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CREDIT AGREEMENT
Dated as of March 28, 2001
among
AGWAY, INC., AGWAY HOLDINGS INC., AGWAY FINANCIAL
CORPORATION, FEED COMMODITIES INTERNATIONAL LLC, MILFORD
FERTILIZER COMPANY LLC, XXXXXXXX AGRONOMIC CONSULTING
SERVICE LLC, AGWAY GENERAL AGENCY, INC. COUNTRY BEST
XXXXX, LLC, COUNTRY BEST-XXXXXXX LLC, AGWAY ENERGY
PRODUCTS LLC, AGWAY ENERGY SERVICES-PA, INC., AND AGWAY
ENERGY SERVICES, INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
Page
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1. AMOUNT AND TERMS OF CREDIT........................................................................... 2
1.1 Credit Facilities........................................................................... 2
1.2 Letters of Credit........................................................................... 5
1.3 Prepayments................................................................................. 5
1.4 Use of Proceeds............................................................................. 7
1.5 Interest and Applicable Margins............................................................. 7
1.6 Eligible Accounts........................................................................... 9
1.7 Eligible Inventory.......................................................................... 11
1.8 Cash Management Systems..................................................................... 13
1.9 Fees........................................................................................ 13
1.10 Receipt of Payments......................................................................... 14
1.11 Application and Allocation of Payments...................................................... 14
1.12 Loan Account and Accounting................................................................. 15
1.13 Indemnity................................................................................... 15
1.14 Access...................................................................................... 16
1.15 Taxes....................................................................................... 17
1.16 Capital Adequacy; Increased Costs; Illegality............................................... 17
1.17 Single Loan................................................................................. 19
2. CONDITIONS PRECEDENT................................................................................. 19
2.1 Conditions to the Initial Loans............................................................. 19
2.2 Further Conditions to Each Loan............................................................. 20
3. REPRESENTATIONS AND WARRANTIES....................................................................... 22
3.1 Corporate Existence; Compliance with Law.................................................... 22
3.2 Executive Offices, Collateral Locations, FEIN............................................... 22
3.3 Corporate Power, Authorization, Enforceable Obligations..................................... 23
3.4 Financial Statements and Projections........................................................ 23
3.5 Material Adverse Effect..................................................................... 24
3.6 Ownership of Property; Liens................................................................ 24
3.7 Labor Matters............................................................................... 25
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness................................................................................ 25
3.9 Government Regulation....................................................................... 25
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3.10 Margin Regulations.......................................................................... 26
3.11 Taxes....................................................................................... 26
3.12 ERISA....................................................................................... 26
3.13 No Litigation............................................................................... 28
3.14 Brokers..................................................................................... 28
3.15 Intellectual Property....................................................................... 28
3.16 Full Disclosure............................................................................. 28
3.17 Environmental Matters....................................................................... 28
3.18 Insurance................................................................................... 29
3.19 Deposit and Disbursement Accounts........................................................... 29
3.20 Government Contracts........................................................................ 29
3.21 Customer and Trade Relations................................................................ 30
3.22 Agreements and Other Documents.............................................................. 30
3.23 Solvency.................................................................................... 30
3.24 Subordinated Debt........................................................................... 30
3.25 PACA; Farm Products......................................................................... 30
3.26 Credit Card Providers....................................................................... 31
4. FINANCIAL STATEMENTS AND INFORMATION................................................................. 31
4.1 Reports and Notices......................................................................... 31
4.2 Communication with Accountants.............................................................. 31
5. AFFIRMATIVE COVENANTS................................................................................ 31
5.1 Maintenance of Existence and Conduct of Business............................................ 31
5.2 Payment of Charges.......................................................................... 32
5.3 Books and Records........................................................................... 32
5.4 Insurance; Damage to, Destruction or Condemnation of Collateral............................. 32
5.5 Compliance with Laws........................................................................ 34
5.6 Supplemental Disclosure..................................................................... 35
5.7 Intellectual Property....................................................................... 35
5.8 Environmental Matters....................................................................... 35
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases....................................................................... 36
5.10 Restructure Advisers........................................................................ 37
5.11 Subordinated Indebtedness and Preferred Stock............................................... 37
5.12 Payment for Perishable Goods................................................................ 37
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5.13 CoBANK Equity Interests..................................................................... 37
5.14 Further Assurances.......................................................................... 38
6. NEGATIVE COVENANTS................................................................................... 38
6.1 Mergers, Subsidiaries, Etc.................................................................. 38
6.2 Investments; Loans and Advances............................................................. 38
6.3 Indebtedness................................................................................ 39
6.4 Employee Loans and Affiliate Transactions................................................... 40
6.5 Capital Structure and Business.............................................................. 41
6.6 Guaranteed Indebtedness..................................................................... 41
6.7 Liens....................................................................................... 41
6.8 Sale of Stock and Assets.................................................................... 42
6.9 ERISA....................................................................................... 42
6.10 Financial Covenants......................................................................... 42
6.11 Hazardous Materials......................................................................... 42
6.12 Sale-Leasebacks............................................................................. 43
6.13 Cancellation of Indebtedness................................................................ 43
6.14 Restricted Payments......................................................................... 43
6.15 Change of Corporate Name or Location; Change of Fiscal Year................................. 43
6.16 No Impairment of Intercompany Transfers..................................................... 44
6.17 No Speculative Transactions................................................................. 44
6.18 Leases...................................................................................... 44
6.19 Changes Relating to Subordinated Debt....................................................... 44
6.20 Credit Card Notices......................................................................... 45
7. TERM................................................................................................. 45
7.1 Termination................................................................................. 45
7.2 Survival of Obligations Upon Termination of Financing Arrangements.......................... 45
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES............................................................... 45
8.1 Events of Default........................................................................... 45
8.2 Remedies.................................................................................... 47
8.3 Waivers by Credit Parties................................................................... 48
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.................................................. 48
9.1 Assignment and Participations............................................................... 48
9.2 Appointment of Agent........................................................................ 50
9.3 Agent's Reliance, Etc....................................................................... 51
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9.4 GE Capital and Affiliates................................................................... 52
9.5 Lender Credit Decision...................................................................... 52
9.6 Indemnification............................................................................. 52
9.7 Successor Agent............................................................................. 53
9.8 Setoff and Sharing of Payments.............................................................. 53
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert..................................................................................... 54
10. SUCCESSORS AND ASSIGNS............................................................................... 56
10.1 Successors and Assigns...................................................................... 56
11. MISCELLANEOUS........................................................................................ 56
11.1 Complete Agreement; Modification of Agreement............................................... 56
11.2 Amendments and Waivers...................................................................... 57
11.3 Fees and Expenses........................................................................... 59
11.4 No Waiver................................................................................... 60
11.5 Remedies.................................................................................... 60
11.6 Severability................................................................................ 60
11.7 Conflict of Terms........................................................................... 60
11.8 Confidentiality............................................................................. 60
11.9 GOVERNING LAW............................................................................... 61
11.10 Notices..................................................................................... 62
11.11 Section Titles.............................................................................. 62
11.12 Counterparts................................................................................ 62
11.13 WAIVER OF JURY TRIAL........................................................................ 62
11.14 Press Releases and Related Matters.......................................................... 63
11.15 Reinstatement............................................................................... 63
11.16 Advice of Counsel........................................................................... 63
11.17 No Strict Construction...................................................................... 63
12. CROSS-GUARANTY....................................................................................... 63
12.1 Cross-Guaranty.............................................................................. 63
12.2 Waivers by Borrowers........................................................................ 64
12.3 Benefit of Guaranty......................................................................... 64
12.4 Subordination of Subrogation, Etc........................................................... 64
12.5 Election of Remedies........................................................................ 65
12.6 Limitation.................................................................................. 65
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12.7 Contribution with Respect to Guaranty Obligations........................................... 65
12.8 Liability Cumulative........................................................................ 66
12.9 Subordination............................................................................... 66
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INDEX OF APPENDICES
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
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Annex C (Section 1.8) - Cash Management System
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Annex D (Section 2.1(a)) - Closing Checklist
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Annex D-1 Mortgaged Properties
Annex E (Section 4.1(a)) - Financial Statements and
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Projections--Reporting
Annex F (Section 4.1(b)) - Collateral Reports
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Annex G (Section 6.10) - Financial Covenants
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Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
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Annex I (Section 11.10) - Notice Addresses
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Annex J (from Annex A
Commitments definition) - Commitments as of Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit
Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of
Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B - Application for Standby Letter of
Credit
Schedule 1.1 - Agent's Representatives
Disclosure Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 1.6(g) - Sales to Directors and Affiliates
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Offices, Collateral
Locations, FEIN
Disclosure Schedule 3.4(A) - Financial Statements
Disclosure Schedule 3.4(B) - Projections
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.22 - Material Agreements
Disclosure Schedule 3.26 - Credit Card Providers
Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 6.2 - Settled Accounts - Notes Receivables
Disclosure Schedule 6.3(a) - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.7(a) - Existing Liens
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Disclosure Schedule 6.7(b) - Existing Capital Leases
Disclosure Schedule 6.8 Permitted Asset Dispositions
Disclosure Schedule 6.15 - Accounting Periods
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This CREDIT AGREEMENT (this "Agreement"), dated as of March
28, 2001 among Agway, Inc., a Delaware corporation, Agway Holdings Inc., a
Delaware corporation, Agway Financial Corporation, a Delaware corporation, Feed
Commodities International LLC, a Delaware limited liability company, Milford
Fertilizer Company LLC, a Delaware limited liability company, Xxxxxxxx Agronomic
Consulting Service LLC, a Delaware limited liability company, Agway General
Agency, Inc. a New York corporation, Country Best Xxxxx, LLC, a Delaware limited
liability company, Country Best-XxXxxxx LLC, a Delaware limited liability
company, Agway Energy Products LLC, a Delaware limited liability company, Agway
Energy Services-PA, Inc., a Delaware corporation, and Agway Energy Services,
Inc. a Delaware corporation, (the foregoing entities are sometimes collectively
referred to herein as the "Borrowers" and individually as a "Borrower"); the
other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a
New York corporation (in its individual capacity, "GE Capital"), for itself, as
Lender, and as Agent for Lenders, and the other Lenders signatory hereto from
time to time.
RECITALS
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WHEREAS, Borrowers have requested that Lenders extend
revolving credit facilities to Borrowers of up to One Hundred Seventy Five
Million Dollars ($ 175,000,000) in the aggregate for the purpose of refinancing
certain indebtedness of Borrowers and to provide (a) working capital financing
for Borrowers, (b) funds for other general corporate purposes of Borrowers and
(c) funds for other purposes permitted hereunder; and for these purposes,
Lenders are willing to make certain loans and other extensions of credit to
Borrowers of up to such amount upon the terms and conditions set forth herein;
WHEREAS, Borrowers have agreed to secure all of their
obligations under the Loan Documents by granting to Agent, for the benefit of
Agent and Lenders, a security interest in and lien upon all of their existing
and after-acquired personal and certain real property, together with a pledge of
all of the Stock of each Borrower other than Agway and in the case of Country
Best Xxxxx LLC and Country Best XxXxxxx LLC, eighty percent (80%) of the Stock
of such entities, as well as cross-guaranties of each of Borrower's obligations
under the Loan Documents; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in Annex A and, for purposes of this Agreement and
the other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
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(i) Subject to the terms and conditions hereof, each
Revolving Lender agrees to make available to Borrowers from time to time until
the Commitment Termination Date its Pro Rata Share of advances (each, a
"Revolving Credit Advance"). The Pro Rata Share of the Revolving Loan of any
Revolving Lender shall not at any time exceed its separate Revolving Loan
Commitment. The obligations of each Revolving Lender hereunder shall be several
and not joint. Until the Commitment Termination Date, Borrowers may borrow,
repay and reborrow under this Section 1.1(a); provided that the amount of any
Revolving Credit Advance to be made at any time shall not exceed Borrowing
Availability at such time. Borrowing Availability may be reduced by Reserves
imposed by Agent in its reasonable credit judgment. Each Revolving Credit
Advance shall be made on notice by Borrower Representative on behalf of
Borrowers to one of the representatives of Agent identified in Schedule 1.1 at
the address specified therein. Any such notice must be given no later than (1)
11:00 a.m. (New York time) on the Business Day of the proposed Revolving Credit
Advance, in the case of an Index Rate Loan, or (2) 11:00 a.m. (New York time) on
the date which is 3 Business Days prior to the proposed Revolving Credit
Advance, in the case of a LIBOR Loan. Each such notice (a "Notice of Revolving
Credit Advance") must be given in writing (by telecopy or overnight courier)
substantially in the form of Exhibit 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be
required by Agent. If Borrowers desire to have the Revolving Credit Advances
bear interest by reference to a LIBOR Rate, Borrower Representative must comply
with Section 1.5(e).
(ii) Except as provided in Section 1.12, each Borrower
shall execute and deliver to each Revolving Lender a note to evidence the
Revolving Loan Commitment of that Revolving Lender. Each note shall be in the
principal amount of the Revolving Loan Commitment of the applicable Revolving
Lender, dated the Closing Date and substantially in the form of Exhibit
1.1(a)(ii) (each a "Revolving Note" and, collectively, the "Revolving Notes").
Each Revolving Note shall represent the obligation of the applicable Borrower to
pay the amount of the applicable Revolving Lender's Revolving Loan Commitment
or, if less, such Revolving Lender's Pro Rata Share of the aggregate unpaid
principal amount of all Revolving Credit Advances to such Borrower together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
aggregate Revolving Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date.
(iii) Anything in this Agreement to the contrary
notwithstanding, Agent may, in its discretion to preserve or protect the
Collateral (but shall have absolutely no obligation to), make Revolving Credit
Advances to Borrowers on behalf of Revolving Lenders in amounts that cause the
outstanding balance of the aggregate Revolving Loan to exceed the Borrowing Base
(less the Swing Line Loan) (any such excess Revolving Credit Advances are herein
referred to collectively as "Overadvances"); provided that (A) no such event or
occurrence shall cause or constitute a waiver of Agent's, Swing Line Lender's or
Revolving Lenders' right to refuse to make any further Overadvances, Swing Line
2
Advances or Revolving Credit Advances, or incur any Letter of Credit
Obligations, as the case may be, at any time that an Overadvance exists, and (B)
no Overadvance shall result in a Default or Event of Default based on Borrowers'
failure to comply with Section 1.3(b)(i) for so long as Agent permits such
Overadvance to be outstanding, but solely with respect to the amount of such
Overadvance. In addition, Overadvances may be made even if the conditions to
lending set forth in Section 2 have not been met. All Overadvances shall
constitute Index Rate Loans, shall bear interest at the Default Rate and shall
be payable on demand. Except as otherwise provided in Section 1.11(b), the
authority of Agent to make Overadvances is limited to an aggregate amount not to
exceed Seven Million Dollars ($7,000,000) at any time, shall not cause the
aggregate Revolving Loan to exceed the Maximum Amount, and may be revoked
prospectively by a written notice to Agent signed by Revolving Lenders holding
more than 50% of the Revolving Loan Commitments.
(b) Swing Line Facility.
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(i) Agent shall notify the Swing Line Lender upon
Agent's receipt of any Notice of Revolving Credit Advance. Subject to the terms
and conditions hereof, the Swing Line Lender may, in its discretion, make
available from time to time until the Commitment Termination Date advances
(each, a "Swing Line Advance") in accordance with any such notice. The
provisions of this Section 1.1(b) shall not relieve Revolving Lenders of their
obligations to make Revolving Credit Advances under Section 1.1(a); provided
that if the Swing Line Lender makes a Swing Line Advance pursuant to any such
notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance
that otherwise may be made by Revolving Credit Lenders pursuant to such notice.
The aggregate amount of Swing Line Advances outstanding shall not exceed at any
time the lesser of (A) the Swing Line Commitment and (B) the lesser of the
Maximum Amount and (except for Overadvances) the Borrowing Base, in each case,
less the outstanding balance of the Revolving Loan at such time ("Swing Line
Availability"). Until the Commitment Termination Date, Borrowers may from time
to time borrow, repay and reborrow under this Section 1.1(b). Each Swing Line
Advance shall be made pursuant to a Notice of Revolving Credit Advance delivered
to Agent by Borrower Representative on behalf of Borrowers in accordance with
Section 1.1(a). Any such notice must be given no later than 1:00 p.m. (New York
time) on the Business Day of the proposed Swing Line Advance. Unless the Swing
Line Lender has received at least one Business Day's prior written notice from
Requisite Lenders instructing it not to make a Swing Line Advance, the Swing
Line Lender shall be entitled to fund that Swing Line Advance, and to have each
Revolving Lender make Revolving Credit Advances in accordance with Section
1.1(b)(iii) or purchase participating interests in accordance with Section
1.1(b)(iv) provided that if all of the condition precedents set forth in Section
2.2 have not been met, Swing Line Lender has received a written waiver thereof
from Requisite Lenders. Notwithstanding any other provision of this Agreement or
the other Loan Documents, the Swing Line Loan shall constitute an Index Rate
Loan. Borrowers shall repay the aggregate outstanding principal amount of the
Swing Line Loan upon demand therefor by Agent.
(ii) Each Borrower shall execute and deliver to the
Swing Line Lender a promissory note to evidence the Swing Line Commitment. Each
note shall be in the principal amount of the Swing Line Commitment of the Swing
Line Lender, dated the Closing Date and substantially in the form of Exhibit
1.1(b)(ii) (each a "Swing Line Note" and, collectively, the "Swing Line Notes").
Each Swing Line Note shall represent the obligation of each Borrower to pay the
amount of the Swing Line Commitment or, if less, the aggregate unpaid principal
3
amount of all Swing Line Advances made to such Borrower together with interest
thereon as prescribed in Section 1.5. The entire unpaid balance of the Swing
Line Loan and all other noncontingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date if not sooner paid in full.
(iii) The Swing Line Lender, at any time and from time
to time in its sole and absolute discretion may on behalf of any Borrower (and
each Borrower hereby irrevocably authorizes the Swing Line Lender to so act on
its behalf) request each Revolving Lender (including the Swing Line Lender) to
make a Revolving Credit Advance to each Borrower (which shall be an Index Rate
Loan) in an amount equal to that Revolving Lender's Pro Rata Share of the
principal amount of the applicable Borrower's Swing Line Loan (the "Refunded
Swing Line Loan") outstanding on the date such notice is given. Unless any of
the events described in Sections 8.1(h) or 8.1(i) has occurred (in which event
the procedures of Section 1.1(b)(iv) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Revolving
Credit Advance are then satisfied, each Revolving Lender shall disburse directly
to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the
Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available
funds on the Business Day next succeeding the date that notice is given. The
proceeds of those Revolving Credit Advances shall be immediately paid to the
Swing Line Lender and applied to repay the Refunded Swing Line Loan.
(iv) If, prior to refunding a Swing Line Loan with a
Revolving Credit Advance pursuant to Section 1.1(b)(iii), one of the events
described in Sections 8.1(h) or 8.1(i) has occurred, then, subject to the
provisions of Section 1.1(b)(v) below, each Revolving Lender shall, on the date
such Revolving Credit Advance was to have been made for the benefit of
Borrowers, purchase from the Swing Line Lender an undivided participation
interest in the Swing Line Loan in an amount equal to its Pro Rata Share of such
Swing Line Loan. Upon request, each Revolving Lender shall promptly transfer to
the Swing Line Lender, in immediately available funds, the amount of its
participation interest.
(v) Each Revolving Lender's obligation to make Revolving
Credit Advances in accordance with Section 1.1(b)(iii) and to purchase
participation interests in accordance with Section 1.1(b)(iv) shall be absolute
and unconditional and shall not be affected by any circumstance, including (A)
any setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Swing Line Lender, any Borrower or any other Person
for any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of any Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement at any time or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Revolving Lender does not make available to Agent or the
Swing Line Lender, as applicable, the amount required pursuant to Sections
1.1(b)(iii) or 1.1(b)(iv), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Revolving Lender, together
with interest thereon for each day from the date of non-payment until such
amount is paid in full at the Federal Funds Rate for the first two Business Days
and at the Index Rate thereafter.
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(c) Reliance on Notices; Appointment of Borrower
Representative. Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine. Agent
may assume that each Person executing and delivering any notice in accordance
herewith was duly authorized, unless the responsible individual acting thereon
for Agent has actual knowledge to the contrary. Each Borrower hereby designates
Agway as its representative and agent on its behalf for the purposes of issuing
Notices of Revolving Credit Advances and Notices of Conversion/Continuation,
giving instructions with respect to the disbursement of the proceeds of the
Loans, selecting interest rate options, requesting Letters of Credit, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan Documents.
Borrower Representative hereby accepts such appointment. Agent and each Lender
may regard any notice or other communication pursuant to any Loan Document from
Borrower Representative as a notice or communication from all Borrowers, and may
give any notice or communication required or permitted to be given to any
Borrower or Borrowers hereunder to Borrower Representative on behalf of such
Borrower or Borrowers. Each Borrower agrees that each notice, election,
representation and warranty, covenant, agreement and undertaking made on its
behalf by Borrower Representative shall be deemed for all purposes to have been
made by such Borrower and shall be binding upon and enforceable against such
Borrower to the same extent as if the same had been made directly by such
Borrower.
1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower Representative, on behalf
of the applicable Borrower, shall have the right to request, and Revolving
Lenders agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of each Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan
Commitments. Borrowers may at any time on at least 5 days' prior written notice
by Borrower Representative to Agent permanently reduce (but not terminate) the
Revolving Loan Commitment; provided that (i) any such prepayments or reductions
shall be in a minimum amount of $2,000,000 and integral multiples of $250,000 in
excess of such amount, (ii) the Revolving Loan Commitment shall not be reduced
to an amount less than $150,000,000, and (iii) after giving effect to such
reductions, Borrowers shall comply with Section 1.3(b)(i). In addition,
Borrowers may at any time on at least 10 days' prior written notice by Borrower
Representative to Agent terminate the Revolving Loan Commitment; provided that
upon such termination, all Loans and other Obligations shall be immediately due
and payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B hereto. Any
voluntary prepayment and any reduction or termination of the Revolving Loan
Commitment must be accompanied by payment of the Fee required by Section 1.9(c),
if any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 1.13(b). Upon any such reduction or termination of the Revolving Loan
Commitment, each Borrower's right to request Revolving Credit Advances, or
request that Letter of Credit Obligations be incurred on its behalf, or request
Swing Line Advances, shall simultaneously be permanently reduced or terminated,
as the case may be; provided that a permanent reduction of the Revolving Loan
5
Commitment shall not require a corresponding pro rata reduction in the L/C
Sublimit.
(b) Mandatory Prepayments.
(i) If at any time the aggregate outstanding balances of
the Revolving Loan and the Swing Line Loan exceed the lesser of (A) the Maximum
Amount and (B) the Borrowing Base, Borrowers shall immediately repay the
aggregate outstanding Revolving Credit Advances to the extent required to
eliminate such excess. If any such excess remains after repayment in full of the
aggregate outstanding Revolving Credit Advances, Borrowers shall provide cash
collateral for the Letter of Credit Obligations in the manner set forth in Annex
B to the extent required to eliminate such excess. Notwithstanding the
foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid
only on demand.
(ii) Immediately upon receipt by any Credit Party of
proceeds of any asset disposition (excluding proceeds of asset dispositions
permitted by Section 6.8 (a)) or any sale of Stock of any Subsidiary of any
Credit Party, Borrowers shall prepay the Loans in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by Borrowers in connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior Liens (to the extent
such Liens constitute Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection
therewith. Any such prepayment shall be applied in accordance with Section
1.3(c).
(iii) If any Borrower issues Stock or any debt
securities, no later than the Business Day following the date of receipt of the
proceeds thereof, the issuing Borrower shall prepay the Loans in an amount equal
to all such proceeds, net of underwriting discounts and commissions and other
reasonable costs paid to non-Affiliates in connection therewith. Any such
prepayment shall be applied in accordance with Section 1.3(c).
(c) Application of Certain Mandatory Prepayments. Any
prepayments made by any Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii)
above shall be applied as follows: first, to Fees and reimbursable expenses of
Agent then due and payable pursuant to any of the Loan Documents; second, to
interest then due and payable on the Swing Line Loan; third, to the principal
balance of the Swing Line Loan outstanding until the same has been repaid in
full; fourth, to interest then due and payable on Revolving Credit Advances;
fifth, to the principal balance of Revolving Credit Advances outstanding until
the same has been paid in full; and last, to any Letter of Credit Obligations to
provide cash collateral therefor in the manner set forth in Annex B, until all
such Letter of Credit Obligations have been fully cash collateralized in the
manner set forth in Annex B. Neither the Revolving Loan Commitment nor the Swing
Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4(c) and the Mortgage(s), respectively, shall be applied first, to the
Swing Line Loans and, second, to Revolving Credit Advances. Neither the
6
Revolving Loan Commitment nor the Swing Line Loan Commitment shall be
permanently reduced by the amount of any such prepayments.
(e) No Implied Consent. Nothing in this Section 1.3 shall be
construed to constitute Agent's or any Lender's consent to any transaction that
is not permitted by other provisions of this Agreement or the other Loan
Documents.
1.4 Use of Proceeds. Borrowers shall utilize the proceeds of the
Revolving Loan and the Swing Line Advances solely for the Refinancing (and to
pay any related transaction expenses), and for the financing of Borrowers'
ordinary working capital and general corporate needs. Borrowers shall not be
permitted to use the proceeds of the Revolving Loan and the Swing Line Advances
for the payment of interest and principal with respect to Subordinated Debt
unless (i) no Default or Event of Default has occurred and is continuing or
would result after giving effect to such payments, and Borrowers collectively
have Borrowing Availability of at least $20,000,000 after giving effect to such
payments, or (ii) if a Default or Event of Default has occurred and is
continuing, Borrowers' collectively have Borrowing Availability of at least
$25,000,000, unless (A) Agent provides Borrower Representative with written
notice that such payments are no longer permitted, (B) any Event of Default has
occurred and is continuing under Section 8.1(a), (C) any Credit Party fails or
neglects to perform, keep or observe any of the provisions set forth in this
Section 1.4 or Annex C, or (D) if the aggregate principal amount outstanding in
Preferred Stock, Subordinated Debt and notes outstanding under the Milford Note
Program is less than Four Hundred and Forty Million Dollars ($440,000,000).
Disclosure Schedule (1.4) contains a description of Borrowers' sources and uses
of funds as of the Closing Date, including Loans and Letter of Credit
Obligations to be made or incurred on that date, and a funds flow memorandum
detailing how funds from each source are to be transferred to particular uses.
1.5 Interest and Applicable Margins.
(a) Borrowers shall pay interest to Agent, for the ratable
benefit of Lenders in accordance with the various Loans being made by each
Lender, in arrears on each applicable Interest Payment Date, at the following
rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus
the Applicable Revolver Index Margin per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus the Applicable Revolver LIBOR
Margin per annum, based on the aggregate Revolving Credit Advances outstanding
from time to time; and (ii) with respect to the Swing Line Loan, the Index Rate
plus the Applicable Revolver Index Margin per annum.
The Applicable Margins are as follows:
Applicable Revolver Index Margin 1.75%
Applicable Revolver LIBOR Margin 3.25%
Applicable L/C Margin 3.25%
Applicable Unused Line Fee Margin 0.375%
7
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and interest shall be made by Agent on the basis of a 360-day year, in each case
for the actual number of days occurring in the period for which such interest
and Fees are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
final, binding and conclusive on Borrowers, absent manifest error.
(d) So long as an Event of Default has occurred and is
continuing under Section 8.1(a), (h) or (i) or so long as any other Default or
Event of Default has occurred and is continuing and at the election of Agent (or
upon the written request of Requisite Lenders) confirmed by written notice from
Agent to Borrower Representative, the interest rates applicable to the Loans and
the Letter of Credit Fees shall be increased by two percentage points (2%) per
annum above the rates of interest or the rate of such Fees otherwise applicable
hereunder ("Default Rate"), and all outstanding Obligations shall bear interest
at the Default Rate applicable to such Obligations. Interest and Letter of
Credit Fees at the Default Rate shall accrue from the initial date of such
Default or Event of Default until that Default or Event of Default is cured or
waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section
2.2, Borrower Representative shall have the option to (i) request that any
Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all
or any part of outstanding Loans (other than the Swing Line Loan) from Index
Rate Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan,
subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if
such conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
first day after the last day of the LIBOR Period of the Loan to be continued.
Any Loan or group of Loans having the same proposed LIBOR Period to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$5,000,000. Any such election must be made by 11:00 a.m. (New York time) on the
3rd Business Day prior to (1) the date of any proposed Advance which is to bear
interest at the LIBOR Rate, (2) the end of each LIBOR Period with respect to any
LIBOR Loans to be continued as such, or (3) the date on which Borrower
Representative wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR
Period designated by Borrower Representative in such election. If no election is
received with respect to a LIBOR Loan by 11:00 a.m. (New York time) on the 3rd
Business Day prior to the end of the LIBOR Period with respect thereto (or if a
Default or an Event of Default has occurred and is continuing or if the
additional conditions precedent set forth in Section 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower Representative must make such election by notice
to Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e). No
8
Loan may be made as or converted into a LIBOR Loan until the earlier of (i) 45
days after the Closing Date or (ii) completion of primary syndication as
determined by Agent and after notification of such completion to the Borrower
Representative.
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrowers or as a
court of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. All of the Accounts owned by each Borrower and
reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "Eligible Accounts" for purposes of this Agreement,
except any Account to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish, modify or eliminate Reserves
against Eligible Accounts from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust advance rates with respect to Eligible Accounts, in
its reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments, new criteria, changes in advance
rates or the elimination of Reserves (other than elimination of the dilution
Reserve and any additional Reserves established after the Closing Date which
elimination shall be at Agent's sole discretion) which have the effect of making
more credit available. Eligible Accounts shall not include any Account of any
Borrower:
(a) that does not arise from the sale of goods or the
performance of services by such Borrower in the ordinary course of its business;
9
(b) (i) upon which such Borrower's right to receive payment is not absolute or
is contingent upon the fulfillment of any condition whatsoever or (ii) as to
which such Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process or (iii) if the Account
represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor's
obligation to pay that invoice is subject to such Borrower's completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account but only to the amount disputed;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably acceptable to
Agent in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject
to any right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer or
director with any Credit Party, except with respect to sales to directors and to
those Affiliates identified on Disclosure Schedule 1.6(g);
(h) that is the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, or department,
agency or instrumentality thereof unless Agent, in its sole discretion, has
agreed to the contrary in writing and such Borrower, if necessary or desirable,
has complied with respect to such obligation with the Federal Assignment of
Claims Act of 1940;
(i) that is the obligation of an Account Debtor located in a
foreign country other than Canada (excluding the province of Newfoundland, the
Northwest Territories and the Territory of Nunavit) unless payment thereof is
assured by a letter of credit assigned and delivered to Agent, reasonably
satisfactory to Agent as to form, amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
such Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods that are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
10
(i) the Account is not paid within the earlier of: 60
days following its due date or 90 days following its original invoice date;
(ii) the Account Debtor obligated upon such Account
suspends business, makes a general assignment for the benefit of creditors or
fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or more
of the Dollar amount of all Accounts owing by that Account Debtor are ineligible
under the other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties in
the Loan Documents are untrue;
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment, following prior notice
of such limit by Agent to Borrower Representative;
(r) to the extent that such Account, together with all other
Accounts owing by such Account Debtor and its Affiliates as of any date of
determination exceed 10% of all Eligible Accounts;
(s) that is payable in any currency other than Dollars; or
(t) that is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.7 Eligible Inventory. All of the Inventory owned by the Borrowers and
reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "Eligible Inventory" for purposes of this Agreement,
except any Inventory to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish, modify or eliminate Reserves
against Eligible Inventory from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust advance rates with respect to Eligible Inventory, in
its reasonable credit judgment, subject to the approval of Supermajority
Revolving Lenders in the case of adjustments, new criteria, changes in advance
rates or the elimination of Reserves (other than the elimination of Reserves
established prior to the Closing Date pursuant to Section 5.9 in the event
Borrowers obtain landlord or mortgagee agreements, access agreements or bailee
letters, in form and substance satisfactory to Agent, after the Closing Date or
11
the elimination of Reserves established after the Closing Date, which
elimination in each case shall be at Agent's sole discretion) which have the
effect of making more credit available. Eligible Inventory shall not include any
Inventory of any Borrower that:
(a) is not owned by such Borrower free and clear of all Liens
and rights of any other Person (including the rights of a purchaser that has
made progress payments and the rights of a surety that has issued a bond to
assure such Borrower's performance with respect to that Inventory), except the
Liens in favor of Agent, on behalf of itself and Lenders, and Permitted
Encumbrances in favor of landlords and bailees to the extent permitted in
Section 5.9 hereof (subject to Reserves established by Agent in accordance with
Section 5.9 hereof);
(b) (i) other than with respect to Eligible Energy Product
Inventory, is not located on premises owned, leased or rented by such Borrower
and set forth in Disclosure Schedule (3.2), (ii) is stored at a leased location,
unless Agent has given its prior consent thereto and unless either (x) a
reasonably satisfactory landlord waiver has been delivered to Agent, or (y)
Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iii) is stored with a bailee or warehouseman unless a reasonably
satisfactory, acknowledged bailee letter has been received by Agent and Reserves
reasonably satisfactory to Agent have been established with respect thereto, or
(iv) is located at an owned location subject to a mortgage in favor of a lender
other than Agent unless a reasonably satisfactory mortgagee waiver has been
delivered to Agent, or (v) is located at any site if the aggregate book value of
Inventory at any such location is less than $100,000 (except with respect to
HVAC equipment, if the aggregate book value of Inventory at any such location is
less than $25,000);
(c) consists of perishable agricultural commodities subject to
PACA;
(d) is subject to Exchange Agreements, but only to the extent
such Inventory is subject to Exchange Agreements;
(e) is placed on consignment or is in transit except for
Eligible-in-Transit Inventory;
(f) is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(g) is excess, obsolete, unsalable, shopworn, seconds,
damaged, customized (but only with respect to customized Inventory consisting of
bags produced by the Apex Bag division) or unfit for sale;
(h) consists of display items or packing or shipping
materials, manufacturing supplies, work-in-process Inventory or replacement
parts (except to the extent such replacement parts are held out for sale in the
ordinary course of business of such Borrower's energy product business);
(i) consists of goods which have been returned by the buyer,
unless such goods can be sold in the ordinary course of such Borrower's
business;
12
(j) is not of a type held for sale in the ordinary course of
such Borrower's business;
(k) is not subject to a first priority lien in favor of Agent
on behalf of itself and Lenders, subject to Permitted Encumbrances;
(l) breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents;
(m) consists of any costs associated with additional
"freight-in" charges;
(n) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
(o) is not covered by casualty insurance reasonably acceptable
to Agent; or
(p) is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.8 Cash Management Systems. On or prior to the Closing Date, Borrowers
will establish and will maintain until the Termination Date, the cash management
systems described in Annex C (the "Cash Management Systems").
