EXHIBIT 99.2
EXECUTION COPY
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LETTER OF CREDIT AND GUARANTY AGREEMENT
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AMONG
AGWAY, INC.,
A DEBTOR AND A DEBTOR-IN-POSSESSION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE, AND
ANY SUCCESSOR TO AGWAY, INC.
AS BORROWER
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AGWAY GENERAL AGENCY, INC., XXXXXXXX AGRONOMIC CONSULTING
SERVICE LLC, COUNTRY BEST XXXXX, LLC, COUNTRY BEST-XXXXXXX, LLC,
PQR, LLC (F/K/A FEED COMMODITIES INTERNATIONAL, LLC),
EACH A DEBTOR AND A DEBTOR-IN-POSSESSION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
AS GUARANTORS
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AND
JPMORGAN CHASE BANK
AS LETTER OF CREDIT ISSUER
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DATED AS OF APRIL 2, 2004
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS...................................................2
SECTION 1.01 Defined Terms.............................................2
SECTION 1.02 Terms Generally...........................................7
SECTION 2. AMOUNT AND TERMS OF CREDIT....................................7
SECTION 2.01 Letters of Credit.........................................7
SECTION 2.02 Issuance of Letters of Credit.............................8
SECTION 2.03 Nature of Letter of Credit Obligations Absolute...........8
SECTION 2.04 Optional Termination or Reduction of Commitment...........8
SECTION 2.05 Cash Collateral...........................................9
SECTION 2.06 New L/C Commitment Fee....................................9
SECTION 2.07 Letter of Credit Facility Fees............................9
SECTION 2.08 Nature of Fees............................................9
SECTION 2.09 Priority and Liens........................................9
SECTION 2.10 Right of Set-Off.........................................10
SECTION 2.11 Security Interest in Cash Collateral Account.............10
SECTION 2.12 Payment of Obligations...................................10
SECTION 2.13 No Discharge; Survival of Claims.........................11
SECTION 2.14 Assumption by New Obligor................................11
SECTION 3. REPRESENTATIONS AND WARRANTIES...............................11
SECTION 3.01 Organization and Authority................................11
SECTION 3.02 Due Execution.............................................11
SECTION 3.03 Statements Made...........................................12
SECTION 4. CONDITIONS OF LENDING........................................12
SECTION 4.01 Conditions Precedent to Issuance of Replacement
Letters of Credit.........................................12
SECTION 4.02 Conditions Precedent to Each New Letter of Credit.........14
SECTION 4.03 Request by Borrower as Representation and Warranty........15
SECTION 5. AFFIRMATIVE COVENANTS........................................15
SECTION 5.01 Assumption Upon Consummation..............................15
SECTION 5.02 Notice of Event of Default, etc...........................15
SECTION 5.03 Notice of Monthly Operating Reports.......................15
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 6. NEGATIVE COVENANTS...........................................15
SECTION 6.01 Chapter 11 Claims and Liens...............................15
SECTION 6.02 Actions with respect to Cash Collateral Account...........15
SECTION 7. EVENTS OF DEFAULT............................................15
SECTION 7.01 Events of Default.........................................15
SECTION 8. GUARANTY.....................................................17
SECTION 8.01 Guaranty..................................................17
SECTION 8.02 No Impairment of Guaranty.................................18
SECTION 8.03 Subrogation...............................................18
SECTION 9. MISCELLANEOUS................................................18
SECTION 9.01 Notices..................................................18
SECTION 9.02 Survival of Agreement, Representations and
Warranties, etc..........................................19
SECTION 9.03 Successors and Assigns...................................19
SECTION 9.04 Confidentiality..........................................19
SECTION 9.05 Expenses.................................................20
SECTION 9.06 Indemnity................................................20
SECTION 9.07 CHOICE OF LAW............................................20
SECTION 9.08 No Waiver................................................21
SECTION 9.09 Extension of Maturity....................................21
SECTION 9.10 Amendments, etc..........................................21
SECTION 9.11 Severability.............................................21
SECTION 9.12 Headings.................................................21
SECTION 9.13 Execution in Counterparts................................21
SECTION 9.14 Prior Agreements.........................................21
SECTION 9.15 Further Assurances.......................................21
SECTION 9.16 WAIVER OF JURY TRIAL.....................................21
SECTION 9.17 JURISDICTION AND VENUE...................................22
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TABLE OF CONTENTS
(continued)
PAGE
EXHIBITS
Exhibit A Form of Assumption Agreement
Exhibit B Application for Standby Letter of Credit
Exhibit C Form of Order
Exhibit D Form of Assignment of Deposit Agreement
Exhibit E Form of Opinion
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LETTER OF CREDIT AND GUARANTY AGREEMENT
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Dated as of April 2, 2004
LETTER OF CREDIT AND GUARANTY AGREEMENT, dated as of April 2,
2004, among Agway, Inc., a Delaware corporation (the "Borrower"), a debtor and
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debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code,
the Guarantors signatory hereto (the "Guarantors"), each a debtor and a
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debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code
(the cases of the Borrower and the Guarantors, the "Cases"), and JPMORGAN CHASE
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BANK (the "Bank") as letter of credit issuer.
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INTRODUCTORY STATEMENT
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WHEREAS, on October 4, 2002 (the "Filing Date"), each of the
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Borrower and the Guarantors filed a voluntary petition with the Bankruptcy Court
initiating the Cases and has continued in the possession of its assets and in
the management of its business pursuant to Sections 1107 and 1108 of the
Bankruptcy Code.
WHEREAS, a certain Debtor-In-Possession Credit Agreement,
dated as of October 1, 2002 (as heretofore amended, modified or supplemented,
the "Existing DIP Credit Agreement"), was entered into by and among the Borrower
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and certain direct or indirect subsidiaries of the Borrower signatory thereto,
the Lenders party thereto (the "Existing DIP Lenders") and General Electric
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Capital Corporation ("GE Capital") pursuant to which the Existing DIP Lenders
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provided a revolving credit facility of up to $125,000,000 on a post-petition
basis on the terms and conditions set forth therein.
WHEREAS, pursuant to the Existing DIP Credit Agreement,
Existing DIP Lenders have issued certain letters of credit totaling
approximately $30,300,000.00 which are identified on Schedule A attached hereto
(collectively, the "Existing Letters of Credit");
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WHEREAS, the Existing DIP Credit Agreement will mature on
April 4, 2004 and the Existing Lenders have informed the Borrower that they will
not renew the Existing Letters of Credit as they expire;
WHEREAS, the Borrower has determined that it is in its best
interest to replace the Existing Letters of Credit with letters of credit issued
by the Bank (the "Letters of Credit") and to establish with the Bank a facility
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pursuant to which the Bank will, at the request of Borrower and in accordance
with the terms of this Agreement, issue Letters of Credit in an aggregate amount
of up to $40,000,000 to the Borrower to be used by the Borrower to (i) replace,
up to an aggregate face amount not to exceed $30,300,000, the Existing Letters
of Credit, which replacement may temporarily include the issuance of
back-to-back Letters of Credit in support of such Existing Letters of Credit;
and (ii) obtain additional Letters of Credit up to an aggregate face amount not
to exceed the amount by which the sum of $40,000,000 exceeds the aggregate
outstanding amount of Existing Letters of Credit on the date hereof;
WHEREAS, the Letters of Credit will be used to support the
obligations of the Borrower and its Subsidiaries in connection with the
liquidation of the Borrower's and its Subsidiaries' assets;
WHEREAS, to provide security for the payment by the Borrower
of all amounts due to the Bank in respect of any Letters of Credit and the
payment of the other obligations of the Borrower attendant thereto, the Borrower
and the Guarantors will provide to the Bank the following (as more fully
described herein):
(a) an allowed administrative expense claim in each of the
Cases pursuant to Section 364(c)(1) of the Bankruptcy Code having superpriority
over all administrative expenses of the kind specified in Sections 503(b) and
507(b) of the Bankruptcy Code;
(b) cash collateral equal to 104% of the face amount of each
Letter of Credit issued hereunder, such cash collateral to be maintained in the
Cash Collateral Account.
