Exhibit 10.3
EXECUTION VERSION
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LOAN AND SECURITY AGREEMENT
by and among
PIERRE FOODS, INC.
as Borrower,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Administrative Agent
Dated as of May 29, 2002
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1. DEFINITIONS AND CONSTRUCTION............................................................................1
1.1. Definitions....................................................................................1
1.2. Accounting Terms..............................................................................27
1.3. Code..........................................................................................27
1.4. Construction..................................................................................27
1.5. Schedules and Exhibits........................................................................27
2. LOAN AND TERMS OF PAYMENT..............................................................................27
2.1. Revolver Advances.............................................................................27
2.2. Term Loan; Mandatory Prepayment...............................................................29
2.3. Borrowing Procedures and Settlements..........................................................29
2.4. Payments......................................................................................35
2.5. Overadvances..................................................................................38
2.6. Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations....................38
2.7. Cash Management...............................................................................40
2.8. Crediting Payments; Float Charge..............................................................41
2.9. Designated Account............................................................................41
2.10. Maintenance of Loan Account; Statements of Obligations........................................42
2.11. Fees..........................................................................................42
2.12. Letters of Credit.............................................................................43
2.13. LIBOR Option..................................................................................46
2.14. Capital Requirements..........................................................................48
3. CONDITIONS; TERM OF AGREEMENT..........................................................................48
3.1. A. Conditions Precedent to the Initial Extension of Credit....................................49
3.2. Conditions Subsequent to the Initial Extension of Credit......................................53
3.3. Conditions Precedent to all Extensions of Credit..............................................54
3.4. Term..........................................................................................54
3.5. Effect of Termination.........................................................................55
3.6. Early Termination by Borrower.................................................................55
4. CREATION OF SECURITY INTEREST..........................................................................56
4.1. Grant of Security Interest....................................................................56
4.2. Control of Collateral.........................................................................56
4.3. Negotiable Collateral.........................................................................56
4.4. Collection of Accounts, General Intangibles, and Negotiable Collateral........................56
4.5. Delivery of Additional Documentation Required.................................................56
4.6. Power of Attorney.............................................................................57
4.7. Control Agreements............................................................................57
4.8. Right to Inspect; Inventories, Appraisals and Audits..........................................58
5. REPRESENTATIONS AND WARRANTIES.........................................................................58
5.1. No Encumbrances...............................................................................58
5.2. Eligible Accounts.............................................................................58
5.3. Eligible Inventory............................................................................58
5.4. Equipment.....................................................................................58
5.5. Location of Inventory and Equipment...........................................................58
5.6. Inventory Records.............................................................................59
5.7. Legal Status..................................................................................59
5.8. Due Organization and Qualification; Subsidiaries..............................................59
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5.9. Due Authorization; No Conflict................................................................59
5.10. Litigation....................................................................................61
5.11. No Material Adverse Change....................................................................61
5.12. Fraudulent Transfer...........................................................................61
5.13. Employee Benefits.............................................................................62
5.14. Environmental Condition.......................................................................62
5.15. Brokerage Fees................................................................................62
5.16. Intellectual Property.........................................................................62
5.17. Leases........................................................................................62
5.18. DDAs..........................................................................................62
5.19. Compliance with Laws..........................................................................62
5.20. Indebtedness..................................................................................63
5.21. Payment of Taxes..............................................................................63
5.22. Complete Disclosure...........................................................................63
5.23. Subordination.................................................................................63
5.24. Share Exchange................................................................................63
5.25. Contracts with Affiliates.....................................................................63
6. AFFIRMATIVE COVENANTS..................................................................................64
6.1. Accounting System.............................................................................64
6.2. Collateral Reporting..........................................................................64
6.3. Financial Statements, Reports, Certificates...................................................65
6.4. Guarantor Reports.............................................................................67
6.5. Return........................................................................................67
6.6. Maintenance of Properties.....................................................................67
6.7. Taxes.........................................................................................67
6.8. Insurance.....................................................................................68
6.9. Location of Inventory and Equipment...........................................................68
6.10. Compliance with Laws..........................................................................69
6.11. Leases........................................................................................69
6.12. Brokerage Commissions.........................................................................69
6.13. Existence.....................................................................................69
6.14. Environmental.................................................................................69
6.15. Investment Proceeds, Etc......................................................................69
6.16. Disclosure Updates............................................................................70
6.17. Mandatory Prepayment from Certain Permitted Dispositions......................................70
7. NEGATIVE COVENANTS.....................................................................................70
7.1. Indebtedness..................................................................................70
7.2. Liens.........................................................................................71
7.3. Restrictions on Fundamental Changes...........................................................71
7.4. Disposal of Assets............................................................................71
7.5. Change of Name or Address.....................................................................71
7.6. Guarantee.....................................................................................71
7.7. Nature of Business............................................................................72
7.8. Prepayments and Amendments....................................................................72
7.9. Change of Control.............................................................................72
7.10. Consignments..................................................................................72
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7.11. Distributions.................................................................................72
7.12. Accounting Methods............................................................................72
7.13. Investments...................................................................................73
7.14. Transactions with Affiliates..................................................................73
7.15. Reserved......................................................................................73
7.16. Suspension....................................................................................73
7.17. Reserved......................................................................................73
7.18. Use of Proceeds...............................................................................73
7.19. Inventory and Equipment with Bailees..........................................................73
7.20. Securities Accounts...........................................................................73
7.21. Financial Covenants...........................................................................73
8. EVENTS OF DEFAULT......................................................................................75
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................................................77
9.1. Rights and Remedies...........................................................................77
9.2. Remedies Cumulative...........................................................................79
10. TAXES AND EXPENSES.....................................................................................79
11. WAIVERS; INDEMNIFICATION...............................................................................80
11.1. Demand; Protest; etc..........................................................................80
11.2. The Lender Group's Liability for Collateral...................................................80
11.3. Indemnification...............................................................................80
12. NOTICES................................................................................................81
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.............................................................82
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.............................................................83
14.1. Assignments and Participations................................................................83
14.2. Successors....................................................................................85
15. AMENDMENTS; WAIVERS....................................................................................85
15.1. Amendments and Waivers........................................................................85
15.2. Replacement of Holdout Lender.................................................................86
15.3. No Waivers; Cumulative Remedies...............................................................87
16. AGENT; THE LENDER GROUP................................................................................87
16.1. Appointment and Authorization of Agent........................................................87
16.2. Delegation of Duties..........................................................................88
16.3. Liability of Agent............................................................................88
16.4. Reliance by Agent.............................................................................88
16.5. Notice of Default or Event of Default.........................................................89
16.6. Credit Decision...............................................................................89
16.7. Costs and Expenses; Indemnification...........................................................89
16.8. Agent in Individual Capacity..................................................................90
16.9. Successor Agent...............................................................................90
16.10. Lender in Individual Capacity.................................................................91
16.11. Withholding Taxes.............................................................................91
16.12. Collateral Matters............................................................................93
16.13. Restrictions on Actions by Lenders; Sharing of Payments.......................................94
16.14. Agency for Perfection.........................................................................94
16.15. Payments by Agent to the Lenders..............................................................94
16.16. Concerning the Collateral and Related Loan Documents..........................................95
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16.17. Field Audits and Examination Reports; Confidentiality; Disclaimers
by Lenders; Other Reports and Information.....................................................95
16.18. Several Obligations; No Liability.............................................................96
16.19. Legal Representation of Agent.................................................................96
17. GENERAL PROVISIONS.....................................................................................96
17.1. Effectiveness.................................................................................97
17.2. Section Headings..............................................................................97
17.3. Interpretation................................................................................97
17.4. Severability of Provisions....................................................................97
17.5. Amendments in Writing.........................................................................97
17.6. Counterparts; Telefacsimile Execution.........................................................97
17.7. Revival and Reinstatement of Obligations......................................................97
17.8. Integration...................................................................................97
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 Inventory Locations; Eligible Inventory Locations
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7 Cash Management Banks and Accounts
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10(a) Litigation
Schedule 5.10(b) Commercial Tort Claims
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.19 Reserved
Schedule 5.20 Permitted Indebtedness
Schedule 5.25 Contracts With Affiliates
Schedule 6.8 Collateral Insurance Policies
Schedule 7.13 Investments
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is entered into as
of May 29, 2002 by and among, on the one hand, the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, as the
administrative agent for the Lenders and any other holder of Obligations
referred to below ("Agent"), and, on the other hand, PIERRE FOODS, INC., a North
Carolina corporation ("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. Definitions. As used in this Agreement, the following terms shall
have the following definitions:
"Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, Chattel Paper, or a
General Intangible.
"Accounts" means all of Borrower's now owned or hereafter acquired
right, title, and interest with respect to "accounts" (as such term is defined
from time to time in the Code), and any and all supporting obligations in
respect thereof.
"ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by Xxxxx Fargo or
its Affiliates for the account of Borrower or its Subsidiaries.
"Additional Documents" has the meaning set forth in Section 4.5.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person; (b)
each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person; and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.
"Agent" means Foothill, solely in its capacity as administrative agent
and collateral agent for the Lenders hereunder and any other holder of
Obligations, and any successor thereto.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
"Agent's Account" means the account identified on Schedule A-1.
"Agent's Liens" means the Liens granted by Borrower to Agent for the
benefit of the Lender Group under this Agreement or the other Loan Documents.
"Agent-Related Persons" means Agent, together with its Affiliates,
officers, directors, employees, and agents.
"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of determination,
an amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 3.0% times the Maximum Revolver Amount, (b)
during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, 2.0% times the Maximum Revolver Amount, and (c) during the
period of time from and including the date that is the second anniversary of the
Closing Date up to the date that is the third anniversary of the Closing Date,
1.0% times the Maximum Revolver Amount, and (d) from and after the third
anniversary of the Closing Date, 0% times the Maximum Revolver Amount.
"Assignee" has the meaning set forth in Section 14.1.
"Assignment and Acceptance" means an Assignment and Acceptance in the
form of Exhibit A-1.
"Authorized Person" means any officer or other employee of Borrower.
"Availability" means, as of any date of determination, if such date is
a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Borrower is entitled to borrow as Advances, after giving effect to
all then outstanding Obligations (other than Bank Products Obligations) and all
sublimits and reserves applicable hereunder.
"Availability Reserves" means such reserves as Agent from time to time
determines in its Permitted Discretion as being appropriate to reflect the
impediments to Agent's ability to realize upon the Collateral. Without limiting
the generality of the foregoing, Availability Reserves may include (but are not
limited to) reserves based on the following: (a) three (3) months' rent for any
Eligible Inventory Location for which an acceptable Collateral Access Agreement
has not been received by Agent (irrespective of whether any rent is currently
due); (b) returns, customer credits, or similar items; including so-called
accrued marketing promotions, accrued marketing bid prices and accrued marketing
rebates; (c) payables (based upon payables which are 60 days or more past due);
(d) customer deposits; (e) taxes, assessments, insurance premiums and other
governmental charges, including tax Liens, ad valorem, personal property, sales,
and other taxes
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which may have priority over the security interests of the Lender Group in the
Collateral; (f) held or post-dated checks issued by Borrower; (g) any judgment
lien against Borrower or Collateral; and (h) Borrower's failure to pay when due
and payable any indebtedness owing to any trade creditor. In addition to the
foregoing, Availability Reserves shall include the Share Exchange Reserve until
the Share Exchange Reserve Termination Date.
"Bailee Acknowledgment" means a record in form and substance
satisfactory to Agent authenticated by any bailee, warehouseman or other third
party in possession of any Equipment or Inventory acknowledging that it holds
possession of the applicable Inventory and/or Equipment for the benefit of
Agent, on behalf of the Lenders.
"Bank Product Agreements" means those certain cash management service
agreements entered into from time to time by Borrower or its Subsidiaries in
connection with any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Borrower or
its Subsidiaries to Xxxxx Fargo or its Affiliates pursuant to or evidenced by
the Bank Product Agreements and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all such amounts that Borrower
is obligated to reimburse to Agent or any member of the Lender Group as a result
of Agent or such member of the Lender Group purchasing participations or
executing indemnities or reimbursement obligations with respect to the Bank
Products provided to Borrower or its Subsidiaries pursuant to the Bank Product
Agreements.
"Bank Products" means any service or facility extended to Borrower or
its Subsidiaries by Xxxxx Fargo or any Affiliate of Xxxxx Fargo including: (a)
credit cards, (b) credit card processing services, (c) debit cards, (d) purchase
cards, (e) ACH Transactions, (f) cash management, including controlled
disbursement, accounts or services, or (g) Hedge Agreements.
"Bank Product Reserves" means, as of any date of determination, the
amount of reserves that Agent has established (based upon Xxxxx Fargo's or its
Affiliate's reasonable determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding.
"Bankruptcy Code" means the United States Bankruptcy Code, as in effect
from time to time.
"Base LIBO Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), on the basis of the rates at which Dollar deposits are offered
to major banks in the London interbank market on or about 2:00 p.m. (Boston,
Massachusetts time) 2 Business Days prior to the commencement of the applicable
Interest Period, for a term and in amounts comparable to the Interest Period and
amount of the LIBO Rate Loan requested by Borrower in accordance with this
Agreement, which determination shall be conclusive in the absence of manifest
error.
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"Base Rate" means, the rate of interest announced within Xxxxx Fargo at
its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Base Rate Loan" means each portion of an Advance, the Term Loan or a
Capex Loan that bears interest at a rate determined by reference to the Base
Rate.
"Base Rate Margin" means at any date of determination, (x) if the
Borrower's EBITDA for the immediately proceeding fiscal year, as evidence by the
Borrower's audited financial statements, is less than $20,000,000, 0.50
percentage points, (y) if the Borrower's EBITDA for the immediately preceding
fiscal year as evidenced by the Borrower's audited financial statements is
greater than or equal to $20,000,000, but less than or equal to $25,000,000,
0.25 percentage points, or (z) if the Borrower's EBITDA for the immediately
preceding fiscal year as evidenced by the Borrower's audited financial
statements is greater than $25,000,000, 0.00 percentage points.
"Base Rate Term Loan Margin" means 0.75 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of
Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the
past six years.
"Board of Directors" means the board of directors (or comparable
managers) of Borrower or any committee thereof duly authorized to act on behalf
thereof.
"Books" means all of Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of Borrower's or its Subsidiaries' Records relating to its or their business
operations or financial condition, and all of its or their goods or General
Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances, or term
loans, in the case of the Term Loan, or capex loans, in the case of the Capex
Loans, made on the same day by the Lenders (or Agent on behalf thereof), or by
Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent
Advance.
"Borrowing Base" has the meaning set forth in Section 2.1(a).
"Business Day" means any day that is not a Saturday, Sunday, or other
day on which national banks are authorized or required to close, except that, if
a determination of a Business Day shall relate to a LIBO Rate Loan, the term
"Business Day" also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.
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"Business Plan" means the set of Projections of Borrower for the 5 year
period following the Closing Date (on a year by year basis, and for the 1 year
period following the Closing Date, on a month by month basis), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent and attached hereto as Exhibit D-1, together with any amendment,
modification or revision thereto approved by Agent in its Permitted Discretion.
"Capex Loan(s)" has the meaning set forth in Section 2.2(b).
"Capex Loan Amount" means an amount equal to the lesser of (a)
$10,000,000 and (b) 80% of the hard cost of eligible capital equipment net of
taxes, freight, engineering and related soft costs.
"Capex Loan Commitment" means, with respect to each Lender, its Capex
Loan Commitment, and, with respect to all Lenders, their Capex Loan Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Xxxxx'x, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
Xxxxx'x, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
"Cash Management Bank" has the meaning set forth in Section 2.7(a).
"Cash Management Account" has the meaning set forth in Section 2.7(a).
"Cash Management Agreements" means those certain cash management
service agreements, each in form and substance satisfactory to Agent and each of
which is among Borrower, Agent, and one of the Cash Management Banks.
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"Change in Control Agreements" means collectively, the Amended and
Restated Change in Control Agreements, each dated as of July 6, 1999 between the
respective Guarantors and Fresh Foods, Inc., predecessor to the Borrower.
"Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than one or more
of the Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 10%, or more, of the Stock
of Borrower having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) Borrower ceases to own and control,
directly or indirectly, 100% of the outstanding capital Stock of each of its
Subsidiaries extant as of the Closing Date.
"Chattel Paper" means all of Borrower's now owned or hereafter acquired
right, title, and interest with respect to "chattel paper", including, without
limitation, "tangible chattel paper" and "electronic chattel paper", as such
terms are defined from time to time in the Code, and any and all supporting
obligations in respect thereof.
"Closing Date" means the date of the making of the initial Advance (or
other extension of credit) hereunder or, if different, the date on which Agent
sends Borrower a written notice that each of the conditions precedent set forth
in Section 3.1 either have been satisfied or have been waived.
"Code" means the Uniform Commercial Code, as in effect from time to
time in The Commonwealth of Massachusetts.
"Collateral" means all of Borrower's now owned or hereafter acquired
right, title, and interest in and to each of the following:
(a) Accounts,
(b) Chattel Paper,
(c) DDAs,
(d) Documents,
(e) General Intangibles,
(f) Goods (including, without limitation, Inventory and
Equipment),
(g) Instruments,
(h) Investment Property,
(i) Letter of Credit Rights,
(j) Real Property Collateral,
(k) the Commercial Tort Claims set forth on Schedule 5.10(b),
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(l) money or other assets of Borrower that now or hereafter
come into the possession, custody, or control of any member of the
Lender Group, and
(m) any and all proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance
covering any or all of the foregoing, and any and all Accounts, Books,
General Intangibles, (Goods, including without limitation Equipment and
Inventory), Investment Property, Negotiable Collateral, Real Property,
money, DDAs, or other tangible or intangible property resulting from
the sale, exchange, collection, or other disposition of any of the
foregoing, or any portion thereof or interest therein, and the proceeds
thereof.
Notwithstanding, the foregoing, the term "Collateral" shall
not include the promissory note of Xxxxx X. Xxxxxxxxxx, Xx. in favor of
the Borrower in the principal amount of $5,000,000, or the promissory
note of Columbia Hill, LLC (subsequently assigned to and assumed by
PFMI) in favor of the Borrower in the principal amount of $705,493.00.
"Collateral Access Agreement" means a waiver or consent in form and
substance satisfactory to Agent executed by any lessor of Real Property leased
by Borrower or any other Person having a Lien upon, or having rights or
interests in the Equipment or Inventory.
"Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrower.
"Commercial Tort Claim" means any now existing or hereafter arising
"commercial tort claim," as such term is defined from time to time in the Code.
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, its Capex Loan Commitment, or its Total
Commitment, as the context requires, and, with respect to all Lenders, their
Revolver Commitments, their Term Loan Commitments, their Capex Loan Commitment,
or their Total Commitments, as the context requires, in each case as such Dollar
amounts are set forth beside such Lender's name under the applicable heading on
Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder in accordance with the provisions
of Section 14.1.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.
"Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Borrower on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Borrower (as such terms are
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used in Rule 14a-11 under the Exchange Act) and whose initial assumption of
office resulted from such contest or the settlement thereof.
