LONG TERM CREDIT AGREEMENT
Dated as of March __, 1998
among
AGRIBRANDS INTERNATIONAL, INC.
THE SUBSIDIARY BORROWERS AND SUBSIDIARY OBLIGORS
FROM TIME TO TIME PARTY HERETO,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS,
and
ABN AMRO BANK N.V.,
as Agent
TABLE OF CONTENTS
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Page
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ARTICLE I: DEFINITIONS 1
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1.1 Certain Defined Terms. 1
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1.2 Currency Equivalents. 19
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ARTICLE II: THE CREDITS 20
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2.1 Revolving Loans to the Company and the Subsidiary Borrowers 20
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2.2 Prepayments. 20
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2.3 Method of Borrowing 21
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2.4 Method of Selecting Types and Interest Periods for Advances;
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Determination of Applicable Margins, Interest on Advances to
Purina Korea, Inc
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21
(a) Method of Selecting Types and Interest Periods for
Advances 21
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(b) Determination of Applicable Margins, Applicable Letter of Credit
Fee and Applicable Facility Fee 22
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2.5 Minimum Amount of Each Advance 24
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2.6 Method of Selecting Types and Interest Periods for
Conversion and Continuation of Advances 24
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(A) Right to Convert 24
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(B) Automatic Conversion and Continuation 25
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(C) No Conversion Post-Default or Post-Unmatured Default 25
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(D) Conversion/Continuation Notice 25
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2.7 Default Rate 25
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2.8 Method of Payment 25
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2.9 Notes, Telephonic Notices 26
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2.10 Promise to Pay; Interest and Fees; Interest Payment Dates;
Interest and Fee Basis; Taxes; Loan and Control Accounts 26
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(A) Promise to Pay 26
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(B) Interest Payment Dates 26
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(C) Fees 26
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(D) Interest and Fee Basis 27
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(E) Taxes 27
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(F) Loan Account 30
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(G) Entries Binding 30
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2.11 Notification of Advances, Interest Rates, Prepayments and
Aggregate Commitment Reductions 30
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2.12 Lending Installations 30
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2.13 Non-Receipt of Funds by the Agent 30
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2.14 Termination Date 31
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2.15 Replacement of Certain Lenders 31
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2.16 Letters of Credit 32
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2.17 Letter of Credit Participation 33
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2.18 Reimbursement Obligation 33
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2.19 Cash Collateral 34
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2.20 Letter of Credit Fees 34
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2.21 Indemnification; Exoneration 35
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2.22 Judgment Currency 36
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2.23 Currency Disruption 37
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2.24 Termination Date Extension 37
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ARTICLE III: CHANGE IN CIRCUMSTANCES 37
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3.1 Yield Protection 37
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3.2 Changes in Capital Adequacy Regulations 38
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3.3 Availability of Types of Advances 39
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3.4 Funding Indemnification 39
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3.5 Lender Statements; Survival of Indemnity 39
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ARTICLE IV: CONDITIONS PRECEDENT 40
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4.1 Initial Advances and Letters of Credit 40
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4.2 Each Advance and Letter of Credit 40
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ARTICLE V: REPRESENTATIONS AND WARRANTIES 41
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5.1 Organization; Powers 41
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5.2 Authority 41
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5.3 No Conflict; Governmental Consents 41
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5.4 Financial Statements 42
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5.5 No Material Adverse Change 42
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5.6 Taxes 42
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(A) Tax Examinations 42
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(B) Payment of Taxes 43
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5.7 Litigation; Loss Contingencies and Violations 43
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5.8 Subsidiaries; Capital Stock 43
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5.9 ERISA 43
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5.10 Accuracy of Information 44
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5.11 Securities Activities 44
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5.12 Material Agreements 45
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5.13 Compliance with Laws 45
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5.14 Assets and Properties 45
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5.15 Statutory Indebtedness Restrictions 45
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5.16 Post-Retirement Benefits 45
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5.17 Insurance 45
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5.18 Contingent Obligations 45
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5.19 Restricted Junior Payments 46
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5.20 Labor Matters 46
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5.21 Environmental Matters 46
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5.22 Foreign Employee Benefit Matters 47
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ARTICLE VI: COVENANTS 47
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6.1 Reporting 47
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(A) Financial Reporting 47
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(B) Notice of Default 48
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(C) Lawsuits 49
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(D) Insurance 49
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(E) ERISA Notices 49
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(F) Labor Matters 50
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(G) Other Indebtedness 51
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(H) Other Reports 51
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(I) Environmental Notices 51
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(J) Other Information 51
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6.2 Affirmative Covenants 51
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(A) Existence, Etc. 51
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(B) Corporate Powers; Conduct of Business 52
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(C) Compliance with Laws, Etc. 52
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(D) Payment of Taxes and Claims; Tax Consolidation 52
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(E) Insurance 52
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(F) Inspection of Property; Books and Records; Discussions 52
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(G) ERISA Compliance 53
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(H) Maintenance of Property 53
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(I) Environmental Compliance 53
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(J) Use of Proceeds 53
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(K) Foreign Employee Benefit Compliance 53
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6.3 Negative Covenants 53
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(A) Indebtedness 53
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(B) Sales of Assets 54
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(C) Liens 55
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(D) Investments 55
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(E) Contingent Obligations 56
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(F) Restricted Junior Payments 56
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(G) Conduct of Business; Subsidiaries; Acquisitions 57
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(H) Transactions with Shareholders and Affiliates 57
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(I) Sales and Leasebacks 58
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(J) Margin Regulations 58
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(K) ERISA 58
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(L) Issuance of Equity Interests 59
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(M) Organizational Documents 59
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(N) Other Indebtedness 59
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(O) Fiscal Year 59
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(P) Hedging Obligations 59
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(Q) Subsidiary Covenants 59
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6.4 Financial Covenants 59
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(A) Interest Coverage Ratio 59
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(B) Maximum Leverage Ratio 60
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(C) Capital Expenditures 60
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(D) Minimum Consolidated Net Worth 60
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(E) Country Debt Limitations 60
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ARTICLE VII: DEFAULTS 62
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7.1 Defaults 62
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ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND
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REMEDIES 64
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8.1 Remedies 64
(a) Termination of Commitments; Acceleration 64
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(b) Rescission 65
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(c) Enforcement 65
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8.2 Defaulting Lender 65
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8.3 Amendments 66
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8.4 Preservation of Rights 67
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ARTICLE IX: GENERAL PROVISIONS 67
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9.1 Survival of Representations 67
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9.2 Governmental Regulation 67
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9.3 Performance of Obligations 67
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9.5 Entire Agreement 68
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9.7 Expenses; Indemnification 68
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(A) Expenses 68
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(B) Indemnity 69
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(C) Waiver of Certain Claims; Settlement of Claims 69
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(D) Survival of Agreements 70
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9.8 Numbers of Documents 70
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9.9 Accounting 70
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9.10 Severability of Provisions 70
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9.11 Nonliability of Lenders 70
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9.12 GOVERNING LAW 70
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9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL 70
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(A) JURISDICTION 70
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(B) OTHER JURISDICTIONS 71
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(C) VENUE 71
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(D) WAIVER OF JURY TRIAL 71
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9.14 Subordination of Intercompany Indebtedness 71
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9.15 No Strict Construction 73
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ARTICLE X: THE AGENT 73
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10.1 Appointment; Nature of Relationship 73
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10.2 Powers 73
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10.3 General Immunity 73
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10.4 No Responsibility for Loans, Creditworthiness, Collateral,
Recitals, Etc. 73
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10.5 Action on Instructions of Lenders 74
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10.6 Employment of Agents and Counsel 74
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10.7 Reliance on Documents; Counsel 74
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10.8 The Agent's Reimbursement and Indemnification 74
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10.9 Rights as a Lender 74
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10.10 Lender Credit Decision 75
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10.11 Successor Agent 75
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10.12 Collateral Documents 75
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ARTICLE XI: SETOFF; RATABLE PAYMENTS 76
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11.1 Setoff 76
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11.2 Ratable Payments 76
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11.3 Application of Payments 76
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11.4 Relations Among Lenders 77
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ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS 77
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12.1 Successors and Assigns 77
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12.2 Participations 78
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(A) Permitted Participants; Effect 78
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(B) Voting Rights 78
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(C) Benefit of Setoff 78
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12.3 Assignments 78
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(A) Permitted Assignments 78
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(B) Effect; Effective Date 79
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(C) The Register 79
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12.4 Confidentiality 79
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12.5 Dissemination of Information 80
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ARTICLE XIII: NOTICES 80
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13.1 Giving Notice 80
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13.2 Change of Address 81
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ARTICLE XIV: COUNTERPARTS 81
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EXHIBITS AND SCHEDULES
Exhibits
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EXHIBIT A -- Commitments
(Definitions)
EXHIBIT B -- Form of Note
(Definitions)
EXHIBIT C -- Form of Compliance Certificate
(Definitions, 4.2, 6.1(A)(iii))
EXHIBIT D -- Form of Assignment Agreement
( 2.15, 12.3)
EXHIBIT E -- List of Closing Documents
( 4.1)
EXHIBIT F -- Form of Officer's Certificate
( 4.2, 6.1(A)(iii))
EXHIBIT G -- Financial Statements
( 5.4(A), 5.18)
Schedules
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The information presented on each of the following Schedules is dated as of
[February 28, 1998].
Schedule 1.1.1 -- Permitted Existing Contingent Obligations
(Definitions)
Schedule 1.1.2 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.3 -- Permitted Existing Investments (Definitions)
Schedule 1.1.4 -- Permitted Existing Liens (Definitions)
Schedule 2.16(b) -- Existing Letters of Credit ( 2.16(b))
Schedule 5.3 -- Conflicts; Governmental Consents ( 5.3)
Schedule 5.7 -- Litigation; Loss Contingencies ( 5.7)
Schedule 5.8 -- Subsidiaries ( 5.8)
Schedule 5.17 -- Insurance ( 5.17, 6.1(D), 6.2(E))
Schedule 5.20 -- Labor Matters; Compensation Agreements ( 5.20)
Schedule 5.21 -- Environmental Matters ( 5.21)
Schedule 6.3(F) -- Restricted Junior Payments
Schedule 6.3(H) -- Transactions with Shareholders and Affiliates
LONG TERM CREDIT AGREEMENT
This Long Term Credit Agreement dated as of March __, 1998 is entered
into among Agribrands International, Inc., a Missouri corporation, any
Subsidiary Borrowers and any Subsidiary Obligors (as such terms are defined
herein) which are now or may hereafter become a party hereto from time to
time, the financial institutions from time to time a party hereto as Lenders,
whether by execution of this Agreement or an assignment and acceptance
pursuant to Section 12.3, ABN AMRO Bank N.V., in its capacity as Agent for
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itself and the other Lenders. The parties hereto agree as follows:
ARTICLE I: DEFINITIONSARTICLE I DEFINITIONS
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1.1 Certain Defined Terms. In addition to the terms defined in other
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sections of this Agreement, the following terms used in this Agreement shall
have the following meanings, applicable both to the singular and the plural
forms of the terms defined:
As used in this Agreement:
"Acquisition" means any transaction, or any series of related
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transactions, consummated on or after the date of this Agreement, by which the
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Company or any Subsidiary of the Company (i) acquires any going business or
all or substantially all of the assets of any firm, corporation or division
thereof, whether through purchase of assets, merger or otherwise, including,
without limitation, by surrender of or foreclosure on collateral provided by
customers or (ii) directly or indirectly acquires (in one transaction or as of
the most recent transaction in a series of transactions, including, without
limitation, by surrender of or foreclosure on collateral provided by
customers) at least a majority (in number of vote) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage of voting power), of the membership,
ownership or other equity interests in a limited liability company or of the
outstanding partnership interests of a partnership.
"Advance" means a borrowing hereunder consisting of the aggregate amount
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of the several Loans made by the Lenders to a Borrower of the same Type and,
in the case of Eurodollar Advances and Korean Eurodollar Advances, for the
same Interest Period.
"Affected Lender" is defined in Section 2.15 hereof.
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"Affiliate" of any Person means any other Person directly or indirectly
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controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act) of greater than ten percent (10%) or more of any class of voting Capital
Stock (or other voting interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person through ownership of Equity
Interests. In addition, each director of a Borrower or any Subsidiary of a
Borrower shall be deemed to be an Affiliate of each Borrower.
"Agent" means ABN AMRO Bank N.V. in its capacity as contractual
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representative for itself and the Lenders pursuant to Article X hereof and any
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successor Agent appointed pursuant to Article X hereof.
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"Aggregate Commitment" means the aggregate of the Commitments of all the
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Lenders under this Agreement as adjusted from time to time pursuant to the
terms hereof. The initial Aggregate Commitment is Fifty-Five Million and
00/100 Dollars ($55,000,000.00).
"Agreement" means this Long Term Credit Agreement, as it may be amended,
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restated or otherwise modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted accounting
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principles as in effect as of the date of this Agreement in the United States.
If any changes in generally accepted accounting principles are hereafter
required or permitted and are adopted by the Company with the agreement of its
independent certified public accountants and such changes result in a change
in the method of calculation of any of the financial covenants, restrictions
or standards herein or in the related definitions or terms used therein
("Covenant Accounting Changes"), the parties hereto agree to enter into
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negotiations, in good faith, in order to amend such provisions in a credit
neutral manner so as to reflect equitably such changes with the desired result
that the criteria for evaluating the Company's consolidated financial
condition shall be the same after such changes as if such changes had not been
made; provided, however, that no Covenant Accounting Change shall be given
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effect in such calculations until such provisions are amended in a manner
reasonably satisfactory to the Required Lenders. If such amendment is entered
into, all references in this Agreement to Agreement Accounting Principles
shall mean generally accepted accounting principles as of the date of such
amendment except as agreed in connection with the Covenant Accounting Changes
set forth in such an amendment and together with any changes in generally
accepted accounting principles after the date of such amendment which are not
Covenant Accounting Changes.
"Alternate Base Rate" means, for any day, a fluctuating rate of interest
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per annum equal to the higher of (i) the Prime Rate for such day and (ii) the
sum of (a) the Federal Funds Effective Rate for such day and (b) one-half of
one percent (0.5%) per annum.
"Applicable Facility Fee" as at any date of determination, shall be the
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rate per annum then applicable in the determination of the amount payable
under Section 2.10(C) with respect to the Aggregate Commitment determined in
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accordance with the provisions of Section 2.4(b).
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"Applicable Eurodollar Margin" as at any date of determination, shall be
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the rate per annum then applicable to Eurodollars Rate Loans determined in
accordance with the provisions of Section 2.4(b).
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"Applicable Base Rate Margin" as at any date of determination, shall be
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the rate per annum then applicable to Base Rate Loans determined in accordance
with the provisions of Section 2.4(b).
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"Applicable Letter of Credit Fee" as at any date of determination, shall
--------------------------------
be the rate per annum then applicable in the determination of the amount
payable under Section 2.20 with respect to Letters of Credit, determined in
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accordance with the provisions of Section 2.4(b).
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"Applicable Margin(s)" is defined in Section 2.4(b).
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"Arranger" means ABN AMRO Bank N.V. in its capacity as the arranger for
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the loan transaction evidenced by this Agreement.
"Authorized Officer" means any of the chief executive officer, chief
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operating officer, chief financial officer, controller and treasurer of a
Borrower, acting singly.
"Base Rate" means, for any day for any Loan, a rate per annum equal to
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(i) the Alternate Base Rate for such day plus (ii) the Applicable Base Rate
Margin applicable to such Loan, changing when and as the Alternate Base Rate
changes.
"Base Rate Advance" means an Advance which bears interest at the Base
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Rate.
"Base Rate Loan" means a Loan, or portion thereof, which bears interest
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at the Base Rate.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
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of ERISA (other than a Multiemployer Plan) in respect of which the Company or
any other member of the Controlled Group is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of
ERISA.
"Borrower" shall mean the Company, [the Company's Canadian Subsidiary, a
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company organized under the federal laws of Canada], Purina Italia, S.p.A., a
company organized under the laws of Italy, Purina Espana, S.A., a company
organized under the laws of Spain, Purina Hungaria Animal Feed Production &
Trading Company, Ltd., a company organized under the laws of Hungary, and
Purina Korea, Inc., a corporation organized under the laws of the Republic of
Korea, and each of their respective successors and assigns.
"Borrowing Date" means a date on which an Advance, is made hereunder.
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"Borrowing Notice" is defined in Section 2.4(a) hereof.
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"Business Day" means (i) with respect to any borrowing, payment or rate
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selection of Revolving Loans bearing interest at the Eurodollar Rate, a day
(other than a Saturday or Sunday) on which banks are open for business in New
York, New York and on which dealings in United States Dollars and Korean Won
are carried on in the relevant interbank market and (ii) for all other
purposes a day (other than a Saturday or Sunday) on which banks are open for
business in New York, New York.
"Calculation Date" means (i) with respect to any Revolving Loan or Letter
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of Credit in Korean Won, the Business Day of the making of such Revolving Loan
or the issuance of the Letter of Credit with respect to Korean Won; (ii) with
respect to outstanding Revolving Loans and Letters of Credit, (x) the Business
Day on which any subsequent Loan is made or Letter of Credit is issued, (y)
the twenty-fifth day of each calendar month (or, if such date is not a
Business Day, the next succeeding Business Day), and (z) any other Business
Day selected at the option of the Agent or at the direction of the Required
Lenders; provided, with respect to any option exercised pursuant to clause
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(ii)(z) above, without the consent of the Agent required to calculate the
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applicable Exchange Rate, the Calculation Date selected shall not be earlier
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than the second (2nd) Business Day following exercise of such option.
"Capital Expenditures" means, for any period, the aggregate of all
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expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases) by the Company and its Subsidiaries during that period
that, in conformity with Agreement Accounting Principles, are required to be
included in or reflected by the property, plant, equipment or similar fixed
asset accounts reflected in the consolidated balance sheet of the Company and
its Subsidiaries other than with respect to the acquisition of inventory in
the ordinary course of business.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
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(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (howsoever designated)
of corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing person, in each such case
regardless of class or designation.
"Capitalized Lease" of a Person means any lease of property by such
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Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.
"Capitalized Lease Obligations" of a Person means the amount of the
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obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"Cash Collateral Account" means that certain deposit account, Account No.
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[___________] maintained at all times by the Company at ABN AMRO Bank N.V.
with a balance not less than $25,000,000 at any time.
"Cash Equivalents" means (i) marketable direct obligations issued or
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unconditionally guaranteed by the government of the United States or the
government of any member of the European Union; (ii) domestic and Eurodollar
certificates of deposit and time deposits, bankers' acceptances and Base Rate
certificates of deposit issued by any commercial bank organized under the laws
of the United States, any state thereof, the District of Columbia, or its
branches or agencies or the laws of any member of the European Union and
having capital and surplus in an aggregate amount not less than $500,000,000
(fully protected, if denominated in a currency other than Dollars, against
currency fluctuations for any such deposits with a term of more than ten (10)
days); (iii) shares of money market, mutual or similar funds having net assets
in excess of $500,000,000 maturing or being due or payable in full not more
than one hundred eighty (180) days any Borrower's acquisition thereof and the
investments of which are limited to investment grade securities (i.e.,
securities rated at least Baa by ▇▇▇▇▇'▇ Investors Service, Inc. or at least
BBB by Standard & Poor's Ratings Group) and (iv) commercial paper of United
States and foreign banks and bank holding companies and their subsidiaries and
United States and foreign finance, commercial, industrial or utility companies
which, at the time of acquisition, are rated A-1 (or better) by Standard &
Poor's Ratings Group or P-1 (or better) by ▇▇▇▇▇'▇ Investors Services, Inc. or
commercial paper of British banks of similar credit quality approved for such
purposes by the Agent in its sole discretion; provided that the maturities of
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such Cash Equivalents shall not exceed 365 days.
"Cash Interest Expense" will mean, for any period, the total Interest
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Expense of the applicable entity actually paid in cash (including the interest
component of Capitalized Leases but excluding the arrangement fee set forth in
the letter agreement between the Agent, the Arranger and the Company dated
February 25, 1998) all as determined in conformity with Agreement Accounting
Principles.
"Change" is defined in Section 3.2 hereof.
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"Change of Control" means any of the following:
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(i) any "person" or "group" (as such terms are used in Sections 13(d)
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and 14(d) of the Exchange Act)is or becomes the "beneficial owner" (as defined
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in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of 20% or more of the
combined voting power of the Company's Capital Stock ordinarily having the
right to vote at an election of directors;
(ii) during any period of 12 consecutive calendar months,
individuals:
(a) who were directors of the Company on the first day of such period, or
(b) whose election or nomination for election to the board of directors of
the Company was recommended or approved by at least a majority of the
directors then still in office who were directors of the Company on the first
day of such period, or whose election or nomination for election was so
approved,
shall cease to constitute a majority of the board of directors of the Company;
(iii) the Company consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of its
property to any Person, or any corporation consolidates with or merges into
the Company, in either event pursuant to a transaction in which the
outstanding Capital Stock of the Company is reclassified or changed into or
exchanged for cash, securities or other property; and
(iv) except as provided by Section 6.3(B)(iv) with respect to the
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sale, dissolution or liquidation of certain Subsidiaries of the Company, shall
cease to own of record and beneficially, with sole voting and dispositive
power, at least 80% of the outstanding shares of Capital Stock of each
Subsidiary Borrower and each Subsidiary Obligor ordinarily having the right to
vote at an election of directors or shall cease to have the power, directly or
indirectly, to elect a majority of the board of directors of each Subsidiary
Borrower.
"Closing Date" means March __, 1998.
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"Code" means the Internal Revenue Code of 1986, as amended, reformed or
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otherwise modified from time to time.
"Collateral Document" shall mean the Pledge Agreements, the Guaranties
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and all other security agreements, mortgages, loan agreements, notes,
guarantees, pledges, powers of attorney, consents, assignments, contracts, fee
letters, notices, leases, financing statements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of the Company
or any of its Subsidiaries and delivered to the Agent or any of the Lenders,
together with all agreements and documents referred to therein or contemplated
thereby.
"Collateral" means all property and interest in property now owned or
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hereafter acquired by the Company which has been pledged to the Agent for the
benefit of the Holders of Secured Obligations under the Pledge Agreements.
"Commission" means the Securities and Exchange Commission and any Person
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succeeding to the functions thereof.
"Commitment" means, for each Lender, the obligation of such Lender to
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make Revolving Loans, and to purchase participations in Letters of Credit not
exceeding the Dollar Amount set forth on Exhibit A to this Agreement opposite
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its name thereon under the heading "Commitment" or in the assignment and
acceptance by which it became a Lender, as such amount may be modified from
time to time pursuant to the terms of this Agreement or to give effect to any
applicable assignment and acceptance.
"Company" means Agribrands International, Inc., a Missouri corporation,
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together with its successors and assigns.
"Compliance Certificate" means a certificate substantially in the form of
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Exhibit C delivered to the Agent and each Lender by the Company pursuant to
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the provisions of this Agreement and covering, among other things, its
calculation of the Applicable Margins, Applicable Facility Fee, Applicable
Letter of Credit Fee, its compliance with the financial covenants contained in
Section 6.4 and certain other provisions of this Agreement.
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"Confidential Information Memorandum" means that certain Confidential
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Information Memorandum dated February 1998 and delivered by the Agent and the
Company to prospective Lenders in connection with this Agreement.
"Consolidated EBITDA" means, for any period, EBITDA of the Company and
its Subsidiaries on a consolidated basis.
"Consolidated Net Worth" means, at a particular date, all amounts which
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would be included under shareholders' or members' equity for the Company and
its consolidated Subsidiaries deter-mined in accordance with Agreement
Accounting Principles.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
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substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"Contingent Obligation", as applied to any Person, means any Contractual
----------------------
Obligation, contingent or otherwise, of that Person with respect to any
Indebtedness of another or other obligation or liability of another,
including, without limitation, any such Indebtedness, obligation or liability
of another directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), co-made or
discounted or sold with recourse by that Person, or in respect of which that
Person is otherwise directly or indirectly liable, including Contractual
Obligations (contingent or otherwise) arising through any agreement to
purchase, repurchase, or otherwise acquire such Indebtedness, obligation or
liability or any security therefor, or to provide funds for the payment or
discharge thereof (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain solvency, assets, level of
income, or other financial condition, or to make payment other than for value
received.
"Contingent Purchase Price Obligation", as applied to any Person, means
--------------------------------------
any Contractual Obligation of such Person incurred in connection with an
Acquisition pursuant to which such Person is obligated to pay additional
consideration to the applicable seller in the form of an earnout, milestone
payment, contingent purchase price payment, or other similar performance based
compensation relating to post-Acquisition financial or operating performance
of the business acquired.
"Contractual Obligation", as applied to any Person, means any provision
-----------------------
of any equity or debt securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument, in any case in writing, to
which that Person is a party or by which it or any of its properties is bound,
or to which it or any of its properties is subject.
"Controlled Group" means the group consisting of (i) any corporation
-----------------
(other than ▇▇▇▇▇▇▇ Purina Company) which is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as
the Company; (ii) a partnership or other trade or business (whether or not
incorporated (other than ▇▇▇▇▇▇▇ Purina Company)) which is under common
control (within the meaning of Section 414(c) of the Code) with the Company;
and (iii) a member of the same affiliated service group (within the meaning of
Section 414(m) of the Code) as the Company, any corporation described in
clause (i) above or any partnership or trade or business described in clause
------ ------
(ii) above (in each case, other than ▇▇▇▇▇▇▇ Purina Company).
---
"Conversion/Continuation Notice" is defined in Section 2.6(D) hereof.
------------------------------- --------------
"Customary Permitted Liens" means:
---------------------------
(i) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other similar Liens imposed
by law created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with Agreement Accounting Principles;
(iii) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) incurred or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment insurance or other
types of social security benefits or to secure the performance of bids,
tenders, sales, contracts (other than for the repayment of borrowed money),
surety, appeal and performance bonds; provided that (A) all such Liens do not
--------
in the aggregate materially detract from the value of assets or property of
any Borrower taken as a whole or materially impair the use thereof in the
operation of the businesses taken as a whole, and (B) all Liens securing bonds
to stay judgments or in connection with appeals that do not secure at any time
an aggregate amount exceeding $5,000,000;
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements, building
restrictions and other similar charges or encumbrances on the use of real
property which do not interfere with the ordinary conduct of the business of
any Borrower or any Subsidiary of any Borrower;
(v) Liens of attachment or judgment with respect to judgments, writs
or warrants of attachment, or similar process against any Borrower or any
Subsidiary of any Borrower which do not constitute a Default under Section
-------
7.1(h);
---
(vi) Liens arising from leases, subleases or licenses granted to
others which do not interfere in any material respect with the business of any
Borrower or any Subsidiary of any Borrower; and
(vii) any interest or title of the lessor in the property subject to
any operating lease entered into by any Borrower or any Subsidiary of any
Borrower in the ordinary course of business.
"Default" means an event described in Article VII hereof.
------- ------------
"DOL" means the United States Department of Labor and any Person
---
succeeding to the functions thereof.
--
"Dollar" or "$" means the lawful money of the United States of America.
------ -
"Dollar Amount" of any currency at any date shall mean (i) the amount of
--------------
such currency if such currency is Dollars or (ii) the Equivalent Amount of
Dollars if such currency is any currency other than Dollars, calculated on the
basis of the then applicable Exchange Rate.
"EBITDA" will mean, for any period, on a consolidated basis for the
------
applicable Person, the sum of the amounts for such period, without
duplication, of (i) net sales minus (ii) cost of products sold minus (iii)
selling, general and administrative expenses, plus (iv) depreciation expense
to the extent deducted in computing the amounts in clauses (ii) and (iii)
above, plus (v) amortization expense, including, without limitation,
amortization of goodwill and other intangible assets to the extent deducted in
computing the amounts in clauses (ii) and (iii) above, all as determined in
accordance with Agreement Accounting Principles. EBITDA for each Subsidiary
shall be calculated excluding the effect of any service fees paid by such
Subsidiary to the Company.
"EBITDA Contribution Ratio" shall mean the ratio of (i) Total Debt of the
-------------------------
Company and its Subsidiaries to (ii) the sum of 100% of EBITDA contributed by
Subsidiaries in countries with a rating of equal to or better than BBB- from
S&P and Baa3 from Moody's and 50% of EBITDA contributed by Subsidiaries in
countries with a rating of lower than BBB- from S&P or lower than Baa3 from
Moody's.
"Environmental, Health or Safety Requirements of Law" means all
---------------------------------------------------------
Requirements of Law derived from or relating to federal, state and local laws
or regulations relating to or addressing pollution or protection of the
environment, or protection of worker health or safety, including, but not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et seq., the Occupational Safety and Health
-- ---
Act of 1970, 29 U.S.C. 651 et seq., and the Resource Conservation and
-- ---
Recovery Act of 1976, 42 U.S.C. 6901 et seq., in each case including any
-- ---
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder, and any state or local equivalent thereof.
"Environmental Lien" means a lien in favor of any Governmental Authority
-------------------
for (a) any liability under Environmental, Health or Safety Requirements of
Law, or (b) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant
into the environment.
"Environmental Property Transfer Act" means any applicable requirement of
-----------------------------------
law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site
Recovery Act" or "Responsible Property Transfer Act."
"Equipment" means all of the present and future (i) equipment, including,
---------
without limitation, machinery, manufacturing, distribution, selling, data
processing and office equipment, assembly systems, tools, molds, dies,
fixtures, appliances, furniture, furnishings, vehicles, vessels, aircraft,
aircraft engines, and trade fixtures, (ii) other tangible personal property
(other than the Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection
therewith, and any substitutions therefor and replacements, products and
proceeds thereof owned by the Company or any of the other Borrowers.
"Equity Interests" means Capital Stock and all warrants, options purchase
----------------
rights, conversion or exchange rights, other rights to acquire Capital Stock
and all voting rights, calls or claims of any character with respect thereto
(but excluding any debt security that is convertible into, or exchangeable
for, Capital Stock).
"Equivalent Amount" of any currency with respect to any amount of Dollars
-----------------
at any date means the equivalent in such currency of such amount of Dollars,
calculated on the basis of the then applicable Exchange Rate rounded up to the
nearest incremental amount of such currency as determined by the Agent from
time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time including (unless the context otherwise requires)
any rules or regulations promulgated thereunder.
"Eurodollar Advance" means an Advance (other than a Korean Eurodollar
-------------------
Advance) which bears interest at the Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Loan or Korean
--------------------
Eurodollar Loan for the relevant Interest Period, the rate at which deposits
in Dollars are offered by ABN AMRO Bank N.V. to first-class banks in the
London interbank market at approximately (x) in the case of a Eurodollar Loan,
11:00 a.m. (London time) two Business Days and (y) in the case of a Korean
Eurodollar Loan, 11:00 a.m. (London time) three Business Days, prior to the
first day of such Interest Period, in the approximate amount of the portions
of the relevant Eurodollar Loan of ABN AMRO Bank N.V., and having a maturity
approximately equal to such Interest Period.
"Eurodollar Loan" means a Loan (other than a Korean Eurodollar Loan), or
----------------
portion thereof, which bears interest at the Eurodollar Rate.
"Eurodollar Payment Office" of the Agent means, for each of the Agreed
---------------------------
Currencies, the office, branch or affiliate of the Agent, specified as the
"Eurodollar Payment Address" for such currency on the signature page for each
Lender hereto or such other office, branch, affiliate or correspondent bank of
the Agent, as it may from time to time specify to the Borrowers and each
Lender as its Eurodollar Payment Office.
"Eurodollar Rate" means, with respect to a Eurodollar Advance or Korean
----------------
Eurodollar Advance for the relevant Interest Period, the sum of (a) (i) the
Eurodollar Base Rate divided by (ii) one minus the Reserve Requirement
-----
(expressed as a decimal) applicable to such Interest Period plus (b) the
----
percentage determined in accordance with Section 2.4(b) to be the Applicable
--------------
Eurodollar Margin in connection with Eurodollar Loans.
"Exchange Rate" means with respect to Korean Won on a particular date,
--------------
the rate at which Korean Won may be exchanged into Dollars, calculated on the
basis of the arithmetical mean of the buy and sell spot rates of exchange of
the Agent in the London interbank market (or other market where the Agent's
foreign currency exchange operations in respect of Korean Won are then being
conducted) for Korean Won at or about 1:00 p.m. (local time), on such date for
the purchase of Dollars with Korean Won for delivery five (5) Business Days
later; provided, however, that if at the time of any such determination, for
-------- -------
any reason, no such spot rate is being quoted, the Agent may use any
reasonable method it deems appropriate to determine such rate, and such
determination shall be conclusive absent manifest error.
"Existing Letters of Credit" is defined in Section 2.16(b).
"Federal Funds Effective Rate" means, for any day, an interest rate per
------------------------------
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10:00
a.m. (New York time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent
in its sole discretion.
"Fees" is defined in Section 6.4(A) hereof.
---- ---------------
"Foreign Employee Benefit Plan" means any employee benefit plan as
--------------------------------
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Company, any of its Subsidiaries or any
members of its Controlled Group and is not covered by ERISA pursuant to ERISA
Section 4(b)(4).