Accordingly, the parties hereto hereby agree as follows:
SECTION 1 DEFINITIONS
SECTION 1.01 DEFINED TERMS. As used in this Agreement, the following terms
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shall have the meanings specified below:
"Affiliate" shall mean, as to any Person, any other Person
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which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition, a Person (a
"Controlled Person") shall be deemed to be "controlled by" another Person (a
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"Controlling Person") if the Controlling Person possesses, directly or
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indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Agreement" shall mean this Letter of Credit and Guaranty
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Agreement, as the same may from time to time be further amended, modified or
supplemented.
"Alternate Base Rate" shall mean, for any day, a rate per
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annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the
Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate"
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shall mean the rate of interest per annum publicly announced from time to time
by the Bank as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on the date such change
is publicly announced. "Base CD Rate" shall mean the sum of (a) the quotient of
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(i) the Three-Month Secondary CD Rate divided by (ii) a percentage expressed as
a decimal equal to 100% minus Statutory Reserves and (b) the Assessment Rate.
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary market
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rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
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or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Bank from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "Federal Funds Effective
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Rate" shall mean, for any day, the weighted average of the rates on overnight
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Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day of
such transactions received by the Bank from three Federal funds brokers of
recognized standing selected by it. If for any reason the Bank shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate
or both for any reason, including the inability or failure of the Bank to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (b) or (c), or both, of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
"Assessment Rate" shall mean for any date the annual rate
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(rounded upwards, if necessary, to the next 1/100 of 1%) most recently estimated
by the Bank as the then current net annual assessment rate that will be employed
in determining amounts payable by the Bank to the Federal Deposit Insurance
Corporation (or any successor) for insurance by such Corporation (or any
successor) of time deposits made in dollars at the Bank's domestic offices.
"Assumption Agreement" shall mean that certain Assumption
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Agreement, substantially in the form of Exhibit A attached hereto, to be entered
into by the New Obligor on the Effective Date pursuant to which the New Obligor
(i) agrees to assume and perform the rights and obligations as Borrower
hereunder and (ii) assigns and pledges to the Bank, for its benefit, and thereby
grants to the Bank, for its benefit, a first priority security interest in the
New Obligor's right, title and interest in and to the Cash Collateral Account.
"Bank" shall have the meaning set forth in the Introduction.
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"Bank Affiliate" means, an Affiliate of the Bank or (ii) any
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entity (whether a corporation, partnership, trust or otherwise) that is engaged
in making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by the Bank or an Affiliate of such Bank.
"Bankruptcy Code" shall mean The Bankruptcy Reform Act of
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1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101
et seq.
"Bankruptcy Court" shall mean the United States Bankruptcy
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Court for the Northern District of New York or any other court having
jurisdiction over the Cases from time to time.
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"Board" shall mean the Board of Governors of the Federal
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Reserve System of the United States.
"Borrower" shall mean (i) until the Effective Date, Agway,
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Inc., as a debtor and debtor-in-possession under the Bankruptcy Code and (ii)
from and after the Effective Date, the New Obligor.
"Business Day" shall mean any day other than a Saturday,
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Sunday or other day on which banks in the State of New York are required or
permitted to close (and other than a day on which the Bank is closed).
"Carve Out" has the meaning set forth in Section 2.09.
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"Cases" shall have the meaning set forth in the Introduction.
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"Cash Collateral Account" shall mean the account established
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by the Borrower under the sole and exclusive control of the Bank and maintained
at the office of the Bank at 000 Xxxx Xxxxxx, Xxxxxxxx, X.X. 13204 designated as
the "Agway Cash Collateral Account" that shall be used solely for the purposes
set forth herein and shall at all times be in an amount equal to at least 104%
of the Letter of Credit Outstandings.
"Closing Date" shall mean the date on which this Agreement has
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been executed and the conditions precedent to the issuance of the initial
Letters of Credit set forth in Section 4.01 have been satisfied or waived, which
date shall occur promptly upon entry of the Order, but not later than ten (10)
days following the entry of the Order.
"Dollars" and "$" shall mean lawful money of the United States
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of America.
"Effective Date" shall mean the effective date provided in the
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Liquidating Plan that is confirmed pursuant to an order of the Bankruptcy Court.
"Event of Default" shall have the meaning given such term in
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Section 7.
"Existing DIP Credit Agreement" shall have the meaning given
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such term in the Introductory Statement.
"Existing DIP Lenders" shall have the meaning given such term
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in the Introductory Statement.
"Existing Letter of Credit" shall have the meaning given such
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term in the Introductory Statement.
"Expenses" shall mean the expenses described in Section 9.05.
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"Fees" shall collectively mean the New L/C Commitment Fee, the
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Letter of Credit Fees and all other fees referred to in this Agreement.
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"Filing Date" shall have the meaning given such term in the
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Introductory Statement.
"Financial Officer" shall mean the Chief Financial Officer,
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Controller or Treasurer of the Borrower or such other executive officer duly
authorized by the Borrower to perform the responsibilities thereof in connection
with this Agreement.
"GAAP" shall mean generally accepted accounting principles
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applied in accordance with Section 1.02.
"Governmental Authority" shall mean any Federal, state,
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municipal or other governmental department, commission, board, bureau, agency or
instrumentality or any court, in each case whether of the United States or
foreign.
"Guarantors" shall have the meaning set forth in the
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Introduction.
"LC Documents" shall mean this Agreement, the Letters of
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Credit, the application for each Letter of Credit, and any other instrument or
agreement executed and delivered by the Borrower to the Bank in connection
herewith.
"Letter of Credit" shall mean any Replacement Letter of Credit
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or New Letter of Credit issued pursuant to Section 2.01, each of which letters
of credit shall be (i) a standby letter of credit with a non-renewal provision
of not less than 30 days, (ii) issued to facilitate the liquidation of
Borrower's and its Subsidiaries' assets, (iii) denominated in Dollars and (iv)
in such form as may be approved from time to time by the Bank.
"Letter of Credit Fees" shall mean the fees set forth in
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Section 2.07.
"Letter of Credit Outstandings" shall mean, at any time, the
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sum of (i) the aggregate undrawn face amount of all Letters of Credit then
outstanding; plus (ii) all amounts theretofore drawn under Letters of Credit and
not then reimbursed.
"Lien" shall mean any mortgage, pledge, security interest,
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encumbrance, lien or charge of any kind whatsoever (including any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Liquidating Plan" shall mean the Plan of Liquidation dated
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February 26, 2004 and filed with the Bankruptcy Court, as the same may from time
to time be amended or supplemented, in the Cases. The Bank agrees that the form
of the Liquidating Plan dated February 26, 2004 filed with the Bankruptcy Court
is acceptable to the Bank.
"Maturity Date" shall mean the earlier of (i) April 1, 2006
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and (ii) unless (A) the Liquidating Plan and the Bankruptcy Court order
confirming the Liquidating Plan are reasonably satisfactory to the Bank and (B)
the New Obligor shall have assumed the Obligations of the Borrower as set forth
in Section 2.14, the Effective Date.
"New L/C Commitment" shall mean the commitment of the Bank to
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issue New Letters of Credit pursuant to the terms and conditions of this
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Agreement, which shall not exceed the amount by which the sum of $40,000,000
exceeds the aggregate outstanding amount of Existing Letters of Credit on the
date hereof, as such New L/C Commitment may be reduced pursuant to Section
2.01(b).
"New L/C Commitment Fee" shall mean the fee set forth in
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Section 2.06.
"New Letter of Credit" shall mean any irrevocable evergreen
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standby letter of credit with a non-renewal clause of at least thirty (30) days
issued pursuant to Section 2.01 which is not issued to replace an Existing
Letter of Credit.