"Control Agreement" means an agreement, in form and substance
satisfactory to Agent, executed and delivered by Borrower, Agent, and the
applicable securities intermediary or bank, which agreement is sufficient to
give Agent "control" over the subject Securities Account, DDA or Investment
Property as provided in the Code.
"Copyright Security Agreement" means a copyright security agreement
executed and delivered by Borrower and Agent, the form and substance of which is
satisfactory to Agent.
"Cost" means the calculated cost of Inventory, as determined from
invoices received by Borrower, Borrower's purchase journals or stock ledgers,
based upon Borrower's accounting practices, known to Agent, which practices are
in effect on the date on which this Agreement was executed. "Cost" does not
include any inventory capitalization costs inclusive of advertising, but may
include other charges used in Borrower's determination of cost of goods sold and
bringing goods to market, all within Agent's Permitted Discretion and in
accordance with GAAP.
"Daily Balance" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other "deposit account" (as such term is
defined from time to time in the Code) maintained by Borrower.
"Default" means an event, condition, or default that, with the giving
of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any Advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3 days
from and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto.
"Designated Account" means certain DDA of Borrower identified on
Schedule D-1.
"Dilution" means, as of any date of determination, a percentage, based
upon the experience of the immediately prior 90 days, that is the result of
dividing (a) the Dollar amount of bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to the Accounts during
such period, by (b) the Dollar amount of Borrower's xxxxxxxx with respect to
Accounts during such period (excluding extraordinary items) plus the Dollar
amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5.00%.
8
"Disbursement Letter" means an instructional letter executed and
delivered by Borrower to Agent regarding the extensions of credit to be made on
the Closing Date, the form and substance of which is satisfactory to Agent.
"Document" means all of Borrower's now owned or hereafter acquired
right, title, and interest with respect to any "document" as such term is
defined in the Code, and any and all supporting obligations in respect thereof.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by Agent's
counsel to Borrower, together with Borrower's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Borrower's and its
Subsidiaries consolidated net earnings (or loss), minus extraordinary gains,
plus extraordinary non-cash losses (including any required impairment of
intangibles under FASB 142), interest expense, income taxes, and depreciation
and amortization for such period, as determined in accordance with GAAP. For
purposes of clarity, Columbia Hill Aviation, LLC will be excluded from all
calculations of Borrower's EBITDA hereunder.
"Eligible Accounts" means those Accounts created by Borrower in the
ordinary course of Borrower's business, that arise out of its sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrower under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below, which criteria may be fixed and revised by Agent
in its Permitted Discretion from time to time after the Closing Date. In
determining the amount to be included, Eligible Accounts shall be calculated net
of customer deposits and unapplied cash remitted to Borrower. Eligible Accounts
shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within
60 days of original invoice date or Accounts with selling terms of more
than 90 days,
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, vendor or agent of Borrower,
(d) Accounts arising in a transaction wherein goods are placed
on consignment or are sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a xxxx and hold, or any other terms by
reason of which the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in Dollars,
9
(f) Accounts with respect to which the Account Debtor either
(i) does not maintain its chief executive office in the United States,
or (ii) is not organized under the laws of the United States or any
state thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account
is supported by an irrevocable letter of credit satisfactory to Agent
(as to form, substance, and issuer or domestic confirming bank) that
has been delivered to Agent and is directly drawable by Agent, or (z)
the Account is covered by credit insurance in form, substance, and
amount, and by an insurer, satisfactory to Agent,
(g) Accounts (but not including Accounts due Borrower from
schools or school districts) with respect to which the Account Debtor
is either (i) the United States or any department, agency, or
instrumentality of the United States (exclusive, however, of Accounts
with respect to which Borrower has complied, to the reasonable
satisfaction of Agent, with the Assignment of Claims Act, 31 USC ss.
3727), or (ii) any state of the United States (exclusive, however, of
(y) Accounts owed by any state that does not have a statutory
counterpart to the Assignment of Claims Act or (z) Accounts owed by any
state that does have a statutory counterpart to the Assignment of
Claims Act as to which Borrower has complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to its
obligation to pay the Account, to the extent of such claim, right of
setoff, or dispute,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrower exceed 10%, or in the case of
International Multifoods Corporation, 20% (each such percentage as
applied to a particular Account Debtor being subject to reduction by
Agent in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Accounts, to the extent of
the obligations owing by such Account Debtor in excess of such
percentage,
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of
business, or as to which Borrower has received notice of an imminent
Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
(k) Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, or West Virginia (or
any other state that requires a creditor to file a business activity
report or similar document in order to bring suit or otherwise enforce
its remedies against such Account Debtor in the courts or through any
judicial process of such state), unless Borrower has qualified to do
business in New Jersey, Minnesota, West Virginia, or such other states,
or has filed a business activities report with the applicable division
of taxation, the department of revenue, or with such other state
offices, as appropriate, for the then-current year, or is exempt from
such filing requirement,
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(l) Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien,
(n) Accounts with respect to which (i) the goods giving rise
to such Account have not been shipped and billed to the Account Debtor,
or (ii) the services giving rise to such Account have not been
performed and billed to the Account Debtor, or
(o) Accounts that represent the right to receive progress
payments or other advance xxxxxxxx that are due prior to the completion
of performance by Borrower of the subject contract for goods or
services.
"Eligible Inventory" means Inventory consisting of first quality
finished goods held for sale in the ordinary course of Borrower's business
located at one of Borrower's business locations in the continental United States
and set forth on Schedule E-1 (or (up to a maximum aggregate amount of
$1,500,000) in-transit between any such locations), that complies with each of
the representations and warranties respecting Eligible Inventory made by
Borrower in the Loan Documents, and that is not excluded as ineligible by virtue
of the one or more of the criteria set forth below, which criteria may be fixed
and revised from time to time by Agent in its Permitted Discretion after the
Closing Date. In determining the value of Eligible Inventory, Inventory shall be
valued at the lower of Cost or market on a basis consistent with Borrower's
historical accounting practices less the aggregate amount of all Inventory
Reserves.
An item of Inventory shall not be included in Eligible Inventory if:
(a) Borrower does not have good, valid and marketable title
thereto (including Inventory acquired on consignment),
(b) it is not located at one of the locations in the United
States set forth on Schedule E-1 or in transit (up to a maximum
aggregate Cost value of $1,500,000) from one such location to another
such location,
(c) it is located on real property leased by Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral
Access Agreement executed by the lessor,
(d) it is located in a contract warehouse or is otherwise
stored with a bailee, warehouseman or similar third party unless it is
subject to a Bailee Acknowledgment executed by the bailee,
warehouseman, or other third party, as the case may be, and unless it
is segregated or otherwise separately identifiable from goods of
others, if any, stored on the premises,
(e) it is not subject to a valid and perfected first priority
security Agent's Lien, or
(f) it consists of goods returned or rejected by Borrower's
customers.
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"Eligible Inventory Locations" means collectively the locations
designated on Schedule E-1 as eligible inventory locations.
"Eligible Raw Materials Inventory" means an amount equal to the value,
determined in accordance with the first-in, first-out method of inventory
accounting, as reflected on Borrower's perpetual inventory in accordance with
GAAP consistently applied, of raw materials used to produce the Borrower's
inventory, which raw materials are located on property owned or leased by the
Borrower and as to which the Borrower has acquired title and the Agent has a
valid and perfected first-priority security interest under all applicable law
and as to which the Borrower has furnished reasonably detailed information to
the Agent, after taking into account all charges and liens (other than those of
the Agent) of all kinds against such raw materials and reductions in the market
value thereof, all as determined by the Agent in its Permitted Discretion.
Without limiting the generality of the foregoing, Eligible Raw Materials
Inventory shall not include any raw materials (i) subject to any lien, claim or
encumbrance of any kind, including statutory liens such as PACA or PSA liens,
and claims arising by reason of setoff, (ii) covered by a document of title or
warehouse receipt until such document of title or warehouse receipt has been
delivered to the Agent. Raw material inventory immediately loses the status of
Eligible Raw Material Inventory if and when the Borrower sells it, otherwise
passes title thereto, consumes it, materially changes it in the course of
processing the same, it is damaged, or the Agent, at the written request of the
Borrower and in the Agent's sole discretion, releases or transfers its security
interest therein. Notwithstanding the foregoing, but without duplication,
Eligible Raw Materials Inventory shall be reduced by the amount of any specific
reserve established by any Borrower with respect to any Eligible Raw Materials
Inventory.
"Eligible Transferee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, (e) so long as no Event of Default has
occurred and is continuing, any other Person approved by Agent and Borrower, and
(f) during the continuation of an Event of Default, any other Person approved by
Agent.
"Environmental Actions" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and
12
enforceable written policy or rule of common law now or hereafter in effect and
in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, to the extent binding on Borrower, relating to the environment,
employee health and safety, or Hazardous Materials, including CERCLA; RCRA; the
Federal Water Pollution Control Act, 33 USC ss.1251 et seq. the Toxic Substances
Control Act, 15 USC ss.2601 et seq. the Clean Air Act, 42 USC ss.7401 et seq.;
the Safe Drinking Water Act, 42 USC.ss.3803 et seq.; the Oil Pollution Act of
1990, 33 USC ss. 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC ss.11001 et seq.; the Hazardous Material
Transportation Act, 49 USC ss.1801 et seq.; and the Occupational Safety and
Health Act, 29 USC ss.651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.
"Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter acquired
right, title, and interest with respect to "equipment" (as such term is defined
from time to time in the Code), fixtures and vehicles (including motor
vehicles), including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose employees
are treated as employed by the same employer as the employees of Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of Borrower under
IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which Borrower is a member under IRC Section 414(m),
or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC,
any Person subject to ERISA that is a party to an arrangement with Borrower and
whose employees are aggregated with the employees of Borrower under IRC Section
414(o).
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrower aged in excess of historical
levels with respect thereto and all book overdrafts in excess of their
13
historical practices with respect thereto, in each case as determined by Agent
in its Permitted Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect
from time to time.
"Existing Lender" means Fleet Capital Corporation.
"FDA" means the United States Food and Drug Administration.
"Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrower and Agent, in form and substance satisfactory to
Agent.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Fresh Foods Guaranty" means that certain Guaranty and Trademark
Security Agreement executed and delivered by Fresh Foods Properties, LLC, a
North Carolina limited liability company.
"Fringe Plan" shall mean an "employee benefit plan" as defined in ERISA
established or maintained by an employer in which a substantial number of the
participants are non-Affiliate employees.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "general intangibles" (as
such term is defined from time to time in the Code), and any and all supporting
obligations in respect thereof.
"Goods" means all of Borrower's now owned or hereafter acquired right,
title, and interest with respect to "goods", as that term is defined from time
to time in the Code, including, without limitation, any and all Inventory and
Equipment.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.
"Guarantors" means Xxxxx X. Xxxxxxxxxx, Xx. and Xxxxx X. Xxxxx,
jointly, severally and jointly and severally.
14
"Guaranty" means that certain general continuing guaranty executed and
delivered by Guarantors in favor of Agent, for the benefit of the Lender Group,
in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Borrower or its
Subsidiaries and Xxxxx Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower's or its Subsidiaries' exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of Borrower or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all obligations for the
deferred purchase price of assets (other than trade debt incurred in the
ordinary course of business and repayable in accordance with customary trade
practices), and (f) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Indenture" means the Indenture dated as of June 9, 1998, among Fresh
Foods, Inc., a North Carolina corporation (which is incorrectly referred to as a
Delaware corporation in such Indenture), certain of its subsidiaries and State
Street Bank and Trust Company, a Massachusetts trust company, as trustee, as
amended and supplemented from time to time.
"Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria,
15
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
"Intangible Assets" means, with respect to any Person, that portion of
the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Instruments" means all of Borrower's now owned or hereafter acquired
right, title, and interest with respect to "instruments", including, without
limitation, any "promissory notes", as such terms are defined from time to time
in the Code, and any and all supporting obligations in respect thereof.
"Interest Period" means, with respect to each LIBO Rate Loan, a period
commencing on the date of the making of such LIBO Rate Loan and ending 1, 2, or
3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day, (b)
interest shall accrue at the applicable rate based upon the LIBO Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (c) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (d) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 1, 2, or 3 months after the date
on which the Interest Period began, as applicable, and (e) Borrower may not
elect an Interest Period which will end after the Maturity Date.
"Inventory" means all Borrower's now owned or hereafter acquired right,
title, and interest with respect to inventory, including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by
Borrower as lessor, goods that are furnished by Borrower under a contract of
service, and raw materials, work in process, or materials used or consumed in
Borrower's business.
"Inventory Reserves" means such reserves as Agent determines from time
to time in its Permitted Discretion as being appropriate to reflect the
impediments to Agent's ability to realize upon the Collateral. Without limiting
the generality of the foregoing, Inventory Reserves may include (but are not
limited to) reserves based on the following: (a) the extent to which Inventory
consists of goods that (i) are obsolete, slow-moving, restrictive (including
private label inventory) or custom items, bills and hold goods, defective,
damaged, prepared for return to vendor, not first quality goods, work-in-process
or raw materials (other than Eligible Raw Materials Inventory) or (ii)
constitute samples, spare parts, labels, packaging and shipping materials or
supplies; (b) seasonality; (c) imbalance or change in Inventory character,
composition or mix; (d) markdowns; (e) the estimated costs relating to unpaid
freight charges, warehousing or storage charges, taxes, duties, capitalized
interest, rebates, and other similar unpaid costs associated with the
acquisition of Inventory by Borrower; (f) the estimated reclamation claims of
unpaid sellers of Inventory sold to Borrower, (g) the Cost of Inventory at any
location containing less than $100,000 of Cost value of Inventory and (h) the
amount of any so-called "cost-variance" reported on the Borrower's Books.
16
"Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.
"Investment Property" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "investment property", as
such term is defined from time to time in the Code, and any and all supporting
obligations in respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time
to time.
"Issuing Lender" means Foothill or any other Lender that, at the
request of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C
Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender pursuant
to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
"Leasehold Interests" means Borrower's leasehold estate or interest in
each of the properties at or upon which Borrower conducts business or maintains
any of the Collateral, together with Borrower's interest in any of the
improvements and fixtures located upon or appurtenant to each leasehold
interest, including without limitation, any rights of Borrower to payments,
proceeds of value of any kind or nature realized upon the sale or transfer of
such estate or interest.
"Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of the
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower under any of the
Loan Documents that are paid or incurred by the Lender Group, (b) fees or
charges paid or incurred by Agent in connection with the Lender Group's
transactions with Borrower, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals to the extent of the fees and charges (and up to the
amount of any limitation) contained in this Agreement, real estate surveys, real
estate title
17
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Agent in the disbursement of funds to or for the account of Borrower
(by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting
from the dishonor of checks, (e) reasonable costs and expenses paid or incurred
by the Lender Group to correct any default or enforce any provision of the Loan
Documents, or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, preparing for sale, or advertising to sell the
Collateral, or any portion thereof, irrespective of whether a sale is
consummated, (f) audit fees and expenses of Agent related to audit examinations
of the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by the Lender Group in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or the Lender Group's relationship with
Borrower or any guarantor of the Obligations, (h) Agent's and each Lender's
reasonable fees and expenses (including attorneys fees) incurred in advising,
structuring, drafting, reviewing, administering, or amending the Loan Documents,
and (i) Agent's and each Lender's reasonable fees and expenses (including
attorneys fees) incurred in terminating, enforcing (including attorneys fees and
expenses incurred in connection with a "workout," a "restructuring", or an
Insolvency Proceeding concerning Borrower or in exercising rights or remedies
under the Loan Documents), or defending the Loan Documents, irrespective of
whether suit is brought, or in taking any Remedial Action concerning the
Collateral.
"Lender-Related Person" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and Agent of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the context
requires.
"Letter of Credit Rights" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to "letter-of-credit
rights", as that term is defined from time to time in the Code, and any and all
supporting obligations in respect thereof.
"Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.
"LIBO Deadline" has the meaning set forth in Section 2.13(b)(i).
"LIBO Notice" means a written notice in the form of Exhibit L-1.
"LIBO Rate" means, for each Interest Period for each LIBO Rate Loan,
the rate per annum determined by Agent (rounded upwards, if necessary, to the
next 1/16%) by dividing (a) the Base LIBO Rate for such Interest Period, by (b)
100% minus the Reserve Percentage. The LIBO Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage.
"LIBO Rate Loan" means each portion of an Advance or the Term Loan that
bears interest at a rate determined by reference to the LIBO Rate.
18
"LIBO Rate Margin" means, at any date of determination, (x) if the
Borrower's EBITDA for the immediately preceding fiscal year, as evidenced by the
Borrower's audited financial statements, is less than $20,000,000, 3.00
percentage points, (y) if the Borrower's EBITDA for the immediately preceding
fiscal year, as evidenced by the Borrower's audited financial statements, is
greater than or equal to $20,000,000, but less than or equal to $25,000,000,
2.75 percentage points, or (z) if the Borrower's EBITDA for the immediately
preceding fiscal year, as evidenced by the Borrower's audited financial
statements, is greater than $25,000,000, 2.50 percentage points.
"LIBO Rate Term Loan Margin" means 3.25 percentage points.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"Lien" means any interest in an asset securing an obligation owed to,
or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product Agreements, the
Cash Management Agreements, all Control Agreements, the Copyright Security
Agreement, the Disbursement Letter, the Due Diligence Letter, the Fee Letter,
the Guaranty, the Letters of Credit, the Mortgages, the Perfection Certificate,
the Patent Security Agreement, the Trademark Security Agreement, the Fresh Foods
Guaranty, any Bank Product Agreement, any certificates (including without
limitation, reports concerning the Borrowing Base and the Compliance
Certificate) from time to time delivered by Borrower pursuant to this Agreement
or any other Loan Document, any note or notes executed by Borrower in connection
with this Agreement and payable to a member of the Lender Group, and any other
agreement entered into, now or in the future, by Borrower and the Lender Group
in connection with this Agreement.
"Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower, including, without limitation,
any material adverse deviation at any time from the Business Plan of the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrower taken as a whole, (b) a material
impairment of Borrower's ability to perform its obligations under the Loan
Documents to which it is a party or of the Lender Group's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of the
enforceability or priority of the Agent's Liens with respect to the Collateral
as a result of an action or failure to act on the part of Borrower.
19
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $50,000,000.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by
Borrower in favor of Agent, for the benefit of the Lender Group, in form and
substance satisfactory to Agent, that encumber (on a first priority basis) the
Real Property Collateral and the related improvements thereto.
"Negotiable Collateral" means all of Borrower's now owned and hereafter
acquired right, title and interest with respect to letters of credit,
Instruments, Documents, Goods covered by Documents, Chattel Paper and all
supporting obligations of the foregoing.
"Net Liquidation Percentage" means, at any date of determination, the
percentage of the Cost value of Borrower's Inventory that is estimated to be
recoverable in an orderly liquidation of such Inventory, net of liquidation
expenses, such percentage to be as determined from time to time by Agent in its
Permitted Discretion or by a qualified appraisal company selected by Agent.