"Foreign Pension Plan" means any employee benefit plan as described in
----------------------
Section 3(3) of ERISA which (i) is maintained or contributed to for the
benefit of employees of the Company, any of its Subsidiaries or any of its
ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of
ERISA, and (iii) under applicable local law, is required to be funded through
a trust or other funding vehicle.
"Governmental Acts" is defined in Section 2.21(a) hereof.
------------------ ----------------
"Governmental Authority" means any nation or government, any federal,
-----------------------
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranty" means each of (i) those certain Guaranties dated as of the
--------
Closing Date executed in favor of the Agent for the benefit of the Holders of
Secured Obligations pursuant to which each of the Subsidiary Borrowers and
Subsidiary Obligors shall guaranty all of the Obligations of the other
Subsidiary Borrowers and Subsidiary Obligors and (ii) that certain Guaranty
dated as of the Closing Date executed by the Company in favor of the Agent for
the benefit of the Holders of Secured Obligations pursuant to which the
Company shall guaranty all of the Obligations of the Subsidiary Borrowers and
the Subsidiary Obligors, in each case, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"Hedging Agreements" is defined in Section 6.3(P).
------------------- ---------------
"Hedging Obligations" of a Person means any and all obligations of such
--------------------
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts and warrants, and (ii) any and all
cancellations, buy backs, reversals, terminations or assignments of any of the
foregoing.
"Holders of Secured Obligations" means the holders of the Secured
---------------------------------
Obligations from time to time and shall refer to (i) each Lender in respect of
-
its Loans (including, if applicable, any agency or Affiliate of a Lender, (ii)
the Issuing Lenders in respect of Reimbursement Obligations and other
Obligations relating to its Letters of Credit, (iii) the Agent, the Arranger,
and the Issuing Lenders in respect of all other present and future obligations
and liabilities of any Borrower or any of their subsidiaries of every type and
description arising under or in connection with this Agreement or any other
Loan Document, (iv) each Indemnitee in respect of the obligations and
liabilities of any Borrower to such Person hereunder or under any of the Loan
Documents, (v) each Lender (or any agency or Affiliate thereof) in respect of
all Hedging Obligations of any Borrower or any of their Subsidiaries to such
lender (or agency or Affiliate thereof) and (vi) their respective successors,
transferees and assigns.
"Indebtedness" of any Person means (i) any indebtedness of such Person,
------------
contingent or otherwise, (a) in respect of borrowed money including all
principal, interest, fees and expenses with respect thereto (whether or not
the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), or (b) evidenced by bonds, notes, acceptances,
debentures or other instruments or letters of credit (or reimbursement
obligations with respect thereto, including, in the case of the Borrowers,
Reimbursement Obligations with respect to amounts funded under the Letters of
Credit) or representing the balance deferred and unpaid of the purchase price
of any property (including pursuant to Capitalized Leases) or services, if and
to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles (except that any such balance that constitutes a trade
payable and/or an accrued liability arising in the ordinary course of business
shall not be considered Indebtedness); (ii) to the extent not otherwise
included, (a) any Capitalized Lease Obligations, (b) obligations, whether or
not assumed, secured by Liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by such Person, and (c)
Contingent Obligations (exclusive of whether such items would appear upon such
balance sheet). The amount of Indebtedness of any Person at any date shall be
without duplication (i) the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability of any
such Contingent Obligations at such date and (ii) in the case of Indebtedness
of others secured by a Lien to which the property or assets owned or held by
such Person is subject, the lesser of (x) the fair market value at such date
of any asset subject to a Lien securing the Indebtedness of others and (y) the
amount of the Indebtedness secured.
"Indemnified Matters" is defined in Section 9.7(B) hereof.
-------------------- ---------------
"Indemnitees" is defined in Section 9.7(B) hereof.
----------- ---------------
"Interest Expense" means, for any period, the consolidated total interest
----------------
expense of the Company and its Subsidiaries, determined on a consolidated
basis, whether paid or accrued, but without duplication (including the
interest component of Capitalized Leases), but excluding interest expense not
payable in cash (including amortization of discount) and excluding the
arrangement fee set forth in the letter agreement between the Agent, the
Arranger and the Company dated February 25, 1998, all as determined in
conformity with Agreement Accounting Principles.
"Interest Period" means, (x) with respect to a Eurodollar Loan, a period
----------------
of one (1), two (2), three (3) or six (6) months, and, to the extent available
to all of the Lenders, upon request of the applicable Borrower and only if the
Lenders, in their discretion, shall agree, nine (9) months or twelve (12)
months, and (y) with respect to a Korean Eurodollar Loan, a period of one
(1), two (2) or three (3) months, and, to the extent available to all of the
Lenders, upon request of Purina Korea, Inc. and only if the Lenders, in their
discretion, shall agree, six (6) months, in each case commencing on a Business
Day selected by the applicable Borrower pursuant to this Agreement. Such
Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter; provided,
--------
however, that if there is no such numerically corresponding day in such next,
------
second, third or sixth succeeding month, such Interest Period shall end on the
last Business Day of such next, second, third or sixth succeeding month. With
respect to a Korean Won Advance, Interest Period means a period designated by
the Agent of approximately ninety (90) days. If an Interest Period would
otherwise end on a day which is not a Business Day, such Interest Period shall
end on the next succeeding Business Day, provided, however, that if said next
-------- -------
succeeding Business Day falls in a new calendar month, such Interest Period
shall end on the immediately preceding Business Day.
"Investment" means, with respect to any Person, (i) any purchase or other
----------
acquisition by that Person of any Equity Interest, notes, debentures or other
securities, or of a beneficial interest in any Equity Interest, notes,
debentures or other securities, issued by any other Person, (ii) any purchase
by that Person of all or substantially all of the assets of a business
conducted by another Person, and (iii) any loan, advance (other than deposits
with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable, advances to employees and similar items in each
case made or incurred in the ordinary course of business) or capital
contribution by that Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to the
---
functions thereof.
"Issuing Lender" means, as the context may require, ABN AMRO Bank N.V.,
---------------
with respect to Letters of Credit issued by it pursuant to this Agreement, and
any other Lender that becomes an Issuing Lender, pursuant to Section 2.16,
------------
with respect to Letters of Credit issued by such Lender.
"Knowledge" means, at any time and relative to any matter, knowledge
---------
which the Authorized Officers of the Company, the Subsidiary Borrowers and the
Subsidiary Obligors would reasonably be expected to have regarding such
matter.
"Korean CD Rate" means with respect to any Korean Won Advance for any
----------------
specified Interest Period, the rate per annum, as determined by the Agent,
shown on page "KWCD 3M" screen of the Bloomberg L.P. service (or such other
page as may replace the "KWCD 3M" screen on that service) for the purpose of
displaying the rate offered in Seoul, Korea for 91-day certificates of deposit
issued in Seoul, Korea as of 11:00 a.m. (Seoul time) five (5) Business Days
prior to the first day of such Interest Period.
"Korean Eurodollar Advance" means an Advance to Purina Korea, Inc., in
---------------------------
Dollars which bears interest at the Korean Eurodollar Rate.
"Korean Eurodollar Rate" means a rate per annum equal to the Eurodollar
------------------------
Rate minus the Applicable Eurodollar Margin plus 3.50% per annum.
----- ----
"Korean Eurodollar Loan" means a Loan, or portion thereof, which bears
------------------------
interest at the Korean Eurodollar Rate.
"Korean Won Advance" means an advance made pursuant to Section 2.1
-------------------- -----------
denominated in Korean Won to Purina Korea, Inc.
"Korean Won Loan" means with respect to a Lender, such Lender's portion
-----------------
of any Korean Won Advance or Korean Eurodollar Advance made pursuant to
Section 2.1.
------
"L/C Draft" means a draft drawn on an Issuing Lender pursuant to a Letter
---------
of Credit.
"L/C Interest" is defined in Section 2.17.
------------- -------------
"L/C Obligations" means, without duplication, an amount equal to the sum
----------------
of (i) the aggregate of the amount then available for drawing under each of
the Letters of Credit, (ii) the face amount of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the Issuing Lender, (iii) the aggregate outstanding amount of all
Reimbursement Obligations at such time and (iv) the aggregate face amount of
all Letters of Credit requested by any Borrower but not yet issued (unless the
request for an unissued Letter of Credit has been denied).
"Lenders" means the lending institutions listed on the signature pages of
-------
this Agreement, including the Issuing Lenders and their respective successors
and assigns.
"Lending Installation" means, with respect to a Lender or the Agent, any
---------------------
office, branch, subsidiary or affiliate of such Lender or the Agent.
"Letter(s) of Credit" means the letters of credit to be issued by one of
--------------------
the Issuing Lenders pursuant to Section 2.21 hereof.
-------------
"Lien" means any lien (statutory or other), mortgage, pledge,
----
hypothecation, assignment, deposit arrangement, encumbrance or preference,
----
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"Loan(s)" means with respect to a Lender, such Lender's portion of any
-------
Advance made pursuant to Section 2.1.
------------
"Loan Account" is defined in Section 2.10(F) hereof.
------------- ----------------
"Loan Documents" means this Agreement, the Notes, the and all other
---------------
documents, instruments and agreements executed in connection therewith or
contemplated thereby, including the letter agreements regarding fees among the
Agent, the Arranger, and the Company and between the Agent and the Borrower,
in each case as the same may be amended, restated or otherwise modified and in
effect from time to time.
"Margin Stock" shall have the meaning ascribed to such term in Regulation
------------
U.
"Material Adverse Effect" means a material adverse effect upon (a) the
-------------------------
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company and its Subsidiaries taken as a whole,
(b) the ability of the Company and the other Borrowers and the Subsidiary
Obligors taken as a whole to perform their obligations under the Loan
Documents in any material respect, or (c) the ability of the Lenders or the
Agent to enforce in any material respect the Obligations or their rights with
respect to the Collateral other than any such inability resulting form the
gross negligence or willful misconduct of any Lender or the Agent.
"Maximum Korean Commitment" shall mean the maximum amount which the
---------------------------
Lenders have agreed to provide as Loans or Letters of Credit to Purina Korea,
Inc. under this Agreement. The initial Maximum Korean Commitment is
$15,000,000.
"Maximum Korean Won Commitment" shall mean the maximum amount which the
-------------------------------
Lenders have agreed to provide as Loans or Letters of Credit to Purina Korea,
Inc. in Korean Won under this Agreement. The Dollar Amount of the initial
Maximum Korean Won Commitment is $7,500,000.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
-------
"Multiemployer Plan" means a "Multiemployer Plan" as defined in Section
-------------------
4001(a)(3) of ERISA which is, or within the immediately preceding six (6)
years was, contributed to by either the Company or any member of the
Controlled Group.
"Note" means any promissory note issued by any Lender in substantially
----
the form of Exhibit B hereto, duly executed by a Borrower and payable to the
---------
order of a Lender in the amount of its Commitment, including any amendment,
restatement, modification, renewal or replacement of such Note.
"Notice of Assignment" is defined in Section 12.3(B) hereof.
---------------------- ----------------
"Obligations" means all Loans, advances, debts, liabilities, obligations,
-----------
covenants and duties owing by any of the Borrowers or Subsidiary Obligors to
---
the Agent, the Arranger, or the Lenders, the Issuing Lenders, any Affiliate of
any of the foregoing or any Indemnitee, of any kind or nature, present or
future, arising under this Agreement, the Notes, any other Loan Document,
whether or not evidenced by any note, guaranty or other instrument, whether or
not for the payment of money, whether arising by reason of an extension of
credit, loan, guaranty, indemnification, or in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and
however acquired. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and disbursements, paralegals' fees
(in each case whether or not allowed), and any other sum chargeable to any of
the Borrowers or Subsidiary Obligors under this Agreement or any other Loan
Document.
"Other Taxes" is defined in Section 2.10(E)(ii) hereof.
------------ --------------------
"Participants" is defined in Section 12.2(A) hereof.
------------ ----------------
"Payment Date" means the last Business Day of each March, June, September
------------
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
----
thereto.
"Permitted Acquisition" is defined in Section 6.3(G) hereof.
---------------------- ---------------
"Permitted Existing Contingent Obligations" means the Contingent
--------------------------------------------
Obligations of the Borrowers and all other Subsidiaries of the Company
--
identified as such on Schedule 1.1.1 to this Agreement.
- ---------------
"Permitted Existing Indebtedness" means the Indebtedness of the Borrowers
-------------------------------
and all other Subsidiaries of the Company identified as such on Schedule 1.1.2
--------------
to this Agreement.
"Permitted Existing Investments" means the Investments of the Borrowers
--------------------------------
and all other Subsidiaries of the Company identified as such on Schedule 1.1.3
--------------
to this Agreement.
"Permitted Existing Liens" means the Liens on assets of the Borrowers or
-------------------------
all other Subsidiaries of the Company identified as such on Schedule 1.1.4 to
--------------
this Agreement.
"Person" means any natural person, corporation, firm, company, joint
------
venture, partnership, association, enterprise, trust or other entity or
organization, or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA in
----
respect of which the Company or any member of the Controlled Group is, or
within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA.
"Pledge Agreements" means those certain Pledge Agreements dated as of the
-----------------
Closing Date pursuant to which the Company pledges to the Agent for the
benefit of the Holders of Secured Obligations all of the Capital Stock of each
of the Subsidiary Borrowers and Subsidiary Obligors.
"Prime Rate" shall mean the rate of interest per annum announced from
-----------
time to time by the Agent as its prime lending rate in effect at its principal
office in New York, New York; each change in the Prime Rate shall be effective
on the date such change is announced. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate charged by any
customers. ABN AMRO Bank N.V. and the other Lenders may make commercial loans
or other loans at rates of interest at, above or below the Prime Rate.
"Pro Rata Share" means, with respect to any Lender, the percentage
----------------
obtained by dividing (A) such Lender's Commitment at such time (as adjusted
from time to time in accordance with the provisions of this Agreement) by (B)
the Aggregate Commitments at such time; provided, however, if all of the
-------- -------
Commitments are terminated pursuant to the terms of this Agreement, then "Pro
Rata Share" means the percentage obtained by dividing (x) the sum of all of
such Lender's Loans and L/C Obligations by (y) the aggregate amount of all
Loans and L/C Obligations.
"Purchasers" is defined in Section 12.3(A) hereof.
---------- ----------------
"Rate Option" means the applicable Eurodollar Rate or Base Rate.
------------
"Regulation G" means Regulation G of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by nonbank, nonbroker lenders for the
purpose of purchasing or carrying margin stock (as defined therein).
"Regulation T" means Regulation T of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by and to brokers and dealers of
securities for the purpose of purchasing or carrying margin stock (as defined
therein).
"Regulation U" means Regulation U of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying Margin Stock applicable to member banks of the Federal Reserve
System.
"Regulation X" means Regulation X of the Board of Governors of the
-------------
Federal Reserve System as from time to time in effect and any successor or
other regulation or official interpretation of said Board of Governors
relating to the extension of credit by foreign lenders for the purpose of
purchasing or carrying margin stock (as defined therein).
"Reimbursement Obligation" is defined in Section 2.18 hereof.
------------------------- -------------
"Release" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
---
the indoor or outdoor environment, including the movement of Contaminants
through or in the air, soil, surface water or groundwater.
"Replacement Lender" is defined in Section 2.15 hereof.
------------------- -------------
"Reportable Event" means a reportable event as defined in Section 4043 of
----------------
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days
after such event occurs; provided, however, that a failure to meet the minimum
-------- -------
funding standards of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means Lenders whose Pro Rata Shares, in the aggregate,
----------------
are at least sixty-six and two-thirds percent (66-2/3%), provided, however,
-------- -------
that, if any of the Lenders shall have failed to fund its Revolving Credit
Share of any Loan requested by any Borrower which such Lenders are obligated
to fund under the terms of this Agreement and any such failure has not been
cured, then for so long as such failure continues, "Required Lenders" means
Lenders (excluding all Lenders whose failure to fund such Loans have not been
so cured) whose Pro Rata Shares represent at least sixty-six and two-thirds
percent (66-2/3%) of the aggregate Pro Rata Shares of such non-defaulting
Lenders; provided, further, however, that, if the Commitments have been
-------- ------- -------
terminated pursuant to the terms of this Agreement, "Required Lenders" means
Lenders (without regard to such Lenders' performance of their respective
obligations hereunder) whose aggregate ratable shares (stated as a percentage)
of the aggregate outstanding principal balance of all Loans and L/C
Obligations are at least sixty-six and two-thirds percent (66-2/3%).
"Requirements of Law" means, as to any Person, the charter and by-laws or
-------------------
other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, T, U and X, ERISA, the Fair Labor Standards Act,
the Worker Adjustment and Retraining Notification Act, Americans with
Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit or environmental,
labor, employment, occupational safety or health law, rule or regulation,
including Environmental, Health or Safety Requirements of Law.
"Reserve Requirement" means the maximum reserve requirement, as
--------------------
prescribed by the Board of Governors of the Federal Reserve System (or any
---
successor) with respect to "Eurodollar liabilities" or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Loans is determined or category of extensions of
credit or other assets which includes loans by a non-United States office of
any Lender to United States residents.
"Reset Date" is defined in Section 1.2.
----------- ------------
"Restricted Junior Payment" means (i) any dividend or other distribution,
-------------------------
direct or indirect, on account of any ownership, membership or other Equity
Interest in the Company now or hereafter outstanding, except a dividend
payable solely in additional interests of the same type, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any ownership, membership or other Equity
Interest in the Company or any such interests or shares of any class of
Capital Stock of the Company now or hereafter outstanding, (iii) any payment
made to redeem, purchase, repurchase or retire, or to obtain the surrender of,
any outstanding options or other rights to acquire any ownership, membership
or other Equity Interests in the Company and (iv) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of any ownership, membership or other Equity
Interests in the Company or of a claim for reimbursement, indemnification or
contribution arising out of or related to any such claim for damages or
rescission.
"Revolving Advance" means a borrowing hereunder consisting of the
------------------
aggregate amount of the several ratable Revolving Loans made by the Lenders
-
having Commitments to the Company of the same Type and, in the case of
Eurodollar Advances, denominated in the same currency and for the same
Interest Period.
"Revolving Credit Availability" means, at any particular time, the amount
-----------------------------
by which the Aggregate Commitment at such time exceeds the Dollar Amount of
the Revolving Credit Obligations at such time.
"Revolving Credit Obligations" means, at any particular time, the sum of
-----------------------------
(i) the outstanding principal Dollar Amount of the Revolving Loans at such
time, plus (ii) the L/C Obligations at such time.
----
"Revolving Credit Share" means, with respect to any Lender, the
------------------------
percentage obtained by dividing (A) such Lender's Commitment at such time by
---
(B) the Aggregate Commitment at such time.
"Revolving Loan" is defined in Section 2.1.
--------------- ------------
"Risk-Based Capital Guidelines" is defined in Section 3.2 hereof.
------------------------------- ------------
"Secured Obligations" means, collectively, (i) the Obligations and (ii)
--------------------
all Hedging Obligations owing to one or more of the Lenders (or any agency or
Affiliate thereof).
"S&P" means Standard & Poor's Ratings Group.
---
"Single Employer Plan" means a Plan maintained by the Company or any
----------------------
member of the Controlled Group for employees of the Company or any member of
the Controlled Group.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
----------
outstanding Capital Stock having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any company, partnership, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a direct or indirect Subsidiary of the Company.
"Subsidiary Borrowers" means those Borrowers which are Subsidiaries of
---------------------
the Company.
"Subsidiary Obligors" means Purina Korea, Inc., a corporation organized
--------------------
under the laws of Korea, Industrias Purina S.A. de C.V., a company organized
under the laws of Mexico, Purina Colombiana S.A., a company organized under
the laws of Colombia, [the Company's Brazilian subsidiary, a company organized
under the laws of Brazil,] Purina Philippines, Inc., a corporation organized
under the laws of the Philippines, and Purina de Venezuela, V.A., a company
organized under the laws of Venezuela.
"Taxes" is defined in Section 2.10(E)(i) hereof.
----- -------------------
"Termination Date" means the earlier of (a) March 31, 2001 or (b) the
-----------------
date of termination of the Commitments pursuant to Section 8.1.
------------
"Termination Event" means (i) a Reportable Event with respect to any
------------------
Benefit Plan; (ii) the withdrawal of the Company or any member of the
Controlled Group from a Benefit Plan during a plan year in which the Company
or such Controlled Group member was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or the cessation of operations which results in
the termination of employment of twenty percent (20%) of Benefit Plan
participants who are employees of the Company or any member of the Controlled
Group; (iii) the imposition of an obligation on the Company or any member of
the Controlled Group under Section 4041 of ERISA to provide affected parties
written notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan; (v) any event or condition which
might constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Benefit Plan; or (vi) the
partial or complete withdrawal of the Company or any member of the Controlled
Group from a Multiemployer Plan.
"Total Debt" means the sum of all Indebtedness of the Company and its
-----------
Subsidiaries (including, without limitation and without duplication, standby
letters of credit (whether on or off-balance sheet)) minus ordinary course
-----
liability for trade indebtedness (including reimbursement under commercial
letters of credit).
"Tranche C Obligations" means the Obligations of the Borrowers other than
---------------------
Purina Korea, Inc.
"Tranche D Obligations" means the Obligations of the Subsidiary Obligors.
---------------------
"Transferee" is defined in Section 12.5 hereof.
---------- -------------
"Type" means, with respect to any Advance, its nature as a Base Rate
----
Advance or a Eurodollar Advance or a Korean Eurodollar Advance or a Korean Won
Advance.
"Unmatured Default" means an event which, but for the lapse of time or
------------------
the giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms. Any accounting terms used in
this Agreement which are not specifically defined herein shall have the
meanings customarily given them in accordance with United States generally
accepted accounting principles in existence as of the date hereof.
1.2 Currency Equivalents. Not later than 1:00 p.m., New York time or
---------------------
Seoul, Korea time, as applicable, on each Calculation Date, the Agent shall
(i) determine the Exchange Rate as of such Calculation Date with respect to
Korean Won and (ii) give notice thereof to the Company and the Lenders. The
Exchange Rates so determined shall become effective immediately with respect
to any new Loans being made or Letters of Credit being issued on any
Calculation Date and otherwise on the fifth Business Day immediately following
the relevant Calculation Date (a "Reset Date"), shall remain effective until
the next succeeding Reset Date and shall during the period of their
effectiveness be employed in making any computation of currency equivalents
required to be made under this Agreement.
ARTICLE II: THE CREDITSARTICLE II THE CREDITS
-------------------------------------------------------
2.1 Revolving Loans to the Company and the Subsidiary Borrowers. Upon
-----------------------------------------------------------
the satisfaction of the conditions precedent set forth in Sections 4.1 and 4.2
------------ ---
hereof, from and including the date of this Agreement and prior to the
Termination Date, each Lender with a Commitment severally and not jointly
agrees, on the terms and conditions set forth in this Agreement, to make
revolving loans to the Company and/or the Subsidiary Borrowers from time to
time, in Dollars or, with respect to Purina Korea, Inc., Korean Won, in a
Dollar Amount, not to exceed such Lender's Revolving Credit Share of the
Dollar Amount of the Revolving Credit Availability at such time (each
individually, a "Revolving Loan" and, collectively, the "Revolving Loans");
provided, however, at no time shall the Dollar Amount of the Revolving Credit
------ -------
Obligations in Korean Won exceed the Maximum Korean Won Commitment other than
as a result of currency fluctuations and then only to the extent permitted in
Section 2.2(B); provided, further, however, at no time shall the amount of the
-------------- -------- ------- -------
Revolving Credit Obligations owed by any of the Borrowers pursuant to this
Agreement exceed the corresponding amounts listed below:
Agribrands International, Inc. $ 5,000,000
[Canadian Subsidiary] $ 6,500,000
Purina Italia S.p.A. $ 4,000,000
Purina Espana, S.A. $ 2,500,000
Purina Hungaria Animal Feed
Production & Trading Company Ltd. $ 2,000,000
Purina Korea, Inc. $15,000,000
Each Revolving Advance under this Section 2.1 shall consist of Revolving Loans
-----------
made by each such Lender ratably in proportion to such Lender's respective
Revolving Credit Share. Subject to the terms of this Agreement, the Borrowers
may borrow, repay and reborrow at any time prior to the Termination Date. The
Revolving Loans (other than any Korean Won Advances or Korean Eurodollar
Advances) shall initially be Base Rate Loans and thereafter may be continued
as Base Rate Loans or converted into Eurodollar Loans in the manner provided
in Section 2.6 and subject to the other conditions and limitations therein set
-----------
forth and set forth in this Article II. Korean Won Advances and Korean
-----------
Eurodollar Advances shall bear interest at the rates prescribed in Section
-------
2.4(c). On the Termination Date, the outstanding principal balance of the
---
Revolving Loans shall be paid in full by the applicable Borrower and prior to
the Termination Date prepayments of the Revolving Loans shall be made if and
to the extent required in Section 2.2(B).
---------------
2.2 Prepayments2 Prepayments. (A) Optional Payments. Upon prior
----------- ----------- -----------------
notice to the Agent which notice shall be given not later than 11:00 a.m. (New
York time) on the date of payment, the Borrowers may from time to time repay
or prepay, without penalty or premium all or any part of outstanding Base Rate
Advances. Subject to payment of all amounts payable pursuant to Section 3.4
-----------
upon not less than (x) five (5) Business Days' prior notice with respect to
Advances to Purina Korea, Inc. and (y) two (2) Business Day's prior notice
with respect to all other Advances, in each case to the Agent which notice
shall be given not later than 11:00 a.m. (New York time or Seoul, Korea time,
as applicable), the Borrowers may from time to time repay or prepay all or any
part of the Korean Eurodollar Advances or Korean Won Advances, or Eurodollar
Advances, respectively. Unless the aggregate outstanding principal balance of
the applicable Loans is to be prepaid in full, voluntary prepayments of the
Loans shall be in the same aggregate minimum amounts and integral multiples in
excess of such amounts as are required for borrowings of Loans of the same
Type and in the same currency as set forth in Section 2.5.
------------
(B) Mandatory Prepayments. If at any time the Dollar Amount of the
----------------------
Revolving Credit Obligations is greater than 105% of the Aggregate Commitment,
the Borrowers shall within five (5) Business Days after receiving notice
thereof from the Agent make a mandatory prepayment (i) of the Obligations in
an amount equal to such excess and (ii) of the Korean Won Loans and/or L/C
Obligations denominated in Korean Won in an aggregate amount such that after
giving effect thereto the Dollar Amount of the sum of the Korean Won Loans and
L/C Obligations denominated in Korean Won is less than or equal to the Maximum
Korean Won Commitment.
2.3 Method of Borrowing. The Agent shall notify each Lender having
---------------------
Commitments by 12:00 noon (New York time or Seoul, Korea time, as applicable)
of each Revolving Advance on the Borrowing Date of each Base Rate Advance, two
(2) Business Days before the Borrowing Date of each Eurodollar Advance, three
(3) Business Days before the Borrowing Date of each Korean Eurodollar Advance,
and five (5) Business Days before the Borrowing Date for each Korean Won
Advance, and, not later than 1:00 p.m. (New York time or Seoul, Korea time, as
applicable) on each Borrowing Date, each Lender having Revolving Credit
Commitments shall make available its Revolving Loan or Loans, in funds
immediately available in New York, New York to the Agent at its address
specified pursuant to Article XIII hereof unless the Agent has notified the
------------
Lenders that such Loan is to be made available to Purina Korea, Inc. at the
Agent's office in Seoul, Korea, in which case each Lender shall make available
its Revolving Loan or Loans, in funds immediately available to the Agent at
its office in Seoul, Korea not later than 1:00 p.m. at the Agent's office in
Seoul, Korea in Korean Won or Dollars, as requested. The Agent will promptly
make the funds so received from the Lenders available to the applicable
Borrower.
2.4 Method of Selecting Types and Interest Periods for Advances;
------------------------------------------------------------------
Determination of Applicable Margins, Interest on Advances to Purina Korea,
-----------------------------------------------------------------------
Inc. The Advances (other than Korean Won Advances or Korean Eurodollar
Advances) may be Base Rate Advances or Eurodollar Advances, or a combination
thereof, selected by the applicable Borrower in accordance with this Article
-------
II. Advances to Purina Korea, Inc., shall bear interest as prescribed in
-
Section 2.4(c). The applicable Borrower may select, in accordance with this
-
Article II, Rate Options and Interest Periods applicable to portions of the
----------
Revolving Loans.
-
(a) Method of Selecting Types and Interest Periods for Advances. The
------------------------------------------------------------
applicable Borrower shall select the Type of Advance and, in the case of each
Eurodollar Advance or Korean Eurodollar Advance, the Interest Period
applicable to each Advance from time to time. The applicable Borrower shall
give the Agent irrevocable notice (a "Borrowing Notice") not later than 11:00
a.m., New York time (or Seoul time for Korean Won Advances or Korean
Eurodollar Advance) (i) on the Borrowing Date of each Base Rate Advance; (ii)
two (2) Business Days before the Borrowing Date for each Eurodollar Advance;
(iii) three (3) Business Days before the Borrowing Date for each Korean
Eurodollar Advance; and (iv) five (5) Business Days before the Borrowing Date
for each Korean Won Advance, specifying: (i) the Borrowing Date (which shall
be a Business Day) of such Advance; (ii) the aggregate amount of such Advance;
(iii) the Type of Advance selected, as applicable; and (iv) in the case of
each Eurodollar Advance or Korean Eurodollar Advance, the Interest Period.
There shall be (x) no more than twenty (20) Interest Periods in effect with
respect to all of the Revolving Loans at any time, and (y) with respect to any
Borrower individually, no more than four (4) Interest Periods in effect with
respect to all of the Revolving Loans made to such Borrower at any time, in
each case, with Interest Periods for the same term but in different currencies
or to different Borrowers being treated as separate Interest Periods. Each
Base Rate Advance shall bear interest from and including the date of the
making of such Advance to (but not including) the date of repayment thereof at
the Base Rate, changing when and as such Base Rate changes. Each Eurodollar
Advance, Korean Eurodollar Advance and Korean Won Advance shall bear interest
from and including the first day of the Interest Period applicable thereto to
(but not including) the last day of such Interest Period at the interest rate
determined as applicable to such Advance. All Obligations (other than
Advances) shall bear interest from and including the date such amount is
payable under the terms of this Agreement or the other Loan Documents to (but
not including) the date of repayment thereof at the Base Rate, changing when
and as such Base Rate changes. Changes in the rate of interest on that
portion of any Advance maintained as a Base Rate Loan or such other
Obligations will take effect simultaneously with each change in the applicable
Base Rate.
(b) Determination of Applicable Margins, Applicable Letter of Credit Fee
--------------------------------------------------------------------
and Applicable Facility Fee.
------------------------------
(i) Definitions. As used in this Section 2.4(b) and in this Agreement,
----------- --------------
the following terms shall have the following meanings:
"Applicable Margins", "Applicable Facility Fee" and "Applicable Letter of
------------------ ----------------------- --------------------
Credit Fee" shall mean the Applicable Base Rate Margins and/or Applicable
-----------
Eurodollar Margins, with respect to Loans and the Applicable Facility Fee
----
and/or Applicable Letter of Credit Fee, with respect to fees payable as the
----
case may be. The Applicable Margins shall be determined, in accordance with
--
the provisions of this Section 2.4(b), by reference to the following:
- ---------------
0564993.03 - 25 -
(ii) Determination of Applicable Margins, Applicable Letter of Credit
-----------------------------------------------------------------
Fee and Applicable Facility Fee.
---------------------------------
(A) The Applicable Margins in respect of any Loan, the Applicable Letter
of Credit Fee payable under Section 2.20 and the Applicable Facility Fee
-------------
payable under Section 2.10(c) shall be determined by reference to the table
----------------
set forth in clause (i) above, as applicable, on the basis of the EBITDA
-----------
Contribution Ratio determined by reference to the most recent financial
statements delivered pursuant to Section 6.1(A)(i) or 6.1(A)(ii); provided,
----------------- ---------- --------
however, for the period from the Closing Date until August 31, 1998, the
-----
Applicable Margins, Applicable Letter of Credit Fee, Applicable Facility Fee
---
shall be at Level II; provided, further that Level IV shall be applicable only
-------- -------
in the event that the Company shall have a rating of equal to or better than
BBB- from S&P or Baa3 from ▇▇▇▇▇'▇ and, provided, further, however, that the
-------- ------- -------
Borrowers shall not be eligible for any reduction in the pricing prescribed in
this Section 2.4 in the event that as of the date of determination, the
------------
Company's Consolidated EBITDA for the most recently completed four fiscal
-
quarters (or, prior to March 31, 1999, the period from the Closing Date to the
end of the most recently completed quarter) shall be less than 80% of the
Company's forecasted Consolidated EBITDA for such period as set forth on
Exhibit G hereto.
(B) Upon receipt of the financial statements delivered pursuant to
Section 6.1(A)(i) or Section 6.1(A)(ii), as applicable, the Applicable Margins
------------ ------------------
for all outstanding Loans, the Applicable Letter of Credit Fee and Applicable
Facility Fee shall be adjusted, such adjustment being effective on the first
(1st) Business Day after receipt of such financial statements and the
Compliance Certificate to be delivered in connection therewith; provided,
--------
however, if the Borrowers shall not have timely delivered such financial
---
statements in accordance with Section 6.1(A)(i) or Section 6.1(A)(ii), as
- ------------------ ------------------
applicable, beginning with the date upon which such financial statements
should have been delivered and continuing until such financial statements are
delivered, it shall be assumed for purposes of determining the Applicable
Margins, the Applicable Facility Fee and the Applicable Letter of Credit Fee
that the EBITDA Contribution Ratio was greater than 1.50 to 1.0.