"New Obligor" shall mean the liquidating trust (or such other
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surviving entity established pursuant to the Liquidating Plan that is reasonably
satisfactory to the Bank) established pursuant to the Liquidating Plan as the
assignee of certain of the assets of Agway, Inc.
"Obligations" shall mean the payment and/or reimbursement to
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the Bank by the Borrower and the Guarantors of (a) all amounts drawn under
Letters of Credit together with interest thereon; (b) all Fees and Expenses; and
(c) all other present and future, fixed or contingent, monetary obligations of
the Borrower and the Guarantors to the Bank under the LC Documents.
"Order" shall have the meaning given such term in Section
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4.01(b).
"Person" shall mean any natural person, corporation, division
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of a corporation, partnership, trust, joint venture, association, company,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Replacement L/C Commitment" shall mean the commitment of the
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Bank to issue Replacement Letters of Credit pursuant to the terms and conditions
of this Agreement, as such Replacement L/C Commitment may be reduced pursuant to
Section 2.01(b).
"Replacement Letter of Credit" shall mean any irrevocable
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evergreen standby letter of credit with a non-renewal clause of at least thirty
(30) days issued pursuant to Section 2.01, which letter or letters of credit
shall replace one (1) or more Existing Letters of Credit (or be issued in favor
of the issuer thereof on a "back-to-back" basis).
"Subsidiary" shall mean, with respect to any Person (herein
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referred to as the "parent"), any corporation, association or other business
entity (whether now existing or hereafter organized) of which at least a
majority of the securities or other ownership interests having ordinary voting
power for the election of directors is, at the time as of which any
determination is being made, owned or controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Superpriority Claim" shall mean a claim against the Borrower
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and any Guarantor in any of the Cases which is an administrative expense claim
having priority over any or all administrative expenses of the kind specified in
Sections 503(b) or 507(b) of the Bankruptcy Code.
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"Termination Date" shall mean the earliest to occur of (i) the
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Maturity Date and (ii) the acceleration of the Obligations and the termination
of all commitments in accordance with the terms hereof.
"Total Commitment" shall mean, collectively, the Replacement
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L/C Commitment and the New L/C Commitment which shall at no time exceed
$40,000,000, as such commitment may be reduced pursuant to Section 2.01(b).
"Unused New L/C Commitment" shall mean, at any time, the New
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L/C Commitment less the aggregate face amount of all New Letters of Credit then
outstanding.
SECTION 1.02 TERMS GENERALLY. The definitions in Section 1.01 shall apply
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equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Sections, Exhibits and
Schedules shall be deemed references to Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time.
SECTION 2 AMOUNT AND TERMS OF CREDIT
SECTION 2.01 LETTERS OF CREDIT.
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(a) Upon the terms and subject to the conditions herein set forth, the
Borrower may request the Bank, at any time and from time to time after the date
of satisfaction of the conditions set forth in Section 4.01 and prior to the
Termination Date, to issue, and, subject to the terms and conditions contained
herein, the Bank shall issue, for the account of (x) the Borrower, one or more
Replacement Letters of Credit for the benefit of the Borrower or its Subsidiary
Yawga Energy Products LLC or (y) the Borrower one or more New Letters of Credit,
provided that no Letter of Credit shall be issued if: (i) the conditions to such
issuance set forth in this Agreement have not been met, (ii) after giving effect
to such issuance the aggregate Letter of Credit Outstandings shall exceed the
Total Commitment or (iii) the requested Letter of Credit shall expire later than
one hundred eighty (180) days following the scheduled Maturity Date.
(b) Once a Replacement Letter of Credit or New Letter of Credit is issued
pursuant to the terms hereof, the Replacement L/C Commitment or the New L/C
Commitment, as the case may be, shall be automatically and permanently reduced
by an amount equal to the face amount of such Replacement Letter of Credit or
New Letter of Credit, provided, however, that notwithstanding such reduction of
the Replacement L/C Commitment, a new Replacement Letter of Credit may be issued
in favor of the beneficiary of an Existing Letter of Credit (x) in substitution
for that portion of the back-to-back Replacement Letter of Credit that was
issued in favor of the issuer of such Existing Letter of Credit in respect of
such Existing Letter of Credit and (y) upon the reduction of the back-to-back
Replacement Letter of Credit issued to such issuer in an amount corresponding to
the amount of such substitute Letter of Credit (or in advance of such reduction
and in the amount of the anticipated reduction if so requested by the Borrower).
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(c) The Borrower shall pay to the Bank, in addition to the fees and charges
that are specifically provided for in Section 2.07 hereof, such other fees and
charges in connection with the issuance and processing of the Letters of Credit
issued by the Bank as are customarily imposed by the Bank from time to time in
connection with letter of credit transactions.
(d) Drafts drawn under each Letter of Credit shall be reimbursed by the
Borrower in Dollars not later than the first Business Day following the date of
draw and shall bear interest from the date of draw until the first Business Day
following the date of draw at a rate per annum equal to the Alternate Base Rate
plus 2% and thereafter on the unreimbursed portion until reimbursed in full at a
rate per annum equal to the Alternate Base Rate plus 4% (computed on the basis
of the actual number of days elapsed over a year of 360 days or when the
Alternate Base Rate is based on the Prime Rate, a year with 365 days or 366 days
in a leap year). Draws under each Letter of Credit shall be reimbursed from cash
maintained in the Cash Collateral Account. The Borrower hereby authorizes the
Bank to withdraw from the Cash Collateral Account funds equal to the amount of
the draw under each Letter of Credit drawn and the Bank agrees to make such
withdrawal from the Cash Collateral Account not later than one Business Day
following the date of a draw under a Letter of Credit.
SECTION 2.02 ISSUANCE OF LETTERS OF CREDIT. Whenever the Borrower desires
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the Bank to issue a Letter of Credit, it shall deliver to the Bank an
application for standby letter of credit in substantially the form of Exhibit B
hereto at least three (3) days in advance of the requested date of issuance and
specifying the date on which the proposed Letter of Credit is to be issued
(which shall be a Business Day), the stated amount of the Letter of Credit so
requested, the expiration date of such Letter of Credit and the name and address
of the beneficiary thereof.
SECTION 2.03 NATURE OF LETTER OF CREDIT OBLIGATIONS ABSOLUTE. The
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obligations of the Borrower to make deposits into the Cash Collateral Account,
to reimburse the Bank for draws made under any Letter of Credit and to reimburse
the Bank for all fees, costs and expenses with respect to any Letter of Credit
as set forth in this Agreement shall be unconditional and irrevocable and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which the Borrower or any Guarantor may have at any time
against a beneficiary of any Letter of Credit or against the Bank, whether in
connection with this Agreement or any unrelated transaction; (iii) any draft,
demand, certificate or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; (iv) payment by the
Bank of any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit; (v) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vi) the fact that any Event of Default
shall have occurred and be continuing.
SECTION 2.04. OPTIONAL TERMINATION OR REDUCTION OF COMMITMENT. Upon at
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least two Business Days' prior written notice to the Bank, the Borrower may at
any time terminate, or from time to time in part permanently reduce, the Total
Commitment. Each such reduction of the Total Commitment shall be in the
principal amount of $100,000 or any integral multiple thereof. Simultaneously
with each reduction or termination of the Total Commitment, the Borrower shall
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pay to the Bank the New L/C Commitment Fee accrued and unpaid on the amount of
the New L/C Commitment terminated or reduced through the date thereof.
SECTION 2.05 CASH COLLATERAL. As a condition to the issuance of each
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Letter of Credit, the Borrower shall deposit into the Cash Collateral Account
the amount that is equal to 104% of the stated amount of such Letter of Credit.