"Notes" means the initial 10 3/4% Senior Notes Due 2006 issued under
and pursuant to the terms of the Indenture, together with any notes issued in
exchange for, or in addition to, the 10 3/4% Senior Notes Due 2006.
"Obligations" means (a) all loans (including the Term Loan and the
Capex Loans), Advances, debts, principal, interest (including any interest that,
but for the provisions of the Bankruptcy Code, would have accrued), contingent
reimbursement obligations with respect to outstanding Letters of Credit, Bank
Product Obligations, premiums, liabilities (including all amounts charged to
Borrower's Loan Account pursuant hereto), obligations, fees (including the fees
provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that, but for the provisions of the Bankruptcy
Code, would have accrued), lease payments, guaranties, covenants, and duties of
any kind and description owing by Borrower to the Lender Group pursuant to or
evidenced by the Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Group Expenses that Borrower is required to pay or reimburse by
the Loan Documents, by law, or otherwise, and (b) all Bank Product Obligations.
Any reference in this Agreement or in the Loan Documents to the Obligations
shall include all amendments, changes, extensions, modifications, renewals
replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
For the purposes of Sections 2.3(c)(iii), 2.3(e), 2.6(a) and 14.1, the
definition of Required Lenders, and determining whether an Overadvance has
occurred under Section 2.5, the term "Obligations" shall not include Bank
Product Obligations.
"Originating Lender" has the meaning set forth in Section 14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
20
"PACA" means the Perishable Agricultural Commodities Act (7 U.S.C.
ss.ss.499a et seq.) as amended, and any successor statute thereto, including,
without limitation, all rules, regulations, guidelines, orders and judgments
promulgated or enacted thereunder.
"PFMI" means PF Management, Inc., a North Carolina corporation.
"PSA" means the Purchase and Xxxxxxxxxx Xxx, 0000 (7 U.S.C. ss.ss.181
et seq.) as amended, and any successor statute thereto, including, without
limitation, all rules, regulations, guidelines, orders and judgments promulgated
or enacted thereunder.
"Participant" has the meaning set forth in Section 14.1(e).
"Patent Security Agreement" means a patent security agreement executed
and delivered by Borrower and Agent, the form and substance of which is
satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance satisfactory to
Agent, from Existing Lender to Agent respecting the amount necessary to repay in
full all of the obligations of Borrower owing to Existing Lender and obtain a
release of all of the Liens existing in favor of Existing Lender in and to the
assets of Borrower.
"Perfection Certificate" means the form entitled Representations and
Warranties of Officers of Pierre Foods, Inc. submitted by Agent to Borrower with
respect to Borrower, together with Borrower's completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
"Period" means a four (4) or five (5) week period of which there are
twelve (12) such periods during the fiscal year of the Borrower, determined
based upon a 52-53 week accounting period.
"Permitted Discretion" means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions by
Borrower or its Subsidiaries of Equipment that is substantially worn, damaged,
or obsolete or not used or useable by the Borrower in the ordinary course of
business, provided, that Permitted Dispositions under this clause (a) shall not
exceed $1,000,000 during any fiscal year of the Borrower without the Agent's
prior written consent, (b) sales by Borrower or its Subsidiaries of Inventory to
buyers in the ordinary course of business, and (c) the use or transfer of money
or Cash Equivalents by Borrower or its Subsidiaries in a manner that is not
prohibited by the terms of this Agreement or the other Loan Documents.
"Permitted Holder" means one or more of PFMI, Xxxxx X. Xxxxxxxxxx, Xx.,
Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxx or any Person as to which one or more of
PFMI, Xxxxx X. Xxxxxxxxxx, Xx., Xxxxx X. Xxxxx, and Xxxxx X. Xxxxxxxxx
beneficially own (as defined in Rule 13d-3 under the Exchange Act), in the
aggregate, more than 50% of the Stock (or equity interests) or such Person and
control more than 50% of the Stock (or equity interests) of such Person which
entitles the holder to vote for its board of directors or governing body.
21
"Permitted Investments" means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business and (d) investments listed on Schedule 7.13.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests, (g) Liens arising from deposits made in connection with obtaining
worker's compensation or other unemployment insurance, (h) Liens or deposits to
secure performance of bids, tenders, or leases incurred in the ordinary course
of business and not in connection with the borrowing of money, (i) Liens granted
as security for surety or appeal bonds in connection with obtaining such bonds
in the ordinary course of business, (j) Liens resulting from any judgment or
award that is not an Event of Default hereunder, (k) Liens with respect to the
Real Property Collateral that are exceptions to the commitments for title
insurance issued in connection with the Mortgages, as accepted by Agent, and (l)
with respect to any Real Property that is not part of the Real Property
Collateral, easements, rights of way, and zoning restrictions that do not
materially interfere with or impair the use or operation thereof.
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on the Books in
such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Borrower or any of its Subsidiaries, as
applicable, in good faith, and (c) Agent is satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $5,000,000. In no
event shall Permitted Purchase Money Indebtedness include Indebtedness incurred
for the purpose of financing all or any part of the acquisition cost of any
Inventory.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
Property.
22
"Projections" means Borrower's forecasted (a) balance sheets, (b)
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Borrower's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with
respect thereto, (x) prior to the Revolver Commitment being reduced to
zero, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,
and (y) from and after the time that the Revolver Commitment has been
terminated or reduced to zero, the percentage obtained by dividing (I)
the aggregate principal amount of such Lender's Advances by (II) the
aggregate principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive
payments of fees with respect thereto, (x) prior to the Revolver
Commitment being reduced to zero, the percentage obtained by dividing
(i) such Lender's Revolver Commitment, by (ii) the aggregate Revolver
Commitments of all Lenders, and (y) from and after the time that the
Revolver Commitment has been terminated or reduced to zero, the
percentage obtained by dividing (I) the aggregate principal amount of
such Lender's Advances by (II) the aggregate principal amount of all
Advances,
(c) (i) with respect to a Lender's obligation to make the
Term Loan and receive payments of interest, fees, and principal with
respect thereto, (i) prior to the making of the Term Loan, the
percentage obtained by dividing (x) such Lender's Term Loan Commitment,
by (y) the aggregate amount of all Lenders' Term Loan Commitments, and
(ii) from and after the making of the Term Loan, the percentage
obtained by dividing (x) the principal amount of such Lender's portion
of the Term Loan Amount by (y) the Term Loan Amount, and
(ii) with respect to a Lender's obligation to make
the Capex Loan and receive payments of interest, fees, and principal
with respect thereto, (i) prior to the making of the Capex Loan, the
percentage obtained by dividing (x) such Lender's Capex Loan
Commitment, by (y) the aggregate amount of all Lenders' Capex Loan
Commitments, and (ii) from and after the making of the Capex Loan, the
percentage obtained by dividing (x) the principal amount of such
Lender's portion of the Capex Loan Amount by (y) the Capex Loan Amount,
and
(d) with respect to all other matters as to a particular
Lender (including the indemnification obligations arising under Section
16.7), the percentage obtained by dividing (i) such Lender's Revolver
Commitment plus the unpaid principal amount of such Lender's portion of
the Term Loan Amount and the Capex Loan Amount, by (ii) the aggregate
amount of Revolver Commitments of all Lenders plus the Term Loan Amount
and the Capex Loan Amount; provided, however, that in the event the
Revolver
23
Commitments have been terminated or reduced to zero, Pro Rata Share
shall be the percentage obtained by dividing (A) the principal amount
of such Lender's Advances plus the unpaid principal amount of such
Lender's portion of the Term Loan Amount and the Capex Loan Amount by
(B) the principal amount of all outstanding Advances plus the Term Loan
Amount and the Capex Loan Amount.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations) incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any fee, leasehold or other estate or interest in
real property now or hereafter owned or leased hereafter acquired by Borrower
and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real Property
identified on Schedule R-1 and any Real Property hereafter acquired by Borrower.
"Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC ss. 9601.
"Report" has the meaning set forth in Section 16.17.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate 51% of the Total Commitments, or if the Commitments have been
terminated irrevocably, 51% of the Obligations (other than Bank Product
Obligations) then outstanding.
"Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Reserves" means collectively, all Inventory Reserves, Availability
Reserves, Bank Products Reserves and any other reserve created by Agent
hereunder.
"Restricted Payment" has the meaning set forth in Section 7.11.
24
"Revolver Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of (a)
the then extant amount of outstanding Advances, plus (b) the then extant amount
of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrower to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrower,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
any successor thereto.
"Seasonal Period" means, during each calendar year, the period from and
after August 1 up to and including the end of the next succeeding February.
"Securities Account" means a "securities account" as such term is
defined from time to time in the Code.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
"Share Exchange" means the transactions contemplated by the Share
Exchange Agreement.
"Share Exchange Agreement" has the meaning set forth in Section 5.24.
"Share Exchange Reserve" means $500,000.
"Share Exchange Reserve Termination Date" means the date upon which all
payments to shareholders of the Borrower due in connection with the Share
Exchange shall have been made in full, and all liabilities of the Borrower for
payment of money in connection with the Share Exchange (whether in connection
with the exercise of dissenter's rights or otherwise) shall have terminated.
"Solvent" means, with respect to any Person on a particular date, that
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"Stock" means all shares, options, warrants, interests, participations,
or other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including
25
common stock, preferred stock, or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means Foothill or any other Lender that, at the request
of Borrower and with the consent of Agent agrees, in such Lender's sole
discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
"Taxes" has the meaning set forth in Section 16.11.
"Term Loan" has the meaning set forth in Section 2.2(a).
"Term Loan Amount" means, at any date of determination, an amount equal
to the lesser of (a) $16,000,000 and (b) the result of 90% of the net forced
liquidation value of eligible Equipment, all as determined by one or more
appraisals on terms and conditions satisfactory in the Agent's Permitted
Discretion, plus 50% of the fair market value of eligible Real Property
Collateral, all as determined by an appraisal on terms and conditions
satisfactory in the Agent's Permitted Discretion.
"Term Loan Commitment" means, with respect to each Lender, its Term
Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Trademark Security Agreement" means a trademark security agreement
executed and delivered by Borrower and Agent, the form and substance of which is
satisfactory to Agent.
"Underlying Issuer" means a third Person which is the beneficiary of an
L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrower.
"Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.
26
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a national
banking association.
1.2. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3. Code. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth from time to time in the Code
unless otherwise defined herein.
1.4. Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5. Schedules and Exhibits. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1. Revolver Advances.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrower in an amount at any one time outstanding not to exceed such Lender's
Pro Rata Share of an amount equal to the lesser of (i) the Revolver Commitment
less the Letter of Credit Usage, or (ii) the Borrowing Base less the Letter of
Credit Usage and the aggregate amount of the Availability Reserves. For purposes
of this Agreement, "Borrowing Base," as of any date of determination, shall mean
an amount equal to the result of:
27
(A) 85% of the amount of Eligible Accounts less the
amount, if any, of the Dilution Reserve and the
aggregate amount of other customary Reserves
plus, an amount equal to
(B)(I) During the Seasonal Period, 60% of the Cost of
Eligible Inventory, and at all other times 55% of the
Cost of Eligible Inventory
plus (II)During the Seasonal Period, 60% of
the Cost of Eligible Raw Material Inventory and at all
other times 55% of the Cost of Eligible Raw Material
Inventory provided, that (x) the amount calculated in
accordance with clause B(I) above shall not exceed 80%
times the Net Liquidation Percentage times the Cost of
the Borrower's Eligible Inventory; (y) the amount
calculated in accordance with clause B(II) above shall
not exceed 80% times the Net Liquidation Percentage
times the Cost of the Borrower's Eligible Raw Material
Inventory, up to a maximum amount of $4,000,000; and
(z) the aggregate amount calculated in accordance with
clauses B(I) and B(II) above shall not exceed
$20,000,000.
(C) the aggregate amount of Reserves, if any,
established by Agent under Section 2.1(b).
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right, without declaring an Event of
Default, to reduce its inventory advance rates or establish Reserves (including
Bank Products Reserves) in such amounts, and with respect to such matters, as
Agent in its Permitted Discretion shall deem necessary or appropriate, against
the Borrowing Base, including with respect to (i) sums that Borrower is required
to pay (such as taxes, assessments, insurance premiums, or, in the case of
leased assets, rents or other amounts payable under such leases) and has failed
to pay under any Section of this Agreement or any other Loan Document, (ii) as
determined by Agent in its Permitted Discretion based on noncompliance with the
covenants set forth in Sections 6 and 7, and (iii) amounts owing by Borrower to
any Person to the extent secured by a Lien on, or trust over, any of the
Collateral (other than any existing Permitted Lien set forth on Schedule P-1
which is specifically identified thereon as entitled to have priority over the
Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent likely
would have a priority superior to the Agent's Liens (such as Liens or trusts in
favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral. In addition to the foregoing, Agent shall have the right to have the
Inventory reappraised by a qualified appraisal company selected by Agent from
time to time after the Closing Date for the purpose of redetermining the Net
Liquidation Percentage of the Eligible Inventory portion of the Collateral and,
as a result, redetermining the Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Revolver Commitment.
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(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2. Term Loan; Mandatory Prepayment.
(a) (i) Term Loan. Subject to the terms and conditions of this
Agreement, on or after the Closing Date and up to the third anniversary of the
Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan") to Borrower in an amount equal to such Lender's Pro Rata Share of the
Term Loan Amount. The Term Loan shall be repaid in equal monthly installments of
principal based upon a five (5) year amortization schedule, such installment to
be due and payable on the first day of each month commencing on the first day of
the first month following the funding of the Term Loan and continuing until the
Maturity Date. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan shall be due and payable on the date of
termination of this Agreement, whether by its terms, by prepayment, or by
acceleration. All amounts outstanding under the Term Loan shall constitute
Obligations.
(ii) Mandatory Prepayment. If, at any date of
determination, the outstanding principal amount of the Term Loan exceeds the
Term Loan Amount as of such date, the Borrower shall immediately prepay the Term
Loan in an amount sufficient to cause the outstanding balance of the Term Loan
not to exceed the Term Loan Amount as of such date.
(b) Capex Loans. Subject to the terms and conditions of this
Agreement, on or after the Closing Date and up to the third anniversary of the
Closing Date each Lender with a Capex Loan Commitment agrees (severally, not
jointly or jointly and severally) to make capex loans (each, a "Capex Loan", and
collectively, the "Capex Loans") to Borrower in an amount equal to such Lender's
Pro Rata Share of the Capex Loan Amount. The Capex Loans shall be repaid in
equal monthly installments of principal based on a five (5) year amortization
schedule, such installments to be due and payable on the first day of each month
commencing on the first day of the first month following the funding of each
Capex Loan and continuing until the Maturity Date. The outstanding unpaid
principal balance and all accrued and unpaid interest under the Capex Loan shall
be due and payable on the date of termination of this Agreement, whether by its
terms, by prepayment, or by acceleration. All amounts outstanding under the
Capex Loan shall constitute Obligations.
2.3. Borrowing Procedures and Settlements.
(a) Procedure for Borrowing. Each Borrowing shall be made by
an irrevocable written request by an Authorized Person delivered to Agent, which
notice must be received by Agent no later than 1:00 p.m. (Boston, Massachusetts
time) on the Business Day prior to the date that is the requested Funding Date
in the case of a request for an Advance or in the case of the Term Loan or a
Capex Loan not less than thirty (30) days prior to the date that is the
requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
in the case of a request for Swing Loan in an amount of $10,000,000, or less,
such notice will be timely received if it is
29
received by Agent no later than 1:00 p.m. (Boston, Massachusetts time) on the
Business Day that is the requested Funding Date. At Agent's election, in lieu of
delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving of
such notice.
(b) Agent's Election. Promptly after receipt of a request for
a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) Making of Advances.
(i) In the event that Agent shall elect to have the
terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a request
for a Borrowing pursuant to Section 2.3(a), Agent shall notify the
Lenders, not later than 4:00 p.m. (Boston, Massachusetts time) on the
Business Day immediately preceding the Funding Date applicable thereto,
by telecopy, telephone, or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such Lender's
Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, not later than 1:00
p.m. (Boston, Massachusetts time) on the Funding Date applicable
thereto. After Agent's receipt of the proceeds of such Advances (or the
Term Loan or Capex Loan, as applicable), upon satisfaction of the
applicable conditions precedent set forth in Section 3 hereof, Agent
shall make the proceeds thereof available to Borrower on the applicable
Funding Date by transferring immediately available funds equal to such
proceeds received by Agent to Borrower's Designated Account; provided,
however, that, subject to the provisions of Section 2.3(i), Agent shall
not request any Lender to make, and no Lender shall have the obligation
to make, any Advance (or its portion of the Term Loan or Capex Loan, as
applicable) if Agent shall have actual knowledge that (1) one or more
of the applicable conditions precedent set forth in Section 3 will not
be satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the
Closing Date, at least 1 Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrower the amount of
that Lender's Pro Rata Share of the Borrowing, Agent may assume that
each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrower on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to
Agent in
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immediately available funds and Agent in such circumstances has made
available to Borrower such amount, that Lender shall on the Business
Day following such Funding Date make such amount available to Agent,
together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to Agent shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is not
made available to Agent on the Business Day following the Funding Date,
Agent will notify Borrower of such failure to fund and, upon demand by
Agent, Borrower shall pay such amount to Agent for Agent's account,
together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Advances composing such Borrowing. The
failure of any Lender to make any Advance on any Funding Date shall not
relieve any other Lender of any obligation hereunder to make an Advance
on such Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Advance to be made by such
other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to
the Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Borrower and if no Default or Event
of Default had occurred and is continuing (and to the extent such
Defaulting Lender's Advance was not funded by the Lender Group), retain
same to be re-advanced to Borrower as if such Defaulting Lender had
made Advances to Borrower. Subject to the foregoing, Agent may hold
and, in its Permitted Discretion, re-lend to Borrower for the account
of such Defaulting Lender the amount of all such payments received and
retained by it for the account of such Defaulting Lender. Solely for
the purposes of voting or consenting to matters with respect to the
Loan Documents, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero. This
Section shall remain effective with respect to such Lender until (x)
the Obligations under this Agreement shall have been declared or shall
have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Borrower shall have waived such Defaulting Lender's
default in writing, or (z) the Defaulting Lender makes its Pro Rata
Share of the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section
shall not be construed to increase or otherwise affect the Commitment
of any Lender, to relieve or excuse the performance by such Defaulting
Lender or any other Lender of its duties and obligations hereunder, or
to relieve or excuse the performance by Borrower of its duties and
obligations hereunder to Agent or to the Lenders other than such
Defaulting Lender. Any such failure to fund by any Defaulting Lender
shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Borrower at its option, upon written notice
to Agent, to arrange for a substitute Lender to assume the Commitment
of such Defaulting Lender, such substitute Lender to be acceptable to
Agent. In connection with the arrangement of such a substitute Lender,
the Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and
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deliver a completed form of Assignment and Acceptance Agreement in
favor of the substitute Lender (and agrees that it shall be deemed to
have executed and delivered such document if it fails to do so) subject
only to being repaid its share of the outstanding Obligations (other
than Bank Product Obligations) (including an assumption of its Pro Rata
Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever; provided further, however, that any
such assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups' or
Borrower's rights or remedies against any such Defaulting Lender
arising out of or in relation to such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent
of Swing Lender, as a Lender, to have the terms of this Section 2.3(d)
apply to a requested Borrowing as described in Section 2.3(b), Swing
Lender as a Lender shall make such Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan" and
such Advances being referred to collectively as "Swing Loans")
available to Borrower on the Funding Date applicable thereto by
transferring immediately available funds to Borrower's Designated
Account. Each Swing Loan is an Advance hereunder and shall be subject
to all the terms and conditions applicable to other Advances, except
that no such Swing Loan shall be eligible for the LIBOR Option and all
payments on any Swing Loan shall be payable to Swing Lender as a Lender
solely for its own account (and for the account of the holder of any
participation interest with respect to such Swing Loan). Subject to the
provisions of Section 2.3(i), Agent shall not request Swing Lender as a
Lender to make, and Swing Lender as a Lender shall not make, any Swing
Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (ii) the requested Borrowing
would exceed the Availability on such Funding Date. Swing Lender as a
Lender shall not otherwise be required to determine whether the
applicable conditions precedent set forth in Section 3 have been
satisfied on the Funding Date applicable thereto prior to making, in
its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's
Liens, shall constitute Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to Advances that
are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrower and the
Lenders, from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable conditions
precedent set forth in Section 3 have not been satisfied, to make
Advances to Borrower on behalf of the Lenders that Agent, in its
Permitted Discretion deems necessary or desirable (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations (other than the
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Bank Product Obligations), or (C) to pay any other amount chargeable to
Borrower pursuant to the terms of this Agreement, including Lender
Group Expenses and the costs, fees, and expenses described in Section
10 (any of the Advances described in this Section 2.3(e) shall be
referred to as "Agent Advances"). Each Agent Advance is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that no such Agent Advance shall
be eligible for the LIBOR Option and all payments thereon shall be
payable to Agent solely for its own account (and for the account of the
holder of any participation interest with respect to such Agent
Advance).