(C) Interest on Advances to Purina Korea, Inc. Advances to Purina
----------------------------------------------
Korea, Inc. in Korean Won shall bear interest in the per annum rate equal to
the Korean CD Rate minus 6.00% per annum. Advances to Purina Korea, Inc. in
-----
Dollars shall bear interest at a rate per annum equal to the Korean Eurodollar
Rate.
2.5 Minimum Amount of Each Advance. Each Eurodollar Advance or Korean
------------------------------
Eurodollar Advance shall be in the minimum amount of $1,000,000 (and in
multiples of $100,000 if in excess thereof). Each Base Rate Advance shall be
in the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
thereof), provided, however, that any Base Rate Advance may be in the amount
-------- -------
of the unused Aggregate Commitment. Each Korean Won Advance shall be in the
minimum amount of [________] Won (and in multiples of [________] Won if in
excess thereof).
2.6 Method of Selecting Types and Interest Periods for Conversion and
------------------------------------------------------------------
Continuation of Advances.
------------------------
(A) Right to Convert. The Borrowers may elect from time to time,
------------------
subject to the provisions of Section 2.3, Section 2.4, and this Section 2.6 to
----------- ----------- -----------
convert all or any part of a Loan of any Type into any other Type or Types of
Loans; provided that any conversion of any Eurodollar Advance or Korean
--------
Eurodollar Advance shall be made on, and only on, the last day of the Interest
Period applicable thereto.
(B) Automatic Conversion and Continuation. Base Rate Loans shall continue as
-------------------------------------
Base Rate Loans unless and until such Base Rate Loans are converted into
Eurodollar Loans. Eurodollar Loans shall continue as Eurodollar Loans until
the end of the then applicable Interest Period therefor, at which time such
Eurodollar Loans shall be automatically converted into Base Rate Loans unless
the applicable Borrower shall have given the Agent requesting that, at the end
of such Interest Period, such Eurodollar Loans continue as a Eurodollar Loan.
Korean Eurodollar Advances shall continue as Korean Eurodollar Advances until
repaid and Korean Won Advances shall continue as Korean Won Advances until
repaid.
(C) No Conversion Post-Default or Post-Unmatured Default.
---------------------------------------------------------
Notwithstanding anything to the contrary contained in Section 2.6(A) or
--- --------------
Section 2.6(B), no Loan may be converted into or continued as a Eurodollar
---------
Loan except with the consent of the Required Lenders when any Default or
Unmatured Default has occurred and is continuing.
(D) Conversion/Continuation Notice. The Borrower shall give the Agent
------------------------------
irrevocable notice (a "Conversion/Continuation Notice") of each conversion of
a Base Rate Loan into a Eurodollar Loan or continuation of a Eurodollar Loan
not later than 11:00 a.m. (New York time) three Business Days before the
proposed date of such conversion or continuation, specifying: (1) the
requested date (which shall be a Business Day) of such conversion or
continuation; (2) the amount and Type of the Loan to be converted or
continued; and (3) the amounts of Eurodollar Loan(s) into which such Loan is
to be converted or continued and the duration of the Interest Periods
applicable thereto.
2.7 Default Rate. After the occurrence and during the continuance of a
------------
Default, the interest rate(s) applicable to the Obligations and the letter of
credit fee payable under Section 2.20 with respect to Letters of Credit shall
------------
be increased by two percent (2.0%) per annum above the Base Rate, Eurodollar
Rate, Korean CD Rate, Korean Eurodollar Rate or Applicable Letter of Credit
Fee, as applicable.
2.8 Method of Payment. All payments of principal, interest, and fees
-------------------
hereunder shall be made, without setoff, deduction or counterclaim, to the
Agent (i) at the Agent's office in New York, New York (or, in the case of
Advances to Purina Korea, Inc., Seoul, Korea) in immediately available funds
or at any other Lending Installation of the Agent specified in writing by 9:00
a.m. (New York time) on the day before the date when due) by the Agent to the
Company, by 12:00 noon (New York time) with respect to Advances to Borrowers
other than Purina Korea, Inc. and 12:00 noon (Seoul time) with respect to
Advances to Purina Korea, Inc. on the date when due and shall be made ratably
among the applicable Lenders with respect to Revolving Advances in proportion
to their Revolving Credit Shares (unless such amount is not to be shared
ratably in accordance with the other terms hereof). Each Advance shall be
repaid or prepaid in the currency in which it was made in the amount borrowed
and interest payable thereon shall be paid in such currency. Each payment
delivered to the Agent for the account of any Lender shall be delivered
promptly by the Agent to such Lender in the same type of funds which the Agent
received at its address specified pursuant to Article XIII or at any Lending
------------
Installation specified in a notice received by the Agent from such Lender by
9:00 a.m. (New York time) on the Business Day prior to the date such payment
is to be made. The Borrowers authorize the Agent to charge any account of any
Borrower maintained with the Agent, as applicable, for each payment of
principal, interest and fees as it becomes due hereunder if not paid when due.
Notwithstanding the foregoing provisions of this Section, if, after the making
of any Advance in Korean Won, currency control or exchange regulations are
imposed in the Republic of Korea with the result that different types of such
currency (the "New Currency") are introduced and the type of currency in which
the Advance was made (the "Original Currency") no longer exists or Purina
Korea, Inc. is not able to make payment to the Agent for the account of the
applicable Lenders in such Original Currency, then all payments to be made by
Purina Korea, Inc. hereunder or under the Notes in such Original Currency
shall be made in such amount and such type of the New Currency or Dollars as
shall be equivalent to the amount of such payment otherwise due hereunder or
under the Notes in the Original Currency as determined as of the date of
repayment, it being the intention of the parties hereto that the Borrowers
take all risks of the imposition of any such currency control or exchange
regulations.
2.9 Notes, Telephonic Notices. The Agent and the Lenders are authorized
-------------------------
to record the principal amount of each of the Loans and each repayment with
respect to Loans on the schedule attached to the applicable Note issued to
evidence the Revolving Loans; provided, however, that the failure to so record
-------- -------
shall not affect the applicable Borrower's obligations under any such Note.
2.10 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest
-------------------------------------------------------------------
and Fee Basis; Taxes; Loan and Control Accounts
------------------------------------------------------
(A) Promise to Pay. Each of the Borrowers unconditionally promises to
--------------
pay when due the principal amount of each Loan made to it and all other
Obligations incurred by it, and to pay all unpaid interest accrued thereon, in
accordance with the terms of this Agreement and the Notes, it being understood
and agreed that each Subsidiary Borrower and Subsidiary Obligor shall be
obligated to repay only the Loans made to it and pay the other Obligations
incurred by it and certain other Loans made and Obligations incurred by other
Subsidiary Borrowers and Subsidiary Obligors.
(B) Interest Payment Dates. Interest accrued on each Base Rate Loan
------------------------
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof, on any date on which the Base Rate Loan is
prepaid, whether due to acceleration or otherwise, and at maturity (whether by
acceleration or otherwise). Interest accrued on each Eurodollar Loan or
Korean Eurodollar Loan or Korean Won Loan shall be payable on the last day of
its applicable Interest Period, on any date on which the Eurodollar Loan or
Korean Eurodollar Loan is prepaid, whether by acceleration or otherwise, and
at maturity; provided, interest accrued on each Eurodollar Loan or Korean
--------
Eurodollar Loan having an Interest Period longer than three months shall also
be payable on the last day of each three-month interval during such Interest
Period. Interest accrued on the principal balance of all other Obligations
shall be payable in arrears (i) upon repayment thereof in full or in part,
(ii) if not theretofore paid in full, at the time such other Obligation
becomes due and payable (whether by acceleration or otherwise) and (iii) if
not theretofore paid in full, on demand, commencing on the first such day
following the date such Obligation became payable pursuant to the terms of
this Agreement or the other Loan Documents.
(C) Fees. (i) The Company shall pay or cause the appropriate
----
Subsidiary to pay to the Agent, for the account of the Lenders in accordance
with their Pro Rata Shares, a facility fee accruing at the rate of the
Applicable Facility Fee per annum from and after the Closing Date until the
Termination Date on the sum of the Aggregate Commitment in effect from time to
time minus the Maximum Korean Won Commitment. All such facility fees payable
under this clause (C) shall be payable quarterly in arrears on each Payment
-----------
Date commencing June 30, 1998 and on the Termination Date. In addition, the
Company shall pay to the Agent, for the account of the Lenders in accordance
with their Pro Rata Shares, a Korean facility fee accruing at the rate of
3.00% per annum payable on the Maximum Korean Won Commitment from and after
the Closing Date until the Termination Date, payable quarterly in arrears on
each Payment Date commencing June 30, 1998 and on the Termination Date.
(ii) The Company agrees to pay or cause the appropriate Subsidiary to
pay to the Agent the fees set forth in the letter agreement between the Agent
and the Company dated February 25, 1998.
(D) Interest and Fee Basis. Interest on Eurodollar Loans, Korean
-------------------------
Eurodollar Loans and Korean Won Loans and fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest on Base Rate Loans
shall be calculated for actual days elapsed on the basis of a 365/366-day
year. Interest shall be payable for the day an Obligation is incurred but not
for the day of any payment on the amount paid if payment is received prior to
12:00 noon (New York time) with respect to Advances (other than Advances to
Purina Korea, Inc.) and 12:00 noon (Seoul time) with respect to Advances to
Purina Korea, Inc. If any payment of principal of or interest on a Loan or
any payment of any other Obligations shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment; provided,
--------
however, if such extension of payment would cause payment of principal or
---
interest on any Eurodollar Loan or Korean Eurodollar Loan to be made in the
next following calendar month, such payment shall be made on the immediately
preceding Business Day.
(E) Taxes.
-----
(i) Any and all payments by any of the Borrowers or Subsidiary Obligors
hereunder shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings or any liabilities with respect thereto including those arising
after the date hereof as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority but excluding, in the case of each Lender and the
Agent, such taxes (including income taxes, franchise taxes and branch profit
taxes) as are imposed on or measured by such Lender's or Agent's, as the case
may be, income by the United States of America or any Governmental Authority
of the jurisdiction under the laws of which such Lender or Agent, as the case
may be, is organized or incorporated (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings, and liabilities which the Agent or
a Lender determines to be applicable to this Agreement, the other Loan
Documents, the Commitments, the Loans or the Letters of Credit being
hereinafter referred to as "Taxes"). Subject to Section 2.10(E)(vii), if any
---------------------
of the Borrowers or Subsidiary Obligors shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under the other Loan
Documents to any Lender or the Agent, (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.10(E))
---------------
such Lender or Agent (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) such Borrower or
Subsidiary Obligor shall make such deductions, and (iii) such Borrower or
Subsidiary Obligor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. If a
withholding tax of the United States of America or any other Governmental
Authority shall be or become applicable (y) after the date of this Agreement,
to such payments by any of the Borrowers made to the Lending Installation or
any other office that a Lender may claim as its Lending Installation, or (z)
after such Lender's selection and designation of any other Lending
Installation, to such payments made to such other Lending Installation, such
Lender shall use reasonable efforts to make, fund and maintain its Loans and
issue Letters of Credit through another Lending Installation of such Lender in
another jurisdiction so as to reduce the Borrowers' liability hereunder, if
the making, funding or maintenance of such Loans and the issuance of such
Letters of Credit through such other Lending Installation of such Lender does
not, in the good faith judgment of such Lender, otherwise adversely affect
such Loans, or obligations under the Commitments or such Lender. With respect
to such deduction or withholding for or on account of any Taxes and to confirm
that all such Taxes have been paid to the appropriate Governmental
Authorities, the Company shall promptly (and in any event not later than
thirty (30) days after receipt) furnish to each Lender and the Agent such
certificates, receipts and other documents as may be required (in the judgment
of such Lender or the Agent) to establish any tax credit to which such Lender
or the Agent may be entitled. A payment may be made by the Company or by the
Subsidiary that is the Borrower with respect to the Loan that gives rise to
such payment.
(ii) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder, from the issuance
of Letters of Credit hereunder, or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the other Loan
Documents, the Commitments, the Loans or the Letters of Credit (hereinafter
referred to as "Other Taxes").
(iii) Subject to Section 2.10(E)(vii), the Company indemnifies each
---------------------
Lender and the Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable under this Section 2.10(E)) paid by such Lender
---------------
or the Agent (as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted. This
indem-nification shall be made within thirty (30) days after the date such
Lender or the Agent (as the case may be) makes written demand therefor. A
certificate as to any additional amount payable to any Lender or the Agent
under this Section 2.10(E) submitted to the Company and the Agent by such
----------------
Lender or the Agent shall show in reasonable detail the amount payable and the
calculations used to determine such amount and shall, absent manifest error,
be final, conclusive and binding upon all parties hereto.
(iv) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by any Borrower or Subsidiary Obligor, such Borrower or Subsidiary
Obligor shall furnish to the Agent the original or a certified copy of a
receipt evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement of any of
the Borrowers or Subsidiary Obligor hereunder, the agreements and obligations
of the Borrowers and Subsidiary Obligor contained in this Section 2.10(E)
---------------
shall survive the payment in full of principal and interest hereunder, the
termination of the Letters of Credit and the termination of this Agreement.
(vi) Without limiting the obligations of the Borrowers and Subsidiary
Obligor under this Section 2.10(E) (except as expressly provided by subsection
--------------- ----------
(vii) below), (A) each Lender that has a Commitment that is not created or
-----
organized under the laws of the United States of America or a political
---
subdivision thereof shall deliver to the Company and the Agent on or before
---
the Closing Date, or, if later, the date on which such Lender becomes a Lender
--
pursuant to Section 12.3 hereof, a true and accurate certificate executed in
------------
duplicate by a duly authorized officer of such Lender, in a form satisfactory
to the Company and the Agent, to the effect that such Lender is capable under
the provisions of an applicable tax treaty concluded by the United States of
America (in which case the certificate shall be accompanied by two executed
copies of Form 1001 of the IRS) or under Section 1442 of the Code (in which
case the certificate shall be accompanied by two copies of Form 4224 of the
IRS) of receiving payments of interest and fees hereunder without deduction or
withholding of United States federal income tax and (B) each Lender shall
deliver to the Company and the Agent on or before the Closing Date, or, if
later, the date on which such Lender becomes a Lender, a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender,
in a form satisfactory to the Company and the Agent, to the effect that such
Lender is capable under the provisions of an applicable tax treaty or under
the provisions of applicable law of receiving payments of interest with
respect to the Advances to Purina Korea, Inc. hereunder without deduction or
withholding of income tax. Each such Lender further agrees to deliver to the
Company and the Agent, from time to time a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender
substantially in a form satisfactory to the Company and the Agent, before or
promptly upon the occurrence of any event requiring a change in the most
recent certificate previously delivered by it pursuant to this Section
-------
2.10(E)(vi). Further, each Lender which delivers a certificate accompanied by
----
Form 1001 of the IRS covenants and agrees to deliver to the Company and the
Agent within fifteen (15) days prior to January 1, 1999, and every third (3rd)
anniversary of such date thereafter, on which this Agreement is still in
effect, another such certificate and two accurate and complete original signed
copies of Form 1001 (or any successor form or forms required under the Code or
the applicable regulations promulgated thereunder), and each Lender that
delivers a certificate accompanied by Form 4224 of the IRS covenants and
agrees to deliver to the Company and the Agent within fifteen (15) days prior
to the beginning of each subsequent taxable year of such Lender during which
this Agreement is still in effect, another such certificate and two accurate
and complete original signed copies of IRS Form 4224 (or any successor form or
forms required under the Code or the applicable regulations promulgated
thereunder).
Each such certificate shall certify pursuant to this Section 2.10(E)(vi)
-------------------
as to one of the following:
(a) that such Lender is capable of receiving payments of interest
hereunder without deduction or withholding of United States of America federal
income tax;
(b) that such Lender is not capable of receiving payments of interest
hereunder without deduction or withholding of the applicable income tax as
specified therein but is capable of recovering the full amount of any such
deduction or withholding from a source other than the Borrowers and the
Subsidiary Obligor and will not seek any such recovery from the Borrowers or
the Subsidiary Obligor; or
(c) that, as a result of the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a Governmental
Authority or any change in the interpretation or application thereof by a
Governmental Authority after the date such Lender became a party hereto, such
Lender is not capable of receiving payments of interest hereunder without
deduction or withholding of applicable income tax as specified therein and
that it is not capable of recovering the full amount of the same from a source
other than the Borrowers and the Subsidiary Obligors.
Each Lender shall promptly furnish to the Company and the Agent such
additional documents as may be reasonably required by the Company or the Agent
to establish any exemption from or reduction of any Taxes or Other Taxes
required to be deducted or withheld and which may be obtained without undue
expense to such Lender.
A Borrower shall provide such information and take such action as a
Lender may reasonably request without undue expense to such Borrower to enable
the Lender to comply with the foregoing provisions of this subsection (vi).
---------------
(vii) None of the Borrowers shall be required to pay any additional amounts
under subsection (i) above or indemnification under subsection (iii) above to
-------------- ----------------
the extent that the obligation to pay such additional amounts or
indemnification would not have arisen but for: (a) a failure by the Lender or
Agent to comply with the provisions of subsection (vi) above; or (b) the
---------------
certifications referred to in subsection (vi) above not being true.
----------------
(viii) Each Lender and the Agent agree that if it shall become aware
that it is entitled to receive a refund in respect of Taxes or Other Taxes as
to which it has been indemnified by the Company or any other Borrower pursuant
to this Section 2.10(E), it shall promptly notify the Company of the
----------------
availability of such refund and at the request of the Company will apply for
-
such refund; provided, however the failure to provide such notice shall not
relieve the Company or any other Borrower of any of their Obligations
hereunder. Upon receipt of such refund, the Lender or Agent agrees to pay
such refund to the applicable Borrower along with any interest actually
received from the taxing authority, net of all out-of-pocket expenses of such
Lender or Agent incurred with respect to such refund.
(F) Loan Account. Each Lender shall maintain in accordance with its
-------------
usual practice an account or accounts (a "Loan Account") evidencing the
Obligations of each of the Borrowers to such Lender owing to such Lender from
time to time, including the amount of principal and interest payable paid to
such Lender from time to time hereunder and under the Notes.
(G) Entries Binding. The entries made in each Loan Account shall be
----------------
conclusive and binding for all purposes, absent manifest error, unless the
Company objects to information contained in the Loan Account within thirty
(30) days of the Company's receipt of such information.
2.11 Notification of Advances, Interest Rates, Prepayments and Aggregate
-------------------------------------------------------------------
Commitment Reductions. Promptly after receipt thereof, the Agent will notify
----------------------
each applicable Lender of the contents of each Aggregate Commitment reduction
notice, Borrowing Notice for Revolving Loans, Conversion/Continuation Notice
with respect to Revolving Loans, and repayment notice received by it
hereunder. The Agent will notify each applicable Lender of the interest rate
applicable to each Eurodollar Loan, Korean Eurodollar Loan and Korean Won Loan
promptly upon determination of such interest rate, and the Agent will give
each applicable Lender prompt notice of each change in the Alternate Base
Rate.
2.12 Lending Installations. Each Lender may book its Loans at any
----------------------
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Notes shall be deemed held by each
Lender for the benefit of such Lending Installation. Each Lender may, by
written or facsimile notice to the Agent and the Borrowers, designate a
Lending Installation through which Loans will be made by it and for whose
account Loan payments are to be made.
2.13 Non-Receipt of Funds by the Agent. Unless the applicable Borrower
---------------------------------
or a Lender, as the case may be, notifies the Agent prior to the date on which
it is scheduled to make payment to the Agent of (i) in the case of a Lender,
the proceeds of a Loan or (ii) in the case of a Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders for
the account of the applicable Lenders, that it does not intend to make such
payment, the Agent may assume that such payment has been made. The Agent may,
but shall not be obligated to, make the amount of such payment available to
the intended recipient in reliance upon such assumption. If such Lender or
Borrower, as the case may be, has not in fact made such payment to the Agent
the recipient of such payment shall, on demand by the Agent, repay to the
Agent the amount so made available together with interest thereon in respect
of each day during the period commencing on the date such amount was so made
available by the Agent until the date the Agent recovers such amount at a rate
per annum equal to (i) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (ii) in the case of payment by a Borrower, the
interest rate applicable to the relevant Loan.
2.14 Termination Date. This Agreement shall be effective until the
-----------------
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent
indemnity and reimbursement obligations) shall have been fully and
indefeasibly paid and satisfied, all financing arrangements among the
Borrowers and the Lenders shall have been terminated (other than under Hedging
Agreements) and all of the Letters of Credit shall have expired, been canceled
or terminated, all of the rights and remedies under this Agreement and the
other Loan Documents shall survive and the Agent shall be entitled to retain
its security interest in and to all existing and future Collateral for the
benefit of itself and the Holders of Secured Obligations.
2.15 Replacement of Certain Lenders. In the event a Lender ("Affected
------------------------------
Lender") shall have: (i) failed to fund its Revolving Credit Share of any
Advance requested by any Borrower which such Lender is obligated to fund under
the terms of this Agreement and which failure has not been cured, (ii)
requested compensation from any Borrower under Sections 2.10(E), 3.1 or 3.2 to
---------------- --- ---
recover Taxes, Other Taxes or other additional costs incurred by such Lender
which are not being incurred generally by the other Lenders, (iii) delivered a
notice pursuant to Section 3.3 claiming that such Lender is unable to extend
-----------
Eurodollar Loans to any Borrower for reasons not generally applicable to the
other Lenders, (iv) declined to extend the Termination Date or the expiry date
of the Aggregate Commitment with respect to the Tranche D Obligations pursuant
to Section 2.24, or (v) has invoked Section 9.2, then, in any such case, any
------------- -----------
Borrower or the Agent may make written demand on such Affected Lender (with a
copy to the Agent in the case of a demand by any Borrower and a copy to the
Borrowers in the case of a demand by the Agent) for the Affected Lender to
assign, and such Affected Lender shall use its best efforts to assign pursuant
to one or more duly executed assignment and acceptance agreements in
substantially the form of Exhibit D five (5) Business Days after the date of
---------
such demand, to one or more financial institutions that comply with the
provisions of Section 12.3(A) (and, if selected by the Borrowers is reasonably
---------------
acceptable to the Agent, and, so long as no Default shall have occurred and is
continuing, if selected by the Agent is reasonably acceptable to the Company)
which any Borrower or the Agent, as the case may be, shall have engaged for
such purpose ("Replacement Lender"), all of such Affected Lender's rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, its Commitment, all Loans owing to it, all of its
participation interests in existing Letters of Credit and its obligation to
participate in Letters of Credit hereunder) in accordance with Section 11.3.
------------
The Agent agrees, upon the occurrence of such events with respect to an
Affected Lender and upon the written request of any Borrower, to use its
reasonable efforts to obtain the commitments from one or more financial
institutions qualified to act as a Replacement Lender. Further, with respect
to such assignment the Affected Lender shall have concurrently received, in
cash, all amounts due and owing to the Affected Lender hereunder or under any
other Loan Document, including, without limitation, the aggregate outstanding
principal amount of the Loans owed to such Lender, together with accrued
interest thereon through the date of such assignment, amounts payable under
Sections 2.10(E), 3.1, and 3.2 with respect to such Affected Lender and
--------------- --- ---
compensation payable under Section 2.10(C) in the event of any replacement of
---- ---------------
any Affected Lender under clause (ii) or clause (iii) of this Section 2.15;
----------- ------------ ------------
provided that upon such Affected Lender's replacement, such Affected Lender
------
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.10(E), 3.1, 3.2, 3.4, and 9.7, as well as to any fees
---------------- --- --- --- ---
accrued for its account hereunder and not yet paid, and shall continue to be
obligated under Section 10.8. Upon the replacement of any Affected Lender
-------------
pursuant to this Section 2.15, the provisions of Section 8.2 shall continue to
------------ -----------
apply with respect to Advances which are then outstanding with respect to
which the Affected Lender failed to fund its Revolving Credit Share and which
failure has not been cured.
2.16 Letters of Credit. (a) Upon receipt of duly executed applications
-----------------
therefor, and such other documents, instructions and agreements as such
Issuing Lender may reasonably require, and subject to the provisions of
Article IV, the Agent shall, or any other Lender in its sole discretion may,
-----
issue standby or commercial letters of credit denominated in Dollars for the
account of the Company or one of the Subsidiary Borrowers or Subsidiary
Obligors or standby letters of credit denominated in Korean Won for the
account of Purina Korea, Inc., on terms as are satisfactory to such Issuing
Lender; provided, however, that no Letter of Credit will be issued hereunder
-------- -------
by an Issuing Lender if on the date of issuance, before or after taking such
Letter of Credit into account, (i) the Dollar Amount of the Revolving Credit
Obligations at such time would exceed the Aggregate Commitments at such time
or (ii) the amount (or with respect to standby Letters of Credit denominated
in Korean Won, the Dollar Amount) of the Revolving Credit Obligations owed by
any of the Borrowers or Subsidiary Obligors pursuant to this Agreement would
exceed the corresponding amounts listed below:
Agribrands International, Inc. $ 5,000,000
[Canadian Subsidiary] $ 6,500,000
Purina Italia S.p.A. $ 4,000,000
Purina Espana, S.A. $ 2,500,000
Purina Hungaria Animal Feed
Production & Trading Company Ltd. $ 2,000,000
Purina Korea, Inc. $15,000,000
Industrias Purina S.A. de C.V. $ 5,000,000
Purina Colombiana S.A. $ 5,000,000
[Brazilian Subsidiary] $ 5,000,000
Purina Philippines, Inc. $ 2,500,000
Purina de Venezuela, V.A. $ 2,500,000
and provided, further, that no Letter of Credit shall be issued which has an
-------- -------
expiration date more than one year after the date of issuance of such Letter
of Credit or an expiration date later than the date which is five (5) Business
Days immediately preceding (x) the Termination Date with respect to Letters of
Credit issued for the account of any Borrower and (y) the then effective
expiry date of the Aggregate Commitment for the Tranche D Obligations with
respect to any Letter of Credit issued for the account of any Subsidiary
Obligor; and provided, further, that all commercial Letters of Credit
-------- -------
requested hereunder shall be made denominated in Dollars. Each Letter of
Credit issued for the account of any Borrower may, upon the request of the
applicable Borrower, include a provision whereby such Letter of Credit shall
be renewed automatically for additional consecutive periods of 12 months or
less (but not beyond the date that is five Business Days prior to the
Termination Date) unless the Issuing Lender notifies the beneficiary thereof
at least 30 days prior to the then-applicable expiry date that such Letter of
Credit will not be renewed. Each Letter of Credit issued for the account of
any Subsidiary Obligor shall be renewed or extended at the request of the
applicable Subsidiary Obligor only with the consent of all of the Lenders.
Prior to issuing any Letter of Credit, the applicable Issuing Lender shall
request and the Agent shall provide confirmation that the request for such
Letter of Credit complies with the provisions of this Section 2.16(a). If the
------------
Agent notifies the applicable Issuing Lender that it is authorized to issue
such Letter of Credit, and the conditions described in Article IV have been
----------
satisfied, then such Issuing Lender shall issue such Letter of Credit as
requested. The applicable Issuing Lender shall give the Agent and each Lender
prompt notice of the issuance of any such Letter of Credit by it. Each
Issuing Lender shall furnish to the Agent and each Lender on the first
Business Day of each month a written report, with respect to each outstanding
Letter of Credit issued by such Issuing Lender, summarizing whether such
Letter of Credit is a standby or commercial Letter of Credit, the maximum
amount available to be drawn thereon, and the beneficiary and the issuance and
expiration dates thereof. Together with each such monthly report each
Issuing Lender shall provide the Agent a copy of each Letter of Credit issued
by such Issuing Bank during the previous month.
(b) Schedule 2.16(b) contains a schedule of certain letters of credit
issued for the account of certain Borrowers and Subsidiary Obligors prior to
the Closing Date by certain Lenders (the "Existing Letters of Credit").
Subject to the satisfaction of the conditions contained in Sections 4.1 and
4.2, from and after the Closing Date the Existing Letters of Credit shall be
deemed to be Letters of Credit issued pursuant to Section 2.16(a).
2.17 Letter of Credit Participation. On the Closing Date with respect
------------------------------
to the Existing Letters of Credit, and immediately upon the issuance of each
Letter of Credit by any Issuing Lender hereunder, each Lender that has a
Commitment shall be deemed to have automatically, irrevocably and
unconditionally purchased and received from the applicable Issuing Lender an
undivided interest and participation in and to such Letter of Credit, the
obligations of the applicable Borrower in respect thereof, and the liability
of the applicable Issuing Lender thereunder (collectively, an "L/C Interest")
in an amount equal to the amount available for drawing under such Letter of
Credit multiplied by such Lender's Revolving Credit Share.
The applicable Issuing Lender will notify the Agent promptly upon
presentation to it of an L/C Draft or upon any other draw under a Letter of
Credit and the Agent will promptly notify each Lender that has a Commitment.
On or before the Business Day on which the applicable Issuing Lender makes
payment of each such L/C Draft or any other draw on a Letter of Credit, on
demand of the Agent received by each Lender that has a Commitment not later
than 12:00 noon (Seoul, Korea time) on the fifth (5th) Business Day after the
date of such demand with respect to Letters of Credit issued for the account
of Purina Korea, Inc., and 12:00 noon (New York time) on the third (3d)
Business Day after the date of such demand with respect to all other Letters
of Credit, each Lender (other than the Issuing Lender) shall make payment on
such Business Day to the Agent for the account of the applicable Issuing
Lender, in immediately available funds in the applicable currency in an amount
equal to such Lender's Revolving Credit Share of the amount of such payment or
draw.
Upon the Agent's receipt of funds as a result of an Issuing Lender's
payment on an L/C Draft or any other draw on a Letter of Credit issued by an
Issuing Lender, the Agent shall promptly pay such funds to the Issuing Lender.
The obligation of each Lender that has a Commitment to pay the Agent for the
account of the applicable Issuing Lender under this Section 2.17 shall be
------------
unconditional, continuing, irrevocable and absolute. In the event that any
such Lender fails to make payment to the Agent of any amount due under this
Section 2.17, the Agent shall be entitled to receive, retain and apply against
----------
such obligation the principal and interest otherwise payable to such Lender
hereunder until the Agent on behalf of the applicable Issuing Lender receives
such payment from such Lender or such obligation is otherwise fully satisfied;
provided, however, that nothing contained in this sentence shall relieve such
-------- -------
Lender of its obligation to reimburse the Agent for such amount in accordance
with this Section 2.17.
-------------
2.18 Reimbursement Obligation. Each of the Borrowers and Subsidiary
-------------------------
Obligors agrees unconditionally, irrevocably and absolutely upon receipt of
notice from the Agent or the applicable Issuing Lender to pay immediately to
the Agent, for the account of the applicable Issuing Lender or the account of
the Lenders, as the case may be, the amount of each advance which may be drawn
under or pursuant to a Letter of Credit issued for its account or an L/C Draft
related thereto (such obligation of each of the Borrowers and Subsidiary
Obligors to reimburse the Issuing Lender or the Agent for an advance made
under a Letter of Credit or L/C Draft being hereinafter referred to as a
"Reimbursement Obligation" with respect to such Letter of Credit or L/C
Draft), each such payment to be made by the applicable Borrower to the Agent
no later than 1:00 p.m. (New York time) or with respect to Reimbursement
Obligations owed by Purina Korea, Inc. 1:00 p.m. (Seoul time) on the Business
Day on which the applicable Issuing Lender makes payment of each such L/C
Draft or, in the case of any other draw on a Letter of Credit, 1:00 p.m. (New
York time) or with respect to Reimbursement Obligations owed by Purina Korea,
Inc. 1:00 p.m. (Seoul time) on the date specified in a demand by the Agent and
such payment shall be made in the applicable currency in which such Letter of
Credit was issued. Any Issuing Lender may direct the Agent to make such
demand with respect to Letters of Credit issued by such Issuing Lender. If
any Borrower at any time fails to repay a Reimbursement Obligation pursuant to
this Section 2.18, such Borrower shall be deemed to have elected to borrow a
-------------
Revolving Loan from the applicable Lenders, as of the date of the Advance
giving rise to the Reimbursement Obligation equal in amount to the amount of
the unpaid Reimbursement Obligation. Such Revolving Loan shall be made as of
the date of the payment giving rise to such Reimbursement Obligation,
automatically, without notice and without any requirement to satisfy the
conditions precedent otherwise applicable to an Advance of Revolving Loans if
such Borrower shall have failed to make such payment to the Agent for the
account of the applicable Issuing Lender prior to such time. Such Revolving
Loans shall constitute a Base Rate Advance, or, in the case of standby Letters
of Credit denominated in Korean Won, a Korean Won Advance, the proceeds of
which Advance shall be used to repay such Reimbursement Obligation. If, for
any reason, any Borrower or Subsidiary Obligor fails to repay a Reimbursement
Obligation on the day such Reimbursement Obligation arises and, for any
reason, the Lenders are unable to make or have no obligation to make a
Revolving Loan, then such Reimbursement Obligation shall bear interest from
and after such day, until paid in full, at the interest rate applicable to a
Base Rate Advance, or in the case of standby Letters of Credit denominated in
Korean Won, at the Korean CD Rate.
