incorporation or Certificate of
Incorporation, as applicable, or By-Laws of the Borrower and the Subsidiaries or
of any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to the Borrower and the Subsidiaries, or
result in the creation of any mortgage, lien, charge or encumbrance upon any of
the properties or assets of the Borrower and the Subsidiaries pursuant to any
such term, except as provided in the Loan Documents. The Borrower and the
Subsidiaries are not in violation of any term of their Articles of Incorporation
or Certificate of Incorporation, as applicable, or By-Laws, or of any material
term of any agreement or instrument to which they are party, or, to the
Borrower's best knowledge, of any judgment, decree, order, statute, rule or
governmental regulation applicable to the Borrower and the Subsidiaries. Without
limiting the generality of the foregoing, to the best knowledge of the Borrower
and the Subsidiaries, the Borrower and the Subsidiaries are in compliance in all
material respects with all federal and state laws and all rules, regulations and
administrative orders of all state and local commissions or authorities which
are applicable to the Borrower and the Subsidiaries or to the operation of their
businesses.
6.11 Enforceability. This Loan Agreement, the Revolving Credit Notes,
the Term Notes, the Guaranty Agreements, and the other Loan Documents to which
the Borrower and the Subsidiaries are party constitute legal, valid and binding
obligations of the Borrower and the Subsidiaries, enforceable against the
Borrower and the Subsidiaries in accordance with their respective terms, except
to the extent the enforceability hereof and thereof may be limited by applicable
laws affecting creditors, rights generally and by equitable principles.
6.12 Governmental Consent. To the best knowledge of the Borrower and
the Subsidiaries, the Borrower and the Subsidiaries are not required to obtain
any order, consent, approval or authorization of, and are not required to make
any declaration or filing with, any governmental authority in connection with
the execution and delivery of this Loan Agreement, the Revolving Credit Notes,
the Term Notes, the Guaranty Agreements, and the other Loan Documents to which
the Borrower and the Subsidiaries are party.
6.13 Environmental Matters. Except as disclosed in the
Existing Studies delivered to the Agent Bank:
A. To the Borrower's knowledge, the Borrower and the
Subsidiaries have duly complied in all material respects with, and their
businesses, operations, assets, equipment, leaseholds and facilities, including,
without limitation, the Real Property, are in material compliance with, the
provisions of all federal, state and local environmental, health and safety
laws, codes and ordinances, and all rules and regulations promulgated
thereunder, including, without limitation, all the Relevant Environmental Laws
and all other laws and regulations with respect to reporting releases of
Hazardous Materials and the registration and maintenance of underground storage
tanks.
43
B. To the Borrower's knowledge, the Borrower and the
Subsidiaries have been issued, and will maintain, all required federal, state
and local permits, licenses, certificates and approvals relating to (i) air
emissions; (ii) discharges to surface water or ground water; (iii) noise
emissions; (iv) solid or liquid waste disposal; (v) the use, generation,
storage, transportation or disposal of Hazardous Materials; and (vi) other
environmental, health or safety matters.
C. The Borrower has not received notice of violations of
any federal, state or local environmental, health or safety laws, codes or
ordinances, or any rules or regulations promulgated thereunder, including,
without limitation, any of the Relevant Environmental Laws, which relate to the
use, ownership or occupancy of any of the Real Property and the Borrower and the
Subsidiaries are not in violation in any material respect of any covenants,
conditions, easements, rights of way or restrictions affecting any of the Real
Property or any rights appurtenant thereto.
D. Except in accordance with a valid governmental permit,
license, certificate or approval, to the Borrower's knowledge there has been no
emission, spill, release, discharge or threatened release into or upon (i) the
air; (ii) the soils or any improvements located thereon; (iii) the surface water
or ground water; or (iv) the sewer, septic system or waste treatment, storage or
disposal system servicing any of the Real Property, of any Hazardous Material
at, upon, under, in or from any of the Real Property (any of which is hereafter
referred to as a "Hazardous Discharge").
E. To the Borrower's knowledge, there has been no
complaint, order, directive, claim, citation or notice by any governmental
authority or any other Person concerning any violation of Relevant Environmental
Laws with respect to (i) air emissions; (ii) spills, releases or discharges to
soils or any improvements located thereon, surface water, ground water or the
sewer, septic system or waste treatment, storage or disposal systems servicing
the Real Property; (iii) noise emissions; (iv) solid or liquid waste disposal;
(v) the use, generation, storage, transportation or disposal of Hazardous
Materials; or (vi) other environmental, health or safety matters, affecting any
of the Borrower and the Subsidiaries, any of the Real Property, any improvements
located thereon or the business conducted thereon (any of which is hereafter
referred to as an "Environmental Complaint").
F. To the Borrower's knowledge, Hazardous Materials
disposed of, treated or stored on or off-site of any Real Property owned, leased
or operated at any time by the Borrower or the Subsidiaries has been disposed
of, treated and stored in compliance in all material respects with all
applicable laws, codes and ordinances and all rules and regulations promulgated
thereunder, including, without limitation, all Relevant Environmental Laws.
G. Except as set forth in the Existing Studies and for
supplies that are to be used or sold in the ordinary course of the respective
businesses of the Borrower and the Subsidiaries and in full compliance with all
applicable laws, codes and ordinances, to the Borrower's knowledge all of the
Real Property are free of all (i) Hazardous Materials; (ii) underground storage
tanks; and (iii) underground pipelines. Except for materials used in the
ordinary course of business, neither the Borrower nor any Existing Subsidiary
has stored, treated or disposed of any Hazardous Materials on, in or under any
44
of the Real Property, or any part thereof, nor permitted the Real Property, or
any part thereof, to be used for the storage, treatment or disposal of Hazardous
Materials. Except for the material used in the ordinary course of business, to
the Borrower's knowledge there has been no storage, treatment, disposal or
release of Hazardous Materials on, in or under the Real Property at any time by
any Person.
H. To the Borrower's knowledge, except in accordance with a
valid required governmental permit, license, certificate or approval, neither
the Borrower nor any Existing Subsidiary has transported or accepted for
transport any Hazardous Materials.
I. To their knowledge, the Borrower and the Subsidiaries
have provided the Agent Bank with true, accurate and complete information
pertaining to the environmental history of all of the Real Property. The
Borrower and the Subsidiaries shall furnish promptly to the Agent Bank true,
accurate and complete copies of all sampling and test results obtained from all
environmental and/or health samples and tests taken at and around any of the
Real Property.
J. The Borrower and the Subsidiaries are not aware of any
claims or litigation, and none of them have received any communication from any
Person (including, without limitation, any governmental authority), concerning
the presence of Hazardous Materials or concerning any violation or alleged
violation of the Relevant Environmental Laws. The Borrower agrees promptly to
notify the Agent Bank of any such claims and to furnish the Agent Bank of any
such claims and to furnish the Agent Bank with a copy of any such communications
received after the date hereof.
SECTION 7
AFFIRMATIVE COVENANTS
The Borrower and the Subsidiaries hereby covenant and agree that
until the Revolving Credit Notes, the Term Notes and the other Obligations have
been respectively paid in full to the Banks, and the Letter of Credit
Subfacility has been terminated, the Borrower and the Subsidiaries will perform
and observe all of the following provisions:
7.1 Corporate Existence and Good Standing. Each of the Borrower and
the Subsidiaries shall preserve its corporate existence in good standing and
shall be and remain qualified to do business and in good standing in all states
and countries in which it is required to be so qualified and where the failure
to be so qualified would have a Material Adverse Effect upon the business of
such entity.
7.2 Money Obligations, Payment of Taxes, ERISA, etc.
A. Governmental Obligations. The Borrower and the
Subsidiaries will pay promptly as they become due and payable all taxes,
assessments and other governmental charges levied upon them or their income or
upon any of their properties or assets or in respect of their franchises,
businesses, income or profits, or upon any part thereof, as well as all lawful
claims of any kind (including claims for labor, materials and supplies) which,
45
if unpaid, might by law become a lien or a charge upon their property before any
of the same become delinquent; provided that no such tax, assessment or charge
need be paid if being contested in good faith and by appropriate proceedings
promptly initiated and diligently conducted by the Borrower and the Subsidiaries
and if such reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor. The Borrower and the Subsidiaries will
satisfy or cause to be satisfied the minimum annual funding standard within the
meaning of ERISA for any employee benefit plan established or maintained by the
Borrower and the Subsidiaries which is subject to ERISA, and the Borrower and
the Subsidiaries will not permit any tax or penalty to be incurred by it as a
result of any failure to satisfy any such minimum funding requirement or as a
result of any violation of the provisions of Section 4975 of the Code, or of any
regulation issued thereunder.
B. Other Obligations. The Borrower and the Subsidiaries
will pay in full all their other debts, obligations and liabilities allowed
hereunder before the same become delinquent, unless the same are being contested
in good faith by the Borrower and the Subsidiaries, the Borrower and the
Subsidiaries have established adequate reserves for the payment of the same in
accordance with GAAP, and the contesting thereof does not involve the risk of
forfeiture or loss of any of the assets of the Borrower or the Subsidiaries.