(ii) The Agent Advances shall be repayable on demand
and secured by the Agent's Liens granted to Agent under the Loan
Documents, shall constitute Advances and Obligations hereunder, and
shall bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrower) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement")
with the Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each Agent
Advance, and (3) with respect to Collections received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 5:00 p.m.
(Boston, Massachusetts time) on the Business Day immediately prior to
the date of such requested Settlement (the date of such requested
Settlement being the "Settlement Date"). Such notice of a Settlement
Date shall include a summary statement of the amount of outstanding
Advances, Swing Loans, and Agent Advances for the period since the
prior Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of
the Advances, Swing Loans, and Agent Advances exceeds such Lender's Pro
Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 3:00 p.m. (Boston,
Massachusetts time) on the Settlement Date, transfer in immediately
available funds to the account of such Lender as such Lender may
designate, an amount such that each such Lender shall, upon receipt of
such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Swing Loans, and Agent Advances, and (z) if a Lender's
balance of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent
Advances as of a Settlement Date, such Lender shall no later than 3:00
p.m. (Boston, Massachusetts time) on the Settlement Date transfer in
immediately available funds to the Agent's Account, an amount such that
each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and
Agent Advances. Such amounts made available to Agent under clause (z)
of the immediately preceding sentence shall be applied against the
33
amounts of the applicable Swing Loan or Agent Advance and, together
with the portion of such Swing Loan or Agent Advance representing Swing
Lender's Pro Rata Share thereof, shall constitute Advances of such
Lenders. If any such amount is not made available to Agent by any
Lender on the Settlement Date applicable thereto to the extent required
by the terms hereof, Agent shall be entitled to recover for its account
such amount on demand from such Lender together with interest thereon
at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans,
and Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to principal,
interest, fees payable by Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net amount
is owed to any such Lender after such application, such net amount
shall be distributed by Agent to that Lender as part of such next
Settlement.
(iii) Between Settlement Dates, Agent, to the extent
no Agent Advances or Swing Loans are outstanding, may pay over to Swing
Lender any payments received by Agent, that in accordance with the
terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections received since the
then immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as
provided for in the previous sentence, Swing Lender shall pay to Agent
for the accounts of the Lenders, and Agent shall pay to the Lenders, to
be applied to the outstanding Advances of such Lenders, an amount such
that each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans,
Agent with respect to Agent Advances, and each Lender (subject to the
effect of letter agreements between Agent and individual Lenders) with
respect to the Advances other than Swing Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable
under this Agreement on the daily amount of funds employed by Swing
Lender, Agent, or the Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than
Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit)
34
hereunder, nor shall any Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations hereunder,
and (ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.
(i) Optional Overadvances. Any contrary provision of this
Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender,
as applicable, and Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrower notwithstanding that an Overadvance exists or thereby
would be created, so long as (i) after giving effect to such Advances (including
a Swing Loan), the sum of then extant amount of outstanding Advances, plus the
then extant amount of the Letter of Credit Usage does not exceed the Borrowing
Base by more than $2,400,000, (ii) after giving effect to such Advances
(including a Swing Loan) the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Revolver Commitment, and (iii) at the time
of the making of any such Advance (including any Swing Loan), Agent does not
believe, in good faith, that the Overadvance created by such Advance will be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrower in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, as applicable, except that
they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
(i) In the event Agent obtains actual knowledge that
the Revolver Usage exceeds the amounts permitted by the preceding
paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to making
any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior notice would
result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented
with Borrower and intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrower to an amount
permitted by the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any Overadvance,
the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.
(ii) Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(f) for the
amount of such Lender's Pro Rata Share of any unintentional
Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(i), and any
Overadvances resulting from the charging to the Loan Account of
interest, fees, or Lender Group Expenses.
35
2.4. Payments.
(a) Payments by Borrower.
(i) Except as otherwise expressly provided herein,
all payments by Borrower shall be made to Agent's Account for the
account of the Lender Group and shall be made in immediately available
funds, no later than 2:00 p.m. (Boston, Massachusetts time) on the date
specified herein. Any payment received by Agent later than 2:00 p.m.
(Boston, Massachusetts time), shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Borrower prior
to the date on which any payment is due to the Lenders that Borrower
will not make such payment in full as and when required, Agent may
assume that Borrower has made (or will make) such payment in full to
Agent on such date in immediately available funds and Agent may (but
shall not be so required), in reliance upon such assumption, distribute
to each Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent Borrower does not make such payment
in full to Agent on the date when due, each Lender severally shall
repay to Agent on demand such amount distributed to such Lender,
together with interest thereon at the Defaulting Lender Rate for each
day from the date such amount is distributed to such Lender until the
date repaid.
(b) Apportionment and Application of Payments.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and individual
Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate held
by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to
any letter agreements between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee relates. All
payments shall be remitted to Agent and all such payments (other than
payments received while no Default or Event of Default has occurred and
is continuing and which relate to the payment of principal or interest
of specific Obligations or which relate to the payment of specific
fees), and all proceeds of Accounts or other Collateral received by
Agent, shall be applied as follows:
(A) first, to pay any Lender Group Expenses then due
to Agent under the Loan Documents, until paid in full,
(B) second, to pay any Lender Group Expenses then due
to the Lenders under the Loan Documents, on a ratable basis,
until paid in full,
(C) third, to pay any fees then due to Agent (for its
separate accounts, after giving effect to any letter
agreements between Agent and the individual Lenders) under the
Loan Documents until paid in full,
36
(D) fourth, to pay any fees then due to any or all of
the Lenders (after giving effect to any letter agreements
between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,
(E) fifth, to pay interest due in respect of all
Agent Advances, until paid in full,
(F) sixth, ratably to pay interest due in respect of
the Advances (other than Agent Advances), the Swing Loans, the
Term Loan and the Capex Loans until paid in full,
(G) seventh, to pay the principal of all Agent
Advances until paid in full,
(H) eighth, ratably to pay all principal amounts then
due and payable (other than as a result of an acceleration
thereof) with respect to the Term Loan and the Capex Loans
until paid in full,
(I) ninth, to pay the principal of all Swing Loans
until paid in full,
(J) tenth, so long as no Event of Default has
occurred and is continuing, and at Agent's election (which
election Agent agrees will not be made if an Overadvance would
be created thereby), to pay amounts then due and owing by
Borrower or its Subsidiaries in respect of Bank Products,
until paid in full,
(K) eleventh, so long as no Event of Default has
occurred and is continuing, to pay the principal of all
Advances until paid in full,
(L) twelfth, if an Event of Default has occurred and
is continuing, ratably (i) to pay the principal of all
Advances until paid in full, and (ii) to Agent, to be held by
Agent, for the benefit of Xxxxx Fargo or its Affiliates, as
applicable, as cash collateral in an amount up to the amount
of the Bank Products Reserve established prior to the
occurrence of, and not in contemplation of, the subject Event
of Default until Borrower's and its Subsidiaries' obligations
in respect of the then extant Bank Products have been paid in
full or the cash collateral amount has been exhausted,
(M) thirteenth, if an Event of Default has occurred
and is continuing, to pay the outstanding principal balance of
the Term Loan (in the inverse order of the maturity of the
installments due thereunder) until the Term Loan is paid in
full, then the Capex Loans (in inverse order of the maturity
of the installments due thereunder) until the Capex Loans are
paid in full;
(N) fourteenth, if an Event of Default has occurred
and is continuing, to Agent, to be held by Agent, for the
ratable benefit of Issuing Lender and those Lenders having a
Revolver Commitment, as cash collateral in an amount up to
105% of the then extant Letter of Credit Usage until paid in
full,
37
(O) fifteenth, to pay any other Obligations
(including Bank Product Obligations) until paid in full, and
(P) sixteenth, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto
under applicable law.
(ii) Agent promptly shall distribute to each Lender,
pursuant to the applicable wire instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a
Settlement delay as provided in Section 2.3(h).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, Section 2.4(b) shall not be
deemed to apply to any payment by Borrower specified by Borrower to be
for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents according
to the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(v) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions contained
in any other Loan Document, it is the intention of the parties hereto
that such priority provisions in such documents shall be read together
and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
2.5. Overadvances. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrower to the Lender
Group pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in Sections 2.1 or 2.12, (an "Overadvance"),
Borrower immediately shall pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priorities set forth in Section 2.4(b). In addition, Borrower hereby
promises to pay the Obligations (including principal, interest, fees, costs, and
expenses) in Dollars in full to the Lender Group as and when due and payable
under the terms of this Agreement and the other Loan Documents.
2.6. Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.
(a) Interest Rates. Except as provided in clause (c) below,
all Obligations (except for undrawn Letters of Credit and except for Bank
Product Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows (i) if
the relevant Obligation is an Advance that is a LIBOR Rate Loan, at a per annum
rate equal to the LIBO Rate plus the LIBO Rate Margin, (ii) if the relevant
Obligation is an Advance that is a Base Rate Loan, at a per annum rate equal to
the Base Rate plus the Base Rate Margin, (iii) if the relevant Obligation is a
portion of the Term Loan that is a
38
LIBO Rate Loan, at a per annum rate equal to the LIBO Rate plus the LIBO Rate
Term Loan Margin, (iv) if the relevant Obligation is a portion of the Term Loan
that is a Base Rate Loan, at a per annum rate equal to the Base Rate plus the
Base Rate Term Loan Margin, and (v) if the relevant Obligation is a Capex Loan,
at a rate of interest equal to the Base Rate plus 1.00 percentage point.
(b) Letter of Credit Fee. Borrower shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any letter
agreement between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.12(e)) which shall accrue at a rate equal to 1.5% per annum times the Daily
Balance of the undrawn amount of all outstanding standby Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters of
Credit and except for Bank Product Obligations) that have been charged
to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate equal to 4 percentage
points above the per annum rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 4 percentage points above the per annum rate
otherwise applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all other
fees payable hereunder shall be due and payable, in arrears, on the first day of
each month at any time that Obligations or Commitments are outstanding. Borrower
hereby authorizes Agent, from time to time, without prior notice to Borrower, to
charge such interest and fees, all Lender Group Expenses (as and when incurred),
the charges, commissions, fees, and costs provided for in Section 2.12(e) (as
and when accrued or incurred), the fees and costs provided for in Section 2.11
(as and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including the installments due and payable with
respect to the Term Loan and the Capex Loans and including any amounts due and
payable to Xxxxx Fargo or its Affiliates in respect of Bank Products up to the
amount of the then extant Bank Products Reserve) to Borrower's Loan Account,
which amounts thereafter shall constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances hereunder. Any interest not
paid when due shall be compounded by being charged to Borrower's Loan Account
and shall thereafter constitute Advances hereunder and shall accrue interest at
the rate then applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the
Loan Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no
event shall the interest rate or rates payable under this Agreement, plus any
other amounts paid in connection
39
herewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.
Borrower and the Lender Group, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained herein to the
contrary notwithstanding, if said rate or rates of interest or manner of payment
exceeds the maximum allowable under applicable law, then, ipso facto, as of the
date of this Agreement, Borrower is and shall be liable only for the payment of
such maximum as allowed by law, and payment received from Borrower in excess of
such legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
2.7. Cash Management.
(a) Borrower shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7 (each a "Cash Management Bank"), and shall
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
one of such Cash Management Banks, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all Collections (including those sent directly by Account
Debtors to a Cash Management Bank) into one of the DDAs set forth on Schedule
2.7 (a "Cash Management Account") at one of the Cash Management Banks. If,
notwithstanding the provisions of this Section 2.7, Borrower receives or
otherwise has dominion over or control of any Collections, Borrower shall hold
such Collections in trust for Agent and shall not commingle such Collections
with any of Borrower's other funds or deposit such Collections in any account of
Borrower except as instructed by Agent.
(b) Borrower shall establish and maintain Cash Management
Agreements with Agent and each Cash Management Bank. Each such Cash Management
Agreement shall be a Control Agreement and provide, among other things, that (i)
upon notice from Agent, the Cash Management Bank will comply with instructions
of Agent directing the disposition of funds in the Cash Management Account
without further consent by Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) Reserved.
(d) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend Schedule 2.7 to add or replace a Cash
Management Account Bank or Cash Management Account; provided, however, that (i)
such prospective Cash Management Bank shall be satisfactory to Agent and Agent
shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, Borrower and such
prospective Cash Management Bank shall have executed and delivered to Agent a
Cash Management Agreement. Borrower shall close any of its Cash Management
Accounts (and
40
establish replacement cash management accounts in accordance with the foregoing
sentence) promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in Agent's
reasonable judgment, or as promptly as practicable and in any event within 60
days of notice from Agent that the operating performance, funds transfer, or
availability procedures or performance of the Cash Management Bank with respect
to Cash Management Accounts or Agent's liability under any Cash Management
Agreement with such Cash Management Bank is no longer acceptable in Agent's
reasonable judgment.
(e) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrower is hereby deemed to
have granted a Lien on each Cash Management Account to Agent.
2.8. Crediting Payments; Float Charge. The receipt of any payment item
by Agent (whether from transfers to Agent by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrower shall be deemed not to have
made such payment and interest shall be calculated accordingly. Anything to the
contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 2:00 p.m. (Boston, Massachusetts time). If any payment item is
received into the Agent's Account on a non-Business Day or after 2:00 p.m.
(Boston, Massachusetts time) on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day. From and after the Closing Date, Agent shall be entitled to charge
Borrower for one (1) Business Day of `clearance' or `float' at the rate
applicable to Base Rate Loans under Section 2.6 on all Collections that are
received by Borrower (regardless of whether forwarded by the Cash Management
Banks to Agent). This across-the-board one (1) Business Day clearance or float
charge on all Collections is acknowledged by the parties to constitute an
integral aspect of the pricing of the financing of Borrower; the effect of such
clearance or float charge being the equivalent of charging one (1) Business Day
of interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Agent.
2.9. Designated Account. Agent is authorized to make the Advances and
the Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder. So long as no Default or Event of Default has occurred and is
continuing, Borrower may add or replace, the Designated Account Bank or the
Designated Account on 30 days prior written notice to Agent; provided, however,
that (i) such prospective Designated Account Bank shall be satisfactory to Agent
and Agent shall have consented in writing in advance to the opening of such
Designated Account with the prospective Designated Account Bank, and (ii)
41
prior to the time of the opening of such Designated Account, Borrower, Agent and
such prospective Designated Account Bank shall have executed and delivered to
Agent a Control Agreement with respect to the Designated Account. Unless
otherwise agreed by Lender and Borrower, any Advance requested by Borrower and
made by Agent and the Lenders hereunder shall be made to the Designated Account.
Unless otherwise agreed by Agent and Borrower, any Advance, Agent Advance, or
Swing Loan requested by Borrower and made by Agent or the Lenders hereunder
shall be made to the Designated Account.
2.10. Maintenance of Loan Account; Statements of Obligations. Agent
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with the Term Loan and the Capex
Loans, all Advances (including Agent Advances and Swing Loans) made by Agent,
Swing Lender, or the Lenders to Borrower or for Borrower's account, the Letters
of Credit issued by Issuing Lender for Borrower's account, and with all other
payment Obligations hereunder or under the other Loan Documents (except for Bank
Product Obligations), including, accrued interest, fees and expenses, and Lender
Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrower or for Borrower's
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and the Lender Group unless,
within 30 days after receipt thereof by Borrower, Borrower shall deliver to
Agent written objection thereto describing the error or errors contained in any
such statements.
2.11. Fees. Borrower shall pay to Agent the following fees and charges,
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Unused Line Fee. On the first day of each month during the
term of this Agreement, an unused line fee in an amount equal to 0.375% per
annum times the result of (a) the Revolver Commitment, less (b) the sum of (i)
the average Daily Balance of Advances that were outstanding during the
immediately preceding month, plus (ii) the average Daily Balance of the Letter
of Credit Usage during the immediately preceding month,
(b) Fee Letter Fees. As and when due and payable under the
terms of the Fee Letter, Borrower shall pay to Agent the fees set forth in the
Fee Letter, and
(c) Audit and Appraisal. For the separate account of Agent,
audit and appraisal fees and charges as follows: (i) a fee of $850 per day, per
auditor, plus out-of-pocket expenses for each financial audit of Borrower
performed by personnel employed by Agent, (ii) if implemented, a one time charge
of $3,000 plus out-of-pocket expenses for expenses for the establishment of
electronic collateral reporting systems, (iii) out-of-pocket expenses for each
appraisal of the Collateral performed by personnel employed by Agent, provided,
that during the period after the Closing Date but prior to the occurrence of an
Event of Default, Borrower shall only be responsible for expenses in connection
with one (1) appraisal for each of the inventory,
42
Equipment and Real Property Collateral per calendar year, and (iv) the actual
charges paid or incurred by Agent if it elects to employ the services of one or
more third Persons to perform financial audits of Borrower, in the normal course
of monitoring the Collateral, to appraise the Collateral.