1.9 Fees.
(a) Borrowers shall pay to GE Capital, individually, the Fees
specified in that certain fee letter dated as of January 17, 2001 among
Borrowers and GE Capital (the "GE Capital Fee Letter"), at the times specified
for payment therein.
(b) As additional compensation for the Revolving Lenders,
Borrowers shall pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a Fee for Borrowers'
non-use of available funds in an amount equal to the Applicable Unused Line Fee
Margin per annum (calculated on the basis of a 360 day year for actual days
elapsed) multiplied by the difference between (x) the Maximum Amount (as it may
be reduced from time to time) and (y) the average for the period for which such
Fee is due of the daily closing balances of the aggregate Revolving Loan and the
Swing Line Loan outstanding during such period.
(c) If Borrowers pay after acceleration or prepay the
Revolving Loan and reduce or terminate the Revolving Loan Commitment, whether
voluntarily or involuntarily and whether before or after acceleration of the
Obligations, or if any of the Commitments are otherwise terminated, Borrowers
shall pay to Agent, for the benefit of Lenders as liquidated damages and
compensation for the costs of being prepared to make funds available hereunder
an amount equal to the Applicable Percentage (as defined below) multiplied by
the sum of the amount of the reduction of the Revolving Loan Commitment. As used
herein, the term "Applicable Percentage" shall mean one percent (1%) in the case
of a prepayment on or prior to the second anniversary of the Closing Date. The
Credit Parties agree that the Applicable Percentage is a reasonable calculation
of Lenders' lost profits in view of the difficulties and impracticality of
determining actual damages resulting from an early termination of the
13
Commitments. Notwithstanding the foregoing, no prepayment fee shall be payable
by Borrowers upon a mandatory prepayment made pursuant to Sections 1.3(b) or
1.16(c); provided that Borrowers do not permanently reduce or terminate the
Revolving Loan Commitment upon any such prepayment and, in the case of
prepayments made pursuant to Sections 1.3(b)(ii) or (b)(iii), the transaction
giving rise to the applicable prepayment is expressly permitted under Section 6.
(d) Borrowers shall pay to Agent, for the ratable benefit of
Revolving Lenders, the Letter of Credit Fee as provided in Annex B.
1.10 Receipt of Payments. Borrowers shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability as of any
date, all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York
time on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.
1.11 Application and Allocation of Payments.
(a) So long as no Default or Event of Default has occurred and
is continuing, (i) payments consisting of proceeds of Accounts received in the
ordinary course of business shall be applied, first, to the Swing Line Loan and,
second, the Revolving Loan; (ii) voluntary prepayments shall be applied as
determined by Borrower Representative, subject to the provisions of Section
1.3(a); and (iii) mandatory prepayments shall be applied as set forth in
Sections 1.3(c) and 1.3(d). All payments and prepayments applied to a particular
Loan shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share. As to any other payment, and as to all
payments made when a Default or Event of Default has occurred and is continuing
or following the Commitment Termination Date, each Borrower hereby irrevocably
waives the right to direct the application of any and all payments received from
or on behalf of such Borrower, and each Borrower hereby irrevocably agrees that
Agent shall have the continuing exclusive right to apply any and all such
payments against the Obligations of Borrowers as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or any other
books and records. In the absence of a specific determination by Agent with
respect thereto, payments shall be applied to amounts then due and payable in
the following order: (1) to Fees and Agent's expenses reimbursable hereunder;
(2) to interest on the Swing Line Loan; (3) to principal payments on the Swing
Line Loan; (4) to interest on the other Loans, ratably in proportion to the
interest accrued as to each Loan; (5) to principal payments on the other Loans
and to provide cash collateral for Letter of Credit Obligations in the manner
described in Annex B, ratably to the aggregate, combined principal balance of
the other Loans and outstanding Letter of Credit Obligations; and (6) to all
other Obligations, including expenses of Lenders to the extent reimbursable
under Section 11.3.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of each Borrower and cause to be
paid all Fees, expenses, Charges, costs (including insurance premiums in
accordance with Section 5.4(a)) and interest and principal, other than principal
14
of the Revolving Loan, owing by Borrowers under this Agreement or any of the
other Loan Documents if and to the extent Borrowers fail to pay promptly any
such amounts as and when due, even if the amount of such charges would exceed
Borrowing Availability at such time. At Agent's option and to the extent
permitted by law, any charges so made shall constitute part of the Revolving
Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record: all Revolving Credit Advances, all
payments made by Borrowers, and all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the
Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Agent's most recent printout or other written statement, shall,
absent manifest error, be presumptive evidence of the amounts due and owing to
Agent and Lenders by Borrowers; provided that any failure to so record or any
error in so recording shall not limit or otherwise affect any Borrower's duty to
pay the Obligations. Agent shall render to Borrower Representative a monthly
accounting of transactions with respect to the Loans setting forth the balance
of the Loan Account as to Borrowers for the immediately preceding month. Unless
Borrower Representative notifies Agent in writing of any objection to any such
accounting (specifically describing the basis for such objection), within 30
days after the date thereof, each and every such accounting shall (absent
manifest error) be deemed final, binding and conclusive on Borrowers in all
respects as to all matters reflected therein. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrowers.
Notwithstanding any provision herein contained to the contrary, any Lender may
elect (which election may be revoked) to dispense with the issuance of Notes to
that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities, obligations, penalties, judgments, costs and
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) that may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents and the administration of such credit,
and in connection with or arising out of the transactions contemplated hereunder
and thereunder and any actions or failures to act in connection therewith,
including any and all Environmental Liabilities and legal costs and expenses
arising out of or incurred in connection with disputes between or among any
parties to any of the Loan Documents (collectively, "Indemnified Liabilities");
provided, that no such Credit Party shall be liable for any indemnification to
an Indemnified Person to the extent that any such suit, action, proceeding,
claim, damage, loss, liability, obligation, penalty, judgment, cost or expense
results from that Indemnified Person's gross negligence or willful misconduct.
NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY
LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON
15
OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
occurs as a result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall refuse to accept any
borrowing of, or shall request a termination of, any borrowing of, conversion
into or continuation of, LIBOR Loans after Borrower Representative has given
notice requesting the same in accordance herewith; or (iv) any Borrower shall
fail to make any prepayment of a LIBOR Loan after Borrower Representative has
given a notice thereof in accordance herewith, then Borrowers shall jointly and
severally indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b), and
such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within 10 Business Days of receipt
thereof, specifying the basis for such objection in detail.
1.14 Access. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon three Business Days' prior notice
as frequently as Agent determines to be reasonably appropriate: (a) provide
Agent and any of its officers, employees and agents access to its properties,
facilities, advisors and employees (including officers) of each Credit Party and
to the Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from any Credit Party's books and
records, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the
Accounts, Inventory and other Collateral of any Credit Party. If a Default or
Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent, each such Credit
Party shall provide such access to Agent and to each Lender at all times and
without advance notice. Furthermore, so long as any Event of Default has
occurred and is continuing, Borrowers shall provide Agent and each Lender with
access to their suppliers and customers. Each Credit Party shall make available
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to Agent and its counsel, as quickly as is possible under the circumstances,
originals or copies of all books and records that Agent may reasonably request.
Each Credit Party shall deliver any document or instrument necessary for Agent,
as it may from time to time reasonably request, to obtain records from any
service bureau or other Person that maintains records for such Credit Party, and
shall maintain duplicate records or supporting documentation on media, including
computer tapes and discs owned by such Credit Party. Agent will give Lenders at
least 3 Business Days' prior written notice of regularly scheduled audits.
Representatives of other Lenders may accompany Agent's representatives on
regularly scheduled audits at no charge to Borrowers.
1.15 Taxes.
(a) Any and all payments by each Borrower hereunder (including
any payments made pursuant to Section 12) or under the Notes shall be made, in
accordance with this Section 1.15, free and clear of and without deduction for
any and all present or future Taxes. If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder (including any
sum payable pursuant to Section 12) or under the Notes, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.15) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made, (ii)
such Borrower shall make such deductions, and (iii) such Borrower shall pay the
full amount deducted to the relevant taxing or other authority in accordance
with applicable law. Within 30 days after the date of any payment of Taxes,
Borrower Representative shall furnish to Agent the original or a certified copy
of a receipt evidencing payment thereof. Agent and Lenders shall not be
obligated to return or refund any amounts received pursuant to this Section
1.15.
(b) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and, within 10 days of demand therefor, pay Agent and
each Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower Representative and Agent a properly completed and executed IRS Form
W-8ECI or Form W-8BEN or other applicable form, certificate or document
prescribed by the IRS or the United States certifying as to such Foreign
Lender's entitlement to such exemption (a "Certificate of Exemption"). Any
foreign Person that seeks to become a Lender under this Agreement shall provide
a Certificate of Exemption to Borrower Representative and Agent prior to
becoming a Lender hereunder. No foreign Person may become a Lender hereunder if
such Person fails to deliver a Certificate of Exemption in advance of becoming a
Lender.
1.16 Capital Adequacy; Increased Costs; Illegality.
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(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall be conclusive and binding on
Borrowers for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower Representative
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) each
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by
such Borrower to such Lender, together with interest accrued thereon, unless
Borrower Representative on behalf of such Borrower, within 5 Business Days after
the delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.
(d) Within 15 days after receipt by Borrower Representative of
written notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.15(a), 1.16(a)
or 1.16(b), Borrower Representative may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender. So long as no
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Default or Event of Default has occurred and is continuing, Borrower
Representative, with the consent of Agent, may obtain, at Borrowers' expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Agent. If Borrowers obtain
a Replacement Lender within 90 days following notice of their intention to do
so, the Affected Lender must sell and assign its Loans and Commitments to such
Replacement Lender for an amount equal to the principal balance of all Loans
held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale; provided, that Borrowers shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment. Notwithstanding the foregoing, Borrowers shall not have the
right to obtain a Replacement Lender if the Affected Lender rescinds its demand
for increased costs or additional amounts within 15 days following its receipt
of Borrowers' notice of intention to replace such Affected Lender. Furthermore,
if Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within 90 days thereafter, Borrowers' rights under this Section
1.16(d) shall terminate and Borrowers shall promptly pay all increased costs or
additional amounts demanded by such Affected Lender pursuant to Sections
1.15(a), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to each Borrower and all of the other
Obligations of each Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower secured,
until the Termination Date, by all of the Collateral, except as may be limited
by any Mortgage.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrowers, each other Credit Party, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Loan Documents, including all those listed in the
Closing Checklist attached hereto as Annex D, each in form and substance
reasonably satisfactory to Agent.
(b) Repayment of Prior Lender Obligations; Satisfaction of
Outstanding L/Cs. (i) Agent shall have received a fully executed original of a
pay-off letter reasonably satisfactory to Agent confirming that all of the Prior
Lender Obligations will be repaid in full from the proceeds of the initial
Revolving Credit Advance and all Liens upon any of the property of Borrowers or
any of their Subsidiaries in favor of Prior Lender shall be terminated by Prior
Lender immediately upon such payment; and (ii) all letters of credit issued or
guaranteed by Prior Lender shall have been cash collateralized, supported by a
guaranty of Agent or supported by a Letter of Credit issued pursuant to Annex B,
as mutually agreed upon by Agent, Borrowers and Prior Lender.
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(c) Approvals. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions or (ii) an officer's
certificate in form and substance reasonably satisfactory to Agent affirming
that no such consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and Eligible
Inventory supporting the initial Revolving Credit Advance and the initial Letter
of Credit Obligations incurred and the amount of the Reserves to be established
on the Closing Date shall be sufficient in value, as determined by Agent, to
provide Borrowers with Borrowing Availability, after giving effect to the
initial Revolving Credit Advance, the incurrence of any initial Letter of Credit
Obligations and the consummation of the Related Transactions (on a pro forma
basis, with trade payables being paid currently, and expenses and liabilities
being paid in the ordinary course of business and without acceleration of sales)
of at least Twenty Five Million Dollars ($25,000,000).
(e) Payment of Fees. Borrowers shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified in
Section 1.9 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Closing Date.
(f) Pre-Closing Syndication. Agent shall have syndicated
Seventy Five Million Dollars ($75,000,000) of the Revolving Loan Commitment,
which syndication shall include Seventy Five Million Dollars ($75,000,000) of
commitments from Rabo Bank and CoBANK.
(g) Restructuring Plan. Agent shall have received the
Agricultural Restructuring Plan, in form and substance acceptable to Agent.
(h) Capital Structure: Other Indebtedness. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Agent.
(i) Due Diligence. Agent shall have completed its business and
legal due diligence, including a roll forward of its previous February 2001
Borrowing Base and a review of Borrowers' hedging policies, with results
reasonably satisfactory to Agent.
(j) Consummation of Related Transactions. Agent shall have
received fully executed copies of the Related Transactions Documents, each of
which shall be in form and substance reasonably satisfactory to Agent and its
counsel. The Related Transactions shall have been consummated in accordance with
the terms of the Related Transactions Documents.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
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(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is untrue or incorrect as of such
date, except to the extent that such representation or warranty expressly
relates to an earlier date and except for changes therein expressly permitted or
expressly contemplated by this Agreement and Agent or Requisite Lenders have
determined not to make such Advance, convert or continue any Loan as LIBOR Loan
or incur such Letter of Credit Obligation as a result of the fact that such
warranty or representation is untrue or incorrect;
(b) any event or circumstance having a Material Adverse Effect
has occurred since the date hereof as determined by the Requisite Lenders and
Agent or Requisite Lenders have determined not to make such Advance, convert or
continue any Loan as a LIBOR Loan or incur such Letter of Credit Obligation as a
result of the fact that such event or circumstance has occurred;
(c) any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default;
(d) after giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the lesser of the Borrowing Base and the
Maximum Amount, in each case, less the then outstanding principal amount of the
Swing Line Loan;
(e) the outstanding principal balance of the aggregate
Revolving Loan is not less than $ 8,000,000 unless prior to the proposed
Advance, conversion or continuation, Borrowers have paid or otherwise escrowed
with Agent all applicable mortgage recording taxes which Agent reasonably
believes may result from Borrowers' failure to maintain such outstanding
principal balance; or
(f) the proceeds of any Advance, Loan or Letter of Credit
Obligations are intended to be used by Borrowers to pay interest and principal
with respect to Subordinated Debt (i) a Default or Event of Default has occurred
and is continuing or would result after giving effect to such payments, and
Borrowers collectively do not have Borrowing Availability of at least
$20,000,000 after giving effect to such payments, or (ii) if a Default or Event
of Default has occurred and is continuing, Borrowers' collectively do not have
Borrowing Availability of at least $25,000,000, and (A) Agent provides Borrower
Representative with written notice that such payments are no longer permitted,
(B) any Event of Default has occurred and is continuing under Section 8.1(a),
(C) any Credit Party fails or neglects to perform, keep or observe any of the
provisions set forth in Section 1.4 or Annex C, or (D) the aggregate principal
amount outstanding in Preferred Stock, Subordinated Debt and notes outstanding
under the Milford Note Program is less than Four Hundred and Forty Million
Dollars ($440,000,000).
The request and acceptance by any Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrowers that the conditions
21
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrowers of
the cross-guaranty provisions set forth in Section 12 and of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and
severally, make the following representations and warranties to Agent and
each Lender with respect to all Credit Parties, each and all of which shall
survive the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
a corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $250,000; (c) has the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all material licenses,
permits, consents or approvals from or by, and has made all material filings
with, and has given all material notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and bylaws or partnership or operating
agreement, as applicable; and (f) subject to specific representations set forth
herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance
with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing
Date, the current location of each Credit Party's chief executive office and the
warehouses and premises at which any Collateral (other than (a) Inventory
consisting of propane which is located in propane tanks located on the property
of consumer purchasers of propane from Borrowers, and (b) Energy Product
Inventory purchased in bulk by Borrowers from terminal or railcar locations
which Inventory is not subject to bailee waivers and is not deemed to be
Eligible Inventory) is located (including a description of the pipeline routes
through which any Collateral is transported) are set forth in Disclosure
Schedule (3.2), and none of such locations has changed within the 6 months
preceding the Closing Date. As of the Closing Date, (x) AEP has a place of
business in more than one county in each of the following states: New York and
Pennsylvania, (y) Agway has a place of business in more than one county in each
of the following states: Massachusetts, New Hampshire, New York, Ohio and
Pennsylvania, and (z) Milford Fertilizer Company LLC has a place of business in
more than one county in the state of Pennsylvania. Disclosure Schedule (3.2)
also lists the federal employer identification number of each Credit Party.
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3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(c), all of which will have been duly obtained,
made or complied with prior to the Closing Date. Each of the Loan Documents
shall be duly executed and delivered by each Credit Party that is a party
thereto and each such Loan Document shall constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms.
3.4 Financial Statements and Projections. Except for the Projections,
all Financial Statements concerning Borrowers and their respective Subsidiaries
that are referred to below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a) Financial Statements. The following Financial Statements
attached hereto as Disclosure Schedule (3.4(a)) have been delivered on the date
hereof:
(i) The audited consolidated balance sheet at June 24,
2000 and the related statements of income and cash flows of Agway, Inc. and its
Subsidiaries, which include all Borrowers, for the Fiscal Years then ended,
certified by PricewaterhouseCoopers LLP, as well as the consolidating balance
sheets at June 24, 2000 and the related consolidating statements of income and
cash flow which make up the consolidated statements.
(ii) The 10-Q for the six months ended December 23,
2000, including the Agway, Inc. consolidated unaudited balance sheet and related
statements of income and cash flows, which include the statements of all
Borrowers.
(iii) The internal consolidated and consolidating
unaudited monthly financial statements for the month ended February 24, 2001,
which have been commonly referred to as the Agway Operations Financial
Statements and are broken down by Borrowers' three business segments.
(b) Projections. The Projections delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(b)) have been prepared by
Borrowers in light of the past operations of their businesses, but including
23
future payments of known contingent liabilities, and reflect projections for the
three year period beginning on March 1, 2001 on a month-by-month basis for the
seventeen month period beginning on February 1, 2001 and on an annual basis
thereafter. The Projections are based upon estimates and assumptions stated
therein, all of which Borrowers believe to be reasonable and fair in light of
current conditions and current facts known to Borrowers and, as of the Closing
Date, reflect Borrowers' good faith and reasonable estimates of the future
financial performance of Borrowers and of the other information projected
therein for the period set forth therein.
3.5 Material Adverse Effect. Between June 24, 2000 and the Closing
Date: (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments and that, alone or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, (b) no contract, lease
or other agreement or instrument has been entered into by any Credit Party or
has become binding upon any Credit Party's assets and no law or regulation
applicable to any Credit Party has been adopted that has had or could reasonably
be expected to have a Material Adverse Effect, and (c) no Credit Party is in
default and to the best of Borrowers' knowledge no third party is in default
under any material contract, lease or other agreement or instrument, that alone
or in the aggregate could reasonably be expected to have a Material Adverse
Effect. Between June 24, 2000 and the Closing Date no event has occurred, that
alone or together with other events, could reasonably be expected to have a
Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good fee simple title to all of its owned Real Estate, and
valid leasehold interests in all of its leased Real Estate, all as described on
Disclosure Schedule (3.6), and copies of all such leases or a summary of terms
thereof reasonably satisfactory to Agent have been delivered, or otherwise been
made available, to Agent. Disclosure Schedule (3.6) further describes any Real
Estate with respect to which any Credit Party is a lessor, sublessor or assignor
as of the Closing Date. Each Credit Party also has good title to, or valid
leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party's right, title and
interest in and to all (i) Mortgaged Properties, and (ii) all other Real Estate
and other properties and assets to the extent such Real Estate and other
properties and assets are material to the conduct of such Credit Party's
business. Disclosure Schedule (3.6) also describes any purchase options, rights
of first refusal or other similar contractual rights pertaining to any Mortgaged
Properties. As of the Closing Date, no portion of any Credit Party's Real Estate
that is material to the conduct of such Credit Party's business has suffered any
material damage by fire or other casualty loss that has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
24
occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matters; (c) all
payments due from any Credit Party for employee health and welfare insurance
(including plans and programs covering directors, former directors, former
employees and retirees) have been paid or accrued as a liability on the books of
such Credit Party; (d) except as set forth in Disclosure Schedule (3.7), no
Credit Party is a party to or bound by any collective bargaining agreement,
material management agreement, material consulting agreement, material
employment agreement, bonus, restricted stock, stock option, or stock
appreciation plan or agreement or any similar plan, agreement or arrangement
(and true and complete copies of any agreements described on Disclosure Schedule
(3.7) have been delivered to Agent); (e) there is no organizing activity
involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Credit Party other than
Agway is owned by each of the Stockholders and in the amounts set forth in
Disclosure Schedule (3.8). Except as set forth in Disclosure Schedule (3.8),
there are no outstanding rights to purchase, options, warrants or similar rights
or agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for
the Obligations) is described in Section 6.3 (including Disclosure Schedule
(6.3(a))). None of the Credit Parties other than Borrowers has any assets
(except Stock of their Subsidiaries) or any Indebtedness or Guaranteed
Indebtedness (except the Obligations).
3.9 Government Regulation. No Credit Party is an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lenders to Borrowers, the
incurrence of the Letter of Credit Obligations on behalf of Borrowers, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
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or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority except
where the failure to so file would not result in damages, costs or liabilities
in excess of $250,000 and all Charges have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding Charges or other amounts being contested in accordance with
Section 5.2(b). Proper and accurate amounts have been withheld by each Credit
Party from its respective employees for all periods in full and complete
compliance with all applicable federal, state, local and foreign laws and such
withholdings have been timely paid to the respective Governmental Authorities.
Disclosure Schedule (3.11) sets forth as of the Closing Date those taxable years
for which any Credit Party's tax returns are currently being audited by the IRS
or any other applicable Governmental Authority, and any assessments or
threatened assessments in connection with such audit, or otherwise currently
outstanding. Except as described in Disclosure Schedule (3.11), no Credit Party
has executed or filed with the IRS or any other Governmental Authority any
agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any Charges. None of the Credit Parties
and their respective predecessors are liable for any Charges: (a) under any
agreement (including any tax sharing agreements) or (b) to each Credit Party's
knowledge, as a transferee. As of the Closing Date, no Credit Party has agreed
or been requested to make any adjustment under IRC Section 481(a), by reason of
a change in accounting method or otherwise, which would have a Material Adverse
Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists (i) all ERISA Affiliates
and (ii) all Plans and separately identifies all Pension Plans, including Title
IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans. Copies of all such listed Plans or summaries thereof, together
with a copy of the latest IRS/DOL 5500-series form for each such Plan, have been
delivered to Agent. Except with respect to Multiemployer Plans, each Qualified
Plan (including any Qualified Plan terminated after 1995) has been determined by
the IRS to qualify under Section 401 of the IRC, the trusts created thereunder
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have been determined to be exempt from tax under the provisions of Section 501
of the IRC (with the scope of such determinations not excluding consideration of
any of the requirements or matters referred to in Sections 4.02 through 4.04 of
Revenue Procedure 93-39), and nothing has occurred that would cause the loss of
such qualification or tax-exempt status. Each Plan is in compliance with the
applicable provisions of ERISA and the IRC, including the timely filing of all
reports required under the IRC or ERISA, including the statement required by 29
CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has failed
to make any contribution or pay any amount due as required by either Section 412
of the IRC or Section 302 of ERISA or the terms of any such Plan, and no
Qualified Plan has at any time been subject to (i) a lien under Section 302(f)
of ERISA or Section 412(n) of the IRC, or (ii) to an accumulated funding
deficiency (whether or not waived) within the meaning of Section 412 of the IRC.
Neither any Credit Party nor ERISA Affiliate has engaged in a "prohibited
transaction," as defined in Section 406 of ERISA and Section 4975 of the IRC, in
connection with any Plan, that would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of
the IRC. No event has occurred that has or would result in excise taxes under
Sections 4971, 4972, 4976, 4977 or 4979 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at
any time within the last five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time); (vi) except in the case of any ESOP, Stock of all Credit Parties and
their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair
market value of the assets of any Plan measured on the basis of fair market
value as of the latest valuation date of any Plan; and (vii) no liability under
any Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that is not rated AAA by the Standard & Poor's Corporation or
an equivalent rating by another nationally recognized rating agency.
(c) Each Credit Party has been and is in compliance with all
requirements of Section 4980B of the IRC (COBRA), and the Health Insurance and
Portability Act of 1996, as amended (HIPPA).
(d) No Credit Party has a liability under any Plan,
non-qualified or foreign plan (including any deferred compensation, stock
compensation, supplemental retirement, or incentive compensation plan, program,
or arrangement for present or former employees, directors or consultants) that,
to the extent required under GAAP, is not reflected on their most recent
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Financial Statements, and there has been no subsequent material amendment or
material increase in cost or benefits.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party and that
, if so determined, could be reasonably be expected to have a Material Adverse
Effect. Except as set forth on Disclosure Schedule (3.13), as of the Closing
Date there is no Litigation pending or, to any Credit Party's knowledge,
threatened, that seeks damages in excess of $500,000 or injunctive relief
against, or alleges criminal misconduct of, any Credit Party.
3.14 Brokers. Except with respect to payments being made to Zolfo
Xxxxxx LLC, no broker or finder brought about the obtaining, making or closing
of the Loans or the Related Transactions, and no Credit Party or Affiliate
thereof has any obligation to any Person in respect of any finder's or brokerage
fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License registered or
applied for is listed, together with application or registration numbers, as
applicable, in Disclosure Schedule (3.15). Each Credit Party conducts its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect. Except as set
forth in Disclosure Schedule (3.15), no Credit Party is aware of any
infringement claim by any other Person with respect to any Intellectual Property
owned or used by it.
3.16 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other written reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Credit Party to Agent or any Lender pursuant to the terms of this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made. The Liens granted to Agent, on behalf of itself and Lenders, pursuant
to the Collateral Documents will at all times be fully perfected first priority
Liens in and to the Collateral described therein, subject, as to priority, only
to Permitted Encumbrances.
3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of
the Closing Date: (i) the Real Estate is free of contamination from any
Hazardous Material except for such contamination that would not adversely impact
the value or marketability of such Real Estate and that would not result in
Environmental Liabilities that could reasonably be expected to exceed $250,000;
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(ii) no Credit Party has caused or suffered to occur any Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) the Credit Parties are and have been in compliance with all Environmental
Laws, except for such noncompliance that would not result in Environmental
Liabilities which could reasonably be expected to exceed $250,000; (iv) the
Credit Parties have obtained, and are in compliance with, all Environmental
Permits required by Environmental Laws for the operations of their respective
businesses as presently conducted or as proposed to be conducted, except where
the failure to so obtain or comply with such Environmental Permits would not
result in Environmental Liabilities that could reasonably be expected to exceed
$250,000, and all such Environmental Permits are valid, uncontested and in good
standing; (v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $250,000, and no Credit Party has
permitted any current or former tenant or occupant of the Real Estate to engage
in any such operations; (vi) there is no Litigation arising under or related to
any Environmental Laws, Environmental Permits or Hazardous Material that seeks
damages, penalties, fines, costs or expenses in excess of $250,000 or injunctive
relief against, or that alleges criminal misconduct by, any Credit Party; (vii)
no notice has been received by any Credit Party identifying it as a "potentially
responsible party under CERCLA or analogous state statutes, and to the knowledge
of the Credit Parties, there are no facts, circumstances or conditions that may
result in any Credit Party being identified as a "potentially responsible party"
under CERCLA or analogous state statutes; and (viii) the Credit Parties have
provided to Agent copies of, or access to, all existing environmental reports,
reviews and audits and all written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) except as set forth on Disclosure Schedule (3.17) is not now, and has
not ever been, in control of any of the Real Estate or any Credit Party's
affairs, and (ii) does not have the capacity through the provisions of the Loan
Documents or otherwise to influence any Credit Party's conduct with respect to
the ownership, operation or management of any of its Real Estate or compliance
with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
of any nature maintained, as of the Closing Date, for current occurrences by
each Credit Party, as well as a schedule and types of coverage.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains lock box, blocked, concentration or other accounts as of the Closing
Date, including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority having a value in excess of $500,000
and no Credit Party's Accounts are subject to the Federal Assignment of Claims
Act (31 U.S.C. Section 3727) or any similar state or local law.
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3.21 Customer and Trade Relations. As of the Closing Date, there exists
no actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in the business
relationship of any Credit Party with any supplier material to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which is listed in Disclosure
Schedule (3.22): supply agreements and purchase agreements not terminable by
such Credit Party within 60 days following written notice issued by such Credit
Party and involving transactions in excess of $2,000,000 per annum; leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $500,000 per annum; licenses and permits
held by the Credit Parties, the absence of which could be reasonably likely to
have a Material Adverse Effect; instruments and documents evidencing any
Indebtedness or Guaranteed Indebtedness of such Credit Party and any Lien
granted by such Credit Party with respect thereto; and instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
Letter of Credit Obligations to be made or incurred on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrower Representative; (c) the Refinancing and the
consummation of the other Related Transactions; and (d) the payment and accrual
of all transaction costs in connection with the foregoing, each Credit Party is
and will be Solvent, except with respect to Holdings, Agway General Agency,
Inc., Country Best-XxXxxxx LLC, Country Best Xxxxx, LLC and Agway Energy
Services-PA, Inc., provided however, Agway and its Subsidiaries (excluding the
Telmark Entities, Agway Insurance Company and all of their respective
Subsidiaries) as a whole are and will be Solvent on a consolidated basis.
3.24 Subordinated Debt. As of the Closing Date, Borrowers have
delivered to Agent a complete and correct copy of the Indentures providing for
the issuance of the Subordinated Notes (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). AFC has the corporate
power and authority to incur the Indebtedness evidenced by the Subordinated
Notes. After reasonable inquiry and to the best of AFC's knowledge, the
subordination provisions of the Subordinated Notes are enforceable against the
holders of the Subordinated Notes by Agent and Lenders. All Obligations,
including the Letter of Credit Obligations, constitute senior Indebtedness
entitled to the benefits of the subordination provisions contained in the
Subordinated Notes. Borrowers acknowledge that Agent and each Lender are
entering into this Agreement and are extending the Commitments in reliance upon
the subordination provisions of the Subordinated Notes and this Section 3.24.