7.3 Financial Statements and Reports. The Borrower will furnish to
the Agent Bank the information required below at the times set forth below:
A. Annual Financial Statements. As soon as available and in
any event within 105 days after the close of each fiscal year of the Borrower,
the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries, as at the end of such fiscal year and the related consolidated and
consolidating statements of earnings and cash flow for such fiscal year, in each
case setting forth comparative figures for the preceding fiscal year, and, in
the case of such consolidated statements examined by PricewaterhouseCoopers LLP
or such other independent certified public accountants of recognized national
standing whose opinion shall not be qualified as to the scope of audit and as to
the status of the Borrower or any of its Subsidiaries as a going concern, (or,
in the case of such consolidating statements; certified by the chief financial
officer of the Borrower), together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of the Borrower
and its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm has obtained no knowledge of
any Event of Default which has occurred and is continuing.
B. Quarterly Financial Statements. As soon as available and
in any event within 45 days after the close of each fiscal quarter in each
fiscal year, the consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such quarter and the related consolidated statements of
earnings and cash flow for such quarter and for the elapsed portion of the
fiscal year ended with the last day of such quarter, and in each case setting
forth comparative figures for the corresponding periods in the prior fiscal year
and in the budget delivered in respect of the current fiscal year, all of which
shall be certified by the chief financial officer or controller of the Borrower,
subject to changes resulting from audit and normal year-end audit adjustments.
46
C. Monthly Reports. As soon as practicable, and in any
event within 45 days, after the end of each month the consolidated balance sheet
of the Borrower and its Subsidiaries, as at the end of such month, and the
related consolidated statements of earnings for such month and for the elapsed
portion of the fiscal year ended with the last day of such month, setting forth
comparative figures for the corresponding periods in the prior fiscal year and
in the budget delivered in respect of the current fiscal year, all of which
shall be certified by the chief financial officer or controller of the Borrower
subject to changes resulting from audit and normal year-end audit adjustments.
D. Budgets; etc. Not more than 45 days after the
commencement of each fiscal year of the Borrower, a consolidated budget of the
Borrower and its Subsidiaries in reasonable detail for such fiscal year.
E. Compliance Certificates. At the time of the delivery of
the financial statements provided for in Section 7.3A, 7.3B and 7.3C, a
Compliance Certificate of the chief financial officer, controller or other
Authorized Officer of the Borrower, completed substantially in the form of
Exhibit H hereto.
F. Notice of Event of Default or Litigation. Promptly, and
in any event within three Business Days after any of the Management Group
obtains knowledge thereof, notice of (x) the occurrence of any event which
constitutes an Event of Default which notice shall specify the nature thereof,
the period of existence thereof and what action the Borrower proposes to take
with respect thereto and (y) the commencement of or any materially adverse
development in any litigation or governmental proceeding pending against the
Borrower or any of its Subsidiaries which, in the Borrower's opinion, is likely
to have a Material Adverse Effect or is likely to have a Material Adverse Effect
on the ability of the Borrower or any of its Subsidiaries to perform their
respective obligations hereunder or under any other Credit Documents.
G. Pension Plans. Immediately upon becoming aware of the
institution of any steps by the Borrower or any other Person to terminate any
Pension Plan, or the failure to make a required contribution to any Pension Plan
if such failure is sufficient to give rise to a Lien under Section 302(f) of
ERISA, or the taking of any action with respect to a Pension Plan which could
result in the requirement that the Borrower furnish a bond or other security to
the PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by the Borrower of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Borrower with respect to any post-retirement Welfare Plan
benefit, notice thereof and copies of all documentation relating thereto;
H. Other Information. Promptly upon transmission thereof,
(i) copies of any filings and registrations with, and reports to, the Securities
and Exchange Commission or any successor thereto (the "SEC") by the Borrower or
any of its Subsidiaries, (ii) copies of all financial statements, proxy
statements, notices and reports as the Borrower or any of its Subsidiaries shall
send generally to analysts and the holders of the Senior Notes in their capacity
as such holders (to the extent not theretofore delivered to the Lenders pursuant
to this Agreement) and with reasonable promptness, such other information or
47
documents (financial or otherwise) as the Agent Bank on its own behalf or on
behalf of the Majority Banks may reasonably request from time to time.
The Banks shall keep confidential all of the financial statements and
other information, unless otherwise publicly available furnished to the Banks
pursuant to this Loan Agreement, except that each Bank shall have the right to
furnish copies of such financial statements and other information furnished to
such Bank to financial institutions which purchase interests in the Revolving
Credit Facility or the Term Loans pursuant to Section 12 hereof and governmental
agencies having jurisdiction over such Bank and which request copies of such
financial statements and/or other information. Such Bank will promptly inform
the Borrower each time such Bank is obligated or required to deliver any such
financial statements and other information to any such governmental agency
having jurisdiction over such Bank.
7.4 Financial Records; Inspection.
A. System of Accounting. The Borrower and the Subsidiaries
will maintain a standard, modern system of accounting established and
administered in accordance with GAAP consistently applied, in which full, true
and correct entries shall be made of all dealings and transactions in relation
to the Borrower's and the Subsidiaries' businesses and affairs, and will set
aside on their books all such proper reserves as shall be required by GAAP.
B. Access to Books and Records. The Borrower and the
Subsidiaries will permit any authorized representative designated by any Bank to
inspect any of the properties of the Borrower and the Subsidiaries, including
their books of account (and to make copies thereof and to take extracts
therefrom), and to discuss their affairs, finances and accounts with their
officers and with their independent accountants, all at such reasonable times
and as often as may be reasonably requested. Discussions with independent
accountants shall be requested in writing and shall be at the cost of the Banks.
Such inspection shall be for the information and benefit of the Banks and,
unless otherwise publicly available, any information obtained thereby or
otherwise pursuant thereto shall not be divulged to others except in connection
with the enforcement of the rights of the Banks upon the occurrence of an Event
of Default hereunder or to financial institutions which purchase interests in
the Revolving Credit Facility and the Term Loans pursuant to Section 12 hereof
and except as may be required by law or by any governmental agency having
jurisdiction over any Bank. Each Bank will promptly inform the Borrower each
time such Bank is obligated or required to deliver any such information to any
governmental agency having jurisdiction over such Bank.
7.5 Maintenance of Properties, etc. The Borrower and the Subsidiaries
will, insofar as they are not prevented by causes beyond their control, maintain
or cause to be maintained in good repair, working order and condition, ordinary
wear and tear excepted, all properties used or useful in the businesses of the
Borrower and the Subsidiaries. The Borrower and the Subsidiaries will maintain
or cause to be maintained, with financially sound and reputable insurers,
insurance with respect to their properties and businesses against loss or damage
48
of the kinds customarily insured against by corporations of established
reputation engaged in the same or a similar business and similarly situated, in
such types and amounts as are customarily carried under similar circumstances by
such other corporations. As an alternative, the Borrower and the Subsidiaries
may provide the Agent Bank with evidence, reasonably satisfactory to the Agent
Bank, that the Borrower and Subsidiaries are self-insured in part or in whole
with respect to their properties and businesses, in such amounts as are
customarily carried under similar circumstances by such other corporations.
7.6 Permits, Certificates, Leases, Licenses. The Borrower and the
Subsidiaries will obtain, maintain and comply at all times, in all material
respects, with all permits, certificates, licenses, approvals, authorizations,
leases and other instruments necessary or appropriate for the conduct of their
businesses as presently conducted or as contemplated to be conducted in the
future.
7.7 Notice. The Borrower will notify the Agent Bank in writing,
within no more than ten (10) calendar days after any Authorized Officer of the
Borrower learns of any of the following: (i) the existence or occurrence of any
Event of Default under this Loan Agreement, (ii) that any representation or
warranty made herein or in any other Loan Document shall, for any reason, not be
or shall cease in any material respect to be true and complete and not
misleading, (iii) the adverse determination in any material arbitration
proceeding, including, without limitation, an audit or examination by the
Internal Revenue Service, involving the Borrower and the Subsidiaries and
describing the nature and result thereof, and what steps are being taken by the
Borrower and the Subsidiaries with respect thereto, or (iv) the adverse
determination in any litigation involving a claim against the Borrower and the
Subsidiaries in excess of the sum of One Million Dollars ($1,000,000) not
covered by applicable insurance, describing the nature and result thereof, and
what steps are being taken by the Borrower and the Subsidiaries with respect
thereto.
7.8 Payment of Obligations. The Borrower will pay the Revolving
Credit Notes, the Term Notes and the other Obligations timely in accordance with
their respective terms in legal tender of the United States of America. All
payments on the Revolving Credit Notes, the Term Notes and the other Obligations
shall be made to the Banks, respectively, in "good and collected funds," at the
principal office of the Agent Bank not later than 12:00 noon (Louisville,
Kentucky time) on the date due; funds received by the Agent Bank after that hour
shall be deemed to have been received on the next following Business Day.