2.12. Letters of Credit.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Xxxxx Fargo) for the account of
Borrower. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender) to the Issuing Lender and Agent (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension) a notice requesting the
issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking
to be amended, renewed, or extended, the date of issuance, amendment, renewal,
or extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such other
information as shall be necessary to prepare, amend, renew, or extend such L/C
or L/C Undertaking. If requested by the Issuing Lender, Borrower also shall be
an applicant under the application with respect to any Underlying Letter of
Credit that is to be the subject of an L/C Undertaking. The Issuing Lender shall
have no obligation to issue a Letter of Credit if any of the following would
result after giving effect to the requested Letter of Credit:
(i) the Letter of Credit Usage would exceed
$7,000,000, or
(ii) the Letter of Credit Usage would exceed the
Borrowing Base less the then extant amount of outstanding Advances, or
(iii) the Letter of Credit Usage would exceed the
Revolver Commitment less the then extant amount of outstanding
Advances.
Borrower and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, the L/C Disbursement immediately and automatically shall be deemed to be
an Advance hereunder and, thereafter, shall bear interest at the rate then
applicable to Advances that are Base Rate Loans under Section 2.6. To the extent
an L/C Disbursement is deemed to be an Advance hereunder, Borrower's obligation
to reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrower pursuant to this paragraph, Agent shall distribute such payment to the
Issuing Lender or, to the extent that
43
Lenders have made payments pursuant to Section 2.12(c) to reimburse the Issuing
Lender, then to such Lenders and the Issuing Lender as their interest may
appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrower had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrower on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrower for
any reason. Each Lender with a Revolver Commitment acknowledges and agrees that
its obligation to deliver to Agent, for the account of the Issuing Lender, an
amount equal to its respective Pro Rata Share pursuant to this Section 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of any payments made by the Issuing Lender in respect of such Letter
of Credit as provided in this Section, Agent (for the account of the Issuing
Lender) shall be entitled to recover such amount on demand from such Lender
together with interest thereon at the Defaulting Lender Rate until paid in full.
(c) Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that Borrower shall not
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Borrower agrees to be bound by
the Underlying Issuer's regulations and interpretations of any Underlying Letter
of Credit or by Issuing Lender's interpretations of any L/C issued by Issuing
Lender to or for Borrower's account, even though this interpretation may be
different from Borrower's own, and Borrower understands and agrees that the
Lender Group shall not be liable for any error, negligence, or mistake, whether
of omission or commission, in following Borrower's instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Borrower understands that the L/C Undertakings may require
Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrower against such Underlying Issuer.
Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group
harmless with respect to any loss, cost, expense (including reasonable attorneys
fees), or liability incurred by the Lender Group under any L/C Undertaking as a
result of the Lender Group's indemnification of any
44
Underlying Issuer; provided, however, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of the Issuing Lender or any other
member of the Lender Group.
(d) Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrower to Agent for the account of the Issuing Lender; it
being acknowledged and agreed that the issuance charge imposed by the
prospective Underlying Issuer is .825% per annum times the face amount of each
Underlying Letter of Credit, that such issuance charge may be changed from time
to time, and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is
or shall be imposed or modified in respect of any Letter of Credit
issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer
or the Lender Group any other condition regarding any Underlying Letter
of Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay on demand such amounts as Agent may
specify to be necessary to compensate the Lender Group for such additional cost
or reduced receipt, together with interest on such amount from the date of such
demand until payment in full thereof at the rate then applicable to Base Rate
Loans hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest or demonstrable error, be
final and conclusive and binding on all of the parties hereto.
(g) Borrower acknowledges and agrees that certain of the
Letters of Credit may provide for the presentation of time drafts to the
Underlying Issuer. If an Underlying Issuer
45
accepts such a time draft that is presented under an Underlying Letter of
Credit, it is acknowledged and agreed that (i) the Letter of Credit will require
the Issuing Lender to reimburse the Underlying Issuer for amounts paid on
account of such time draft on or after the maturity date thereof, (ii)the
pricing provisions hereof (including Sections 2.6(b) and 2.12(e)) shall continue
to apply, until payment of such time draft on or after the maturity date
thereof, as if the Underlying Letter of Credit were still outstanding, and (iii)
on the date on which Issuing Lender makes payment to the Underlying Issuer of
the amounts paid on account of such time draft, Borrower immediately shall
reimburse such amount to Issuing Lender and such amount shall constitute an L/C
Disbursement hereunder.
2.13. LIBOR Option.
(a) Interest and Interest Payment Dates. In lieu of having
interest charged at the rate based upon the Base Rate, Borrower shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
or the Term Loan be charged at a rate of interest based upon the LIBO Rate.
Interest on LIBO Rate Loans shall be payable on the earliest of (i) the last day
of the Interest Period applicable thereto, (ii) the occurrence of an Event of
Default in consequence of which the Required Lenders or Agent on behalf thereof
elect to accelerate the maturity of all or any portion of the Obligations, or
(iii) termination of this Agreement pursuant to the terms hereof. On the last
day of each applicable Interest Period, unless Borrower properly has exercised
the LIBOR Option with respect thereto, the interest rate applicable to such LIBO
Rate Loan automatically shall convert to the rate of interest then applicable to
Base Rate Loans of the same type hereunder. At any time that an Event of Default
has occurred and is continuing, Borrower no longer shall have the option to
request that Advances or the Term Loan bear interest at the LIBO Rate and Agent
shall have the right to convert the interest rate on all outstanding LIBO Rate
Loans to the rate then applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Borrower may, at any time and from time to time,
so long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 2:00 p.m.
(Boston, Massachusetts time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of Borrower's election of the LIBOR Option for a permitted
portion of the Advances or the Term Loan and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR
Notice received by Agent before the LIBOR Deadline, or by telephonic
notice received by Agent before the LIBOR Deadline (to be confirmed by
delivery to Agent of a LIBOR Notice received by Agent prior to 5:00
p.m. (Boston, Massachusetts time) on the same day). Promptly upon its
receipt of each such LIBOR Notice, Agent shall provide a copy thereof
to each of the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and
binding on Borrower. In connection with each LIBO Rate Loan, Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as a
result of (a) the payment of any principal of any LIBO Rate Loan other
than on the last day of an Interest Period applicable thereto
(including as a result of an
46
Event of Default), (b) the conversion of any LIBO Rate Loan other than
on the last day of the Interest Period applicable thereto, or (c) the
failure to borrow, convert, continue or prepay any LIBO Rate Loan on
the date specified in any LIBOR Notice delivered pursuant hereto (such
losses, costs, and expenses, collectively, "Funding Losses"). Funding
Losses shall, with respect to Agent or any Lender, be deemed to equal
the amount determined by Agent or such Lender to be the excess, if any,
of (i) the amount of interest that would have accrued on the principal
amount of such LIBO Rate Loan had such event not occurred, at the LIBO
Rate that would have been applicable thereto, for the period from the
date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period therefor),
minus ----- (ii) the amount of interest that would accrue on such
principal amount for such period at the interest rate which Agent or
such Lender would be offered were it to be offered, at the commencement
of such period, Dollar deposits of a comparable amount and period in
the London interbank market. A certificate of Agent or a Lender
delivered to Borrower setting forth any amount or amounts that Agent or
such Lender is entitled to receive pursuant to this Section shall be
conclusive absent manifest error.
(iii) Borrower shall have not more than 5 LIBO Rate
Loans in effect at any given time. Borrower only may exercise the LIBOR
Option for LIBO Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
(c) Prepayments. Borrower may prepay LIBO Rate Loans at any
time; provided, however, that in the event that LIBO Rate Loans are prepaid on
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with Section
2.4(b) or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with clause (b)(ii) above.
(d) Special Provisions Applicable to LIBO Rate.
(i) The LIBO Rate may be adjusted by Agent with
respect to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes in
applicable law occurring subsequent to the commencement of the then
applicable Interest Period, including changes in tax laws (except
changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase the cost
of funding loans bearing interest at the LIBO Rate. In any such event,
the affected Lender shall give Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the
notice to each other Lender and, upon its receipt of the notice from
the affected Lender, Borrower may, by notice to such affected Lender
(y) require such Lender to furnish to Borrower a statement setting
forth the basis for adjusting such LIBO Rate and the method for
determining the amount of such
47
adjustment, or (z) repay the LIBO Rate Loans with respect to which such
adjustment is made (together with any amounts due under clause (b)(ii)
above).
(ii) In the event that any change in market
conditions or any law, regulation, treaty, or directive, or any change
therein or in the interpretation of application thereof, shall at any
time after the date hereof, in the reasonable opinion of any Lender,
make it unlawful or impractical for such Lender to fund or maintain
LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBO Rate, such Lender shall
give notice of such changed circumstances to Agent and Borrower and
Agent promptly shall transmit the notice to each other Lender and (y)
in the case of any LIBO Rate Loans of such Lender that are outstanding,
the date specified in such Lender's notice shall be deemed to be the
last day of the Interest Period of such LIBO Rate Loans, and interest
upon the LIBO Rate Loans of such Lender thereafter shall accrue
interest at the rate then applicable to Base Rate Loans, and (z)
Borrower shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to
do so.
(e) No Requirement of Matched Funding. Anything to the
contrary contained herein notwithstanding, neither Agent, nor any Lender, nor
any of their Participants, is required actually to acquire eurodollar deposits
to fund or otherwise match fund any Obligation as to which interest accrues at
the LIBO Rate. The provisions of this Section shall apply as if each Lender or
its Participants had match funded any Obligation as to which interest is
accruing at the LIBO Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBO Rate Loans.
2.14. Capital Requirements. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its Borrower bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), will have the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof. Following receipt of such notice,
Borrower agrees to pay such Lender on demand the amount of such reduction of
return of capital as and when such reduction is determined, payable within 90
days after presentation by such Lender of a statement in the amount and setting
forth in reasonable detail such Lender's calculation thereof and the assumptions
upon which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.
48
3. CONDITIONS; TERM OF AGREEMENT.
3.1. A. Conditions Precedent to the Initial Extension of Credit.
The obligation of the Lender Group (or any member thereof) to make the initial
Advance (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before May 31, 2002;
(b) Agent shall have filed all financing statements required
by Agent, duly executed by Borrower, and Agent shall have received searches
reflecting the filing of all such financing statements;
(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect and, if required by Agent, recorded
in the appropriate filing office:
(i) Reserved
(ii) the Guaranty,
(iii) the Mortgages,
(iv) the Copyright Security Agreement,
(v) the Patent Security Agreement,
(vi) the Trademark Security Agreement,
(vii) the Cash Management Agreements,
(viii) any other Control Agreements,
(ix) Bailee Acknowledgements with respect to each
leased location which is not subject to a Collateral Access Agreement;
(x) Reserved
(xi) the Fee Letter,
(xii) the Pay-Off Letter, together with UCC
termination statements and other documentation evidencing the
termination by Existing Lender of its Liens in and to the properties
and assets of Borrower,
(xiii) the Disbursement Letter,
(xiv) the Perfection Certificate,
(xv) the Due Diligence Letter, and
(xvi) the Fresh Foods Guaranty;
49
(d) Agent shall have received Collateral Access
Agreements with respect to each of the Eligible Inventory Locations;
(e) Agent shall have received a copy of an executed Indemnity
or similar agreement pursuant to which PFMI agrees to make all dissenter's
rights payments (over the amount of the Share Exchange Reserve);
(f) Agent shall have received a certificate from the Secretary
of Borrower attesting to the resolutions of Borrower's Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party and authorizing specific
officers of Borrower to execute the same;
(g) Agent shall have received copies of Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Borrower;
(h) Agent shall have received a certificate of status with
respect to Borrower, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
Borrower, which certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(i) Agent shall have received certificates of status with
respect to Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of Borrower) in which its failure to be
duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(j) Agent shall have received the Borrower's March 2, 2002
audited financial statements, and such audited financial statements shall not
vary materially (in the Agent's discretion) from the management - prepared
statements previously delivered to Agent;
(k) Reserved;
(l) Agent shall have received the results of Inventory counts
at the Borrower's Claremont, North Carolina location, and such results shall be
satisfactory in the Agent's sole discretion;
(m) Reserved;
(n) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Agent;
(o) Agent shall have received opinions of Borrower's counsel
(including, with respect to the Mortgages, Borrower's local counsel as required
by Agent) in form and substance satisfactory to Agent;
(p) Agent shall have received satisfactory evidence (including
a certificate of the chief financial officer of Borrower) that all tax returns
required to be filed by Borrower have
50
been timely filed and all taxes upon Borrower or its properties, assets, income,
and franchises (including Real Property taxes and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest;
(q) Borrower shall have, after giving effect to (i) all
payments due the Agent under the Fee Letter, (ii) all amounts due to the
Existing Lender pursuant to the Pay-off Letter and (iii) all Lender Group
Expenses incurred in connection with the preparation, negotiation and execution
of the Loan Documents, an Excess Availability of not less than $15,000,000;
(r) Agent shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrower's books and records and verification of Borrower's representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Agent, (ii) an inspection of each of the locations where Inventory is located,
the results of which shall be satisfactory to Agent (iii) a due diligence review
of the Indenture, and (iv) a due diligence review of the Federal meat program
(including any performance bonds) and the Borrower's FDA compliance, and, upon
completion of all such due diligence, Agent shall have determined in its
Permitted Discretion that no Material Adverse Change shall have occurred in the
Borrower's financial condition or prospects or in the value of the Collateral;
(s) Agent shall have received completed reference checks with
respect to Borrower's senior management, the results of which are satisfactory
to Agent in its sole discretion;
(t) Agent shall have received an appraisal of the Net
Liquidation Percentage applicable to Borrower's Inventory;
(u) Agent shall have received the Closing Date Business Plan;
(v) Borrower shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(w) Reserved;
(x) Reserved;
(y) Agent shall have received copies of each Agreement between
Borrower and any Affiliate of Borrower, together with a certificate signed by
the Chairman, Vice Chairman or Chief Financial Officer of the Borrower and by
each of the Guarantors certifying (i) that each such agreement is a true,
correct, and complete copy thereof, (ii) that each such agreement was negotiated
on an arms'-length basis and complies with all applicable provisions of the
Indenture and Section 7.14 below, (iii) that no default or event of default has
occurred or is continuing under the Indenture and (iv) as to such other matters
concerning the Indenture as may reasonably be required by the Agent;
(z) Borrower shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery
51
by Borrower of this Agreement or any other Loan Document or with the
consummation of the transactions contemplated hereby and thereby; and
(aa) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.1. B. Conditions Precedent to Funding the Term Loan.
(a) Agent shall have received, not more than thirty (30) days
prior to the date of any proposed advance under the Term Loan, appraisals of the
Real Property Collateral, such appraisals to be in form and substance and
performed by appraisers satisfactory to Agent in all respects;
(b) Agent shall have received, not more than thirty (30) days
prior to the date of any proposed advance under the Term Loan, appraisals of
Borrower's machinery and equipment, such appraisals to be in form and substance
and performed by appraisers satisfactory to Agent in all respects, together with
evidence satisfactory to Agent that there are no outstanding liens or
encumbrances (other than those under the Loan Documents), on such machinery and
equipment;
(c) Agent shall have performed and received a reconciliation
of the machinery and equipment owned by Borrower to the machinery and equipment
referred to in the appraisal(s) referenced at item 3.1.B.(b) above;
(d) Agent shall have received, not more than thirty (30) days
prior to the date of any proposed advance under the Term Loan, a mortgagee's
title insurance policy (each a "Mortgagee Policy" and, collectively, the
"Mortgagee Policies") from a title insurance company approved by Agent for each
parcel of the Real Property Collateral insuring that Borrower is vested with a
good, marketable and indefeasible fee simple title to the Real Property
Collateral and that each of the Mortgages constitutes a valid first mortgage of
the fee title in the Real Property Collateral free and clear of all defect and
encumbrances except Permitted Liens; the Mortgagee Policies shall be in such
amounts and shall contain such affirmative coverages and endorsements as Agent
shall require and shall otherwise be in form and substance satisfactory to
Agent. In addition, immediately prior to the funding of the Term Loan, Agent may
require that it receive an endorsement to the Mortgagee Policies in form and
substance satisfactory to Agent confirming the validity and priority of the
Mortgages, redating the policy to the date that the Term Loan is funded and
confirming that the Real Property Collateral is subject to no additional
encumbrances.
(e) Agent shall have received a current ALTA land title survey
prepared by a registered surveyor or engineer for each parcel of the Real
Property Collateral showing adjoining streets and alleys, the location of
improvements, the existence of any encroachments and any recorded or visible
easements, containing a certification from the surveyor or engineer that the
survey correctly shows the relation of the improvements to the property lines
indicated thereon and that there are no encroachments of improvements either
into or off of said parcel except as
52
shown, and containing such other information as required by Agent. Such surveys
shall be acceptable to Agent in all respects;
(f) Agent shall have received so-called Phase I Environmental
Site Investigation Reports (the "Phase I Investigations") with respect to each
parcel comprising the Real Property Collateral. In the event that Agent
determines in its sole discretion that any of the Phase I Investigations are
insufficient to determine the likelihood that Hazardous Materials have affected
any portion of the Real Property Collateral, then Agent may require Borrower to
perform or caused to be performed so-called Phase II Environmental Site
Investigations (the "Phase II Investigations", and together with the Phase I
Investigations, the "Environmental Investigations") on such portion of the Real
Property Collateral including, but not limited to, groundwater and soil sampling
and analysis performed in accordance with generally accepted standards for such
investigations. The environmental consultants performing the Environmental
Investigations and the scope and results of the Environmental Investigations
shall be acceptable to Agent in all respects;
(g) Agent shall have received evidence acceptable to Agent
that each parcel of the Real Property Collateral complies with any applicable
zoning, subdivision, land use and environmental law, regulation or restriction
and has been issued all permits and licenses required for its operation;
(h) Agent shall have received from each tenant or occupant of
the Real Property Collateral a so-called tenant estoppel certificate and a
subordination, non-disturbance and attornment agreement, each in form and
substance acceptable to Agent;
(i) Agent shall have received such other documents,
instruments, opinions or other materials involving the Real Property Collateral
which are requested by Agent; and
(j) All other conditions precedent to the extension of any
credit under this Agreement referenced in Section 3.3 shall be satisfied.
3.1. C. Conditions Precedent to Funding the Capex Loans.
(k) Agent shall have received satisfactory evidence of the
hard cost of eligible capital equipment, together with statements in such detail
as Agent may require setting forth an itemized accounting of the amount of
taxes, freight charges, engineering and related soft costs incurred by Borrower
in connection with the purchase of such eligible capital equipment. For purposes
of this Section 3.1.C.(a), "eligibility" of capital equipment will be determined
in Agent's sole discretion.
(l) All other conditions precedent to the extension of any
credit under this Agreement referred in Section 3.3 shall be satisfied.
3.2. Conditions Subsequent to the Initial Extension of Credit. The
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
53
(a) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be satisfactory to Agent and its counsel;
(b) at all times during the period from the Closing Date to
the date of funding of the Term Loan, the Borrower shall maintain Excess
Availability of at least $5,000,000, and at all times from and after the funding
of the Term Loan, the Borrower shall maintain Excess Availability of at least
$7,500,000; and
(c) if applicable, on or before the dates specified therein,
Borrower shall have performed and delivered all items specified in a
post-closing side letter to be executed as of the Closing Date.