As set forth in Section 2.01(d), upon a draw under any Letter of Credit, the
cash maintained in the Cash Collateral Account shall be withdrawn by the Bank
not later than one Business Day after a draw under a Letter of Credit to
reimburse the Bank for such draw. Xxxx maintained in the Letter of Credit
Account with respect to any undrawn Letter of Credit that has expired or been
replaced shall within two (2) Business Days after such expiration or replacement
be remitted to the Borrower in an amount equal to 104% of such expired or
replaced Letter of Credit. Only following the satisfaction in full by the
Borrower of all Obligations under the LC Documents shall all amounts remaining
in the Cash Collateral Account be remitted to the Borrower. Any interest or
other income earned on the cash maintained in the Cash Collateral Account shall
be remitted to the Borrower at least monthly on the second Business Day of the
month immediately following the month in which interest or other income is
earned.
SECTION 2.06 NEW L/C COMMITMENT FEE. The Borrower shall pay to the Bank a
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commitment fee (the "New L/C Commitment Fee") for the period commencing on the
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Closing Date to the Termination Date or the earlier termination of the New L/C
Commitment, computed (on the basis of the actual number of days elapsed over a
year of 360 days) at the rate of .50% per annum on the Unused New L/C
Commitment. Such New L/C Commitment Fee, to the extent then accrued, shall be
due and payable five (5) Business days after Xxxxxxxx's receipt of the Bank's
fee invoice (i) monthly, in arrears, on the last calendar day of each month,
(ii) on the Termination Date and (iii) as provided in Section 2.04 hereof, upon
any reduction or termination in whole or in part of the New L/C Commitment.
SECTION 2.07 LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to the
------------------------------
Bank (i) a fee calculated (on the basis of the actual number of days elapsed
over a year of 360 days) at the rate of 1.4% per annum on the daily average
Letter of Credit Outstandings and (ii) its customary fees for issuance,
amendments and processing referred to in Section 2.01. Accrued fees described in
clause (i) of the first sentence of this paragraph in respect of each Letter of
Credit shall be due and payable five (5) Business Days after Xxxxxxxx's receipt
of the Bank's fee invoice monthly in arrears on the last calendar day of each
month and on the Termination Date. Accrued fees described in clause (ii) of the
first sentence of this paragraph in respect of each Letter of Credit shall be
payable at times to be determined by the Bank and the Borrower in each event
five (5) Business Days after Xxxxxxxx's receipt of the Bank's invoice.
SECTION 2.08 NATURE OF FEES. All Fees shall be paid to the Bank on the
--------------
dates due, in immediately available funds, as provided herein. Once paid, none
of the Fees shall be refundable under any circumstances.
SECTION 2.09 PRIORITY AND LIENS. The Borrower and each of the Guarantors
------------------
hereby covenants, represents and warrants that, upon entry of the Order and
until the Effective Date, the Obligations of the Borrower and the Guarantors
hereunder and under the Documents: (i) pursuant to Section 364(c)(1) of the
Bankruptcy Code, shall at all times constitute allowed administrative expense
9
claims in the Cases having superpriority over all administrative expenses of the
kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code subject only
to (x) in the event of the occurrence and during the continuance of an Event of
Default, the payment of allowed and unpaid professional fees and disbursements
incurred by the Borrower, the Guarantors and any statutory committees appointed
in the Cases (and, to the extent applicable, the Liquidating Trustee appointed
pursuant to the Liquidating Plan and any professionals retained by the
Liquidating Trustee) in an aggregate amount not in excess of $2,000,000 (plus
all unpaid professional fees and disbursements incurred prior to the occurrence
of an Event of Default to the extent allowed by the Bankruptcy Court at any
time) and (y) the payment of unpaid fees pursuant to 28 U.S.C. ss. 1930 and to
the Clerk of the Bankruptcy Court (collectively, the "Carve-Out") (and the Bank
---------
agrees that so long as no Event of Default or event which with the giving of
notice or lapse of time or both would constitute an Event of Default shall have
occurred, the Borrower and the Guarantors shall be permitted to pay compensation
and reimbursement of expenses allowed and payable under 11 U.S.C. ss. 330 and 11
U.S.C. ss. 331, as the same may be due and payable, and the same shall not
reduce the Carve-Out); and (ii) pursuant to Section 364(c)(2) of the Bankruptcy
Code, shall at all times be secured by a perfected first priority Lien on all
cash maintained in the Letter of Credit Account and any direct investments of
the funds contained therein.
SECTION 2.10. RIGHT OF SET-OFF. Subject to the provisions of Section 7.01,
----------------
upon the occurrence and during the continuance of any Event of Default, the Bank
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law and without further order of or application to the Bankruptcy
Court, to set off and apply any and all amounts, including but not limited to
those in the Cash Collateral Account, at any time held and at any time owing by
the Bank to or for the credit or the account of the Borrower or any Guarantor
against any and all of the Obligations of such Borrower or any Guarantor now or
hereafter existing under this Agreement and/or the LC Documents, irrespective of
whether or not the Bank shall have made any demand under this Agreement or the
LC Documents and although such Obligations may not have been accelerated. The
Bank agrees promptly to notify the Borrower and Guarantor after any such set-off
and application made by the Bank; provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Bank under this Section 2.10 are in addition to any and all other rights and
remedies which the Bank may have upon the occurrence and during the continuance
of any Event of Default.
SECTION 2.11. SECURITY INTEREST IN CASH COLLATERAL ACCOUNT. Pursuant to
---------------------------------------------
Section 364(c)(2) of the Bankruptcy Code, the Borrower and the Guarantors hereby
assign and pledge to the Bank, for its benefit, and hereby grant to the Bank,
for its benefit, a first priority security interest, senior to all other Liens,
if any, in all of the Borrower's and the Guarantors' right, title and interest
in and to the Cash Collateral Account. Other than with respect to the interest
earned on the funds maintained in the Cash Collateral Account, cash held in the
Cash Collateral Account shall not be available for use by the Borrower or any
creditor of the Borrower, whether pursuant to Section 363 of the Bankruptcy Code
or otherwise and shall be released to the Borrower only as described in Section
2.05.
SECTION 2.12 PAYMENT OF OBLIGATIONS. Subject to the provisions of Section
----------------------
7.01, upon the maturity (whether by acceleration or otherwise) of any of the
Obligations under this Agreement and/or the LC Documents, the Bank shall be
10
entitled to immediate payment of such Obligations without further application to
or order of the Bankruptcy Court.
SECTION 2.13. NO DISCHARGE; SURVIVAL OF CLAIMS. Each of the Borrower and
---------------------------------
the Guarantors agrees that (i) its Obligations hereunder shall not be discharged
by the entry of an order confirming a Liquidating Plan (and each of the Borrower
and the Guarantors, pursuant to Section 1141(d)(4) of the Bankruptcy Code,
hereby waives any such discharge) and (ii) the Superpriority Claim granted to
the Bank pursuant to the Order and described in Section 2.09 and the Liens
granted to the Bank pursuant to the Order and described in Sections 2.09 and
2.11 shall not be affected in any manner by the entry of an order confirming a
Liquidating Plan.
SECTION 2.14 ASSUMPTION BY NEW OBLIGOR. On the Effective Date, (a)
---------------------------
pursuant to the Liquidating Plan or otherwise, the Borrower shall assign its
interests in the Cash Collateral Account to the New Obligor, and (b) the New
Obligor shall execute the Assumption Agreement as required pursuant to Section
5.01 (subject to the conditions precedent set forth therein) and the New Obligor
shall thereby assume and perform the rights and Obligations as Borrower
hereunder.
