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EXHIBIT 10.36
CONSENT AND WAIVER
[Northeast Venture]
CONSENT AND WAIVER (this "Consent and Waiver"), dated as of December
1, 1998, relating to the Amended and Restated Credit Agreement, dated as of May
22, 1998 (as amended, supplemented or otherwise modified and in effect on the
date hereof, the "Credit Agreement"), between Suiza Foods Corporation, a
Delaware corporation (the "Company"), the lenders party thereto (the "Lenders")
and First Union National Bank, as administrative agent for the Lenders (in such
capacity, the "Agent").
WHEREAS, the corporations named on Schedule A, Part I, hereto
(hereinafter collectively referred to as the "Suiza Contributed Subsidiaries")
are, directly or indirectly, Wholly Owned Subsidiaries of the Company and
parties to the Subsidiary Guarantee and Security Agreement (as defined in the
Credit Agreement);
WHEREAS, the entities named on Schedule A, Part II, hereto
(hereinafter collectively referred to as the "DFA Contributed Subsidiaries")
are, directly or indirectly, Subsidiaries of Dairy Farmers of America, Inc., a
Kansas cooperative marketing association ("DFA"), and/or Mid-Am Capital,
L.L.C., a limited liability company ("Mid-Am");
WHEREAS, the Company, DFA and Mid-Am desire to enter into a series of
transactions pursuant to which: (i) the Suiza Contributed Subsidiaries will be
merged with and into a Delaware limited liability company (the "Northeast
Venture"), such that the Northeast Venture will survive as a Subsidiary of the
Company; and (ii) DFA and Mid-Am will contribute ownership interests of,
transfer assets of, or cause the merger of, the DFA Contributed Subsidiaries
with or to the Northeast Venture (collectively, the "Transaction");
WHEREAS, upon consummation of the Transaction: (i) seventy-five
percent (75%) of each of the common and preferred ownership interests of the
Northeast Venture will be owned and controlled by the Company or its
Subsidiaries (other than the Northeast Venture); (ii) the remaining twenty-five
percent (25%) of the common ownership interests of the Northeast Venture will
be owned and controlled by DFA; and (iii) the remaining twenty-five percent
(25%) of the preferred ownership interests of the Northeast Venture will be
owned and controlled by Mid-Am; and
WHEREAS, pursuant to the Transaction, the dairy operations of the
Company, DFA and Mid-Am located in the States of Pennsylvania, Delaware, New
Jersey, New York, Connecticut, Rhode Island, Massachusetts, Vermont, New
Hampshire, Maine and Maryland will be operated by Northeast Venture; and
WHEREAS, certain aspects of the Transaction require the consent of the
Majority Lenders or the waiver by the Majority Lenders of certain provisions of
the Credit Agreement and the Security Documents, in each case in accordance
with the terms thereof.
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NOW, THEREFORE, the Majority Lenders hereby agree as follows:
1. Defined Terms. Except as otherwise defined in this Consent and
Waiver, terms defined in the Credit Agreement are used herein as defined
therein.
2. Consent and Waiver of Credit Agreement Provisions. Subject to the
conditions set forth in Section 6 hereto and compliance with the covenants set
forth in Section 7 hereto, notwithstanding Sections 7.15, 8.03, 8.05 and 8.17
of the Credit Agreement and the other terms and provisions of the Credit
Agreement:
(a) the Majority Lenders hereby consent to the consummation
of the Transaction on substantially the terms set forth in the
recitals to this Consent and Waiver;
(b) the Majority Lenders hereby waive the provisions of
Sections 8.03 and 8.05 of the Credit Agreement to the extent
application of such provisions would prohibit the merger of the Suiza
Contributed Subsidiaries or the DFA Contributed Subsidiaries with and
into the Northeast Venture, the contribution of ownership interests in
or the transfer of assets of the DFA Contributed Subsidiaries to the
Northeast Venture or the issuance of ownership interests in the
Northeast Venture to the Company, DFA, Mid-Am or other Persons;
(c) the Majority Lenders hereby waive the provisions of
Section 7.15 of the Credit Agreement to the extent they restrict or
prevent the Northeast Venture from issuing or having outstanding
Equity Rights;
(d) the Majority Lenders hereby waive the provisions of
Sections 8.17(a), (b) and (c) of the Credit Agreement to the extent
such provisions:
(i) would require that the Northeast Venture or any
now-owned or hereafter acquired or formed Subsidiary of the
Northeast Venture be a Wholly Owned Subsidiary;
(ii) would require that the Northeast Venture or any
now-owned or hereafter acquired or formed Subsidiary of the
Northeast Venture become a party, by Joinder Agreement or
otherwise, to the Subsidiary Guarantee and Security Agreement
or any similar agreement; or
(iii) would prohibit or prevent the constituent
documents of the Northeast Venture, or of any now-owned or
hereafter acquired or formed Subsidiary thereof, or any
indenture, agreement, instrument or other arrangement to
which the Northeast Venture or such Subsidiary may be a
party, from prohibiting or restraining or having the effect
of prohibiting or restraining or imposing materially adverse