7.9 Environmental Matters.
A. The Borrower shall notify the Agent Bank promptly and in
reasonable detail in the event that the Borrower becomes aware of the presence
of Hazardous Materials (other than as used in ordinary course of business) or a
violation of the Relevant Environmental Laws resulting from or in connection,
directly or indirectly, with the business or operations of the Borrower or the
Subsidiaries.
B. The Borrower shall ensure that its business and
operations and those of the Subsidiaries comply and continue to comply in all
material respects with the Relevant Environmental Laws.
49
C. Should the Borrower or the Subsidiaries conduct any
business or operations in such a way as to subject any of the Borrower or the
Subsidiaries or the Agent Bank to a claim or violation of the Relevant
Environmental Laws (unless contested in good faith), the Borrower or the
Subsidiaries shall prudently and appropriately remedy and fully cure any
conditions arising therefrom, at their own cost and expense.
D. At their sole cost and expense, the Borrower and the
Subsidiaries shall:
(i) Pay or cause to be paid immediately when due the cost
of compliance with the Relevant Environmental Laws; and
(ii) Keep the Borrower's business, assets and operations
and those of the Subsidiaries free of any lien imposed pursuant to the Relevant
Environmental Laws.
E. The Agent Bank shall not be liable for, and the Borrower
and the Subsidiaries shall immediately pay to the Agent Bank when incurred and
shall indemnify, defend and hold the Agent Bank harmless from and against, all
loss, cost, liability, damage and expense (including, without limitation,
reasonable attorneys' fees and costs incurred in the investigation, defense and
settlement of claims) that the Agent Bank may suffer or incur as mortgagee (as
holder of or assignee in possession or as successor in interest to the Borrower
and the Subsidiaries as owner of a lease, by virtue of exercising the Agent
Bank's right pursuant to a security interest thereof) as a result of or in
connection in any way with any of the Relevant Environmental Laws (including,
without limitation, the assertion that any lien existing pursuant to the
Relevant Environmental Laws takes priority over the lien or security interest of
the Agent Bank's), or any environmental assessment or study from time to time
reasonably undertaken or requested by Agent Bank or breach of any covenant or
undertaking by the Borrower and the Subsidiaries concerning Relevant
Environmental Laws.
F. There shall not occur any unpermitted Hazardous
Discharge or material Environmental Complaint.
7.10 Insurance. The Borrower and the Subsidiaries shall maintain
insurance as follows:
A. Liability Insurance. The Borrower and the Subsidiaries
at their own cost and expense, shall procure, maintain and carry in full force
and effect general liability, public liability, workers' compensation liability
and property damage insurance with respect to the actions and operations of the
Borrower and the Subsidiaries to such extent, in such amounts and with such
deductibles as are carried by prudent businesses similarly situated. Without
limiting the foregoing, such insurance shall insure against any liability for
loss, injury, damage or claims caused by or arising out of or in connection with
the operation of the Borrower's and the Subsidiaries' respective businesses
including injury to or death of any of the Borrower's and the Subsidiaries'
employees, agents or any other persons and damage to or destruction of public or
private property.
B. Physical Damage Insurance. The Borrower and the
Subsidiaries at their own cost and expense, shall insure all of their insurable
properties to such extent, against such hazards (excluding, without limitation,
environmental hazards), in the amount of coverage and with such deductibles as
50
are carried by prudent businesses similarly situated, but in any event in
amounts of coverage not less than the insurable value of the property insured,
with loss payee clause(s) in favor of the Agent Bank.
C. General Insurance Requirements. All insurance which the
Borrower and the Subsidiaries are required to maintain shall be satisfactory to
the Agent Bank in form and amount, and with an insurer rated not less than "A"
by Best's Insurance Ratings. Such insurance shall provide that any loss
thereunder shall be payable notwithstanding any action, inaction, breach of
warranty or condition, breach of declarations, misrepresentation or negligence
of the Borrower and the Subsidiaries.
7.11 Preferred Stock and Senior Notes. The preferred stock issued by
the Borrower and the Senior Notes shall remain outstanding during the term of
this Agreement; provided, however, that the Borrower may from time to time
repurchase or redeem preferred stock and Senior Notes if (i) the Borrower will
be in compliance with Section 8.6 of this Agreement measured immediately after
the proposed purchase; (ii) the Borrower reasonably believes that it will be in
compliance with Section 8.6 of this Agreement measured as of the next ending
Fiscal Quarter and (iii) the purchase will not result in an Event of Default
under this Agreement.
7.12 Agreements with Bollore Technologies S.A. The Borrower's
Distribution Agreements with Bollore Technologies S.A ("Bollore") shall remain
in full force and effect during the term of this Agreement. The term
"Distribution Agreements" has the meaning set forth in a Consent Agreement dated
as of April 4, 1997 between the Borrower and Bollore.
7.13 Principal Management. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
shall remain active in the day-to-day operation and management of the Borrower
and the Subsidiaries in their current positions with the Borrower or such other
positions with responsibilities similar to those currently associated with their
current positions.
7.14 Creation of New Subsidiaries After the Closing Date. To the
extent that the Borrower or any Existing Subsidiary acquires or creates a new
Subsidiary that has annual operating revenues or assets in excess of $1,000,000
after the Closing Date, the Borrower promptly shall cause such new Subsidiary to
join in and become party to this Loan Agreement and the other applicable Loan
Documents through execution of amendment documents reasonably acceptable to
Agent Bank. To the extent that International Flavors and Technologies, Inc.
develops annual operating revenues in excess of $1,000,000 after the Closing
Date, the Borrower shall cause International Flavors and Technologies, Inc. to
join in and become party to this Loan Agreement and the other applicable Loan
Documents through execution of amendment documents reasonably acceptable to
Agent Bank.
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SECTION 8
NEGATIVE COVENANTS
The Borrower and the Subsidiaries hereby covenant and agree that
until the Revolving Credit Notes, the Term Notes and the other Obligations have
been respectively paid in full to the Banks, and the Letter of Credit
Subfacility has been terminated, the Borrower and the Subsidiaries will perform
and observe all of the following provisions:
8.1 Sales, Acquisitions and Other Extraordinary Events. Without the
prior written consent of the Agent Bank, the Borrower and the Subsidiaries shall
not:
A. Sell or otherwise transfer any material part (25% or
more) of their assets on a consolidated basis; or
B. Allow a Change in Control to occur with respect to the
Borrower or the Subsidiaries; or
C. Liquidate or dissolve or take any action with a view
toward liquidation or dissolution.
8.2 Indebtedness, Guaranties, etc. The Borrower and the Subsidiaries
will not, without the prior written consent of the Agent Bank, directly or
indirectly, create, incur, assume, guarantee, agree to purchase or repurchase or
provide funds in respect of, or otherwise become liable with respect to any
Funded Debt other than:
A. The Revolving Credit Facility;
B. The Term Loans;
C. The Letter of Credit Subfacility;
D. The Guaranty Agreements;
E. The Senior Notes; and
F. Funded Debt, other than under Sections 8.2A, 8.2B, 8.2C,
8.2D and 8.2E, that is secured by a purchase money lien on tangible or
intangible personal property, which lien is permitted under Section 8.4 hereof.
8.3 Use of Assets. The Borrower and the Subsidiaries will not use, or
cause or permit the use of, any of their assets in any manner prohibited by law,
governmental regulations or applicable insurance policies.
8.4 Mortgages, Liens, Encumbrances, Security Interests, Assignments,
etc. The Borrower and the Subsidiaries will not, without the prior written
consent of the Agent Bank, directly or indirectly create, incur, assume or
permit to continue in existence any mortgage, lien, charge or encumbrance on, or
52
security interest in, or pledge or deposit of, or conditional sale or other
title retention agreement (including any lease which would constitute Funded
Debt), or assignment of, with respect to, any property or asset now owned or
hereafter acquired by the Borrower and the Subsidiaries; provided, however, that
the restrictions in this Section 8.4 shall not prohibit:
A. Liens on assets as of the Closing Date and which have
been disclosed to Agent Bank in Schedule 8.4 hereto and consented to by Agent
Bank;
B. Liens on assets that are acquired or constructed by
Borrower or any Subsidiary, other than under 8.4A, 8.4B, 8.4C and 8.4D, under a
capital leasing or purchase money borrowing arrangement, so long as the
aggregate value of such assets does not exceed $500,000 at the time such liens
are granted;
C. Liens for taxes, assessments or governmental charges not
yet due and payable or the payment of which is not at the time required for the
reasons set forth by the proviso to the first sentence of Section 7.2A; and
D. Liens incurred or deposits made in the ordinary course
of business in connection with worker's compensation, unemployment insurance and
other types of social security or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, performance and
return of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) for sums not yet due or being contested in
good faith and by appropriate proceedings promptly initiated and diligently
conducted, if such reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor.
8.5 Nature of Businesses. The Borrower and the Subsidiaries will not,
without the prior written consent of the Agent Bank in every specified instance,
engage in any businesses other than the businesses conducted as of the Closing
Date and all businesses incidental thereto.