2.19 Cash Collateral. Notwithstanding anything to the contrary herein
---------------
or in any application for a Letter of Credit, after the occurrence and during
the continuance of Default, each Borrower and Subsidiary Obligor shall, upon
the Agent's demand, deliver to the Agent for the benefit of the Lenders, cash
collateral, having a value, as determined by such Lenders, equal to the
aggregate outstanding L/C Obligations of such Borrower or Subsidiary Obligor
in addition to amounts on deposit in the Cash Collateral Account. Any such
additional collateral shall be held by the Agent in a separate account
appropriately designated as a cash collateral account in relation to this
Agreement and the Letters of Credit and retained by the Agent for the benefit
of the Lenders as collateral security for the Borrowers' and Subsidiary
Obligors' obligations in respect of this Agreement and each of the Letters of
Credit and L/C Drafts. Such amounts shall be applied to reimburse the Agent
or each Issuing Lender, as applicable, for drawings or payments under or
pursuant to Letters of Credit or L/C Drafts, or if no such reimbursement is
required, to payment of such of the other Obligations as the Agent shall
determine. If no Default shall be continuing, amounts remaining in any cash
collateral account (other than the Cash Collateral Account) established
pursuant to this Section 2.19 which are not to be applied to reimburse the
-------------
Agent for amounts actually paid or to be paid by the Agent in respect of a
Letter of Credit or L/C Draft, shall be promptly returned to the applicable
Borrower (after deduction of the Agent's expenses incurred in connection with
such cash collateral account).
2.20 Letter of Credit Fees. The Company agrees to pay (i) quarterly, in
---------------------
arrears, on each Payment Date to the Agent for the ratable benefit of the
Lenders having Commitments, except as set forth in Section 8.2, a letter of
-----------
credit fee ("Letter of Credit Fee") in the amount of:
(w) with respect to Letters of Credit issued for the account of the
Borrowers (other than Purina Korea, Inc.) and the Subsidiary Obligors (other
than Purina Korea, Inc.), a rate per annum equal to the Applicable Letter of
Credit Fee on the aggregate average daily outstanding amount available for
drawing under all of the Letters of Credit issued for its account;
(x) with respect to standby Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Dollars, a per annum rate equal to 3.50%
on the aggregate average daily outstanding amount available for drawing under
all standby Letters of Credit denominated in Dollars and issued for its
account;
(y) with respect to standby Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Korean Won, a per annum rate equal to
1.75% on the aggregate average daily outstanding amount available for drawing
under all of the standby Letters of Credit denominated in Korean Won and
issued for its account; and
(z) with respect to commercial Letters of Credit issued for the account of
Purina Korea, Inc. and denominated in Dollars, a per annum rate equal to 1.50%
on the aggregate average daily outstanding amount available for drawing under
all of the commercial Letters of Credit denominated in Dollars and issued for
its account; plus
----
(ii) to the Agent for the benefit of the Issuing Lenders, a fronting fee of
one-eighth of one percent (0.125%) per annum on the aggregate average daily
outstanding Dollar Amount available for drawing under all of the Letters of
Credit issued for the account of any Borrower or Subsidiary Obligor payable
quarterly, in arrears, on each Payment Date; plus
----
(iii) in each case, all customary fees and other issuance, amendment, document
examination, negotiation and presentment expenses and related charges in
connection with the issuance, amendment, presentation of L/C Drafts, and the
like customarily charged by the Issuing Lender with respect to standby and
commercial Letters of Credit, including, without limitation, standard
commissions with respect to commercial Letters of Credit, payable at the time
of invoice of such amounts.
2.21 Indemnification; Exoneration. (a) In addition to amounts payable
----------------------------
as elsewhere provided in this Agreement, each Borrower and Subsidiary Obligor
with respect to Letters of Credit issued for its account agrees to protect,
indemnify, pay and save harmless the Agent, each Issuing Lender and each
Lender from and against any and all liabilities and costs which the Agent, any
Issuing Lender or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit other than, in
the case of the Issuing Lender, as a result of its gross negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, or (ii) the failure of the Issuing Lender of a Letter of Credit
to honor a drawing under such 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 Governmental Authority (all such acts or omissions herein called
"Governmental Acts").
(b) As among the Borrowers, the Subsidiary Obligors, the Lenders, the
Issuing Lenders and the Agent, the Borrowers and Subsidiary Obligors assume
all risks of the acts and omissions of, or misuse of such Letter of Credit by,
the beneficiary of any Letter of Credit. In furtherance and not in limitation
of the foregoing, subject to the provisions of the Letter of Credit
applications and Letter of Credit reimbursement agreements executed by the
applicable Borrower or Subsidiary Obligor at the time of request for any
Letter of Credit, the Issuing Lender of a Letter of Credit, the Agent and the
Lenders shall not be responsible (in the absence of gross negligence or
willful misconduct in connection therewith, as determined by the final
judgment of a court of competent jurisdiction): (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 a 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
a Letter of Credit to comply duly 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 other similar form of teletransmission or otherwise; (v) for errors
in interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a 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, the Issuing Lender and the
Lenders including, without limitation, any Governmental Acts. None of the
above shall affect, impair, or prevent the vesting of any of the Issuing
Lender's rights or powers under this Section 2.21.
-------------
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by an Issuing
Lender under or in connection with Letters of Credit issued on behalf of any
Borrower or Subsidiary Obligor or any related certificates shall not, in the
absence of gross negligence or willful misconduct, as determined by the final
judgment of a court of competent jurisdiction, put the Issuing Lender, the
Agent or any Lender under any resulting liability to any Borrower or
Subsidiary Obligor or relieve any Borrower or Subsidiary Obligor of any of its
obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of the
Borrowers or the Subsidiary Obligors hereunder, the agreements and obligations
of the Borrowers contained in this Section 2.21 shall survive the payment in
------------
full of principal and interest hereunder, the termination of the Letters of
Credit and the termination of this Agreement.
2.22 Judgment Currency. If, for the purposes of obtaining judgment in
-----------------
any court, it is necessary to convert a sum due from a Borrower hereunder or
under any of the Notes in the currency expressed to be payable herein or under
the Notes (the "specified currency") into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the specified currency with such other
currency at the Agent's main office in New York, New York or Seoul, Korea or
any other applicable local office on the Business Day preceding that on which
the final, non-appealable judgment is given. The obligations of the
applicable Borrower in respect of any sum due to any Lender or the Agent
hereunder or under any Note shall, notwithstanding any judgment in a currency
other than the specified currency, be discharged only to the extent that on
the Business Day following receipt by such Lender or Agent (as the case may
be) of any sum adjudged to be so due in such other currency such Lender or
Agent (as the case may be) may in accordance with normal, reasonable banking
procedures purchase the specified currency with such other currency. If the
amount of the specified currency so purchased is less than the sum originally
due to such Lender or Agent, as the case may be, in the specified currency,
the applicable Borrower agrees, to the fullest extent that it may effectively
do so, as a separate obligation and notwithstanding any such judgment, to
indemnify such Lender or Agent, as the case may be, against such loss, and if
the amount of the specified currency so purchased exceeds (a) the sum
originally due to any Lender or Agent, as the case may be, in the specified
currency and (b) any amounts shared with other Lenders as a result of
allocations of such excess as a disproportionate payment to such Lender under
Section 11.2, such Lender or Agent, as the case may be, agrees to remit such
-------------
excess to the applicable Borrower. Without prejudice to the survival of any
of the other agreements of the Borrowers hereunder, the agreements and
obligations of the Borrowers in this Section 2.22 shall survive the
- -------------
termination of this Agreement and the payment of all other amounts owing
hereunder.
2.23 Currency Disruption. Notwithstanding the satisfaction of all
--------------------
conditions referred to in Article II with respect to any Advance in Korean Won
----------
or in Dollars to Purina Korea, Inc., if, after the Closing Date, a material
adverse change in the banking market (including, without limitation, a
significant down-grading of the credit ratings of the major domestic banks in
the Republic of Korea or the sovereign debt of the Republic of Korea) occurs
or bank regulatory circumstances change or currency controls or restrictions
or other exchange regulations are imposed or other circumstances arise as a
result of which, in the reasonable opinion of the Agent or the Required
Lenders, Korean Won or Dollars in Korea are unavailable to the Lenders or are
no longer readily available or freely traded or other exchange regulations are
imposed in the Republic or Korea with the result that different types of
currency are introduced, then the Advances and standby Letters of Credit
denominated in Korean Won and the Advances in Dollars to Purina Korea, Inc.
and standby Letters of Credit denominated in Dollars for the account of Purina
Korea, Inc. shall no longer be available until such time as the Agent or the
Required Lenders determine that the disqualifying event or events no longer
exist; provided, that during the period that such Korean Won or Letters of
--------
Credit denominated in Dollars are unavailable pursuant to this Section 2.23,
------------
the Company's obligation to pay the Korean facility fee pursuant to Section
-------
2.10(C)(i) shall be suspended.
--------
2.24 Termination Date Extension. The Aggregate Commitment with respect
--------------------------
to Tranche C Obligations shall expire on the Termination Date. Within the
period beginning 120 days and ending 90 days before each anniversary of the
Closing Date, the Company may request in writing that the Termination Date be
extended for an additional year. Within the period beginning 45 days and
ending 30 days prior to such anniversary, each Lender may, in its sole
discretion, agree to such extension by giving written notice of such agreement
to the Company and the Agent (and the failure to provide such notice shall be
determined to be a decision not to extend). The Aggregate Commitment with
respect to Tranche D Obligations shall expire on the first anniversary of the
Closing Date. Within the period beginning 270 days and ending 30 days prior
to such first anniversary of the Closing Date, the Company may request in
writing that the expiry date for the Aggregate Commitment with respect to
Tranche D Obligations be extended to remain in effect for up to one year from
the extension date; and thereafter within the period beginning 270 days and
ending 30 days prior to the then effective expiry date for the Aggregate
Commitment with respect to Tranche D Obligations, the Company may request in
writing that the expiry date for the Aggregate Commitment with respect to
Tranche D Obligations be extended to remain in effect for up to one year from
such then effective extension date. Within 30 days after such request, each
Lender may, in its sole discretion, agree to such extension by giving written
notice of such extension to the Company and the Agent (and the failure to
provide such notice shall be deemed a decision not to extend). The Commitment
of each Lender that declines to extend with respect to the Tranche C
Obligations or the Tranche D Obligations may, at the option of the Company, be
replaced in accordance with Section 12.3 (but only to the extent a replacement
------------
Lender is then available) or the Aggregate Commitment reduced. The Required
Lenders must agree to any extension with respect to the Termination Date or
the expiry of the Aggregate Commitment with respect to Tranche D Obligations
for any such extension to become effective.
ARTICLE III: CHANGE IN CIRCUMSTANCES
------------------------------------------
3.1 Yield Protection. If any law or any governmental or
-----------------
quasi-governmental rule, regulation, policy, guideline or directive (whether
-----
or not having the force of law) adopted after the date of this Agreement and
having general applicability to all banks within the jurisdiction in which
such Lender operates (excluding, for the avoidance of doubt, the effect of and
phasing in of capital requirements or other regulations or guidelines passed
prior to the date of this Agreement), or any interpretation or application
thereof by any Governmental Authority charged with the interpretation or
application thereof, or the compliance of any Lender therewith,
(i) subjects any Lender (each reference in this Section 3.1 to a Lender
-----------
being in its capacity as a Lender or an Issuing Lender, or all of the
foregoing) or any applicable Lending Installation to any tax, duty, charge or
withholding on or from payments due from any of the Borrowers (excluding
taxation imposed by the United States of America or any Governmental Authority
of the jurisdiction under the laws of which such Lender is organized, on the
overall net income of any Lender or applicable Lending Installation), or
changes the basis of taxation of payments to any Lender in respect of its
Loans, its L/C Interests, the Letters of Credit or other amounts due it
hereunder, provided however that this clause (i) shall not apply with respect
----------
to any Taxes to which Section 2.10(E) applies, or
----------------
(ii) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, any Lender or any
applicable Lending Installation with respect to its Eurodollar Loans, Korean
Eurodollar Loans, Korean Won Loans, L/C Interests or the Letters of Credit
(other than reserves and assessments taken into account in calculating the
Eurodollar Rate or Korean Eurodollar Rate), or
(iii) imposes any other condition the result of which is to increase the
cost to any Lender or any applicable Lending Installation of making, funding
or maintaining the Eurodollar Loans, Korean Eurodollar Loans, Korean Won
Loans, the L/C Interests or the Letters of Credit or reduces any amount
received by any Lender or any applicable Lending Installation in connection
with Eurodollar Loans, Korean Eurodollar Loans, Korean Won Loans or Letters of
Credit, or requires any Lender or any applicable Lending Installation to make
any payment calculated by reference to the amount of Loans or L/C Interests
held or interest received by it or by reference to the Letters of Credit, by
an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender
of making, renewing or maintaining its Loans, L/C Interests or Letters of
Credit or to reduce any amount received under this Agreement, then, within 15
days after receipt by the Company of written demand by such Lender pursuant to
Section 3.5, the Company shall pay or cause the appropriate Subsidiary to pay
------------
such Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making,
funding and maintaining its Loans, L/C Interests, Letters of Credit and its
Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender (each
-------------------------------------------
reference in this Section 3.2 to a Lender being in its capacity as a Lender or
-----------
an Issuing Lender, or all of the foregoing) determines (i) the amount of
capital required or expected to be maintained by such Lender, any Lending
Installation of such Lender or any corporation controlling such Lender is
increased as a result of a "Change" (as defined below), and (ii) such increase
in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation
to make Loans hereunder, then, within 15 days after receipt by the Company of
written demand by such Lender pursuant to Section 3.5, the Company shall pay
-----------
or cause the appropriate Subsidiary to pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans, its L/C Interests, the Letters of Credit or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "Change" means (i) any change after the
date of this Agreement in the "Risk-Based Capital Guidelines" (as defined
below) excluding, for the avoidance of doubt, the effect of any phasing in of
such Risk-Based Capital Guidelines or any other capital requirements passed
prior to the date hereof, or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after
the date of this Agreement and having general applicability to all banks and
financial institutions within the jurisdiction in which such Lender operates
which affects the amount of capital required or expected to be maintained by
any Lender or any Lending Installation or any corporation controlling any
Lender. "Risk-Based Capital Guidelines" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If (i) any Lender determines
-----------------------------------
that maintenance of its Eurodollar Loans, Korean Eurodollar Loans or Korean
Won Loans at a suitable Lending Installation would violate any applicable law,
rule, regulation or directive, whether or not having the force of law, or (ii)
the Agent or the Required Lenders determine that (x) deposits of a type,
currency and maturity appropriate to match fund Eurodollar Advances, Korean
Eurodollar Advances or Korean Won Advances are not available or (y) the
interest rate applicable to a Eurodollar Advance, Korean Eurodollar Advances
or Korean Won Advance is unavailable or does not accurately reflect the cost
of making or maintaining such a Eurodollar Advance, Korean Eurodollar Advances
or Korean Won Advance, then the Agent shall suspend the availability of
Eurodollar Advances, Korean Eurodollar Advances or Korean Won Advances and, in
the case of any occurrence set forth in clause (i), require any Eurodollar
----------
Advances, Korean Eurodollar Advances or Korean Won Advances to be repaid or,
at the option of the Company, converted to Base Rate Advances denominated in
Dollars or repaid at the end of the current Interest Period.
3.4 Funding Indemnification. If (i) any payment of a Eurodollar Advance
-----------------------
or Korean Eurodollar Advance or Korean Won Advance occurs on a date which is
not the last day of the applicable Interest Period, (ii) any Loan in any
currency is converted to a Loan in any other currency on a date which is not
the last day of the applicable Interest Period, whether because of
acceleration, prepayment, or otherwise, or if a Eurodollar Advance, a Korean
Eurodollar Advance or Korean Won Advance is not made or continued on the date
specified by the applicable Borrower for any reason other than default by the
Lenders, the applicable Borrower agrees to compensate and indemnify each
Lender, on demand, for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Eurodollar Advance, the Korean
Eurodollar Advance or Korean Won Advance.
3.5 Lender Statements; Survival of Indemnity. If reasonably possible,
----------------------------------------
each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Loans, Korean Eurodollar Loans or Korean Won Loans to reduce
any liability of the Borrowers to such Lender under Sections 3.1 and 3.2 or to
------------ ---
avoid the unavailability of a Type of Advance under Section 3.3, so long as
-----------
such designation is not disadvantageous to such Lender. Each Lender requiring
compensation pursuant to Section 2.10(E) or to this Article III shall use its
--------------- -----------
reasonable efforts to notify the Company and the Agent in writing of any
Change, law, policy, rule, guideline or directive giving rise to such demand
for compensation not later than sixty (60) days following the date upon which
the responsible account officer of such Lender knows or should have known of
such Change, law, policy, rule, guideline or directive; provided, that failure
--------
to give such notice shall not affect any obligations of the Borrowers
hereunder with respect thereto; provided, further that for each such Change,
-------- -------
law policy, rule, guideline or directive giving rise to such demand, such
reimbursement obligations shall be limited to an amount equal to costs
incurred sixty (60) days prior to such notice and thereafter. Any demand for
compensation pursuant to this Article III shall be in writing and shall state
-----------
the amount due, if any, under Section 3.1, 3.2 or 3.4 and shall set forth in
----------- --- ---
reasonable detail the calculations upon which such Lender determined such
amount. Such written demand shall be rebuttably presumed correct for all
purposes. Determination of amounts payable under such Sections in connection
with a Eurodollar Loan, Korean Eurodollar Loan or Korean Won Loan shall be
calculated as though each Lender funded its Eurodollar Loan, Korean Eurodollar
Loan or Korean Won Loan, as applicable through the purchase of a deposit of
the type, currency and maturity corresponding to the deposit used as a
reference in determining the Eurodollar Rate, Korean Eurodollar Rate or Korean
CD Rate, as applicable to such Loan, whether in fact that is the case or not.
The obligations of the Borrowers under Sections 3.1, 3.2 and 3.4 shall survive
------------ --- ---
payment of the Obligations and termination of this Agreement.
ARTICLE IV: CONDITIONS PRECEDENT
-------------------------------------
4.1 Initial Advances and Letters of Credit. The Lenders shall not be
---------------------------------------
required to make the initial Loans or issue any Letters of Credit unless the
Borrowers and Subsidiary Obligors have furnished to the Agent, with sufficient
copies for the Lenders, such documents as the Agent or any Lender or its
counsel may have reasonably requested, including, without limitation, all of
the documents reflected on the List of Closing Documents attached as Exhibit E
---------
to this Agreement.
4.2 Each Advance and Letter of Credit. Except as expressly provided in
---------------------------------
Sections 2.17 with respect to the purchase of participations in Letters of
--------------
Credit, the Lenders shall not be required to make any Advance and the Issuing
---
Lender shall not be required to issue any Letter of Credit, unless on the
applicable Borrowing Date, or in the case of a Letter of Credit, the date on
which the Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default; and
(ii) The representations and warranties contained in Article V are true
---------
and correct in all material respects as of such Borrowing Date, except for
representations and warranties made with reference to a specific date which
representations and warranties shall be true and correct in all material
respects as of such date.
Each Borrowing Notice with respect to each such Advance and the letter of
credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrower requesting such Advance that the
conditions contained in Sections 4.2(i) and (ii) will have been satisfied as
--------------- ----
of the date of such Advance or the issuance of such Letter of Credit. Any
Lender may require a duly completed officer's certificate in substantially the
form of Exhibit F hereto and/or a duly completed compliance certificate in
----------
substantially the form of Exhibit C hereto as a condition to making an
----------
Advance.
ARTICLE V: REPRESENTATIONS AND WARRANTIES
-----------------------------------------------
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans and the other financial accommodations to the
Borrowers and in order to induce the Issuing Lender to issue the Letters of
Credit for the account of the Borrowers and Subsidiary Obligors, each of the
Borrowers and the Subsidiary Obligors represents and warrants as follows to
each Lender and each Agent as of the Closing Date and thereafter on each date
as required by Section 4.2:
------------
5.1 Organization; Powers. Each of the Borrowers and Subsidiary Obligors
--------------------
(i) is a duly organized corporation validly existing and in good standing
under the laws of the jurisdiction of its organization, (ii) is duly qualified
to do business as a foreign company or corporation and is in good standing
under the laws of each jurisdiction in which failure to be so qualified and in
good standing could have a Material Adverse Effect, and (iii) has all
requisite power and authority to own, operate and encumber its property and to
conduct its business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the transactions
contemplated by this Agreement.
5.2 Authority.
---------
(A) Each of the Borrowers and each of the Subsidiary Obligors has the
requisite power and authority (i) to execute, deliver and perform each of the
Loan Documents which have been executed by it as required by this Agreement
and (ii) to file the Loan Documents which must be filed by it with any
Governmental Authority.
(B) The execution, delivery, performance and filing, as the case may be,
of each of the Loan Documents which must be executed or filed by any of the
Borrowers or any Subsidiary Obligor which have been executed or filed as
required by this Agreement and to which any of the Borrowers or any Subsidiary
Obligor is party, and the consummation of the transactions contemplated
thereby, have been duly approved, to the extent required, by the respective
boards of managers or directors, as applicable, and, if necessary, the members
or shareholders or workers' councils of the applicable Borrower or Subsidiary
Obligor, as applicable, and such approvals have not been rescinded. No other
action or proceedings on the part of any Borrower or any Subsidiary Obligor or
other Person are necessary to consummate such transactions.
(C) Each of the Loan Documents to which any of the Borrowers or any
Subsidiary Obligor is a party has been duly executed, delivered or filed, as
the case may be, by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally), is in full force
and effect and no material term or condition thereof has been amended,
modified or waived from the terms and conditions contained in the Loan
Documents delivered to the Agent pursuant to Section 4.1 without the prior
-----------
written consent of the Required Lenders, and each of the Borrowers or each
Subsidiary Obligor has, and, to the best of such Borrower's or Subsidiary
Obligor's Knowledge, all other parties thereto have performed and complied
with all the terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by such parties, and no
unmatured default, default or breach of any covenant by any such party exists
thereunder.
5.3 No Conflict; Governmental Consents. The execution, delivery and
------------------------------------
performance of each of the Loan Documents to which any of the Borrowers or any
Subsidiary Obligor is a party do not and will not (i) conflict with the
documents of organization or governance of such Borrower or Subsidiary
Obligor, (ii) constitute tortious interference with any Contractual Obligation
of any Person or conflict with, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any Requirement of
Law (including, without limitation, any Environmental Property Transfer Act)
or Contractual Obligation of any Borrower or any Subsidiary Obligor, or
require termination of any Contractual Obligation, except such interference,
breach, default or termination which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect or to subject the
Agent, the Arranger, any of the Lenders or any Issuing Lender to any
liability, (iii) with respect to the Loan Documents, result in or require the
creation or imposition of any Lien whatsoever upon any of the property or
assets of any Borrower or any Subsidiary Obligor, other than Liens permitted
by the Loan Documents, or (iv) require any approval of the Borrower's or any
Subsidiary Obligor's members, shareholders, workers' council or other similar
constituent group except such as have been obtained. The execution, delivery
and performance of each of the Loan Documents to which any Borrower or any
Subsidiary Obligor is a party do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, including under any Environmental Property Transfer
Act, except (i) filings, consents or notices which have been or, in the case
of any of the foregoing, not required prior to the Closing Date, will be made,
obtained or given, and (ii) filings, registrations and deliveries necessary to
create or perfect security interests in the Collateral.
5.4 Financial Statements. The historical and forecasted financial
---------------------
statements, including, without limitation, the Consolidating Financial
Forecasts for Subsidiaries dated February 25, 1998 and delivered to the Agent
on February 26, 1998 (the "Statements") of the Company and its Subsidiaries,
copies of which are attached hereto as Exhibit G, (i) with respect to the
---------
historical Statements, (a) were prepared in accordance with generally accepted
accounting principles consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, (b) fairly present on a
pro forma basis the consolidated financial position of the Company and its
Subsidiaries as of the date thereof and consolidated results of operations for
the period covered thereby; and (c) show all material indebtedness and other
liabilities, direct or contingent, of the Company and its consolidated
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and material Contingent Obligations; and (ii) with respect to the
forecasted Statements, the projections and assumptions expressed therein were
prepared in good faith and represent management's opinion based on the
information available to the Company at the time so furnished.
5.5 No Material Adverse Change. (a) Since November 30, 1997 up to the
--------------------------
Closing Date, except as disclosed in Amendment No. 2 to the Company's Form 10
filed with the Commission (a copy of which has been delivered to the Agent),
there has occurred no change in the business, properties, condition (financial
or otherwise), results of operations or prospects of the Company and its
Subsidiaries taken as a whole or any other event which has had or is
reasonably likely to have a Material Adverse Effect.
(b) Since the Closing Date, there has occurred no change in the
business, properties, condition (financial or otherwise), results of
operations or prospects of the Company and its Subsidiaries taken as a whole
or any other event which has had or is reasonably likely to have a Material
Adverse Effect.
5.6 Taxes.
-----
(A) Tax Examinations. All deficiencies which have been asserted against
----------------
the Company or any of the Company's Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable year in respect of
which an examination has been conducted have been fully paid or finally
settled or are being contested in good faith, and as of the Closing Date no
issue has been raised by any taxing authority in any such examination which,
by application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in the Company's consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles. Except as permitted pursuant to Section 6.2(D) and except as
--------------
reserved for in the Company's consolidated financial statements to the extent,
if any, required by Agreement Accounting Principles, neither the Company nor
any of the Company's Subsidiaries anticipates any material tax liability with
respect to the years which have not been closed pursuant to applicable law.
(B) Payment of Taxes. All tax returns and reports of each of the
------------------
Company and its Subsidiaries required to be filed have been timely filed, and
all taxes, assessments, fees and other governmental charges thereupon and upon
their respective property, assets, income and franchises which are shown in
such returns or reports to be due and payable have been paid except those
items which are being contested in good faith and have been reserved for in
accordance with Agreement Accounting Principles. The Company has no Knowledge
of any proposed tax assessment against the Company, or any of the Company's
other Subsidiaries that will have or is reasonably likely to have a Material
Adverse Effect.
5.7 Litigation; Loss Contingencies and Violations. Except for Permitted
---------------------------------------------
Existing Contingent Obligations and as set forth in Schedule 5.7 to this
------------
Agreement, there is no action, suit, proceeding or investigation of which the
Company has Knowledge or arbitration before or by any Governmental Authority
or private arbitrator pending or, to the Knowledge of the Company or any of
its Subsidiaries, threatened against the Company or any of its Subsidiaries or
any property of any of them (i) challenging the validity or the enforceability
of any material provision of the Loan Documents or (ii) which will have or is
reasonably likely to have a Material Adverse Effect. There is no material
loss contingency within the meaning of Agreement Accounting Principles which
has not been reflected in the consolidated financial statements of the Company
prepared and delivered pursuant to Section 6.1(A) for the fiscal period during
--------------
which such material loss contingency was incurred. Neither the Company nor
any of its Subsidiaries is (A) in violation of any applicable Requirements of
Law which violation will have or is reasonably likely to have a Material
Adverse Effect, or (B) subject to or in default with respect to any final
judgment, writ, injunction, restraining order or order of any nature, decree,
rule or regulation of any court or Governmental Authority which will have or
is reasonably likely to have a Material Adverse Effect.
5.8 Subsidiaries; Capital Stock. Schedule 5.8 to this Agreement (i)
----------------------------- ------------
contains a description of the corporate structure of the Company, the
Company's Subsidiaries and any other Person in which the Company or any of its
Subsidiaries holds an equity interest; and (ii) accurately sets forth (A) the
correct legal name, the jurisdiction of organization or incorporation and the
jurisdictions in which each Borrower and the direct and indirect Subsidiaries
of the Company is qualified to transact business as a foreign company or
corporation, (B) the authorized, issued and outstanding shares of each class
of Capital Stock of each entity referred to above that is a corporation and
the owners of such shares (both as of the Closing Date and on a fully-diluted
basis), and (C) a summary of the direct and indirect ownership, membership,
partnership, joint venture, or other equity interests, if any, of the Company
and each Subsidiary of the Company in any Person that is not a corporation.
Except as disclosed on Schedule 5.8, none of the issued and outstanding
-------------
Capital Stock of the Company or any of its Subsidiaries is subject to any
vesting, redemption, or repurchase agreement, and there are no warrants or
options outstanding with respect to such Capital Stock. The outstanding
Capital Stock of the Company and each of its Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and, with the exception of the
Company, is not Margin Stock. Within sixty (60) days after the Closing Date,
the Company's Subsidiaries shall be capitalized (with contributions to
capital, or, in the Company's discretion, loans) as described in the
Consolidating Financial Forecasts for Subsidiaries dated February 25, 1998 and
delivered to the Agent on February 26, 1998.
5.9 ERISA. No Benefit Plan has incurred any accumulated funding
-----
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code)
whether or not waived. Neither the Company nor any member of the Controlled
Group has incurred any liability to the PBGC which remains outstanding other
than the payment of premiums, and there are no premium payments which have
become due which are unpaid. Schedule B to the most recent annual report
filed with the IRS with respect to each Benefit Plan and furnished to the
lenders is complete and accurate. Since the date of each such Schedule B,
there has been no material adverse change in the funding status or financial
condition of the Benefit Plan relating to such Schedule B. Neither the
Company nor any member of the Controlled Group has (i) failed to make a
required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Neither the Company nor any member of the Controlled
Group has failed to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such installment
or other payment. Neither the Company nor any member of the Controlled Group
is required to provide security to a Benefit Plan under Section 401(a)(29) of
the Code due to a Plan amendment that results in an increase in current
liability for the plan year. Neither the Company nor any of its Subsidiaries
maintains or contributes to any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA which provides benefits to employees after
termination of employment other than as required by Section 601 of ERISA.
Each Plan which is intended to be qualified under Section 401(a) of the Code
as currently in effect is so qualified, and each trust related to any such
Plan is exempt from federal income tax under Section 501(a) of the Code as
currently in effect. The Company and all Subsidiaries are in compliance in
all material respects with the responsibilities, obligations and duties
imposed on them by ERISA and the Code with respect to all Plans. Neither the
Company nor any of its Subsidiaries nor any fiduciary of any Plan has engaged
in a nonexempt prohibited transaction described in Sections 406 of ERISA or
4975 of the Code which could reasonably be expected to subject the Company to
liability individually or in the aggregate in excess of $2,500,000. Neither
the Company nor any member of the Controlled Group has taken or failed to take
any action which would constitute or result in a Termination Event, which
action or inaction could reasonably be expected to subject the Company nor any
of its Subsidiaries to liability in excess of $2,500,000. Neither the Company
nor any Subsidiary is subject to any liability under Sections 4063, 4064,
4069, 4204 or 4212(c) of ERISA and no other member of the Controlled Group is
subject to any liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of
ERISA which could reasonably be expected to subject the Company to or any of
its Subsidiaries liability individually or in the aggregate in excess of
$2,500,000. Neither the Company nor any of its Subsidiaries has, by reason of
the transactions contemplated hereby, any obligation to make any payment to
any employee pursuant to any Plan or existing contract or arrangement.
5.10 Accuracy of Information. Each of (i) Amendment No. 2 to the
-------------------------
Company's Form 10 filed with the Commission (a copy of which has been
delivered to the Agent), as of the date of filing of such Form 10, (ii) any
registration statement or report on Form 10-K, 10-Q and 8-K (or their
equivalents) which the Company shall have filed with the Commission as at the
time of filing of such registration or report, as applicable, and (iii) all
written reports, certificates and documents of the Company furnished by or on
behalf of the Company and any of its Subsidiaries to the Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents, including, without limitation, the Confidential Information
Memorandum reviewed by the Company (provided that except as set forth in
Section 5.4, no representation or warranty is made with respect to the forward
------
looking information contained therein), in each case, as of the date
furnished, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made,
not misleading.
5.11 Securities Activities. Neither the Company nor any of its
----------------------
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
5.12 Material Agreements. Neither the Company nor any Subsidiary is a
-------------------
party to any agreement or instrument or subject to any charter or other
contractual or corporate restriction which will have or is reasonably likely
to have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received notice or has Knowledge that (i) it is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation applicable to
it, or (ii) any condition exists which, with the giving of notice or the lapse
of time or both, would constitute a default with respect to any such
Contractual Obligation, in each case, except where such default or defaults,
if any, will not have or are not reasonably likely to have a Material Adverse
Effect.
5.13 Compliance with Laws. The Company and its Subsidiaries are in
----------------------
compliance with all Requirements of Law applicable to them and their
respective businesses, in each case where the failure to so comply
individually or in the aggregate will have or is reasonably likely to have a
Material Adverse Effect.