conditions upon the ability of the Northeast Venture, or any
such Subsidiary thereof, to incur Indebtedness, grant Liens,
make loans, advances or Investments or sell, assign, transfer
or otherwise dispose of Property;
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provided, that the Northeast Venture shall not incur Indebtedness or
grant Liens other than Indebtedness or Liens of the DFA Contributed
Subsidiaries or Persons or Property acquired by, or merged into, the
Northeast Venture, which Indebtedness and Liens (x) otherwise satisfy
the requirements of Sections 8.06 and 8.07 of the Credit Agreement, as
applicable, (y) existed before such acquisition or merger and were not
created in anticipation thereof and (z) in the case of Liens, were
created solely for the purpose of securing Indebtedness representing,
or incurred to finance, refinance or refund, the cost of the Property
subject thereto (provided that (A) no such Lien shall extend to or
cover any Property of the Company or any Subsidiary other than the
Property so acquired, and (B) the principal amount of Indebtedness
secured by any such Lien shall at no time exceed the fair market value
(as determined in good faith by a Responsible Financial Officer of the
Company) of such Property at the time it was acquired);
provided, further, that the Northeast Venture shall not make loans,
advances or Investments or sell, assign, transfer or otherwise dispose
of Property except in accordance with Sections 8.08 or 8.05(c) of the
Credit Agreement, as applicable; and
provided, further, that such constituent documents, indentures,
agreements or other arrangements shall impose no restrictions on the
ability of the Northeast Venture to pay dividends or make other
distributions, other than to give priority to the payment of any
dividends or distributions to any preferred capital stock or other
preferred ownership interests in the Northeast Venture;
(e) the Majority Lenders hereby acknowledge and agree that
Northeast Venture and each of its Subsidiaries shall be a Subsidiary
of the Company, but shall not be an Affiliate of the Company, for all
purposes of the Credit Agreement; and
(f) subject to compliance with the other terms of the Credit
Agreement, the Majority Lenders hereby consent to the Company's future
acquisition of all or any portion of the remaining ownership interests
in the Northeast Venture; provided, however, upon the acquisition by
the Company or its Subsidiaries of all the outstanding capital stock,
Equity Rights and other ownership interests of the Northeast Venture,
the Northeast Venture shall execute a Joinder Agreement and thereby
become a party to the Subsidiary Guarantee and Security Agreement.
3. Waiver of Security Agreement Provisions. Notwithstanding Sections 2
and 5.04 of the Security Agreement, the Majority Lenders hereby waive any
violation of the Security Agreement that would occur as a result of: (a) the
Company's ownership of less than all the ownership interests of the Northeast
Venture; or (b) any restrictions on the transfer or encumbrance of the
Company's interest in the Northeast Venture.
4. Release of Capital Stock of Suiza Contributed Subsidiaries. The
Agent is hereby authorized and directed to deliver all stock certificates and
related stock powers with respect to the Suiza Contributed Subsidiaries to the
Company to facilitate the consummation of the
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Transaction. Effective upon the merger of a Suiza Contributed Subsidiary into
the Northeast Venture, (i) the Subsidiary Guarantee and Security Agreement is
hereby terminated as to such Suiza Contributed Subsidiary and each such Suiza
Contributed Subsidiary is hereby released from all obligations thereunder, (ii)
the capital stock of each such Suiza Contributed Subsidiary is hereby released
from the Lien of the Security Agreement or the Subsidiary Guarantee and
Security Agreement, as the case maybe, and (iii) all references to such Suiza
Contributed Subsidiary in the Credit Agreement and the Security Documents are
hereby deleted.
5. Representations and Warranties of the Company. The Company
represents and warrants to the Agent and the Lenders that (with respect to
matters pertaining to itself and each of its Subsidiaries) as of the date
hereof and as of the date of the consummation of the Transaction:
(a) no Default has occurred and is otherwise continuing under
the Credit Agreement; and
(b) except as permitted by this Consent and Waiver, the
representations and warranties made by the Company in Section 7 of the
Credit Agreement, and by each Obligor in each of the other Loan
Documents to which it is a party, are true and complete on and as of
the date of this Consent and Waiver, and the date of the consummation
of the Transaction, with the same force and effect as if made on and
as of each such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such
specific date);
(c) on a pro forma basis after giving effect to the
Transaction, the Company shall remain in compliance with Sections
8.10, 8.11 and 8.13 of the Credit Agreement; and
(d) the businesses being conducted by the DFA Contributed
Subsidiaries are in the same line or lines of business currently
engaged in by certain Subsidiaries of the Company, or as permitted by
Section 8.14 of the Credit Agreement.