8.6 Fixed Charge Coverage Ratio.
(a) The Borrower shall not permit the ratio of (x) the Borrower and
the Subsidiaries' Consolidated Adjusted EBITDA to (y) the sum of the Borrower
and the Subsidiaries' (i) Consolidated Interest Expense, (ii) cash dividends
paid, (iii) cash income taxes paid and (iv) $12,500,000, measured on a rolling
four Fiscal Quarters basis, to fall below 1.00 to 1.00 as of the end of any of
the following Fiscal Quarters: the Fiscal Quarters ending March 31, 2001, June
30, 2001, September 30, 2001 and December 31, 2001.
(b) The Borrower shall not permit the ratio of (x) the Borrower and
the Subsidiaries' Consolidated Adjusted EBITDA to (y) the sum of the Borrower
and the Subsidiaries' (i) Consolidated Interest Expense, (ii) cash dividends
paid, (iii) cash income taxes paid and (iv) the then outstanding balance of the
Term Loans, measured on a rolling four Fiscal Quarters basis, to fall below 1.00
to 1.00 as of the end of any of the following Fiscal Quarters: the Fiscal
Quarters ending March 31, 2002, June 30, 2002, September 30, 2002 and December
31, 2002 .
53
8.7 Interest Rate Agreements. The Borrower and the Subsidiaries will
not enter into any Interest Rate Agreement unless (i) such Interest Rate
Agreement is intended to fix or establish a maximum interest rate in respect of
Indebtedness with a notional amount not in excess of the Revolving Loan
Commitments and the Term Loan Commitments and is embodied in a standard ISDA
form of agreement which is acceptable to the Banks with respect to any
intercreditor issues, (ii) the Borrower and the Subsidiaries promptly provide a
true and complete copy of such Interest Rate Agreement to the Agent Bank, on
behalf of itself and the Banks. At or following the effective date of any such
Interest Rate Agreement, the Agent Bank may, upon written notification to the
Borrower and the Subsidiaries and the Banks and such counterparty, designate
(which designations shall be made only upon the instructions or with the consent
of the Majority Banks) the credit exposure of such counterparty under such
Interest Rate Agreement as an obligation entitled to share, pari passu with the
Obligations, in respect to the benefits provided by the collateral under the
Loan Documents, in accordance with the applicable provisions of the Loan
Documents, and if the Agent Bank so designates such credit exposure, the
applicable Interest Rate Agreement of such counterparty shall be considered a
"Designated Interest Rate Agreement."
8.8 Senior Notes. The Senior Notes issued by the Borrower shall not
be redeemed or otherwise purchased prior to the maturity thereof, unless (i) the
Borrower will be in compliance with Section 8.6 of this Agreement measured
immediately after the proposed purchase or redemption; (ii) the Borrower
reasonably believes that it will be in compliance with Section 8.6 of this
Agreement measured as of the next ending Fiscal Quarter and (iii) the redemption
or purchase will not result in an Event of Default under this Agreement.
SECTION 9
EVENTS OF DEFAULT; ACCELERATION
9.1 Events of Default. The following events shall constitute Events
of Default under this Loan Agreement:
A. The failure by the Borrower to pay any principal of any
Revolving Credit Note or Term Note when the same becomes due and payable or the
failure of the Borrower to pay any interest thereon or fees hereunder within
three (3) days after the date when the same becomes due and payable; or
B. The failure by the Borrower to reimburse the Agent Bank
upon demand for any draft honored by the Agent Bank under any Letter of Credit
now or hereafter issued by the Agent Bank for the account of the Borrower; or
C. The failure by the Borrower or a Subsidiary to perform
or observe any of the provisions of Sections 7.13, 8.1 or 8.6 hereof; or
D. The failure by the Borrower or a Subsidiary to perform
or observe any of the provisions of Sections 7.10, 8.2, 8.3, 8.4, 8.5 or 8.7
hereof, and such default continues for twenty (20) days after a Financial
Officer or the chief executive officer of the Borrower has knowledge of such
54
failure or for twenty (20) days after written notice of such failure shall have
been delivered to Borrower by any Bank; or
E. The Borrower or a Subsidiary shall default in the
performance of or compliance with any covenant, obligation or provision
contained in this Loan Agreement (other than those referred to above in this
Section 9.1A), and any such default shall not have been remedied within thirty
(30) days after written notice of such default shall have been delivered to the
Borrower; or
F. If any material representation or warranty made in
writing by or on behalf of the Borrower or a Subsidiary herein or pursuant
hereto or otherwise in connection with the Revolving Credit Facility, the Term
Loans and/or the Letter of Credit Subfacility shall have been materially false
or misleading or incorrect when made and the Authorized Officer on behalf of the
Borrower knew of the falsity, misleading nature of or incorrectness of such
representation or warranty when it was made; or
G. The failure of the Borrower or a Subsidiary to pay any
of its Funded Debt (other than Funded Debt with respect to the Revolving Credit
Facility and the Term Loans) which in the aggregate exceeds Five Hundred
Thousand Dollars ($500,000), when due or within any grace period afforded the
Borrower or a Subsidiary for paying the same, or the acceleration of the
maturity of any such Funded Debt by the holder thereof, other than any such
Funded Debt with respect to which the Borrower or a Subsidiary is contesting in
good faith the validity, amount and/or the Borrower or a Subsidiary's liability
therefor and for which adequate reserves have been established on the books of
the Borrower or a Subsidiary in accordance with GAAP; or
H. If any of the Borrower or a Subsidiary shall (i) file a
petition for an order of relief under the federal bankruptcy laws (as in effect
on the date of this Agreement or as they may be amended from time to time); (ii)
admit its inability to pay its debts generally as they become due; (iii) become
insolvent in that its total assets are in the aggregate worth less than all of
its liabilities or it is unable to pay its debts generally as they become due;
(iv) make a general assignment for the benefit of creditors; (v) file a
petition, or admit (by answer, default or otherwise) the material allegations of
any petition filed against it, in bankruptcy under the federal bankruptcy laws
(as in effect on the date of this Agreement or as they may be amended from time
to time), or under any other law for the relief of debtors, or for the
discharge, arrangement or compromise of its debts; or (vi) consent to the
appointment of a receiver, conservator, trustee or liquidator of all or part of
its assets; or
I. If a petition shall have been filed against the Borrower
or a Subsidiary in proceedings under the federal bankruptcy laws (as in effect
on the date of this Agreement, or as they may be amended from time to time), or
under any other laws for the relief of debtors, or for the discharge,
arrangement or compromise of its debts, or an order shall be entered by any
court of competent jurisdiction appointing a receiver, conservator, trustee or
liquidator of all or part of the assets of the Borrower or a Subsidiary, and
such petition or order is not dismissed or stayed within sixty (60) consecutive
days after entry thereof; or
55
J. If a final uninsured judgment or judgments shall be
rendered against any of the Borrower or a Subsidiary in an aggregate amount
exceeding One Million Dollars ($1,000,000) and (i) if, prior to the availability
of any execution thereon, such judgment(s) shall not have been discharged or
execution thereof shall not have been stayed pending appeal, or if, after the
expiration of any such stay, such judgment(s) shall not have been discharged, or
(ii) the Borrower shall not have established adequate reserves on its books in
respect of such final uninsurable judgment or judgments; or
K. In the event the Borrower experiences a Change in
Control without the prior written consent of the Banks; or
L. The occurrence of any uncured event of default under any
of the Loan Documents.
Upon the occurrence of any Event of Default described in clauses H or I of this
Section 9 with respect to the Borrower, the unpaid principal balance of each of
the Revolving Credit Notes, and the other Obligations, together with all accrued
interest thereon, shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of any kind, all of
which are hereby expressly waived by the Borrower. Upon the occurrence of any
other Event of Default referred to in this Section 9, the Agent Bank, on behalf
of the Banks, subject to the provisions of Section 11.4 hereof, may at any time
at its option, by written notice to the Borrower, declare the unpaid principal
balance of and all accrued and unpaid interest on each of the Revolving Credit
Notes, the Term Notes and the other Obligations to be immediately due and
payable in full to the Banks, as applicable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby waived by the
Borrower.
SECTION 10
REMEDIES UPON DEFAULT, ETC.
10.1 Defaults. Upon the occurrence and during the continuation of any
Event of Default, the Banks may proceed to protect and enforce their rights by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in the Revolving
Credit Notes and the Term Notes or for an injunction against a violation of any
of the terms hereof or thereof, or in aid of the exercise of any right, power or
remedy granted hereby or thereby or by law or pursuant to the other Loan
Documents.
10.2 Offset. If any Event of Default shall occur and be continuing,
and the Agent Bank or the Banks have given notice to the Borrower that the Banks
have accelerated the maturity date of the Revolving Credit Notes and the Term
Notes, and/or the other Obligations, each Bank shall have the right then, or at
any time thereafter, to set off against any and all deposit balances and other
sums and Funded Debt and other property then held or owned by such Bank to or
for the credit or account of the Borrower, all without notice to or demand upon
the Borrower or any other Person, all such notices and demands being hereby
expressly waived by the Borrower.