SECTION 3 REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to issue Letters of Credit
hereunder, the Borrower and each of the Guarantors jointly and severally
represent and warrant as follows:
SECTION 3.01 ORGANIZATION AND AUTHORITY. Each of the Borrower and the
----------------------------
Guarantors (i) is duly organized and validly existing under the laws of the
State of its organization or formation and is duly qualified to do business and
is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on the financial condition, operations,
business, properties, assets or prospects of the Borrower and the Guarantors
taken as a whole; (ii) subject to the entry by the Bankruptcy Court of the Order
has the requisite limited liability company or corporate, as the case may be,
power and authority to effect the transactions contemplated hereby, and (iii)
subject to the entry by the Bankruptcy Court of the Order has all requisite
limited liability company or corporate, as the case may be, power and authority
and the legal right to own, pledge, mortgage and operate its properties, and to
conduct its business as now or currently proposed to be conducted.
SECTION 3.02 DUE EXECUTION. Upon the entry by the Bankruptcy Court of the
-------------
Order, the execution, delivery and performance by the Borrower and the
Guarantors of each of the LC Documents to which it is a party (i) are within the
respective limited liability company or, corporate powers, as the case may be of
the Borrower and the Guarantors, have been duly authorized by all necessary
limited liability company or corporate, as the case may be, action including the
consent of shareholders where required, and does not (A) contravene the charter
or by-laws of the Borrower or the Guarantors, (B) violate any law (including,
without limitation, the Securities Exchange Act of 1934) or regulation
(including, without limitation, Regulations T, U or X of the Board), or any
order or decree of any court or Governmental Authority, (C) conflict with or
result in a breach of, or constitute a default under, any material indenture,
mortgage or deed of trust entered into after the Filing Date or any material
lease, agreement or other instrument entered into after the Filing Date binding
11
on the Borrower or the Guarantors or any of their properties, or (D) result in
or require the creation or imposition of any Lien upon any of the property of
the Borrower or the Guarantors other than the Liens granted pursuant to this
Agreement or the Order; and (ii) do not require the consent, authorization by or
approval of or notice to or filing or registration with any Governmental
Authority other than notice of the motion seeking the entry of the Order. Upon
the entry by the Bankruptcy Court of the Order, this Agreement and the LC
Documents, whether duly executed and delivered by the Borrower and the
Guarantors to the Bank prior or subsequent to the date of the Order, shall be a
legal, valid and binding obligation of the Borrower and each Guarantor, and
enforceable against the Borrower and the Guarantors, in accordance with its
terms and the Order.
SECTION 3.03 STATEMENTS MADE. The information that has been delivered in
---------------
writing by the Borrower or any of the Guarantors to the Bank or the Bankruptcy
Court in connection with the Agreement and the LC Documents, taken as a whole
and in light of the circumstances in which made, contains no untrue statement of
a material fact and does not omit to state a material fact necessary to make
such statements not misleading; and, to the extent that any such information
constitutes projections, such projections were prepared in good faith on the
basis of assumptions, methods, data, tests and information believed by the
Borrower or such Guarantor to be reasonable at the time such projections were
furnished.
SECTION 4. CONDITIONS OF LENDING
SECTION 4.01 CONDITIONS PRECEDENT TO ISSUANCE OF REPLACEMENT LETTERS OF
-------------------------------------------------------------
CREDIT. The obligation of the Bank to issue a Replacement Letter of Credit is
------
subject to the following conditions precedent:
(a) Supporting Documents. At the time of the issuance of the initial Letter
--------------------
of Credit, the Bank shall have received for each of the Borrower and the
Guarantors:
(i) a copy of such entity's certificate of incorporation or formation,
as the case may be, as amended, certified as of a recent date by the
Secretary of State of the state of its incorporation or formation;
(ii) a certificate of such Secretary of State, dated as of a recent
date, as to the good standing and/or authority to do business of each
entity and as to payment of taxes by that entity and as to the charter
documents on file in the office of such Secretary of State; and
(iii) a certificate of the Secretary or an Assistant Secretary of that
entity dated the date of the initial Letter of Credit hereunder, and
certifying (A) that attached thereto is a true and complete copy of the
by-laws or operating agreement, as the case may be, of that entity as in
effect on the date of such certification, (B) that attached thereto is a
true and complete copy of resolutions adopted by the Board of Directors of
that entity authorizing the Letter of Credit extensions hereunder, the
execution, delivery and performance in accordance with their respective
terms of this Agreement, the LC Documents and any other documents required
or contemplated hereunder or thereunder and the granting of the security
interest in the Cash Collateral Account and other Liens contemplated
hereby, (C) that the certificate of incorporation or formation, as the case
12
may be, of that entity has not been amended since the date of the last
amendment thereto indicated on the certificate of the Secretary of State
furnished pursuant to clause (i) above and (D) as to the incumbency and
specimen signature of each officer of that entity executing this Agreement
and the LC Documents or any other document delivered by it in connection
herewith or therewith (such certificate to contain a certification by
another officer of that entity as to the incumbency and signature of the
officer signing the certificate referred to in this clause (iii)).
(b) Order. At the time of the issuance of the initial Letter of
-----
Credit, the Bank shall have received a certified copy of an order of the
Bankruptcy Court in substantially the form of Exhibit C (the "Order") that
-----
shall have been entered on or before March 31, 2004 unless extended by
mutual consent of the Borrower and the Bank and that shall be in full force
and effect, which Order (i) shall have been entered, upon an application or
motion of the Borrower reasonably satisfactory in form and substance to the
Bank; and (ii) shall not have been stayed, reversed, modified or amended in
any respect.
(c) Cash Collateral Account. The Borrower shall have (i) deposited
-------------------------
into the Cash Collateral Account an amount in immediately available funds
equal to 104% of the face amount of the Replacement Letters of Credit then
to be issued and (ii) executed and delivered to the Bank an assignment of
deposit agreement with respect to the Cash Collateral Account in
substantially the form of Exhibit D.
(d) Opinion of Counsel. The Bank shall have received a favorable
-------------------
written opinion of Xxxxxx, Xxxxx & Xxxxxxxxxxx, P.C., counsel to the
Borrower, dated as of the Closing Date, substantially in the form of
Exhibit E.
(e) Payment of Fees and Expenses. The Borrower shall have paid to the
----------------------------
Bank all accrued and unpaid Fees and expenses due under and pursuant to
this Agreement and the LC Documents.
(f) Corporate and Judicial Proceedings. All corporate and court
-------------------------------------
proceedings and all instruments and agreements in connection with the
transactions among the Borrower, the Guarantors and the Bank contemplated
by this Agreement shall be reasonably satisfactory in form and substance to
the Bank, and the Bank shall have received all information and copies of
all documents and papers, including records of company, corporate and
judicial proceedings, which the Bank may have reasonably requested in
connection therewith, such documents and papers where appropriate to be
certified by proper company, corporate, governmental or judicial
authorities.
(g) Information. The Bank shall have received such information
-----------
(financial or otherwise) as may have been reasonably requested by the Bank.
(h) Letter of Credit Application. The Bank shall have received an
-----------------------------
application for each Replacement Letter of Credit as required pursuant to
Section 2.02.
(i) Termination of Liens. The Borrower shall have no right to obtain
---------------------
further credit under the Existing DIP Credit Agreement and all liens in
13
favor of the Existing DIP Lenders shall have been satisfied and released,
in each case in a manner reasonably satisfactory to the Bank.
(j) Representations and Warranties. All representations and warranties
------------------------------
contained in this Agreement shall be true and correct in all material
respects on and as of the date of the issuance of each Replacement Letter
of Credit hereunder with the same effect as if made on and as of such date
except to the extent such representations and warranties expressly relate
to an earlier date provided that if Borrower elects to cause the
dissolution of one (1) or more of the Guarantors, the warranty contained in
Section 3.01 above shall not apply to any Guarantor which has been so
dissolved.
(k) No Event of Default. No Event of Default or event which upon
--------------------
notice or lapse of time or both would constitute an Event of Default shall
have occurred and be continuing.
SECTION 4.02 CONDITIONS PRECEDENT TO EACH NEW LETTER OF CREDIT. The
------------------------------------------------------
obligation of the Bank to issue each New Letter of Credit is subject to the
following conditions precedent:
(a) Notice. The Bank shall have received an application for each New
------
Letter of Credit as required pursuant to Section 2.02.