5.14 Assets and Properties. The Company and each of its Subsidiaries
----------------------
has good and marketable title to all of its assets and properties (tangible
and intangible, real or personal) owned by it or a valid leasehold interest in
all of its leased assets (except insofar as marketability may be limited by
any laws or regulations of any Governmental Authority affecting such assets),
and all such assets and property are free and clear of all Liens, except Liens
securing the Obligations and Liens permitted under Section 6.3(C).
---------------
Substantially all of the assets and properties owned by, leased to or used by
the Company and/or each such Subsidiary of the Company are in adequate
operating condition and repair, ordinary wear and tear excepted. Except for
Liens granted to the Agent for the benefit of the Agent and the Holders of
Secured Obligations, neither this Agreement nor any other Loan Document, nor
any transaction contemplated under any such agreement, will affect any right,
title or interest of the Company or such Subsidiary in and to any of such
assets in a manner that will have or is reasonably likely to have a Material
Adverse Effect.
5.15 Statutory Indebtedness Restrictions. Neither the Company, nor any
-----------------------------------
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or
the Investment Company Act of 1940, or any other federal, state, local or
foreign statute or regulation which limits its ability to consummate the
transactions contemplated hereby.
5.16 Post-Retirement Benefits5.16 Post-Retirement Benefits. As of the
------------------------------------------------------
Closing Date, the Company and its Subsidiaries have no expected cost of
post-retirement medical and insurance benefits payable by the Company or its
Subsidiaries to its employees and former employees, as estimated by the
Company in accordance with Financial Accounting Standards Board Statement No.
106.
5.17 Insurance. Schedule 5.17 to this Agreement accurately sets forth
--------- -------------
as of the Closing Date all insurance policies and programs currently in effect
with respect to the respective properties and assets and business of the
Company and its Subsidiaries, specifying for each such policy and program, (i)
the amount thereof, (ii) the risks insured against thereby, (iii) the name of
the insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof, (vi) the
annual premium with respect thereto and (vii) describes any reserves, relating
to any self-insurance program that is in effect. Such insurance policies and
programs reflect coverage that is reasonably consistent with prudent industry
practice.
5.18 Contingent Obligations. Except for Permitted Existing Contingent
----------------------
Obligations, neither the Company nor any of its Subsidiaries has any
Contingent Obligation, contingent liability, long-term lease, or synthetic
lease, not reflected in the financial statements attached hereto as Exhibit G
---------
or otherwise disclosed to the Agent and the Lenders in the other Schedules to
this Agreement, which could reasonably be expected to subject the Company nor
any of its Subsidiaries to liability individually or in the aggregate in
excess of (a) $2,500,000 with respect to payments for Contingent Purchase
Price Obligations (b) $30,000,000 with respect to guarantees issued for the
benefit of third-parties as support for loans and advances made by such
third-parties to Subsidiaries (other than Subsidiary Borrowers and Subsidiary
Obligors) of the Company or (c) $2,500,000 for other amounts.
5.19 Restricted Junior Payments. Neither the Company nor any of its
----------------------------
Subsidiaries has directly or indirectly declared, ordered, paid or made or set
apart any sum or properties for any Restricted Junior Payment or agreed to do
so, except to the extent permitted pursuant to Section 6.3(F) of this
---------------
Agreement.
5.20 Labor Matters.
--------------
(A) There are on the Closing Date no material collective bargaining
agreements, other labor agreements or Multiemployer Plans covering any of the
employees of the Company or any of its Subsidiaries. As of the Closing Date,
no material labor disputes, strikes or walkouts affecting the operations of
the Company or any of its Subsidiaries, is pending, or, to the Company's
Knowledge, threatened, planned or contemplated.
(B) Set forth in Schedule 5.20 to this Agreement is a list, as of the
-------------
Closing Date, of all material consulting agreements, executive compensation
plans, deferred compensation agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase and stock option
plans, severance plans, group life insurance, hospitalization insurance or
other plans or arrangements of the Company and its Subsidiaries providing for
benefits for employees of the Company or its Subsidiaries.
5.21 Environmental Matters. (a) Except as disclosed on Schedule 5.21:
--------------------- -------------
(i) the operations of the Company and its Subsidiaries comply in all
material respects with Environmental, Health or Safety Requirements of Law;
(ii) the Company and its Subsidiaries have all material permits,
licenses or other authorizations required under Environmental, Health or
Safety Requirements of Law and are in material compliance with such permits;
(iii) neither the Company, any of its Subsidiaries nor any of their
respective present property or operations, or, to the best of, the Company's
or any of its Subsidiaries' Knowledge, any of their respective past property
or operations, are subject to or the subject of, any investigation known to
the Company or any of its Subsidiaries, any judicial or administrative
proceeding, order, judgment, decree, settlement or other agreement respecting:
(A) any material violation of Environmental, Health or Safety Requirements of
Law; (B) any material remedial action; or (C) any material claims or
liabilities arising from the Release or threatened Release of a Contaminant
into the environment;
(iv) there is not now, nor to the best of the Company's or any of its
Subsidiaries' Knowledge has there ever been on or in the property of the
Company or any of its Subsidiaries any material landfill, waste pile,
underground storage tanks, aboveground storage tanks, surface impoundment or
hazardous waste storage facility of any kind, polychlorinated biphenyls (PCBs)
used in hydraulic oils, electric transformers or other equipment, or
asbestos-containing material; and
(v) neither the Company nor any of its Subsidiaries has any material
Contingent Obligation or material contingent liability in connection with any
Release or threatened Release of a Contaminant into the environment.
(b) For purposes of this Section 5.21 "material" means any noncompliance
------------
or basis for liability which could reasonably be likely to subject the Company
to liability individually in excess of $2,500,000 or in the aggregate in
excess of $5,000,000.
5.22 Foreign Employee Benefit Matters. (a) Each Foreign Employee
-----------------------------------
Benefit Plan is in compliance in all respects with all laws, regulations and
rules applicable thereto and the respective requirements of the governing
documents for such Plan, except for any non-compliance the consequences of
which, in the aggregate, would not result in a material obligation to pay
money; (b) the aggregate of the accumulated benefit obligations under all
Foreign Pension Plans does not exceed to any material extent the current fair
market value of the assets held in the trusts or similar funding vehicles for
such Plans or reasonable reserves have been established in accordance with
prudent business practices or as required by Agreement Accounting Principles
with respect to any shortfall; (c) with respect to any Foreign Employee
Benefit Plan maintained or contributed to by the Company or any Subsidiary or
any member of its Controlled Group (other than a Foreign Pension Plan),
reasonable reserves have been established in accordance with prudent business
practice or where required by ordinary accounting practices in the
jurisdiction in which such Plan is maintained; and (d) there are no actions,
suits or claims (other than routine claims for benefits) pending or, to the
Knowledge of the Company and its Subsidiaries, threatened against the Company
or any Subsidiary of it or any ERISA Affiliate with respect to any Foreign
Employee Benefit Plan.
ARTICLE VI: COVENANTS
-------------------------
Each of the Borrowers covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in full of all of the
Obligations (other than contingent indemnity and reimbursement obligations),
unless the Required Lenders shall otherwise give prior written consent:
6.1 Reporting. The Borrowers shall:
---------
(A) Financial Reporting. Furnish to the Agent (which will furnish copies
-------------------
of the following to the Lenders):
(i) Quarterly Reports. As soon as practicable, and in any event within
-----------------
forty-five (45) days after the end of the first three fiscal quarters in each
fiscal year beginning with the fiscal quarter ending February 28, 1998, the
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such period, the related consolidated and
consolidating statements of income and the related consolidated statement of
stockholders' equity and cash flow of the Company and its Subsidiaries for
such fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, certified by the chief
financial officer of the Company on behalf of the Company as fairly presenting
in all material respects the consolidated and, as applicable, consolidating
financial position of the Company and its Subsidiaries as at the dates
indicated and the results of their operations and cash flow for the periods
indicated in accordance with Agreement Accounting Principles, subject to
normal year end adjustments.
(ii) Annual Reports. As soon as practicable, and in any event within
---------------
ninety (90) days after the end of each fiscal year, (a) the consolidated and
consolidating balance sheet of the Company and its Subsidiaries as at the end
of such fiscal year and the related consolidated and consolidating statements
of income and the related consolidated statement of stockholders' equity and
cash flow of the Company and its Subsidiaries for such fiscal year, and, in
comparative form the corresponding figures for the previous fiscal year, (b) a
schedule from the Company setting forth for each item in clause (a) hereof,
----------
the corresponding figures from the ▇▇▇▇▇▇▇-dated financial budget for the
current fiscal year delivered pursuant to Section 6.1(A)(iv), and (c) an audit
------------------
report on the items (other than the consolidating financial statements) listed
in clause (a) hereof of independent certified public accountants of recognized
----------
national standing, which audit report shall be unqualified and shall state
that such financial statements fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with Agreement Accounting Principles and that
the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards. The deliveries made pursuant to this clause (ii) shall be
-----------
accompanied by (y) for the fiscal year ending August 31, 1998, the report on
internal controls prepared by the above-referenced accountants and (z) a
certificate of such accountants that, in the course of their examination
necessary for their certification of the foregoing (such examination utilizing
only their customary audit procedures without any necessity of conducting
extra procedures for purposes of this certificates), they have obtained no
knowledge of any Default or Unmatured Default under Section 6.4, or if, in the
opinion of such accountants, any Default or Unmatured Default shall exist,
stating the nature and status thereof.
(iii) Officer's Certificate. Together with each delivery of any
----------------------
financial statement pursuant to clauses (i) and (ii) of this Section 6.1(A),
----------- ---- --------------
(a) an Officer's Certificate of the Company, substantially in the form of
Exhibit F attached hereto and made a part hereof, stating that no Default or
------
Unmatured Default exists, or if any Default or Unmatured Default exists,
stating the nature and status thereof and (b) a Compliance Certificate,
substantially in the form of Exhibit C attached hereto and made a part hereof,
---------
signed by the Company's chief financial officer, setting forth the Company's
calculations for the period then ended for Section 2.2(B) and for Section
-------------- -------
2.4(b) and which demonstrate compliance, when applicable, with the provisions
--
of Section 6.4, and which calculate the EBITDA Contribution Ratio for purposes
-----------
of determining the Applicable Eurodollar Margins, the Applicable Base Rate
Margins, the Applicable Letter of Credit Fee, and the Applicable Facility Fee.
(iv) Budgets. As soon as practicable and in any event not later than
-------
thirty (30) days following the beginning of each fiscal year beginning with
the fiscal year beginning January 1, 1999, a copy of the budget (including a
budgeted balance sheet and income statement) of the Company for the upcoming
fiscal year prepared in such detail as shall be reasonably satisfactory to the
Agent.
(B) Notice of Default. Promptly upon any of the chief executive
-------------------
officer, chief operating officer, chief financial officer of the Company or
obtaining Knowledge (i) of any condition or event which constitutes a Default
or Unmatured Default, or becoming aware that any Lender or Agent has given any
written notice with respect to a claimed Default or Unmatured Default under
this Agreement, or (ii) that any Person has given any written notice to the
Company or any Subsidiary of the Company or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 7.1(e), deliver to the Agent and the Lenders an Officer's Certificate
---------------
specifying (a) the nature and period of existence of any such claimed default,
Default, Unmatured Default, condition or event, (b) the notice given or action
taken by such Person in connection therewith, and (c) what action the Company
has taken, is taking and proposes to take with respect thereto.
(C) Lawsuits. (i) Promptly upon the Company obtaining Knowledge of the
--------
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Company or
any of its Subsidiaries or any property of the Company or any of its
Subsidiaries not previously disclosed pursuant to Section 5.7, which action,
-----------
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances
which expose, in the Company's reasonable judgment, the Company or any of its
Subsidiaries to liability in an amount aggregating $2,500,000 or more, give
written notice thereof to the Agent on behalf of the Lenders and provide such
other information as may be reasonably available to enable each Lender and the
Agent and its counsel to evaluate such matters; and (ii) in addition to the
requirements set forth in clause (i) of this Section 6.1(C), upon request of
---------- --------------
the Agent or the Required Lenders, promptly give written notice of the status
of any action, suit, proceeding, governmental investigation or arbitration
disclosed on Schedule 5.7 or covered by a report delivered pursuant to clause
------------ ------
(i) above and provide such other information as may be reasonably available to
---
it that would not result in loss of any attorney-client privilege by
disclosure to the Lenders to enable each Lender and the Agent and its counsel
to evaluate such matters.
(D) Insurance. As soon as practicable and in any event within one
---------
hundred twenty (120) days of the end of each fiscal year commencing with
fiscal year ending August 31, 1998 deliver to the Agent and the Lenders (i) a
report in form as attached as Schedule 5.17 or otherwise in form and substance
-------------
reasonably satisfactory to the Agent outlining all material insurance coverage
maintained as of the date of such report by the Company and its Subsidiaries
and the duration of such coverage and (ii) an insurance broker's statement
that all premiums with respect to such coverage have been paid when due.
(E) ERISA Notices. Deliver or cause to be delivered to the Agent and
--------------
the Lenders, at the Company's expense, the following information and notices
as soon as reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after the Company obtains
Knowledge that a Termination Event has occurred, a written statement of the
chief financial officer of the Company describing such Termination Event and
the action, if any, which the Company has taken, is taking or proposes to take
with respect thereto, and when known, any action taken or threatened by the
IRS, DOL or PBGC with respect thereto and (b) within ten (10) Business Days
after any member of the Controlled Group obtains Knowledge that a Termination
Event has occurred which could reasonably be expected to subject the Company
to or any of its Subsidiaries liability individually or in the aggregate in
excess of $2,500,000, a written statement of the chief financial officer of
the Company describing such Termination Event and the action, if any, which
the member of the Controlled Group has taken, is taking or proposes to take
with respect thereto, and when known, any action taken or threatened by the
IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Company or any of its
Subsidiaries obtains Knowledge that a prohibited transaction (defined in
Sections 406 of ERISA and Section 4975 of the Code) has occurred, a statement
of the chief financial officer of the Company describing such transaction and
the action which the Company or such Subsidiary has taken, is taking or
proposes to take with respect thereto;
(iii) within ten (10) Business Days after any material increase in the
benefits of any existing Plan or the establishment of any new Benefit Plan or
the commencement of, or obligation to commence, contributions to any Benefit
Plan or Multiemployer Plan to which the Company or any member of the
Controlled Group was not previously contributing, notification of such
increase, establishment, commencement or obligation to commence and the amount
of such contributions;
(iv) within ten (10) Business Days after the Company or any of its
Subsidiaries receives notice of any unfavorable determination letter from the
IRS regarding the qualification of a Plan under Section 401(a) of the Code,
copies of each such letter;
(v) within thirty (30) Business Days after the establishment of any
Foreign Employee Benefit Plan or the commencement of, or obligation to
commence, contributions to any Foreign Employee Benefit Plan to which the
Company or any Subsidiary was not previously contributing, notification of
such establishment, commencement or obligation to commence and the amount of
such contributions;
(vi) within ten (10) Business Days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by the Company or a member of the
Controlled Group with respect to such request;
(vii) within ten (10) Business Days after receipt by the Company or any
member of the Controlled Group of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan, copies of
each such notice;
(viii) within ten (10) Business Days after receipt by the Company or any
member of the Controlled Group of a notice from a Multiemployer Plan regarding
the imposition of withdrawal liability, copies of each such notice;
(ix) within ten (10) Business Days after the Company or any member of
the Controlled Group fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or before
the due date for such installment or payment, a notification of such failure;
and
(x) within ten (10) Business Days after the Company or any member of the
Controlled Group knows or has reason to know that (a) a Multiemployer Plan has
been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (c) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
For purposes of this Section 6.1(E), the Company, any of its Subsidiaries and
--------------
any member of the Controlled Group shall be deemed to know all facts known by
the Administrator of any Plan of which the Borrower or any member of the
Controlled Group or such Subsidiary is the plan sponsor.
(F) Labor Matters. Notify the Agent and the Lenders in writing,
--------------
promptly upon the Company's or any of its Subsidiaries' learning thereof, of
(i) any labor dispute to which the Company or any of its Subsidiaries may
become a party, including, without limitation, any strikes, lockouts or other
disputes relating to such Persons' plants and other facilities and (ii) any
Worker Adjustment and Retraining Notification Act liability incurred with
respect to the closing of any plant or other facility of the Company or any of
its Subsidiaries where, in the case of (i) or (ii), such is reasonably likely
to have a Material Adverse Effect.
(G) Other Indebtedness. Deliver to the Agent (i) a copy of each regular
------------------
report, notice or communication regarding potential or actual defaults
(including any accompanying officers' certificate) delivered by or on behalf
of the Company or any of its Subsidiaries to the holders of Indebtedness for
money borrowed with respect to Indebtedness the outstanding principal balance
of which is at least $2,500,000 pursuant to the terms of the agreements
governing such Indebtedness, such delivery to be made at the same time and by
the same means as such notice or other communication is delivered to such
holders, and (ii) a copy of each notice or other communication received by the
Company or any of its Subsidiaries from the holders of Indebtedness for money
borrowed with respect to Indebtedness the outstanding principal balance of
which is at least $2,500,000 pursuant to the terms of such Indebtedness, such
delivery to be made promptly after such notice or other communication is
received by the Company or the applicable Subsidiary.
(H) Other Reports. Deliver or cause to be delivered to the Agent and
--------------
the Lenders copies of all 10-Ks, 10-Qs and 8-Ks filed with the Commission by
the Company.
(I) Environmental Notices. As soon as possible and in any event within
---------------------
ten (10) days after receipt by the Company or any of its Subsidiaries, a copy
of (i) any notice or claim to the effect that the Company or any of its
Subsidiaries is or may be liable to any Person as a result of the Release by
the Company, any of its Subsidiaries, or any other Person of any Contaminant
into the environment, and (ii) any notice alleging any violation of any
Environmental, Health or Safety Requirements of Law by the Company or any of
its Subsidiaries if, in either case, such notice or claim relates to an event
which could reasonably be expected to subject the Company or any of its
Subsidiaries to liability individually or in the aggregate in excess of
$2,500,000.
(J) Other Information. Within a reasonable period of time following
------------------
receipt of a request therefor from the Agent, prepare and deliver to the Agent
and the Lenders such other information with respect to the Company, any of its
Subsidiaries, or the Collateral, including, without limitation, schedules
identifying and describing the Collateral and any dispositions thereof, as
from time to time may be reasonably requested by the Agent.
6.2 Affirmative Covenants.
----------------------
(A) Existence, Etc. Except as provided by Section 6.3(B)(iv) with
---------------- ------------------
respect to the sale, dissolution or liquidation of certain Subsidiaries of the
Company, the Company shall, and shall cause each of its Subsidiaries to, at
all times maintain its existence and preserve and keep, or cause to be
preserved and kept, in full force and effect its rights and franchises
material to its businesses except that any Subsidiary of the Company may merge
with or liquidate into the Company or any other Subsidiary of the Company;
provided that the surviving entity expressly assumes any liabilities, if any,
-----
of either of such Subsidiaries with respect to the Obligations pursuant to an
assumption agreement reasonably satisfactory to the Agent; provided further
-------- -------
that the Consolidated Net Worth of the surviving corporation is not less than
the Consolidated Net Worth of the Subsidiary with any liability with respect
to the Obligations immediately prior to such merger; and provided further, if
-------- -------
the corporation being merged out of existence or liquidated is a party to a
Pledge Agreement the surviving entity shall execute and deliver such
documents, instruments, agreements and opinions in connection therewith as
shall be required by the Agent in connection with any such Pledge Agreement
(and all accrued interest in connection therewith) of such entity shall be
repaid in full as of the date of such liquidation or merger.
(B) Corporate Powers; Conduct of Business. Except as provided by Section
--------------------------------------- -------
6.3(B)(iv) with respect to the sale, dissolution or liquidation of certain
-------
Subsidiaries of the Company, the Company (x) shall, and shall cause each of
its Subsidiaries to qualify and remain qualified to do business in each
jurisdiction in which the nature of its business requires it to be so
qualified and where the failure to be so qualified will have or is reasonably
likely to have a Material Adverse Effect and (y) will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted.
(C) Compliance with Laws, Etc. The Company shall, and shall cause its
--------------------------
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, properties, assets or
operations of such Person, and (b) obtain as needed all permits necessary for
its operations and maintain such permits in good standing unless failure to
comply or obtain is not reasonably anticipated to have a Material Adverse
Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. The Company shall
----------------------------------------------
pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon it or on any of its properties or
assets or in respect of any of its franchises, business, income or property
before any penalty or interest accrues thereon, and (ii) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Lien permitted by Section 6.3(C)) upon any of
--------------
the Company's or such Subsidiary's property or assets, prior to the time when
any penalty or fine shall be incurred with respect thereto; provided, however,
-------- -------
that no such taxes, assessments and governmental charges referred to in clause
------
(i) above or claims referred to in clause (ii) above (and interest, penalties
--- -----------
or fines relating thereto) need be paid if being contested in good faith by
appropriate proceedings diligently instituted and conducted and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with Agreement Accounting Principles shall have been made therefor.
The Company will not permit any of its Subsidiaries to file or consent to the
filing of any consolidated income tax return with any Person other than the
Company or any of its Subsidiaries.
(E) Insurance. The Company shall maintain for itself and its
---------
Subsidiaries, or shall cause each of its Subsidiaries to maintain in full
force and effect the insurance policies and programs listed on Schedule 5.17
-------------
to this Agreement or substantially similar policies and programs or other
policies and programs as reflect coverage that is reasonably consistent with
prudent industry practice.
(F) Inspection of Property; Books and Records; Discussions. The Company
------------------------------------------------------
shall permit, and cause each of the Subsidiary Borrowers and Subsidiary
Obligors to permit, any authorized representative(s) designated by the Agent
(together with an authorized representative of any Lender that may request to
accompany such authorized representative of the Agent) to visit and inspect
any of the properties of the Company or any of the Subsidiary Borrowers and
Subsidiary Obligors, to examine, audit, check and make copies of their
respective financial and accounting records, books, journals, orders, receipts
and any non-privileged correspondence and other data relating to their
respective businesses or the transactions contemplated hereby (including,
without limitation, in connection with environmental compliance, hazard or
liability), and to discuss their affairs, finances and accounts with their
officers and independent certified public accountants, all upon reasonable
notice and at such reasonable times during normal business hours, as often as
may be reasonably requested; provided, however, that the Borrowers' and
-------- -------
Subsidiary Obligors' obligation to reimburse the Agent for reasonable costs
and expenses incurred in connection with such inspections shall be limited to
no more than one (1) inspection during any twelve-month period if such
inspections are conducted at a time when no Default or Unmatured Default shall
have occurred and is continuing. So long as any Default or Unmatured Default
shall have occurred and is continuing, and to the extent reasonably
practicable, any such inspection with respect to a Borrower or Subsidiary
Obligor will be coordinated with an Authorized Officer of the Company. The
Company shall keep and maintain, and cause each of the Company's Subsidiaries
to keep and maintain, in all material respects, proper books of record and
account in which entries in conformity with Agreement Accounting Principles
shall be made of all dealings and transactions in relation to their respective
businesses and activities, including, without limitation, transactions and
other dealings with respect to the Collateral. If a Default has occurred and
is continuing, the Company, upon the Agent's request, shall turn over copies
of any such records to the Agent or its representatives.
(G) ERISA Compliance. The Company shall, and shall cause each of its
-----------------
domestic Subsidiaries to, establish, maintain and operate all Plans to comply
in all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans.
(H) Maintenance of Property. The Company shall cause all property used
-----------------------
or useful in the conduct of its business or the business of any Subsidiary to
be maintained and kept in adequate condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of the Company may be necessary so that the business carried
on in connection therewith may be properly conducted at all times; provided,
--------
however, that nothing in this Section 6.2(H) shall prevent the Company from
------ --------------
discontinuing the operation or maintenance of any of such property if such
-
discontinuance is, in the judgment of the Company, desirable in the conduct of
-
its business or the business of any Subsidiary and not disadvantageous in any
respect to the Agent or the Lenders.
(I) Environmental Compliance. The Company and its Subsidiaries shall
-------------------------
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance will not have or is not reasonably likely to subject the
Company and its Subsidiaries to liability, individually in excess of
$2,500,000, or in the aggregate in excess of $5,000,000.
(J) Use of Proceeds. The Borrower shall use the proceeds of the Loans
---------------
to pay transaction costs in connection with the transactions evidenced by the
Loan Documents, to refinance existing indebtedness of the Company and its
Subsidiaries and to provide funds for the working capital needs and other
general corporate purposes of the Borrowers and their Subsidiaries. The
Company will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any "Margin Stock" or to make any
Acquisition, other than any Permitted Acquisition pursuant to Section 6.3(G).
--------------
(K) Foreign Employee Benefit Compliance. The Company shall, and shall
-----------------------------------
cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain
and operate all Foreign Employee Benefit Plans to comply in all material
respects with all laws, regulations and rules applicable thereto and the
respective requirements of the governing documents for such Plans, except for
failures to comply which, in the aggregate, would not result in a material
obligation to pay money.
6.3 Negative Covenants.
-------------------
(A) Indebtedness. Neither the Company nor any of its Subsidiaries shall
------------
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(a) the Obligations;
(b) Permitted Existing Indebtedness, and any extension, renewal,
refunding or refinancing thereof, provided that any such extension, renewal,
--------
refunding or refinancing is in an aggregate principal amount not greater than
the principal amount of and interest, fees and expenses accrued on, such
Permitted Existing Indebtedness outstanding at the time thereof and is on
terms (including, without limitation, maturity, amortization, interest rate,
premiums, fees, covenants, subordination, events of default, and remedies) not
materially less favorable to the obligor or adverse to the Lenders than the
terms of such Permitted Existing Indebtedness;
(c) Indebtedness permitted pursuant to Section 6.3(H) arising from
--------------
intercompany loans from (1) the Company, or any other Subsidiary of the
Company to any Borrower, (2) any Subsidiary that is not a Borrower to any
other Subsidiary or (3) any Borrower to any Subsidiary of the Company which is
not a Borrower; provided, that all such Indebtedness is subordinated to the
--------
Obligations on terms provided in this Agreement;
(d) Indebtedness in respect of Hedging Agreements permitted under
Section 6.3(P);
---------
(e) Indebtedness permitted by Sections 6.4(B) and 6.4(E)(2);
---------------- ---------
(f) Indebtedness constituting Contingent Obligations permitted by
Section 6.3(E);
---------
(g) unsecured Indebtedness and other liabilities incurred in the
ordinary course of business and consistent with past practice, but not
incurred through the borrowing of money or the obtaining of credit (other than
customary trade terms).
(B) Sales of Assets. Neither the Company nor any of its Subsidiaries
----------------
shall sell, assign, transfer, lease, convey or otherwise dispose of any
property, whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
(i) sales of Inventory in the ordinary course of business;
(ii) sales of certain assets of Purina Colombiana S.A., Purina de
Venezuela, V.A., [Purina de Guatemala, S.A.], and [Purina Peru S.A.], in each
case as described in that certain Agreement and Plan of Reorganization, dated
as of March ___, 1998, by and among the Company, ▇▇▇▇▇▇▇ Purina Company, and
▇▇▇▇▇▇▇ Purina International Holding Company, Inc., as in effect on the
Closing Date and without giving effect to any amendment or modification
thereto;
(iii) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets (other than the Capital Stock of any Subsidiary
of the Company) if such transaction (a) is of assets no longer required in the
ordinary course of business, (b) is for not less than fair market value, and
(c) when combined with all such other sales, assignments, transfers,
conveyances or other dispositions (i) during any fiscal year represents the
disposition of not greater than ten percent (10%) of the Company's
Consolidated Net Worth calculated as of the date of such sale, assignment,
transfer, conveyance or other disposition and after giving effect to such
transaction; and
(iv) (x) disposition of assets, dissolution, liquidation or sales of
shares of Subsidiaries (other than stock or assets of Subsidiary Borrowers or
Subsidiary Obligors) resulting from a determination by the Company to
discontinue its operations in a particular jurisdiction and (y) with the prior
written consent of all of the Lenders, the dissolution, liquidation or sale of
shares of any Subsidiary Borrower or Subsidiary Obligor and only so long as
any such sale or other disposition is for all cash consideration.
(C) Liens. Neither the Company nor any of its Subsidiaries shall
-----
directly or indirectly create, incur, assume, permit or suffer to exist any
Lien on or with respect to any of their respective property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) Liens securing financing under governmental or other special programs
which are more advantageous to the Company than the financing available under
this Agreement, to the extent such Liens are required in order to participate
in such programs, and any renewals or extensions of any such Liens;
(v) other Liens securing indebtedness not exceeding, in the aggregate, ten
percent (10%) of the Company's Consolidated Net Worth at the time of
incurrence thereof; and
(vi) pledges of assets of entities other than Borrowers and Subsidiary
Obligors to secure Indebtedness of Subsidiaries which are neither Borrowers
nor Subsidiary Obligors.
(D) Investments. Except for Permitted Existing Investments in an amount
-----------
not greater than the amount thereof on the Closing Date, neither the Company
nor any of its Subsidiaries shall directly or indirectly make or own any
Investment except:
(i) Investments constituting Permitted Acquisitions permitted by
Section 6.3(G);
-----------
(ii) Investments in Cash Equivalents;
(iii) Investments consisting of Indebtedness of employees to the
extent such Indebtedness does not exceed in the aggregate $1,000,000 in any
fiscal year;
(iv) Investments in a particular jurisdiction of locally generated
funds;
(v) Investments in Affiliates permitted by Section 6.3(H);
---------------
(vi) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business;
(vii) Investments consisting of deposit accounts maintained by the
Company and its Subsidiaries in connection with its cash management system in
the ordinary course of business and consistent with past practice;
(viii) Investments consisting of compensating balances maintained by
Purina Korea, Inc. in Korea as required by domestic financial institutions as
support for loans and advances made by such financial institutions to Purina
Korea, Inc.; provided, such amounts do not in the aggregate exceed $8,000,000
at any time; and
(ix) Investments constituting Contingent Obligations permitted by
Section 6.3(E) or Restricted Junior Payments permitted by Section 6.3(F); and
------------ --------------
(x) Investments with any other Persons which do not exceed in the
aggregate ten percent (10%) of the Consolidated Net Worth of the Company
(calculated as of the date of each such Investment).
(E) Contingent Obligations. Neither the Company nor any of its
-----------------------
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Contingent Obligation, material contingent liability, long-term
lease, synthetic lease or Contractual Obligation, not reflected in the
financial statements attached hereto as Exhibit G, except: (i) as set forth on
---------
Schedule 1.1.1, (ii) recourse obligations issued for the benefit of
---------------
customers, employees, vendors or other trading partners in the ordinary course
---------
of its business, (iii) guarantees to officers of the Company and its
subsidiaries of obligations of such officers with respect to the business of
the Company and its subsidiaries, (iv) guarantees incurred in connection with
or resulting from Permitted Acquisitions or other Investments not otherwise
prohibited under this Agreement; provided, that to the extent specified in
--------
this Agreement, such guarantees referred to in this clause (iv) shall be
-----------
treated as Indebtedness for purposes of this Agreement, and (v) guarantees
issued by the Company for the benefit of third-parties as support for loans
and advances made by such third-parties to (x) Subsidiary Borrowers or
Subsidiary Obligors and (y) Subsidiaries of the Company (other than Subsidiary
Borrowers and Subsidiary Obligors) in an amount, contingent or otherwise, not
to exceed $30,000,000 at any time.
(F) Restricted Junior Payments. Neither the Company nor any of its
----------------------------
Subsidiaries shall declare or make any Restricted Junior Payment, except:
(i) dividends payable by the Company in compliance with the corporation
law of the State of Missouri; and
(ii) Restricted Junior Payments made by any Subsidiary of the Company to
the Company or any other Subsidiary of the Company except that no Subsidiary
shall make any Investment in (x) any Affiliate (other than the Company) if as
a result thereof such Investments would at any time exceed in the aggregate
thirty percent (30%) of Consolidated Net Worth of the Company or (y) any
Affiliate (other than a Borrower or Subsidiary Obligor) if as a result thereof
such Investments would at any time exceed in the aggregate fifteen percent
(15%) of the Consolidated Net Worth of the Company;
provided, however, that the Restricted Junior Payments described in clause (i)
-------- ------- ----------
and clause (ii) shall not be permitted if either a Default or an Unmatured
------------
Default shall have occurred and be continuing at the date of declaration or
payment thereof or would result therefrom.