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10.3 Rights Cumulative. All of the rights and remedies of the Banks
upon the occurrence of an Event of Default hereunder shall be cumulative to the
greatest extent permitted by law, and shall be in addition to all those rights
and remedies afforded the Banks at law or in equity.
10.4 Payment of Costs and Expenses. All of the reasonable costs,
expenses, damages and liabilities, including, without limitation, all reasonable
attorneys' fees, incurred by and imposed upon any Bank with respect to, in
connection with the enforcement of this Loan Agreement or any other Loan
Document or collection of amounts due hereunder or thereunder or the proof and
allowability of any claim arising under this Loan Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and in
any workout or restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms hereof or of any rights hereunder or
under any other Loan Document or in connection with any foreclosure, collection
or bankruptcy proceedings, in connection with or as a result of any action taken
or omitted to be taken pursuant to this Loan Agreement, the Revolving Credit
Notes and the Term Notes, or the other Loan Documents shall be paid by, and
shall be the sole responsibility of, the Borrower.
SECTION 11
THE AGENT BANK
11.1 Appointment. Each Bank hereby irrevocably designates, appoints
and authorizes the Agent Bank to act as the agent bank under this Loan Agreement
and to execute and deliver or accept on behalf of each of the Banks the other
Loan Documents. Each Bank hereby irrevocably authorizes, and each holder of any
Revolving Credit Note or Term Note by the acceptance of such Revolving Credit
Note or Term Note shall be deemed irrevocably to authorize, the Agent Bank to
take such action on behalf of such Bank and such holder under the provisions of
this Loan Agreement and the other Loan Documents and any other instruments and
agreements referred to herein, and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the Agent Bank
by the terms hereof, together with such powers as are reasonably incidental
thereto. The Agent Bank agrees to act as the agent bank to the extent provided
in this Loan Agreement.
11.2 Delegation of Duties. The Agent Bank may perform any of its
duties hereunder by or through agents or employees (provided such delegation is
exercised with reasonable care and does not constitute a relinquishment of its
duties as Agent Bank) and, subject to Sections 11.5, 11.6 and 11.7 hereof, shall
be entitled to engage and pay for the advice or services of any attorneys,
accountants or other experts concerning all matters pertaining to its duties
hereunder and to rely upon any advice so obtained, provided reasonable care is
used in the selection of the foregoing experts.
11.3 Nature of Duties; Independent Credit Investigation. The Agent
Bank shall have no duties or responsibilities except those expressly set forth
in this Loan Agreement and the other Loan Documents and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Loan Agreement or shall otherwise exist. The duties of the Agent Bank
57
shall be mechanical and administrative in nature and shall include the duty to
provide to each Bank an executed original of such Bank's Revolving Credit Note
and Term Note and an executed original of this Loan Agreement and a copy of the
other Loan Documents; the Agent Bank shall not have by reason of this Loan
Agreement a fiduciary or trust relationship in respect of any Bank; and nothing
in this Loan Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent Bank any obligations in respect of this
Loan Agreement except as expressly set forth herein. Each Bank expressly
acknowledges (i) that the Agent Bank has not made any representations or
warranties to it and that no act which the Agent Bank hereafter takes, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent Bank to any Bank; (ii) that it has made
and will continue to make, without reliance upon the Agent Bank, its own
independent investigation of the financial condition and affairs and its own
appraisal of the creditworthiness of the Borrower in connection with this Loan
Agreement and the making and continuance of the Loans hereunder; and (iii)
except as expressly provided herein, that the Agent Bank shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto, whether coming into
its possession before the making of any Loan or at any time or times thereafter.
11.4 Actions in Discretion of the Agent Bank; Instructions from the
Banks. The Agent Bank agrees, upon the written request of the Majority Banks, to
take or refrain from taking any action of the type specified as being within the
Agent Bank's rights, powers or discretion herein; provided that the Agent Bank
shall not be required to take any action which exposes the Agent Bank to legal
liability or which is contrary to this Loan Agreement or any other Loan Document
or applicable law. In the absence of a request by the Majority Banks, the Agent
Bank shall have authority, in its sole discretion, to take or not to take any
such action, unless this Loan Agreement specifically requires the consent of the
Majority Banks. Any action taken or failure to act pursuant to such instructions
or discretion shall be binding on the Banks, subject to the provisions of
Section 11.6 hereof. Subject to the provisions of Section 11.6 hereof, no Bank
shall have any right of action whatsoever against the Agent Bank as a result of
the Agent Bank acting or refraining from acting hereunder in accordance with the
instructions of the Banks or, in the absence of such instructions, in the
absolute discretion of the Agent Bank.
The consent of the Majority Banks is specifically required before the
Agent Bank declares the unpaid principal balance and all accrued and unpaid
interest on the Revolving Credit Notes and the Term Notes to be immediately due
and payable upon the occurrence of an Event of Default described in Section 9.1
hereof, other than in sections H or I thereof. The Banks shall have 48 hours,
from the Agent Bank's giving of telephonic or written notice of a request for
such consent, to notify the Agent Bank as to whether such consent is granted or
withheld, and any Bank that fails to so notify the Agent Bank within such 48
hour period shall be deemed to have consented to the action proposed by the
Agent Bank.
11.5 Reimbursement and Indemnification of the Agent Bank and the
Banks by the Borrower. The Borrower unconditionally agrees to pay or reimburse
the Agent Bank and hold the Agent Bank harmless against liability for the
payment of all reasonable and necessary out-of-pocket costs, expenses and
disbursements for which reimbursement is customarily obtained, including
58
reasonable fees and expenses of counsel and consultants incurred by the Agent
Bank (i) in connection with the preparation, negotiation, printing, execution,
administration, interpretation and performance of this Loan Agreement and the
other Loan Documents and (ii) relating to any requested amendments, waivers or
consents pursuant to the provisions hereof. The Borrower unconditionally agrees
to pay or reimburse the Agent Bank and each Bank against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent Bank and/or any Bank, in its
capacity as such, in any way relating to or arising out of this Loan Agreement
or any other Loan Document or any action taken or omitted by the Agent Bank
and/or any Bank hereunder or thereunder; provided that the Borrower shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (a) if
the same results from the bad faith, gross negligence or willful misconduct of
the Agent Bank or any Bank, or (b) if the Borrower was not given notice of the
subject claim and the opportunity to participate in the defense thereof, at its
expense, or (c) if the same results from a compromise or settlement agreement
entered into without the consent of the Borrower, which consent shall not be
unreasonably withheld.
11.6 Exculpatory Provisions. Neither the Agent Bank nor any of its
directors, officers, employees, agents or affiliates shall (i) be liable to any
Bank for any action taken or omitted to be taken by it or them hereunder, or in
connection herewith including pursuant to any other Loan Documents, unless
caused by its or their own gross negligence or willful misconduct, (ii) be
responsible in any manner to any of the Banks for the effectiveness,
enforceability, genuineness, validity or the due execution of this Loan
Agreement or any other Loan Document or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Loan Agreement or any other Loan Document, or
(iii) be under any obligation to any of the Banks to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions
hereof or thereof on the part of the Borrower, or the financial condition of the
Borrower, or the existence or possible existence of any Event of Default under
the Loan Documents. Neither the Agent Bank nor any Bank nor any of their
respective directors, officers, employees, agents, attorneys or affiliates shall
be liable to the Borrower or any other Person for consequential damages
resulting from any breach of contract, tort or other wrong in connection with
the negotiation, documentation or administration of the Loan Documents or the
collection of the Obligations.
11.7 Reimbursement and Indemnification of the Agent Bank by the
Banks. Each Bank agrees to reimburse and indemnify the Agent Bank (to the extent
not reimbursed by the Borrower and without limiting the obligation of the
Borrower to do so) in proportion to its Revolving Credit Facility Pro Rata Share
from and against all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent Bank, in its capacity as such, in any way relating to or arising out of
this Loan Agreement or any other Loan Document or any action taken or omitted by
the Agent Bank hereunder or thereunder, provided that no such reimbursement
shall be required with respect to expenses incurred by the Agent Bank during the
time period through the Closing Date and no Bank shall be liable for any portion
59
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (i) if the same relates to or
arises out of the Agent Bank's gross negligence or willful misconduct, or (ii)
if such Bank was not given notice of the subject claim and the opportunity to
participate in the defense thereof, at its expense, or (iii) if the same results
from a compromise and settlement agreement entered into without the consent of
the Bank, which consent shall not be unreasonably withheld.
11.8 Reliance by the Agent Bank. The Agent Bank shall be entitled to
rely upon any writing, telegram, telex or teletype message, facsimile,
resolution, notice, consent, certificate, letter, cablegram, statement, order or
other document or conversation by telephone or otherwise believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon the advice and opinions of counsel and other professional
advisers selected by the Agent Bank. The Agent Bank shall be fully justified in
failing or refusing to take any action hereunder unless it shall first be
indemnified to its satisfaction by the Banks in accordance with their respective
Revolving Credit Facility Pro Rata Shares and Term Loan Facility Pro Rata Shares
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action.