3.25 PACA; Farm Products.
(a) Each Credit Party hereby acknowledges and agrees that (i)
sunflower seeds are not perishable agricultural commodities (as defined in
PACA), and (ii) in the event any Credit Party receives notification from any
30
vendor of sunflower seeds of its intent to enforce its rights under PACA with
respect to sunflower seeds sold to any Credit Party, such Credit Party
immediately shall provide Agent with a copy of such notice, and Agent may
establish a Reserve against the Borrowing Base with respect any sunflower seeds
which otherwise had been deemed Eligible Inventory.
(b) Except as set forth on Disclosure Schedule 3.2, each
Credit Party hereby acknowledges and agrees that no Inventory is "Farm Products"
as such term is defined in the New York Uniform Commercial Code.
3.26 Credit Card Providers. Disclosure Schedule 3.26 lists all Credit
Card Providers engaged by Borrowers to process its credit card receipts and all
agreements executed by Borrowers with such Credit Card Providers.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees
that from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the Financial Statements,
notices, Projections and other information at the times, to the Persons and in
the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees
that, from and after the Closing Date and until the Termination Date, it shall
deliver to Agent or to Agent and Lenders, as required, the various Collateral
Reports (including Borrowing Base Certificates in the form of Exhibit 4.1(b)) at
the times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including PricewaterhouseCoopers LLP,
and authorizes and, at Agent's request, shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information (excluding any work papers) relating to any Credit Party (including
copies of any issued management letters) with respect to the business, financial
condition and other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof and
until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its rights and franchises; continue
to conduct its business substantially as now conducted or as otherwise permitted
hereunder; at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, and keep the same in
good repair, working order and condition in all material respects (taking into
31
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate and trade names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
storage or rental charges payable to warehousemen or bailees, in each case,
before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges, Taxes or claims
described in Section 5.2(a); provided, that (i) adequate reserves with respect
to such contest are maintained on the books of such Credit Party, in accordance
with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges
(other than payments to warehousemen and/or bailees) that is superior to any of
the Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges; (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest; (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met; and (v) Agent has not advised Borrowers in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(a)).
5.4 Insurance; Damage to, Destruction or Condemnation of Collateral.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the types of insurance described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal or cancellation of any such insurance
policy. If any Credit Party at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above, or to pay all
premiums relating thereto, Agent may at any time or times thereafter obtain and
maintain such policies of insurance and pay such premiums and take any other
32
action with respect thereto that Agent deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys' fees, court costs and other charges related thereto, shall
be payable on demand by Borrowers to Agent and shall be additional Obligations
hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in
any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance to, in
Agent's opinion, adequately protect both Agent's and Lender's interests in all
or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its industry.
If reasonably requested by Agent, each Credit Party shall deliver to Agent from
time to time a report of a reputable insurance broker, reasonably satisfactory
to Agent, with respect to its insurance policies.
(c) Each Borrower shall deliver to Agent, in form and
substance reasonably satisfactory to Agent, endorsements to (i) all "All Risk"
and business interruption insurance naming General Electric Capital Corporation,
as Agent, as loss payee, and (ii) all general liability and other liability
policies naming General Electric Capital Corporation as Agent, as additional
insured. Each Borrower irrevocably makes, constitutes and appoints Agent (and
all officers, employees or agents designated by Agent), so long as any Default
or Event of Default has occurred and is continuing or the anticipated insurance
proceeds exceed $3,000,000, as such Borrower's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of such Borrower on
any check or other item of payment for the proceeds ("Insurance Proceeds") of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney, provided however in the event Agent declines to
exercise the foregoing power-of-attorney with respect to the making, settling or
adjusting of claims, any settlement or adjustment of such claims made by
Borrowers in good faith which are upon fair and reasonable terms shall be deemed
to be acceptable and binding on Agent and Lenders. Borrower Representative shall
promptly notify Agent of any loss, damage, or destruction to the Collateral in
the amount of $500,000 or more, whether or not covered by insurance. After
deducting from such Insurance Proceeds the expenses, if any, incurred by Agent
in the collection or handling thereof, Agent may, at its option, apply such
Insurance Proceeds to the reduction of the Obligations in accordance with
Section 1.3(d), or permit or require the applicable Borrower to use such
Insurance Proceeds, or any part thereof, to replace, repair, restore or rebuild
the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss, damage
or destruction.
(d) Condemnation. As of the date hereof, no Borrower has
received any notice of any proceeding for the condemnation or other taking of
any of the Mortgaged Properties or any part thereof and has no knowledge that
any such proceeding is contemplated with respect to any of the Mortgaged
Properties. Borrower Representative shall, promptly upon learning of the
institution of any such proceeding in the amount of $500,000 or more, notify
33
Agent of the pendency of such proceeding, and agrees that Agent may participate
in any such proceeding and Borrower Representative from time to time will
deliver to Agent all instruments reasonably requested by Agent to permit such
participation. Agent shall have no duty to participate in any such proceeding,
provided however in the event Agent declines to exercise its right to
participate, any settlement, judgment or award obtained in such proceeding shall
be deemed to be acceptable and binding on Agent and Lenders. Subject to Section
1.3(b), Agent shall (and is hereby authorized to) collect any and all awards,
payments or other proceeds of any such condemnation or taking ("Condemnation
Proceeds") and after deducting from such Condemnation Proceeds the expenses, if
any, incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such Condemnation Proceeds to the reduction of the Obligations in
accordance with Section 1.3(d) or permit or require the applicable Borrower to
use Condemnation Proceeds, or any part thereof, to replace, repair or restore
the applicable Mortgaged Property.
(e) Notwithstanding the foregoing, if the casualty giving rise
to such Insurance Proceeds or the condemnation giving rise to such Condemnation
Proceeds (A) could not reasonably be expected to have a Material Adverse Effect
and such Insurance Proceeds or Condemnation Proceeds, as the case may be, do not
exceed $500,000 in the aggregate, or (B) covers Real Estate which is not a
Mortgaged Property, Agent shall permit the applicable Borrower to replace,
restore, repair or rebuild the property; provided that if such Borrower shall
not have completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 180 days of the receipt of
proceeds relating to such casualty or condemnation, as the case may be, Agent
may apply such Insurance Proceeds or Condemnation Proceeds, as the case may be,
to the Obligations in accordance with Section 1.3(d). All Insurance Proceeds or
Condemnation Proceeds, as the case may be, that are to be made available to any
Borrower to replace, repair, restore or rebuild the property shall be applied by
Agent to reduce the outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the Borrowing Base in an amount equal to the amount of such Insurance Proceeds
or Condemnation Proceeds, as the case may be, so applied. Thereafter, such funds
shall be made available to that Borrower to provide funds to replace, repair,
restore or rebuild the property as follows: (i) Borrower Representative shall
request a Revolving Credit Advance be made to such Borrower in the amount
requested to be released; (ii) so long as the conditions set forth in Section
2.2 have been met, Revolving Lenders shall make such Revolving Credit Advance;
and (iii) in the case of Insurance Proceeds or Condemnation Proceeds, as the
case may be, applied against the Revolving Loan, the Reserve established with
respect to such Insurance Proceeds or Condemnation Proceeds, as the case may be,
shall be reduced by the amount of such Revolving Credit Advance. To the extent
not used to replace, repair, restore or rebuild the property, such Insurance
Proceeds or Condemnation Proceeds, as the case may be, shall be applied in
accordance with Section 1.3(d).
5.5 Compliance with Laws. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to PACA, ERISA and labor matters and Environmental Laws
and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
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5.6 Supplemental Disclosure. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement within 10 Business Days of the
request each Disclosure Schedule hereto, or any representation herein or in any
other Loan Document, with respect to any matter hereafter arising that, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedule or as an exception to such
representation or that is necessary to correct any information in such
Disclosure Schedule or representation which has been rendered inaccurate thereby
(and, in the case of any supplements to any Disclosure Schedule, such Disclosure
Schedule shall be appropriately marked to show the changes made therein);
provided that (a) no such supplement to any such Disclosure Schedule or
representation shall amend, supplement or otherwise modify any Disclosure
Schedule or representation, or be or be deemed a waiver of any Default or Event
of Default resulting from the matters disclosed therein, except as consented to
by Agent and Requisite Lenders in writing, and (b) no supplement shall be
required or permitted as to representations and warranties that relate solely to
the Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its business
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect.
5.8 Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions that are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate that is reasonably likely to
result in Environmental Liabilities in excess of $250,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $25,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may be
a violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, that, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Credit Party shall, upon Agent's written request (i)
cause the performance of such environmental audits including subsurface sampling
of soil and groundwater, and preparation of such environmental reports, at
Borrowers' expense, as Agent may from time to time reasonably request, which
shall be conducted by reputable environmental consulting firms reasonably
35
acceptable to Agent and shall be in form and substance reasonably acceptable to
Agent, and (ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Agent deems appropriate, including subsurface sampling of soil and groundwater.
Borrowers shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Each Credit Party shall use its best efforts to obtain a
landlord's agreement, mortgagee agreement, access agreement or bailee letter, as
applicable, from the lessor of each leased property, mortgagee of owned property
or bailee with respect to any warehouse, processor or converter facility or
other location where Collateral is stored or located, except to the extent and
at the time such Collateral consists of (i) propane which is located in propane
tanks located on the property of consumer purchasers of propane from Borrowers,
(ii) Energy Product Inventory purchased in bulk by Borrowers from terminal or
railcar locations which is not deemed to be Eligible Inventory, and (iii)
locations where the aggregate book value of Inventory at any such location at
all times is less than $100,000, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be reasonably satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date and
thereafter, if Agent has not received a landlord or mortgagee agreement, access
agreement or bailee letter as of the Closing Date (or, if later, as of the date
such location is acquired or leased or such agreement or waiver is obtained),
any of Borrower's Eligible Inventory at that location shall, in Agent's
discretion, be excluded from the Borrowing Base or be subject to such Reserves
as may be established by Agent in its reasonable credit judgment. After the
Closing Date except as permitted above, no real property or warehouse space
shall be leased by any Credit Party and no Inventory shall be shipped to a
processor or converter under arrangements established after the Closing Date
without the prior written consent of Agent (which consent, in Agent's
discretion, may be conditioned upon the exclusion from the Borrowing Base of
Eligible Inventory at that location or the establishment of Reserves acceptable
to Agent) unless and until a reasonably satisfactory landlord agreement, access
letter or bailee letter, as appropriate, shall first have been obtained with
respect to such location. Each Credit Party shall timely and fully pay and
perform its obligations under all leases and other agreements with respect to
each leased location or public warehouse where any Collateral is or may be
located. To the extent otherwise permitted hereunder, if any Credit Party
acquires a fee ownership interest in Real Estate after the Closing Date, it
shall simultaneously with such acquisition provide to Agent a mortgage or deed
of trust granting Agent a first priority Lien on such Real Estate, together with
environmental audits, mortgage title insurance commitment, real property survey,
local counsel opinion(s), and, if required by Agent, supplemental casualty
insurance and flood insurance, and such other documents, instruments or
agreements reasonably requested by Agent, in each case, in form and substance
reasonably satisfactory to Agent.
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5.10 Restructure Advisers. Borrowers shall continue to retain Zolfo
Xxxxxx LLC as restructuring advisers until (i) Borrowers have substantially
consummated, in Agent's and Zolfo Xxxxxx'x reasonable determination, the
Agricultural Restructuring Plan, or (ii) an earlier date at Agent's discretion.
5.11 Subordinated Indebtedness and Preferred Stock. Borrowers shall
have at the following times outstanding Preferred Stock, Subordinated Debt and
outstanding notes under the Milford Note Program no less than, in the aggregate
principal amount, (i) Four Hundred Fifty Million Dollars ($450,000,000) for the
period February 1 through October 31 of any Fiscal Year, (ii) Four Hundred Forty
Million Dollars ($440,000,000) for the period November 1 through December 31 of
any Fiscal Year, and (iii) Four Hundred Forty Five Million ($445,000,000) for
the period January 1 through January 31 of any Fiscal Year.
5.12 Payment for Perishable Goods.
(a) Borrowers shall pay, not later than the date on which such
invoice is due, the amount of any outstanding invoices for the purchase of
perishable agricultural commodities (as defined in PACA) unless such Borrower
has obtained from the seller of such commodities a waiver of it rights under
PACA in form and substance acceptable to Agent; provided, however, that in the
event that any such invoice requires payment upon delivery, payment shall be
made on such date of delivery. Borrowers acknowledge that Agent shall establish
a Reserve against the Borrowing Base in the amount of, at any given time, all
accounts payable to sellers of perishable agricultural commodities unless any
Borrower has obtained from any such seller a waiver of its rights under PACA, in
form and substance acceptable to the Agent.
(b) Borrower shall pay, in the event that written notification
other than on an invoice is received from any vendor of perishable agricultural
commodities of its intent to enforce its rights under PACA, or to establish a
federal statutory lien or trust under the Food Security Act, 7 U.S.C. ss. 1631,
the related invoice within one Business Day of receipt and notify Agent of such
receipt; provided, however, that such invoice may remain unpaid if, and only so
long as (i) appropriate legal or administrative action has been commenced and is
being diligently pursued or defended by Borrowers, (ii) the ability of the
vendor to pursue any rights or enforce any liens or trusts provided under PACA
has been stayed or otherwise legally prohibited during the pendency of such
action and (iii) Agent shall have established a reserve against the Borrowing
Base in an amount at least equal to the amount claimed to be due by such vendor
under the relevant invoice (but without duplication of any reserve established
under paragraph (a) above).
5.13 CoBANK Equity Interests. AFC shall, for so long as CoBANK is a
Lender hereunder, acquire and maintain such equity interests in CoBANK ("CoBANK
Equity Interests") as CoBANK may from time to time require in accordance with
its bylaws and capital plan in effect as of the date hereof. In connection with
the foregoing, AFC hereby acknowledges receipt, prior to the execution of this
Agreement, of the following with respect to CoBANK: (a) the bylaws, (b) a
written description of the terms and conditions under which the CoBANK Equity
Interests are issued, (c) the most recent annual report, and (d) if more recent
than the latest annual report, the latest quarterly report. The rights and
obligations of the parties with respect to the CoBANK Equity Interests and any
37
patronage or other distributions shall be governed by CoBANK's bylaws and
capital plan.
5.14 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person,
except that (i) Holdings shall be permitted to transfer the Stock of the Telmark
Entities and Agway Insurance Company to Agway, (ii) any Borrower may merge with
any other Borrower, provided that Borrower Representative shall be the survivor
of any such merger to which it is a party, and (iii) Agway Energy Product LLC
may acquire all or substantially all of the assets of the Lebanon division of
The SICO Company ("SICO") subject to the satisfaction of the following
conditions: (A) Agent shall have received at least 10 Business Days' prior
written notice of such proposed acquisition; (B) no additional Indebtedness,
Guaranteed Indebtedness, contingent obligations or other liabilities shall be
incurred, assumed or otherwise be reflected on the consolidated balance sheet of
Borrowers after giving effect to such acquisition, except (i) Loans made
hereunder, and (ii) ordinary course trade payables, accrued expenses and
unsecured Indebtedness; (C) the sum of all amounts payable in connections with
the acquisition of SICO (including all transaction costs and all Indebtedness,
liabilities and contingent obligations incurred or assumed in connection
therewith or otherwise reflected in a consolidated balance sheet of Borrowers)
shall not exceed $850,000; (D) the business and assets acquired in such
acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances); (E) at or prior to the closing of such acquisition, Agent will be
granted a first priority perfected Lien (subject to Permitted Encumbrances) in
the assets purchased from SICO, and Borrowers shall have executed such documents
and taken such actions as may be required by Agent in connection therewith; and
(F) at the time of such acquisition and after giving effect thereto, no Default
or Event of Default has occurred and is continuing.
6.2 Investments; Loans and Advances. Except as scheduled on Disclosure
Schedule (6.2) or otherwise expressly permitted by this Section 6, no Credit
Party shall make or permit to exist any investment in, or make, accrue or permit
to exist loans or advances of money to, any Person, through the direct or
indirect lending of money, holding of securities or otherwise, except that: (a)
Borrowers may hold investments comprised of notes payable, or stock or other
securities issued by Account Debtors to any Borrower pursuant to negotiated
agreements with respect to settlement of such Account Debtor's Accounts in the
ordinary course of business in addition to (i) those certain Accounts settled by
Borrowers prior to the Closing Date and described in Disclosure Schedule (6.2)
and (ii) those certain notes payable received by Borrowers in connection with
38
the disposition of assets pursuant to Section 6.8(e) and (f); (b) each Credit
Party may (i) maintain its existing investments, receive additional investments,
and make investments in those certain entities described in Disclosure Schedule
(6.2) of not more than $1,000,000, in addition to the amount of investments set
forth on Disclosure Schedule (6.2), (ii) make investments in any other Credit
Party; and (iii) make advances to growers of agricultural products provided such
advances are: (A) consistent with such Credit Party's prior practices and made
solely for the purpose of financing inputs required by such growers to grow,
harvest and ship crops, (B) each grower shall have executed and delivered to
such Credit Party an agreement evidencing such Indebtedness which agreement
shall be in form and substance reasonably satisfactory to Agent and shall be
pledged and delivered to Agent pursuant to the applicable Pledge Agreement or
Security Agreement as additional collateral security for the Obligations, and
(C) not more than $10,000,000 in the aggregate at any time, of which, not more
than $4,000,000 at any time shall be made by Country Best-XxXxxxx LLC, and (c)
so long as no Default or Event of Default has occurred and is continuing and
there is no outstanding Revolving Loan balance, Borrowers may make investments,
subject to Control Letters in favor of Agent for the benefit of Lenders or
otherwise subject to a perfected security interest in favor of Agent for the
benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Group or Xxxxx'x Investors Service, Inc., (iii) certificates of deposit
maturing no more than one year from the date of creation thereof issued by
commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits
maturing no more than 30 days from the date of creation thereof with A Rated
Banks and (v) mutual funds that invest solely in one or more of the investments
described in clauses (i) through (iv) above, and (e) other investments not
exceeding $100,000 in the aggregate at any time outstanding.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to
exist any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases permitted in Section
6.7(c), (ii) the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to the extent they
are permitted to remain unfunded under applicable law, (iv) existing
Indebtedness described in Disclosure Schedule (6.3(a)) and refinancings thereof
or amendments or modifications thereto that do not have the effect of increasing
the principal amount thereof or changing the amortization thereof (other than to
extend the same) and that are otherwise on terms and conditions no less
favorable to any Credit Party, Agent or any Lender, as determined by Agent, than
the terms of the Indebtedness being refinanced, amended or modified, (v)
Indebtedness specifically permitted under Section 6.17; (vi) with respect to the
Subordinated Notes, new issuances of money market certificates which have terms
and are subject to conditions substantially similar to the Subordinated Notes
outstanding as of the Closing Date provided that, (A) the applicable interest
rate of any Subordinated Notes issued after the Closing Date, at the time of
such issuance, shall not be greater than the interest rate for federal
government notes of comparable maturity plus 6%, and (B) the maturities of any
Subordinated Notes issued after the Closing Date shall be more than three years
39
following the Closing Date; (vii) with respect to the Milford Fertilizer Note
Program, provided such program continues to be conducted in a manner consistent
with prior practices, and the principal amount of Indebtedness pursuant to such
program does not at any one time exceed $12,000,000; and (viii) Indebtedness
consisting of intercompany loans and advances made by any Borrower to any other
Borrower; provided, that: (A) each Borrower shall have executed and delivered to
each other Borrower, on the Closing Date, a demand note (collectively, the
"Intercompany Notes") to evidence any such intercompany Indebtedness owing at
any time by such Borrower to such other Borrowers which Intercompany Notes shall
be in form and substance reasonably satisfactory to Agent and shall be pledged
and delivered to Agent pursuant to the applicable Pledge Agreement or Security
Agreement as additional collateral security for the Obligations; (B) each
Borrower shall record all intercompany transactions on its books and records in
a manner reasonably satisfactory to Agent; (C) the obligations of each Borrower
under any such Intercompany Notes shall be subordinated to the Obligations of
such Borrower hereunder in a manner reasonably satisfactory to Agent; (D) at the
time any such intercompany loan or advance is made by any Borrower to any other
Borrower and after giving effect thereto, each such Borrower shall be Solvent,
except with respect to Holdings, Agway General Agency, Inc., Country
Best-XxXxxxx LLC, Country Best Xxxxx, LLC and Agway Energy Services-PA, Inc.,
provided however, Agway and its Subsidiaries (excluding all Telmark Entities,
Agway Insurance Company and all of their respective Subsidiaries) as a whole are
and shall be Solvent on a consolidated basis, and (E) no Default or Event of
Default would occur and be continuing after giving effect to any such proposed
intercompany loan.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Sections 6.8(b) or (c); (iii) Indebtedness permitted by Section 6.3(a)(iv)
upon any refinancing thereof in accordance with Section 6.3(a)(iv); (iv) as
otherwise permitted in Section 6.14, and (v) Indebtedness up to $2,000,000
secured by that certain mortgage encumbering the Country Best-Xxxxx' real
property located at 000 Xxxxxxxx Xxxxxxx, Xxxxxx, Xxxxxxx, provided that at the
time such Indebtedness is repaid and after giving effect thereto (A) Borrowers
shall have Borrowing Availability of not less than $40,000,000, and (B) no
Default or Event of Default has occurred and is continuing after giving effect
to any such proposed repayment.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6
with respect to Affiliates, no Credit Party shall enter into or be a party to
any transaction with any other Credit Party or any Affiliate thereof except in
the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party. In
addition, if any such transaction or series of related transactions (other than
Permitted Telmark Sale-Leaseback Transactions) between any Credit Party and an
Affiliate (which is not a Credit Party) involves payments in excess of
$1,000,000 in the aggregate, the terms of these transactions must be disclosed
in advance to Agent and Lenders. All such transactions existing as of the date
40
hereof are described in Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to its
respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $400,000 to any employee and up to a maximum of
$2,000,000 in the aggregate at any one time outstanding.
6.5 Capital Structure and Business. No Credit Party shall (a) make any
changes in any of its business objectives, purposes or operations that could in
any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described in
Disclosure Schedule (3.8), including the issuance or sale of any shares of
Stock, warrants or other securities convertible into Stock or any revision of
the terms of its outstanding Stock; provided that Agway may (i) issue or sell
shares of its Stock for cash or (ii) issue Preferred Stock to Agway's 401K Plan,
in each case, so long as no Change of Control occurs after giving effect
thereto, or (c) amend its charter or bylaws in a manner that would adversely
affect Agent or Lenders or such Credit Party's duty or ability to repay the
Obligations. No Credit Party shall engage in any business other than the
businesses currently engaged in by it or related business.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7(a)) securing the Indebtedness described on Disclosure
Schedule (6.3(a)) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens; provided that the principal
amount of the Indebtedness so secured is not increased and the Lien does not
attach to any other property; (c) Liens created after the date hereof by
conditional sale or other title retention agreements (including Capital Leases)
or in connection with purchase money Indebtedness with respect to Equipment and
Fixtures acquired by any Credit Party in the ordinary course of business,
involving the incurrence of an aggregate amount of (i) purchase money
Indebtedness of not more than $1,000,000 at any one time outstanding and (ii)
Capital Lease Obligations of not more than $5,000,000, in addition to the amount
of obligations under Capital Lease Obligations set forth on Disclosure Schedule
(6.7(b)) outstanding at any one time (provided that such Liens attach only to
the assets subject to such purchase money, Indebtedness or Capital Lease
Obligations, and such Indebtedness is incurred within 20 days following such
purchase and does not exceed 100% of the purchase price of the subject assets),
and (d) Liens created in connection with Permitted Telmark Sale-Leaseback
Transactions. In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, that would
prohibit the creation of a Lien on any of its properties or other assets in
favor of Agent, on behalf of itself and Lenders, as additional collateral for
41
the Obligations, except purchase money security interests, operating leases,
Capital Leases or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale of
Inventory in the ordinary course of business; (b) the sale, transfer, conveyance
or other disposition by a Credit Party of assets that are obsolete or no longer
used or useful in such Credit Party's business and having a net book value not
exceeding $250,000 in any single transaction or $2,000,000 in the aggregate in
any Fiscal Year; (c) other Equipment and Fixtures having a value not exceeding
$250,000 in any single transaction or $1,000,000 in the aggregate in any Fiscal
Year; (d) sale of assets in connection with Permitted Telmark Sale-Leaseback
Transactions; (e) dispositions in accordance with the Agricultural Restructuring
Plan provided that on an aggregate basis, for any rolling 6 month period, at
least seventy-five percent (75%) of the proceeds of such dispositions are in
cash; (f) the disposition of assets in connection with the closing of Agway's
retail operations identified in the Projections attached hereto as Disclosure
Schedule (3.4(B)) provided that (i) at least ninety percent (90%) of the
proceeds of such sales of Real Estate are in cash, and (ii) at least
seventy-five percent (75%) of the proceeds of such sales of assets other than
Real Estate are in cash; (g) the transfer of the Stock of the Telmark Entities
and Agway Insurance Company to Agway; and (h) asset dispositions described in
Disclosure Schedule (6.8). With respect to any disposition of assets permitted
above other than any disposition pursuant to clause (a), (b), (e), (f) and (h),
(A) no such disposition shall be permitted if any Default or Event of Default
shall have occurred and be continuing or would result after giving effect to
such disposition; (B) all proceeds of any such dispositions shall be applied by
Agent in accordance with Section 1.3(c), and Section 1.11 hereof. With respect
to any disposition of assets or other properties permitted pursuant to clauses
(b), (c), (d), (e) and (f) above, subject to Section 1.3(c), Agent agrees on
reasonable prior written notice to release its Lien on such assets or other
properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and deliver to Borrowers, at Borrowers' expense,
appropriate UCC-3 termination statements and other releases as reasonably
requested by Borrowers.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrowers shall not breach or fail to comply
with any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
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6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets, other than Permitted Telmark Sale-Leaseback Transactions and
sale-leasebacks in connection with permitted Capital Lease Obligations.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) intercompany loans and advances between Borrowers to the
extent permitted by Section 6.3, (b) dividends and distributions by Subsidiaries
of any Borrower paid to such Borrower, (c) employee loans permitted under
Section 6.4(b), (d) payments of principal and interest of Intercompany Notes
issued in accordance with Section 6.3, (e) dividends to preferred shareholders
of Agway with respect to Preferred Stock of Agway provided that such payments do
not exceed more than $3,800,000 in the aggregate in any Fiscal Year, (f)
redemptions of Common Stock of Agway in an amount not to exceed $250,000 in any
Fiscal Year; (g) redemptions of Preferred Stock; (h) payments by Country Best
Xxxxx, LLC or Agway Holdings Inc. with respect to any put options exercised by
A. Xxxxx Xxxxxxxx, Jr. ("Xx Xxxxxxxx") or any affiliate of Xx. Xxxxxxxx to whom
Xx. Xxxxxxxx has transferred his interest pursuant to the operating agreement of
Country Best Xxxxx, LLC dated as of August 6, 1997 in an amount not to exceed in
the aggregate $1,200,000.00; (i) dividends of Common Stock of Agway in an amount
not to exceed $200,000 in any single Fiscal Year; (j) Honorary Member Series HM
Preferred Stock of Agway issued to retired members of Agway in an amount not to
exceed $100,000 in any single Fiscal Year; and (k) cash distributions to the
members of Country Best Xxxxx, LLC and Country Best-XxXxxxx LLC as required
under the operating agreements governing such entities, provided Country Best
Xxxxx, LLC and Country Best-XxXxxxx LLC hereby each agree that it shall not
modify, amend or change the provisions of this operating agreements which relate
to the calculation and payment of such distributions, provided, that (i) with
respect to clauses (e), (f), (g) and (h), no Default or Event of Default has
occurred and is continuing or would result after giving effect to such payments,
and Borrowers collectively have Borrowing Availability of at least $20,000,000
after giving effect to such payments, or (ii) with respect to clauses (e), (f),
(g) and (h), if a Default or Event of Default has occurred and is continuing,
and Borrowers' collectively have Borrowing Availability of at least $25,000,000,
Borrowers may continue to make payments of interest and principal with respect
to Subordinated Debt unless (A) Agent provides Borrower Representative with
written notice that such payments are no longer permitted, (B) any Event of
Default has occurred and is continuing under Section 8.1(a), (C) any Credit
Party fails or neglects to perform, keep or observe any of the provisions set
forth in Section 1.4 or Annex C, or (D) the aggregate principal amount
outstanding in Preferred Stock, Subordinated Debt and notes outstanding under
the Milford Note Program is less than Four Hundred and Forty Million Dollars
($440,000,000).
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its corporate name or use any new trade name, or
(b) except with respect to Collateral which is not required under Section 3.2 to
be identified by location, change its chief executive office, principal place of
business, corporate offices or warehouses or locations at which Collateral is
held or stored, or the location of its records concerning the Collateral, in
each case without at least 30 days prior written notice to Agent and after
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Agent's written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in favor
of Agent, on behalf of Lenders, in any Collateral, has been completed or taken,
and provided that any such new location shall be in the continental United
States. Without limiting the foregoing, no Credit Party shall change its name,
identity or corporate structure in any manner that might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code except upon prior written notice to Agent and Lenders and
after Agent's written acknowledgment that any reasonable action requested by
Agent in connection therewith, including to continue the perfection of any Liens
in favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken. No Credit Party shall change its Fiscal Year, except that the Credit
Parties may, upon notice to the Agent, change their Fiscal Year end to June 30
beginning with the Fiscal Year ending June 30, 2002.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of any Borrower
to any Borrower or between Borrowers.
6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it provided any such transaction is consistent
with Credit Parties' hedging policies existing as of the Closing Date, and
provided further no Credit Party shall change any of its hedging policies
existing as of the Closing Date.
6.18 Leases. No Credit Party shall enter into any operating lease for
Equipment or Real Estate, if the aggregate of all such operating lease payments
payable for all Credit Parties on a consolidated basis would exceed the amounts
set forth below opposite each of such periods:
Period Maximum
------ -------
Fiscal Year ending June 30, 2001 $16,500,000
Fiscal Year ending June 30, 2002 $18,000,000
Fiscal Year ending June 30, 2003 $18,500,000
Fiscal Year ending June 30, 2004 $19,000,000
6.19 Changes Relating to Subordinated Debt. No Credit Party shall
change or amend the terms of any Subordinated Debt (or any indenture or
agreement in connection therewith) if the effect of such amendment is to: (a)
increase the interest rate on such Subordinated Debt; (b) change the dates upon
which payments of principal or interest are due on such Subordinated Debt other
than to extend such dates; (c) change any default or event of default other than
to delete or make less restrictive any default provision therein, or add any
covenant with respect to such Subordinated Debt; (d) change the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
44
therefor or to reduce the premiums payable in connection therewith; (e) grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the Credit Party thereunder or confer additional
material rights on the holder of such Subordinated Debt in a manner adverse to
any Credit Party, Agent or any Lender, provided however, AFC shall be permitted
to issue new money market certificates in accordance with Section 6.3(a).
6.20 Credit Card Notices. No Credit Party shall deliver to the Credit
Card Providers any instructions which modify or amend the Credit Card Notices or
in any manner attempt to change the delivery of Borrowers' credit card receipts
to Agent. Additionally, Borrowers shall not materially amend, modify or change
any of their agreements with the Credit Card Providers without Agent's prior
written consent.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans or any other Obligations, due or not
due, liquidated, contingent or unliquidated, or any transaction or event
occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided, that the provisions of Section
11, the payment obligations under Sections 1.15 and 1.16, and the indemnities
contained in the Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal
of, or interest on the Loans or any of the other Obligations when due and
payable, (ii) fails to make any payment of Fees within 3 days after the same are
due and payable, or (iii) fails to pay or reimburse Agent or Lenders for any
expense reimbursable hereunder or under any other Loan Document within 10 days
following Agent's demand for such reimbursement or payment of expenses.
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(b) Any Credit Party fails or neglects to perform, keep or
observe any of the provisions of Sections 1.4, 1.8, 5.4(a) or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Any Borrower fails or neglects to perform, keep or observe
any of the provisions of Section 4 or any provisions set forth in Annexes E or
F, respectively, and the same shall remain unremedied for 3 Business Days or
more.