(G) Conduct of Business; Subsidiaries; Acquisitions. Neither the
---------------------------------------------------
Company nor any of its Subsidiaries shall engage in any business, or acquire
any other business, other than the businesses in, or reasonably related to,
the lines of business carried on by them on the date hereof. The Company
shall not and shall not permit any of its Subsidiaries to create, capitalize
or acquire any Subsidiary after the date hereof or enter into any transaction
or series of transactions in which it acquires all or any significant portion
of the assets of another Person, or such Person merges with or liquidates into
the Company or any of its Subsidiaries, unless (x) such transaction is in
connection with the Company's acquisition from ▇▇▇▇▇▇▇ Purina Company and/or
▇▇▇▇▇▇▇ Purina International Holding Company of the Capital Stock of each of
the Company's Subsidiaries on or about the Closing Date or (y) such
transaction meets the following requirements (each such transaction
constituting a "Permitted Acquisition"):
(1) no Default or Unmatured Default shall have occurred and be
continuing or would result from such transaction or transactions or the
incurrence of any Indebtedness in connection therewith;
(2) to the extent any such transaction, together with all such other
transactions, exceeds in the aggregate $5,000,000 during any fiscal year,
prior to each such transaction, the Company shall deliver to the Agent and the
Lenders a certificate from one of the Company's Authorized Officers
demonstrating to the satisfaction of the Agent and the Required Lenders that
after giving effect to such transaction or transactions and the incurrence of
any Indebtedness permitted by Section 6.3(A) in connection therewith on a pro
--------------
forma basis as if such acquisition, merger or liquidation and such incurrence
of Indebtedness had occurred on the first day of the twelve-month period
ending on the last day of the Company's most recently completed fiscal
quarter, the Company would have been in compliance with all provisions of
Section 6.4 at all times during such twelve-month period and not otherwise in
--------
Default;
(3) the transaction is consummated pursuant to a negotiated agreement on
a non-hostile basis and involves the purchase of, or entering into of, a
business line similar, or reasonably related, to that of the Company's and its
Subsidiaries as of the Closing Date;
(4) in the case of any merger permitted under this Agreement, the
surviving entity expressly assumes any liabilities, if any, either of the
Company or Subsidiary party thereto, as applicable, with respect to the
Obligations pursuant to an assumption agreement reasonably satisfactory to the
Agent; and
(5) the aggregate amount of Investments (including assumed liabilities)
in connection with all such transactions during the term of this Agreement
shall not exceed:
(A) for any single transaction or series of related transactions,
$20,000,000; and
(B) for all transactions, $80,000,000 (excluding Investments actually
made up to $4,000,000 in the aggregate in connection with the Company's
development of production facilities in _____________, China).
(H) Transactions with Shareholders and Affiliates. Except as set forth
---------------------------------------------
on Schedule 6.3(H), neither the Company nor any of its Subsidiaries shall
directly or indirectly (i) enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder or holders of any
Capital Stock or other Equity Interests in the Company, or with any Affiliate
of the Company, on terms that are less favorable to the Company or its
Subsidiaries, as applicable, than those that might be obtained in an arm's
length transaction at the time from Persons who are not such a holder or
Affiliate; or (ii) enter into or permit to exist any such non-arm's length
transaction, including without limitation loans and advances to or other
Investments in (x) any Affiliate (other than the Company) if as a result
thereof such Investments would at any time exceed in the aggregate thirty
percent (30%) of Consolidated Net Worth of the Company or (y) any Affiliate
(other than a Borrower or Subsidiary Obligor) if as a result thereof such
Investments would at any time exceed in the aggregate fifteen percent (15%) of
the Consolidated Net Worth of the Company.
(I) Sales and Leasebacks. Neither the Company nor any of its
----------------------
Subsidiaries shall become liable, directly, by assumption or by Contingent
Obligation, with respect to any lease, whether an Operating Lease, a synthetic
lease or a Capitalized Lease, of any property (whether real or personal or
mixed) (i) which it or one of its Subsidiaries sold or transferred or is to
sell or transfer to any other Person, or (ii) which it or one of its
Subsidiaries intends to use for substantially the same purposes as any other
property which has been or is to be sold or transferred by it or one of its
Subsidiaries to any other Person in connection with such lease, unless in
either case the sale involved is not prohibited under Section 6.3(B) and the
--------------
lease involved is not prohibited under Section 6.3(A).
---------------
(J) Margin Regulations. Neither the Borrower nor any of its
-------------------
Subsidiaries, shall use all or any portion of the proceeds of any credit
-
extended under this Agreement to purchase or carry Margin Stock.
(K) ERISA. The Company shall not (i) engage, or permit any of its
-----
Subsidiaries to engage, in any prohibited transaction described in Sections
406 of ERISA or 4975 of the Code for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from the
DOL;
(ii) permit to exist any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the Internal Revenue Code), with respect to
any Benefit Plan, whether or not waived;
(iii) fail, or permit any Controlled Group member to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Benefit Plan;
(iv) terminate, or permit any Controlled Group member to terminate, any
Benefit Plan which would result in any liability of the Company or any
Controlled Group member under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer Plan
which the Company or any Controlled Group member may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(vi) fail, or permit any Controlled Group member to fail, to pay any
required installment or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or other
payment; or
(vii) amend, or permit any Controlled Group member to amend, a Plan
resulting in an increase in current liability for the plan year such that the
Company or any Controlled group member is required to provide security to such
Plan under Section 401(a)(29) of the Code.
(L) Issuance of Equity Interests. Neither the Company nor any of its
-----------------------------
Subsidiaries shall issue any ownership, membership or other equity interests
after the date of this Agreement if such issuance causes a Change of Control
to occur.
(M) Organizational Documents. Neither the Company nor any of its
-------------------------
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective organizational documents as in effect on
the date hereof in any manner adverse to the interests of the Lenders without
the prior written consent of the Required Lenders.
(N) Other Indebtedness. Neither the Company nor any of its Subsidiaries
------------------
shall amend, supplement or otherwise modify the terms of any Indebtedness owed
by a Borrower or Subsidiary of the Company that would be materially adverse to
the Lenders, including, without limitation, with respect to subordination.
(O) Fiscal Year. The Company shall not change its fiscal year for
------------
accounting or tax purposes from a period consisting of the 12-month period
ending on August 31 of each calendar year.
(P) Hedging Obligations. The Company shall not and shall not permit any
-------------------
of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements other than hedging
or other derivative transactions (i) relating to the acquisition of raw
materials or the sale of products of the Company which are intended to protect
the Company against the risks of changes in market prices or (ii) relating to
currencies in which the Company receives revenues or incurs expenses which are
intended to protect the Company against the risks of changes in the exchange
rates relating to such currencies or (iii) relating to the interest rates on
its outstanding or proposed Indebtedness which are intended to protect the
Company against the risks of changes in the interest rates relating to such
borrowing (such hedging agreements collectively are sometimes referred to
herein as "Hedging Agreements"). In the event a Lender elects to enter into
any Hedging Agreements with the Company or any of its Subsidiaries, the
obligations of the Company or such Subsidiary with respect to such Hedging
Agreements shall be Secured Obligations secured by the Collateral.
(Q) Subsidiary Covenants. The Company will not, and will not permit any
--------------------
Subsidiary Borrower or Subsidiary Obligor to, create or otherwise cause to
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary Borrower or Subsidiary Obligor to (i) pay dividends
or make any other distribution on its stock, or make any other Restricted
Junior Payment, (ii) pay any Indebtedness or other Obligation owed to the
Company or any other Subsidiary, (iii) make loans or advances or other
Investments in the Company or any other Subsidiary, or (iv) sell, transfer or
otherwise convey any of its property to the Company or any other Subsidiary.
6.4 Financial Covenants. The Company shall comply with the following:
-------------------
(A) Interest Coverage Ratio. The Company shall maintain a ratio
-------------------------
("Interest Coverage Ratio") of (i) EBITDA to (ii) Cash Interest Expense of at
least 2.50 to 1.00 as of the end of each fiscal quarter commencing with the
fiscal quarter ending August 31, 1998 through the Termination Date.
In each case the Interest Coverage Ratio shall be determined as of the last
day of each fiscal quarter for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
----- -------
Interest Coverage Ratio shall be calculated using EBITDA and Cash Interest
Expense for the period commencing on the Closing Date through August 31, 1998,
(b) for the fiscal quarter ending November 30, 1998, the Interest Coverage
Ratio shall be calculated using EBITDA and Cash Interest Expense for the
period commencing on the Closing Date through November 30, 1998, and (c) for
the fiscal quarter ending February 28, 1999, the Interest Coverage Ratio shall
be calculated using EBITDA and Cash Interest Expense for the period commencing
on the Closing Date through February 28, 1999).
(B) Maximum Leverage Ratio. The Company shall not permit the ratio
------------------------
("Leverage Ratio") of (i) Total Debt to (ii) EBITDA to be greater than 3.00 to
1.00 as of the end of each fiscal quarter commencing with the fiscal quarter
ending August 31, 1998 through the Termination Date.
The Leverage Ratio shall be calculated, in each case, as of the last day of
each fiscal quarter based upon (A) for purposes of calculating Total Debt,
Indebtedness as of the last day of each such fiscal quarter; and (B) for
EBITDA, the actual amount for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
---- -------
Leverage Ratio shall be calculated using EBITDA for such fiscal quarter
multiplied by four, (b) for the fiscal quarter ending November 30, 1998, the
Leverage Ratio shall be calculated using EBITDA for the two fiscal quarters
ending November 30, 1998 multiplied by two (2), and (c) for the fiscal quarter
ending February 28, 1999, the Leverage Ratio shall be calculated using EBITDA
for the three fiscal quarters ending February 28, 1999 multiplied by
four-thirds (4/3)).
(C) Capital Expenditures. The Company will not, nor will it permit any
--------------------
Subsidiary to, expend, or be committed to expend, for Capital Expenditures
during any one fiscal year in the aggregate for the Company and its
Subsidiaries in excess of (a) $81,250,000 for the fiscal year ending August
31, 1998, (b) $40,000,000 for the fiscal year ending August 31, 1999 plus any
amount permitted to be expended in the previous fiscal year but not expended
and (c) $28,750,000 in the aggregate for the fiscal years ending August 31,
2000 and August 31, 2001 plus any amount permitted to be expended in the
previous fiscal year but not expended.
(D) Minimum Consolidated Net Worth. The Company shall not permit its
--------------------------------
Consolidated Net Worth at any time to be less than the amount set forth below
during the period set forth opposite such amount:
Minimum Consolidated Net Worth Applicable Period
--------------------------------- ------------------
$230,000,000 Closing Date through and including August 31,
1998
$240,000,000 September 1, 1998 through and including August
31, 1999
$250,000,000 At all times thereafter.
For purposes of determining Consolidated Net Worth of the Company and its
Subsidiaries as required by this Section 6.4(D) only, Consolidated Net Worth
--------------
of the Company and its Subsidiaries shall be calculated excluding (i) the
effect of translation account adjustments for the fiscal year ending on August
31, 1998 of up to $10,000,000 and (ii) the effect of further translation
account adjustments of up to an additional $20,000,000.
(E) Country Debt Limitations. Indebtedness (whether under this
--------------------------
Agreement or otherwise) incurred by the Subsidiaries in any particular country
shall be subject to each of the following limitations:
(1) The applicable Borrower or Subsidiary Obligor shall not have
Indebtedness under this Agreement outstanding at any time in excess of the
maximum Dollar Amount set forth below:
Borrower's or Subsidiary Obligor's
----------------------------------
Jurisdiction of Incorporation Maximum Dollar Amount
---------------------------------- ----------------------
Canada $ 6,500,000
---------------------------------- ----------------------
United States $ 5,000,000
---------------------------------- ----------------------
Italy $ 4,000,000
----------------------
Spain $ 2,500,000
----------------------
Hungary $ 2,000,000
---------------------------------- ----------------------
Korea $ 15,000,000
---------------------------------- ----------------------
Mexico $ 5,000,000
---------------------------------- ----------------------
Colombia $ 5,000,000
----------------------
Brazil $ 5,000,000
----------------------
Philippines $ 2,500,000
----------------------
Venezuela $ 2,500,000
---------------------------------- ----------------------
(2) The ratio of (i) Total Debt for each of the Subsidiary Borrowers and
Subsidiary Obligors (including Indebtedness owed to Affiliates but excluding
Contingent Obligations in the form of standby Letters of Credit issued under
this Agreement for the account of such Subsidiary Borrower or Subsidiary
Obligor for the benefit of domestic financial institutions as support for
loans and advances made by such financial institutions to the applicable
Subsidiary Borrower or Subsidiary Obligor to the extent any such loans or
advances are outstanding) to (ii) EBITDA for each of the Subsidiary Borrowers
and Subsidiary Obligors (other than Purina Korea, Inc.) shall not at any time
exceed 3.00 to 1.00. The ratio of (i) Total Debt (including Indebtedness owed
to Affiliates but excluding Contingent Obligations in the form of standby
Letters of Credit issued under this Agreement for the account of Purina Korea,
Inc. for the benefit of domestic financial institutions as support for loans
and advances made by such financial institutions to Purina Korea, Inc. to the
extent any such loans or advances are outstanding) to (ii) EBITDA for Purina
Korea, Inc. shall not at any time exceed 2.25 to 1.00.
The foregoing ratios shall be calculated, in each case, as of the last day of
each fiscal quarter based upon (A) for purposes of calculating Total Debt and
Indebtedness as of the last day of each such fiscal quarter, and (B) for
EBITDA, the actual amount for the four-quarter period ending on such day
(provided; however, (a) for the fiscal quarter ending August 31, 1998, the
---- -------
foregoing ratios shall be calculated using EBITDA for such fiscal quarter
multiplied by four, (b) for the fiscal quarter ending November 30, 1998, the
foregoing ratios shall be calculated using EBITDA for the two fiscal quarters
ending November 30, 1998 multiplied by two (2), and (c) for the fiscal quarter
ending February 28, 1999, the foregoing ratios shall be calculated using
EBITDA for the three fiscal quarters ending February 28, 1999 multiplied by
four-thirds (4/3)).
ARTICLE VII: DEFAULTS
-------------------------
7.1 Defaults. Each of the following occurrences shall constitute a
--------
Default under this Agreement:
(a) Failure to Make Payments When Due. Any Borrower or Subsidiary
-------------------------------------
Obligor shall (i) fail to pay when due any of the Obligations consisting of
principal with respect to the Loans or Letters of Credit or (ii) shall fail to
pay within three (3) days of the date when due any of the other Obligations
under this Agreement or the other Loan Documents.
(b) Breach of Certain Covenants. Any Borrower or Subsidiary Obligor
-----------------------------
shall fail duly and punctually to perform or observe any agreement, covenant
or obligation binding on such Borrower under (i) Sections 6.1 or Sections
------------ --------
6.2(A), (B), (D), (E), (G), or (H), and such failure shall continue unremedied
-- --- --- --- --- ---
for ten (10) Business Days after the earlier to occur of (x) notice from the
Agent or any Lender to the Company of such Default and (y) the Company or any
of its Subsidiaries knew or should have known of such Default exercising
reasonable diligence, or (ii) Sections 6.2(C), (F), (I), (J), or (K), Section
--------------- --- --- --- --- -------
6.3 or Section 6.4.
--- ------------
(c) Breach of Representation or Warranty. Any representation or
----------------------------------------
warranty made or deemed made by any Borrower or Subsidiary Obligor to the
Agent or any Lender herein or by the Company or any of its Subsidiaries in any
of the other Loan Documents or in any statement or certificate at any time
given by any such Person pursuant to any of the Loan Documents shall be false
or misleading in any material respect on the date as of which made (or deemed
made).
(d) Other Defaults. Any Borrower or Subsidiary Obligor shall default in
--------------
the performance of or compliance with any term contained in this Agreement
(other than as covered by paragraphs (a), (b) or (c) of this Section 7.1), or
-------------- --- --- -----------
the Company or any of its Subsidiaries shall default in the performance of or
compliance with any term contained in any of the other Loan Documents, and
such default shall continue for thirty (30) days after the earlier to occur of
(i) notice from the Agent or any Lender to the Company of such Default and
(ii) the Company or any of its Subsidiaries knew or should have known of such
default exercising reasonable diligence.
(e) Default as to Other Indebtedness. Any of the Company or any of its
--------------------------------
Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (other than the Obligations) the outstanding principal
amount of which Indebtedness is in excess of $5,000,000; or any breach,
default or event of default shall occur, or any other condition shall exist
under any instrument, agreement or indenture pertaining to any such
Indebtedness, if the effect thereof is to cause an acceleration, mandatory
redemption, a requirement that the Company or any such Subsidiary offer to
purchase such Indebtedness or other required repurchase of such Indebtedness,
or permit the holder(s) of such Indebtedness to accelerate the maturity of any
such Indebtedness or require a redemption or other repurchase of such
Indebtedness; or any such Indebtedness shall be otherwise declared to be due
and payable (by acceleration or otherwise) or required to be prepaid, redeemed
or otherwise repurchased by the Company or any of its Subsidiaries (other than
by a regularly scheduled required prepayment) prior to the stated maturity
thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
----------------------------------------------------------
(i) An involuntary case shall be commenced against the Company, or its
Subsidiaries with an aggregate net worth equal to or greater than ten percent
(10%) of the Company's Consolidated Net Worth, and the petition shall not be
dismissed, stayed, bonded or discharged within sixty (60) days after
commencement of the case; or a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company or such
Subsidiaries in an involuntary case, under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect; or any other
similar relief shall be granted under any applicable federal, state, local or
foreign law.
(ii) A decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Company, or its
Subsidiaries with an aggregate net worth equal to or greater than ten percent
(10%) of the Company's Consolidated Net Worth, or over all or a substantial
part of the property of the Company, or such Subsidiaries shall be entered; or
an interim receiver, trustee or other custodian of the Company or such
Subsidiaries or of all or a substantial part of the property of the Company or
such Subsidiaries shall be appointed or a warrant of attachment, execution or
similar process against any substantial part of the property of the Company or
such Subsidiaries shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Company or
---------------------------------------------------
its Subsidiaries with an aggregate net worth equal to or greater than ten
percent (10%) of the Company's Consolidated Net Worth, shall (i) commence a
voluntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (ii) consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to
a voluntary case, under any such law, (iii) consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property, (iv) make any assignment for the benefit of
creditors or (v) take any corporate action to authorize any of the foregoing.
(h) Judgments and Attachments. Any money judgment(s), writ or warrant
-------------------------
of attachment, or similar process against any of the Company or any of its
Subsidiaries or any of their respective assets involving in any single case or
in the aggregate an amount in excess of $5,000,000 is (are) entered and shall
remain undischarged, unvacated, unbonded or unstayed for a period of sixty
(60) days or in any event later than fifteen (15) days prior to the date of
any proposed sale thereunder.
(i) Dissolution. Any order, judgment or decree shall be entered against
-----------
the Company, or its Subsidiaries with an aggregate net worth equal to or
greater than ten percent (10%) of the Company's Consolidated Net Worth,
decreeing its involuntary dissolution or split up and such order shall remain
undischarged and unstayed for a period in excess of sixty (60) days; or the
Company or such Subsidiaries shall otherwise dissolve or cease to exist except
as specifically permitted by this Agreement unless the dissolving entity is a
limited liability company which elects to continue its existence.
(j) Loan Documents; Failure of Security. At any time, for any reason,
-----------------------------------
(i) any Loan Document as a whole that materially affects the ability of the
Agent, or any of the Lenders to enforce the Obligations or enforce their
rights against the Collateral, ceases to be in full force and effect or any of
the Company or any of its Subsidiaries party thereto seeks to repudiate its
obligations thereunder and the Liens intended to be created thereby are, or
any of the Company or any such Subsidiary seeks to render such Liens, invalid
and unperfected, or (ii) any action shall be taken to discontinue or to assert
the invalidity or unenforceability of any Loan Document, or (iii) Liens on
Collateral with a fair market value in excess of $2,500,000 in favor of the
Agent contemplated by the Loan Documents shall, at any time, for any reason,
be invalidated or otherwise cease to be in full force and effect, or such
Liens shall not have the priority contemplated by this Agreement or the Loan
Documents.
(k) Termination Event. Any Termination Event occurs which the Required
-----------------
Lenders believe is reasonably likely to subject the Company or any of its
Subsidiaries to liability individually or in the aggregate in excess of
$2,500,000.
(l) Waiver of Minimum Funding Standard. If the plan administrator of
-----------------------------------
any Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and any Lender believes the
substantial business hardship upon which the application for the waiver is
based could reasonably be expected to subject either the Company or any
Controlled Group member to liability individually or in the aggregate in
excess of $2,500,000.
(m) Change of Control. A Change of Control shall occur.
-------------------
(n) Environmental Matters. The Company or any of its Subsidiaries shall
---------------------
be the subject of any proceeding or investigation pertaining to (i) the
Release by the Company or any of its Subsidiaries of any Contaminant into the
environment, (ii) the liability of any of the Company or any of its
Subsidiaries arising from the Release by any other Person of any Contaminant
into the environment, or (iii) any violation of any Environmental, Health or
Safety Requirements of Law by the Company or any of its Subsidiaries, which,
in any case, has or is reasonably likely to subject the Company or any of its
Subsidiaries to liability individually in excess of $2,500,000 or in the
aggregate in excess of $5,000,000.
(o) Guarantor Revocation. Except as provided by Section 6.3(B)(iv) with
-------------------- ------------------
respect to the sale, dissolution or liquidation of certain Subsidiaries of the
Company, any guarantor of the Obligations shall terminate or revoke or refuse
to perform any of its payment obligations under the applicable guarantee
agreement or breach any of the other terms of such guarantee agreement which
breach remains unremedied for five (5) days.
A Default shall be deemed "continuing" until waived in writing in
accordance with Section 8.3.
------------
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND
------------------------------------------------------------------------------
REMEDIES
--------
8.1 Remedies.s
(a) Termination of Commitments; Acceleration If any Default described
----------------------------------------
in Section 7.1(f) or 7.1(g) occurs with respect to any of the Borrowers, the
--------------- ------
obligations of the Lenders to make Loans hereunder and the obligation of the
Agent or any Issuing Lender to issue Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent, any Lender or
any Issuing Lender. If any other Default occurs, the Required Lenders may (i)
terminate or suspend the obligations of the Lenders to make Loans hereunder
and the obligation of the Issuing Lenders to issue Letters of Credit
hereunder, or (ii) declare the Obligations to be due and payable, or both, and
upon any declaration under clause (ii), the Obligations shall become
------------
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrowers expressly waive.
(b) Rescission. If at any time after termination of the Lenders'
----------
obligations to make Loans or acceleration of the maturity of the Loans,
Borrowers shall pay all arrears of interest and all payments on account of
principal of the Loans and Reimbursement Obligations which shall have become
due otherwise than by acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates specified in this
Agreement) and all Defaults and Unmatured Defaults (other than nonpayment of
principal of and accrued interest on the Loans due and payable solely by
virtue of acceleration) shall be waived pursuant to Section 8.3, then upon the
-----------
written consent of the Required Lenders and written notice to Borrowers, the
termination of Lenders' respective obligations to make Loans and the
respective Lenders' and the Issuing Lenders' obligations to participate in or
issue Letters of Credit or the aforesaid acceleration and its consequences may
be rescinded and annulled; but such action shall not affect any subsequent
Default or Unmatured Default or impair any right or remedy consequent thereon.
The provisions of the preceding sentence are intended merely to bind the
Lenders and the Issuing Lenders to a decision which may be made at the
election of the Required Lenders; they are not intended to benefit Borrowers
and do not give Borrowers the right to require the Lenders to rescind or annul
any termination of the aforesaid obligations of the Lenders or Issuing Lenders
or any acceleration hereunder, even if the conditions set forth herein are
met.
(c) Enforcement. The Borrowers acknowledge that in the event the
-----------
Borrowers fail to perform, observe or discharge any of their respective
obligations or liabilities under this Agreement or any other Loan Document,
any remedy of law may prove to be inadequate relief to the Agent, the Issuing
Lenders and the Lenders; therefore, Borrowers agree that the Agent, the
Issuing Lenders and the Lenders shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
8.2 Defaulting Lender. In the event that any Lender fails to fund its
-----------------
Revolving Credit Share of any Advance requested or deemed requested by any
Borrower which such Lender is obligated to fund under the terms of this
Agreement (the funded portion of such Advance being hereinafter referred to as
a "Non Pro Rata Loan"), until the earlier of such Lender's cure of such
failure and the termination of the Commitments, the proceeds of all amounts
thereafter repaid to the Agent by the Borrowers and otherwise required to be
applied to such Lender's share of all other Obligations pursuant to the terms
of this Agreement shall be advanced to the Borrowers by the Agent ("Cure
Loans") on behalf of such Lender to cure, in full or in part, such failure by
such Lender, but shall nevertheless be deemed to have been paid to such Lender
in satisfaction of such other Obligations. Notwithstanding anything in this
Agreement to the contrary:
(i) the foregoing provisions of this Section 8.2 shall apply only with
-----------
respect to the proceeds of payments of Obligations and shall not affect the
conversion or continuation of Loans pursuant to Section 2.6;
------------
(ii) any such Lender shall be deemed to have cured its failure to fund
its Revolving Credit Share of any Advance at such time as an amount equal to
such Lender's original Revolving Credit Share of the requested principal
portion of such Advance is fully funded to the applicable Borrower, whether
made by such Lender itself or by operation of the terms of this Section 8.2,
-----------
and whether or not the Non Pro Rata Loan with respect thereto has been repaid,
converted or continued;
(iii) regardless of whether or not a Default has occurred or is
continuing, and notwithstanding the instructions of the applicable Borrower as
to its desired application, all repayments of principal which, in accordance
with the other terms of this Agreement, would be applied to the outstanding
Base Rate Loans shall be applied first, ratably to all Base Rate Loans
-----
constituting Non Pro Rata Loans, second, ratably to Base Rate Loans other than
------
those constituting Non Pro Rata Loans or Cure Loans and, third, ratably to
-----
Base Rate Loans constituting Cure Loans;
(iv) for so long as and until the earlier of any such Lender's cure of
the failure to fund its Revolving Credit Share of any Advance and the
termination of the Commitments, the term "Required Lenders" for purposes of
this Agreement shall mean Lenders (excluding all Lenders whose failure to fund
their respective Revolving Credit Shares of such Advance have not been so
cured) whose Pro Rata Shares represent at least sixty-six and two-thirds
(66-2/3%) of the aggregate Pro Rata Shares of such Lenders; and
(v) for so long as and until any such Lender's failure to fund its
Revolving Credit Share of any Advance is cured in accordance with Section
-------
8.2(ii), (A) such Lender shall not be entitled to any facility fees with
---
respect to its Commitments and (B) such Lender shall not be entitled to any
-
letter of credit fees, which facility fees and letter of credit fees shall
accrue in favor of the non-defaulting, shall be allocated among such
performing Lenders ratably based upon their relative Commitments.
8.3 Amendments. Subject to the provisions of this Article VIII, the
---------- ------------
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrowers may enter into agreements supplemental hereto for
the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrowers hereunder or
waiving any Default hereunder; provided, however, that no such supplemental
-------- -------
agreement shall, without the consent of each Lender affected thereby:
(i) Postpone or extend the Termination Date or any other date fixed for
any payment of principal of, or interest on, the Loans, the Reimbursement
Obligations or any fees or other amounts payable to such Lender (except with
respect to (a) any modifications of the provisions relating to prepayments of
Loans and other Obligations and (b) a waiver of the application of the default
rate of interest pursuant to Section 2.7 hereof).
------------
(ii) Reduce the principal amount of any Loans or L/C Obligations, or
reduce the rate or extend the time of payment of interest or fees thereon.
(iii) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Commitment of any Lender hereunder
(except with respect to an increase in any sublimits for any Types of Loans
within the Commitments).
(v) Permit any Borrower to assign its rights under this Agreement.
(vi) Amend this Section 8.3.
------------
(vii) Except as provided by Section 6.3(B)(iv) with respect to the sale,
------------------
dissolution or liquidation of certain Subsidiaries of the Company, release any
guarantor of all or any part of the Obligations or release all or
substantially all of the Collateral.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. No amendment of any
provision of this Agreement relating to any Issuing Lender shall be effective
without the written consent of the Agent and each of the Issuing Lenders. The
Agent may waive payment of the fee required under Section 12.3(B) without
---------------
obtaining the consent of any of the Lenders.
8.4 Preservation of Rights. No delay or omission of the Lenders, the
-----------------------
Issuing Lenders or the Agent to exercise any right under the Loan Documents
shall impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of a Loan or the issuance of a Letter of
Credit notwithstanding the existence of a Default or the inability of the
Borrowers to satisfy the conditions precedent to such Loan or issuance of such
Letter of Credit shall not constitute any waiver or acquiescence. Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment
or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in writing signed by the Lenders
required pursuant to Section 8.3, and then only to the extent in such writing
-----------
specifically set forth. All remedies contained in the Loan Documents or by
law afforded shall be cumulative and all shall be available to the Agent, the
Issuing Lenders and the Lenders until the Obligations have been paid in full.
ARTICLE IX: GENERAL PROVISIONS
-----------------------------------
9.1 Survival of Representations. All representations and warranties of
---------------------------
the Borrowers and Subsidiary Obligors contained in this Agreement shall
survive delivery of the Notes and the making of the Loans herein contemplated.
9.2 Governmental Regulation. Anything contained in this Agreement to
------------------------
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrowers and neither the Agent nor any Issuing Lender shall be obligated
to issue any Letter of Credit for the account of any Borrower in violation of
any limitation or prohibition provided by any applicable statute or
regulation.
9.3 Performance of Obligations. Each of the Borrowers agrees that the
--------------------------
Agent may, but shall have no obligation to (i) at any time, pay or discharge
taxes, liens, security interests or other encumbrances levied or placed on or
threatened against any Collateral and (ii) after the occurrence and during the
continuance of a Default make any other payment or perform any act required of
any Borrower under any Loan Document or take any other action which the Agent
in its discretion deems necessary or desirable to protect or preserve the
Collateral. The Agent shall use its best efforts to give the applicable
Borrower notice of any action taken under this Section 9.3 prior to the taking
-----------
of such action or promptly thereafter provided the failure to give such notice
shall not affect the applicable Borrower's obligations in respect thereof.
Each of the Borrowers agrees to pay the Agent, upon demand, the principal
amount of all funds advanced by the Agent under this Section 9.3, together
-----------
with interest thereon at the rate from time to time applicable to Base Rate
Loans from the date of such advance until the outstanding principal balance
thereof is paid in full. If any Borrower fails to make payment in respect of
any such advance under this Section 9.3 within one (1) Business Day after the
-----------
date such Borrower receives written demand therefor from the Agent, the Agent
shall promptly notify each Lender and each Lender agrees that it shall
thereupon make available to the Agent, in Dollars in immediately available
funds, the amount equal to such Lender's Pro Rata Share of such advance. If
such funds are not made available to the Agent by such Lender within one (1)
Business Day after the Agent's demand therefor, the Agent will be entitled to
recover any such amount from such Lender together with interest thereon at the
Federal Funds Effective Rate for each day during the period commencing on the
date of such demand and ending on the date such amount is received. The
failure of any Lender to make available to the Agent its Pro Rata Share of any
such unreimbursed advance under this Section 9.3 shall neither relieve any
-----------
other Lender of its obligation hereunder to make available to the Agent such
other Lender's Pro Rata Share of such advance on the date such payment is to
be made nor increase the obligation of any other Lender to make such payment
to the Agent. All outstanding principal of, and interest on, advances made
under this Section 9.3 shall constitute Obligations secured by the Collateral
-----------
until paid in full by the Borrowers.
9.4 Headings. Section headings in the Loan Documents are for
--------
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
9.5 Entire Agreement. The Loan Documents embody the entire agreement
-----------------
and understanding among the Borrowers, the Subsidiary Obligors, the Agent, and
the Lenders and supersede all prior agreements and understandings relating to
the subject matter thereof.
9.6 Several Obligations; Benefits of this Agreement. The respective
-------------------------------------------------
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other. The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
9.7 Expenses; Indemnification.
--------------------------
(A) Expenses. Subject to the letter agreements dated February 25, 1998
--------
and November 3, 1997 among the Company, the Agent and the Arranger with
respect to costs and expenses incurred on or prior to the Closing Date, the
Borrowers shall reimburse the Agent and the Arranger for any reasonable costs,
internal charges and out-of-pocket expenses (including attorneys' and
paralegals' fees and time charges of attorneys and paralegals for the Agent or
the Arranger, which attorneys and paralegals may be employees of the Agent or
the Arranger) paid or incurred by the Agent or Arranger in connection with the
preparation, negotiation, execution, delivery, syndication, review, amendment,
modification, and administration of the Loan Documents. Each of the Borrowers
also agrees to reimburse the Agent, the Lenders and the Issuing Lenders for
any costs, internal charges and out-of-pocket expenses (including attorneys'
and paralegals' fees and time charges of attorneys and paralegals for the
Agent, the Lenders and the Issuing Lenders, which attorneys and paralegals may
be employees of the Agent, the Lenders or the Issuing Lenders) paid or
incurred by the Agent, any Lender or any Issuing Lender in connection with the
collection of the Obligations and enforcement of the Loan Documents. In
addition to expenses set forth above, each of the Borrowers agrees to
reimburse the Agent, promptly after the request therefor, for each audit,
collateral analysis or other business analysis performed by the Agent (or its
authorized representative) for the benefit of the Lenders in connection with
this Agreement or the other Loan Documents in an amount equal to the Agent's
then customary charges for each person employed to perform such audit or
analysis, plus all reasonable costs and expenses (including without
limitation, travel expenses) incurred by the Agent in the performance of such
audit or analysis; provided, that each Borrower and Subsidiary Obligor shall
--------
only be responsible for expenses in connection with one (1) such audit or
business analysis performed with respect to such Borrower or Subsidiary
Obligor, as applicable, in any twelve-month period at a time when no Default
had occurred or was continuing. The Agent shall provide the Borrowers with a
detailed statement of all reimbursements requested under this Section 9.7(A).