6. Conditions Precedent. The effectiveness of this Consent and Waiver
is subject to the receipt by the Agent of the following documents, each of
which shall be satisfactory to the Agent in form and substance:
(a) certified copies of the Amended and Restated Operating
Agreement and Certificate of Formation of Limited Liability Company
(or equivalent documents) of the Northeast Venture;
(b) Uniform Commercial Code searches for each DFA Contributed
Subsidiary for each jurisdiction in which such Person conducts its
respective business or in which any of its respective Properties are
located (or otherwise as the Agent may reasonably request);
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(c) appropriately completed and duly executed copies of
Uniform Commercial Code Financing Statements, sufficient to perfect in
the Agent a security interest in the ownership interests of the
Northeast Venture owned by the Company, in accordance with the
Security;
(d) an opinion, appropriately dated, of counsel to the
Northeast Venture covering such matters as the Agent may reasonably
request;
(e) an opinion, appropriately dated, of Milbank, Tweed,
Xxxxxx & XxXxxx, special New York counsel to First Union, covering
such matters as the Agent may reasonably request;
(f) if requested by the Agent, environmental surveys and
assessments prepared by one or more firms of licensed engineers
(familiar with the identification of toxic and hazardous substances)
in form and substance satisfactory to the Agent, such environmental
survey and assessment to be based upon physical on-site inspections by
such firm of each of the existing sites and facilities owned, operated
or leased by the DFA Contributed Subsidiaries as well as an historical
review of the uses of such sites and facilities and of the business
and operations of the DFA Contributed Subsidiaries; and
(g) an amendment to the Security Agreement pursuant to which
the Company shall pledge all of its right, title and interest in or to
the Northeast Venture to the Agent for the benefit of the Lenders.
7. Covenants. In addition to any covenants set forth in the Credit
Agreement, the Company covenants and agrees with the Lenders and the Agent
that:
(a) the Company, together with its Subsidiaries (other than
the Northeast Venture), shall at all times collectively retain voting
control of at least 51% of each class of capital stock or other
ownership interests of the Northeast Venture;
(b) notwithstanding anything to the contrary in the
definitions of "EBITDA", the Company shall include within EBITDA for
any period no more than the pro rata share (equal to the aggregate
shares of capital stock or other ownership interests in the Northeast
Venture then held by the Company and its Subsidiaries (other than the
Northeast Venture) divided by the total shares of outstanding capital
stock or other ownership interests in the Northeast Venture) of the
Northeast Venture's operating income, depreciation and amortization,
and other income for such period; and
(c) notwithstanding anything to the contrary in the
definition of "Applicable Margin", the Applicable Margin for
Eurodollar Loans shall be 0.75% from the date of the effectiveness of
the Transaction until the Company has delivered to the Agent the
financial statements for the period ended March 31, 1999 required by
Section 8.01 of the Credit Agreement.
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8. Miscellaneous. Except as expressly provided herein, the Credit
Agreement and the Security Documents shall remain unmodified and in full force
and effect. This Consent and Waiver may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Consent and Waiver by
signing any such counterpart. This Consent and Waiver shall be governed by, and
construed in accordance with, the law of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Consent and
Waiver to be duly executed and delivered as of the day and year first above
written.
COMPANY:
SUIZA FOODS CORPORATION
By: J. Xxxxxxx Xxxxx
Title: Vice President and Treasurer
AGREED AND ACCEPTED:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: Xxxxx Xxxxxxxx
Title: Senior Vice President
LENDERS
FIRST UNION NATIONAL BANK
By: Xxxxx Xxxxxxxx
Title: Senior Vice President
THE FIRST NATIONAL BANK OF
CHICAGO
By: Xxxx X. Xxxxx
Title: First Vice President
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BANK OF AMERICA NT&SA
By: W. Xxxxxx Xxxxxxx
Title: Managing Director
NATIONSBANK, N.A.