(d) Any Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for 20 days or more.
(e) A default or breach occurs under any other agreement,
document or instrument to which any Credit Party is a party that is not cured
within any applicable grace period therefor, and such default or breach (i)
involves the failure to make any payment when due in respect of any Indebtedness
or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $1,000,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $3,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral in respect thereof to be
demanded, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect (other than inadvertent,
immaterial errors not exceeding $250,000 in the aggregate in any Borrowing Base
Certificate), or any representation or warranty herein or in any Loan Document
or in any written statement, report, financial statement or certificate (other
than a Borrowing Base Certificate) made or delivered to Agent or any Lender by
any Credit Party is untrue or incorrect in any material respect as of the date
when made or deemed made.
(g) Assets of any Credit Party with a fair market value of
$500,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for 45 days or more.
(h) A case or proceeding is commenced against any Credit Party
seeking a decree or order in respect of such Credit Party (i) under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party's assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party, and such case or
proceeding shall remain undismissed or unstayed for 60 days or more or a decree
or order granting the relief sought in such case or proceeding shall be entered
by a court of competent jurisdiction.
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(i) Any Credit Party (i) files a petition seeking relief under
the Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner the institution of proceedings thereunder or the
filing of any such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, (iv)
takes any action in furtherance of any of the foregoing; or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of money in
excess of $500,000 in the aggregate at any time are outstanding against one or
more of the Credit Parties and the same are not, within 45 days after the entry
thereof, discharged or execution thereof stayed or bonded pending appeal, or
such judgments are not discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document ceases to be a valid and perfected
first priority Lien (except as otherwise permitted herein or therein) in any of
the Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as
a result of which revenue-producing activities cease or are substantially
curtailed at any facility or facilities of Borrowers generating more than 10% of
Borrowers' consolidated revenues for the Fiscal Year preceding such event and
such cessation or curtailment continues for more than 20 days.
(n) Any "Event of Default" under and as defined in any
Mortgage shall occur.
8.2 Remedies.
(a) If any Default or Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, suspend the Revolving Loan facility with respect to
additional Advances and/or the incurrence of additional Letter of Credit
Obligations, whereupon any additional Advances and additional Letter of Credit
Obligations shall be made or incurred in Agent's sole discretion (or in the sole
discretion of the Requisite Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default has occurred and is continuing, Agent may (and at
the written request of Requisite Lenders shall), without notice except as
otherwise expressly provided herein, increase the rate of interest applicable to
the Loans and the Letter of Credit Fees to the Default Rate.
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(b) If any Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice: (i) terminate the Revolving Loan facility with respect to further
Advances or the incurrence of further Letter of Credit Obligations; (ii) declare
all or any portion of the Obligations, including all or any portion of any Loan
to be forthwith due and payable, and require that the Letter of Credit
Obligations be cash collateralized as provided in Annex B, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrowers and each other Credit Party; or (iii) exercise any
rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(h) or (i), the
Revolving Loan facility shall be immediately terminated and all of the
Obligations, including the aggregate Revolving Loan, shall become immediately
due and payable without declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement, any other Loan Document or by applicable law, each Credit Party
waives (including for purposes of Section 12): (a) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Agent on which any Credit Party may in any way be liable,
and hereby ratifies and confirms whatever Agent may do in this regard, (b) all
rights to notice and a hearing prior to Agent's taking possession or control of,
or to Agent's replevy, attachment or levy upon, the Collateral or any bond or
security that might be required by any court prior to allowing Agent to exercise
any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling
and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may
make an assignment to a Person of, or sell participations in, at any time or
times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
in the form attached hereto as Exhibit 9.1(a) and otherwise in form and
substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) after giving effect to any such partial assignment, the assignee
Lender shall have Commitments in an amount at least equal to $5,000,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; (iv) include a payment to Agent of an assignment fee of $3,500; and
(v) so long as no Event of Default has occurred and is continuing, require the
consent of Borrower Representative, which shall not be unreasonably withheld or
delayed; provided that no such consent shall be required for an assignment to a
Qualified Assignee. In the case of an assignment by a Lender under this Section
9.1, the assignee shall have, to the extent of such assignment, the same rights,
48
benefits and obligations as all other Lenders hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Each
Borrower hereby acknowledges and agrees that any assignment shall give rise to a
direct obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.13,
1.15, 1.16 and 9.8, each Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Agent nor any Lender (other than the Lender selling
a participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrowers and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this Section
9.1 as reasonably required to enable the assigning or selling Lender to effect
any such assignment or participation, including the execution and delivery of
any and all agreements, notes and other documents and instruments as shall be
reasonably requested and, if requested by Agent, the preparation of
informational materials for, and the participation of management in meetings
with, potential assignees or participants. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
49
descriptions of the Credit Parties and their respective affairs contained in any
selling materials provided by them and all other information provided by them
and included in such materials, except that any Projections delivered by
Borrowers shall only be certified by Borrowers as having been prepared by
Borrowers in compliance with the representations contained in Section 3.4(c).
(e) Any Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants); provided that
such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.16(a),
increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).
(g) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender"), may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing by the Granting Lender to Agent and
Borrowers, the option to provide to Borrowers all or any part of any Loans that
such Granting Lender would otherwise be obligated to make to Borrowers pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). Any SPC may (i) with notice to, but without the prior written
consent of, Borrowers and Agent, and without paying any processing fee therefor,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions providing liquidity and/or credit support to or
for the account of such SPC to support the funding or maintenance of Loans and
(ii) disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This Section 9.1(g)
may not be amended without the prior written consent of each Granting Lender,
all or any of whose Loans are being funded by an SPC at the time of such
amendment. For the avoidance of doubt, the Granting Lender shall for all
purposes, including without limitation, the approval of any amendment or waiver
of any provision of any Loan Document or the obligation to pay any amount
otherwise payable by the Granting Lender under the Loan Documents, continue to
be the Lender of record hereunder.
9.2 Appointment of Agent. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
50
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders with respect to
any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Agent shall be entitled to
refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, Supermajority
Revolving Lenders or all affected Lenders, as the case may be, and
Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to
take any action hereunder or under any other Loan Document (a) if such
action would, in the opinion of Agent, be contrary to law or the terms
of this Agreement or any other Loan Document, (b) if such action would,
in the opinion of Agent, expose Agent to Environmental Liabilities or
(c) if Agent shall not first be indemnified to its satisfaction against
any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against
Agent as a result of Agent acting or refraining from acting hereunder
or under any other Loan Document in accordance with the instructions of
Requisite Lenders, Supermajority Revolving Lenders or all affected
Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
51
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of
Borrowers hereunder), ratably according to their respective Pro Rata Shares,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, proceedings, claims, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted to be taken
by Agent in connection therewith; provided, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, proceedings, claims, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. Without limiting
the foregoing, each Lender agrees to reimburse Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees) 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
52
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less
than 30 days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within 30 days after the date such notice of resignation was given by
the resigning Agent, such resignation shall become effective and the Requisite
Lenders shall thereafter perform all the duties of Agent hereunder until such
time, if any, as the Requisite Lenders appoint a successor Agent as provided
above. Any successor Agent appointed by Requisite Lenders hereunder shall be
subject to the approval of Borrower Representative, such approval not to be
unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default has occurred and is continuing.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent's resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to offset and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of any Borrower or Guarantor (regardless of whether such balances are then due
to such Borrower or Guarantor) and any other properties or assets at any time
held or owing by that Lender or that holder to or for the credit or for the
account of any Borrower or Guarantor against and on account of any of the
Obligations that are not paid when due. Any Lender exercising a right of setoff
or otherwise receiving any payment on account of the Obligations in excess of
its Pro Rata Share thereof shall purchase for cash (and the other Lenders or
holders shall sell) such participations in each such other Lender's or holder's
Pro Rata Share of the Obligations as would be necessary to cause such Lender to
share the amount so offset or otherwise received with each other Lender or
holder in accordance with their respective Pro Rata Shares (other than offset
rights exercised by any Lender with respect to Sections 1.13, 1.15 or 1.16).
Each Lender's obligation under this Section 9.8 shall be in addition to and not
in limitation of its obligations to purchase a participation in an amount equal
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to its Pro Rata Share of the Swing Line Loans under Section 1.1. Each Credit
Party that is a Borrower or Guarantor agrees, to the fullest extent permitted by
law, that (a) any Lender may exercise its right to offset with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amounts so offset to other Lenders and holders and (b)
any Lender so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of offset, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the
purchase of participations by that Lender shall be rescinded and the purchase
price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in the
Swing Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(b). If
the Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (New York time) on the date such Notice of Revolving Advance is received,
by telecopy, telephone or other similar form of transmission. Each Revolving
Lender shall make the amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire transfer to Agent's
account as set forth in Annex H not later than 3:00 p.m. (New York time) on the
requested funding date, in the case of an Index Rate Loan, and not later than
11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR
Loan. After receipt of such wire transfers (or, in the Agent's sole discretion,
before receipt of such wire transfers), subject to the terms hereof, Agent shall
make the requested Revolving Credit Advance to the Borrower designated by
Borrower Representative in the Notice of Revolving Credit Advance. All payments
by each Revolving Lender shall be made without setoff, counterclaim or deduction
of any kind.
(ii) On the 2nd Business Day of each calendar week or
more frequently at Agent's election (each, a "Settlement Date"), Agent shall
advise each Lender by telephone, or telecopy of the amount of such Lender's Pro
Rata Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded all
payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrowers since
the previous Settlement Date for the benefit of such Lender on the Loans held by
it. To the extent that any Lender (a "Non-Funding Lender") has failed to fund
all such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrowers. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender in Annex H or the applicable Assignment Agreement)
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not later than 2:00 p.m. (New York time) on the next Business Day following each
Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume
that each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower Representative and Borrowers shall immediately repay such amount
to Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrowers
may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to any
Borrower on behalf of any Revolving Lender and is not reimbursed therefor on the
same Business Day as such Advance is made, Agent shall be entitled to retain for
its account all interest accrued on such Advance until reimbursed by the
applicable Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrowers and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to any Borrower or paid
to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to any Borrower or such other
Person, without setoff, counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender
to make any Revolving Credit Advance or any payment required by it hereunder or
to purchase any participation in any Swing Line Loan to be made or purchased by
it on the date specified therefor shall not relieve any other Lender (each such
other Revolving Lender, an "Other Lender") of its obligations to make such
Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, purchase a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" or a "Revolving Lender"
(or be included in the calculation of "Requisite Lenders" or "Supermajority
Revolving Lenders" hereunder) for any voting or consent rights under or with
55
respect to any Loan Document. At Borrower Representative's request, Agent or a
Person reasonably acceptable to Agent shall have the right with Agent's consent
and in Agent's sole discretion (but shall have no obligation) to purchase from
any Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at
Agent's request, sell and assign to Agent or such Person, all of the Commitments
of that Non-Funding Lender for an amount equal to the principal balance of all
Loans held by such Non-Funding Lender and all accrued interest and fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.
(e) Dissemination of Information. Agent shall use reasonable
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided, that
Agent shall not be liable to any Lender for any failure to do so, except to the
extent that such failure is attributable to Agent's gross negligence or willful
misconduct. Lenders acknowledge that Borrowers are required to provide Financial
Statements and Collateral Reports to Lenders in accordance with Annexes E and F
hereto and agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent or Requisite Lenders.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
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(other than the GE Capital Fee Letter) or confidentiality agreement between any
Credit Party and Agent or any Lender or any of their respective Affiliates,
predating this Agreement and relating to a financing of substantially similar
form, purpose or effect shall be superseded by this Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by
Agent, no amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrowers, and by Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable. Except
as set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Borrowing Base, or
that makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7,
shall be effective unless the same shall be in writing and signed by Agent,
Supermajority Revolving Lenders and Borrowers. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement that waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Lenders and Borrowers. Notwithstanding anything contained in
this Agreement to the contrary, no waiver or consent with respect to any Default
or any Event of Default shall be effective for purposes of the conditions
precedent to the making of Loans or the incurrence of Letter of Credit
Obligations set forth in Section 2.2 unless the same shall be in writing and
signed by Agent, Requisite Lenders and Borrowers. Notwithstanding anything
contained in this Agreement to the contrary, Agent shall have sole discretion to
extend, modify or waive the terms of that certain letter agreement, dated as of
the date hereof, among Borrowers and Agent regarding the completion and delivery
of certain items after the Closing Date.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby:
(i) increase the principal amount of any Lender's Commitment or Pro Rata Share
(which action shall be deemed only to affect those Lenders whose Commitments and
Pro Rata Shares are increased and may be approved by Requisite Lenders,
including those Lenders whose Commitments and Pro Rata Shares are increased);
(ii) reduce the principal of, rate of interest on or Fees payable with respect
to any Loan or Letter of Credit Obligations of any affected Lender; (iii) extend
any scheduled payment date (other than payment dates of mandatory prepayments
under Section 1.3(b)(ii) and (iii)) or final maturity date of the principal
amount of any Loan of any affected Lender; (iv) waive, forgive, defer, extend or
postpone any payment of interest or Fees as to any affected Lender; (v) release
any Guaranty or, except as otherwise permitted herein or in the other Loan
Documents, release, or permit any Credit Party to sell or otherwise dispose of,
any Collateral with a value exceeding $10,000,000 in the aggregate (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
57
the Commitments or of the aggregate unpaid principal amount of the Loans that
shall be required for Lenders or any of them to take any action hereunder; and
(vii) amend or waive this Section 11.2 or the definitions of the terms
"Requisite Lenders" or "Supermajority Revolving Lenders" insofar as such
definitions affect the substance of this Section 11.2. Furthermore, no
amendment, modification, termination or waiver affecting the rights or duties of
Agent or L/C Issuer under this Agreement or any other Loan Document shall be
effective unless in writing and signed by Agent or L/C Issuer, as the case may
be, in addition to Lenders required hereinabove to take such action. Each
amendment, modification, termination or waiver shall be effective only in the
specific instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required for Agent to
take additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the holder of that Note. No notice
to or demand on any Credit Party in any case shall entitle such Credit Party or
any other Credit Party to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the
consent of Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is not
obtained as described in this clause (i) and in clause (ii) below being referred
to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Supermajority Revolving
Lenders, the consent of Requisite Lenders is obtained, but the consent of
Supermajority Revolving Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person reasonably acceptable to Agent shall
have the right with Agent's consent and in Agent's sole discretion (but shall
have no obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lenders for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lenders and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions, proceedings or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrowers termination
statements, mortgage releases and other documents necessary or appropriate to
evidence the termination of the Liens securing payment of the Obligations.
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11.3 Fees and Expenses. Borrowers shall reimburse (i) Agent for all
fees, costs and expenses (including the reasonable fees and expenses of all of
its counsel, advisors, consultants and auditors) and (ii) Agent (and, with
respect to clauses (c) and (d) below, all Lenders) for all fees, costs and
expenses, including the reasonable fees, costs and expenses of counsel or other
advisors (including environmental and management consultants and appraisers),
incurred in connection with the negotiation and preparation of the Loan
Documents and incurred in connection with:
(a) the forwarding to Borrowers or any other Person on behalf
of Borrowers by Agent of the proceeds of any Loan (including a wire transfer fee
of $25 per wire transfer);
(b) any amendment, modification or waiver of, consent with
respect to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and administration of the
Loans made pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Borrower or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to Agent by virtue of the
Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; provided,
further, that no Person shall be entitled to reimbursement under this clause (c)
in respect of any litigation, contest, dispute, suit, proceeding or action to
the extent any of the foregoing results from such Person's gross negligence or
willful misconduct;
(d) any attempt to enforce any remedies of Agent against any
or all of the Credit Parties or any other Person that may be obligated to Agent
or any Lender by virtue of any of the Loan Documents, including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided, that
in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any workout or restructuring of the Loans during the
pendency of one or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral,
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
59
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrowers to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential information provided to them by the Credit
Parties and designated as confidential for a period of 2 years following receipt
thereof, except that Agent and any Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender in evaluating, approving,
structuring or administering the Loans and the Commitments; (b) to any bona fide
60
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of Agent's or
such Lender's counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
Litigation to which Agent or such Lender is a party; or (f) that ceases to be
confidential through no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX
XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY X XXXXX XXXXXXX XXXXXXX XX XXX
XXXX XXXXXX; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
61
UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered: (a) upon the earlier of actual receipt and 3
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) 1 Business Day after deposit with a reputable overnight courier with
all charges prepaid or (d) when delivered, if hand-delivered by messenger, all
of which shall be addressed to the party to be notified and sent to the address
or facsimile number indicated in Annex I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower Representative or Agent) designated in Annex I to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
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11.14 Press Releases and Related Matters. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure using the name of GE Capital
or its affiliates or referring to this Agreement, the other Loan Documents or
the Related Transactions Documents without at least 2 Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing such press release or other public disclosure.
Each Credit Party consents to the publication by Agent or any Lender of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Borrower for liquidation or reorganization, should any Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 12 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 12 shall be absolute and
unconditional, irrespective of, and unaffected by,
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(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 12) or any other Loan Document or the waiver or consent
by Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any action, or the
absence of any action, by Agent and Lenders in respect thereof (including the
release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel Agent or Lenders to xxxxxxxx assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 12, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.
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12.5 Election of Remedies. If Agent or any Lender may, under applicable
law, proceed to realize its benefits under any of the Loan Documents giving
Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower
or by any other Person, either by judicial foreclosure or by non-judicial sale
or enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Agent or such Lender. Any election of remedies that results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event Agent or any Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 12, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent or any Lender might otherwise be
entitled but for such bidding at any such sale.
12.6 Limitation. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 12 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount that could be claimed by Agent and Lenders from
such Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
12.7 Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under
this Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a "Guarantor Payment") that, taking
into account all other Guarantor Payments then previously or concurrently made
65
by any other Borrower, exceeds the amount that such Borrower would otherwise
have paid if each Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's "Allocable Amount"
(as defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as determined
immediately prior to the making of such Guarantor Payment, then, following
indefeasible payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Borrower for the
amount of such excess, pro rata based upon their respective Allocable Amounts in
effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim that could then
be recovered from such Borrower under this Section 12 without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 12.7 is intended to or
shall impair the obligations of Borrowers, jointly and severally, to pay any
amounts as and when the same shall become due and payable in accordance with the
terms of this Agreement, including Section 12.1. Nothing contained in this
Section 12.7 shall limit the liability of any Borrower to pay the Loans made
directly or indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of the
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
12.8 Liability Cumulative. The liability of Borrowers under this
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
12.9 Subordination.
(a) Each Credit Party covenants and agrees that the payment of
any indebtedness and all obligations and liabilities owing by any Credit Party
in favor of any other Credit Party, whether now existing or hereafter incurred
(collectively, the "Intercompany Obligations") is subordinated, to the extent
and in the manner provided in this Section 12.9, to the prior payment in full of
66
all Obligations owed or hereafter owing to Agent and Lenders by the Borrowers
and that such subordination is for the benefit of Agent for itself and Lenders.
(b) Each Credit Party hereby (i) authorizes Agent on behalf of
Lenders to demand specific performance of the terms of this Section 12.9 at any
time when any Credit Party shall have failed to comply with any provisions of
this Section 12.9 which are applicable to it and (ii) irrevocably waives any
defense based on the adequacy of a remedy at law, which might be asserted as a
bar to such remedy of specific performance.
(c) Upon any distribution of assets of any Credit Party in any
dissolution, winding up, liquidation or reorganization (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(i) Agent and Lenders shall first be entitled to receive
payment in full in cash of the Obligations before any Credit Party is entitled
to receive any payment on account of the Intercompany Obligations.
(ii) Any payment or distribution of assets of any Credit
Party of any kind or character, whether in cash, property or securities, to
which any other Credit Party would be entitled except for the provisions of this
Section 12.9(c), shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution directly to Agent for the benefit of
the Lenders in the manner set forth herein, to the extent necessary to make
payment in full of all Obligations remaining unpaid after giving effect to any
concurrent payment or distribution or provisions therefor to Agent for itself
and Lenders.
(iii) In the event that notwithstanding the foregoing
provisions of this Section 12.9(c), any payment or distribution of assets of any
Credit Party of any kind or character, whether in cash, property or securities,
shall be received by any other Credit Party on account of any Intercompany
Obligations before all Obligations are paid in full, such payment or
distribution shall be received and held in trust for and shall be paid over to
Agent for itself and Lenders for application to the payment of the Obligations
until all of the Obligations shall have been paid in full, after giving effect
to any concurrent payment or distribution or provision therefor to Agent for
itself and Lenders.
(d) No right of Agent, any Lender or any other present or
future holders of the Obligations to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of any Credit Party or by any act or failure to act, in good
faith, by any Credit Party, or by any noncompliance by any Credit Party with the
terms of the Intercompany Obligations, regardless of any knowledge thereof which
any Credit Party may have or be otherwise charged with.
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
BORROWERS
AGWAY, INC.
AGWAY HOLDINGS INC.
AGWAY FINANCIAL CORPORATION
FEED COMMODITIES INTERNATIONAL LLC
MILFORD FERTILIZER COMPANY LLC
XXXXXXXX AGRONOMIC CONSULTING SERVICE LLC
COUNTRY BEST-XXXXXXX LLC
AGWAY ENERGY PRODUCTS LLC
AGWAY ENERGY SERVICES-PA, INC.
AGWAY ENERGY SERVICES, INC.
By: /s/ XXXXX X. XXXXXXX
-----------------------------------------------------
Name: XXXXX X. XXXXXXX
-----------------------------------------------------
Title: TREASURER
-----------------------------------------------------
AGWAY GENERAL AGENCY, INC.
COUNTRY BEST XXXXX, LLC
By: /s/ XXXXX X. XXXXXXX
-----------------------------------------------------
Name: XXXXX X. XXXXXXX
-----------------------------------------------------
Title: ASST. TREASURER
-----------------------------------------------------
68
LENDERS
COBANK, ACB
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------
Name: XXXXXX X. XXXXXX
--------------------------------------
Title:
--------------------------------------
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEEN BANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /s/ XXXXX XXXXX By: /s/ XXX XXXXX
------------------------- --------------------------
Name: XXXXX XXXXX Name: XXX XXXXX
------------------------- --------------------------
Title: VICE PRESIDENT Title: SENIOR CREDIT OFFICER
------------------------- --------------------------
GMAC BUSINESS CREDIT, LLC
By: /s/ XXXXXXX X. XXXXXXX
-----------------------------------------------------
Name: XXXXXXX X. XXXXXXX
-----------------------------------------------------
Title: DIRECTOR
-----------------------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ XXXXXX XXXX
-----------------------------------------------------
Duly Authorized Signatory
69
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings, and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:
"Account Debtor" means any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account.
"Accounting Changes" has the meaning ascribed thereto in Annex
G.
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments), whether arising out of goods sold or services
rendered by it or from any other transaction (including any such obligations
that may be characterized as an account or contract right under the Code), (b)
all of each Credit Party's rights in, to and under all purchase orders or
receipts for goods or services, (c) all of each Credit Party's rights to any
goods represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (d) all monies due or to become due
to any Credit Party, under all purchase orders and contracts for the sale of
goods or the performance of services or both by such Credit Party or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Credit Party), including the right to receive the proceeds
of said purchase orders and contracts, (e) all health care insurance receivables
and (f) all collateral security and guaranties of any kind, given by any Account
Debtor or any other Person with respect to any of the foregoing.
"Advance" means any Revolving Credit Advance or Swing Line
Advance, as the context may require.
"AEP" means Agway Energy Products LLC.
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrowers, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of any Borrower. For the purposes
of this definition, "control" of a Person shall mean the possession, directly or
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indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
"AFC" means Agway Financial Corporation, a Delaware
corporation.
"Agway" means Agway Inc., a Delaware corporation.
"Agway's 401K Plan" means the Amended and Restated Employees'
Thrift Investment Plan of Agway, Inc., dated as of May 17, 1999, as amended.
"Agent" means GE Capital in its capacity as Agent for Lenders
or its successor appointed pursuant to Section 9.7.
"Agreement" means the Credit Agreement by and among Borrowers,
the other Credit Parties party thereto, GE Capital, as Agent and Lender and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Agricultural Restructuring Plan" means that certain
restructuring plan, dated November 17, 2000 and approved by the Board of
Directors of Agway.
"Appendices" has the meaning ascribed to it in the recitals to
the Agreement.
"Applicable L/C Margin" means the per annum fee, from time to
time in effect, payable with respect to outstanding Letter of Credit Obligations
as determined by reference to Section 1.5(a).
"Applicable Margins" means collectively the Applicable L/C
Margin, the Applicable Unused Line Fee Margin, the Applicable Revolver Index
Margin and the Applicable Revolver LIBOR Margin.
"Applicable Revolver Index Margin" means the per annum
interest rate margin from time to time in effect and payable in addition to the
Index Rate applicable to the Revolving Loan, as determined by reference to
Section 1.5(a).
"Applicable Revolver LIBOR Margin" means the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a).
"Applicable Unused Line Fee Margin" means the per annum fee,
from time to time in effect, payable in respect of Borrowers' non-use of
committed funds pursuant to Section 1.9(b), which fee is determined by reference
to Section 1.5(a).
"Assignment Agreement" has the meaning ascribed to it in
Section 9.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the
United States Code, 11 U.S.C.ss.ss.101 et seq.
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"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Borrower Representative" means Agway in its capacity as
Borrower Representative pursuant to the provisions of Section 1.1(c).
"Borrowers" and "Borrower" have the respective meanings
ascribed thereto in the preamble to the Agreement.
"Borrowing Availability" means as of any date of determination
as to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the Borrowing
Base, in each case, less the sum of the aggregate Revolving Loan and Swing Line
Loan then outstanding; provided that an Overadvance in accordance with Section
1.1(a)(iii) may cause the Revolving Loan and the Swing Line Loan to exceed the
Borrowing Base by the amount of such permitted Overadvance.
"Borrowing Base" means, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to 85% of the book value of Borrowers' Eligible
Accounts other than Eligible Deferred Term Accounts;
(b) up to 65% of the book value of Eligible Deferred Term
Accounts;
(c) the lesser of (i) 55% of the book value of Borrowers'
Eligible Inventory valued at the lower of cost or market or (ii) 85% of the Net
Orderly Liquidation Value of Borrowers' Eligible Inventory; and
(d) up to 75% of the book value of Eligible Energy Product
Inventory valued at the lower of cost or market;
in each case, less any Reserves established by Agent at such time.
"Borrowing Base Certificate" means a certificate to be
executed and delivered from time to time by Borrowers in the form attached to
the Agreement as Exhibit 4.1(b).
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the State of
New York and in reference to LIBOR Loans shall mean any such day that is also a
LIBOR Business Day.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto that have a useful life of
more than one year and that are required to be capitalized under GAAP.
"Capital Lease" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
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"Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex
B.
"Cash Equivalents" has the meaning ascribed to it in Annex B.
"Cash Management Systems" has the meaning ascribed to it in
Section 1.8.
"Change of Control" means any of the following: (a) any person
or group of persons (within the meaning of the Securities Exchange Act of 1934,)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934,) of 20% or more of the issued and outstanding shares of
capital Stock of Agway having the right to vote for the election of directors of
Agway under ordinary circumstances; and (b) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Agway (together with any new directors
whose election by the board of directors of Agway or whose nomination for
election by the Stockholders of Agway was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a majority of the directors then in office.
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party, wherever located.
"Closing Date" means March 28, 2001.
"Closing Checklist" means the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"CoBANK" means CoBANK, ACB.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Agent's or
any Lender's Lien on any Collateral is governed by the Uniform Commercial Code
A-4
as enacted and in effect in a jurisdiction other than the State of New York, the
term "Code" shall mean the Uniform Commercial Code as enacted and in effect in
such other jurisdiction solely for purposes of the provisions thereof relating
to such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
"Collateral" means the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"Collateral Documents" means the Security Agreement, the
Pledge Agreements, the Mortgages, the Intellectual Property Security Agreement
and all similar agreements entered into guaranteeing payment of, or granting a
Lien upon property as security for payment of, the Obligations.
"Collateral Reports" means the reports with respect to the
Collateral referred to in Annex F.
"Collection Account" means that certain account of Agent,
account number 000-000-00 in the name of Agent at Bankers Trust Company in New
York, New York ABA No. 021 001 033, or such other account as may be specified in
writing by Agent as the "Collection Account."
"Commercial Tort Claim" means a claim arising in tort with
respect to which: (a) the claimant is an organization; or (b) the claimant is an
individual and the claim: (i) arose in the course of the claimant's business or
profession; and (ii) does not include damages arising out of personal injury to
or the death of an individual.
"Commitment Termination Date" means the earliest of (a) Xxxxx
00, 0000, (x) the date of termination of Lenders' obligations to make Advances
and to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of prepayment in full
by Borrowers of the Loans and the cancellation and return (or stand-by
guarantee) of all Letters of Credit or the cash collateralization of all Letter
of Credit Obligations pursuant to Annex B, and the permanent reduction of all
Commitments to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment (including without duplication the Swing
Line Lender's Swing Line Commitment as a subset of its Revolving Loan
Commitment) as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender and (b) as to all Lenders, the
aggregate of all Lenders' Revolving Loan Commitments (including without
duplication the Swing Line Lender's Swing Line Commitment as a subset of its
Revolving Loan Commitment), which aggregate commitment shall be One Hundred
Seventy Five Million Dollars ($175,000,000) on the Closing Date, as to each of
clauses (a) and (b), as such Commitments may be reduced, amortized or adjusted
from time to time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in
Annex E.
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"Concentration Accounts" has the meaning ascribed to it in
Annex C.
"Condemnation Proceeds" has the meaning ascribed to it in
Section 5.4.
"Contracts" means all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, or (iii) a futures commission merchant or clearing house,
as applicable, with respect to commodity accounts and commodity contracts held
by any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.
"Copyright License" means any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.
"Credit Card Notices" means those certain notices issued by
Borrowers in favor of Agent to the Credit Card Providers pursuant to which such
Credit Card Providers agree to transfer all credit card receipts of Borrowers
into the Collection Account.
"Credit Card Providers" means the banks and finance companies
listed on Disclosure Schedule 3.26, as updated or supplemented from time to
time.
"Credit Parties" means each Borrower.
"Default" means any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section
1.5(d).
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"Disbursement Accounts" has the meaning ascribed to it in
Annex C.
"Disclosure Schedules" means the Schedules prepared by
Borrowers and denominated as Disclosure Schedules (1.4) through (6.15) in the
Index to the Agreement.
"Documents" means all "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"EBITDA" means, with respect to any Person for any fiscal
period, without duplication, an amount equal to (a) consolidated net income of
such Person for such period determined in accordance with GAAP, minus (b) the
sum of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains (including pension income) that have been added in determining
consolidated net income, in each case to the extent included in the calculation
of consolidated net income of such Person for such period in accordance with
GAAP, but without duplication, plus (c) the sum of (i) any provision for income
taxes, (ii) Interest Expense, (iii) loss from extraordinary items for such
period, (iv) the amount of depreciation and amortization for such period, (v)
amortized debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (2) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (3) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.
"Eligible Accounts" has the meaning ascribed to it in Section
1.6.
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"Eligible Deferred Term Accounts" means customer accounts,
comprised of a single invoice or series of invoices, having terms in excess of
30 days, payable either at a specific date in a lump sum or through regularly
scheduled payments over a period of time with a defined maturity date, and are
established in ordinary course of business for annual agronomic needs to
include, but not limited to, seed, fertilizer, crop protectant, or agronomic
services. Such accounts will be eligible to the extent defined in Section 1.6 of
this Agreement, notwithstanding Section 1.6(1)(i) which will be modified as to
such Accounts so that they will be deemed ineligible if not paid within the
earlier of 60 days following the due date of the scheduled payment or 90 days
following the scheduled payment, as applicable.
"Eligible Energy Product Inventory" means all Energy Product
Inventory (a) owned by Borrowers free and clear of all Liens and rights of any
other Person, except Liens in favor of Agent and Lenders and Permitted
Encumbrances, (b) which are not located on premises owned, leased or rented by
any Borrower or any of their Affiliates, (c) which is subject to a reasonably
satisfactory acknowledged bailee letter or access agreement that has been
received by Agent, (d) as to which Agent's and Lenders' Lien is a first
priority, perfected Lien, (e) as to which of all of the representations and
warranties pertaining to such Inventory set forth in the Agreement or the other
Loan Documents is true, and (f) as determined by Agent in its reasonable credit
judgment to not be excluded under Section 1.7 and otherwise to be "Eligible
Inventory" hereunder.