(b) Cash Collateral Account. The Borrower shall have deposited into
-------------------------
the Cash Collateral Account an amount in immediately available funds equal
to 104% of the face amount of such New Letter of Credit then to be issued.
(c) Representations and Warranties. All representations and warranties
------------------------------
contained in this Agreement shall be true and correct in all material
respects on and as of the date of the issuance of each New Letter of Credit
hereunder with the same effect as if made on and as of such date except to
the extent such representations and warranties expressly relate to an
earlier date, provided that if Borrower elects to cause the dissolution of
one (1) or more of the Guarantors, the warranty contained in Section 3.01
above shall not apply to any Guarantor which has been so dissolved.
(d) No Default. On the date of the issuance of each New Letter of
-----------
Credit, no Event of Default or event which upon notice or lapse of time or
both would constitute an Event of Default shall have occurred and be
continuing.
(e) Order. The Order shall be in full force and effect and shall not
-----
have been stayed, reversed, modified or amended in any respect.
(f) Payment of Fees. The Borrower shall have paid to the Bank the then
---------------
unpaid balance of all accrued and unpaid Fees then payable under and
pursuant to this Agreement and the LC Documents.
(g) Assumption Agreement. In the event that such issuance shall be
---------------------
after the Effective Date, the Bank shall have received an executed copy of
the Assumption Agreement and the conditions set forth in Section 2.14 shall
have been satisfied.
14
SECTION 4.03 REQUEST BY XXXXXXXX AS REPRESENTATION AND WARRANTY. The
------------------------------------------------------
request by the Borrower for, and the acceptance by the Borrower of, the issuance
of each Letter of Credit hereunder shall be deemed to be a representation and
warranty by the Borrower that, as of the date of such request, all conditions
specified in this Section have been satisfied (or waived prior thereto by the
Bank).
SECTION 5. AFFIRMATIVE COVENANTS
From the date hereof and until the later of (i) the last date that any
Letter of Credit shall remain outstanding or (ii) any amount shall remain
outstanding or unpaid under this Agreement, the Borrower and each of the
Guarantors agree that, unless the Bank shall otherwise consent in writing, the
Borrower and each of the Guarantors will:
SECTION 5.01 ASSUMPTION UPON CONSUMMATION. On the Effective Date, cause
-------------------------------
the New Obligor to execute the Assumption Agreement.
SECTION 5.02 NOTICE OF EVENT OF DEFAULT, ETC. Promptly give to the Bank
--------------------------------
notice in writing of any Event of Default or the occurrence of any event or
circumstance which with the passage of time or giving of notice or both would
constitute an Event of Default.
SECTION 5.03 NOTICE OF MONTHLY OPERATING REPORTS. Furnish to the Bank and
-------------------------------------
its counsel promptly after the same are available, copies of monthly operating
reports filed by or on behalf of the Borrower or any of the Guarantors with the
Bankruptcy Court in the Cases.
SECTION 6. NEGATIVE COVENANTS
From the date hereof and until the later of (i) the last date
that any Letter of Credit shall remain outstanding or (ii) any amount shall
remain outstanding or unpaid under this Agreement, the Borrower and each of the
Guarantors agree that, unless the Bank shall otherwise consent in writing, the
Borrower and each of the Guarantors will not:
SECTION 6.01 CHAPTER 11 CLAIMS AND LIENS. Incur, create, assume, suffer to
---------------------------
exist or permit any (i) Superpriority Claim which is pari passu with or senior
to the claims of the Bank against the Borrower or any of such Guarantors or (ii)
any Lien whatsoever on the Cash Collateral Account.
SECTION 6.02 ACTIONS WITH RESPECT TO CASH COLLATERAL ACCOUNT. Make any
--------------------------------------------------
draws or disbursements from or take any action which may jeopardize, impair or
detract from the Bank's rights pursuant to this Agreement and the LC Documents
with respect to the Cash Collateral Account.
SECTION 7. EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. In the case of the happening of any of the
-----------------
following events and the continuance thereof beyond the applicable period of
grace if any (each, an "Event of Default"):
----------------
15
(a) any material representation or warranty made by the Borrower or any
Guarantor in this Agreement or in any LC Document; or if any other document
shall be delivered pursuant to the Agreement, shall prove to have been false or
misleading in any material respect when made or delivered; or
(b) default shall be made in the payment of any Fees or interest pursuant
to this Agreement when due; and such default shall remain unremedied for more
than two (2) Business Days following the Borrower's receipt of written notice
thereof; or
(c) default shall be made by the Borrower or any Guarantor in the due
observance or performance of any covenant, condition or agreement contained in
this Agreement or any of the LC Documents, and the default shall remain
unremedied for more than ten (10) Business Days following Xxxxxxxx's receipt of
written notice thereof; or
(d) the Cases shall be dismissed or converted to a case under Chapter 7 of
the Bankruptcy Code or the Borrower or any Guarantor shall file a motion or
other pleading seeking the dismissal of the Cases under Section 1112 of the
Bankruptcy Code or otherwise; a trustee under Chapter 7 or Chapter 11 of the
Bankruptcy Code, a responsible officer or an examiner with enlarged powers
relating to the operation of the business (powers beyond those set forth in
Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code shall be appointed in the Cases and the order appointing such
trustee, responsible officer or examiner shall not be reversed or vacated within
30 days after the entry thereof; or an application shall be filed by the
Borrower or any Guarantor for the approval of any other claim (regardless of
whether such claim is a Super-Priority Claim is pari passu with or senior to the
claims of the Bank) with respect to the Cash Collateral Account; or
(e) any material provision of the Agreement or the LC Documents shall, for
any reason, cease to be valid and binding on the Borrower or any of the
Guarantors, or the Borrower or any of the Guarantors shall so assert in any
pleading filed in any court; or
(f) an order of the Bankruptcy Court shall be entered reversing, staying
for a period in excess of seven (7) days, vacating or (without the written
consent of the Bank) otherwise amending, supplementing or modifying the Order or
terminating this Agreement, the issuance of Letters of Credit or terminating the
Cash Collateral Account; or
(g) there shall be enforced any judgment or order with respect to this
Agreement which does or could reasonably be expected to impair any of the Bank's
rights and/or remedies hereunder, including but not limited to the grant of any
lien or claim (whether or not pari passu to those of the Bank) with respect to
---- -----
the Cash Collateral Account;
then, and in every such event and at any time thereafter during the continuance
of such event, and without further order of or application to the Bankruptcy
Court, the Bank may, by notice to the Borrower (with a copy to the United States
Trustee for the Northern District of New York), take one or more of the
following actions, at the same or different times (provided, that with respect
to clause (iv) below) the Bank shall provide the Borrower (with a copy to the
United States Trustee for the Northern District of New York) with three (3)
Business Days' written notice prior to taking the action contemplated thereby:
(i) terminate forthwith the Total Commitment; (ii) declare any and all amounts
16
then outstanding to be forthwith due and payable; (iii) require the Borrower and
the Guarantors upon demand to forthwith deposit in the Cash Collateral Account
any and all amounts due with respect thereto (and to the extent the Borrower and
the Guarantors shall fail to furnish such funds as demanded by the Bank, the
Bank shall be authorized to debit any other accounts of the Borrower and the
Guarantors maintained with the Bank in such amount three (3) Business Days after
the giving of the notice referred to above) to the extent the funds contained in
the Cash Collateral Account shall be insufficient to satisfy the Obligations;
(iv) set-off amounts in the Cash Collateral Account or any other accounts
maintained with the Bank and apply such amounts to the Obligations of the
Borrower and the Guarantors hereunder; and (v) exercise any and all remedies
under the Agreement, the LC Documents and/or under applicable law available to
the Bank.
SECTION 8. GUARANTY
SECTION 8.01 GUARANTY.