By: W. Xxxxxx Xxxxxxx
Title: Managing Director
BANCO POPULAR DE PUERTO RICO
By: Xxxxx Juenv
Title: Senior Vice President
By: Xxxxxxx Xxxxxxx
Title: Vice President
THE BANK OF NOVA SCOTIA
By: F.C.H. Xxxxx
Title: Senior Manager, Loan Operations
THE BANK OF TOKYO - MITSUBISHI, LTD.,
HOUSTON AGENCY
By: X. Xxxxxxx
Title: Vice President
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CREDIT AGRICOLE INDOSUEZ
By: W. Xxxxx Xxxxxx
Title: First Vice President
By: Xxxxx Xxxxx, F.V.P.
Title: Head of Corporate Banking
Chicago
CREDIT LYONNAIS NEW YORK BRANCH
By: Xxxxxx Xxxxxxxxx
Title: Senior Vice President
FLEET NATIONAL BANK
By: Xxxxx Xxxxx
Title: Vice President
XXXXX FARGO BANK (TEXAS) N.A.
By: Austin O. Sierra
Title: Banking Officer
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CIBC INC.
By: Xxxxxx Xxxxxxx
Title: Executive Director CIBC
Xxxxxxxxxxx Corp., as Agent
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: Xxxxx X'Xxxxx
Title: Vice President
By: Xxxxxx Xxxxxx
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By: W. Xxxxxxx Xxxxxxx
Title: Senior Credit Officer Senior
Vice President
By: Xxxxx X. Xxxxxxxx
Title: Vice President
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XXXXXX TRUST AND SAVINGS BANK
By: Xxxxx X. Xxxxxxx
Title: Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY
By: Xxxxxxxxxxx X. Xxxxxx
Title: Director, Head of SG - Dallas
By:
Title:
AMSOUTH BANK
By:
Title:
BANK ONE, TEXAS, N.A.
By: Xxxxxxxxxxx X. Xxxxxx
Title: Vice President
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BANKBOSTON N.A.
By: Xxxxxxx Xxxxxxx
Title: Vice President
BANQUE NATIONALE DE XXXXX XXXXXXX
AGENCY
By: Xxxxxx X. Xxxxxx
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT
By: Xxxx Xxxxx
Title: Vice President
By: Xxxxxx Xxxx
Title: Assistant Treasurer
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:
Title:
By:
Title:
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THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
By: Xxxxx Xxxxxxx
Title: Head of Southwest Region
MELLON BANK, N.A.
By: Xxxxxx X. Xxxxxx
Title: Assistant Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: Xx. Xxxxx Xxxxxxxx
Title: Chief Manager
NATEXIS BANQUE BFCE
By: Xxxxxxx X. Xxxxxxx
Title: Vice President
By: Xxxx X. Xxxxxx
Title: Assistant Treasurer
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NATIONAL CITY BANK OF KENTUCKY
By: Xxx Xxxxxxx
Title: Vice President
THE ROYAL BANK OF SCOTLAND PLC
By:
Title:
THE SANWA BANK, LIMITED, NEW YORK BRANCH
By: Xxxx X. Xxxxxx
Title: Vice President
STB DELAWARE FUNDING TRUST I
By: Xxxxxx X. Xxxxxxxx
Title: Assistant Vice President
SUNTRUST BANK, ATLANTA
By: F. Xxxxxx Xxxxxxx
Title: Vice President
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By: Xxxxxxx X. Xxxxxx
Title: Banking Officer
THE TOKAI BANK, NEW YORK BRANCH
By: Xxxxxxxx Xxxxxxxx
Title: Assistant General Manager
THE TOYO TRUST & BANKING CO., LTD.
By: T. Mikumo
Title: Vice President
UNION BANK OF CALIFORNIA
By: Xxxxxx X. Xxxxxx
Title: Vice President
MICHIGAN NATIONAL BANK
By: Xxxx Xxxxxx
Title: Commercial Relationship Manager
Exhibit A, Part I--Suiza Contributed Subsidiaries
Exhibit A, Part II--DFA Contributed Subsidiaries
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EXHIBIT A
EXHIBIT A, PART I--SUIZA CONTRIBUTED SUBSIDIARIES.
o Garelick Farms, Inc. (MA)
x Xxxxxxx Bros. Holdings, Inc. (MA)
o West Lynn Creamery, Inc. (MA)
o West Lynn Creamery Realty Corp. (MA)
o Fairdale Farms, Inc. (VT)
o Grant's Dairy, Inc. (ME)
o Miscoe Springs, Inc. (MA)
EXHIBIT A, PART II--DFA CONTRIBUTED SUBSIDIARIES.
o Tuscan/Lehigh Dairies, L.P. (DE)
o New England Dairies, Inc. (CT) (Owner of 44% of Terrace
Dairy, Inc.)
o Meola's Mt. Wachusett Dairy, Inc. (MA)
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