3.3. Conditions Precedent to all Extensions of Credit. The obligation
of the Lender Group (or any member thereof) to make any Advance (or to extend
any other credit hereunder) shall be subject to the following conditions
precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Borrower, Agent, any Lender, or any of its Affiliates;
(d) with respect to any Advance or extension of credit
hereunder relating to a redemption of any of the Notes issued under and pursuant
to the terms of the Indenture, the receipt by the Agent (on behalf of the
Lenders) of (i) an "Officers' Certificate" and "Opinion of Counsel" (as each
term is defined in the Indenture) from the Borrower to the effect that such
redemption will comply with the conditions contained in the Indenture relating
to such redemption and (ii) a Treasurer's Certificate certifying that, after
giving effect to such requested Advance, the Borrower will have Excess
Availability of at least $15,000,000; and
(e) no Material Adverse Change shall have occurred.
3.4. Term. This Agreement shall become effective upon the execution and
delivery hereof by Borrower, Agent, and the Lenders and shall continue in full
force and effect for a term ending on May 29, 2007, (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
54
3.5. Effect of Termination. On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrower with respect to any outstanding Letters of Credit and including all
Bank Products Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender, and (b)
providing cash collateral to be held by Agent for the benefit of Xxxxx Fargo or
its Affiliates with respect to the then extant Bank Products Obligations). No
termination of this Agreement, however, shall relieve or discharge Borrower of
its duties, Obligations, or covenants hereunder and the Agent's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and the Lender Group's obligations to provide additional
credit hereunder have been terminated. When this Agreement has been terminated
and all of the Obligations have been fully and finally discharged and the Lender
Group's obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrower's sole expense, execute and
deliver any UCC termination statements, lien releases, mortgage releases,
re-assignments of trademarks, discharges of security interests, and other
similar discharge or release documents (and, if applicable, in recordable form)
as are reasonably necessary to release, as of record, the Agent's Liens and all
notices of security interests and liens previously filed by Agent with respect
to the Obligations.
3.6. Early Termination by Borrower. Borrower has the option, at any
time upon 90 days prior written notice to Agent, to terminate this Agreement by
paying to Agent, for the benefit of the Lender Group, in cash, the Obligations
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of Xxxxx Fargo or its Affiliates
with respect to the then extant Bank Products Obligations), in full, together
with the Applicable Prepayment Premium (to be allocated based upon letter
agreements between Agent and individual Lenders). If Borrower has sent a notice
of termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrower shall be obligated to repay the Obligations
(including (a) either (i) providing cash collateral to be held by Agent for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage, or (ii) causing the original Letters
of Credit to be returned to the Issuing Lender, and (b) providing cash
collateral to be held by Agent for the benefit of Xxxxx Fargo or its Affiliates
with respect to the then extant Bank Products Obligations), in full, together
with the Applicable Prepayment Premium, on the date set forth as the date of
termination of this Agreement in such notice. In the event of the termination of
this Agreement and repayment of the Obligations at any time prior to the
Maturity Date, for any other reason, including (a) termination upon the election
of the Required Lenders to terminate after the occurrence of an Event of
Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in
any Insolvency Proceeding, or (iv) restructure, reorganization or compromise of
the Obligations by the confirmation of a plan of reorganization, or any other
plan of compromise, restructure, or arrangement in any Insolvency Proceeding,
then, in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to the Lender Group or profits lost by the Lender Group
as a result of such early termination, and by mutual agreement of the parties as
to a reasonable estimation and calculation
55
of the lost profits or damages of the Lender Group, Borrower shall pay the
Applicable Prepayment Premium to Agent (to be allocated based upon letter
agreements between Agent and individual Lenders), measured as of the date of
such termination.
4. CREATION OF SECURITY INTEREST.
4.1. Grant of Security Interest. Borrower hereby grants to Agent, for
the benefit of the Lender Group and any other holder of Obligations, a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by Borrower of each of its covenants and duties
under the Loan Documents. The Agent's Liens in and to the Personal Property
Collateral shall attach to all Personal Property Collateral without further act
on the part of Agent or Borrower. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrower has no authority, express or implied, to dispose of any
item or portion of the Collateral.
4.2. Control of Collateral. If from time to time any Collateral,
including any proceeds or supporting obligations, consists of property or rights
of Borrower in which the perfection or priority of Agent's security interest is
dependent upon or enhanced by Agent's gaining control of such Collateral,
Borrower shall immediately notify Agent and, at Agent's request, deliver the
appropriate Control Agreements or take such actions as may be necessary to give
Agent control over such Collateral as provided in the Code.
4.3. Negotiable Collateral. If from time to time any Collateral,
including any proceeds, is evidenced by or consists of letters of credit,
Instruments, Documents, Goods covered by Documents, Investment Property or
Chattel Paper, and if perfection or priority of Agent's security interest in
such Collateral is dependent on or enhanced by possession, Borrower, immediately
upon the request of Agent, shall endorse and deliver physical possession of such
Collateral to Agent.
4.4. Collection of Accounts, General Intangibles, and Negotiable
Collateral. At any time after the occurrence and during the continuation of an
Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrower that the Accounts, Chattel Paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, Chattel Paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Borrower shall hold any
Collections that it receives in trust for the Lender Group, as the Lender
Group's trustee, and immediately will deliver said Collections to Agent or a
Cash Management Bank in their original form as received by Borrower.
4.5. Delivery of Additional Documentation Required. At any time upon
the request of Agent, Borrower shall execute and deliver to Agent, any and all
financing statements (including, without limitation, any amendments thereto and
any "in lieu" continuation statements), security agreements, pledges,
assignments, endorsements of certificates of title, bailee acknowledgments and
all other documents (the "Additional Documents") that Agent may request in its
Permitted
56
Discretion, each in form and substance satisfactory to Agent, to perfect and
continue perfected or to better perfect the Agent's Liens in the Collateral
(whether now owned or hereafter arising or acquired), to create and perfect
Liens in favor of Agent in any Real Property acquired after the Closing Date,
and in order to fully consummate all of the transactions contemplated hereby and
under the other Loan Documents. To the maximum extent permitted by applicable
law, Borrower authorizes Agent to execute any such Additional Documents in
Borrower's name and authorize Agent to file such executed Additional Documents
in any appropriate filing office. Without limiting the foregoing, Borrower shall
(a) give the Agent prompt written notice of any Commercial Tort Claim of
Borrower not specifically identified herein and any Letter of Credit Right of
Borrower. Borrower shall grant to the Agent, for the benefit of the Lender
Group, a security interest in any such Commercial Tort Claim or Letter of Credit
Right and the proceeds thereof, and (b) on such periodic basis as Agent shall
require, (i) provide Agent with a report of all new patentable, copyrightable or
trademarkable materials acquired or generated by Borrower during the prior
period, (ii) cause all patents, copyrights, and trademarks acquired or generated
by Borrower that are not already the subject of a registration with the
appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Borrower's ownership thereof, (iii) cause to be
prepared, executed, and delivered to Agent supplemental schedules to the
applicable Loan Documents to identify such patents, copyrights and trademarks as
being subject to the security interests created thereunder, and (iv) execute and
deliver to Agent at Agent's request Patent, Trademark or Copyright Security
Agreements with respect to such patents, trademarks or copyrights for filing
with the appropriate filing office.
4.6. Power of Attorney. Borrower hereby irrevocably makes, constitutes,
and appoints Agent (and any of Agent's officers, employees, or Agent designated
by Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower
refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign Borrower's name on any invoice or xxxx of lading
relating to the Collateral, drafts against Account Debtors, or notices to
Account Debtors, (c) send requests for verification of Accounts, (d) endorse
Borrower's name on any Collection item that may come into the Lender Group's
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting the
Accounts, Chattel Paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as Borrower's attorney, and
each and every one of its rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and the Lender Group's obligations to extend credit hereunder are
terminated.
4.7. Control Agreements. No arrangement contemplated hereby or by any
Control Agreement in respect of any DDA or any Securities Accounts or other
Investment Property shall be modified by Borrower without the prior written
consent of Agent.
57
4.8. Right to Inspect; Inventories, Appraisals and Audits. Subject to
Section 2.11(c) as to payment of expenses, Agent and each Lender (through any of
their respective officers, employees, or Agent) shall have the right, from time
to time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
Without limiting the generality of the foregoing. Agent may from time to time in
its discretion obtain or conduct appraisals, audits and inspections conducted by
such appraisers or other Persons as are satisfactory to Agent.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date, and at and as of the date of the making of each Advance
(or other extension of credit) made thereafter, as though made on and as of the
date of such Advance (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1. No Encumbrances. Borrower has good and indefeasible title to all
of the property composing the Collateral and the Real Property, free and clear
of Liens except for Permitted Liens.
5.2. Eligible Accounts. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Borrower's business, owed to Borrower without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation. As to each Account
that is identified by Borrower as an Eligible Account in a borrowing base report
submitted to Agent, such Account is not excluded as ineligible by virtue of one
or more of the excluding criteria set forth in the definition of eligible
Accounts.
5.3. Eligible Inventory. All Eligible Inventory is of good and
merchantable quality, free from defects. All locations at which the Borrower
stores any Inventory are listed on Schedule E-1. As to each item of Inventory
that is identified by Borrower as Eligible Inventory in a borrowing base report
submitted to Agent, such Inventory is located at one of the locations set forth
on Schedule E-1 which is designated on such Schedule E-1 as an Eligible
Inventory Location or is in transit (up to a maximum aggregate Cost value of
$1,500,000) from one such location to another such location and is not otherwise
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Inventory.
5.4. Equipment. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.
5.5. Location of Inventory and Equipment. Except as set forth on
Schedule 5.5, the Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party. The Inventory and Equipment are located only at
the locations identified on Schedule 5.5.
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5.6. Inventory Records. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7. Legal Status. Each Borrower represents and warrants that
(a) Schedule 5.7 correctly sets forth (i) such Borrower's
exact legal name, (ii) such Borrower's type and jurisdiction of organization,
(iii) such Borrower's organizational identification number or accurately states
that such Borrower has none, and (iv) such Borrower's place of business or, if
more than one, its chief executive office, as well as such Borrower's mailing
address, if different.
(b) All information set forth on the applicable Perfection
Certificate pertaining to such Borrower is accurate and complete (except for
immaterial inaccuracies that do not affect Agent's ability to obtain or maintain
a perfected security interest in any portion of the Collateral) as of the date
hereof.
5.8. Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding. Other than as described on Schedule 5.8(b), there
are no subscriptions, options, warrants, or calls relating to any shares of
Borrower's capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Except in connection with
dissenter's rights under the Share Exchange, Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate
list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock or membership interests, as applicable, authorized
for each of such Subsidiaries; and (iii) the number and the percentage of the
outstanding shares of each such class owned directly or indirectly by Borrower.
All of the outstanding capital Stock of each such Subsidiary has been validly
issued and is fully paid and non-assessable. The membership interests in Fresh
Foods Properties, LLC are uncertificated.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. Neither Borrower nor any of its
respective Subsidiaries is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of Borrower's
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.
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5.9. Due Authorization; No Conflict.
(a) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
(b) The execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to Borrower,
the Governing Documents of Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on Borrower, (ii) conflict with,
result in a breach of, or constitute (with due notice or lapse of time or both)
a default under any material contractual obligation of Borrower, (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of Borrower's interest holders or any approval or consent
of any Person under any material contractual obligation of Borrower.
(c) Other than the filing of financing statements, fixture
filings, and Mortgages, the execution, delivery, and performance by Borrower of
this Agreement and the Loan Documents to which Borrower is a party do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by, any Governmental Authority or other Person.
(d) This Agreement and the other Loan Documents and all other
documents contemplated hereby and thereby, when executed and delivered by
Borrower will be the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with its respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected, and
first priority Liens, subject only to Permitted Liens
(f) The execution, delivery, and performance by each Guarantor
of the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of Guarantor.
(g) The execution, delivery, and performance by Guarantor of
the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to Guarantor,
or any order, judgment, or decree of any court or other Governmental Authority
binding on Guarantor, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of Guarantor, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
Guarantor, other than Permitted Liens, or (iv) require any approval or consent
of any Person under any material contractual obligation of Guarantor.
(h) The execution, delivery, and performance by Guarantor of
the Loan Documents to which Guarantor is a party do not and will not require any
registration with,
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consent, or approval of, or notice to, or other action with or by, any
Governmental Authority (including the SEC) or other Person.
(i) The Loan Documents to which Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed and delivered by
Guarantor will be legally valid and binding obligations of Guarantor,
enforceable against Guarantor in accordance with their respective terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.
5.10. Litigation.
(a) Other than those matters disclosed on Schedule 5.10 and
immaterial matters where the amount in controversy is less than $50,000, there
are no actions, suits, or proceedings pending or, to the best knowledge of
Borrower, threatened against Borrower, or any of its Subsidiaries, as
applicable. Schedule 5.10 includes, as applicable, for each matter set forth
thereon (i) the name, docket number and jurisdiction for such matter, (ii) the
status of such proceeding, and (iii) whether such matter is covered by an
insurance policy and, if so, the insurance carrier, the policy number and the
deductible amount associated with such insurance policy.
(b) There are no actions, suits or proceedings pending or, to
the best knowledge of Borrower, threatened against Borrower or any of its
Subsidiaries, as applicable, that question the validity or enforceability of
this Agreement or any other Loan Document or any action taken by Borrower in
connection therewith.
(c) Schedule 5.10(b) lists all Borrower's Commercial Tort
Claims existing as of the date hereof.
5.11. No Material Adverse Change. All financial statements relating to
Borrower or Guarantor that have been delivered by Borrower or Guarantor to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrower's (or Guarantor's, as applicable) financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrower (or Guarantor, as applicable)
since the date of the latest financial statements submitted to the Lender Group
on or before the Closing Date.
5.12. Fraudulent Transfer.
(a) Borrower is Solvent.
(b) No transfer of property is being made by Borrower and no
obligation is being incurred by Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrower.
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5.13. Employee Benefits. None of Borrower, any of its Subsidiaries, or
any of its ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14. Environmental Condition. Except as set forth on Schedule 5.14,
(a) to Borrower's knowledge, none of Borrower's properties or assets has ever
been used by Borrower or by previous owners or operators in the disposal of, or
to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release or
transport was in violation, in any material respect, of applicable Environmental
Law, (b) to Borrower's knowledge, none of Borrower's properties or assets has
ever been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) Borrower has not
received notice that a Lien arising under any Environmental Law has attached to
any revenues or to any Real Property owned or operated by Borrower, and (d)
Borrower has not received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower resulting in the releasing
or disposing of Hazardous Materials into the environment.
5.15. Brokerage Fees. Except Xxxxxxxx Xxxxxx and Company ("Xxxxxxxx
Xxxxxx"), Borrower has not utilized the services of any broker or finder in
connection with Borrower's obtaining financing from the Lender Group under this
Agreement and no brokerage commission or finders fee is payable by Borrower in
connection herewith. All fees, expenses and costs of Xxxxxxxx Xxxxxx shall be
borne solely by the Borrower.
5.16. Intellectual Property. Borrower owns, or holds licenses in, all
trademarks, trade names, copyrights, patents, patent rights, and licenses that
are necessary to the conduct of its business as currently conducted. Attached
hereto as Schedule 5.16 is a true, correct, and complete listing of all material
patents, patent applications, trademarks, trademark applications, copyrights,
and copyright registrations as to which Borrower is the owner or is an exclusive
licensee.
5.17. Leases. Borrower enjoys peaceful and undisturbed possession under
all leases material to the business of Borrower and to which Borrower is a party
or under which Borrower is operating. All of such leases are valid and
subsisting and no material default by Borrower exists under any of them.
5.18. DDAs. Set forth on Schedule 5.18 are all of the DDAs of Borrower,
including, with respect to each depositary (i) the name and address of that
depositary, and (ii) the account numbers of the accounts maintained with such
depositary.
5.19. Compliance with Laws. Borrower has conducted its business in
accordance with, is in compliance with, and is not the subject of a pending
investigation by any Governmental Authority with respect to, the requirements of
all applicable federal, state and local statutes, rules, regulations and orders
applicable to Borrower, including without limitation all rules and regulations
promulgated by the FDA or any other Governmental Authority relating to the
conduct of Borrower's business, other than statutes, rules, regulations and
orders the non-compliance with which does not or will not have a material
adverse effect on Borrower.
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5.20. Indebtedness. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date. Such Schedule
accurately reflects the aggregate principal amount of such Indebtedness and the
principal terms thereof.
5.21. Payment of Taxes. Except where the failure to do so could not
reasonably be expected to have a Material Adverse Change, (a) all tax returns
required to be filed by Borrower has been timely filed and (b) all taxes upon
Borrower or its properties, assets, income and franchises (including real
property taxes and payroll taxes) but not subject of a Permitted Protest have
been paid prior to delinquency.
5.22. Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Borrower in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower in writing to Agent or any Lender will be, true and accurate
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Business Plan represents, and as of the date
on which any other Business Plan is delivered to Agent, such additional Business
Plans represent Borrower's good faith best estimate of its future performance
for the periods covered thereby.
5.23. Subordination. None of the Indebtedness of the Borrower is
subordinate or junior in right of payment to any other Indebtedness of the
Borrower pursuant to a written agreement to that effect.
5.24. Share Exchange. The Agreement and Plan of Share Exchange dated as
of December 20, 2001, among the Borrower, PF Management, Inc. and certain
individuals, as may be modified, amended or supplemented from time to time (the
"Share Exchange Agreement"), and the transactions contemplated under the Share
Exchange Agreement do not and, upon consummation, will not conflict with, result
in a default or event of default or give rise to a right of redemption under,
the terms of the Indenture. The Share Exchange will not constitute a "Change in
Control" (as such term is defined in either of the Change in Control
Agreements). Consummation of the Share Exchange will not result in any liability
or payment obligation on the part of the Borrower which will exceed the Share
Exchange Reserve, whether in connection with dissenter's rights or otherwise.
5.25. Contracts with Affiliates. Set forth on Schedule 5.25 is a true
and complete list of all contracts and agreements (written or oral) between the
Borrower and any Affiliate of the Borrower. Schedule 5.25 sets forth the parties
to, terms of and payments due, if any, under each such contract or agreement.
All such contracts and agreements were entered into in compliance with and are,
as of the date hereof (including each date as of which this representation is
deemed remade) in compliance with the Indenture.
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6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
shall and shall cause each of its Subsidiaries to do all of the following:
6.1. Accounting System. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrower also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2. Collateral Reporting. Collateral Reporting. Provide Agent (and if
so requested by Agent, with copies for each Lender) with the following documents
at the following times in form satisfactory to Agent:
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Daily (a) a sales journal, collection journal, and
credit register since the last such schedule and a
calculation of the Borrowing Base as of such date,
and
(b) notice of all returns, disputes, or claims;
in the case of clauses (a) and (b) above, in such
level of detail as may from time to time be
required by Agent.