---------
(a) Each of the Guarantors unconditionally and irrevocably guarantees the
due and punctual payment by the Borrower of the Obligations. Each of the
Guarantors further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and it will
remain bound upon this guaranty notwithstanding any extension or renewal of any
of the Obligations. The Obligations of the Guarantors shall be joint and
several.
(b) Each of the Guarantors waives presentation to, demand for payment from
and protest to the Borrower or any other Guarantor, and also waives notice of
protest for nonpayment. The Obligations of the Guarantors hereunder shall not be
affected by (i) the failure of the Bank to assert any claim or demand or to
enforce any right or remedy against the Borrower or any other Guarantor under
the provisions of this Agreement or any other LC Document or otherwise; (ii) any
extension or renewal of any provision hereof or thereof; (iii) any rescission,
waiver, compromise, acceleration, amendment or modification of any of the terms
or provisions of any of the LC Documents; (iv) the release, exchange, waiver or
foreclosure of any security held by the Bank for the Obligations or any of them;
(v) the failure of the Bank to exercise any right or remedy against any other
Guarantor; or (vi) the release or substitution of any Guarantor for any other
Guarantor.
(c) Each of the Guarantors further agrees that this guaranty constitutes a
guaranty of payment when due and not just of collection, and waives any right to
require that any resort be had by the Bank to any security held for payment of
the Obligations or to any balance of any deposit, account or credit on the books
of the Bank in favor of the Borrower or any other Guarantor, or to any other
Person.
(d) Each of the Guarantors hereby waives any defense that it might have
based on a failure to remain informed of the financial condition of the Borrower
and of any other Guarantor and any circumstances affecting the ability of the
Borrower to perform under this Agreement.
(e) Each Guarantor's guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Obligations or any other
instrument evidencing any Obligations, or by the existence, validity,
enforceability, perfection, or extent of any collateral therefor or by any other
17
circumstance (excepting only payment in full of the Obligations) relating to the
Obligations which might otherwise constitute a defense to this Guaranty. The
Bank makes no representation or warranty in respect to any such circumstances or
shall have any duty or responsibility whatsoever to any Guarantor in respect of
the management and maintenance of the Obligations.
(f) Subject to the provisions of Section 7.01, upon the Obligations
becoming due and payable (by acceleration or otherwise), the Bank shall be
entitled to immediate payment of such Obligations by the Guarantors upon written
demand by the Bank, without further application to or order of the Bankruptcy
Court.
SECTION 8.02 NO IMPAIRMENT OF GUARANTY. The obligations of the Guarantors
--------------------------
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason, including, without limitation, any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense or set-off, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality or unenforceability of the Obligations. Without
limiting the generality of the foregoing, the obligations of the Guarantors
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Bank to assert any claim or demand or to enforce any remedy under
this Agreement or any other agreement, by any waiver or modification of any
provision thereof, by any default, failure or delay, willful or otherwise, in
the performance of the Obligations, or by any other act or thing or omission or
delay to do any other act or thing which may or might in any manner or to any
extent vary the risk of the Guarantors or would otherwise operate as a discharge
of the Guarantors as a matter of law, unless and until the Obligations are paid
in full.
SECTION 8.03 SUBROGATION. Upon payment by any Guarantor of any sums to the
-----------
Bank hereunder, all rights of such Guarantor against the Borrower arising as a
result thereof by way of right of subrogation or otherwise, shall in all
respects be subordinate and junior in right of payment to the prior final and
indefeasible payment in full of all the Obligations. If any amount shall be paid
to such Guarantor for the account of the Borrower, such amount shall be held in
trust for the benefit of the Bank and shall forthwith be paid to the Bank to be
credited and applied to the Obligations, whether matured or unmatured.
SECTION 9. MISCELLANEOUS
SECTION 9.01 NOTICES. Notices and other communications provided for herein
-------
shall be in writing (including facsimile communication) and shall be mailed,
transmitted by facsimile or delivered to the Borrower or any Guarantor at 000
Xxxxxxxxx Xxxxx, XxXxxx, Xxx Xxxx 00000, Attention: Xxxxx X. Xxxxxxx, Corporate
Treasurer, telecopy number 000-000-0000 with a copy to Xxxxxx, Xxxxx &
Xxxxxxxxxxx, P.C., 000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention:
Xxxxx Xxxxxx, telecopy number 315-474-4040, and to the Bank addressed to Xxxxx
Xxxxx, JPMorgan Chase Bank, 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, telecopy
number 000-000-0000, with a copy to Xxxxxxx Xxxxx, Esq., JPMorgan Chase Bank,
Xxx Xxxxx Xxxxxx, XX-0, Xxxxxxxxx, Xxx Xxxx, 00000, telecopy number
000-000-0000, and Xxxxxx X. Xxxxxxx, Esq., Xxxxxx, Xxxxx & Xxxxxxx, LLP, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, telecopy number 000-000-0000, or such
other address as such party may from time to time designate by giving written
notice to the other parties hereunder. All notices and other communications
18
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the fifth Business Day after the date when
sent by registered or certified mail, postage prepaid, return receipt requested,
if by mail; or when receipt is acknowledged, if by any facsimile equipment of
the sender; in each case addressed to such party as provided in this Section
9.01 or in accordance with the latest unrevoked written direction from such
party; provided, however, that in the case of notices to the Bank, notices
pursuant to the preceding sentence with respect to change of address and
pursuant to Section 2 shall be effective only when received by the Bank.
SECTION 9.02 SURVIVAL OF AGREEMENT, REPRESENTATIONS AND WARRANTIES, ETC.
-------------------------------------------------------------
All warranties, representations and covenants made by the Borrower or any
Guarantor herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Bank and shall survive the issuance of Letters of Credit
herein contemplated regardless of any investigation made by the Bank or on its
behalf and shall continue in full force and effect so long as any amount due or
to become due hereunder is outstanding and unpaid and so long as the Commitments
have not been terminated. All statements in any such certificate or other
instrument shall constitute representations and warranties by the Borrower and
the Guarantors hereunder with respect to the Borrower.
SECTION 9.03 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
----------------------
and inure to the benefit of the Borrower, and the Bank and their respective
successors and assigns. Except and only to the extent provided for in the
Assumption Agreement or the Order, neither the Borrower nor any of the
Guarantors may assign or transfer any of their rights or obligations hereunder
without the prior written consent of the Bank.
SECTION 9.04 CONFIDENTIALITY. The Bank agrees to keep any information
---------------
delivered or made available by the Borrower or any of the Guarantors to it
confidential from anyone other than persons employed or retained by the Bank who
are or are expected to become engaged in evaluating, approving, structuring or
administering the Letters of Credit; provided that nothing herein shall prevent
the Bank from disclosing such information (i) to any of its Affiliates or to any
prospective Assignees, provided such party agrees to keep such information
confidential to the same extent required by the Bank hereunder, (ii) upon the
order of any court or administrative agency, (iii) upon the request or demand of
any regulatory agency or governmental authority, (iv) which has been publicly
disclosed other than as a result of a disclosure by the Bank or any bank which
is not permitted by this Agreement, (v) in connection with any litigation to
which the Bank, or its respective Affiliates may be a party to the extent
reasonably required, (vi) to the extent reasonably required in connection with
the exercise of any remedy hereunder, (vii) to the Bank's legal counsel,
independent auditors and advisors and (viii) the Bank shall use reasonable
efforts to notify the Borrower of any required disclosure under clause (ii) of
this Section. Notwithstanding anything else in this Agreement or the LC
Documents to the contrary, each party hereto (and each employee, representative,
or other agent of any party) may disclose to any and all persons, without
limitation of any kind, the Federal income tax treatment and Federal tax
structure of any and all transaction(s) contemplated herein and all materials of
any kind (including opinions or other tax analyses) that are or have been
provided to any party (or to any employee, representative, or other agent of any
party) relating to such tax treatment or tax structure, provided, however, that
-------- -------
this authorization of disclosure shall not apply to restrictions reasonably
19
necessary to comply with securities laws. This authorization of disclosure is
retroactively effective immediately upon commencement of the first discussions
regarding the transactions contemplated herein, and the parties aver and affirm
that this tax disclosure authorization has been given on a date which is no
later than 30 days from the first day that any party hereto (or any employee,
representative, or other agent of any party hereto) first made or provided a
statement as to the potential tax consequences that may result from the
transactions contemplated hereby. Notwithstanding anything else in this
Agreement or the LC Documents to the contrary, the confidentiality obligations
set forth in this Section 9.04 shall survive the Termination Date and the
termination of this Agreement.