"Eligible In-Transit Inventory" means all Inventory, excluding
any Energy Product Inventory, owned by Borrowers and not covered by Letters of
Credit, and which Inventory is in transit to one of the Borrowers' locations and
which inventory (a) has been paid for and is owned by one of the Borrowers, (b)
is fully insured, (c) is subject to a first priority security interest in and
lien upon such goods in favor of Agent (except for any possessory lien upon such
goods in the possession of a freight carrier or shipping company securing only
the freight charges for the transportation of such goods to such Borrowers), (d)
is evidenced or deliverable pursuant to documents, notices, instruments,
statements and bills of lading that have been delivered to Agent or an agent
acting on its behalf, and (e) is otherwise deemed to be "Eligible Inventory"
hereunder.
"Eligible Inventory" has the meaning ascribed to it in Section
1.7.
"Energy Product Inventory" means all fuel, petroleum and
energy products, including without limitation, heating oil, propane, natural
gas, kerosene, diesel fuel and gasoline, now owned or hereafter acquired by any
Credit Party.
"Environmental Laws" means all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C.ss.ss.9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 X.X.X.xx.xx. 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.ss.136 et seq.); the
Solid Waste Disposal Act (42 X.X.X.xx.xx. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C.ss.ss.2601 et seq.); the Clean Air Act (42
U.S.C.ss.ss.7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C.ss.ss.1251 et seq.); the Occupational Safety and Health Act (29
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U.S.C.ss.ss.651 et seq.); and the Safe Drinking Water Act (42 U.S.C. xx.xx.
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any
trade or business (whether or not incorporated) that, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
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ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition that might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status; or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section
8.1.
"Exchange Agreements" mean collectively, (a) the Petroleum
Product Exchange and Thruput Agreement dated as of August 29, 2000, by and
between Amerada Xxxx Corporation and AEP, the Petroleum Product Exchange and
Thruput Agreement dated as of September 1, 1999, by and between Amerada Xxxx
Corporation and Agway Petroleum Corporation, the Exchange Agreement dated as of
July 1, 1987, by and between Amerada Xxxx Corporation and Agway Petroleum
Corporation, the Exchange Agreement dated as of July 1, 1998, by and between
Gulf Oil Limited Partnership and AEP, the Exchange or Thruput Agreement dated as
of February 1, 1991, by and between United Refining Company and Agway Petroleum
Corporation, the Exchange Agreement dated as of October 1, 1991, by and between
Mobil Oil Corporation and Agway Petroleum Corporation, the Exchange Agreement
dated as of July 1, 1998, by and between Coastal Refining & Marketing, Inc. and
AEP, as each may be amended, supplemented, restated, or otherwise modified from
time to time, and (b) any and all similar agreements entered into by any Credit
Party relating to the exchange of any Energy Product Inventory.
"Fair Labor Standards Act" means the Fair Labor Standards Act,
29 U.S.C. ss.201 et seq.
"Farm Products" means all "farm products" as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including but not limited to livestock and feeds.
"Federal Funds Rate" means, for any day, a floating rate equal
to the weighted average of the rates on overnight Federal funds transactions
among members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
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"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fees" means any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth
in Annex G.
"Financial Statements" means the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrowers delivered in accordance with Section 3.4 and Annex E.
"Fiscal Month" means any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" means any of the quarterly accounting periods
of Borrowers, which quarterly accounting periods through the Termination Date
are as set forth on Disclosure Schedule (6.15).
"Fiscal Year" means any of the annual accounting periods of
Borrowers which accounting periods are as set forth on Disclosure Schedule 6.15.
"Fixed Charges" means, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense paid or accrued during
such period, plus (b) scheduled payments of principal with respect to
Indebtedness (excluding Indebtedness consisting of Subordinated Debt and any
notes outstanding under the Milford Note Program) during such period, plus (c)
Capital Expenditures during such period, plus (d) dividends distributed in cash
with respect to the Preferred Stock and Common Stock of Agway for such period,
plus (e) the aggregate amount of cash required to be paid in respect of taxes
for such period, less (f) interest income (cash or non-cash), plus (g) in the
case of any Fiscal Quarter ending during the month of December, in the event the
aggregate principal amount of the outstanding Preferred Stock, Subordinated Debt
and outstanding notes under the Milford Note Program is less than $460,000,000,
the difference between such aggregate principal amount outstanding at the end of
such Fiscal Quarter and $460,000,000, plus (h) in the case of any Fiscal Quarter
ending during a month other than December, in the event the aggregate principal
amount of the outstanding Preferred Stock, Subordinated Debt and outstanding
notes under the Milford Note Program is less than $470,000,000, the difference
between such aggregate principal amount outstanding at the end of such Fiscal
Quarter and $470,000,000.
"Fixed Charge Coverage Ratio" means, with respect to any
Person for any fiscal period, the ratio of EBITDA to Fixed Charges.
"Fixtures" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Funded Debt" means, with respect to any Person, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness that by its terms matures more
than one year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from the
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date of creation thereof, and specifically including Capital Lease Obligations,
current maturities of long-term debt, revolving credit and short-term debt
extendible beyond one year at the option of the debtor, and also including, in
the case of Borrowers, the Obligations and, without duplication, Guaranteed
Indebtedness consisting of guaranties of Funded Debt of other Persons.
"GAAP" means generally accepted accounting principles in the
United States of America consistently applied, as such term is further defined
in Annex G to the Agreement.
"GE Capital" means General Electric Capital Corporation, a New
York corporation.
"GE Capital Fee Letter" means that certain letter, dated as of
January 17, 2001, between GE Capital and Borrowers with respect to certain Fees
to be paid from time to time by Borrowers to GE Capital.
"General Intangibles" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, chooses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, including embedded software.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" means as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner,
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including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Hazardous Material" means any substance, material or waste
that is regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance that is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
Holdings" means Agway Holdings Inc., a Delaware corporation.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred 6 months or
more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are unsecured and not overdue by more than 6 months
unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and surety
bonds, whether or not matured, (c) all obligations evidenced by notes, bonds,
debentures or similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
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assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in
Section 1.13.
"Indemnified Person" has the meaning ascribed to in Section
1.13.
"Indentures" means (i) that certain Indenture, dated as of
August 23, 1989, as amended, modified and supplemented, among AFC, Agway and Key
Bank of Central New York National Association, (ii) Indenture dated as of
September 1, 1976, by and between Agway, Inc. and First Trust & Deposit Company,
as Trustee, for Subordinated Debentures due July 1, 2001, (iii) Indenture dated
as of September 1, 1978, by and between Agway, Inc. and First Trust & Deposit
Company, as Trustee, for Subordinated Debentures due July 1, 2003, (iv)
Indenture dated as of September 1, 1985, by and between Agway, Inc. and Key Bank
of Central New York, as Trustee, for Subordinated Member Money Market
Certificates due October 31, 2005, (v) Indenture dated as of September 1, 1986,
by and between Agway Financial Corporation and Key Bank of Central New York, as
Trustee, for Subordinated Member Money Market Certificates, (vi) Supplemental
Indenture dated as of October 1, 1986, by and among Agway, Inc., Agway Financial
Corporation and Key Bank of Central New York, as Trustee, (vii) Indenture dated
as of August 24, 1987, by and between Agway Financial Corporation and Key Bank
of Central New York National Association, as Trustee, for Subordinated Member
Money Market Certificates, (viii) Indenture dated as of August 23, 1988, by and
between Agway Financial Corporation and Key Bank of Central New York, as
Trustee, for Subordinated Member Money Market Certificates, (ix) Supplemental
Indenture dated as of October 14, 1988, by and among Agway Financial
Corporation, Agway, Inc., as Guarantor, and Key Bank of Central New York
National Association, as Trustee, (x) Indenture dated as of August 23, 1989, by
and between Agway Financial Corporation, Agway, Inc. as Guarantor and Key Bank
of Central New York, as Trustee, for Subordinated Member Money Market
Certificates, and ( xi) Supplemental Indenture dated as of August 24, 1992, by
and among Agway Financial Corporation, Agway, Inc., as Guarantor, and Key Bank
of New York, as Trustee.
"Index Rate" means, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks" (or, if The Wall Street Journal ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
Each change in any interest rate provided for in the Agreement based upon the
Index Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instruments" means all "instruments," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificates of deposit, and all notes
and other, without limitation, evidences of indebtedness, other than instruments
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that constitute, or are a part of a group of writings that constitute, Chattel
Paper.
"Insurance Proceeds" has the meaning ascribed to it in Section
5.4.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intellectual Property Security Agreement" means the
Intellectual Property Security Agreement made in favor of Agent, on behalf of
itself and Lenders, by each applicable Credit Party, as amended from time to
time.
"Intercompany Notes" has the meaning ascribed to it in Section
6.3.
"Interest Expense" means, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period;
provided that, in addition to the foregoing, each of (x) the date upon which all
of the Commitments have been terminated and the Loans have been paid in full and
(y) the Commitment Termination Date shall be deemed to be an "Interest Payment
Date" with respect to any interest that has then accrued under the Agreement.
"Inventory" means all "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods, or
materials or supplies of any kind, nature or description used or consumed or to
be used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies and embedded software.
"Investment Property" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
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"IRC" means the Internal Revenue Code of 1986 and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"L/C Issuer" has the meaning ascribed to it in Annex B.
"L/C Sublimit" has the meaning ascribed to it in Annex B.
"Lenders" means GE Capital, the other Lenders named on the
signature pages of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include any assignee of
such Lender.
"Letter of Credit Fee" has the meaning ascribed to it in Annex
B.
"Letter of Credit Obligations" means all outstanding
obligations incurred by Agent and Lenders at the request of Borrower
Representative, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance of Letters of Credit by Agent or another
L/C Issuer or the purchase of a participation as set forth in Annex B with
respect to any Letter of Credit. The amount of such Letter of Credit Obligations
shall equal the maximum amount that may be payable at such time or at any time
thereafter by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" means documentary or standby letters of
credit issued for the account of any Borrower by any L/C Issuer, and bankers'
acceptances issued by any Borrower, for which Agent and Lenders have incurred
Letter of Credit Obligations.
"LIBOR Business Day" means a Business Day on which banks in
the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower Representative
pursuant to the Agreement and ending one, two or three months thereafter, as
selected by Borrower Representative's irrevocable notice to Agent as set forth
in Section 1.5(e); provided, that the foregoing provision relating to LIBOR
Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be to
carry such LIBOR Period into another calendar month in which event such LIBOR
Period shall end on the immediately preceding LIBOR Business Day
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end 2 LIBOR Business Days prior to such date;
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(c) any LIBOR Period that begins on the last LIBOR 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 LIBOR Period) shall
end on the last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as
not to require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that
there shall be no more than five (5) separate LIBOR Loans in existence at any
one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is 2 LIBOR Business Days prior to the
beginning of such LIBOR Period (including basic, supplemental, marginal and
emergency reserves under any regulations of the Federal Reserve Board or other
Governmental Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to Agent
and Borrower Representative.
"License" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
"Loan Account" has the meaning ascribed to it in Section 1.12.
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"Loan Documents" means the Agreement, the Notes, the
Collateral Documents, the Master Standby Agreement, and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of any Credit Party, or any employee of any Credit
Party, and delivered to Agent or any Lender in connection with the Agreement or
the transactions contemplated thereby. Any reference in the Agreement or any
other Loan Document to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan Document as
the same may be in effect at any and all times such reference becomes operative.
"Loans" means the Revolving Loan and the Swing Line Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Margin Stock" has the meaning ascribed to in Section 3.10.
"Master Standby Agreement" means the Master Agreement for
Standby Letters of Credit dated as of the Closing Date among Borrowers, as
Applicant(s), and GE Capital, as issuer.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of any Credit Party or the Credit Parties taken as a whole, (b) any Borrower's
ability to pay any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement, (c) the Collateral or Agent's Liens, on behalf
of itself and Lenders, on the Collateral or the priority of such Liens, or (d)
Agent's or any Lender's rights and remedies under the Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, any event or
occurrence adverse to one or more Credit Parties which results or could
reasonably be expected to result in costs and/or liabilities or loss of
revenues, individually or in the aggregate, measured at the time of such event
or occurrence, to any Credit Party in excess of the lesser of $20,000,000 and
10% of Borrowing Availability as of any date of determination shall constitute a
Material Adverse Effect.
"Maximum Amount" means, as of any date of determination, an
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"Mortgaged Properties" has the meaning assigned to it in Annex
D.
"Mortgages" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
on behalf of itself and Lenders with respect to the Mortgaged Properties, all in
form and substance reasonably satisfactory to Agent.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate
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is making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Orderly Liquidation Value" means as to any Eligible
Inventory, the net orderly liquidation value of such Eligible Inventory, as
determined by an appraisal, performed by an appraiser retained by Borrowers and
acceptable to Agent and reflecting asset values acceptable to Agent.
"Net Worth" means, with respect to any Person as of any date
of determination, the book value of the assets of such Person, minus the sum of
(a) reserves applicable thereto, and (b) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes and the Swing
Line Notes.
"Notice of Conversion/Continuation" has the meaning ascribed
to it in Section 1.5(e).
"Notice of Revolving Credit Advance" has the meaning ascribed
to it in Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities
and obligations for the performance of covenants, tasks or duties or for payment
of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"Overadvance" has the meaning ascribed to it in Section
1.1(a)(iii).
"PACA" means the Perishable Agricultural Commodities Act, 7
U.S.C.ss.499, as it may be amended from time to time.
"Patent License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
"Patents" means all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or of any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of
ERISA.
"Permitted Encumbrances" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business (other than liens or statutory trusts arising under
PACA or the Food Security Act of 1985 (7 U.S.C. Section 1631et seq.)) and
securing liabilities in an outstanding aggregate amount not in excess of
$250,000 at any time, so long as such Liens attach only to Inventory; (f)
deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings
to which any Credit Party is a party; (g) any attachment or judgment lien not
constituting an Event of Default under Section 8.1(j); (h) zoning restrictions,
easements, licenses, or other restrictions on the use of any Real Estate or
other minor irregularities in title (including leasehold title) thereto, so long
as the same do not materially impair the use, value, or marketability of such
Real Estate; (i) presently existing or hereafter created Liens in favor of
Agent, on behalf of Lenders; (j) Liens expressly permitted under clauses (b) and
(c) of Section 6.7 of the Agreement; and (k) leases or subleases granted to
others not interfering in any material respect with the business of any Credit
Party.
"Permitted Telmark Sale-Leaseback Transactions" means those
certain proposed sale-leaseback transactions identified on Disclosure Schedule
(6.7(b)) between any of the Telmark Entities and any Borrower, provided at the
time of any such proposed sale-leaseback transaction, the applicable Telmark
Entity is not in default of any of its existing credit facilities, and provided
further that Borrowers shall cause on or before April 15, 2001 any equipment
subject to that certain Master Lease Agreement, dated June 25, 1997 between
Agway, Inc. and Fleet Bank, upon the release and/or purchase of such equipment
under such Master Lease Agreement, to become subject to a lease agreement
between one of the Telmark Entities and Agway, Inc., provided however Borrowers
shall not be required to subject any equipment identified on Schedules 1, 2, 6,
11 and 14 of Master Lease Agreement to a lease with one of the Telmark Entities.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" means, at any time, an "employee benefit plan", as
defined in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to or has
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maintained, contributed to or had an obligation to contribute to at any time
within the past 7 years on behalf of participants who are or were employed by
any Credit Party or ERISA Affiliate.
"Pledge Agreement" means the Pledge Agreements of even date
herewith executed by Borrowers in favor of Agent, on behalf of itself and
Lenders, pledging all Stock or interests, as the case may be, and all
Intercompany Notes owing to or held by them, as amended from time to time.
"Preferred Stock" means the 6% Cumulative Preferred Stock,
Series A, the 8% Cumulative Preferred Stock, Series B, the 7% Cumulative
Preferred Stock, Series C and Series HM Preferred Stock issued by Agway.
"Prior Lender" means collectively, CoBANK and Rabo Bank.
"Prior Lender Obligations" means all obligations of any Credit
Party and any of their Subsidiaries to the Prior Lender pursuant to that certain
(i) Master Loan Agreement, dated as of January 1, 1998 between CoBANK and AFC,
as amended, modified and supplemented, and (ii) Amended and Restated Letter of
Credit and Reimbursement Agreement, dated as of December 10, 1997, between AFC
and Rabo Bank, as amended, modified and supplemented.
"Proceeds" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral, (e) dividends, interest,
distributions and Instruments with respect to Investment Property and pledged
Stock, and (f) any and all other amounts from time to time paid or payable under
or in connection with any of the Collateral, upon disposition or otherwise.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheet of Borrowers and their Subsidiaries as of December 31, 2000 after
giving pro forma effect to the Related Transactions.
"Projections" means Borrowers' forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary (excluding the Telmark Entities, Agway Insurance Company and all of
their respective Subsidiaries) or division-by-division basis, if applicable, and
otherwise consistent with the historical Financial Statements of the Borrowers,
together with appropriate supporting details and a statement of underlying
assumptions.
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"Pro Rata Share" means with respect to all matters relating to
any Lender, (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders, (b) with respect to all Loans, the
percentage obtained by dividing (i) the aggregate Commitments of that Lender by
(ii) the aggregate Commitments of all Lenders, and (d) with respect to all Loans
on and after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Loans held by
that Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Assignee" means (a) any Lender, any Affiliate of
any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in
commercial loans and that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act of 1933) which extends credit or buys loans as one of its
businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of
BBB or higher from S&P and a rating of Baa2 or higher from Xxxxx'x at the date
that it becomes a Lender and which, through its applicable lending office, is
capable of lending to Borrowers without the imposition of any withholding or
similar taxes; provided that no Person determined by Agent to be acting in the
capacity of a vulture fund or distressed debt purchaser shall be a Qualified
Assignee, and no Person or Affiliate of such Person (other than a Person that is
already a Lender) holding Subordinated Debt or Stock issued by any Credit Party
shall be a Qualified Assignee.
"Rabo Bank" means Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch.
"Ratable Share" has the meaning ascribed to it in Section
1.1(b).
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Refinancing" means the repayment in full by Borrowers of the
Prior Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" has the meaning ascribed to it in
Section 1.1(b)(iii).
"Related Transactions" means the initial borrowing under the
Revolving Loan on the Closing Date, the Refinancing, the payment of all fees,
costs and expenses associated with all of the foregoing and the execution and
delivery of all of the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents and
all other agreements or instruments executed in connection with the Related
Transactions.
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"Release" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" means at least 2 Lenders having in the
aggregate (a) more than 51% of the Commitments of all Lenders, or (b) if the
Commitments have been terminated, more than 51% of the aggregate outstanding
amount of all Loans.
"Reserves" means (a) reserves established by Agent from time
to time against Eligible Inventory pursuant to Section 5.9, (b) reserves
established by Agent from time to time against the Borrowing Base pursuant to
Section 5.12, (c) reserves established pursuant to Section 5.4(c), (d) a
dilution reserve with respect to Eligible Accounts, and (e) such other reserves
against Eligible Accounts, Eligible Inventory or Borrowing Availability of
Borrowers that Agent may, in its reasonable credit judgment, establish from time
to time. Without limiting the generality of the foregoing, Reserves established
to ensure the payment of accrued Interest Expenses or Indebtedness shall be
deemed to be a reasonable exercise of Agent's credit judgment.
"Restricted Payment" means, with respect to any Credit Party
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of Stock; (b) any payment on account of the purchase,
redemption, defeasance, sinking fund or other retirement of such Credit Party's
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly; (c) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated Debt; (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire Stock
of such Credit Party now or hereafter outstanding; (e) any payment of a claim
for the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party's Stock or of a
claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder of
such Credit Party other than payment of compensation in the ordinary course of
business to Stockholders who are employees of such Person; and (g) any payment
of management fees (or other fees of a similar nature) by such Credit Party to
any Stockholder of such Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a)(i).
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"Revolving Lenders" means, as of any date of determination,
Lenders having a Revolving Loan Commitment.
"Revolving Loan" means, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrowers plus (ii)
the aggregate Letter of Credit Obligations incurred on behalf of Borrowers.
Unless the context otherwise requires, references to the outstanding principal
balance of the Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations.
"Revolving Loan Commitment" means (a) as to any Lender, the
aggregate commitment of such Lender to make Revolving Credit Advances or incur
Letter of Credit Obligations as set forth on Annex J to the Agreement or in the
most recent Assignment Agreement executed by such Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances or incur Letter of Credit Obligations, which aggregate commitment shall
be One Hundred Seventy Five Million Dollars ($175,000,000) on the Closing Date,
as such amount may be adjusted, if at all, from time to time in accordance with
the Agreement.
"Revolving Note" has the meaning ascribed to it in Section
1.1(a)(ii).
"Security Agreement" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto, as amended, modified or
supplemented from time to time.
"Senior Interest Coverage Ratio" means, with respect to any
Person for any period, the ratio of EBITDA to Senior Interest Expense.
"Senior Interest Expense" means, with respect to any Person
for any fiscal period, interest expense (whether cash or non-cash) of such
Person determined in accordance with GAAP for the relevant period ended on such
date, including, interest expense with respect to any Funded Debt of such Person
and interest expense for the relevant period that has been capitalized on the
balance sheet of such Person, excluding interest expense due in connection with
the Milford Note Program and excluding interest expense (whether cash or
non-cash) due under Subordinated Debt.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
be reasonably be expected to become an actual or matured liability.
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"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
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
Securities and Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder
of Stock of such Person.
"Subordinated Debt" means the Indebtedness of AFC evidenced by
the Subordinated Notes and any other Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subordinated Notes" means those certain subordinated money
market certificates and debentures issued by AFC pursuant to the Indentures.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower.
"Supermajority Revolving Lenders" means Lenders having (a)
66-2/3% or more of the Revolving Loan Commitments of all Lenders, or (b) if the
Revolving Loan Commitments have been terminated, 66-2/3% or more of the
aggregate outstanding amount of the Revolving Loan (with the Swing Line Loan
being attributed to the Lender making such Loan) and Letter of Credit
Obligations.
"Supporting Obligations" means a letter-of-credit right or
secondary obligation that supports the payment or performance of an Account,
Chattel Paper, a Document, a General Intangible, an Instrument, or Investment
Property.
"Swing Line Advance" has the meaning ascribed to it in Section
1.1(b)(i).
"Swing Line Availability" has the meaning ascribed to it in
Section 1.1(b)(i).
"Swing Line Commitment" means, as to the Swing Line Lender,
the commitment of the Swing Line Lender to make Swing Line Advances as set forth
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on Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" means GE Capital.
"Swing Line Loan" means, as the context may require, at any
time, the aggregate amount of Swing Line Advances outstanding to any Borrower or
to all Borrowers.
"Swing Line Note" has the meaning ascribed to it in Section
1.1(b)(ii).
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"Telmark Entities" means collectively, Telmark LLC, Telease
Financial Services, Ltd., Telmark Lease Funding I LLC, Telmark Lease Funding II
LLC and Telmark Lease Funding III LLC and any Subsidiary of any of them formed
after the Closing Date.
"Termination Date" means the date on which (a) the Loans have
been repaid in full, (b) all other Obligations under the Agreement and the other
Loan Documents have been completely discharged (c) all Letter of Credit
Obligations have been cash collateralized, canceled or backed by standby letters
of credit in accordance with Annex B, and (d) none of Borrowers shall have any
further right to borrow any monies under the Agreement.
"Title IV Plan" means a Pension Plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA, and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"Trademark License" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"Trademarks" means all of the following now owned or hereafter
existing or adopted or acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
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assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Welfare Plan" means a Plan described in Section 3(i) of
ERISA.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code as in
effect in the State of New York to the extent the same are used or defined
therein. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection
or clause as contained in the Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may from time to time
be amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
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ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower Representative
on behalf of Borrowers' account, Letter of Credit Obligations by causing Letters
of Credit to be issued by GE Capital or a Subsidiary thereof or a bank or other
legally authorized Person selected by or acceptable to Agent in its sole
discretion (each, an "L/C Issuer") for such Borrower's account and guaranteed by
Agent; provided, that if the L/C Issuer is a Revolving Lender, then such Letters
of Credit shall not be guaranteed by Agent but rather each Revolving Lender
shall, subject to the terms and conditions hereinafter set forth, purchase (or
be deemed to have purchased) risk participations in all such Letters of Credit
issued with the written consent of Agent, as more fully described in paragraph
(b)(ii) below. The aggregate amount of all such Letter of Credit Obligations
shall not at any time exceed the least of (i) Thirty Five Million Dollars
($35,000,000) (the "L/C Sublimit") and (ii) the Maximum Amount less the
aggregate outstanding principal balance of the Revolving Credit Advances and the
Swing Line Loan, and (iii) the Borrowing Base less the aggregate outstanding
principal balance of the Revolving Credit Advances and the Swing Line Loan. No
such Letter of Credit shall have an expiry date that is more than one year
following the date of issuance thereof, unless otherwise determined by the
Agent, in its sole discretion, and neither Agent nor Revolving Lenders shall be
under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date that
is later than the Commitment Termination Date.
(b) (i) Advances Automatic; Participations. In the event that
Agent or any Revolving Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance to the applicable Borrower under Section
1.1(a) of the Agreement regardless of whether a Default or Event of Default has
occurred and is continuing and notwithstanding any Borrower's failure to satisfy
the conditions precedent set forth in Section 2, and each Revolving Lender shall
be obligated to pay its Pro Rata Share thereof in accordance with the Agreement.
The failure of any Revolving Lender to make available to Agent for Agent's own
account its Pro Rata Share of any such Revolving Credit Advance or payment by
Agent under or in respect of a Letter of Credit shall not relieve any other
Revolving Lender of its obligation hereunder to make available to Agent its Pro
Rata Share thereof, but no Revolving Lender shall be responsible for the failure
of any other Revolving Lender to make available such other Revolving Lender's
Pro Rata Share of any such payment.
(ii) If it shall be illegal or unlawful for any Borrower to
incur Revolving Credit Advances as contemplated by paragraph (b)(i) above
because of an Event of Default described in Sections 8.1(h) or (i) or otherwise
or if it shall be illegal or unlawful for any Revolving Lender to be deemed to
have assumed a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Revolving Lender, then (A) immediately and
without further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
B-1
case may be) an undivided interest and participation equal to such Revolving
Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the Letter
of Credit Obligations in respect of all Letters of Credit then outstanding and
(B) thereafter, immediately upon issuance of any Letter of Credit, each
Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation in such Revolving Lender's Pro Rata Share (based on
the Revolving Loan Commitments) of the Letter of Credit Obligations with respect
to such Letter of Credit on the date of such issuance. Each Revolving Lender
shall fund its participation in all payments or disbursements made under the
Letters of Credit in the same manner as provided in the Agreement with respect
to Revolving Credit Advances.
(c) Cash Collateral.
(i) If Borrowers are required to provide cash collateral for
any Letter of Credit Obligations pursuant to the Agreement prior to the
Commitment Termination Date, each Borrower will pay to Agent for the ratable
benefit of itself and Revolving Lenders cash or cash equivalents acceptable to
Agent ("Cash Equivalents") in an amount equal to 105% of the maximum amount then
available to be drawn under each applicable Letter of Credit outstanding for the
benefit of such Borrower. Such funds or Cash Equivalents shall be held by Agent
in a cash collateral account (the "Cash Collateral Account") maintained at a
bank or financial institution acceptable to Agent. The Cash Collateral Account
shall be in the name of the applicable Borrower and shall be pledged to, and
subject to the control of, Agent, for the benefit of Agent and Lenders, in a
manner satisfactory to Agent. Each Borrower hereby pledges and grants to Agent,
on behalf of itself and Lenders, a security interest in all such funds and Cash
Equivalents held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of all amounts due in respect of
the Letter of Credit Obligations and other Obligations, whether or not then due.
The Agreement, including this Annex B, shall constitute a security agreement
under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then
due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrowers shall either (A) provide cash collateral therefor in
the manner described above, or (B) cause all such Letters of Credit and
guaranties thereof, if any, to be canceled and returned, or (C) deliver a
stand-by letter (or letters) of credit in guaranty of such Letter of Credit
Obligations, which stand-by letter (or letters) of credit shall be of like tenor
and duration (plus 30 additional days) as, and in an amount equal to 105% of,
the aggregate maximum amount then available to be drawn under, the Letters of
Credit to which such outstanding Letter of Credit Obligations relate and shall
be issued by a Person, and shall be subject to such terms and conditions, as are
be satisfactory to Agent in its sole discretion.
(iii) From time to time after funds are deposited in the Cash
Collateral Account by any Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable by such Borrower to
Agent and Lenders with respect to such Letter of Credit Obligations of such
B-2
Borrower and, upon the satisfaction in full of all Letter of Credit Obligations
of such Borrower, to any other Obligations of any Borrower then due and payable.
(iv) No Borrower nor any Person claiming on behalf of or
through any Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrowers to Agent and Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other Obligations
then due and owing and upon payment in full of such Obligations, any remaining
amount shall be paid to Borrowers or as otherwise required by law. Interest
earned on deposits in the Cash Collateral Account shall be for the account of
Agent.
(d) Fees and Expenses. Borrowers agree to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (i) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (ii)
for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "Letter of Credit Fee") in an amount equal to the
Applicable L/C Margin from time to time in effect multiplied by the maximum
amount available from time to time to be drawn under the applicable Letter of
Credit. Such fee shall be paid to Agent for the benefit of the Revolving Lenders
in arrears, on the first day of each month and on the Commitment Termination
Date. In addition, Borrowers shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit Obligations.
Borrower Representative shall give Agent at least 2 Business Days' prior written
notice requesting the incurrence of any Letter of Credit Obligation. The notice
shall be accompanied by the form of the Letter of Credit (which shall be
acceptable to the L/C Issuer) and a completed Application for Standby Letter of
Credit in the form of Exhibit B attached hereto. Notwithstanding anything
contained herein to the contrary, Letter of Credit applications by Borrower
Representative and approvals by Agent and the L/C Issuer may be made and
transmitted pursuant to electronic codes and security measures mutually agreed
upon and established by and among Borrower Representative, Agent and the L/C
Issuer.
(f) Obligation Absolute. The obligation of Borrowers to
reimburse Agent and Revolving Lenders for payments made with respect to any
Letter of Credit Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrowers and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following:
(i) any lack of validity or enforceability of any Letter of
Credit or the Agreement or the other Loan Documents or any other agreement;
B-3
(ii) the existence of any claim, setoff, defense or other
right that any Borrower or any of their respective Affiliates or any Lender may
at any time have against a beneficiary or any transferee of any Letter of Credit
(or any Persons or entities for whom any such transferee may be acting), Agent,
any Lender, or any other Person, whether in connection with the Agreement, the
Letter of Credit, the transactions contemplated herein or therein or any
unrelated transaction (including any underlying transaction between any Borrower
or any of their respective Affiliates and the beneficiary for which the Letter
of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided
in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit or
guaranty thereof against presentation of a demand, draft or certificate or other
document that does not comply with the terms of such Letter of Credit or such
guaranty;
(v) any other circumstance or event whatsoever, that is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default has
occurred and is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in
the Agreement, Borrowers hereby agree to pay and to protect, indemnify, and save
harmless Agent and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) that Agent or any
Lender may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of
Agent or any Lender seeking indemnification or of any L/C Issuer to honor a
demand for payment under any Letter of Credit or guaranty thereof as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority, in each case other than
to the extent solely as a result of the gross negligence or willful misconduct
of Agent or such Lender (as finally determined by a court of competent
jurisdiction).
(ii) As between Agent and any Lender and Borrowers, Borrowers
assume all risks of the acts and omissions of, or misuse of any Letter of Credit
by beneficiaries, of any Letter of Credit. In furtherance and not in limitation
of the foregoing, to the fullest extent permitted by law, neither Agent nor any
Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (C) failure of
the beneficiary of any Letter of Credit to comply fully with conditions required
B-4
in order to demand payment under such Letter of Credit; provided, that in the
case of any payment by Agent under any Letter of Credit or guaranty thereof,
Agent shall be liable to the extent such payment was made solely as a result of
its gross negligence or willful misconduct (as finally determined by a court of
competent jurisdiction) in determining that the demand for payment under such
Letter of Credit or guaranty thereof complies on its face with any applicable
requirements for a demand for payment under such Letter of Credit or guaranty
thereof; (D) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they may be in cipher; (E) errors in interpretation of technical terms;
(F) any loss or delay in the transmission or otherwise of any document required
in order to make a payment under any Letter of Credit or guaranty thereof or of
the proceeds thereof; (G) the credit of the proceeds of any drawing under any
Letter of Credit or guaranty thereof; and (H) any consequences arising from
causes beyond the control of Agent or any Lender. None of the above shall
affect, impair, or prevent the vesting of any of Agent's or any Lender's rights
or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrowers in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between or among Borrowers and such
L/C Issuer, including an Application and Agreement For Standby Letter of Credit,
and a Master Standby Agreement entered into with Agent.