11.9 Notice of Default. The Agent Bank shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default unless the loan
officer of the Agent Bank, responsible for the Revolving Credit Facility has
actual knowledge of such Event of Default or the Agent Bank has received written
notice from a Bank or the Borrower referring to this Loan Agreement,
specifically describing such Event of Default.
11.10 The Banks in Their Individual Capacities. With respect to its
Revolving Loan Commitment, the Agent Bank shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not the
Agent Bank, and the term "Banks" shall, unless the context otherwise indicates,
include the Agent Bank in its individual capacity. Each Bank and its Affiliates
may, without liability to account, except as prohibited herein, make loans to,
accept deposits from, discount drafts for, act as trustee under indentures of,
and generally engage in any kind of banking or trust business with, the Borrower
and its Affiliates, in the case of the Agent Bank, as though it were not acting
as Agent Bank hereunder and in the case of each Bank, as though such Bank were
not a Bank hereunder.
11.11 Holders of Revolving Credit Notes and the Term Notes. The Agent
Bank may deem and treat any payee of any Revolving Credit Note or any Term Note
as the owner thereof for all purposes hereof unless and until written notice of
the assignment or transfer thereof shall have been filed with the Agent Bank.
Any request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Revolving
Credit Note or Term Note shall be conclusive and binding on any subsequent
holder, transferee or assignee of such Revolving Credit Note or Term Note or of
any Revolving Credit Note or Term Note issued in exchange therefor.
11.12 Equalization of the Banks. The Banks and the holders of any
participations in any Revolving Credit Notes and the Term Notes agree among
themselves that, with respect to all amounts received by any Bank or any such
holder for application to any Revolving Credit Note or under any such
60
participation, whether received by voluntary payment, by the exercise of the
right of setoff or banker's lien, by counterclaim or by any other non-pro rata
source, equitable adjustment will be made in the manner stated in the following
sentence so that, in effect, all such excess amounts will be shared ratably
among the Banks and such holders in proportion to their interests in payments
under the Revolving Credit Notes and the Term Notes. The Banks or any such
holder receiving any such amount shall purchase for cash from each of the other
Banks an interest in such Bank's Revolving Credit Loans in such amount as shall
result in a ratable participation by the Banks and each holder in the aggregate
unpaid amount under the Revolving Credit Notes and the Term Notes, provided that
if all or any portion of such excess amount is thereafter recovered from the
Bank or the holder making such purchase, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by law (including court order) to be
paid by the Bank or the holder making such purchase.
11.13 Successor Agent Bank. The Agent Bank, with the consent of the
Borrower which shall not be unreasonably withheld, may resign as Agent Bank upon
not less than thirty (30) days prior written notice given to the Borrower and
the other Bank(s). If the Agent Bank shall resign under this Loan Agreement,
then either (i) the Banks shall appoint a successor Agent Bank, subject to the
consent to such successor Agent Bank by the Borrower, such consent not to be
unreasonably withheld, or (ii) if a successor Agent Bank shall not be so
appointed and approved within the thirty (30) day period following the Agent
Bank's notice to the Banks of its resignation, then the Agent Bank shall
appoint, with the consent of the Borrower, such consent not to be unreasonably
withheld, a successor Agent Bank who shall serve as Agent Bank until such time
as the Banks appoint, and the Borrower consents, which consent shall not be
unreasonably withheld, to the appointment of a successor Agent Bank. Upon its
appointment pursuant to either clause (i) or (ii) above, such successor Agent
Bank shall succeed to the rights, powers and duties of the Agent Bank and the
term "Agent Bank" shall mean such successor Agent Bank, effective upon its
appointment, and the former Agent Bank's rights, powers and duties as Agent Bank
shall be terminated without any other or further act or deed on the part of such
former Agent Bank or any of the other parties to this Loan Agreement. After the
resignation of any Agent Bank hereunder, the provisions of this Section 10 shall
not by reason of such resignation be deemed to release the Agent Bank from
liability for any actions taken or not taken by it while it was the Agent Bank
under this Loan Agreement.
11.14 Calculations. In the event an error in computing any amount
payable to any Bank is made, the Agent Bank, the Borrower and each affected Bank
shall, forthwith upon discovery of such error, make such adjustments as shall be
required to correct such error, and any compensation therefor will be calculated
at the Federal Funds Effective Rate.
11.15 Withholding Tax. A. If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Internal Revenue Code and such
Bank claims exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Internal Revenue Code, such Bank agrees with and in
favor of the Agent Bank, to deliver to the Agent Bank:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two properly completed and
executed copies of IRS Form 1001 before the payment of any interest in the first
61
calendar year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each succeeding
taxable year of such Bank during which interest may be paid under this
Agreement; and
(iii) such other form or forms as may be required under the
Internal Revenue Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent Bank of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
B. If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Bank, such Bank agrees to notify the
Agent Bank of the percentage amount in which it is no longer the beneficial
owner of Obligations of the Borrower to such Bank. To the extent of such
percentage amount, the Agent Bank will treat such Bank's IRS Form 1001 as no
longer valid.
C. If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent Bank sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Section 1341 and 1442
of the Internal Revenue Code.
D. If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent Bank may withhold from any interest payment to such
Bank an amount equivalent to the applicable withholding tax after taking into
account such reduction. However, if the forms or other documentation required by
subsection A of this Section are not delivered to the Agent Bank, then the Agent
Bank may withhold from any interest payment to such Bank not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax imposed by Sections 1441 and 1442 of the Internal Revenue Code, without
reduction.
E. If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent Bank did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Agent Bank of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Bank shall indemnify the Agent Bank fully for all
amounts paid, directly or indirectly, by the Agent Bank as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent Bank under this Section 10,
together with all costs and expenses (including attorney costs). The obligation
62
of the Banks under this subsection shall survive the payment of all Obligations
and the resignation or replacement of the Agent Bank.
11.16 Beneficiaries. Except as set forth in Sections 11.5 and 11.13
hereof, the provisions of this Section 11 are solely for the benefit of the
Agent Bank and the Banks, and the Borrower shall not have any right to rely on
or enforce any of the provisions hereof. In performing its functions and duties
under this Loan Agreement, the Agent Bank shall act solely as agent of the Banks
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for the Borrower or any other
Person.
SECTION 12
ASSIGNMENTS AND PARTICIPATIONS
A. Assignments to Eligible Assignees. Each Bank shall have
the right at any time, with the prior consent of the Borrower and the Agent
Bank, which shall not be unreasonably withheld, to sell, assign, transfer or
negotiate all or any part of its Revolving Loan Commitment and Revolving Credit
Loans and Term Loans in a minimum amount of Five Million Dollars ($5,000,000) to
one or more commercial banks, insurance companies, savings and loan
associations, savings banks or other financial institutions, pension funds or
mutual funds or other accredited investors ("Eligible Assignees"). In the case
of any sale, assignment, transfer or negotiation of all or part of the Revolving
Loan Commitment, Revolving Credit Loans and Term Loans authorized under this
Section 12, the assignee, transferee or recipient shall have, to the extent of
such sale, assignment, transfer or negotiation, the same rights, benefits and
obligations as it would if it were a Bank hereunder, including, without
limitation (x) the right to approve or disapprove actions which, in accordance
with the terms hereof, require the approval of the Banks, and (y) the obligation
to fund Revolving Credit Loans pursuant to Section 2 hereof. The Bank assigning
a portion or all of its Revolving Loan Commitment, Revolving Credit Loans and
Term Loans pursuant to this Section 12, or the bank purchasing the interest of
the Assigning Bank, shall pay a fee to the Agent Bank in the amount of Three
Thousand Dollars ($3,000).
B. Participations. Notwithstanding Section 12A hereof, each
Bank may grant participations in all or any part of its Revolving Loan
Commitment, Revolving Credit Loans and Term Loans to one or more Eligible
Assignees; provided that (i) any such disposition shall not, without the consent
of the Borrower, require the Borrower to file a registration statement with the
Securities and Exchange Commission or apply to qualify the Revolving Credit
Loans or the Revolving Credit Notes under the blue sky law of any state; and
(ii) the holder of any such participation, other than an Affiliate of such Bank,
shall not be entitled to require the Banks to take or omit to take any action
hereunder except action directly extending the final maturity of any portion of
the principal amount of or interest on a Revolving Credit Loan or term Loan
allocated to such participation or a reduction of the principal amount of or the
rate of interest payable on the Revolving Credit Loans and Term Loans allocated
to such participation.
C. Assignments to Affiliates. Notwithstanding the foregoing
provisions of this Section 12, each Bank may at any time sell, assign, transfer,
or negotiate all or any part of its Revolving Loan Commitment, Revolving Credit
63
Loans and Term Loans to any Affiliate of such Bank; provided that an Affiliate
to whom such disposition has been made shall not be considered a "Bank" for
purposes of this Loan Agreement other than for purposes of Section 10.2 hereof;
provided further that the Borrower shall not incur any additional expenses
solely as a result of such sale, assignment, transfer or negotiation.