SECTION 9.05 EXPENSES. Whether or not the transactions hereby contemplated
--------
shall be consummated, the Borrower and the Guarantors agree to pay all
reasonable out-of-pocket expenses incurred by the Bank (including but not
limited to the reasonable fees and disbursements of Xxxxxx, Xxxxx & Xxxxxxx LLP
and any other counsel that the Bank shall retain in connection with the
preparation, execution, delivery and administration of this Agreement and the
issuance of the Letters of Credit and the LC Documents), the reasonable and
customary costs, fees and expenses internally allocated charges and expenses
(collectively, the "Expenses"), and following the occurrence of an Event of
Default, all reasonable out-of-pocket expenses incurred by the Bank in the
enforcement or protection of the rights of the Bank in connection with this
Agreement and/or the LC Documents, including but not limited to the reasonable
fees and disbursements of any counsel for the Bank. All such accrued and unpaid
Expense payments shall be paid by the Borrower promptly after the entry of the
Order and thereafter on demand, within five (5) Business Days following
Xxxxxxxx's receipt of a statement setting forth such costs and expenses. In the
event that no written objection to such statement(s) is received by the Bank
within such five (5) Business Day period, the Bank may (but shall not be
required to) pay the amounts of such statements on behalf of the Borrower from
any accounts (including, but not limited to, the Cash Collateral Account)
maintained at the Bank for the Borrower. The obligations of the Borrower and the
Guarantors under this Section shall survive the termination of this Agreement
and/or the payment of the Obligations.
SECTION 9.06 INDEMNITY. The Borrower and each of the Guarantors agree to
---------
indemnify and hold harmless the Bank and its directors, officers, employees,
agents and Affiliates (each an "Indemnified Party") from and against any and all
expenses, losses, claims, damages and liabilities incurred by such Indemnified
Party arising out of claims made by any Person (including without limitation any
beneficiary or proposed beneficiary of a Letter of Credit) in any way relating
to the transactions contemplated hereby, but excluding therefrom all expenses,
losses, claims, damages, and liabilities to the extent that they are determined
by the final judgment of a court of competent jurisdiction to have resulted from
the gross negligence or willful misconduct of such Indemnified Party. The
obligations of the Borrower and the Guarantors under this Section shall survive
the termination of this Agreement and/or the payment of the Obligations.
SECTION 9.07 CHOICE OF LAW. THIS AGREEMENT AND THE OTHER LC DOCUMENTS SHALL
-------------
IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK AND (TO THE EXTENT APPLICABLE) THE BANKRUPTCY CODE.
20
SECTION 9.08 NO WAIVER. No failure on the part of the Bank to exercise, and
---------
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law.
SECTION 9.09 EXTENSION OF MATURITY. Should any payment of principal of or
----------------------
interest or any other amount due hereunder become due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, in the case of principal, interest shall be payable
thereon at the rate herein specified during such extension.
SECTION 9.10 AMENDMENTS, ETC. No modification, amendment or waiver of any
----------------
provision of this Agreement and no consent to any departure by the Borrower or
any Guarantor therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
SECTION 9.11 SEVERABILITY. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.12 HEADINGS. Section headings used herein are for convenience
--------
only and are not to affect the construction of or be taken into consideration in
interpreting this Agreement.
SECTION 9.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
--------------------------
any number of counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same instrument.
SECTION 9.14 PRIOR AGREEMENTS. This Agreement represents the entire
-----------------
agreement of the parties with regard to the subject matter hereof and the terms
of any letters and other documentation entered into between the Borrower or a
Guarantor and the Bank prior to the execution of this Agreement which relate to
the issuance of Letters of Credit are replaced by the terms of this Agreement.
SECTION 9.15 FURTHER ASSURANCES. Whenever and so often as reasonably
-------------------
requested by the Bank, the Borrower and the Guarantors will promptly execute and
deliver or cause to be executed and delivered all such other and further
instruments, documents or assurances (including but not limited to the LC
Documents), and promptly do or cause to be done all such other and further
things as may be necessary and reasonably required in order to further and more
fully vest in the Bank all rights, interests, powers, benefits, privileges and
advantages conferred or intended to be conferred by this Agreement.
SECTION 9.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE GUARANTORS AND
--------------------
THE BANK HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
21
OF THE LC DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND/OR THEREBY.
SECTION 9.17 JURISDICTION AND VENUE. The Bank, the Borrower and the
------------------------
Guarantors consent and agree to the non-exclusive personal jurisdiction of the
United States Federal District court for the Northern District of New York and
of the Supreme Court for the County of Onondaga, State of New York with respect
to any litigation matter in any way relating to this Agreement or any Letter of
Credit, and each of such parties agree that venue in either of such Courts is a
convenient forum.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and the year first written.
BORROWER:
AGWAY, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Treasurer
GUARANTORS:
AGWAY GENERAL AGENCY, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Treasurer
XXXXXXXX AGRONOMIC CONSULTING SERVICE LLC
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Treasurer
COUNTRY BEST XXXXX, LLC
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Treasurer
COUNTRY BEST-XXXXXXX, LLC
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Treasurer
23
PQR, LLC (F/K/A FEED COMMODITIES
INTERNATIONAL, LLC)
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Title: Treasurer
BANK:
JPMORGAN CHASE BANK
By: /s/ Xxxxx X. Xxxxx
------------------------
Title: Vice President
24
SCHEDULE A
LIST OF EXISTING LETTERS OF CREDIT
L/C NUMBER BENEFICIARY NAME $ AMOUNT EXPIRY DATE
------------------------------------------------------------------------------------------------------------
SE441614P Pacific Employers Insurance/ACE American 5,000,000.00 June 4, 2004
SE441751P Pacific Employers Insurance/ACE American 5,374,468.00 July 31, 2004
SE442574W Pacific Employers Insurance/ACE American 4,251,074.00 June 30, 2004
SE441588P Reliance Insurance 3,073,484.50 May 15, 2004
SE441589P Reliance Insurance 2,500,000.00 May 15, 2004
SE441590P Reliance Insurance 2,000.000.00 May 15, 2004
SE441591P Reliance Insurance 3,200,000.00 May 15, 2004
SE441617P Travelers Insurance 350,870.00 May 21, 2004
1781P CitiCapital Fleet 980,000.00 August 20, 2004
SE441469P Fremont First Assoc. 150,000.00 June 27, 2004
SE443116W Greenwich Insurance 1,500,000.00 February 6, 2005
SE443136W NJ Dept. of Environmental Protection 100,000.00 February 14, 2005
SE443137W NJ Dept. of Environmental Protection 100,000.00 February 14, 2005
SE443138W NJ Dept. of Environmental Protection 100,000.00 February 14, 2005
SE443139W NJ Dept. of Environmental Protection 100,000.00 February 14, 2005
SE443323W NYS Dept. of Agriculture 200,000.00 April 30, 2004
SE443410W PA Dept. of Revenue 1,225,000.00 August 31, 2004
EXHIBIT A
Form of Assumption Agreement
EXHIBIT B
Application for Standby Letter of Credit
EXHIBIT C
Form of Order
EXHIBIT D
Form of Assignment of Deposit Agreement
EXHIBIT E
Form of Opinion