B-5
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Each Borrower shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination
Date, each Borrower shall deposit and cause its Subsidiaries to 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 cash, checks, drafts or other similar
items of payment relating to or constituting payments made in respect of any and
all Collateral (whether or not otherwise delivered to a Lock Box) into lock
boxes ("Lock Boxes") at the banks identified in Disclosure Schedule (3.19) (the
"Lock Box Banks"), or in the blocked accounts ("Blocked Accounts") at the banks
identified in Disclosure Schedule (3.19) (the "Blocked Account Banks" and
together with the Lock Box Banks, the "Relationship Banks" and each, a
"Relationship Bank") or other depository accounts (the "Deposit Accounts")
identified on Disclosure Schedule 3.19. On or before the Closing Date, the
Credit Parties shall have established a concentration account (the
"Concentration Account") at the bank designated as the Concentration Account
bank in Disclosure Schedule (3.19) (the "Concentration Account Bank"), which
bank shall be reasonably satisfactory to Agent. On or before December 1, 2001,
Agway shall establish a Lock Box for the agriculture feed at a bank reasonably
acceptable to Agent and for the agriculture agronomy at a bank reasonably
acceptable to Agent, and shall request in writing and otherwise take such
reasonable steps to ensure that all relevant Account Debtors forward payment
directly to such Lock Boxes.
(b) Each Borrower may maintain, in its name, an account (each
a "Disbursement Account" and collectively, the "Disbursement Accounts") at a
bank reasonably acceptable to Agent into which Agent shall, from time to time,
deposit proceeds of Revolving Credit Advances and Swing Line Advances made to
such Borrower pursuant to Section 1.1 for use by such Borrower solely in
accordance with the provisions of Section 1.4.
(c) On or before the Closing Date (or such later date as Agent
shall consent to in writing), the Concentration Account Bank, each bank where a
Disbursement Account is maintained and all other Relationship Banks, shall have
entered into tri-party lockbox account agreements or blocked account agreements,
as appropriate, with Agent, for the benefit of itself and Lenders, and the
applicable Borrower and Subsidiaries thereof, as applicable, in form and
substance reasonably acceptable to Agent, which shall become operative on or
prior to the Closing Date. Each such lockbox account agreement and each such
blocked account agreement shall provide, among other things, that (i) all items
of payment deposited in such account and proceeds thereof deposited in the
Concentration Account are held by such bank as agent or bailee-in-possession or
as depository for Agent, on behalf of itself and Lenders, (ii) the bank
executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Closing Date (A) with respect to banks at which a Lock Box is
C-1
maintained, such Lock Box Bank agrees to forward immediately all amounts in each
Lock Box to the Concentration Account Bank and to commence the process of daily
sweeps from such Lock Box Account into the Concentration Account, (B) with
respect to banks at which a Blocked Account is maintained, such Blocked Account
Bank agrees to forward immediately all amounts in each Blocked Account to the
Concentration Account Bank and to commence the process of daily sweeps from such
Blocked Account into the Concentration Account, provided, that a reserve for
fees and returned items may be maintained in certain of the Lock Boxes and
Blocked Accounts listed on Disclosure Schedule (3.19) in an amount not to exceed
the amount set forth opposite the respective account numbers on Disclosure
Schedule (3.19) after the wire transfer has been made on any business day, and
(C) with respect to the Concentration Account Bank, such bank agrees to
immediately forward all amounts received in the Concentration Account to the
Collection Account through daily sweeps from the Concentration Account into the
Collection Account. No Borrower shall, or shall cause or permit any Subsidiary
thereof to, accumulate or maintain cash in Disbursement Accounts or payroll
accounts as of any date of determination in excess of checks or ACH payments
outstanding against such accounts as of that date and amounts necessary to meet
minimum balance or prefunding requirements.
(d) So long as no Default or Event of Default has occurred and
is continuing, Borrowers may amend Disclosure Schedule (3.19) to add or replace
a Relationship Bank, Lock Box, Blocked Account, or Deposit Account or to replace
any Concentration Account or any Disbursement Account; provided, that (i) Agent
shall have consented in writing in advance to the opening of such account or
Lock Box with the relevant bank and (ii) prior to the time of the opening of
such account or Lock Box, the applicable Borrower or its Subsidiaries, as
applicable, and such bank shall have executed and delivered to Agent a tri-party
blocked account, lock box or concentration account agreement, in form and
substance reasonably satisfactory to Agent except that no such agreement shall
be entered into with respect to any new Deposit Accounts. Borrowers shall close
any of their accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within 30 days following notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or Lock Boxes of the bank holding such accounts or Agent's
liability under any tri-party lock box or blocked account agreement with such
bank is no longer acceptable in Agent's reasonable judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts,
the Concentration Accounts and the Deposit Accounts shall be cash collateral
accounts, with all cash, checks and other similar items of payment in such
accounts securing payment of the Loans and all other Obligations, and in which
each Borrower and each Subsidiary thereof shall have granted a Lien to Agent, on
behalf of itself and Lenders, pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with Section 1.10 and shall be applied
(and allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
C-2
(g) Each Borrower shall and shall cause its Affiliates,
officers, employees, agents, directors or other Persons acting for or in concert
with such Borrower (each a "Related Person") to (i) hold in trust for Agent, for
the benefit of itself and Lenders, all checks, cash and other items of payment
received by such Borrower or any such Related Person, and (ii) within 1 Business
Day after receipt by such Borrower or any such Related Person of any checks,
cash or other items of payment, deposit the same into a Blocked or Lock Box
Account of such Borrower. Each Borrower and each Related Person thereof
acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral. All proceeds of
the sale or other disposition of any Collateral, shall be deposited directly
into the applicable Blocked Accounts, Lock Box Accounts or Deposit Accounts as
listed on Disclosure Schedule 3.19.
C-3
ANNEX D (SECTION 2.1(A))
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):
(a) Appendices. All Appendices to the Agreement, in form and
substance satisfactory to Agent.
(b) Revolving Notes and Swing Line Notes. Duly executed
originals of the Revolving Notes and Swing Line Notes for each applicable
Lender, dated the Closing Date.
(c) Security Agreement. Duly executed originals of the
Security Agreement, dated the Closing Date, and all instruments, documents and
agreements executed pursuant thereto.
(d) Insurance. Satisfactory evidence that the insurance
policies required by Section 5.4 are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or
endorsements, as requested by Agent, in favor of Agent, on behalf of Lenders.
(e) Security Interests and Code Filings.
(i) Evidence satisfactory to Agent that Agent (for the benefit
of itself and Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly executed by each
Credit Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Agent may request in order to perfect its security interests in the
Collateral and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together with copies
of such financing statements, none of which shall cover the Collateral, except
for those relating to the Prior Lender Obligations (all of which shall be
terminated on the Closing Date).
(ii) Evidence satisfactory to Agent, including copies, of all
UCC-1 and other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Inventory may be consigned.
(iii) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by each Borrower, (ii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of each Borrower, and (iii) all futures commission agents and
clearing houses with respect to all commodities contracts and commodities
accounts held by any Borrower.
D-1
(f) Payoff Letter; Termination Statements. Copies of a duly
executed payoff letter, in form and substance reasonably satisfactory to Agent,
by and between all parties to the Prior Lender loan documents evidencing
repayment in full of all Prior Lender Obligations, together with (a) UCC-3 or
other appropriate termination statements, in form and substance satisfactory to
Agent, manually signed by the Prior Lender releasing all liens of Prior Lender
upon any of the personal property of each Credit Party, and (b) termination of
all blocked account agreements, bank agency agreements or other similar
agreements or arrangements or arrangements in favor of Prior Lender or relating
to the Prior Lender Obligations.
(g) Intellectual Property Security Agreement. Duly executed
originals of the Intellectual Property Security Agreement, dated the Closing
Date and signed by each Credit Party which owns Trademarks, Copyrights and/or
Patents, as applicable, all in form and substance reasonably satisfactory to
Agent, together with all instruments, documents and agreements executed pursuant
thereto.
(h) Initial Borrowing Base Certificate. Duly executed
originals of an initial Borrowing Base Certificate from Borrowers, dated the
Closing Date, reflecting information concerning Eligible Accounts and Eligible
Inventory of Borrowers as of a date not more than 7 days prior to the Closing
Date.
(i) Initial Notice of Revolving Credit Advance. Duly executed
originals of a Notice of Revolving Credit Advance, dated the Closing Date, with
respect to the initial Revolving Credit Advance to be requested by Borrower
Representative on the Closing Date.
(j) Letter of Direction. Duly executed originals of a letter
of direction from Borrower Representative addressed to Agent, on behalf of
itself and Lenders, with respect to the disbursement on the Closing Date of the
proceeds of the initial Revolving Credit Advance.
(k) Cash Management System; Blocked Account Agreements.
Evidence satisfactory to Agent that, as of the Closing Date, Cash Management
Systems complying with Annex C to the Agreement have been established and are
currently being maintained in the manner set forth in such Annex C, together
with copies of duly executed tri-party blocked account and lock box agreements,
reasonably satisfactory to Agent, with the banks as required by Annex C.
(l) Charter and Good Standing. For each Credit Party, such
Person's (a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental Authority.
(m) Bylaws and Resolutions. For each Credit Party, (a) such
Person's bylaws, together with all amendments thereto and (b) resolutions of
such Person's Board of Directors and stockholders, approving and authorizing the
execution, delivery and performance of the Loan Documents to which such Person
is a party and the transactions to be consummated in connection therewith, each
D-2
certified as of the Closing Date by such Person's corporate secretary or an
assistant secretary as being in full force and effect without any modification
or amendment.
(n) Incumbency Certificates. For each Credit Party, signature
and incumbency certificates of the officers of each such Person executing any of
the Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
(o) Opinions of Counsel. Duly executed originals of opinions
of Weil, Gotshal & Xxxxxx LLP, counsel for the Credit Parties, together with any
local counsel opinions reasonably requested by Agent, each in form and substance
reasonably satisfactory to Agent and its counsel, dated the Closing Date, and
each accompanied by a letter addressed to such counsel from the Credit Parties,
authorizing and directing such counsel to address its opinion to Agent, on
behalf of Lenders, and to include in such opinion an express statement to the
effect that Agent and Lenders are authorized to rely on such opinion.
(p) Pledge Agreements. Duly executed originals of each of the
Pledge Agreements accompanied by (as applicable) (a) share or interest
certificates representing all of the outstanding Stock or interest being pledged
pursuant to such Pledge Agreement and stock or interest powers for such share or
interest certificates executed in blank and (b) the original Intercompany Notes
and other instruments evidencing Indebtedness being pledged pursuant to such
Pledge Agreement, duly endorsed in blank.
(q) Accountants' Letters. A letter from the Credit Parties to
their independent auditors authorizing the independent certified public
accountants of the Credit Parties to communicate with Agent and Lenders in
accordance with Section 4.2.
(r) Fee Letter. Duly executed originals of the GE Capital Fee
Letter.
(s) Officer's Certificate. Agent shall have received duly
executed originals of a certificate of the Treasurer or Assistant Treasurer of
each Borrower, dated the Closing Date, stating that, since June 24, 2000 (a) no
event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) no Litigation has been commenced
which, if successful, would have a Material Adverse Effect or could challenge
any of the transactions contemplated by the Agreement and the other Loan
Documents; and (c) except for changes due to the seasonal nature of Borrowers'
business, there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of any Borrower or any of its
Subsidiaries.
(t) Waivers. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters, access agreements and mortgagee
agreements in form and substance reasonably satisfactory to Agent, in each case
as required pursuant to Section 5.9.
(u) Mortgages. Mortgages covering all of the Real Estate
identified on Annex D-1 (each a "Mortgaged Property," collectively the
"Mortgaged Properties") together with: (a) title searches, in each case
reasonably satisfactory in form and substance to Agent; (b) evidence that
counterparts of the Mortgages have been recorded in all places to the extent
necessary or desirable, in the judgment of Agent, to create a valid and
D-3
enforceable first priority lien (subject to Permitted Encumbrances) on each
Mortgaged Property in favor of Agent for the benefit of itself and Lenders (or
in favor of such other trustee as may be required or desired under local law);
and (c) an opinion of counsel in each state in which any Mortgaged Property is
located in form and substance and from counsel reasonably satisfactory to Agent;
and (d) any lease amendments or other forms of consent required from any
landlords and third parties in connection with such Mortgages.
(v) Audited Financials; Financial Condition. Agent shall have
received the Financial Statements, Projections and other materials set forth in
Section 3.4, certified by Borrower Representative's Chief Financial Officer, in
each case in form and substance reasonably satisfactory to Agent, and Agent
shall be satisfied, in its sole discretion, with all of the foregoing. Agent
shall have further received a certificate of the Chief Financial Officer of
Borrower Representative, based on such Projections, to the effect that (a) each
Borrower will be Solvent upon the consummation of the transactions contemplated
herein except with respect to Holdings, Agway General Agency, Inc., Country
Best-XxXxxxx LLC, Country Best Xxxxx, LLC and Agway Energy Services-PA, Inc.,
(b) Borrowers on a consolidated basis will be Solvent upon the consummation of
the transactions contemplated herein, and (c) the Projections are based upon
estimates and assumptions stated therein, all of which Borrower Representative
believes to be reasonable and fair in light of current conditions and current
facts known to Borrower Representative and, as of the Closing Date, reflect
Borrower Representative's good faith and reasonable estimates of its future
financial performance and of the other information projected therein for the
period set forth therein.
(w) Master Standby Agreement. A Master Agreement for Standby
Letters of Credit among Borrowers and GE Capital.
(x) Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Agent may, in its sole discretion,
request.
X-0
XXXXX X-0
MORTGAGED PROPERTIES
FEE
Property Name Owner Address
------------- ----- -------
Xxxxx Crops Agway, Inc. 0 Xxxx Xxx
Xxxxx
Xxxxxxxxx Xxxxxx
Xxx Xxxx
Xxxxxxx Fertilizer Agway, Inc. 0000 Xxxxxx Xxxxx Xxxx
Xxxx Xxxxxx
Xxxxx Xxxxxx
Pennsylvania
Andgrow Turf - Rosenhayn Agway, Inc. 000 Xxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxxxxxx Xxxxxx
Xxx Xxxxxx
Apex Bag Agway, Inc. 000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxxxxxx Xxxxxx
Ohio
Batavia Feed Agway, Inc. 0000 Xxxxxxxxxx Xxxx & Xx. 00
Xxxxxxx
Xxxxxxxx Xxxxxx
New York
Bernardston Feed Agway, Inc. 456, 472, 488, 000 Xxxxxxxxxx Xxxx
Xxxxxxxxxxx
Xxxxxxxx Xxxxxx
Massachusetts
Canton Feed Agway, Inc. 0000 XX Xxxxx 00
Xxxxxx
Xx. Xxxxxxxx Xxxxxx
New York
Central Maine Agway Agway, Inc. 36, 50, 00 Xxxxx Xxxx
Xxxxxxx
Xxxxxxxx Xxxxxx
Xxxxx
D-1-1
Country Best Xxxxxxx Country Best - 000 Xxxxx 00xx Xxxxxx
XxXxxxx, LLC Xxxxx
Xxxxxxx County
Texas
Country Best Florida Agway, Inc. 000 X. Xxxxxxx Xxxxx
Xxxxx Xxxx
Xxxxxxxxxxxx Xxxxxx
Florida
0000 Xxxxxxx Xxxx
Xxxxx Xxxx
Xxxxxxxxxxxx Xxxxxx
Xxxxxxx
Curryville Agway Agway, Inc. Route 000
Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxxxxx
Xxxxx Xxxxxx
Pennsylvania
Depot @ Letterkenny Agway, Inc. Xxxxxxxx Avenue
Xxxxxx
Xxxxxxxx County
Pennsylvania
Grandin Sunflower Agway, Inc. 000 Xxxxx Xxxxxx
Xxxxxxx
Xxxx Xxxxxx
Xxxxx Xxxxxx
Railroad Property
Xxxxxxx
Xxxx County
North Dakota
Guilderland Feed Agway, Inc. 0 XxxXxxxx Xxxx
Xxxxxxxxxxx
Xxxxxx Xxxxxx
Xxx Xxxx - no access
D-1-2
Jamestown Feed Agway, Inc. Co. Xxx 000
Xxxxxx Xxxxxx Xxxx
Poland
Chautauqua County
New York
Xxxxxx Xxxxxxx Fertilizer 000 X. Xxxxxx Xxxxxx
Company Laurel
Sussex County
Delaware
Milford Fertilizer Milford Fertilizer NE Front Street and State
Company Xx 00 & Xx Xx 000
Xxxxxxx
Xxxx Xxxxxx
Xxxxxxxx
Millardsville Milford Fertilizer 000 Xxxxxxxxxxx Xxxx
Company Xxxxxxx
Lebanon County
Pennsylvania
Salem Agway Agway, Inc. 0000 Xxxxx Xxxxx 00
Xxxxx
Xxxxxxxxxx Xxxxxx
New York
Sangerfield Agway Agway, Inc. US Rt 20
Sangerfield
Oneida County
New York
Seedway Agway, Inc. 7 Parcels
Seneca
Ontario County
New York
Somerset Agway Agway, Inc. 000 X. Xxxxxxxx Xxxxxx
Xxxxxxxx
Xxxxxxxx Xxxxxx
Pennsylvania
Sprakers Crops Agway, Inc. 000 Xxxxx Xxxxxxx 000
Xxxx
Xxxxxxxxxx Xxxxxx
Xxx Xxxx
D-1-3
Spring Garden Agway, Inc. 000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxx
Pennsylvania
Winfield Feed Agway, Inc. Xxxxx 00
Xxxxx
Xxxxx Xxxxxx
Pennsylvania
D-1-4
ANNEX E (SECTION 4.1(A))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS--REPORTING
Borrowers shall deliver or cause to be delivered to Agent or
to Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within 30 days
after the end of each Fiscal Month, financial information regarding Borrowers
and their Subsidiaries (excluding all Telmark Entities, Agway Insurance Company
and all of their respective Subsidiaries), certified by the Chief Financial
Officer or the Treasurer of Borrower Representative, consisting of consolidated
and consolidating (i) unaudited monthly financial statements in the form of the
Agway Operations Financial Statements delivered pursuant to Section 3.4(a)(iii)
hereof, all prepared in accordance with GAAP (subject to normal year-end
adjustments); and (ii) a summary of the outstanding balance of all Intercompany
Notes as of the last day of that Fiscal Month. Such financial information shall
be accompanied by (A) a statement in reasonable detail (each, a "Compliance
Certificate") showing the calculations used in determining compliance with each
Financial Covenant that is tested on a monthly basis, (B) a summary of the
discussions of Borrowers' management regarding such financial statements and (C)
the certification of the Chief Financial Officer of Borrower Representative that
(i) such financial information presents fairly in accordance with GAAP (subject
to normal year-end adjustments) the financial position and results of operations
of Borrowers and their Subsidiaries (excluding all Telmark Entities, Agway
Insurance Company and all of their respective Subsidiaries), on a consolidated
and consolidating basis, in each case as at the end of such Fiscal Month and for
that portion of the Fiscal Year then ended and (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default has occurred and is continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default.
(b) Quarterly Financials. To Agent and Lenders, within 45 days
after the end of each Fiscal Quarter, consolidated and consolidating financial
information regarding Borrowers and their Subsidiaries (excluding all Telmark
Entities, Agway Insurance Company and all of their respective Subsidiaries),
certified by the Chief Financial Officer or the Treasurer of Borrower
Representative, including (i) unaudited balance sheets as of the close of such
Fiscal Quarter and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Quarter and
(ii) unaudited statements of income and cash flows for such Fiscal Quarter, in
each case setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Projections for such
Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by (A) a
Compliance Certificate in respect of each of the Financial Covenants that is
tested on a quarterly basis and (B) the certification of the Chief Financial
Officer or the Treasurer of Borrower Representative that (i) such financial
E-1
information presents fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and statements of
cash flows of Borrowers and their Subsidiaries (excluding all Telmark Entities,
Agway Insurance Company and all of their respective Subsidiaries), on both a
consolidated and consolidating basis, as at the end of such Fiscal Quarter and
for that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default has occurred and is continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrowers shall deliver to Agent and Lenders, within 45 days after the
end of each Fiscal Quarter, a management discussion and analysis that includes a
comparison to budget for that Fiscal Quarter and a comparison of performance for
that Fiscal Quarter to the corresponding period in the prior year.
(c) Operating Plans. To Agent and Lenders, as soon as
available, but not later than 30 days after the end of (i) each Fiscal Year, an
annual operating plan for Borrowers, on a consolidated and consolidating basis,
approved by the Board of Directors of Borrowers, for the following Fiscal Year,
which (A) includes a statement of all of the material assumptions on which such
plan is based, (B) includes monthly balance sheets, income statements and
statements of cash flows for the following year and (C) integrates sales, gross
profits, operating expenses, operating profit, cash flow projections and
Borrowing Availability projections, all prepared on the same basis and in
similar detail as that on which operating results are reported (and in the case
of cash flow projections, representing management's good faith estimates of
future financial performance based on historical performance), and including
plans for personnel, Capital Expenditures and facilities, and (ii) each second
Fiscal Quarter, an annual operating plan for Borrowers, on a consolidated and
consolidating basis, for the current Fiscal Year, which (A) includes a statement
of all of the material assumptions on which such plan is based, (B) includes
monthly balance sheets, income statements and statements of cash flows for the
current year and (C) integrates sales, gross profits, operating expenses,
operating profit, cash flow projections and Borrowing Availability projections,
all prepared on the same basis and in similar detail as that on which operating
results are reported (and in the case of cash flow projections, representing
management's good faith estimates of future financial performance based on
historical performance), and including plans for personnel, Capital Expenditures
and facilities.
(d) Annual Audited Financials. To Agent and Lenders, within 90
days after the end of each Fiscal Year, audited Financial Statements for
Borrowers and their Subsidiaries (excluding all Telmark Entities, Agway
Insurance Company or all of their respective Subsidiaries) on a consolidated and
(unaudited) consolidating basis, consisting of balance sheets and statements of
income and retained earnings and cash flows, setting forth in comparative form
in each case the figures for the previous Fiscal Year, which Financial
Statements shall be prepared in accordance with GAAP and certified without
qualification, by an independent certified public accounting firm of national
standing or otherwise acceptable to Agent. Such Financial Statements shall be
accompanied by (i) a statement prepared in reasonable detail showing the
calculations used in determining compliance with each of the Financial
Covenants, (ii) a report from such accounting firm to the effect that, in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default has occurred (or
specifying those Defaults and Events of Default that they became aware of), it
being understood that such audit examination extended only to accounting matters
and that no special investigation was made with respect to the existence of
Defaults or Events of Default, (iii) the annual letters to such accountants in
E-2
connection with their audit examination detailing contingent liabilities and
material litigation matters, and (iv) the certification of the Chief Executive
Officer, Chief Financial Officer or Treasurer of Borrowers that all such
Financial Statements present fairly in accordance with GAAP the financial
position, results of operations and statements of cash flows of Borrowers and
their Subsidiaries (excluding all Telmark entities, Agway Insurance Company and
all of their respective Subsidiaries), on a consolidated and consolidating
basis, as at the end of such Fiscal Year and for the period then ended, and that
there was no Default or Event of Default in existence as of such time or, if a
Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.
(e) Management Letters. To Agent and Lenders, within 5
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants.
(f) Default Notices. To Agent and Lenders, as soon as
practicable, and in any event within 5 Business Days after an executive officer
of any Borrower has actual knowledge of the existence of any Default, Event of
Default or other event that has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Agent and Lenders,
promptly upon their becoming available, copies of: (i) all Financial Statements,
reports, notices and proxy statements made publicly available by any Credit
Party to its security holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any Credit Party with
any securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
(h) Subordinated Debt and Equity Notices. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within 2 Business Days after any Credit Party obtains knowledge of any matured
or unmatured event of default with respect to any Subordinated Debt, notice of
such event of default.
(i) Supplemental Schedules. To Agent, supplemental
disclosures, if any, required by Section 5.6.
(j) Litigation. To Agent in writing, promptly upon learning
thereof, notice of any Litigation commenced or threatened against any Credit
Party that (i) seeks damages in excess of $1,000,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate by any Governmental Agency
in connection with any Plan, (iv) alleges criminal misconduct by any Credit
Party, (v) alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Liabilities in excess of $250,000 or (vi)
involves any product recall.
E-3
(k) Insurance Notices. To Agent, disclosure of losses or
casualties required by Section 5.4.
(l) Lease Default Notices. To Agent, within 2 Business Days
after receipt thereof, copies of (i) any and all default notices received under
or with respect to any leased location, terminal, port or public warehouse where
Collateral is located, and (ii) such other notices or documents as Agent may
reasonably request.
(m) Lease Amendments. To Agent, within 2 Business Days after
receipt thereof, copies of all material amendments to real estate leases.
(n) PACA Notices. To Agent, within 2 Business Days after
receipt thereof, copies of all (i) notices under the Food Security Act of 1985
(7 U.S.C. Section 1631 et. seq.), or (ii) notices to preserve the statutory
trust under PACA.
(o) Other Documents. To Agent and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as Agent or any Lender shall from time to time reasonably
request.
E-4
ANNEX F (SECTION 4.1(B))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in any event no less
frequently than 10 Business Days after the end of each calendar Month (together
with a copy of all or any part of the following reports requested by any Lender
in writing after the Closing Date), each of the following reports, each of which
shall be prepared by the Borrower Representative as of the last day of the
immediately preceding Fiscal Month prior to the date of any such request:
(i) a Borrowing Base Certificate with respect to Borrowers, in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(ii) with respect to Borrowers, a summary of Inventory by
location and type with a supporting perpetual Inventory report, in each case
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion; and
(iii) with respect to Borrowers, a monthly trial balance
showing Accounts outstanding aged from invoice date as follows: 1 to 30 days, 31
to 60 days, 61 to 90 days and 91 days or more, accompanied by supporting detail
and documentation as shall be requested by Agent in its reasonable discretion.
(b) To Agent, on a daily basis, collateral reports with
respect to Borrowers, including all additions and reductions (cash and non-cash)
with respect to Accounts of Borrowers, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion.
(c) To Agent, on a daily basis, updated collateral reports
with respect to all Energy Product Inventory of Borrowers, in each case,
accompanied by such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion.
(d) To Agent, on a weekly basis, updated collateral reports
with respect to all country product and agricultural Inventory of Borrowers, in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion.
(e) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E:
(i) a reconciliation of the Accounts trial balance of
Borrowers to the Borrowers' most recent Borrowing Base Certificate, general
ledger and monthly Financial Statements delivered pursuant to Annex E, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
F-1
(ii) a reconciliation of the perpetual inventory by location
of Borrowers to Borrowers' most recent Borrowing Base Certificate, general
ledger and monthly Financial Statements delivered pursuant to Annex E, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(iii) an aging of accounts payable and a reconciliation of
that accounts payable aging to Borrowers' general ledger and monthly Financial
Statements delivered pursuant to Annex E, in each case accompanied by, in the
case of each vendor which has sold perishable agricultural commodities (as
defined in PACA) to Borrowers, the payment terms of such accounts payable and
such other such supporting detail and documentation as shall be requested by
Agent in its reasonable discretion;
(iv) a reconciliation of the outstanding Loans as set forth in
the monthly Loan Account statement provided by Agent to Borrowers' general
ledger and monthly Financial Statements delivered pursuant to Annex E, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(v) a report reflecting Borrowers' hedging positions with
respect to all Energy Product Inventory;
(vi) a report reflecting and itemizing the outstanding
balances of (A) Indebtedness, owing from growers in accordance with advances
permitted under Section 6.2 (b)(iii), and (B) notes payable with respect to
Accounts settled by Account Debtors of Borrowers; and
(vii) a report summarizing Borrowers' cash receipts in a form
consistent with prior reports reflecting such information delivered to Agent.
(f) To Agent, at the time of delivery of each of the quarterly
Financial Statements delivered pursuant to Annex E, (i) a listing of government
contracts of each Borrower subject to the Federal Assignment of Claims Act of
1940; and (ii) a list of any applications for the registration of any Patent,
Trademark or Copyright filed by any Credit Party with the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in the prior Fiscal Quarter;
(g) To Agent, at Agent's request and at Borrowers' expense,
the results of each physical verification, if any, that Borrowers or any of
their Subsidiaries may in their discretion have made, or caused any other Person
to have made on their behalf, of all or any portion of their Inventory (and, if
a Default or an Event of Default has occurred and is continuing, Borrowers
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);
(h) To Agent, at Borrowers' expense, (i) two (2) inventory
appraisals per Fiscal Year, (ii) one (1) fixed asset appraisal per Fiscal Year,
and (iii) such other appraisals of its assets as Agent may request at any time
after the occurrence and during the continuance of a Default or an Event of
Default, such appraisals to be conducted by an appraiser, and in form and
substance reasonably satisfactory to Agent;
F-2
(i) To Agent, written notice of any Credit Card Provider's
intent to (x) establish a reserve, (y) change its agreement with the Borrowers
or (z) terminate its agreement with the Borrowers.
(j) Such other reports, statements and reconciliations with
respect to the Borrowing Base, Collateral or Obligations of any or all Credit
Parties as Agent shall from time to time request in its reasonable discretion;
(k) Agent shall be permitted, at Borrower's expense, to
conduct four (4) collateral audits per Fiscal Year.