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Weekly (c) Inventory reports specifying Borrower's cost
of its Inventory, by category, with additional
detail showing additions to and deletions from the
Inventory.
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Period (not later than the (d) a detailed calculation of the Borrowing Base
10th day of each month, (including detail regarding those Accounts that
except, in the case of are not Eligible Accounts, Inventory in transit as
clause (h), not later than of Period-end, Inventory that is not Eligible
the 21st day of each Inventory and raw materials inventory that is not
month) Eligible Raw Materials Inventory),
(e) a detailed aging, by total, of the Accounts,
together with a reconciliation to the detailed
calculation of the Borrowing Base previously
provided to Agent,
(f) a summary aging, by vendor, of Borrower's
accounts payable and any book overdraft,
(g) a calculation of Dilution for the prior month,
and
(h) a detailed report setting forth the
calculation of so-called Accrued Marketing
Promotion, Accrued Marketing Bid Price and Accrued
Marketing Rebates.
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Quarterly (i) a detailed list of Borrower's customers,
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(j) a report regarding Borrower's accrued, but
unpaid, ad valorem taxes,
--------------------------------------------------------------------------------
Upon request by Agent (k) copies of invoices in connection with the
Accounts, credit memos, remittance advices,
deposit slips, shipping and delivery documents in
connection with the Accounts and, for Inventory
and Equipment acquired by Borrower, purchase
orders and invoices, and
(l) such other reports as to the Collateral, or
the financial condition of Borrower, as Agent may
request.
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In addition, Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.
6.3. Financial Statements, Reports, Certificates. Deliver to Agent:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Borrower's
fiscal years,
(i) a company prepared consolidated and
consolidating balance sheet, income statement, and statement of cash
flow covering Borrower's and its Subsidiaries' operations during such
period,
(ii) a certificate signed by the chief financial
officer of Borrower to the effect that:
(A) the financial statements delivered hereunder
have been prepared in accordance with GAAP (except for the
lack of footnotes and being subject to year-end audit
adjustments) and fairly present in all material respects the
financial condition of Borrower and its Subsidiaries,
(B) the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are
true and correct in all material respects on and as of the
date of such certificate, as though made on and as of such
date (except to the extent that such representations and
warranties relate solely to an earlier date), and
(C) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent
of any non-compliance, describing such non-compliance as to
which he or she may have knowledge and what action Borrower
has taken, is taking, or proposes to take with respect
thereto), and
(iii) for each month that is the date on which a
financial covenant in Section 7.21 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail,
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compliance at the end of such period with the applicable financial
covenants contained in Section 7.21,
(b) as soon as available, but in any event within 90 days
after the end of each of Borrower's fiscal years,
financial statements of Borrower and its Subsidiaries
for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in accordance
with GAAP (such audited financial statements to include a balance
sheet, income statement, and statement of cash flow and, if prepared,
such accountants' letter to management),
(c) as soon as available, but in any event within 30 days
prior to the start of each of Borrower's fiscal years,
(i) copies of the Business Plan, in form and
substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the forthcoming 3
years, year by year, and for the forthcoming fiscal year, month by
month, certified by the chief financial officer of Borrower as being
such officer's good faith best estimate of the financial performance of
Borrower and its Subsidiaries during the period covered thereby (it
being understood that Agent may in its Permitted Discretion, but shall
not be under any obligation to, revise financial, Excess Availability
and retail covenants set forth in Sections 7.20 and 7.21 as a result of
its review of such Business Plans and/or create or expand Reserves),
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax
returns, and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided by
Borrower to its shareholders generally,
(e) when filed by Borrower and, if requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) Borrower conducts business or is required to pay any
such excise tax, (ii) where Borrower's failure to pay any such applicable excise
tax would result in a Lien on the properties or assets of Borrower, or (iii)
where Borrower's failure to pay any such applicable excise tax reasonably could
be expected to result in a Material Adverse Change,
(f) as soon as and in any event within two (2) Business Days
after Borrower has knowledge of any event or condition that constitutes a
Default or an Event of Default, notice
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thereof and a statement of the curative action that Borrower proposes to take
with respect thereto, and
(g) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrower.
In addition to the financial statements referred to above, Borrower
agrees to deliver financial statements prepared on both a consolidated and
consolidating basis and that neither Borrower nor any Subsidiary of Borrower
will have a fiscal year different from that of Borrower. Borrower agrees that
its independent certified public accountants are authorized to communicate with
Agent (with prior notice to Borrower and subject to the right of the Borrower to
participate in any conference) and to release to Agent whatever financial
information (with copies to Borrower) concerning Borrower that Agent reasonably
may request. Borrower waives the right to assert a confidential relationship, if
any, it may have with any accounting firm or service bureau in connection with
any information requested by Agent pursuant to or in accordance with this
Agreement, and agree that Agent may contact directly any such accounting firm or
service bureau in order to obtain such information.
6.4. Guarantor Reports. Cause each Guarantor to deliver copies of its
annual Federal and state tax returns no later than 30 days after the same are
required to be filed by law.
6.5. Return. Cause returns and allowances as between Borrower and its
Account Debtors to be on the same basis and in accordance with the usual
customary practices of Borrower, as they exist at the time of the execution and
delivery of this Agreement. If, at a time when no Event of Default has occurred
and is continuing, any Account Debtor returns any Inventory to Borrower,
Borrower promptly shall determine the reason for such return and, if Borrower
accepts such return, issue a credit memorandum (with a copy of any credit
memorandum in excess of $100,000 to be sent to Agent) in the appropriate amount
to such Account Debtor. Notwithstanding the foregoing, Agent expressly reserves
the right to request copies of any credit memorandum issued by Borrower (in any
amount) at any time. If, at a time when an Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to Borrower, Borrower
promptly shall determine the reason for such return and, if Agent consents
(which consent shall not be unreasonably withheld), issue a credit memorandum
(with a copy to be sent to Agent) in the appropriate amount to such Account
Debtor.
6.6. Maintenance of Properties. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee,
so as to prevent any loss or forfeiture thereof or thereunder.
6.7. Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrower
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to
67
Agent indicating that Borrower has made such payments or deposits. Upon request
of Agent, Borrower shall deliver satisfactory evidence of payment of applicable
excise taxes in each jurisdictions in which Borrower is required to pay any such
excise tax.
6.8. Insurance.
(a) At Borrower's expense, maintain insurance respecting its
property and assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Agent. Borrower
shall deliver copies of all such policies to Agent together with, in the case of
the insurance policies listed on Schedule 6.8 (collectively, the "Collateral
Insurance Policies") a satisfactory lender's loss payable endorsement naming
Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Borrower shall give Agent prompt notice of any loss
covered by such insurance in excess of $50,000. Agent shall have the exclusive
right to adjust any losses payable under any Collateral Insurance Policy in
excess of $250,000, without any liability to Borrower whatsoever in respect of
such adjustments. Any monies received as payment for any loss under any
insurance policy mentioned above (other than liability insurance policies) or as
payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Agent to be applied at the option of the Required
Lenders either to the prepayment of the Obligations or shall be disbursed to
Borrower under staged payment terms reasonably satisfactory to the Required
Lenders for application to the cost of repairs, replacements, or restorations.
Any such repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal to the value of the
items or property destroyed prior to such damage or destruction.
(c) Borrower shall not take out separate insurance concurrent
in form or contributing in the event of loss with that required to be maintained
under this Section 6.8, unless Agent is included thereon as named insured with
the loss payable to Agent under a lender's loss payable endorsement or its
equivalent. Borrower immediately shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
6.9. Location of Inventory and Equipment. Keep the Inventory (other
than up to an aggregate of $500,000 of Inventory (which shall not constitute
Eligible Inventory) at any one time stored at a temporary location) and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that Borrower may amend Schedule 5.5 so long as such amendment occurs by written
notice to Agent not less than 30 days prior to the date on which the Inventory
or Equipment is moved to such new location, so long as such new location is
within the continental United States, and so long as, at the time of such
written notification, Borrower
68
provides any financing statements, fixture filings or other documents necessary
to perfect and continue perfected the Agent's Liens on such assets and also
provides to Agent a Bailee Acknowledgment or Collateral Access Agreement, if and
as applicable.
6.10. Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.
6.11. Leases. Pay when due all rents and other amounts payable under
any leases to which Borrower is a party or by which Borrower's properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
6.12. Brokerage Commissions. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower's obtaining
financing from the Lender Group under this Agreement. Borrower agrees and
acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrower, and Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrower's obtaining financing from the
Lender Group under this Agreement.
6.13. Existence. At all times preserve and keep in full force and
effect Borrower's valid existence and good standing and any rights and
franchises material to Borrower's businesses.
6.14. Environmental.
(a) Keep any property either owned or operated by Borrower
free of any Environmental Liens or post bonds or other financial assurances
sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Agent documentation of such compliance which Agent
reasonably requests, (c) promptly notify Agent of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
Borrower and take any Remedial Actions required to xxxxx said release or
otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Agent with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of Borrower, (ii) commencement of any
Environmental Action or notice that an Environmental Action will be filed
against Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
6.15. Investment Proceeds, Etc. The proceeds of any Investment from any
source in Borrower or any Subsidiary of Borrower and any other funds received by
Borrower other than from ordinary course business operations (including, without
limitation, tax refunds, damage awards, or insurance or condemnation proceeds)
shall be deposited directly into the Agent's Account to be applied on account of
the Obligations in accordance with Section 2.4(b).
69
6.16. Disclosure Updates. Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.17. Mandatory Prepayment from Certain Permitted Dispositions. The
Borrower will pay (immediately upon receipt) or cause to be paid directly to the
Agent all proceeds (over $25,000 per fiscal year) of transactions constituting
Permitted Dispositions under clause (a) of the definition thereof, such proceeds
to be applied by the Agent in permanent reduction of the outstanding balance of
the Capex Loans (to the extent the asset sold was purchased with proceeds of a
Capex Loan) or the Term Loans (in all other cases) in either instance such
prepayments to be applied in inverse order of maturity. In the event of a
Permitted Disposition (under clause (a) of the definition thereof) at a time
when neither Capex Loans nor Term Loans are outstanding, proceeds will be
applied in reduction (but not permanent reduction) of the Advances.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, Borrower
will not and will not permit any of its Subsidiaries to do any of the following:
7.1. Indebtedness. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20, including
Indebtedness evidenced by the Notes;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Agent's
reasonable judgment, materially impair the prospects of repayment of the
Obligations by Borrower or materially impair Borrower's creditworthiness, (ii)
such refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to Borrower, and (iv) if the Indebtedness that is refinanced,
renewed, or extended was subordinated in right of
70
payment to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension Indebtedness must be include subordination terms and
conditions that are at least as favorable to the Lender Group as those that were
applicable to the refinanced, renewed, or extended Indebtedness; and
(e) Indebtedness composing Permitted Investments.
7.2. Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3. Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock or otherwise change Borrower's type of
organization, jurisdiction of organization or other legal or corporate
structure, provided, that any Subsidiary of the Borrower in existence on the
Closing Date may be merged with and into the Borrower, with the Borrower being
the surviving corporation, so long as such merger does not constitute a default
under or cause an acceleration, redemption or payment obligation under any
material contract of the Borrower, including the Indenture.
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
(d) Amend the Share Exchange Agreement except to extend the
expiration date.
7.4. Disposal of Assets. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of
Borrower's assets.
7.5. Change of Name or Address. Change Borrower's name or
organizational identification number or relocate Borrower's chief executive
office to a new location; provided, however, that Borrower may change its name
or chief executive office location upon at least 30 days prior written notice by
Borrower to Agent of such change and so long as, at the time of such written
notification, Borrower provides (i) any financing statements, fixture filings or
other agreements or documents necessary to perfect and continue perfected
Agent's Liens and (ii) in the case of such a relocation, if the new chief
executive office location is leased by Borrower, a Collateral Access Agreement
with respect thereto.
7.6. Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Agent.
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7.7. Nature of Business. Make any change in the principal nature of
Borrower's business.
7.8. Prepayments and Amendments.
(a) Except in connection with a refinancing permitted by
Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower, other than the Obligations in accordance with this
Agreement, and
(b) Except in connection with a refinancing permitted by
Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1(b) or (c).
7.9. Change of Control. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10. Consignments. Consign any Inventory or sell any Inventory on xxxx
and hold, sale or return, sale on approval, or other conditional terms of sale.
7.11. Distributions. Except as expressly provided below, (i) declare,
order, pay or make any Restricted Payment or (ii) set aside any sum or property
therefor or exercise any set-off or similar rights of Borrower, if any, with
respect to any indebtedness that is the subject of an intercreditor and
subordination agreement.
As used herein, the term "Restricted Payment" means (i) any cash
dividend or other cash distribution or payment, direct or indirect, on or on
account of any shares of any class of stock of Borrower now or hereafter
outstanding; (ii) any dividend or other distribution in respect of, or
redemption, purchase or other acquisition (except shares acquired by payment by
the Borrower of an amount not to exceed the Share Exchange Reserve in connection
with dissenter's rights under the Share Exchange Agreement), direct or indirect,
of any shares of any class of stock of Borrower now or hereafter outstanding or
of any warrants, options or rights to purchase any such stock (including,
without limitation, the repurchase of any such stock, warrant, option or right
or any refund of the purchase price thereof in connection with the exercise by
the holder thereof of any right of rescission or similar remedies with respect
thereto); and (iii) except payments to Affiliates under contracts and agreements
specified on Schedule 5.25 or otherwise satisfying the requirements of Section
7.14, any direct salary, non-salary managerial fees (excluding directors' fees),
fee (consulting, management or other), fringe benefit (other than under a Fringe
Plan), allowance, other expense (other than for normal and ordinary business
purposes) or payment directly or indirectly paid or payable by Borrower (as
compensation or otherwise) to any named executive officer (as such term is
defined in Regulation S-K) or Director or other Affiliate of Borrower; provided
that such salary, fees, benefits, allowances, expense or other payment are
approved by the Board of Directors.
7.12. Accounting Methods. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's accounting records without said
72
accounting firm or service bureau agreeing to provide Agent information
regarding the Collateral or Borrower's financial condition.
7.13. Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrower and its Subsidiaries shall not have Permitted Investments
(other than in the Cash Management Accounts) in deposit accounts or Securities
Accounts in excess of $500,000 outstanding at any one time unless Borrower or
any of its Subsidiaries, as applicable, and the applicable securities
intermediary or bank have entered into a Control Agreement or similar
arrangements governing such Permitted Investments, as Agent shall determine in
its Permitted Discretion, to perfect (and further establish) the Agent's Liens
in such Permitted Investments.
7.14. Transactions with Affiliates. Directly or indirectly enter into
any transaction with any Affiliate of Borrower except for transactions that are
in the ordinary course of Borrower's business, upon fair and reasonable terms,
that are fully disclosed to Agent, and that are no less favorable to Borrower
than would be obtained in an arm's length transaction with a non-Affiliate.
7.15. Reserved.
7.16. Suspension. Suspend or go out of a substantial portion of its
business.
7.17. Reserved.
7.18. Use of Proceeds. Use the proceeds of the Advances, the Term Loan
or a Capex Loan for any purpose other than (a) on the Closing Date, (i) to repay
in full the outstanding principal, accrued interest, and accrued fees and
expenses owing to Existing Lender, and (ii) to pay transactional fees, costs,
and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for ongoing capital
expenditures and general corporate purposes of the Borrower.
7.19. Inventory and Equipment with Bailees. The Inventory (other than
up to an aggregate of $500,000 of Inventory (which shall not constitute Eligible
Inventory) at any one time stored at a temporary location) and Equipment shall
not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party unless Agent has granted its prior written consent and Borrower
has delivered to Agent a Bailee Acknowledgment with respect to the applicable
Inventory and/or Equipment.
7.20. Securities Accounts. Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrower shall not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrower may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.
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7.21. Financial Covenants.
(a) Fail to maintain:
Minimum EBITDA. EBITDA, measured on a fiscal
quarter-end basis, if Excess availability is greater than $12,500,000,
or monthly from and after the date on which Excess Availability is
less than $12,500,000 of not less than the required amount set forth
in the following table for the applicable period set forth opposite
thereto;
Required EBITDA Amount Monthly Quarterly
---------------------- ------- ---------
May, 2002 $2,984,000 $2,984,000
June, 2002 $3,531,000
July, 2002 $4,517,000
August, 2002 $6,230,000 $6,230,000
September, 2002 $7,832,000
October, 2002 $10,013,000
November, 2002 $11,774,000 $11,774,000
December, 2002 $12,824,000
January, 2003 $14,794,000
February, 2003 $16,658,000 $16,658,000
The EBITDA covenant levels set forth above are cumulative fiscal
year-to-date numbers. The EBITDA covenant for the Borrower's 2004
fiscal year will be no less than $18,600,000. Monthly and quarterly
test levels for fiscal year 2004, together with EBITDA covenant levels
for fiscal years 2005 and beyond, will be based upon receipt by Agent
of an updated Business Plan, but in no event will the EBITDA covenant
levels for fiscal years 2005 and beyond be less than the EBITDA
covenant level for fiscal year 2004.