--------------
(B) Indemnity. Each of the Borrowers and Subsidiary Obligors further agrees
---------
to defend, protect, indemnify, and hold harmless the Agent, the Arranger, each
and all of the Lenders, each and all of the Issuing Lenders, and each of their
respective Affiliates, and each of such Agent's, Arranger's, Lender's, Issuing
Lender's or Affiliate's respective officers, directors, employees, attorneys
and agents (including, without limitation, those retained in connection with
the satisfaction or attempted satisfaction of any of the conditions set forth
in Article IV) (collectively, the "Indemnitees") from and against any and all
----------
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses of any kind or nature whatsoever (including,
without limitation, the fees and disbursements of counsel for such Indemnitees
in connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitees shall be designated a party thereto), imposed
on, incurred by, or asserted against such Indemnitees in any manner relating
to or arising out of:
(i) this Agreement, the other Loan Documents, or any act, event or
transaction related or attendant thereto, the making of the Loans, and the
issuance of and participation in Letters of Credit hereunder, the management
of such Loans or Letters of Credit, the use or intended use of the proceeds of
the Loans or Letters of Credit hereunder, or any of the other transactions
contemplated by the Loan Documents; or
(ii) any liabilities, obligations, responsibilities, losses, damages,
personal injury, death, punitive damages, economic damages, consequential
damages, treble damages, intentional, willful or wanton injury, damage or
threat to the environment, natural resources or public health or welfare,
costs and expenses (including, without limitation, attorney, expert and
consulting fees and costs of investigation, feasibility or remedial action
studies), fines, penalties and monetary sanctions, interest, direct or
indirect, known or unknown, absolute or contingent, past, present or future
relating to violation of any Environmental, Health or Safety Requirements of
Law arising from or in connection with the past, present or future operations
of the Company, its Subsidiaries or any of their respective predecessors in
interest, or, the past, present or future environmental, health or safety
condition of any respective property of the Company or its Subsidiaries, the
presence of asbestos-containing materials at any respective property of the
Company or its Subsidiaries or the Release or threatened Release of any
Contaminant into the environment (collectively, the "Indemnified Matters");
provided, however, the Borrowers and Subsidiary Obligors shall have no
-------- -------
obligation to an Indemnitee hereunder with respect to (i) Indemnified Matters
-------
to the extent any such Indemnified Matter is found in a final non-appealable
judgment by a court of competent jurisdiction to have arisen from such
Indemnitee's gross negligence or wilful misconduct or (ii) Indemnified Matters
arising solely out of a dispute between the Agent or a dispute between any
Lender and the Agent. If the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrowers and Subsidiary Obligors
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified
Matters incurred by the Indemnitees.
(C) Waiver of Certain Claims; Settlement of Claims. Each of the
----------------------------------------------------
Borrowers and each of the Subsidiary Obligors agrees to assert no claim
against any of the Indemnitees on any theory of liability for consequential
damages, indirect damages, exemplary damages, punitive damages or any other
similar theory of damages howsoever categorized. No settlement shall be
entered into by the Company or any if its Subsidiaries with respect to any
claim, litigation, arbitration or other proceeding relating to or arising out
of the transaction evidenced by this Agreement or the other Loan
Documents(whether or not the Agent, any Lender, any Issuing Lender or any
Indemnitee is a party thereto) unless such settlement releases all Indemnitees
from any and all liability with respect thereto.
(D) Survival of Agreements. The obligations and agreements of the
------------------------
Borrowers and Subsidiary Obligors under this Section 9.7 shall survive the
-----------
termination of this Agreement.
9.8 Numbers of Documents. All statements, notices, closing documents,
--------------------
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.9 Accounting. Except as provided to the contrary herein, all
----------
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10 Severability of Provisions. Any provision in any Loan Document
----------------------------
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
9.11 Nonliability of Lenders. The relationship among the Borrowers and
-----------------------
the Lenders, Issuing Lenders and the Agent shall be solely that of borrower
and lender. Neither the Agent nor any Lender nor any Issuing Lender shall
have any fiduciary responsibilities to the Borrowers or to the Subsidiary
Obligors. Neither the Agent, nor any Lender, nor any Issuing Lender
undertakes any responsibility to the Borrowers or the Subsidiary Obligors to
review or inform the Borrowers or Subsidiary Obligors of any matter in
connection with any phase of the Borrowers' or Subsidiary Obligors' business
or operations.
9.12 GOVERNING LAW. THE AGENT ACCEPTS THIS AGREEMENT, ON BEHALF OF
--------------
ITSELF, THE OTHER AGENTS, THE LENDERS AND THE ISSUING LENDERS, AT CHICAGO,
ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. THIS AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF ILLINOIS. WITHOUT LIMITING THE FOREGOING, ANY DISPUTE BETWEEN
ANY BORROWER OR ANY SUBSIDIARY OBLIGOR AND THE AGENT, ANY LENDER, ANY ISSUING
LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM
IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
9.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
--------------------------------------------------------------
(A) JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH OF THE
------------ --------------
PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS WHETHER
ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, MAY BE RESOLVED EXCLUSIVELY
BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES
HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO
WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY OBJECTION
--------------
THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. EACH OF THE BORROWERS AND SUBSIDIARY OBLIGORS
-------------------
AGREES THAT THE AGENT, ANY LENDER, ANY ISSUING LENDER OR ANY HOLDER OF SECURED
OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST ANY BORROWER OR ANY
SUBSIDIARY OBLIGOR OR ANY BORROWER'S OR SUBSIDIARY OBLIGOR'S PROPERTY IN A
COURT IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL
JURISDICTION OVER SUCH BORROWER OR SUBSIDIARY OBLIGOR OR (2) REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH OF THE
BORROWERS AND SUBSIDIARY OBLIGORS AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT UNDER THIS CLAUSE (B) BY
----------
SUCH PERSON TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH
PERSON ALL OF WHICH PERMISSIVE COUNTERCLAIMS MAY BE BROUGHT ONLY IN THE
JURISDICTION SET FORTH IN CLAUSE (A) ABOVE. EACH OF THE BORROWERS AND
-----------
SUBSIDIARY OBLIGORS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
-------------
(C) VENUE. EACH OF THE BORROWERS AND SUBSIDIARY OBLIGORS IRREVOCABLY
-------
WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY
----- --- ----------
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH IN ANY JURISDICTION SET FORTH
ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
--------------------
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
9.14 Subordination of Intercompany Indebtedness. Each of the Borrowers
------------------------------------------
and Subsidiary Obligors agrees that any and all claims of such Borrower or
Subsidiary Obligor against any other Borrower, any Subsidiary Obligor, any
endorser, obligor or any other guarantor of all or any part of the Secured
Obligations, or against any of its properties shall be subordinate and subject
in right of payment to the prior payment, in full and in cash, of all Secured
Obligations. Notwithstanding any right of any Borrower or Subsidiary Obligor
to ask, demand, ▇▇▇ for, take or receive any payment from any other Borrower
or any Subsidiary Obligor, all rights, liens and security interests of any
Borrower or Subsidiary Obligor, whether now or hereafter arising and howsoever
existing, in any assets of any other Borrower or any Subsidiary Obligor
(whether constituting part of Collateral given to any Holder of Secured
Obligations or the Agent to secure payment of all or any part of the Secured
Obligations or otherwise) shall be and are subordinated to the rights of the
Holders of Secured Obligations and the Agent in those assets. No Borrower or
Subsidiary Obligor shall have any right to possession of any such asset or to
foreclose upon any such asset, whether by judicial action or otherwise, unless
and until all of the Secured Obligations (other than contingent indemnity
obligations) shall have been fully paid and satisfied and all financing
arrangements among the Borrowers, Subsidiary Obligors and the Holders of
Secured Obligations have been terminated. So long as any Default shall have
occurred and is continuing, if all or any part of the assets of any Borrower
or Subsidiary Obligor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Borrower or
Subsidiary Obligor, whether partial or complete, voluntary or involuntary, and
whether by reason of liquidation, bankruptcy, arrangement, receivership,
assignment for the benefit of creditors or any other action or proceeding, or
if the business of any Borrower or Subsidiary Obligor is dissolved or if
substantially all of the assets of any Borrower or Subsidiary Obligor are
sold, then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any indebtedness of any such
Borrower or Subsidiary Obligor to any other Borrower or Subsidiary Obligor
("Intercompany Indebtedness") shall be paid or delivered directly to the Agent
for application on any of the Secured Obligations, due or to become due, until
such Secured Obligations (other than contingent indemnity obligations) shall
have first been fully paid and satisfied. The Borrowers and the Subsidiary
Obligors irrevocably authorize and empower the Agent to demand, ▇▇▇ for,
collect and receive every such payment or distribution and give acquittance
therefor and to make and present for and on behalf of the applicable Borrower
or Subsidiary Obligor such proofs of claim and take such other action, in the
Agent's own name or in the name of the applicable Borrower or Subsidiary
Obligor or otherwise, as the Agent may deem necessary or advisable for the
enforcement of this Section 9.14; provided, that the Agent agrees not to
------------- --------
exercise such powers unless a Default shall have occurred and is continuing.
The Agent may vote such proofs of claim in any such proceeding, receive and
collect any and all dividends or other payments or disbursements made thereon
in whatever form the same may be paid or issued and apply the same on account
of any of the Secured Obligations. Should any payment, distribution, security
or instrument or proceeds thereof be received by any Borrower or Subsidiary
Obligor upon or with respect to the Intercompany Indebtedness at any time a
Default shall have occurred and be continuing and prior to the satisfaction of
all of the Secured Obligations (other than contingent indemnity obligations)
and the termination of all financing arrangements among the Borrowers, the
Subsidiary Obligors and the Holders of Secured Obligations, the applicable
Borrower or Subsidiary Obligor shall receive and hold the same in trust, as
trustee, for the benefit of the Holders of Secured Obligations and shall so
long as any Default shall have occurred and be continuing promptly deliver the
same to the Agent, for the benefit of the Holders of Secured Obligations, in
precisely the form received (except for the endorsement or assignment of the
Borrower where necessary), for application to any of the Secured Obligations,
due or not due, and, until so delivered, the same shall be held in trust by
the Borrower or Subsidiary Obligor, as applicable, as the property of the
Holders of Secured Obligations. If any Borrower or Subsidiary Obligor fails
to make any such endorsement or assignment to the Agent, the Agent or any of
its officers or employees are irrevocably authorized to make the same. So
long as any Default shall have occurred and is continuing, the Borrowers and
Subsidiary Obligors agree that until the Secured Obligations (other than the
contingent indemnity obligations) have been paid in full (in cash) and
satisfied and all financing arrangements among the Borrowers, Subsidiary
Obligors and the Holders of Secured Obligations have been terminated, the
Borrowers and Subsidiary Obligors will not assign or transfer to any Person
(other than the Agent) any claim such Borrower or Subsidiary Obligor has or
may have against any other Borrower or Subsidiary Obligor.
9.15 No Strict Construction. The parties hereto have participated
------------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
ARTICLE X: THE AGENT
-------------------------
10.1 Appointment; Nature of Relationship. ABN AMRO Bank N.V. is
--------------------------------------
appointed by the Lenders (each reference in this Article X to a Lender being
---------
in its capacity either as a Lender or an Issuing Lender, or any or all of the
foregoing) as the Agent hereunder and under each other Loan Document, and each
of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this
Article X. Notwithstanding the use of the defined term "Agent," it is
-----
expressly understood and agreed that the Agent shall not have any fiduciary
---
responsibilities to any Lender by reason of this Agreement and that the Agent
is merely acting as the representative of the Lenders with only those duties
as are expressly set forth in this Agreement and the other Loan Documents. In
its capacity as the Lenders' contractual representative, the Agent (i) does
not assume any fiduciary duties to any of the Lenders, (ii) is a
"representative" of the Lenders within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Loan Documents. Each of the Lenders agrees to assert
no claim against the Agent on any agency theory or any other theory of
liability for breach of fiduciary duty, all of which claims each Lender
waives.
10.2 Powers. The Agent shall have and may exercise such powers under
------
the Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties or fiduciary duties to the Lenders, or
any obligation to the Lenders to take any action hereunder or under any of the
other Loan Documents except any action specifically provided by the Loan
Documents required to be taken by the Agent.
10.3 General Immunity. Neither the Agent nor any of its respective
-----------------
directors, officers, agents or employees shall be liable to any of the
Borrowers, the Subsidiary Obligors, the Lenders or any Lender for any action
taken or omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith except to the extent any such
action or inaction is found in a final non-appealable judgment by a court of
competent jurisdiction to have arisen from the gross negligence or willful
misconduct of such Person.
10.4 No Responsibility for Loans, Creditworthiness, Collateral,
---------------------------------------------------------------
Recitals, Etc. Neither the Agent nor any of its respective directors,
-------
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (iii) the satisfaction of
any condition specified in Article IV; (iv) the existence or possible
-----------
existence of any Default or (v) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith. The Agent shall not be responsible to any Lender for any recitals,
statements, representations or warranties herein or in any of the other Loan
Documents, for the perfection or priority of any of the Liens on any of the
Collateral, or for the execution, effectiveness, genuineness, validity,
legality, enforceability, collectibility, or sufficiency of this Agreement or
any of the other Loan Documents or the transactions contemplated thereby, or
for the financial condition of any Subsidiary Obligor of any or all of the
Obligations, the Company or any of its Subsidiaries.
10.5 Action on Instructions of Lenders. The Agent shall in all cases be
---------------------------------
fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders (except with respect to actions that require the consent of
all of the Lenders as provided in Section 8.3), and such instructions and any
-----------
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders and on all Holders of Secured Obligations. The Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction
by the Lenders pro rata against any and all liability, cost and expense that
it may incur by reason of taking or continuing to take any such action.
10.6 Employment of Agents and Counsel. The Agent may execute any of its
--------------------------------
duties hereunder and under any other Loan Document by or through employees,
agents, and attorneys-in-fact, and shall not be answerable to the Lenders,
except as to money or securities received by it or its authorized agents, for
the default or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. The Agent shall be entitled to advice of counsel
concerning the contractual arrangement among the Agent and the Lenders, as the
case may be, and all matters pertaining to its duties hereunder and under any
other Loan Document.
10.7 Reliance on Documents; Counsel. The Agent shall be entitled to
--------------------------------
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
10.8 The Agent's Reimbursement and Indemnification. The Lenders agree
---------------------------------------------
to reimburse and indemnify the Agent ratably in proportion to their respective
Pro Rata Shares (i) for any amounts not reimbursed by the Borrowers or
Subsidiary Obligors for which the Agent is entitled to reimbursement or
indemnification by the Borrowers or Subsidiary Obligors under the Loan
Documents, (ii) for any other expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents including as a result of
a dispute among the Lenders or between any Lender and the Agent, and (iii) for
any liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature whatsoever
which may be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of the Loan Documents or any other document
delivered in connection therewith or the transactions contemplated thereby, or
the enforcement of any of the terms thereof or of any such other documents,
including as a result of a dispute among the Lenders or between any Lender and
the Agent, provided that no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have arisen solely from the gross
negligence or willful misconduct of the Agent.
10.9 Rights as a Lender. With respect to its Commitments, Loans made by
------------------
it, the Notes issued to it in its individual capacity and Letters of Credit
issued by it as an Issuing Lender, the Agent shall have the same rights and
powers hereunder and under any other Loan Document as any Lender and may
exercise the same as through it were not the Agent, and the term "Lender" or
"Lenders" or "Issuing Lender" or "Issuing Lenders", as applicable, shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, enter into
Hedging Agreements and generally engage in any kind of trust, debt, equity or
other transaction, in addition to those contemplated by this Agreement or any
other Loan Document, with the Company or any of its Subsidiaries in which such
Person is not prohibited hereby from engaging with any other Person.
10.10 Lender Credit Decision. Each Lender acknowledges that it has,
------------------------
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Company, the Borrowers and
the Subsidiary Obligors and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Lender also acknowledges
that it will, independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement and the other Loan Documents.
10.11 Successor Agent. The Agent may resign at any time by giving
----------------
written notice thereof to the Lenders and the Borrowers. Upon any such
resignation, the Required Lenders shall have the right to appoint, on behalf
of the Borrowers and the Lenders, a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within thirty days after the retiring Agent's giving notice
of resignation, then the retiring Agent may appoint, on behalf of the
Borrowers and the Lenders, a successor Agent. Notwithstanding anything herein
to the contrary, so long as no Default has occurred and is continuing, each
such successor Agent shall be subject to approval by the Company, which
approval shall not be unreasonably withheld. Such successor Agent shall be a
commercial bank having capital and retained earnings of at least $500,000,000.
Upon the acceptance of any appointment as the Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Loan Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article X shall continue in effect
---------
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent hereunder and under the other Loan Documents.
10.12 Collateral Documents. Each Lender authorizes the Agent to enter
--------------------
into each of the Collateral Documents to which it is a party and to take all
action contemplated by such documents. Each Lender agrees that no Lender
shall have the right individually to seek to realize upon the security granted
by any Collateral Document, it being understood and agreed that such rights
and remedies may be exercised solely by the Agent for the benefit of the
Holders of Secured Obligations upon the terms of the Collateral Documents.
10.13. No Duties Imposed Upon Arranger. None of the Persons identified
-------------------------------
on the cover page to this Agreement, the signature pages to this Agreement or
otherwise in this Agreement as an "Arranger" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none
of the Lenders identified on the cover page to this Agreement, the signature
pages to this Agreement or otherwise in this Agreements as an "Arranger" shall
have or be deemed to have any fiduciary duty to or fiduciary relationship with
any Lender. In addition to the agreements set forth in Section 10.10, each of
-------------
the Lenders acknowledges that it has not relied, and will not rely, on any of
the Lenders so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
ARTICLE XI: SETOFF; RATABLE PAYMENTS
------------------------------------------
11.1 Setoff. In addition to, and without limitation of, any rights of
------
the Lenders or Issuing Lenders under applicable law, if any Default occurs and
is continuing, any indebtedness from any Lender or Issuing Lender to any of
the Borrowers or Subsidiary Obligors (including all account balances, whether
provisional or final and whether or not collected or available) may be offset
and applied toward the payment of the Obligations owing to such Lender, such
Issuing Lender and the other Obligations, whether or not the Obligations, or
any part hereof, shall then be due.
11.2 Ratable Payments. If any Lender, whether by setoff or otherwise,
----------------
has payment made to it upon its Loans (other than payments received pursuant
to Sections 3.1, 3.2 or 3.4) in a greater proportion than that received by any
------------ --- ---
other Lender, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligation or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to the obligations owing to
them. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
11.3 Application of Payments. Subject to the provisions of Section 8.2,
----------------------- -----------
the Agent shall, unless otherwise specified at the direction of the Required
Lenders which direction shall be consistent with the last sentence of this
Section 11.3, apply all payments and prepayments in respect of any Obligations
---------
and all proceeds of Collateral in the following order:
(A) first, to pay interest on and then principal of any portion of the
Loans which the Agent may have advanced on behalf of any Lender for which the
Agent has not then been reimbursed by such Lender or the Borrower or
Subsidiary Obligor;
(B) second, to pay interest on and then principal of any advance made
under Section 9.3 for which the Agent has not then been paid by the Borrowers
-----------
or the Subsidiary Obligors or reimbursed by the Lenders;
(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Agent;
(D) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and Issuing Lender;
(E) fifth, to pay interest due in respect of Loans and L/C Obligations;
(F) sixth, to the ratable payment or prepayment of principal outstanding
on Loans and Reimbursement Obligations and Hedging Obligations in such order
as the Agent may determine in its sole discretion;
(G) seventh, to provide required cash collateral if any pursuant to
Section 2.19; and
---------
(H) eighth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior
to the occurrence of a Default) by the Borrowers, all principal payments in
respect of Loans shall be applied first, to repay outstanding Base Rate Loans,
-----
and then to repay outstanding Eurodollar Loans and Korean Eurodollar Loans
----
with those Eurodollar Loans and Korean Eurodollar Loans, as applicable, which
have earlier expiring Interest Periods being repaid prior to those which have
later expiring Interest Periods. The order of priority set forth in this
Section 11.3 and the related provisions of this Agreement are set forth solely
--------
to determine the rights and priorities of the Agent, the Lenders, the Issuing
Lender and other Holders of Secured Obligations as among themselves. As long
as a Default shall have occurred and is continuing, the order of priority set
forth in clauses (D) through (H) of this Section 11.3 may at any time and from
----------- --- ------------
time to time be changed by the Required Lenders without necessity of notice to
or consent of or approval by the Borrowers, the Subsidiary Obligors, or any
other Person. The order of priority set forth in clauses (A) through (C) of
----------- ---
this Section 11.3 may be changed only with the prior written consent of the
-------------
Agent.
11.4 Relations Among Lenders.
-------------------------
(a) Except with respect to the exercise of set-off rights of any Lender
in accordance with Section 11.1, the proceeds of which are applied in
-------------
accordance with this Agreement, and each Lender agrees that it will not take
any action, nor institute any actions or proceedings, against any Borrower,
any Subsidiary Obligor or any other obligor hereunder or with respect to any
Collateral or Loan Document, without the prior written consent of the Required
Lenders or, as may be provided in this Agreement or the other Loan Documents,
at the direction of the Agent.
(b) The Lenders are not partners or co-venturers, and no Lender shall be
liable for the acts or omissions of, or (except as otherwise set forth herein
in case of the Agent) authorized to act for, any other Lender.
ARTICLE XII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
----------------------------------------------------------------------
12.1 Successors and Assigns. The terms and provisions of the Loan
------------------------
Documents shall be binding upon and inure to the benefit of the Borrowers, the
Subsidiary Obligors and the Lenders and their respective successors and
assigns, except that (i) none of the Borrowers or Subsidiary Obligors shall
have the right to assign their rights or obligations under the Loan Documents
and (ii) any assignment by any Lender must be made in compliance with Section
-------
12.3 hereof. Notwithstanding clause (ii) of this Section 12.1, any Lender may
---- ----------- ------------
at any time, without the consent of any Borrower, any Subsidiary Obligor or
the Agent, assign all or any portion of its rights under this Agreement and
Notes, if any, issued to it to a Federal Reserve Bank; provided, however, that
-------- -------
no such assignment shall release the transferor Lender from its obligations
hereunder. The Agent may treat the payee of any Note issued to any individual
Lender as the owner thereof for all purposes hereof unless and until such
payee complies with Section 12.3 hereof in the case of an assignment thereof
------------
or, in the case of any other transfer, a written notice of the transfer is
filed with the Agent. Any assignee or transferee of a Note or of an interest
in the Loans agrees by acceptance thereof to be bound by all the terms and
provisions of the Loan Documents. 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 Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
12.2 Participations.
--------------
(A) Permitted Participants; Effect. Subject to the terms set forth in
------------------------------
this Section 12.2, any Lender may, in the ordinary course of its business and
------------
in accordance with applicable law, at any time sell to one or more banks or
other entities ("Participants") participating interests in any Loan owing to
such Lender, any Note held by such Lender, any Commitment of such Lender, any
L/C Interest of such Lender or any other interest of such Lender under the
Loan Documents on a pro-rata or non-pro-rata basis; provided that without the
--------
prior written consent of the Agent, the amount of such participation shall not
be for less than $5,000,000. Notice of such participation to the Company and
the Agent shall be required prior to any participation becoming effective with
respect to a Participant which is not a Lender or an Affiliate thereof. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
holder of any such Note for all purposes under the Loan Documents, all amounts
payable by the Borrowers and Subsidiary Obligors under this Agreement shall be
determined as if such Lender had not sold such participating interests, and
the Borrowers, Subsidiary Obligors and the Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents except that, for purposes of Article III
-----------
hereof, the Participants shall be entitled to the same rights as if they were
Lenders; provided however that no Participant shall be entitled to receive any
-------- -------
greater payment under such Article III than the Lender would have been
------------
entitled to receive with respect to the rights participated.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
-------------
without the consent of any Participant, any amendment, modification or waiver
of any provision of the Loan Documents other than any amendment, modification
or waiver with respect to any Loan or Commitment in which such Participant has
an interest which requires the consent of all of the Lenders under Section
-------
8.3.
(C) Benefit of Setoff. The Borrowers and the Subsidiary Obligors agree
-----------------
that each Participant shall be deemed to have the right of setoff provided in
Section 11.1 hereof in respect to its participating interest in amounts owing
-------------
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
--------
in Section 11.1 hereof with respect to the amount of participating interests
-------------
sold to each Participant except to the extent such Participant exercises its
right of set off. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11.1
------------
hereof, agrees to share with each Lender, any amount received pursuant to the
exercise of its right of setoff, such amounts to be shared in accordance with
Section 11.2 as if each Participant were a Lender.
-------------
12.3 Assignments.
-----------
(A) Permitted Assignments. Any Lender may, in the ordinary course of
----------------------
its business and in accordance with applicable law, at any time assign to one
or more banks or other entities ("Purchasers") all or a portion of its rights
and obligations under this Agreement (including, without limitation, any
Commitments, any Loans owing to it, all of its interests as Issuing Lender
with respect to Letters of Credit, all of its participation interests in
existing Letters of Credit and its obligation to participate in additional
Letters of Credit in accordance with the provisions of this Section 12.3.
------------
Such assignment shall be substantially in the form of Exhibit D hereto and,
---------
without the prior consent of the Agent, shall not be permitted hereunder
unless (i) such assignment is either for all of such Lender's rights and
obligations under the Loan Documents or involves Loans and Commitments in an
aggregate amount of at least $5,000,000 and (ii) the Purchaser shall be able
to fund in Korean Won its share of any Advance requested or deemed requested
in Korean Won by Purina Korea, Inc. Notice to the Agent and the Company and
consent of the Company and the Agent (which consents will not be unreasonably
withheld) shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate thereof;
provided, however, no consent of the Company shall be required for any
-------
assignment to become effective at a time when a Default has occurred and is
continuing.
(B) Effect; Effective Date. Upon (i) delivery to the Agent of a notice
----------------------
of assignment, substantially in the form attached as Appendix I to Exhibit D
---------- ---------
hereto (a "Notice of Assignment"), together with any consent required by
Section 12.3(A) hereof, and (ii) payment of a $3,500 fee to the Agent for
-----------
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. The Notice of
Assignment shall contain a representation by the Purchaser to the effect that
none of the consideration used to make the purchase of the Commitment, Loans
and L/C Obligations under the applicable assignment agreement are "plan
assets" as defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser, if
not already a Lender, shall for all purposes be a Lender party to this
Agreement and any other Loan Documents executed by the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no consent or action
by any of the Borrowers, Subsidiary Obligors or the Lenders and no further
consent or action by the Agent shall be required to release the transferor
Lender with respect to the percentage of the Commitments, Loans and Letter of
Credit participations assigned to such Purchaser. Upon the consummation of
any assignment to a Purchaser pursuant to this Section 12.3(B), if requested
---------------
by the transferor Lender or Purchaser, the transferor Lender, the Agent and
the Borrowers shall make appropriate arrangements so that replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitments, as adjusted pursuant to such assignment
provided if no such request is made, the master Note(s) shall reflect their
Commitments, as adjusted pursuant to such assignment.
(C) The Register. The Agent shall maintain at its address referred to
------------
in Section 13.1 a copy of each assignment delivered to and accepted by it
-------------
pursuant to this Section 12.3 and a register (the "Register") for the
- -------------
recordation of the names and addresses of the Lenders and the Commitments of
-
and principal amount of the Loans owing to, each Lender from time to time and
whether such Lender is an original Lender or the assignee of another Lender
pursuant to an assignment under this Section 12.3. The entries in the
-------------
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Company and each of its Subsidiaries, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrowers or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
12.4 Confidentiality. Subject to Section 12.5, the Agent and the
--------------- -------------
Lenders shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement in accordance with such Person's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices. Each of the Agent and the
Lenders agrees that it will not make use of any such confidential information
for personal gain or for transactions other than those contemplated by this
Agreement, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by
such Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than the Company and its
Subsidiaries provided that such source is not bound by a confidentiality
agreement known to such Agent or such Lender; provided, however, that the
-------- -------
Agent and any Lender may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which such Agent
or such Lender is subject or in connection with an examination of such Agent
or such Lender by any such Governmental Authority; (B) pursuant to subpoena or
other court process (and shall use its best efforts to provide advance notice
thereof to the extent foreseeable and permitted); (C) when required to do so
in accordance with the provisions of any applicable requirement of law (and
shall use its best efforts to provide advance notice thereof to the extent
foreseeable and permitted); (D) to the extent reasonably required in
connection with any litigation or proceeding to which the Agent, any Lender or
their respective affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors; (G) to any
affiliate of the Agent or such Lender, or to any prospective Transferee,
provided that such affiliate or prospective Transferee agrees to keep such
information confidential to the same extent required of the Agent and the
Lenders hereunder (and, so long as no Default shall have occurred and is
continuing, shall use its best efforts to provide advance notice thereof); and
(H) as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company or any of its Subsidiaries is
party or is deemed party with such Agent or such Lender. In any event, the
Agent and the Lenders may make disclosure reasonably required by a prospective
Transferee in connection with the contemplated participation or assignment or
as required or requested by any Governmental Authority or representative
thereof or pursuant to legal process and shall require any such Transferee or
prospective Transferee to agree (and require any of its Transferees to agree)
to comply with this Section 12.4. In no event shall the Agent or any Lender
------------
be obligated or required to return any materials furnished by the Borrowers or
Subsidiary Obligors; provided, however, each prospective Transferee shall be
-------- -------
required to agree that if it does not become a participant or assignee it
shall return all materials furnished to it by or on behalf of the Borrowers or
Subsidiary Obligors in connection with this Agreement.
12.5 Dissemination of Information. Each of the Borrowers and Subsidiary
----------------------------
Obligors authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in the Loan Documents by operation of
law (each a "Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning the Company and its
Subsidiaries and the Collateral; provided that prior to any such disclosure,
--------
such prospective Transferee shall agree to preserve in accordance with Section
-------
12.4 the confidentiality of any confidential information described therein.
----
ARTICLE XIII: NOTICES
-------------------------
13.1 Giving Notice. Except as otherwise permitted by Section 2.11 with
------------- ------------
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Documents shall be in
writing or by facsimile and addressed or delivered to such party, with respect
to any Borrower or any Subsidiary Obligor, in care of the Company at the
address set forth below, and for any other party at its address set forth
below its signature hereto or at such other address as may be designated by
such party in a notice to the other parties. Any notice, if mailed and
properly addressed with postage prepaid, shall be deemed given when received;
any notice, if transmitted by facsimile, shall be deemed given when
transmitted; or, if by courier, one (1) Business Day after deposit with a
reputable overnight carrier services, with all charges paid. Notices to any
Borrower or any Subsidiary Obligor shall be addressed as follows:
Agribrands International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer
Phone: (___)___-____
Facsimile: (___)___-____
13.2 Change of Address. Any of the Borrowers, Subsidiary Obligors, the
-----------------
Agent and any Lender may each change the address for service of notice upon it
by a notice in writing to the other parties hereto.
ARTICLE XIV: COUNTERPARTS
-----------------------------
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. Delivery of an executed signature
page hereof or thereof by facsimile transmission shall be effective as
delivery of a manually signed counterpart. This Agreement shall be effective
when it has been executed by the Borrowers, the Subsidiary Obligors, the Agent
and the Lenders and each party as notified the Agent by facsimile or
telephone, that it has taken such action.
S-2
IN WITNESS WHEREOF, the Borrowers, the Subsidiary Obligors, the Lenders
and the Agent have executed this Agreement as of the date first above written.
AGRIBRANDS INTERNATIONAL, INC.
as a Borrower
By:___________________________
Name:
Title:
[THE COMPANY'S CANADIAN SUBSIDIARY]
as a Borrower
By: ______________________________
Name:
Title:
PURINA ITALIA, S.p.A.
as a Borrower
By: ______________________________
Name:
Title:
PURINA ESPANA, S.A.
as a Borrower
By: ______________________________
Name:
Title:
PURINA HUNGARIA ANIMAL FEED PRODUCTION & TRADING COMPANY, LTD.
as a Borrower
By: ______________________________
Name:
Title:
▇-▇
▇▇▇▇▇▇ ▇▇▇▇▇, INC.
as a Borrower
By: ______________________________
Name:
Title:
INDUSTRIAS PURINA S.A. DE C.V.
as a Subsidiary Obligor
By: ______________________________
Name:
Title:
PURINA COLOMBIANA S.A.
as a Subsidiary Obligor
By: ______________________________
Name:
Title:
[THE COMPANY'S BRAZILIAN SUBSIDIARY]
as a Subsidiary Obligor
By: ______________________________
Name:
Title:
PURINA PHILIPPINES, INC.
as a Subsidiary Obligor
By: ______________________________
Name:
Title:
PURINA VENEZUELA, V.A.
as a Subsidiary Obligor
By: ______________________________
Name:
Title:
ABN AMRO BANK N.V.
as the Agent, an Issuing Lender,
and as a Lender
By:___________________________
Name:
Title:
Notice Address:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone No.: 312/
Facsimile No.: 312/
Payment Address for Dollars: Same as above.
Eurodollar Payment Address: Same as above.
The Agent proposes readdressing this issue after receipt of commitments
from prospective Lenders on March 19th.