D. No Release of Obligations. No Bank shall, as between the
Borrower and such Bank, be relieved of any of its obligations hereunder as a
result of any granting of participations in all or any part of its Revolving
Loan Commitment, Revolving Credit Loans or Term Loans. Each Bank shall, as
between the Borrower and such Bank, be relieved of its obligations hereunder as
a result of any sale, assignment, transfer or negotiation of all or any part of
its Revolving Loan Commitment, Revolving Credit Loans and Term Loans made in
accordance with Section 12.A hereof.
SECTION 13
INDEMNITY
The Borrower shall indemnify and hold harmless each Bank and its
successors, assigns, agents and employees from and against any and all claims,
actions, suits, proceedings, costs, expenses, damages, fines, penalties and
liabilities, including, without limitation, reasonable attorneys' fees and
costs, arising out of, connected with or resulting from the operation of the
business of the Borrower.
SECTION 14
INCREASED COSTS; TAXES; CAPITAL ADEQUACY
14.1 Compensation for Increased Costs and Taxes. In the event that
the Banks shall determine in good faith (which determination shall, absent
manifest or demonstrable error, be final and conclusive and binding upon both
the Borrower and the Banks) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
Closing Date, or compliance by the Banks with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority, and which has the force of law and
first becomes effective after the Closing Date in all cases of general
applicability to the banking industry:
(i) subjects any Bank (or its applicable lending office) to
any additional Covered Tax with respect to this Loan Agreement or any of the
Revolving Credit Loans or the Term Loans or any of its other obligations
hereunder, or changes the basis of taxation of payments to such Bank (or its
applicable lending office) of principal, interest, fees or any other amount
payable hereunder (but not changes in Excluded Taxes);
64
(ii) imposes, modifies or holds applicable any additional
reserve (including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit extended by, or
any other acquisition of funds by, any Bank (or its applicable lending office)
(other than any such reserve or other requirements with respect to LIBOR Loans
that are reflected in the definition of LIBOR); or
(iii) imposes any other condition on or affecting any Bank
(or its applicable lending office) or its obligations hereunder or the London
interbank market, other than with respect to Taxes;
and the result of any of the foregoing is to increase the cost to any Bank of
agreeing to make, making or maintaining Revolving Credit Loans and Term Loans
hereunder or to reduce any amount received or receivable by any Bank (or its
applicable lending office) with respect thereto, then, in any such case, the
Borrower shall promptly pay to such Bank, upon demand, such additional amount or
amounts (in the form of an increased rate of, or a different method of
calculating, interest as such Bank in its reasonable discretion shall determine)
as may be necessary to compensate such Bank on an after-tax basis for any such
increased cost or reduction in amounts received or receivable hereunder;
provided that any increased cost arising as a result of any of the foregoing
other than in respect of Taxes shall apply only to LIBOR Loans to the extent the
same bear interest by reference to the LIBOR. The Bank seeking reimbursement for
such amounts from the Borrower shall deliver to the Borrower a written statement
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Bank under this Section 14.1, which statement shall be
conclusive and binding upon both parties hereto absent manifest or demonstrable
error.
14.2 Withholding of Taxes.
A. Payments to Be Free and Clear. All sums payable by the
Borrower under this Loan Agreement and the other Loan Documents to or for the
benefit of any Bank or any Person who acquires any interest in the Revolving
Credit Loans pursuant to the provisions hereof shall be paid free and clear of
and (except to the extent required by law) without any deduction or withholding
on account of any Covered Tax imposed, levied, collected, withheld or assessed
by or within the United States of America or any political subdivision in or of
the United States of America or any other jurisdiction from or to which a
payment is made by or on behalf of the Borrower or by any federation or
organization of which the United States of America or any such jurisdiction is a
member at the time of payment.
B. Grossing-up of Payments. If the Borrower or any other
Person is required by law to make any deduction or withholding on account of any
Covered Tax from any sum paid or payable by the Borrower to any Bank under any
of the Loan Documents:
(i) The Borrower shall notify such Bank of any such
requirement or any change in any such requirement as soon as the Borrower
becomes aware of it;
65
(ii) The Borrower shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the liability to pay
is imposed on the Borrower) for their own account or (if that liability is
imposed on such Bank) on behalf of and in the name of such Bank;
(iii) The sum payable by the Borrower in respect of which
the relevant deduction, withholding or payment is required shall be increased to
the extent necessary to ensure that, after the making of that deduction,
withholding or payment, such Bank receives on the due date and retains (free
from any liability in respect of any such deduction, withholding or payment) a
net sum equal to what it would have received and so retained had no such
deduction, withholding or payment in respect of Covered Taxes been required or
made; and
(iv) Within thirty (30) days after paying any sum from
which it is required by law to make any deduction or withholding, and within
thirty (30) days after the due date of payment of any Tax which it is required
to pay by clause (ii) above, the Borrower shall deliver to such Bank evidence
satisfactory to such Bank of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to any Bank
under clause (iii) above except to the extent that any change after the date
hereof in any such requirement for a deduction, withholding or payment as is
mentioned therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Loan Agreement in
respect of payments to such Bank.
C. Tax Refund. If the Borrower determines in good faith
that a reasonable basis exists for contesting a Covered Tax, the relevant Bank
or Tax Transferee, as applicable, shall cooperate with the Borrower in
challenging such Tax at the Borrower's expense if requested by the Borrower (it
being understood and agreed that no Bank shall have any obligation to contest,
or any responsibility for contesting, any Tax). If any Tax Transferee or any
Bank, as applicable, receives a refund (whether by way of a direct payment or by
offset of any Covered Tax for which a payment has been made pursuant to this
Section 14) the amount of such refund (together with any interest received
thereon) shall be paid to the Borrower to the extent payment has been made in
full pursuant to this Section 14.
14.3 Capital Adequacy Adjustment. If any Bank shall have determined
in good faith that the adoption, effectiveness, phase-in or applicability of any
law, rule or regulation (or any provision thereof) regarding capital adequacy,
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
applicable lending office) with any guideline, request or directive regarding
capital adequacy of any such governmental authority, central bank or comparable
agency in all cases of general applicability to the banking industry, and which
has the force of law and first becomes effective after the Closing Date, has or
will have the effect of reducing the rate of return on the capital of such Bank
or any corporation controlling such Bank as a consequence of, or with reference
to, such Bank's Revolving Credit Loans or other obligations hereunder to a level
below that which such Bank or such controlling corporation would have achieved
but for such adoption, effectiveness, phase-in, applicability, change or
66
compliance (taking into consideration the policies of such Bank or such
controlling corporation with regard to capital adequacy), then from time to
time, within ten (10) Business Days after demand by such Bank, the Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank or such controlling corporation on an after-tax basis for such reduction as
and when incurred. Each Bank, upon determining in good faith that any additional
amounts will be payable pursuant to this Section 14.3, will give prompt written
notice thereof to the Borrower, which notice shall set forth the basis of the
calculation of such additional amounts, although the failure to give any such
notice shall not release or diminish any of the Borrower's obligations to pay
additional amounts under this Section 14.3.
14.4 Banks' Obligation to Mitigate. Each Bank agrees that, as
promptly as practicable after the officer of such Bank responsible for
administering the Revolving Credit Loans under this Loan Agreement becomes aware
of the occurrence of an event or the existence of a condition that would entitle
such Bank to receive payments under Section 14 hereof, it will, to the extent
not inconsistent with its internal policies, use reasonable efforts (i) to make,
fund or maintain its Revolving Credit Loans through another lending office of
such Bank, or (ii) take such other reasonable measures, if as a result thereof,
the additional amounts which would otherwise be required to be paid to such Bank
pursuant to Section 14 hereof would be materially reduced and if, as determined
by such Bank in its sole discretion, the making, funding or maintaining of such
Revolving Credit Loans through such other lending office or in accordance with
such other measures, as the case may be, would not otherwise materially
adversely affect such Revolving Credit Loans or the interests of such Bank;
provided that such Bank will not be obligated to utilize such other lending
office pursuant to this Section 14.3 unless the Borrower agrees to pay all
expenses incurred by such Bank in utilizing such other lending office. A
certificate as to the amount of any such expenses payable by the Borrower
pursuant to this Section 14.4 (setting forth in reasonable detail the basis for
requesting such amount) submitted by any Bank to the Borrower shall be
conclusive absent manifest or demonstrable error.
SECTION 15
NOTICES
All notices required or permitted to be given hereunder shall be
given in writing and shall be personally delivered or sent by facsimile
transmission or by registered or certified United States mail, return receipt
requested, postage prepaid, addressed as follows (or to such other address as to
which any party hereto shall have given the other parties written notice):
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If to the Borrower:
North Atlantic Trading Company, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Subsidiaries:
c/o North Atlantic Trading Company, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the BANK ONE, KENTUCKY, NA
Agent Bank: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Banks: To the Banks at the respective
address of each Bank
Set forth in Schedule 1.1 hereof
All notices hereunder shall be deemed given upon the earlier of (i)
actual delivery in person or by facsimile transmission, or (ii) two (2) Business
Days after having been deposited in the United States mails, in accordance with
the foregoing. Except where the Borrower is expressly required by the provisions
of this Loan Agreement to give notice to all of the Banks, it shall be
sufficient whenever the Subsidiaries or the Borrower are required to give notice
hereunder for the Subsidiaries or the Borrower to give such notice solely to the
Agent Bank.