(b) Make:
Capital Expenditures. Capital expenditures in any
fiscal year in excess of the amount set forth in the following table
for the applicable period:
Date Amount
---- ------
1Q03 $2,537,000
2Q03 $11,250,000
3Q03 $15,362,000
4Q03 $16,437,000
1Q04 $4,468,000
2Q04 $10,437,000
3Q04 $19,406,000
4Q04 $27,125,000
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Capital expenditure covenant levels for fiscal years 2005 and beyond will be set
at levels satisfactory in the Permitted Discretion of Agent and based upon
updated Business Plans.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
8.1. If Borrower fails to pay when due and payable or when declared due
and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations);
8.2 (a) If Borrower fails or neglects to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in Sections 6.4
(Guarantor Reports), 6.7 (Tax Returns), 6.9 (Location of Inventory and
Equipment), 6.10 (Compliance with Laws), or 6.11 (Leases) of this Agreement and
such failure continues for a period of 5 Business Days;
(b) If Borrower fails or neglects to perform, keep, or observe
any term, provision, condition, covenant, or agreement contained in Sections 6.1
(Accounting System) or 6.6 (Maintenance of Properties) of this Agreement and
such failure continues for a period of 15 Business Days; or
(c) If Borrower fails or neglects to perform, keep, or observe
any other term, provision, condition, covenant, or agreement contained in this
Agreement, or in any of the other Loan Documents (giving effect to any grace
periods, cure periods, or required notices, if any, expressly provided for in
such Loan Documents); in each case, other than any such term, provision,
condition, covenant, or agreement that is the subject of another provision of
this Section 8, in which event such other provision of this Section 8 shall
govern;
8.3. If any material portion of Borrower's or any of its Subsidiaries'
assets is attached, seized, subjected to a writ or distress warrant, levied
upon, or comes into the possession of any third Person;
8.4. If an Insolvency Proceeding is commenced by Borrower or any of its
Subsidiaries;
8.5. If an Insolvency Proceeding is commenced against Borrower, or any
of its Subsidiaries and any of the following events occur: (a) Borrower or the
Subsidiary consents to the institution of the Insolvency Proceeding against it,
(b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Agent (including any
successor agent) and
75
each other member of the Lender Group shall be relieved of their obligation to
extend credit hereunder, (d) an interim trustee is appointed to take possession
of all or any substantial portion of the properties or assets of, or to operate
all or any substantial portion of the business of, Borrower or any of its
Subsidiaries, or (e) an order for relief shall have been entered therein;
8.6. If Borrower or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.7. If a notice of Lien, levy, or assessment is filed of record with
respect to Borrower's or any of its Subsidiaries' assets by the United States,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien, whether xxxxxx or
otherwise, upon Borrower's or any of its Subsidiaries' assets and the same is
not paid on the payment date thereof;
8.8. If a judgment or other claim becomes a Lien or encumbrance upon
any material portion of Borrower's or any of its Subsidiaries' properties or
assets and the same is not released, discharged or bonded (to the satisfaction
of Agent by the first to occur of fifteen (15) days after such Lien or
encumbrance arises or the date on which the holder of such Lien or encumbrance
attempts to enforce such rights against Borrower's properties or assets, whether
by foreclosure or otherwise);
8.9. If there is a default (whether existing on the Closing Date or
occurring after the Closing Date) under (i) the Indenture; or (ii) under any
other material agreement to which Borrower or any of its Subsidiaries is a party
and in the case of the foregoing clause (ii) only, such default (a) occurs at
the final maturity of the obligations thereunder or (b) results in a right by
the other party thereto, irrespective of whether exercised, to accelerate the
maturity of Borrower's or its Subsidiaries' obligations thereunder, to terminate
such agreement, or to refuse to renew such agreement pursuant to an automatic
renewal right therein;
8.10. Reserved.
8.11. If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.12. If any misstatement or misrepresentation exists now or hereafter
in any warranty, representation, statement, or Record made to the Lender Group
by Borrower, its Subsidiaries, or any officer, employee, agent, or director of
Borrower or any of its Subsidiaries;
8.13. If the obligation of any Guarantor under its Guaranty is limited
or terminated by operation of law or by such Guarantor thereunder, or if there
shall be a breach by any Guarantor of any representation, warranty or covenant
in any Guaranty;
8.14. If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent
76
permitted by the terms hereof or thereof, first priority Lien on or security
interest in the Collateral covered hereby or thereby;
8.15. Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Borrower, or a proceeding shall be commenced by
Borrower, or by any Governmental Authority having jurisdiction over Borrower,
seeking to establish the invalidity or unenforceability thereof, or Borrower
shall deny that Borrower has any liability or obligation purported to be created
under any Loan Document; or
8.16 If the Borrower's payment obligations in connection with the
exercise of dissenter's rights under the Share Exchange exceed the Share
Exchange Reserve.
8.17 If, on or before March 10, 2006, the Indenture maturity date for
repayment of the principal amount of the Notes have not been extended beyond
June 30, 2007 on terms satisfactory in the sole discretion of the Agent.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1. Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to give written notice to the Borrower of the occurrence of such
Event of Default and thereafter to exercise any of the rights and remedies of a
secured party under the Code and any other rights and remedies provided for in
this Agreement or any other Loan Document or otherwise available to it at law or
in equity on behalf of the Lender Group (and Agent, acting upon the instructions
of the Required Lenders, shall do the same on behalf of the Lender Group), such
rights and remedies to include, without limitation, the following, all of which
are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrower and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Notify Account Debtors and other Persons obligated on the
Collateral to make payment or otherwise render performance to or for Agent, and,
to the extent permitted under the Code, enforce the obligations of Account
Debtors and other Persons obligated on the Collateral and exercise the rights of
Borrowers with respect to such obligations and any property that may secure such
obligations;
77
(e) Take any proceeds of the Collateral;
(f) Make any filings with the applicable recording offices
required to enforce any Borrower's rights as a mortgagee of Real Property;
(g) Cause Borrower to hold all returned Inventory in trust for
the Lender Group, segregate all returned Inventory from all other assets of
Borrower or in Borrower's possession and conspicuously label said returned
Inventory as the property of the Lender Group;
(h) Without notice to or demand upon Borrower or Guarantor,
make such payments and do such acts as Agent considers necessary or reasonable
to protect its security interests in the Collateral. Borrower agrees to assemble
the Personal Property Collateral if Agent so requires, and to make the Personal
Property Collateral available to Agent at a place that Agent may designate which
is reasonably convenient to both parties. Borrower authorizes Agent to enter the
premises where the Personal Property Collateral is located, to take and maintain
possession of the Personal Property Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Agent's determination appears
to conflict with the Agent's Liens and to pay all expenses incurred in
connection therewith and to charge the Loan Account therefor. With respect to
any of Borrower's owned or leased premises, Borrower hereby grants Agent a
license to enter into possession of such premises and to occupy the same,
without charge, in order to exercise any of the Lender Group's rights or
remedies provided herein, at law, in equity, or otherwise;
(i) Without notice to Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by the Lender
Group (including any amounts received in the Cash Management Accounts), or (ii)
Indebtedness at any time owing to or for the credit or the account of Borrower
held by the Lender Group;
(j) Hold, as cash collateral, any and all balances and
deposits of Borrower held by the Lender Group, and any amounts received in the
Cash Management Accounts, to secure the full and final repayment of all of the
Obligations;
(k) Instruct each Cash Management Bank and any other
depositary with whom a DDA subject to a Control Agreement is maintained, to pay
any and all balances and deposits in the applicable Cash Management Account or
other DDA to the Agent's Account;
(l) Instruct any securities intermediary to liquidate the
applicable Securities Account or any related Investment Property maintained or
held thereby and remit the proceeds thereof to the Agent's Account;
(m) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Personal Property Collateral. Borrower hereby grants to Agent a
license or other right to use, without charge, Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for sale,
and selling any Personal Property Collateral and
78
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
(n) Sell, or cause to be sold, the Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrower's premises) as Agent determines is commercially reasonable. It is not
necessary that the Collateral be present at any such sale;
(o) Agent shall give notice of the disposition of the
Collateral as follows:
(i) Agent shall give Borrower a notice in writing of
the time and place of public sale, or, if the sale is a private sale or
some other disposition other than a public sale is to be made of the
Collateral, the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in Section 12, at
least 10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any
portion of the Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a recognized
market;
(p) Agent, on behalf of the Lender Group, may credit bid and
purchase at any public sale;
(q) Agent may seek the appointment of a receiver or keeper to
take possession of all or any portion of the Collateral or to operate same and,
to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(r) The Lender Group shall have all other rights and remedies
available to it at law or in equity pursuant to any other Loan Documents; and
(s) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrower. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Borrower.
9.2. Remedies Cumulative. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative and may be exercised simultaneously. The Lender Group shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by the Lender Group of one right or
remedy shall be deemed an election, and no waiver by the Lender Group of any
Event of Default shall be deemed a continuing waiver. No delay by the Lender
Group shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due
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to third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its sole discretion and without prior notice to Borrower, may do any
or all of the following: (a) make payment of the same or any part thereof, (b)
set up such reserves in the Loan Account as Agent deems necessary to protect the
Lender Group from the exposure created by such failure, or (c) in the case of
the failure to comply with Section 6.8 hereof, obtain and maintain insurance
policies of the type described in Section 6.8 and take any action with respect
to such policies as Agent deems prudent. Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1. Demand; Protest; etc. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which Borrower may in any way be liable.
11.2. The Lender Group's Liability for Collateral. Borrower hereby
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrower.
11.3. Indemnification. Borrower shall pay, indemnify, defend, and hold
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, Agent, and attorneys-in-fact (each, an "Indemnified Person") harmless
(to the fullest extent permitted by law) from and against any and all claims,
demands, suits, actions, investigations, proceedings, and damages, and all
reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision
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shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Borrower
was required to indemnify the Indemnified Person receiving such payment, the
Indemnified Person making such payment is entitled to be indemnified and
reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING
INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED
LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT
ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrower or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Borrower or Agent, as applicable, may designate to each other
in accordance herewith), or telefacsimile to Borrower or to Agent, as the case
may be, at its address set forth below:
If to Borrower: Pierre Foods, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Fax No.: 000-000-0000
With copies to: The Power Plant
0000 Xxxxxx Xxxxxx
Xxxxx 000-X
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
Attn: T. Xxxxxxx Xxxxxx
Fax No.: 000-000-0000
If to Agent or
to Lender Group: FOOTHILL CAPITAL CORPORATION
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: BFD Manager
Fax No. (000) 000-0000
with copies to: Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx, P.C.
Fax No. (000) 000-0000
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Agent and Borrower may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this Section 12
other than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN
RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO
WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
SUFFOLK, THE COMMONWEALTH OF MASSACHUSETTS, PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER
AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).
BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
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14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1. Assignments and Participations.
(a) Any Lender may, with the written consent of Agent
(provided that no written consent of Agent shall be required in connection with
any assignment and delegation by a Lender to an Eligible Transferee), assign and
delegate to one or more assignees (each an "Assignee") all, or any ratable part
of all, of the Obligations, the Commitments and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum amount
of $5,000,000; provided, however, that Borrower and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Borrower and Agent by such Lender and the Assignee,
(ii) such Lender and its Assignee have delivered to Borrower and Agent an
Assignment and Acceptance in form and substance satisfactory to Agent, and (iii)
the assignor Lender or Assignee has paid to Agent for Agent's separate account a
processing fee in the amount of $5,000. Anything contained herein to the
contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Borrower) that it has received an executed Assignment and
Acceptance and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto), and such assignment shall affect a novation between
Borrower and the Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (3)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (4) such Assignee will, independently
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and without reliance upon Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement, (5) such Assignee appoints and authorizes Agent to take
such actions and to exercise such powers under this Agreement as are delegated
to Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
in its Obligations, the Commitment, and the other rights and interests of that
Lender (the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any sale of any such participating interests by a Lender to an Eligible
Transferee); provided, however, that (i) the Originating Lender shall remain a
"Lender" for all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations, the
Commitments, and the other rights and interests of the Originating Lender
hereunder shall not constitute a "Lender" hereunder or under the other Loan
Documents and the Originating Lender's obligations under this Agreement shall
remain unchanged; (ii) the Originating Lender shall remain solely responsible
for the performance of such obligations; (iii) Borrower, Agent, and the Lenders
shall continue to deal solely and directly with the Originating Lender in
connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents; (iv) no Lender shall transfer or grant
any participating interest under which the Participant has the right to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums; and (v) all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation; except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative
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through the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrower, the
Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by the Lenders among themselves.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrower or
Borrower's business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss.203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2. Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Borrower may not assign this Agreement or any rights or duties hereunder
without the Lenders' prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release Borrower from its Obligations. A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1. Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Borrower and then any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all of the Lenders affected thereby and
Borrower and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
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(d) change the percentage of the Commitments that is required
to take any action hereunder,
(e) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section
16.12,
(g) change the definition of "Required Lenders",
(h) contractually subordinate any of the Agent's Liens,
(i) release Borrower or Guarantor from any obligation for the
payment of money, or
(j) change the definitions of Borrowing Base, Dilution,
Dilution Reserve, Eligible Accounts, Eligible Inventory, Maximum Revolver
Amount, Revolver Commitment, Net Liquidation Percentage, Term Loan Amount, Capex
Loan Amount, or change Section 2.1(b); or
(k) amend any of the provisions of Section 16,
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower.
15.2. Replacement of Holdout Lender.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("Holdout Lender") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "Replacement Lender"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
(b) Prior to the effective date of such replacement, the
Holdout Lender and each Replacement Lender shall execute and deliver an
Assignment and Acceptance Agreement, subject only to the Holdout Lender being
repaid its share of the outstanding Obligations (including an assumption of its
Pro Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to
execute and deliver any such Assignment and Acceptance Agreement prior to the
effective date of such replacement, the Holdout Lender shall be deemed to have
executed and delivered such
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Assignment and Acceptance Agreement. The replacement of any Holdout Lender shall
be made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3. No Waivers; Cumulative Remedies. No failure by Agent or any
Lender to exercise any right, remedy or option under this Agreement or any other
Loan Document, nor any delay by Agent or any Lender in exercising the same, will
operate as a waiver thereof. No waiver by Agent or any Lender will be effective
unless it is in writing, and then only to the extent specifically stated. No
waiver by Agent or any Lender on any occasion shall affect or diminish Agent's
and each Lender's rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Agent's and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1. Appointment and Authorization of Agent. Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent and the
Lenders, and Borrower shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make
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Advances, for itself or on behalf of Lenders as provided in the Loan Documents,
(d) exclusively receive, apply, and distribute the Collections as provided in
the Loan Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the
Collections, (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Borrower, the Obligations, the
Collateral, the Collections, or otherwise related to any of same as provided in
the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent
may deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.
16.2. Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through Agent, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3. Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Borrower or any Subsidiary or
Affiliate of Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrower or any of its
Subsidiaries or Affiliates.
16.4. Reliance by Agent. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
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16.5. Notice of Default or Event of Default. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Borrower
referring to this Agreement, describing such Default or Event of Default, and
stating that such notice is a "notice of default." Agent promptly will notify
the Lenders of its receipt of any such notice or of any Event of Default of
which Agent has actual knowledge. If any Lender obtains actual knowledge of any
Event of Default, such Lender promptly shall notify the other Lenders and Agent
of such Event of Default. Each Lender shall be solely responsible for giving any
notices to its Participants, if any. Subject to Section 16.4, Agent shall take
such action with respect to such Default or Event of Default as may be requested
by the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable.
16.6. Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrower
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
16.7. Costs and Expenses; Indemnification. Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrower is obligated to reimburse Agent
or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent
is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for
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such out-of-pocket costs and expenses prior to the distribution of any amounts
to Lenders. In the event Agent is not reimbursed for such costs and expenses
from Collections received by Agent, each Lender hereby agrees that it is and
shall be obligated to pay to or reimburse Agent for the amount of such Lender's
Pro Rata Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Borrower and without limiting
the obligation of Borrower to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's ratable share of any costs
or out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8. Agent in Individual Capacity. Foothill and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrower and its
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrower or its Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.
16.9. Successor Agent. Agent may resign as Agent upon 45 days notice to
the Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
inure to
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its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
16.10. Lender in Individual Capacity. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with Borrower
and its Subsidiaries and Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents as though such Lender were not a Lender
hereunder without notice to or consent of the other members of the Lender Group.
The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11. Withholding Taxes.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception, (a) a
statement of the Lender, signed under penalty of perjury, that it is
not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder (within the meaning of Section 881(c)(3)(B) of
the IRC), or (III) a controlled foreign corporation described in
Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form
W-8BEN, before the first payment of any interest under this Agreement
and at any other time reasonably requested by Agent or Borrower;
(ii) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Form W-8BEN before the first payment of any
interest under this Agreement and at any other time reasonably
requested by Agent or Borrower;
(iii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of such
Lender, two properly completed and executed
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copies of IRS Form W-8ECI before the first payment of any interest is
due under this Agreement and at any other time reasonably requested by
Agent or Borrower;
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrower to such Lender, such Lender
agrees to notify Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender. To the extent of
such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify and hold Agent harmless for all amounts
paid, directly or indirectly, by Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and expenses
(including attorneys fees and expenses). The obligation of the Lenders under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.
(e) All payments made by Borrower hereunder or under any other
Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the
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branch or lending office of the Lender participating in the transactions set
forth herein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any note, including any amount paid pursuant
to this Section 16.11(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrower shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 16.11, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence. Borrower
will furnish to Agent as promptly as possible after the date the payment of any
Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by Borrower.
16.12. Collateral Matters.
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release any Lien on any Collateral (i)
upon the termination of the Commitments and payment and satisfaction in full by
Borrower of all Obligations, (ii) constituting property being sold or disposed
of if a release is required or desirable in connection therewith and if Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which Borrower owned no interest at the time the security interest was
granted or at any time thereafter, or (iv) constituting property leased to
Borrower under a lease that has expired or is terminated in a transaction
permitted under this Agreement. Except as provided above, Agent will not execute
and deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Borrower at any time, the Lenders will confirm in writing
Agent's authority to release any such Liens on particular types or items of
Collateral pursuant to this Section 16.12; provided, however, that (1) Agent
shall not be required to execute any document necessary to evidence such release
on terms that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrower in respect of)
all interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrower or is cared
for, protected, or insured or has been encumbered, or that the Agent's Liens
have been properly or sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or
93
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13. Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrower or any deposit accounts of Borrower
now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by Agent, take or
cause to be taken any action, including, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or could
be, to give such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
16.14. Agency for Perfection. Agent hereby appoints each other Lender
as its agent (and each Lender hereby accepts such appointment) for the purpose
of perfecting the Agent's Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15. Payments by Agent to the Lenders. All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice
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to Agent. Concurrently with each such payment, Agent shall identify whether such
payment (or any portion thereof) represents principal, premium, or interest of
the Obligations.
16.16. Concerning the Collateral and Related Loan Documents. Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
16.17. Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information. By becoming a party to
this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by
Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrower
and will rely significantly upon the Books, as well as on representations of
Borrower's personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrower and its Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrower that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Borrower of any request by any court,
governmental or administrative agency, or pursuant to any subpoena or other
legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying
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Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrower, or the indemnifying Lender's participation in, or the indemnifying
Lender's purchase of, a loan or loans of Borrower; and (ii) to pay and protect,
and indemnify, defend and hold Agent, and any such other Lender preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including, attorneys fees and costs)
incurred by Agent and any such other Lender preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrower to Agent that has not been contemporaneously
provided by Borrower to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrower, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Borrower the
additional reports or information reasonably specified by such Lender, and, upon
receipt thereof from Borrower, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Borrower a statement
regarding the Loan Account, Agent shall send a copy of such statement to each
Lender.
16.18. Several Obligations; No Liability. Notwithstanding that certain
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to Borrower or any other Person for any failure by
any other Lender to fulfill its obligations to make credit available hereunder,
nor to advance for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection with the
financing contemplated herein.
16.19. Legal Representation of Agent. In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Xxxxxx, Xxxx & Xxxxxxx ("Xxxxxx") only has represented and only shall represent
Foothill in its capacity as Agent and as a Lender. Each other Lender hereby
acknowledges that Xxxxxx does not represent it in connection with any such
matters.
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17. GENERAL PROVISIONS.
17.1. Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrower, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2. Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3. Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Agent, the Lender Group or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4. Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5. Amendments in Writing. This Agreement only can be amended by a
writing in accordance with Section 15.1.
17.6. Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis, except as otherwise specifically provided therein or therefor.
17.7. Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Borrower or Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrower or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8. Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and
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shall not be contradicted or qualified by any other agreement, oral or written,
before the date hereof.
[The remainder of this page is left blank intentionally.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
PIERRE FOODS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxx
Chief Financial Officer
FOOTHILL CAPITAL CORPORATION,
as Agent and as a Lender
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
Vice President
Signature Page to Loan and Security Agreement