AGRIBRANDS INTERNATIONAL, INC. AND SUBSIDIARIES
TERM SHEET
AGRIBRANDS INTERNATIONAL, INC.
MULTICURRENCY REVOLVING CREDIT FACILITIES
FEBRUARY 25, 1998
BORROWERS: Agribrands International, Inc. (the "COMPANY") and the
Company's Canadian, Italian, Spanish, Hungarian and Korean subsidiaries (the
"SUBSIDIARY BORROWERS"; together with the Company, the "BORROWERS").
OBLIGORS: The Korean, Mexican, Colombian, Brazilian, Philippine
and Venezuelan subsidiaries of the Company (the "SUBSIDIARY OBLIGORS") shall
apply for letters of credit.
AGENT: ABN AMRO Bank N.V. (individually, "ABN AMRO", as
administrative agent, the "AGENT").
SYNDICATION
MANAGEMENT: The Agent, in consultation with the Company, will manage
all aspects of the syndication including, without limitation, the timing of
offers to potential Lenders, the amounts offered to potential Lenders, the
acceptance of commitments, the designation of "Fronting Banks" (as defined
below) for particular currencies and the compensation provided. The Agent
shall, in consultation with the Company, allocate any commitments received
from the Lenders. All Lenders will be required to commit to make the "Agreed
Currencies" (as defined below) available to the Borrowers.
LENDERS: A selected group of financial institutions agreed to by
the Agent and the Company (collectively, together with ABN AMRO in its
capacity as lenders, the "LENDERS").
DOCUMENTATION: The Facilities will be evidenced by a credit agreement (the
"CREDIT AGREEMENT"), notes, guarantees, pledge agreements and other legal
documentation (collectively, together with the Credit Agreement, the "LOAN
DOCUMENTS") mutually satisfactory to the Borrowers, the Agent and its counsel,
and the Lenders.
FACILITIES: Senior secured revolving credit facilities totaling up to
$110,000,000 (the "AGGREGATE FACILITY AMOUNT"), available in amounts detailed
on Exhibit B for letters of credit and advances in U.S. Dollars (and, for
----------
Purina Korea, Inc., Korean Won of up to the Dollar Equivalent of $15,000,000)
-
as follows:
FACILITY 1: Up to $55,000,000 (50% of the Aggregate Facility Amount) shall be
----------
in a 364-day revolving credit.
Tranche A: Up to $20,000,000 will be available as advances to the Borrowers
----------
(other than Purina Korea, Inc.) or as letters of credit for the account of the
Borrowers under Tranche A. Amounts under Tranche A will only be available to
a particular Borrower if there is no availability to such Borrower under
Tranche C.
Tranche B: Up to $35,000,000 will be available as (i) letters of credit
----------
denominated in U.S. Dollars for the account of the Subsidiary Obligors or (ii)
-----
letters of credit or direct advances in U.S. Dollars and Korean Won to the
Korean subsidiary under Tranche B. Amounts under Tranche B will only be
available to a particular Borrower if there is no availability to such
Borrower under Tranche D.
FACILITY 2: Up to $55,000,000 (50% of the Aggregate Facility Amount) shall be
----------
in a three year revolving credit.
Tranche C: Up to $20,000,000 will be available as advances to the Borrowers
----------
(other than Purina Korea, Inc.) or as letters of credit under Tranche C.
Tranche D: Up to $35,000,000 will be available as (i) letters of credit
----------
denominated in U.S. Dollars for the account of the Subsidiary Obligors or (ii)
-----
letters of credit or direct advances in U.S. Dollars and Korean Won to the
Korean subsidiary under Tranche D.
MATURITY - FACILITY 1: 364 days from the closing date or any extension date
------------------------
agreed to as provided herein. Not more than 59 days and not less than 30 days
--
before the end of the applicable 364 day period, the Company may request in
writing that the maturity date for Facility 1 be extended for an additional
364 days. Within 30 days after such extension request, each Lender may, in its
sole discretion, agree to such extension by giving written notice thereof to
the Company and the Agent (and the failure to provide such notice shall be
deemed to be a declination of such consent).
MATURITY - FACILITY 2:
------------------------
Tranche C: Three years from the closing date. Within the period from 120 to
----------
90 days before the end of each anniversary of the closing date, the Company
may request in writing that the maturity date for Tranche C be extended for an
additional year. 30 days prior to such anniversary, each Lender under Tranche
C may, in its sole discretion, agree to such an extension by giving written
notice thereof to the Company and the Agent (and the failure to provide such
notice shall be deemed to be a declination of such consent).
Tranche D: One year from the closing date. Within the period from 270 to 30
----------
days prior to the then effective expiry date, the Company may request in
writing that the maturity date for Tranche D be extended so that the
commitments with respect to Tranche D will remain in effect for up to one year
from the extension date and the Lenders will respond to such request within 30
days of receiving it. Each Lender under Tranche D may, in its sole
discretion, agree to such an extension by giving written notice thereof to the
Company and the Agent (and the failure to provide such notice shall be deemed
to be a declination of such consent).
The commitment of each Lender that declines to extend may be replaced or the
Aggregate Facility Amount reduced. The Required Lenders under the applicable
Tranche of each Facility must agree to any extension in respect of any Tranche
of any Facility for such extension thereof to become effective.
SUBSIDIARY BORROWING LIMITATIONS: The amount which may be borrowed by the
----------------------------------
Subsidiary Borrowers will be subject to established limitations on
---
indebtedness for each Subsidiary Borrower, as discussed more fully below.
---
CURRENCIES: (A) Currencies. Loans and letters of credit under Tranche A
---------- ----------
and Tranche C from each of the Lenders will be available in U.S. Dollars only.
Letters of credit under Tranche B and Tranche D from each of the Lenders will
be available in U.S. Dollars only except that direct advances of up to the
U.S. Dollar Equivalent of $15,000,000 will be available to Purina Korea, Inc.
in Korean Won.
(B) Currency Disruption. With respect to Korean Won, if, after the date
-------------------
of this Term Sheet, a material adverse change in the banking market (including
without limitations a significant downgrading of the credit ratings of the
major domestic banks in any particular country) occurs, bank regulatory
circumstances have changed, currency controls or restrictions or other
exchange regulations are imposed or other circumstances arise rendering Korean
Won unavailable to the Lenders or making such currency no longer readily
available or freely traded or other exchange regulations are imposed in the
country in which such currency is issued with the result that different types
of such currency are introduced, then loans and letters of credit denominated
in Korean Won shall no longer be available until such time as the
disqualifying event(s) no longer exist.
CURRENCY ADJUSTMENTS: The documentation for the Facilities will contain
-----------------------
procedures requiring the Borrowers to prepay loans if from time to time (at
----
intervals and upon events to be determined) aggregate outstandings of the
--
Lenders, calculated in U.S. Dollars, exceed, as of the last business day of
--
each month, 105% of the then applicable aggregate commitment under the
--
Facilities. Prepayments must be made within 5 business days of notification
--
by the Agent, and must reduce (i) the outstandings under the Facilities to an
amount equal to or less than the then applicable aggregate commitment under
the Facilities and (ii) the outstandings in Korean Won to an amount equal to
or less than the Dollar amount committed to in such currency.
LETTER OF CREDIT SUBFACILITY; RISK PARTICIPATION: Certain Lenders to be
-----------------------------------------------------
determined shall act as issuing banks in respect of the letters of credit.
-----
Each Lender that is not the issuing bank for a letter of credit shall purchase
--
a participation interest in such letter of credit equal to its pro rata
portion of its commitment with respect to the applicable Tranche of the
applicable Facility. Drawings under a standby Letter of Credit shall be
deemed an advance of the Tranche of the applicable Facility and shall bear
interest at the rates set forth on the pricing grid plus an issuing fee.
BORROWING
OPTIONS AND
RATES: The Borrowers may request revolving credit loans which
bear interest at defined margins (the "APPLICABLE MARGIN") over the Borrowers'
selected borrowing option. The Borrower may elect the following borrowing
options:
Tranche A and Tranche C: A per annum rate equal to either (i) Base Rate +
---------- ----------
Applicable Margin (as set forth on Exhibit A) or (ii) LIBOR + Applicable
--- ---------
Margin (as set forth on Exhibit A).
--- ----------
Tranche B and Tranche D: For borrowings in Korean Won: A per annum rate
---------- ----------
equal to Korean CD Rate - 600 b.p. For borrowings by Purina Korea, Inc. in
----
U.S. Dollars: A per annum rate equal to LIBOR + 350 b.p. For borrowings in
--
U.S. Dollars by Borrowers other than Purina Korea, Inc.: A per annum rate
--
equal to either (i) Base Rate + Applicable Margin (as set forth on Exhibit A)
--
or (ii) LIBOR + Applicable Margin (as set forth on Exhibit A).
----------
[Definition of Korean CD Rate to come, but will be based on 91-day CD rate in
South Korea in effect as of the date of such borrowing].
The "Pricing Schedule" attached as Exhibit A sets forth
---------
the Applicable Margins over such selected borrowing options. After default,
the interest rate will be equal to the Base Rate (or applicable local floating
rate equivalent to the Base Rate) plus the Applicable Margin plus 2.0% per
----
annum.
INCREASED COSTS;
YIELD PROTECTION: The Credit Agreement will include customary provisions
regarding (a) availability, (b) protecting the Lenders against increased
costs or loss of yield or imposition of withholding taxes resulting from
changes in reserve, tax, capital adequacy and other requirements of law or as
a result of a triggering event, (c) indemnifying the Lenders for breakage
costs incurred in connection with among other things, any prepayment of a
LIBOR or other fixed rate loan on a day other than the last day of an interest
period with respect thereto and (d) illegality.
FEES: The Facilities shall include the fees set forth on the
Pricing Schedule attached as Exhibit A.
----------
GENERAL PROVISIONS
RELATING TO
INTEREST RATES: Interest periods on fixed rate loans shall be one, two,
three or six months, where readily available. Interest on Base Rate and other
floating rate loans shall be payable quarterly, upon any prepayment (whether
due to acceleration or otherwise) and at final maturity. Interest on fixed
rate loans shall be payable in arrears on the last day of each interest period
and, in the case of an interest period longer than three months (or if
interest periods are not applicable under the local pricing options),
quarterly, upon any repayment (whether due to acceleration or otherwise) and
at final maturity. Unless the local pricing convention is otherwise, interest
on all loans (other than Base Rate loans) will be calculated on a 360-day
basis. Interest on Base Rate loans shall be calculated on a 365/6-day basis.
U.S. Dollar denominated loans made available in the U.S. will be made
available on a same day basis at the Base Rate plus the applicable margin.
Loans provided on a fixed rate basis will be available on three business days
prior notice. U.S. Dollar and Korean Won loans to Purina Korea, Inc. in Korea
will be available on four business days' prior notice.
PREPAYMENTS: Base Rate and other floating rate loans may be repaid or
prepaid at any time. LIBOR and other fixed rate loans may be prepaid upon
prior notice to be agreed upon and payment of any minimum breakage charges and
other breakage costs.
GUARANTEES: Each of the Subsidiary Borrowers and Subsidiary Obligors
will jointly and severally guarantee all obligations under the Facilities of
the other Subsidiary Borrowers and Subsidiary Obligors; provided, mutually
acceptable modifications to the guarantee structure shall be made if
necessary to reduce any material adverse tax consequences resulting from the
proposed structure; and the Company will guarantee all obligations under the
Facilities of the Subsidiary Borrowers and Subsidiary Obligors.
COLLATERAL: There will be a negative pledge on the assets of all the
Subsidiaries, subject to liens in amounts and under circumstances to be agreed
upon. To minimize U.S. income taxes with respect to foreign earnings, the
indebtedness of all of the Subsidiary Borrowers and Subsidiary Obligors shall
be secured by a pledge of 100% of the stock of the Subsidiary Borrowers and
the Subsidiary Obligors and the indebtedness of the Company shall be secured
by a pledge of 65% of the stock of all the Subsidiary Borrowers and the
Subsidiary Obligors. In addition, mutually acceptable modifications to the
collateral and/or guarantees shall be made if necessary to minimize taxes and
costs. If the required pledge agreements and guarantees cannot be obtained
prior to the Closing Date, the Borrowers and Subsidiary Obligors will deliver
assurances satisfactory to the Agent in its sole discretion. In addition the
Company shall at all times maintain with ABN AMRO a cash collateral account
with a balance not less than $25,000,000 at any time, which account shall be
pledged to the Agent for the benefit of the Lenders, and all amounts on
deposit in such cash collateral account shall be available to the Agent and
the Lenders to reduce the Borrowers' obligations upon the occurrence of any
payment default. Amounts in the cash collateral account may be invested in
permitted investments and, prior to a default under the Credit Agreement,
income earned on such investments will be available to the Company.
REPRESEN-
TATIONS AND
WARRANTIES: Usual representations and warranties in connection with
each loan (or letter of credit) under the Facilities, including but not
limited to accuracy of financial statements, absence of litigation, ERISA,
absence of material adverse change, absence of default or unmatured default,
environmental, priority of Agent's liens, compliance with material
requirements of law, compliance with material agreements, compliance with
Regulations G, T, U and X. The Company will represent that within 60 days
after the Closing Cate, the Company's subsidiaries will be capitalized (with
contributions to capital or, in the Company's discretion, loans) as outlined
in the Consolidating Financial Forecasts for Subsidiaries dated February 25,
1998 and delivered to the Agent on February 26, 1998.
COVENANTS: The Credit Agreement will contain customary covenants
(including, without limitation, compliance with laws, ERISA, environmental,
maintenance of insurance, keeping of books, conduct of business, maintenance
of properties, payment of taxes and inspection of records). The Credit
Agreement will also contain customary restrictive covenants, including,
without limitation, restrictions (subject to exceptions, as appropriate, to be
negotiated) on the following:
Acquisitions and Mergers: The Company and its subsidiaries may invest by
acquisition and/or merger an amount not to exceed $20,000,000 (including
assumed debt) with respect to any individual transaction or an aggregate
amount of $80,000,000 (including assumed debt) during the term of the Credit
Agreement. The Company will not merge with or otherwise acquire or combine
with any other entity nor permit any Subsidiary Borrower or Subsidiary Obligor
to do so, except that, subject to the limitations in the preceding sentence,
such a merger, acquisition or combination shall be permitted if the Company or
such subsidiary is the surviving entity and if the Company certifies that, on
a pro forma (last twelve months) basis following such transaction, the Company
complied with all of its obligations and covenants under the Agreement.
Sales of Assets: The Company will not sell or otherwise dispose of its
assets, nor permit its subsidiaries to do so, except of (i) dispositions of
assets in the ordinary course of its business having a book value not
exceeding 10% of the Company's Consolidated Net Worth during any fiscal year,
(ii) dispositions of assets no longer required for its operations to the
extent that the Company acquires replacement assets having a cost at least
equal to the book value of the assets disposed of within 180 days thereafter
and (iii) disposition of assets or sales of shares of subsidiaries (other than
stock or assets of Subsidiary Borrowers or Subsidiary Obligors) resulting from
a determination by the Company to discontinue its operations in a particular
jurisdiction.
Liens and Encumbrances: The Company will not create or permit to exist any
liens or encumbrances on any shares or assets of the Company or any subsidiary
which secure indebtedness for borrowed money except (i) liens existing at the
date of the Agreement and disclosed to the Banks prior to such date, (ii)
liens securing financing under governmental or other special programs which
are more advantageous to the Company than the financing available under the
Agreement, to the extent such liens are required in order to participate in
such programs, (iii) renewals or extensions of any such liens, (iv) other
liens securing indebtedness not exceeding, in the aggregate, 10% of the
Company's Consolidated Net Worth at the time of incurrence thereof, and (vi)
pledges of assets of entities other than Borrowers and Subsidiary Obligors to
secure indebtedness of subsidiaries which are neither Borrowers nor Subsidiary
Obligors.
Indebtedness and Off-balance Sheet Items: The Company and its subsidiaries
will not incur any indebtedness to unrelated entities in an aggregate amount
in excess of 10% of the Company's Consolidated Net Worth.
Guarantees: The Company and Subsidiary Borrowers and Subsidiary Obligors will
not issue any guarantees or similar undertakings for the obligations of others
except (i) guarantees issued for the benefit of customers, employees, vendors
or other trading partners in the ordinary course of its business, (ii)
guarantees to officers of the Company and its subsidiaries of obligations of
such officers with respect to the business of the Company and its subsidiaries
and (iii) guarantees incurred in connection with or resulting from
acquisitions or investments not otherwise prohibited under the Agreement,
provided that, to the extent specified in the Agreement, such guarantees
referred to in this clause (iii) shall be treated as indebtedness for money
borrowed for purposes of the covenants of the Agreement.
Changes in Business Lines: The Company will not enter into any lines of
business or acquire any other businesses except for businesses in, or
reasonably related to, the lines of business carried on by the Company and its
subsidiaries at the date of the Agreement.
Investments, Loans and Advances: The Company and its subsidiaries will not
make any investments, loans or advances to third parties except (i)
investments in permitted acquisitions, (ii) investments of excess funds in
readily marketable securities, (iii) employee loans, (iv) other investments in
a particular jurisdiction of locally-generated funds which are designed to
optimize the Company's overall tax or currency position and (v) loans to or
investments in unrelated entities not to exceed in the aggregate 10% of the
Consolidated Net Worth of the Company.
Transactions with Affiliates: The Company will not enter into any
transactions with any of its subsidiaries or affiliates except for (i)
transactions in existence or contemplated at the date of the Agreement as
described to the Banks prior to the date thereof and (ii) transactions entered
into in the ordinary course of the Company's business on terms no less
favorable to the Company than would be available from unrelated parties. The
Company and its subsidiaries will not make loans or advances to or investments
in related entities which exceed in the aggregate 30% of the Consolidated Net
Worth of the Company. The Company and its Subsidiary Borrowers and Subsidiary
Obligors will not make loans or advances to or investments in related entities
other than Borrowers or Subsidiary Obligors which exceed in the aggregate 15%
of the Consolidated Net Worth of the Company. All such loans shall be
subordinated to the indebtedness owed to the Lenders.
Speculative Financial Contracts: The Company and its subsidiaries will not
enter into any speculative derivative or other financial transactions,
provided, that this shall not prohibit hedging or other derivative
transactions (i) relating to the acquisition of raw materials or the sale of
products of the Company which are intended to protect the Company against the
risks of changes in market prices or (ii) relating to currencies in which the
Company receives revenues or incurs expenses which are intended to protect the
Company against the risks of changes in the exchange rates relating to such
currencies or (iii) relating to the interest rates on its outstanding or
proposed indebtedness for money borrower which are intended to protect the
Company against the risks of changes in the interest rates relating to such
borrowings.
Leases: Sale and leaseback transactions, synthetic leases and operating
leases will be limited.
Capital Expenditures: Capital expenditures in excess of $81,250,000 in the
first year, $40,000,000 in the second year, and $28,750,000 in the third year
(with one year carryover permitted) will be prohibited.
In addition the Agreement will contain customary reporting requirements,
including, without limitation, annual audited consolidated and certified
unaudited consolidating financial statements of the Company and its
consolidated subsidiaries due within 90 days after each fiscal year; quarterly
certified unaudited consolidated and consolidating financial statements of the
Company and its consolidated subsidiaries due within 45 days after each fiscal
quarter; quarterly compliance and no default certificate signed by the chief
financial officer due within 45 days of each quarter; annual budget
requirements; notice of default; notice of other matters (including, without
limitation, litigation, environmental, ERISA, default on other indebtedness).
FINANCIAL
COVENANTS: Total Debt/EBITDA: The Company shall not permit the ratio
of Total Debt to EBITDA to exceed at any time 3.0 to 1.00. Total Debt shall
include all indebtedness for borrowed money and standby letters of credit
(whether on or off-balance sheet) but shall not include ordinary course
liability for trade indebtedness (including reimbursement under trade letters
of credit). For purposes hereof, EBITDA, for the first four fiscal quarterly
calculations, shall be annualized using EBITDA from the closing date to the
date of such calculation.
"EBITDA" will be defined to mean for any period, on a consolidated basis for
the applicable entity, the sum of the amounts for such period, without
duplication, of (i) net sales minus (ii) cost of products sold minus (iii)
----- -----
selling, general and administrative, plus (iv) depreciation expense to the
----
extent deducted in computing net income, plus (v) amortization expense,
----
including, without limitation, amortization of goodwill and other intangible
assets to the extent deducted in computing net income. EBITDA for each
Subsidiary shall be calculated excluding the effect of any service fees paid
by such Subsidiary to the Company.
Interest Coverage Ratio: The Company shall maintain a ratio of EBITDA to Cash
Interest Expense as of the end of each fiscal quarter during the periods set
forth below of at least the amounts set forth below:
Applicable Period Minimum Interest Coverage Ratio
------------------ -------------------------------
At all times 2.50 to 1.00
For the purposes hereof, for the first four calculations of the Interest
Coverage Ratio, EBITDA and Cash Interest Expense shall be calculated for such
amounts from the closing date to the end of such fiscal quarter.
"Cash Interest Expense" will be defined to mean for any period, the total
interest expense of the applicable entity actually paid in cash (including the
interest component of Capitalized Leases) all as determined in conformity with
the United States generally accepted accounting principles.
Minimum Net Worth: The Company shall at all times during the periods set
forth below maintain a minimum Net Worth of at least:
Required
Net Worth Applicable Period
---------- ------------------
$230,000,000 Closing date -8/31/98
$240,000,000 9/1/98-8/31/99
$250,000,000 At all times thereafter
In calculating net worth for the purpose of determining compliance with the
net worth covenant, (i) the effect of translation account adjustments for
fiscal 1998 of up to $10,000,000 shall be excluded and (ii) thereafter, the
effect of translation account adjustments of up to an additional $20,000,000
shall be excluded.
Country Debt Limitations. Indebtedness (whether under the Facilities or
otherwise) incurred by the Subsidiaries in any particular country shall be
subject to each of the following limitations:
(1) The applicable Borrower shall not have Loans outstanding under the
Facilities which exceed the maximum U.S. Dollar equivalent limitations as set
forth on Exhibit B attached hereto; and
----------
(2) The Total Debt (including indebtedness owed to related
entities)/EBITDA ratio for each of the Subsidiary Borrowers and Subsidiary
Obligors (other than Purina Korea, Inc.) shall not at any time exceed 3.0 to
1.00. The Total Debt/EBITDA ratio for Purina Korea, Inc. shall not at any
time exceed 2.25 to 1.00.
Calculation of Financial Covenants: Unless otherwise noted, all financial
covenants will be calculated for the Company and its consolidated Subsidiaries
on a rolling 4-quarter basis and on the basis of GAAP as in effect at the date
of the Credit Agreement. The financial covenants will be tested first as of
August 31, 1998 for the period beginning on the Closing Date and ending on
August 31, 1998.
CONDITIONS
OF BORROWING: The obligations of the Lenders to make the loans under
the Facilities are subject to customary conditions precedent (borrowing
certificates, legal opinions requested by the Lenders, accuracy of
representations and warranties, no default certificate, corporate resolutions,
etc.).
CONDITIONS
OF INITIAL
BORROWING: Additional conditions precedent to initial funding of the
Facilities will be as deemed appropriate by the Agent for secured
multicurrency financings generally and for this transaction in particular,
including but not limited to the following:
Due Diligence: The completion of all business, accounting, tax and legal
--------------
review of the Borrowers, their business operations, assets and liabilities,
----
including, without limitation, review of financial statements, and review of
--
pending and threatened litigation and insurance coverage relating thereto,
environmental risks and liabilities (for current and past properties and for
off-site liabilities), material agreements, real estate leases, debt
agreements, property ownership, retiree medical benefits, ERISA obligations
and compliance with applicable laws and regulations deemed necessary or
prudent by the Agent and the Lenders, and such review shall have provided the
Agent and the Lenders with results and information which, in the Agent's and
the Lenders' determination, are satisfactory to permit the Agent and the
Lenders to enter into the financing transaction described herein. As of the
date of this Term Sheet, the Agent has substantially completed its business
and financial due diligence with results satisfactory to the Agent. All
financial, accounting, and tax aspects of the transaction must be acceptable,
including, without limitation receipt of Internal Revenue Service favorable
determination regarding spin-off treatment.
Documentation: The negotiation, execution and delivery of definitive
-------------
documentation with respect to the Facilities satisfactory to the Agent and the
--------
Lenders.
No Material Adverse Change. There shall not have occurred a material adverse
---------------------------
change since November 30, 1997 in the business, assets, operations, condition
(financial or otherwise) or prospects of the Company and its subsidiaries or
in the facts and information regarding such entities as represented to date
(except for developments disclosed to the Agent in writing prior to the date
of this Term Sheet).
Opinions. The Agent shall have received (a) satisfactory opinions, to the
--------
extent permitted by local law, of counsel to the Borrowers (which shall
---
cover, among other things, authority, legality, validity, binding effect and
---
enforceability of the Loan Documents (including, without limitation, the
guarantees under applicable local law) and perfection and priority of Lien on
pledged stock) and such corporate resolutions, certificates and other
documents as the Agent shall reasonably require and (b) satisfactory evidence
that the Agent (on behalf) of the Lenders) holds a perfected, first priority
lien in all of the collateral for the Facilities, subject to no other liens
except for permitted liens to be determined.
Other Customary Conditions. Other conditions customary for transactions of
----------------------------
this type, to include: (a) receipt of all governmental and third party
--
consents; (b) the absence of any action, suit, investigation or proceeding
--
pending or threatened in any court or before any arbitrator or governmental
--
authority that purports to affect the Company or its Subsidiaries or any
--
transaction contemplated hereby, or that could have a material adverse effect
--
on any of the Borrowers or any transaction contemplated hereby or on the
ability of the Company and its subsidiaries to perform its obligations under
the documents to be executed in connection with the Facilities; and (c)
receipt and review, with results satisfactory to the Agent and its counsel, of
information regarding litigation, tax, accounting, labor, insurance, pension
liabilities (actual or contingent), real estate leases, material contracts,
debt agreements, property ownership, and contingent liabilities of the Company
and its Subsidiaries. As of the date of this Term Sheet, the Agent has
substantially completed its business and financial due diligence with results
satisfactory to the Agent.
DEFAULTS: Customary events of default, including, without
limitation, defaults for nonpayment of principal when due, nonpayment of
interest and fees within 3 days, inaccuracy of representations and warranties,
default in the performance of any covenant, default in performance of any
other term (with grace periods, as appropriate, to be negotiated), bankruptcy
or insolvency of the Company or subsidiaries with aggregate net worth equal to
or greater than 10% of the Company's Consolidated Net Worth, ERISA, unstayed
judgment and cross-default to any indebtedness of the Company or any
consolidated subsidiary of $5,000,000 or more, which default would permit the
holders of such indebtedness to cause such indebtedness to become due prior to
its stated maturity and change of control.
ASSIGNMENTS
AND
PARTICIPA-
TIONS: The Lenders may sell assignments in minimum amounts
of$5,000,000 with the consent of the Company and the Agent (such consents not
to be unreasonably withheld; provided no consent of the Company shall be
required following the occurrence of a default) or participations in their
notes or commitments under the Facilities; provided, further however that each
assignee shall be required to be able to fund in Korean Won. A $3,500 fee
shall be payable to the Agent (by the assignor or the assignee) with respect
to each assignment.
OTHER
EXPENSES: The Company agrees to reimburse or pay the Agent for
all reasonable costs, fees and expenses (including, without limitation legal
fees) as provided in the mandate letter between the Agent and the Company
GOVERNING
LAW: Illinois.
REQUIRED
LENDERS: 66-2/3%
AGENT'S
COUNSEL: Sidley & Austin
This term sheet is intended as an outline and does not purport to summarize
all the terms, conditions, covenants, representations, warranties and other
provisions which might be contained in definitive legal documentation for this
transaction. This term sheet supersedes and replaces any prior term sheets
delivered in connection with this matter.
EXHIBIT A -- PRICING SCHEDULE
PRICING GRID: The Applicable Margins for the Loans, expressed in
basis points per annum, is set out below; provided, however, that from the
Closing Date through August 31, 1998 pricing shall be at Level II, provided,
further however, until completion of the first two fiscal quarters following
the closing date, the Borrowers will not be eligible for pricing under Level
III or IV regardless of the EBITDA Contribution Ratio; provided, further,
-------- -------
however, that the Borrowers shall not be eligible for any reduction in the
pricing set forth below in the event that as of the date of determination
consolidated EBITDA for the most recently completed four fiscal quarters (or
prior to March 31, 1999, the period from the Closing Date to the end of the
most recently completed quarter) shall be less than eighty percent (80%) of
the forecasted consolidated EBITDA for such period:
APPLICABLE MARGINS:
TRANCHE A AND TRANCHE C
-----------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ (4)
I II III
- -- --- ------
EBITDA CONTRIBUTION
RATIO(1) Greater than Less than Less than
1.50 to 1.00 or equal 1.00 to
to 1.50 to 1.00
1.00 but
greater than
or equal to
FACILITY FEE 50 37.5 25 17.5
SPREAD OVER LIBOR (2) 150 100 75 50
SPREAD OVER BASE RATE (3) 25 0 0 0
(1) Ratio of (i) Total Debt of the Company and its Subsidiaries to
(ii) the sum of 100% of EBITDA contributed by Subsidiaries in countries
with a rating of equal to or better than BBB- from Standard & Poor's
Ratings Group ("S&P") and Baa3 from ▇▇▇▇▇'▇ Investors Service, Inc.
("MOODY'S") and 50% of EBITDA contributed by Subsidiaries in countries
with a rating of lower than BBB- from S&P or lower than Baa3 from
Moody's.
(2) Spread over LIBOR (fully adjusted for maximum statutory
reserves, associated cost rates and the like)
(3) Spread over Base Rate
(4) To be eligible for pricing at Level IV the Company shall be
required to have an investment grade rating from Moody's (Baa3) or
S&P (BBB-).
APPLICABLE MARGINS:
TRANCHE B AND ▇▇▇▇▇▇▇ ▇
-----------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇ II III IV (4)
EBITDA Greater than Less than or Less than
Contribution 1.50 to 1.00 equal to 1.50 1.00 to
Ratio (1) to 1.00 but 1.00
greater than
or equal to
1.00 to 1.00
FACILITY FEE 175 125 100 75
SPREAD OVER
LIBOR (2) 175 125 100 75
SPREAD OVER
BASE RATE (3) 50 0 0 0
(1) Ratio of (i) Total Debt of the Company and its Subsidiaries to (ii)
the sum of 100% of EBITDA contributed by Subsidiaries in countries with a
rating of equal to or better than BBB- from S&P and Baa3 from Moody's and 50%
of EBITDA contributed by Subsidiaries in countries with a rating of lower than
BBB- from S&P or lower than Baa3 or less from Moody's.
(2) Spread over LIBOR (fully adjusted for maximum statutory reserves,
associated cost rates and the like)
(3) Spread over Base Rate
(4) To be eligible for pricing at Level IV the Company shall be required
to have an investment grade rating from Moody's or S&P.
FEES: The Facilities shall include the following fees:
Facility Fee: A per annum fee (see the Pricing Grid above),
payable on the maximum amount of the aggregate commitment under the applicable
Tranche of the applicable Facility (minus the maximum committed amount of
loans available to Purina Korea, Inc., currently $15,000,000), quarterly in
arrears and on the earlier of the termination of each such Tranche or
Facility.
Korean Facility Fee: A per annum fee equal to 300 b.p., payable upon
the maximum committed amount of loans available to the Korean Subsidiary in
Korean Won under Tranche B and Tranche D, quarterly in arrears and on the
earlier of the termination of each such Tranche or Facility.
Letter of Credit Fees: A per annum fee equal to the then effective
Applicable Margin for LIBOR loans for such Tranche, payable quarterly in
arrears to the Lenders ratably for standby and commercial letters of credit,
together with standard issuance fees for the letter of credit fronting bank.
In addition, a fronting fee of one-eighth of one percent per annum shall be
payable to the issuing bank, for its own account, payable quarterly in
arrears, for standby and commercial letters of credit.
EXHIBIT B-COUNTRY DEBT LIMITATIONS
TRANCHE A AND TRANCHE C
---------------------------
TRANCHE A TRANCHE C
COUNTRY Maximum Indebtedness Maximum Indebtedness by
by the Borrowers in the Borrowers in such Country
such Country
Canada $6,500,000 $6,500,000
United States $5,000,000 $5,000,000
Italy $4,000,000 $4,000,000
Spain $2,500,000 $2,500,000
Hungary $2,000,000 $2,000,000
TOTAL $20,000,000 $20,000,000
TRANCHE B AND TRANCHE D
---------------------------
TRANCHE B TRANCHE D
COUNTRY Maximum Indebtedness Maximum Indebtedness by
by the Subsidiaries in the Subsidiaries
such Country in such Country
Korea $15,000,000 $15,000,000
Mexico $5,000,000 $5,000,000
Colombia $5,000,000 $5,000,000
Brazil $5,000,000 $5,000,000
Philippines $2,500,000 $2,500,000
Venezuela $2,500,000 $2,500,000
TOTAL $ 35,000,000 $ 35,000,000
Aggregate of U.S. Dollars and the U.S. Dollar equivalent in Korean Won