SECTION 16
MISCELLANEOUS
16.1 Ratable Sharing. Each Bank agrees with the other Banks that (i)
with respect to all amounts received by it which are applicable to the payment
of principal of or interest on the Revolving Credit Loans and the Term Loans,
including, without limitation, all amounts received by such Bank pursuant to the
exercise of the right of setoff pursuant to Section 10.2 hereof, equitable
adjustment will be made so that, in effect, all such amounts will be shared
among the Banks proportionately in accordance with their respective Revolving
Credit Facility Pro Rata Shares and Term Loan Pro Rata Shares, whether received
by voluntary payment, by the exercise of the right of set-off or banker's lien,
68
by counterclaim or cross action or by the enforcement of any or all of the
Obligations, and (ii) if any of them shall exercise any right of counterclaim,
set-off, banker's lien or similar right with respect to amounts owed by the
Borrower hereunder, that Bank shall apportion the amount recovered as a result
of the exercise of such right pro rata in accordance with (a) all amounts
outstanding at such time owed by the Borrower to it hereunder with respect to
the Revolving Credit Loans and the Term Loans, and (b) all amounts otherwise
owed by the Borrower to it, and (iii) if any of them shall thereby through the
exercise of any right of counterclaim, set-off, banker's lien or otherwise, or
as adequate protection of a deposit treated as cash collateral under the
Bankruptcy Code, receive payment or reduction of a proportion of the aggregate
amount of principal and interest due with respect to the Revolving Credit Loans
and the Term Loans made by that Bank or any participation therein, or any other
amount payable hereunder (collectively, the "Aggregate Amount Due" to such
Bank), which is greater than the proportion received by any other Bank in
respect of the Aggregate Amount Due to such other Bank, then the Bank receiving
such proportionately greater payment shall (y) notify each other Bank and the
Agent Bank of such receipt and (z) purchase participations (which it shall be
deemed to have done simultaneously upon the receipt of such payment) in the
Aggregate Amounts Due to the other Banks so that all recoveries of Aggregate
Amounts Due shall be shared by the Banks in proportion to their respective
Revolving Credit Facility Pro Rata Shares and Term Loan Pro Rata Shares;
provided that if all or part of such proportionately greater payment received by
such purchasing Bank is thereafter recovered from such Bank, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to that Bank to the extent of such recovery, but without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
participant in respect of any Revolving Credit Loan and any Term Loan may
exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by the Borrower to that participant as fully
as if that participant were a Bank in the amount of such participation held by
that participant.
16.2 Waiver. No course of dealing in respect of, nor any omission or
delay in the exercise of, any right, power, remedy or privilege by the Banks
shall operate as a wavier thereof, nor shall any right, power, remedy or
privilege of the Banks be exclusive of any other right, power, remedy or
privilege referred to herein or in any related document or now or hereafter
available at law, in equity, in bankruptcy, by statute or otherwise. Each such
right, power, remedy or privilege may be exercised by the Banks, either
independently or concurrently with others, and as often and in such order as the
Banks may deem expedient. No waiver or consent granted by the Banks in respect
of this Loan Agreement or the other Loan Documents shall be binding upon the
Banks unless specifically granted in writing by a duly authorized officer of the
Agent Bank, which writing shall be strictly construed.
16.3 Survival of Representations and Warranties. All representations,
warranties and covenants of the Borrower and each Bank contained herein or made
pursuant hereto shall survive the execution and delivery of this Loan Agreement
and shall continue throughout the term hereof. Further, the indemnities set
forth in Section 12 hereof shall survive the payment of the Revolving Credit
Notes and the Term Notes and the other Obligations to the Banks, as applicable.
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16.4 Invalidity. If any part of this Loan Agreement shall be adjudged
invalid or unenforceable, whether in general or in any particular circumstance,
then such partial invalidity or enforceability shall not cause the remainder of
this Loan Agreement to be or to become invalid or unenforceable, and if a
provision hereof is held invalid or unenforceable in one or more of its
applications, the parties hereto agree that said provision shall remain in
effect in all valid applications that are severable from the invalid or
unenforceable application or applications.
16.5 Assignment. This Loan Agreement may not be assigned by the
Borrower or any Subsidiary without the prior written consent of the Banks. This
Loan Agreement may be assigned by the Banks as provided in Section 12 hereof.
All rights of the Banks hereunder shall inure to the benefit of their respective
successors and assigns, and all obligations, covenants and agreements of the
Borrower shall bind its permitted successors and assigns, if any.
16.6 Governing Law. This Loan Agreement and the rights and
obligations of the parties hereunder shall, in all respects, be governed by and
construed in accordance with the laws of the State of New York.
16.7 Section Headings. The section headings of this Loan Agreement
are inserted herein solely for convenience of reference and shall not affect the
construction or interpretation of the provisions hereof.
16.8 Entire Agreement. This Loan Agreement and the other Loan
Documents constitute the entire agreement between the Borrower and the Banks
with respect to the subject matter hereof.
16.9 Time of the Essence. Time shall be of the essence in the payment
and performance of all of the Borrower's obligations under this Loan Agreement,
the Revolving Credit Note and the other Loan Documents to which the Borrower are
party.
16.10 Modifications. This Loan Agreement may be modified only in
writing executed by the Borrower and the Banks. Neither this Loan Agreement nor
the other Loan Documents nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by Banks holding at least fifty and one tenth percent (50.1%)
of the aggregate of the Revolving Credit Facility Pro Rata Shares and the Term
Loan Pro Rata Shares (the "Majority Banks"); provided, however, that no such
change, waiver, discharge or termination, shall, without the consent of each
Bank, (i) extend the Revolving Loan Commitment Termination Date or the final
maturity of the Revolving Credit Note of such Bank, or change the rate or extend
the time of payment of interest, principal or fees, or reduce the principal
amount thereof, or increase the aggregate amount of the Revolving Loan
Commitments above the maximum amount provided for in Section 2.1 hereof, or
increase any Bank's commitment to disburse its Revolving Loan Pro Rata Share of
Revolving Credit Loans requested by the Borrower as set forth in Section 2.1
hereof, or (ii) amend, modify or waive any provisions of this Section 16.10
(Modifications), Section 11 (The Agent Bank) or Section 16.1 (Ratable Sharing),
or (iii) amend, modify or waive any provision requiring consent of all Banks.
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16.11 CONSENT TO JURISDICTION AND VENUE. THE PARTIES CONSENT TO ONE
OR MORE ACTIONS BEING INSTITUTED AND MAINTAINED IN ANY OF (I) THE JEFFERSON
COUNTY, KENTUCKY, CIRCUIT COURT, (II) THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF KENTUCKY, (III) THE SUPREME COURT OF NEW YORK COUNTY, NEW
YORK OR (IV) THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK (AT AGENT BANK'S DISCRETION) TO ENFORCE THIS AGREEMENT AND/OR ONE OR MORE
OF THE OTHER LOAN DOCUMENTS, AND WAIVE ANY OBJECTION TO ANY SUCH ACTION BASED
UPON LACK OF PERSONAL OR SUBJECT MATTER JURISDICTION OR IMPROPER VENUE. THE
PARTIES AGREE THAT ANY PROCESS OR OTHER LEGAL SUMMONS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING MAY BE SERVED BY MAILING A COPY THEREOF BY CERTIFIED
MAIL, OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL, ADDRESSED TO THE ADDRESSES
PROVIDED IN SECTION 15 OF THIS AGREEMENT.
16.12 JURY WAIVER. EACH OF THE PARTIES (BY ACCEPTANCE HEREOF) HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) BETWEEN THEM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREIN. THIS PROVISION IS A MATERIAL INDUCEMENT
TO THE LENDER TO PROVIDE THE FINANCING ESTABLISHED BY THIS AGREEMENT.
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IN WITNESS WHEREOF, the Agent Bank, each Bank, the Borrower and each Existing
Subsidiary has caused this Loan Agreement to be duly executed as of the day and
year first above written.
BANK ONE, KENTUCKY, NA, as Agent Bank
("the Agent Bank")
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President
BANK ONE, KENTUCKY, NA, as a Bank (a "Bank")
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President
NORTH ATLANTIC TRADING COMPANY, INC.,
as the Borrower
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
NATIONAL TOBACCO COMPANY, L.P.,
as an Existing Subsidiary
By NATIONAL TOBACCO FINANCE
CORPORATION as its general partner
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
NORTH ATLANTIC OPERATING COMPANY , INC.
as an Existing Subsidiary
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
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NATIONAL TOBACCO FINANCE CORPORATION
as an Existing Subsidiary
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
73