F-3
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrowers and their Subsidiaries (excluding
all Telmark Entities, Agway Insurance Company and all of their respective
Subsidiaries) on a consolidated basis shall not make Capital Expenditures during
the following periods that exceed in the aggregate the amounts set forth
opposite each of such periods:
Period Maximum Capital Expeditures per Period
------ --------------------------------------
December 23, 2000 through June 30, 2001 $ 15,500,000
Fiscal Year ending June 29, 2002 18,400,000
Fiscal Year ending June 28, 2003 15,500,000
June 29, 2003 through March 27, 2004 12,000,000
(b) Minimum Fixed Charge Coverage Ratio. Borrowers and their
Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and all of
their respective Subsidiaries) shall have on a consolidated basis at the end of
each Fiscal Quarter set forth below, a Fixed Charge Coverage Ratio for the
12-month period then ended (except for any period commencing December 23, 2000
and ending on or prior to December 29, 2001, which shall be for the periods
described below) of not less than the following:
0.70x for the period of two Fiscal Quarters commencing December 23,
2000 and ending June 30, 2001;
0.30x for the period of three Fiscal Quarters commencing December 23,
2000 and ending September 29, 2001;
0.30x for the period of four Fiscal Quarters commencing December 23,
2000 and ending December 29, 2001;
0.35x for the Fiscal Quarter ending March 30, 2002;
0.50x for the Fiscal Quarter ending June 29, 2002;
0.50x for the Fiscal Quarter ending September 28, 2002;
0.55x for the Fiscal Quarter ending December 28, 2002;
0.60x for the Fiscal Quarter ending March 29, 2003;
0.65x for the Fiscal Quarter ending June 28, 2003;
0.65x for the Fiscal Quarter ending September 27, 2003;
0.65x for the Fiscal Quarter ending December 27, 2003
0.70x for the Fiscal Quarter ending March 27, 2004
(c) Minimum EBITDA (Agway Operations). Borrowers and their
Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and all of
their respective Subsidiaries) on a consolidated basis shall have, at the end of
each Fiscal Quarter set forth below, EBITDA for the 12-month period then ended
G-1
(except for any period commencing December 23, 2000 and ending on or prior to
December 29, 2001, which shall be for the periods described below) of not less
than the following:
Period EBITDA
------ ------
December 23, 2000 through June 30, 2001 $25,600,000
December 23, 2000 through September 29, 2001 17,000,000
December 23, 2000 through December 29, 2001 21,000,000
March 30, 2002 25,100,000
June 29, 2002 31,600,000
September 28, 2002 32,300,000
December 28, 2002 35,600,000
March 29, 2003 38,000,000
June 28, 2003 41,000,000
September 27, 2003 40,800,000
December 27, 2003 41,800,000
March 27, 2004 44,300,000
(d) Minimum EBITDA (Agriculture). The Agway Agriculture
Business Unit (as designated on the Agway Operations financial statements) on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, EBITDA for the 12-month period then ended (except for any period
commencing December 23, 2000 and ending on or prior to December 29, 2001, which
shall be for the periods described below) of not less than the following:
Period EBITDA
------ ------
December 23, 2000 through June 30, 2001 $ 8,500,000
December 23, 2000 through September 29, 2001 3,800,000
December 23, 2000 through December 29, 2001 1,800,000
March 30, 2002 4,700,000
June 29, 2002 8,300,000
September 28, 2002 11,100,000
December 28, 2002 12,400,000
March 29, 2003 13,400,000
June 28, 2003 12,600,000
September 27, 2003 12,800,000
December 27, 2003 13,000,000
March 27, 2004 13,400,000
(e) Minimum EBITDA (Country Products). The Agway Country
Products Group Business Unit (as designated on the Agway Operations financial
statements) on a consolidated basis shall have, at the end of each Fiscal
Quarter set forth below, EBITDA for the 12-month period then ended (except for
any period commencing December 23, 2000 and ending on or prior to December 29,
2001, which shall be for the periods described below) of not less than the
following:
G-2
Period EBITDA
------ ------
December 23, 2000 through June 30, 2001 $ 1,700,000
December 23, 2000 through September 29, 2001 3,000,000
December 23, 2000 through December 29, 2001 4,600,000
March 30, 2002 6,500,000
June 29, 2002 8,000,000
September 28, 2002 8,600,000
December 28, 2002 9,400,000
March 29, 2003 9,800,000
June 28, 2003 10,600,000
September 27, 2003 10,500,000
December 27, 2003 11,200,000
March 27, 2004 12,400,000
(f) Minimum EBITDA (Energy). The Agway Energy Business Unit
(as designated on the Agway Operations financial statements on a consolidated
basis shall have, at the end of each Fiscal Quarter set forth below, EBITDA for
the 12-month period then ended (except for any period commencing December 23,
2000 and ending on or prior to December 29, 2001, which shall be for the periods
described below) of not less than the following:
Period EBITDA
------ ------
December 23, 2000 through June 30, 2001 $18,300,000
December 23, 2000 through September 29, 2001 16,500,000
December 23, 2000 through December 29, 2001 23,100,000
March 30, 2002 21,600,000
June 29, 2002 21,600,000
September 28, 2002 18,600,000
December 28, 2002 19,000,000
March 29, 2003 19,400,000
June 28, 2003 21,700,000
September 27, 2003 21,400,000
December 27, 2003 21,500,000
March 27, 2004 22,100,000
(g) Minimum Senior Interest Coverage Ratio. Borrowers and
their Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and
all of their respective Subsidiaries) on a consolidated basis shall have at the
end of each Fiscal Quarter set forth below, a Senior Interest Coverage Ratio for
the 12-month period then ended (except for any period commencing December 23,
2000 and ending on or prior to December 29, 2001, which shall be for the periods
described below) of not less than the following:
5.3x for the period of two Fiscal Quarters commencing December 23, 2000
and ending June 30, 2001
2.6x for the period of three Fiscal Quarters commencing December 23,
2000 and ending September 29, 2001
G-3
2.5x for the period of four Fiscal Quarters commencing December 23,
2000 and ending December 29, 2001
3.1x for the Fiscal Quarter ending March 30, 2002
4.0x for the Fiscal Quarter ending June 29, 2002
4.0x for the Fiscal Quarter ending September 28, 2002
4.2x for the Fiscal Quarter ending December 28, 2002
4.3x for the Fiscal Quarter ending March 29, 2003
4.8x for the Fiscal Quarter ending June 28, 2003
4.8x for the Fiscal Quarter ending September 27, 2003
4.9x for the Fiscal Quarter ending December 27, 2003
5.0x for the Fiscal Quarter ending March 27, 2004
(h) Minimum Excess Availability. Borrowers and their
Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and all of
their respective Subsidiaries) at all times shall have Borrowing Availability,
after giving effect to Eligible Accounts, Eligible Deferred Accounts and
Eligible Inventory of Borrowers supporting Revolving Credit Advances and all
Letter of Credit Obligations (on a pro forma basis, with trade payables being
paid in the ordinary course, and expenses and liabilities being paid in the
ordinary course of business and without acceleration of sales) of at least Ten
Million Dollars ($10,000,000).
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrowers, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' and their Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by any Borrower's certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers and Requisite Lenders agree upon the required amendments, then after
G-4
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrowers and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.
G-5
ANNEX H (SECTION 9.9(A))
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Agent's and GE Capital's Account:
--------------------------------
Name: General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA #: 000000000
Account #: 00000000
Account Name: GECC/CAF Depository
Reference: CFN 44447
CoBank Account:
--------------
Name: CoBank, ACB
Bank: CoBank, ACB
ABA #: 000000000
Account #: 00000000
Reference: Agway Financial Corporation
Rabo Bank Account:
-----------------
Name: Rabobank International, New York Branch
Bank: Bank of New York, for the account of
Rabobank International
ABA #: 000-000-000
Account #: 000-0000-000
Reference: Agway Financial Corporation
Attn: Corporate Services Department
GMAC Business Credit, LLC Account:
---------------------------------
Name: GMAC Business Credit LLC
Bank: Bank One, Michigan
Detroit, Michigan
ABA #: 000000000
Account #: 0000000-84
Reference: Agway, Inc.
H-1
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
i. If to Agent or GE Capital, at
General Electric Capital Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Agway Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
ii. If to any Borrower, to Borrower Representative, at
Agway, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-1
with copies to:
Weil, Gotshal & Xxxxxx LLP
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-2
ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
--------------------------------
TO
CREDIT AGREEMENT
Lender(s)
---------
Revolving Loan Commitment
(including a Swing Line Commitment
of $10,000,000)
$75,000,000 General Electric Capital Corporation
Revolving Loan Commitment
$52,000,000 CoBank, ACB
Revolving Loan Commitment
$23,000,000 Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank Nederland", New York Branch
Revolving Loan Commitment
$25,000,000 GMAC Business Credit, LLC
J-1
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT, dated as of March 28, 2001, among
Agway, Inc., a Delaware corporation ("Agway"), Agway Holdings Inc., a
Delaware corporation ("AHI"), Agway Financial Corporation, a Delaware
corporation ("AFC"), Feed Commodities International LLC, a limited
liability company organized under the laws of the state of Delaware
("FCI"), Milford Fertilizer Company LLC, a limited liability company
organized under the laws of the state of Delaware ("MFC"), Xxxxxxxx
Agronomic Consulting Service LLC, a limited liability company organized
under the laws of the state of Delaware ("BACS"), Agway General Agency,
Inc. a New York corporation ("AGA"), Country Best Xxxxx, LLC, a limited
liability company organized under the laws of the state of Delaware
("CBA"), Country Best-Xxxxxxx LLC, a limited liability company
organized under the laws of the state of Delaware ("CBD"), Agway Energy
Products LLC, a limited liability company organized under the laws of
the state of Delaware ("AEP"), Agway Energy Services-PA, Inc., a
Delaware corporation ("AESPA"), and Agway Energy Services, Inc., a
Delaware corporation ("AES"); (Agway, AHI, AFC, FCI, MFC, BACS, AGA,
CBA, CBD, AEP, AESPA and AES are sometimes collectively referred to
herein as "Grantors" and individually as a "Grantor"), and GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation, in its capacity
as Agent for Lenders.
W I T N E S S T H:
------------------
WHEREAS, pursuant to that certain Credit Agreement dated as of
the date hereof by and among Grantors, Agent and Lenders (including all annexes,
exhibits and schedules thereto, as from time to time amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), Lenders have agreed
to make the Loans and to incur Letter of Credit Obligations on behalf of
Grantors;
WHEREAS, in order to induce Agent and Lenders to enter into
the Credit Agreement and other Loan Documents and to induce Lenders to make the
Loans and to incur Letter of Credit Obligations as provided for in the Credit
Agreement, Grantors have agreed to grant a continuing Lien on the Collateral (as
hereinafter defined) to secure the Obligations;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise
defined herein have the meanings given to them in the Credit Agreement or in
Annex A thereto. All other terms contained in this Security Agreement, unless
the context indicates otherwise, have the meanings provided for by the Code to
the extent the same are used or defined therein.
2. GRANT OF LIEN.
-------------
(a) To secure the prompt and complete payment, performance and
observance of all of the Obligations (specifically including, without
limitation, each Grantor's Obligations arising under the cross-guaranty
provisions of Section 12 of the Credit Agreement), each Grantor hereby grants,
assigns, conveys, mortgages, pledges, hypothecates and transfers to Agent, for
itself and the benefit of Lenders, a Lien upon all of its right, title and
interest in, to and under the following property, whether now owned by or owing
to, or hereafter acquired by or arising in favor of such Grantor (including
under any trade names, styles or derivations thereof), and whether owned or
consigned by or to, or leased from or to, such Grantor, and regardless of where
located (all of which being hereinafter collectively referred to as the
"Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all Fixtures;
(vii) all Farm Products;
(viii) all General Intangibles;
(ix) all Goods;
(x) all Instruments;
(xi) all Inventory (including all Energy Product
Inventory);
(xii) all Investment Property;
(xiii) all Blocked Accounts, Concentration Accounts,
depository accounts, Disbursement Accounts, and all other deposit and
other bank accounts and all deposits therein;
(xiv) all money, cash or cash equivalents of any
Grantor;
2
(xv) all Supporting Obligations of any Grantor;
(xvi) any Commercial Tort Claims; and
(xvii) to the extent not otherwise included, all
Proceeds and products of the foregoing and all accessions to,
substitutions and replacements for, and rents and profits of, each of
the foregoing (including insurance proceeds).
(b) In addition, to secure the prompt and complete payment,
performance and observance of the Obligations and in order to induce Agent and
Lenders as aforesaid, each Grantor hereby grants to Agent, for itself and the
benefit of Lenders, a right of setoff against the property of such Grantor held
by Agent or any Lender, consisting of property described above in Section 2(a)
now or hereafter in the possession or custody of or in transit to Agent or any
Lender, for any purpose, including safekeeping, collection or pledge, for the
account of such Grantor, or as to which such Grantor may have any right or
power.
3. AGENT'S AND LENDERS' RIGHTS: LIMITATIONS ON AGENT'S AND
LENDERS' OBLIGATIONS.
(a) It is expressly agreed by Grantors that, anything herein
to the contrary notwithstanding, each Grantor shall remain liable under each of
its Contracts and each of its Licenses to observe and perform all the conditions
and obligations to be observed and performed by it thereunder. Neither Agent nor
any Lender shall have any obligation or liability under any Contract or License
by reason of or arising out of this Security Agreement or the granting herein of
a Lien thereon or the receipt by Agent or any Lender of any payment relating to
any Contract or License pursuant hereto. Neither Agent nor any Lender shall be
required or obligated in any manner to perform or fulfill any of the obligations
of any Grantor under or pursuant to any Contract or License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract or License, or to present or file any claims, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
(b) Agent may at any time after a Default or Event of Default
shall have occurred and be continuing, without prior notice to any Grantor,
notify Account Debtors, parties to the Contracts and obligors in respect of
Instruments and Chattel Paper, that the Accounts and the right, title and
interest of any Grantor in and under such Contracts, Instruments and Chattel
Paper have been assigned to Agent, and that payments shall be made directly to
Agent. Upon the request of Agent, each Grantor shall so notify Account Debtors,
parties to Contracts and obligors in respect of Instruments and Chattel Paper.
3
(c) Agent may at any time in Agent's own name, in the name of
a nominee of Agent or in the name of any Grantor communicate (by mail,
telephone, facsimile or otherwise) with Account Debtors, parties to Contracts,
obligors in respect of Instruments and obligors in respect of Chattel Paper to
verify with such Persons, to Agent's satisfaction, the existence, amount terms
of, and any other matter relating to, any such Accounts, Contracts, Instruments
or Chattel Paper. If a Default or Event of Default shall have occurred and be
continuing, each Grantor, at its own expense, shall cause the independent
certified public accountants then engaged by such Grantor to prepare and deliver
to Agent and each Lender at any time and from time to time promptly upon Agent's
request the following reports with respect to each Grantor: (i) a reconciliation
of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a
test verification of such Accounts as Agent may request. Each Grantor, at its
own expense, shall deliver to Agent the results of each physical verification,
if any, which such Grantor may in its discretion have made, or caused any other
Person to have made on its behalf, of all or any portion of its Inventory.
4. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants that:
(a) Each Grantor is the sole owner of each item of the
Collateral upon which it purports to xxxxx x Xxxx hereunder, and has good title
thereto free and clear of any and all Liens other than Permitted Encumbrances.
(b) No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
such as may have been filed (i) by any Grantor in favor of Agent pursuant to
this Security Agreement or the other Loan Documents, and (ii) in connection with
any other Permitted Encumbrances.
(c) This Security Agreement is effective to create a valid and
continuing Lien on and, upon the filing of the appropriate financing statements
listed on Schedule I hereto, a perfected Lien in favor of Agent, for itself and
the benefit of Lenders, on the Collateral with respect to which a Lien may be
perfected by filing pursuant to the Code. Such Lien is prior to all other Liens,
except Permitted Encumbrances that would be prior to Liens in favor of Agent for
the benefit of Agent and Lenders as a matter of law, and is enforceable as such
as against any and all creditors of and purchasers from any Grantor (other than
purchasers of Inventory in the ordinary course of business). All action by any
Grantor necessary or desirable to protect and perfect such Lien on each item of
the Collateral has been duly taken.
(d) Schedule II hereto lists all Chattel Paper of each
Grantor. All action by any Grantor necessary or desirable to protect and perfect
the Lien of Agent on each item set forth on Schedule II (including the delivery
of all originals thereof to Agent and the legending of all Chattel Paper as
required by Section 5(b) hereof) has been duly taken. The Lien of Agent, for the
benefit of Agent and Lenders, on the Collateral listed on Schedule II hereto is
4
prior to all other Liens, except Permitted Encumbrances that would be prior to
the Liens in favor of Agent as a matter of law, and is enforceable as such
against any and all creditors of and purchasers from any Grantor.
(e) Each Grantor's state of organization or incorporation,
chief executive office, principal place of business, offices, all warehouses and
premises where Collateral is stored or located, and the locations of all of its
books and records concerning the Collateral are set forth on Schedule III-A,
Schedule III-B, Schedule III-C, Schedule III-D, Schedule III-E, Schedule III-F,
Schedule III-G, Schedule III-H, Schedule III-I, Schedule III-J, Schedule III-K,
and Schedule III-L, respectively, hereto.
(f) With respect to the Accounts, except as specifically
disclosed in the most recent Collateral Report delivered to Agent (i) they
represent bona fide sales of Inventory or rendering of services to Account
Debtors in the ordinary course of each Grantor's business and are not evidenced
by a judgment, Instrument or Chattel Paper; (ii) there are no setoffs, claims or
disputes existing or asserted with respect thereto and no Grantor has made any
agreement with any Account Debtor for any extension of time for the payment
thereof, any compromise or settlement for less than the full amount thereof, any
release of any Account Debtor from liability therefor, or any deduction
therefrom except a discount, compromise, settlement or allowance allowed by such
Grantor in the ordinary course of its business for prompt payment and disclosed
to Agent; (iii) to each Grantor's knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforceability thereof or
could reasonably be expected to reduce the amount payable thereunder as shown on
any Grantor's books and records and any invoices, statements and Collateral
Reports delivered to Agent and Lenders with respect thereto; (iv) no Grantor has
received any notice of proceedings or actions which are threatened or pending
against any Account Debtor which might result in any material adverse change in
such Account Debtor's financial condition; and (v) no Grantor has knowledge that
any Account Debtor is unable generally to pay its debts as they become due.
Further with respect to the Accounts (x) the amounts shown on all invoices,
statements and Collateral Reports which may be delivered to the Agent with
respect thereto are actually and absolutely owing to such Grantor as indicated
thereon and are not in any way contingent; (y) no payments have been or shall be
made thereon except payments immediately delivered to the applicable Blocked
Accounts or the Agent as required pursuant to the terms of Annex C to the Credit
Agreement; and (z) to each Grantor's knowledge, all Account Debtors have the
capacity to contract.
(g) With respect to any Inventory scheduled or listed on the
most recent Collateral Report delivered to Agent pursuant to the terms of this
Security Agreement or the Credit Agreement, (i) such Inventory is located at one
of the applicable Grantor's locations set forth on Schedule III-A, Schedule
III-B, Schedule III-C, Schedule III-D, Schedule III-E, Schedule III-F, Schedule
III-G, Schedule III-H, Schedule III-I, Schedule III-J, Schedule III-K, or
Schedule III-L hereto, as applicable, (ii) no Inventory is now, or shall at any
time or times hereafter be stored at any other location without Agent's prior
5
consent, and if Agent gives such consent, each applicable Grantor will
concurrently therewith obtain, to the extent required by the Credit Agreement,
bailee, landlord and mortgagee agreements, (iii) the applicable Grantor has good
title to such Inventory and such Inventory is not subject to any Lien or
security interest or document whatsoever except for the Lien granted to Agent,
for the benefit of Agent and Lenders, and except for Permitted Encumbrances,
(iv) except as specifically disclosed in the most recent Collateral Report
delivered to Agent, such Inventory is Eligible Inventory, (v) such Inventory is
not subject to any licensing, patent, royalty, trademark, trade name or
copyright agreements with any third parties which would require any consent of
any third party upon sale or disposition of that Inventory or the payment of any
monies to any third party as a precondition of such sale or other disposition,
and (vi) the completion of manufacture, sale or other disposition of such
Inventory by Agent following an Event of Default shall not require the consent
of any Person and shall not constitute a breach or default under any contract or
agreement to which any Grantor is a party or to which such property is subject.
(h) No Grantor has any interest in, or title to, any Patent,
Trademark or Copyright except as set forth in Schedule IV hereto. This Security
Agreement is effective to create a valid and continuing Lien on and, upon filing
of the Copyright Security Agreements with the United States Copyright Office and
filing of the Patent Security Agreements and the Trademark Security Agreements
with the United States Patent and Trademark Office, perfected security interests
in favor of Agent on each Grantor' s Patents, Trademarks and Copyrights and such
perfected security interests are enforceable as such as against any and all
creditors of and purchasers from any Grantor. Upon filing of the Copyright
Security Agreements with the United States Copyright Office and filing of the
Patent Security Agreements and the Trademark Security Agreements with the United
States Patent and Trademark Office and the filing of appropriate financing
statements listed on Schedule I hereto, all action necessary or desirable to
protect and perfect Agent's Lien on each Grantor's Patents, Trademarks or
Copyrights shall have been duly taken.
5. COVENANTS. Each Grantor covenants and agrees with Agent,
for the benefit of Agent and Lenders, that from and after the date of this
Security Agreement and until the Termination Date:
6
(a) Further Assurances: Pledge of Chattel Paper.
(i) At any time and from time to time, upon the written
request of Agent and at the sole expense of Grantors, each Grantor
shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further actions as Agent may
deem desirable to obtain the full benefits of this Security Agreement
and of the rights and powers herein granted, including (A) using its
best efforts to secure all consents and approvals necessary or
appropriate for the assignment to or for the benefit of Agent of any
License or Contract held by such Grantor or in which such Grantor has
any rights not heretofore assigned, (B) filing any financing or
continuation statements under the Code with respect to the Liens
granted hereunder or under any other Loan Document, (C) transferring
Collateral to Agent's possession (for the benefit of Agent and Lenders)
if such Collateral consists of Chattel Paper or if a Lien on such
Collateral can be perfected only by possession, or if requested by
Agent, (D) obtaining, or using its best efforts to obtain, waivers of
Liens, if any exist, from landlords and mortgagees in accordance with
the Credit Agreement, (E) obtaining signed acknowledgments of Agent's
Liens from banks holding any Grantor's depository accounts and bailees
having possession of any Grantor's Goods; and (F) obtaining signed
control agreements from any securities intermediary holding any
Grantor's Financial Assets. Each Grantor also hereby authorizes Agent,
for the benefit of Agent and Lenders, to file any such financing or
continuation statements without the signature of such Grantor to the
extent permitted by applicable law. If any amount payable under or in
connection with any of the Collateral is or shall become evidenced by
any Instrument, such Instrument, other than checks and notes received
in the ordinary course of business, shall be duly endorsed in a manner
satisfactory to Agent immediately upon such Grantor's receipt thereof.
(ii) Each Grantor shall deliver to Agent the original of all
letters of credit issued to it as a beneficiary along with a collateral
assignment thereof evidencing the consent to such assignment by the
issuer of the letter of credit and each correspondent or confirming
bank, all in form and substance reasonably satisfactory to Agent.
(iii) Each Grantor shall take all steps necessary to grant the
Agent control of all electronic chattel paper in accordance with the
Code as revised effective July 1, 2001.
(iv) Each Grantor authorizes the Agent to file financing
statements describing the Collateral without the signature of such
Grantor to the extent permitted by law.
7
(b) Maintenance of Records. Grantors shall keep and maintain,
at their own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Grantors shall xxxx their books and records pertaining to the
Collateral to evidence this Security Agreement and the Liens granted hereby. All
Chattel Paper shall be marked with the following legend: "This writing and the
obligations evidenced or secured hereby are subject to the security interest of
General Electric Capital Corporation, as Agent, for the benefit of Agent and
certain Lenders."
(c) Covenants Regarding Patent, Trademark and Copyright
Collateral.
(i) Grantors shall notify Agent immediately if they know or
have reason to know that any application or registration relating to
any Patent, Trademark or Copyright (now or hereafter existing) material
to the operation of such Grantor's business may become abandoned, or of
any adverse determination or development (including the institution of,
or any such determination or development in, any proceeding in the
United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding any Grantor's ownership of any such
Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(ii) Within 45 days after the end of each Fiscal Quarter,
grantors shall provide Agent a list of any applications for the
registration of any Patent, Trademark or copyright filed by any Credit
Party with The United States Patent and Trademark Office, The United
States Copyright Office or any similar office or agency in the prior
Fiscal Quarter, and, upon request of Agent, Grantor shall execute and
deliver any and all Patent Security Agreements, Copyright Security
Agreements or Trademark Security Agreements as Agent may request to
evidence Agent's Lien on such Patent, Trademark or Copyright, and the
General Intangibles of such Grantor relating thereto or represented
thereby.
(iii) Grantors shall take all actions necessary or requested
by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the
Patents, Trademarks and Copyrights (now or hereafter existing) material
to the operation of such Grantor's business , including the filing of
applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation
proceedings.
(iv) In the event that any of the Patent, Trademark or
Copyright Collateral is infringed upon, or misappropriated or diluted
by a third party, such Grantor shall notify Agent promptly after such
Grantor learns thereof. Such Grantor shall, unless such Grantor shall
reasonably determine that such Patent, Trademark or Copyright
Collateral is in no way material to the conduct of its business or
8
operations, promptly xxx for infringement, misappropriation or dilution
and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as
Agent shall deem appropriate under the circumstances to protect such
Patent, Trademark or Copyright Collateral.
(d) Indemnification. In any suit, proceeding or action brought
by Agent or any Lender relating to any Account, Chattel Paper, Contract,
Document, General Intangible or Instrument for any sum owing thereunder or to
enforce any provision of any Account, Chattel Paper, Contract, Document, General
Intangible or Instrument, each Grantor will save, indemnify and keep Agent and
Lenders harmless from and against all expense (including reasonable attorneys'
fees and expenses), loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by any Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to, or in favor of, such obligor or its successors from such Grantor,
except in the case of Agent or any Lender, to the extent such expense, loss, or
damage is attributable solely to the gross negligence or willful misconduct of
Agent or such Lender as finally determined by a court of competent jurisdiction.
All such obligations of Grantors shall be and remain enforceable against and
only against Grantors and shall not be enforceable against Agent or any Lender.
(e) Compliance with Terms of Accounts, etc. In all material
respects, each Grantor will perform and comply with all obligations in respect
of its Accounts, Chattel Paper, Contracts and Licenses and all other agreements
to which it is a party or by which it is bound relating to the Collateral.
(f) Limitation on Liens on Collateral. No Grantor will create,
permit or suffer to exist, and each Grantor will defend the Collateral against,
and take such other action as is necessary to remove, any Lien on the Collateral
except Permitted Encumbrances, and will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under the Collateral
against the claims and demands of all Persons whomsoever.
(g) Limitations on Disposition. No Grantor will sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so except as permitted by the Credit Agreement.
(h) Further Identification of Collateral. Grantors will, if so
requested by Agent, furnish to Agent, as often as Agent requests, statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Agent may reasonably request, all
in such detail as Agent may specify.
(i) Notices. Grantors will advise Agent promptly, in
reasonable detail, (i) of any Lien (other than Permitted Encumbrances) or claim
made or asserted against any of the Collateral, and (ii) of the occurrence of
9
any other event which would have a material adverse effect on the aggregate
value of the Collateral or on the Liens created hereunder or under any other
Loan Document.
6. AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
On the Closing Date each Grantor shall execute and deliver to
Agent a power of attorney (the "Power of Attorney") substantially in the form
attached hereto as Exhibit A. The power of attorney granted pursuant to the
Power of Attorney is a power coupled with an interest and shall be irrevocable
until the Termination Date. The powers conferred on Agent, for the benefit of
Agent and Lenders, under the Power of Attorney are solely to protect Agent's
interests (for the benefit of Agent and Lenders) in the Collateral and shall not
impose any duty upon Agent or any Lender to exercise any such powers. Agent
agrees that (a) it shall not exercise any power or authority granted under the
Power of Attorney unless an Event of Default has occurred and is continuing, and
(b) Agent shall account for any moneys received by Agent in respect of any
foreclosure on or disposition of Collateral pursuant to the Power of Attorney
provided that none of Agent or any Lender shall have any duty as to any
Collateral, and Agent and Lenders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers. NONE OF AGENT,
LENDERS OR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS
OR REPRESENTATIVES SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY ACT OR FAILURE TO
ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE,
EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
7. REMEDIES: RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it
under this Security Agreement, the Credit Agreement, the other Loan Documents
and under any other instrument or agreement securing, evidencing or relating to
any of the Obligations, if any Event of Default shall have occurred and be
continuing, Agent may exercise all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, each Grantor
expressly agrees that in any such event Agent, without demand of performance or
other demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon such Grantor or
any other Person (all and each of which demands, advertisements and notices are
hereby expressly waived to the maximum extent permitted by the Code and other
applicable law), may forthwith enter upon the premises of such Grantor where any
Collateral is located through self-help, without judicial process, without first
obtaining a final judgment or giving such Grantor or any other Person notice and
opportunity for a hearing on Agent's claim or action and may collect, receive,
assemble, process, appropriate and realize upon the Collateral, or any part
10
thereof, and may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. Agent or any Lender shall have the right upon any such public sale or
sales and, to the extent permitted by law, upon any such private sale or sales,
to purchase for the benefit of Agent and Lenders, the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which equity of
redemption each Grantor hereby releases. Such sales may be adjourned and
continued from time to time with or without notice. Agent shall have the right
to conduct such sales on any Grantor's premises or elsewhere and shall have the
right to use any Grantor's premises without charge for such time or times as
Agent deems necessary or advisable.
Each Grantor further agrees, at Agent's request, to assemble
the Collateral and make it available to Agent at places which Agent shall
select, whether at such Grantor's premises or elsewhere. Until Agent is able to
effect a sale, lease, or other disposition of Collateral, Agent shall have the
right to hold or use Collateral, or any part thereof, to the extent that it
deems appropriate for the purpose of preserving Collateral or its value or for
any other purpose deemed appropriate by Agent. Agent shall have no obligation to
any Grantor to maintain or preserve the rights of such Grantor as against third
parties with respect to Collateral while Collateral is in the possession of
Agent. Agent may, if it so elects, seek the appointment of a receiver or keeper
to take possession of Collateral and to enforce any of Agent's remedies (for the
benefit of Agent and Lenders), with respect to such appointment without prior
notice or hearing as to such appointment. Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale to
the Obligations as provided in the Credit Agreement, and only after so paying
over such net proceeds, and after the payment by Agent of any other amount
required by any provision of law, need Agent account for the surplus, if any, to
any Grantor. To the maximum extent permitted by applicable law, each Grantor
waives all claims, damages, and demands against Agent or any Lender arising out
of the repossession, retention or sale of the Collateral except such as arise
solely out of the gross negligence or willful misconduct of Agent or such Lender
as finally determined by a court of competent jurisdiction. Each Grantor agrees
that ten (10) days prior notice by Agent of the time and place of any public
sale or of the time after which a private sale may take place is reasonable
notification of such matters. Grantors shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are insufficient to
pay all Obligations, including any reasonable attorneys' fees and other expenses
incurred by Agent or any Lender to collect such deficiency.
(b) Except as otherwise specifically provided herein, each
Grantor hereby waives presentment, demand, protest or any notice (to the maximum
extent permitted by applicable law) of any kind in connection with this Security
Agreement or any Collateral.
11
8. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL.
For the purpose of enabling Agent to exercise rights and remedies under Section
7 hereof (including, without limiting the terms of Section 7 hereof, in order to
take possession of, hold, preserve, process, assemble, prepare for sale, market
for sale, sell or otherwise dispose of Collateral) at such time as Agent shall
be lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to Agent, for the benefit of Agent and Lenders, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sublicense any Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same
may be located, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.
9. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF
COLLATERAL. Agent and each Lender shall use reasonable care with respect to the
Collateral in its possession or under its control. Neither Agent nor any Lender
shall have any other duty as to any Collateral in its possession or control or
in the possession or control of any agent or nominee of Agent or such Lender, or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto.
10. REINSTATEMENT. This Security Agreement shall remain in
full force and effect and continue to be effective should any petition be filed
by or against any Grantor for liquidation or reorganization, should any Grantor
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Grantor's assets, and shall continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Obligations, or any part thereof, is, pursuant to applicable law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11. NOTICES. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give and serve upon any other party any communication with respect to this
Security Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given in the
manner, and deemed received, as provided for in the Credit Agreement.
12
12. SEVERABILITY. Whenever possible, each provision of this
Security Agreement shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision of this Security Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Security
Agreement. This Security Agreement is to be read, construed and applied together
with the Credit Agreement and the other Loan Documents which, taken together,
set forth the complete understanding and agreement of Agent, Lenders and
Grantors with respect to the matters referred to herein and therein.
13. NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor any
Lender shall by any act, delay, omission or otherwise be deemed to have waived
any of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Agent and then only to the extent therein set forth. A waiver
by Agent of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which Agent would otherwise have had
on any future occasion. No failure to exercise nor any delay in exercising on
the part of Agent or any Lender, any right, power or privilege hereunder, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies hereunder provided are cumulative and may be exercised singly or
concurrently, and are not exclusive of any rights and remedies provided by law.
None of the terms or provisions of this Security Agreement may be waived,
altered, modified or amended except by an instrument in writing, duly executed
by Agent and Grantors.
14. LIMITATION BY LAW. All rights, remedies and powers
provided in this Security Agreement may be exercised only to the extent that the
exercise thereof does not violate any applicable provision of law, and all the
provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be limited
to the extent necessary so that they shall not render this Security Agreement
invalid, unenforceable, in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable law.
15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section
10 hereof, this Security Agreement shall terminate upon the Termination Date.
16. SUCCESSORS AND ASSIGNS. This Security Agreement and all
obligations of Grantors hereunder shall be binding upon the successors and
assigns of each Grantor (including any debtor-in-possession on behalf of such
Grantor) and shall, together with the rights and remedies of Agent, for the
benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and
Lenders, all future holders of any instrument evidencing any of the Obligations
and their respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Obligations or any portion thereof or interest
13
therein shall in any manner affect the Lien granted to Agent, for the benefit of
Agent and Lenders, hereunder. No Grantor may assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this Security Agreement.
17. COUNTERPARTS. This Security Agreement may be executed in
any number of separate counterparts, each of which shall collectively and
separately constitute one agreement.
18. GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL
COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK, SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
GRANTORS, AGENT AND LENDERS PERTAINING TO THIS SECURITY AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
SECURITY AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT,
LENDERS AND GRANTORS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, AND, PROVIDED, FURTHER,
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS
AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN
ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH
ON ANNEX I TO THE CREDIT AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
14
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
19. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS,
AND GRANTORS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS SECURITY AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.
20. SECTION TITLES. The Section titles contained in this
Security Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of the agreement between the parties
hereto.
21. NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Security Agreement.
In the event an ambiguity or question of intent or interpretation arises, this
Security Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Security
Agreement.
22. ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 18 and Section 19, with its counsel.
(a) BENEFIT OF LENDERS. All Liens granted or contemplated
hereby shall be for the benefit of Agent and Lenders, and all proceeds or
payments realized from Collateral in accordance herewith shall be applied to the
Obligations in accordance with the terms of the Credit Agreement.
15
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized officer
as of the date first set forth above.
AGWAY, INC.
AGWAY HOLDINGS INC.
AGWAY FINANCIAL CORPORATION
FEED COMMODITIES INTERNATIONAL LLC
MILFORD FERTILIZER COMPANY LLC
XXXXXXXX AGRONOMIC CONSULTING SERVICE LLC
COUNTRY BEST-XXXXXXX LLC
AGWAY ENERGY PRODUCTS LLC
AGWAY ENERGY SERVICES-PA, INC.
AGWAY ENERGY SERVICES, INC.
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------
Name: XXXXX X. XXXXXXX
--------------------------------------------
Title: TREASURER
-----------------------------------------
AGWAY GENERAL AGENCY, INC.
COUNTRY BEST XXXXX, LLC
By: /s/ XXXXX X. XXXXXXX
---------------------------------------------
Name: XXXXX X. XXXXXXX
-------------------------------------------
Title: ASST. TREASURER
-------------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT
By: /s/ XXXXXX XXXX
------------------------------------------
Name: XXXXXX XXXX
------------------------------------------
Title: Its Duly Authorized Signatory
PLEDGE AGREEMENT
----------------
This PLEDGE AGREEMENT, dated as of March 28, 2001 (together
with all amendments, if any, from time to time hereto, this "Agreement") between
AGWAY, INC., a Delaware corporation, AGWAY FINANCIAL CORPORATION, a Delaware
corporation, AGWAY HOLDINGS INC., a Delaware corporation, FEED COMMODITIES
INTERNATIONAL LLC, a limited liability company organized under the laws of the
state of Delaware, MILFORD FERTILIZER COMPANY LLC, a limited liability company
organized under the laws of the state of Delaware, XXXXXXXX AGRONOMIC CONSULTING
SERVICE LLC, a limited liability company organized under the laws of the state
of Delaware, AGWAY GENERAL AGENCY, INC., a New York corporation, COUNTRY BEST
XXXXX, LLC, a limited liability company organized under the laws of the state of
Delaware, COUNTRY BEST XXXXXXX LLC, a limited liability company organized under
the laws of the state of Delaware, AGWAY ENERGY PRODUCTS LLC, a limited
liability company organized under the laws of the state of Delaware, AGWAY
ENERGY SERVICES-PA, INC, a Delaware corporation, and AGWAY ENERGY SERVICES,
INC., a Delaware corporation (collectively, the "Pledgors") and GENERAL ELECTRIC
CAPITAL CORPORATION in its capacity as Agent for Lenders ("Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Credit Agreement dated as of
the date hereof by and among the Pledgors, the Persons named therein as Credit
Parties (the "Borrowers"), Agent and the Persons signatory thereto from time to
time as Lenders (including all annexes, exhibits and schedules thereto, and as
from time to time amended, restated, supplemented or otherwise modified (the
"Credit Agreement") the Lenders have agreed to make Loans to, and incur Letter
of Credit Obligations for the benefit of, Borrowers;
WHEREAS, Pledgors are the record and beneficial owner of the
shares of Stock and limited liability company interests listed in Parts A and B
of Schedule I hereto and the owners of the promissory notes and instruments
listed in Part C of Schedule I hereto;
WHEREAS, the Pledgors benefit from the credit facilities made
available to Borrowers under the Credit Agreement;
WHEREAS, in order to induce Agent and Lenders to make the
Loans and to incur the Letter of Credit Obligations as provided for in the
Credit Agreement, the Pledgors have agreed to pledge the Pledged Collateral to
Agent in accordance herewith;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained and to induce Lenders to make Loans and to incur
Letter of Credit Obligations under the Credit Agreement, it is agreed as
follows:
1. Definitions. Unless otherwise defined herein, terms defined
in the Credit Agreement are used herein as therein defined, and the following
shall have (unless otherwise provided elsewhere in this Agreement) the following
respective meanings (such meanings being equally applicable to both the singular
and plural form of the terms defined):
"Bankruptcy Code" means title 11, United States Code, as
amended from time to time, and any successor statute thereto.
"Operating Agreement" means each limited liability company
agreement, operating agreement or similar agreement identified on Part B of
Schedule I hereto, in each case, as amended, supplemented or otherwise modified
from time to time.
"Pledged Collateral" has the meaning assigned to such term in
Section 2 hereof.
"Pledged Entity" means an issuer of Pledged Shares, Pledged
Interests or Pledged Indebtedness.
"Pledged Indebtedness" means the Indebtedness evidenced by
promissory notes and instruments listed on Part C of Schedule I hereto;
"Pledged Interests" means the limited liability company
interests listed on part B of Schedule I hereto.
"Pledged Shares" means those shares listed on Part A of
Schedule I hereto.
"Secured Obligations" has the meaning assigned to such term in
Section 3 hereof.
2. Pledge. Pledgors hereby pledge to Agent, and grant to Agent
for itself and the benefit of Lenders, a first priority security interest in
(other than the shares of AG Processing Inc., CF Industries, Inc., Universal
Cooperatives, Inc. and CoBank, ACB, in which Agent for itself and the benefit of
Lenders shall have a second priority security interest in, subordinate only to
the lien of the issuer of said shares to secure any indebtedness of the owner of
said shares to said issuer (the "Issuer Lien") all of the following
(collectively, the "Pledged Collateral"):
(a) the Pledged Shares and the certificates representing the
Pledged Shares, and all dividends, distributions, cash, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the Pledged Shares; and
(b) the Pledged Interests and the certificates representing
the Pledged Interests, if any, including, without limitation, (i) all
of Pledgors' rights, powers, and remedies under each Operating
Agreement, and (ii) any rights to properties, assets, distributions,
liquidating distributions and allocations of profits and losses in
respect of such Pledged Interests; and
(c) such portion, as determined by Agent as provided in
Section 6(d) below, of any additional limited liability company
interests or equity interests of a Pledged Entity or other options or
rights with respect to any such interests from time to time acquired by
the Pledgors in any manner (which equity interests shall be deemed to
be part of the Pledged Shares and which limited liability company
interests shall be deemed to be part of the Pledged Interests), and the
2
certificates representing such additional shares, and all dividends,
distributions, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Stock; and
(d) the Pledged Indebtedness and the promissory notes or
instruments evidencing the Pledged Indebtedness, and all interest,
cash, instruments and other property and assets from time to time
received, receivable or otherwise distributed in respect of the Pledged
Indebtedness; and
(e) all additional Indebtedness arising after the date hereof
and owing to the Pledgors and evidenced by promissory notes or other
instruments, together with such promissory notes and instruments, and
all interest, cash, instruments and other property and assets from time
to time received, receivable or otherwise distributed in respect of
that Pledged Indebtedness.
3. Security for Obligations. This Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of all
Obligations of any kind under or in connection with the Credit Agreement and the
other Loan Documents and all obligations of the Pledgors now or hereafter
existing under this Agreement including, without limitation, all fees, costs and
expenses whether in connection with collection actions hereunder or otherwise
(collectively, the "Secured Obligations").
4. Delivery of Pledged Collateral. All certificates and all
promissory notes and instruments evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of Agent, for itself and the benefit of
Lenders, pursuant hereto. Notwithstanding the foregoing and except as otherwise
provided under Section 6(h) hereto, or except as consistent with prior practices
when such notes and instruments evidencing the Pledged Indebtedness are required
to be utilized with respect to collection efforts, all promissory notes and
instruments evidencing the Pledged Indebtedness, other than notes evidencing
intercompany indebtedness and the note receivable from Southern States
Cooperative, Inc. dated July 31, 2000 in the original principal amount of
$13,300,000, shall be held by Agway, Inc., on behalf of Agent for the benefit of
the Agent and Lenders, at its corporate headquarters located at 000 Xxxxxxxxx
Xxxxx, XxXxxx, Xxx Xxxx 00000. All Pledged Shares and, if evidenced by
certificates, all Pledged Interests shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Agent and all promissory notes or other instruments evidencing
the Pledged Indebtedness shall be endorsed by the Pledgors.
5. Representations and Warranties. Pledgors represent and
warrant to Agent that:
(a) Pledgors are, and at the time of delivery of the Pledged
Shares and Pledged Interests to Agent will be, the sole holder of
record and the sole beneficial owner of such Pledged Collateral pledged
by the Pledgors free and clear of any Lien thereon or affecting the
title thereto, except for the Issuer Lien or any Lien created by this
Agreement; Pledgors are and at the time of delivery of the Pledged
Indebtedness to Agent will be, the sole owner of such Pledged
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Collateral free and clear of any Lien thereon or affecting title
thereto, except for the Issuer Lien or any Lien created by this
Agreement;
(b) All of the Pledged Shares and the Pledged Interests have
been duly authorized, validly issued and are fully paid and
non-assessable; the Pledged Indebtedness has been duly authorized,
authenticated or issued and delivered by, and is the legal, valid and
binding obligations of, the Pledged Entities;
(c) Pledgors have the right and requisite authority to pledge,
assign, transfer, deliver, deposit and set over the Pledged Collateral
pledged by Pledgors to Agent as provided herein;
(d) None of the Pledged Shares, Pledged Interests or Pledged
Indebtedness has been issued or transferred by Pledgors in violation of
the securities registration, securities disclosure or similar laws of
any jurisdiction to which such issuance or transfer may be subject;
(e) All of the Pledged Shares and Pledged Interests are
presently owned by the Pledgors, and are presently represented by the
certificates listed on Parts A and B of Schedule I hereto. As of the
date hereof, there are no existing options, warrants, calls or
commitments of any character whatsoever relating to the Pledged Shares
or Pledged Interests;
(f) Other than the consent of CoBank, ACB to a pledge of its
stock, no consent, approval, authorization or other order or other
action by, and no notice to or filing with, any Governmental Authority
or any other Person is required (i) for the pledge by the Pledgors of
the Pledged Collateral pursuant to this Agreement or for the execution,
delivery or performance of this Agreement by the Pledgors, or (ii) for
the exercise by Agent of the voting or other rights provided for in
this Agreement or the remedies in respect of the Pledged Collateral
pursuant to this Agreement, except as may have been obtained or may be
required in connection with such disposition by laws affecting the
offering and sale of securities generally;
(g) Except as otherwise provided in Section 2 hereof, the
pledge, assignment and delivery of the Pledged Collateral pursuant to
this Agreement will create a valid first priority Lien on and a first
priority perfected security interest in favor of the Agent for the
benefit of Agent and Lenders in the Pledged Collateral and the proceeds
thereof, securing the payment of the Secured Obligations, subject to no
other Lien;
(h) This Agreement has been duly authorized, executed and
delivered by the Pledgors and constitutes a legal, valid and binding
obligation of the Pledgors enforceable against the Pledgors in
accordance with its terms;
(i) The Pledged Shares constitute the percentage of the issued
and outstanding shares of Stock owned by each Pledgor of each Pledged
Entity listed in Part A of Schedule I hereto;
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(j) The Pledged Interests represent a fully enforceable and
validly existing right of the Pledgors to share in the respective
distributions, profits and losses of each Pledged Entity listed in Part
B of Schedule I hereto, and rights to approve or consent to such
Pledged Entity's actions in accordance with the relevant Operating
Agreement;
(k) A true and complete copy of each Operating Agreement,
including all amendments, supplements and other modifications thereto,
has previously been delivered to Agent. Each Operating Agreement is a
legal, valid and binding agreement, enforceable by and against the
applicable Pledgors in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting creditors' rights and to equitable principles of general
applicability. Except as otherwise permitted to be made under the
Credit Agreement, no additional contributions are required to be made
by the Pledgors in respect of the Pledged Interests and, there exist no
liabilities or obligations, monetary or otherwise, of the Pledgors to
any Pledged Entity; and
(l) Except as disclosed on Part C of Schedule I, none of the
Pledged Indebtedness is subordinated in right of payment to other
Indebtedness (except for the Secured Obligations) or subject to the
terms of an indenture.
The representations and warranties set forth in this Section 5
shall survive the execution and delivery of this Agreement.
6. Covenants. Pledgors covenant and agree that until the
Termination Date:
(a) Subject to the Issuer Lien provided in Section 2 hereof,
without the prior written consent of Agent, Pledgors will not sell,
assign, transfer, pledge, or otherwise encumber any of their rights in
or to the Pledged Collateral, or any unpaid dividends, interest or
other distributions or payments with respect to the Pledged Collateral
or xxxxx x Xxxx in the Pledged Collateral, unless otherwise expressly
permitted by the Credit Agreement;
(b) Pledgors will, at their expense, promptly execute,
acknowledge and deliver all such instruments and take all such actions
as Agent from time to time may request in order to ensure to Agent and
Lenders the benefits of the Liens in and to the Pledged Collateral
intended to be created by this Agreement, including the filing of any
necessary Code financing statements, which may be filed by Agent with
or (to the extent permitted by law) without the signature of the
Pledgors, and will cooperate with Agent, at Pledgors expense, in
obtaining all necessary approvals and making all necessary filings
under federal, state, local or foreign law in connection with such
Liens or any sale or transfer of the Pledged Collateral;
(c) Pledgors have and will defend the title to the Pledged
Collateral and the Liens of Agent in the Pledged Collateral against the
claim of any Person and will maintain and preserve such Liens;
(d) Pledgors will, upon obtaining ownership of any additional
Stock, limited liability company interest or promissory notes or
instruments of a Pledged Entity or Stock, limited liability company
5
interests or promissory notes or instruments otherwise required to be
pledged to Agent pursuant to any of the Loan Documents, which Stock,
limited liability company interests, notes or instruments are not
already Pledged Collateral, promptly (and in any event within five (5)
Business Days) deliver to Agent a Pledge Amendment, duly executed by
the respective Pledgor, in substantially the form of Schedule II hereto
(a "Pledge Amendment") in respect of any such additional Stock, limited
liability company interests, notes or instruments, pursuant to which
Pledgors shall pledge to Agent all of such additional Stock, limited
liability company interests, notes and instruments. Pledgors hereby
authorize Agent to attach each Pledge Amendment to this Agreement and
agree that all Pledged Shares, Pledged Interests and Pledged
Indebtedness listed on any Pledge Amendment delivered to Agent shall
for all purposes hereunder be considered Pledged Collateral;
(e) Pledgors shall comply in all respects with the terms and
conditions of each Operating Agreement and all other contracts and
agreements relating to the Pledged Collateral. Without the prior
written consent of Agent, Pledgors shall not amend, supplement or
otherwise modify (or consent to any such amendment, supplement or
modification) the terms of any Operating Agreement in a manner which
would adversely affect Agent's or Pledgors' duty or ability to repay
the Secured Obligations;
(f) Pledgors shall deliver to each Pledged Entity listed on
Part B of Schedule I hereto a Pledge Instruction in the form of Exhibit
A hereto and shall cause each such Pledged Entity to record on its
books the pledge created hereby and to execute and deliver the
Acknowledgment and Agreement with respect to this Agreement in the form
of Exhibit B hereto;
(g) If the Pledged Interests become evidenced by certificates
or any other instrument, Pledgors shall immediately deliver all such
certificates or instruments to Agent together with duly executed
instruments of transfer or assignments in blank, all in form and
substance satisfactory to Agent; and
(h) Upon the occurrence of an Event of Default and at Agent's
request, Pledgors shall immediately deliver to Agent, but in no event
later than two Business Days after request, all promissory notes and
instruments evidencing the Pledged Indebtedness, duly endorsed in a
manner acceptable to the Agent.
7. Pledgors' Rights. As long as no Default or Event of Default
shall have occurred and be continuing and until written notice shall be given to
Pledgors in accordance with Section 8(a) hereof:
(a) Pledgors shall have the right, from time to time, to vote
and give consents with respect to the Pledged Collateral, or any part
thereof for all purposes not inconsistent with the provisions of this
Agreement, the Credit Agreement or any other Loan Document; provided,
however, that no vote shall be cast, and no consent shall be given or
action taken, which would have the effect of impairing the position or
interest of Agent in respect of the Pledged Collateral or which would
authorize, effect or consent to (unless and to the extent expressly
permitted by the Credit Agreement):
6
(i) the dissolution or liquidation, in whole or in
part, of a Pledged Entity;
(ii) the consolidation or merger of a Pledged Entity
with any other Person;
(iii) the sale, disposition or encumbrance of all or
substantially all of the assets of a Pledged Entity, except for the
Issuer Liens and Liens in favor of Agent;
(iv) any change in the authorized number of shares,
the stated capital or the authorized share capital of a Pledged Entity
or the issuance of any additional shares of its Stock;
(v) the issuance of any limited liability company
interests or other equity interests of any nature or the issuance of
any other interests convertible into or granting the right to purchase
or exchange for any limited liability company interests or other equity
interests of any nature of any Pledged Entity or the issuance of any
certificates representing any Pledged Interests; or
(vi) the alteration of the voting rights with respect
to the Stock of a Pledged Entity; and
(b) Subject to the Issuer Lien provided in Section 2 hereof,
(i) Pledgors shall be entitled, from time to time, to collect and
receive for their own use all cash dividends and interest paid in
respect of the Pledged Shares, Pledged Interests and Pledged
Indebtedness to the extent not in violation of the Credit Agreement
other than any and all: (A) dividends, distributions and interest paid
or payable other than in cash in respect of any Pledged Collateral, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Shares or Pledged Interests in connection with a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in capital of a Pledged
Entity; and (C) cash paid, payable or otherwise distributed, in respect
of principal of, or in redemption of, or in exchange for, any Pledged
Collateral; provided, however, that until actually paid all rights to
such distributions shall remain subject to the Lien created by this
Agreement; and
(ii) all dividends, distributions and interest (other
than such cash dividends and interest as are permitted to be paid to
Pledgors in accordance with clause (i) above) and all other
distributions in respect of any of the Pledged Shares, Pledged
Interests or Pledged Indebtedness, whenever paid or made, shall be
delivered to Agent to hold as Pledged Collateral and shall, if received
by Pledgors, be received in trust for the benefit of Agent, be
segregated from the other property or funds of Pledgors, and be
forthwith delivered to Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
7
8. Defaults and Remedies; Proxy.
(a) Except for the shares of stock subject to the Issuer Lien
provided for in Section 2 hereof, upon the occurrence of an Event of
Default and during the continuation of such Event of Default, and
concurrently with written notice to the Pledgors, Agent (personally or
through an agent) is hereby authorized and empowered to transfer and
register in its name or in the name of its nominee the whole or any
part of the Pledged Collateral, to exchange certificates or instruments
representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, to exercise the voting
and all other rights as a holder with respect thereto, to collect and
receive all cash dividends, interest, principal and other distributions
made thereon, to sell in one or more sales after ten (10) days' notice
of the time and place of any public sale or of the time at which a
private sale is to take place (which notice Pledgors agree is
commercially reasonable) the whole or any part of the Pledged
Collateral and to otherwise act with respect to the Pledged Collateral
as though Agent was the outright owner thereof. Any sale shall be made
at a public or private sale at Agent's place of business, or at any
place to be named in the notice of sale, either for cash or upon credit
or for future delivery at such price as Agent may deem fair, and Agent
may be the purchaser of the whole or any part of the Pledged Collateral
so sold and hold the same thereafter in its own right free from any
claim of Pledgors or any right of redemption. Each sale shall be made
to the highest bidder, but Agent reserves the right to reject any and
all bids at such sale which, in its discretion, it shall deem
inadequate. Demands of performance, except as otherwise herein
specifically provided for, notices of sale, advertisements and the
presence of property at sale are hereby waived and any sale hereunder
may be conducted by an auctioneer or any officer or agent of Agent.
PLEDGORS HEREBY IRREVOCABLY CONSTITUTE AND APPOINT AGENT AS THE PROXY
AND ATTORNEY-IN-FACT OF PLEDGORS WITH RESPECT TO THE PLEDGED
COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES AND PLEDGED
INTERESTS, WITH FULL POWER OF SUBSTITUTION TO DO SO. THE APPOINTMENT OF
AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND
SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE. IN ADDITION TO THE
RIGHT TO VOTE THE PLEDGED SHARES AND PLEDGED INTERESTS, THE APPOINTMENT
OF AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO
EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A
HOLDER OF THE PLEDGED SHARES AND PLEDGED INTERESTS WOULD BE ENTITLED
UNDER EACH OPERATING AGREEMENT OR OTHERWISE (INCLUDING GIVING OR
WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS OR MEMBERS, CALLING
SPECIAL MEETINGS OF SHAREHOLDERS OR MEMBERS AND VOTING AT SUCH
MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED SHARES
AND PLEDGED INTERESTS ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY
PESON (INCLUDING THE ISSUER OF THE PLEDGED SHARES AND PLEDGED INTERESTS
OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT. NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY DUTY
8
TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE
LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.
(b) If, at the original time or times appointed for the sale
of the whole or any part of the Pledged Collateral, the highest bid, if
there be but one sale, shall be inadequate to discharge in full all the
Secured Obligations, or if the Pledged Collateral be offered for sale
in lots, if at any of such sales, the highest bid for the lot offered
for sale would indicate to Agent, in its discretion, that the proceeds
of the sales of the whole of the Pledged Collateral would be unlikely
to be sufficient to discharge all the Secured Obligations, Agent may,
on one or more occasions and in its discretion, postpone any of said
sales by public announcement at the time of sale or the time of
previous postponement of sale, and no other notice of such postponement
or postponements of sale need be given, any other notice being hereby
waived; provided, however, that any sale or sales made after such
postponement shall be after ten (10) days' notice to Pledgors.
(c) If, at any time when Agent in its sole discretion
determines, following the occurrence and during the continuance of an
Event of Default, that, in connection with any actual or contemplated
exercise of its rights (when permitted under this Section 8) to sell
the whole or any part of the Pledged Shares hereunder, it is necessary
or advisable to effect a public registration of all or part of the
Pledged Collateral pursuant to the Securities Act of 1933, as amended
(or any similar statute then in effect) (the "Act"), Pledgors shall, in
an expeditious manner, cause the Pledged Entities to:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement with respect to
the Pledged Shares and in good faith use commercially reasonable
efforts to cause such registration statement to become and remain
effective;
(ii) Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Act with respect to the sale or other disposition of the Pledged
Shares covered by such registration statement whenever Agent shall
desire to sell or otherwise dispose of the Pledged Shares;
(iii) Furnish to Agent such numbers of copies of a
prospectus and a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as Agent may request
in order to facilitate the public sale or other disposition of the
Pledged Shares by Agent;
(iv) Use commercially reasonable efforts to register
or qualify the Pledged Shares covered by such registration statement
under such other securities or blue sky laws of such jurisdictions
within the United States and Puerto Rico as Agent shall request, and do
such other reasonable acts and things as may be required of it to
9
enable Agent to consummate the public sale or other disposition in such
jurisdictions of the Pledged Shares by Agent;
(v) Furnish, at the request of Agent, on the date
that shares of the Pledged Collateral are delivered to the underwriters
for sale pursuant to such registration or, if the security is not being
sold through underwriters, on the date that the registration statement
with respect to such Pledged Shares becomes effective, (A) an opinion,
dated such date, of the independent counsel representing such
registrant for the purposes of such registration, addressed to the
underwriters, if any, and in the event the Pledged Shares are not being
sold through underwriters, then to Agent, in customary form and
covering matters of the type customarily covered in such legal
opinions; and (B) a comfort letter, dated such date, from the
independent certified public accountants of such registrant, addressed
to the underwriters, if any, and in the event the Pledged Shares are
not being sold through underwriters, then to Agent, in a customary form
and covering matters of the type customarily covered by such comfort
letters and as the underwriters or Agent shall reasonably request. The
opinion of counsel referred to above shall additionally cover such
other legal matters with respect to the registration in respect of
which such opinion is being given as Agent may reasonably request. The
letter referred to above from the independent certified public
accountants shall additionally cover such other financial matters
(including information as to the period ending not more than five (5)
Business Days prior to the date of such letter) with respect to the
registration in respect of which such letter is being given as Agent
may reasonably request; and
(vi) Otherwise use commercially reasonable efforts to
comply with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable but not later than 18 months after the effective date of
the registration statement, an earnings statement covering the period
of at least 12 months beginning with the first full month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Act.
(d) All expenses incurred in complying with Section 8(c)
hereof, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), printing expenses, fees and
disbursements of counsel for the registrant, the fees and expenses of
counsel for Agent, expenses of the independent certified public
accountants (including any special audits incident to or required by
any such registration) and expenses of complying with the securities or
blue sky laws or any jurisdictions, shall be paid by Pledgors.
(e) If, at any time when Agent shall determine to exercise its
right to sell the whole or any part of the Pledged Collateral
hereunder, such Pledged Collateral or the part thereof to be sold shall
not, for any reason whatsoever, be effectively registered under the
Act, Agent may, in its discretion (subject only to applicable
requirements of law), sell such Pledged Collateral or part thereof by
private sale in such manner and under such circumstances as Agent may
deem necessary or advisable, but subject to the other requirements of
this Section 8, and shall not be required to effect such registration
10
or to cause the same to be effected. Without limiting the generality of
the foregoing, in any such event, Agent in its discretion (x) may, in
accordance with applicable securities laws, proceed to make such
private sale notwithstanding that a registration statement for the
purpose of registering such Pledged Collateral or part thereof could be
or shall have been filed under said Act (or similar statute), (y) may
approach and negotiate with a single possible purchaser to effect such
sale, and (z) may restrict such sale to a purchaser who is an
accredited investor under the Act and who will represent and agree that
such purchaser is purchasing for its own account, for investment and
not with a view to the distribution or sale of such Pledged Collateral
or any part thereof. In addition to a private sale as provided above in
this Section 8, if any of the Pledged Collateral shall not be freely
distributable to the public without registration under the Act (or
similar statute) at the time of any proposed sale pursuant to this
Section 8, then Agent shall not be required to effect such registration
or cause the same to be effected but, in its discretion (subject only
to applicable requirements of law), may require that any sale hereunder
(including a sale at auction) be conducted subject to restrictions:
(i) as to the financial sophistication and ability of
any Person permitted to bid or purchase at any such sale;
(ii) as to the content of legends to be placed upon
any certificates representing the Pledged Collateral sold in such sale,
including restrictions on future transfer thereof;
(iii) as to the representations required to be made
by each Person bidding or purchasing at such sale relating to that
Person's access to financial information about the Pledgors and such
Person's intentions as to the holding of the Pledged Collateral so sold
for investment for its own account and not with a view to the
distribution thereof; and
(iv) as to such other matters as Agent may, in its
discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in
compliance with the Bankruptcy Code and other laws affecting the
enforcement of creditors' rights and the Act and all applicable state
securities laws.
(f) Pledgors recognize that Agent may be unable to effect a
public sale of any or all the Pledged Collateral and may be compelled
to resort to one or more private sales thereof in accordance with
clause (e) above. Pledgors also acknowledge that any such private sale
may result in prices and other terms less favorable to the seller than
if such sale were a public sale and, notwithstanding such
circumstances, agree that any such private sale shall not be deemed to
have been made in a commercially unreasonable manner solely by virtue
of such sale being private. Agent shall be under no obligation to delay
a sale of any of the Pledged Collateral for the period of time
necessary to permit the Pledged Entity to register such securities for
public sale under the Act, or under applicable state securities laws,
even if Pledgors and the Pledged Entity would agree to do so.
11
(g) Pledgors agree to the maximum extent permitted by
applicable law that following the occurrence and during the continuance
of an Event of Default they will not at any time plead, claim or take
the benefit of any appraisal, valuation, stay, extension, moratorium or
redemption law now or hereafter in force in order to prevent or delay
the enforcement of this Agreement, or the absolute sale of the whole or
any part of the Pledged Collateral or the possession thereof by any
purchaser at any sale hereunder, and Pledgors waive the benefit of all
such laws to the extent they lawfully may do so. Pledgors agree that
they will not interfere with any right, power and remedy of Agent
provided for in this Agreement or now or hereafter existing at law or
in equity or by statute or otherwise, or the exercise or beginning of
the exercise by Agent of any one or more of such rights, powers or
remedies. No failure or delay on the part of Agent to exercise any such
right, power or remedy and no notice or demand which may be given to or
made upon Pledgors by Agent with respect to any such remedies shall
operate as a waiver thereof, or limit or impair Agent's right to take
any action or to exercise any power or remedy hereunder, without notice
or demand, or prejudice its rights as against Pledgors in any respect.
(h) Pledgors further agree that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to
Agent, that Agent shall have no adequate remedy at law in respect of
such breach and, as a consequence, agree that each and every covenant
contained in this Section 8 shall be specifically enforceable against
Pledgors, and Pledgors hereby waive and agree not to assert any
defenses against an action for specific performance of such covenants
except for a defense that the Secured Obligations are not then due and
payable in accordance with the agreements and instruments governing and
evidencing such obligations.
9. Irrevocable Authorization and Instruction. Pledgors hereby
authorize and instruct each Pledged Entity listed on Part B of Schedule I hereto
and CoBank, ACB with respect to the CoBank stock listed on Part A of Schedule I
to comply with any instruction received by it from Agent without any further
order or further consent or instructions from Pledgors and Pledgors agree that
each Pledged Entity shall be fully protected in so complying.
10. Waiver. No delay on Agent's part in exercising any power
of sale, Lien, option or other right hereunder, and no notice or demand which
may be given to or made upon Pledgors by Agent with respect to any power of
sale, Lien, option or other right hereunder, shall constitute a waiver thereof,
or limit or impair Agent's right to take any action or to exercise any power of
sale, Lien, option, or any other right hereunder, without notice or demand, or
prejudice Agent's rights as against Pledgors in any respect.
11. Assignment. Agent may assign, indorse or transfer any
instrument evidencing all or any part of the Secured Obligations as provided in,
and in accordance with, the Credit Agreement, and the holder of such instrument
shall be entitled to the benefits of this Agreement.
12. Termination. Immediately following the Termination Date,
Agent shall deliver to Pledgors the Pledged Collateral pledged by the Pledgors
at the time subject to this Agreement and all instruments of assignment executed
in connection therewith, free and clear of the Liens hereof and, except as
12
otherwise provided herein, all of Pledgors' obligations hereunder shall at such
time terminate.
13. Lien Absolute. Subject to the Issuer Lien provided in
Section 2 hereof, all rights of Agent hereunder, and all obligations of Pledgors
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any part of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from
the Credit Agreement, any other Loan Document or any other agreement or
instrument governing or evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other
Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) the insolvency of any Credit Party; or
(e) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgors.
14. Release. Pledgors consent and agree that Agent may at any
time, or from time to time, in its discretion:
(a) renew, extend or change the time of payment, and/or the
manner, place or terms of payment of all or any part of the Secured
Obligations; and
(b) exchange, release and/or surrender all or any of the
Collateral (including the Pledged Collateral), or any part thereof, by
whomsoever deposited, which is now or may hereafter be held by Agent in
connection with all or any of the Secured Obligations; all in such
manner and upon such terms as Agent may deem proper, and without notice
to or further assent from Pledgors, it being hereby agreed that
Pledgors shall be and remain bound upon this Agreement, irrespective of
the value or condition of any of the Collateral, and notwithstanding
any such change, exchange, settlement, compromise, surrender, release,
renewal or extension, and notwithstanding also that the Secured
Obligations may, at any time, exceed the aggregate principal amount
thereof set forth in the Credit Agreement, or any other agreement
governing any Secured Obligations. Pledgors hereby waive notice of
acceptance of this Agreement, and also presentment, demand, protest and
notice of dishonor of any and all of the Secured Obligations, and
promptness in commencing suit against any party hereto or liable
hereon, and in giving any notice to or of making any claim or demand
hereunder upon Pledgors. No act or omission of any kind on Agent's part
shall in any event affect or impair this Agreement.
13
15. Reinstatement. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Pledgors or any Pledged Entity for liquidation or reorganization, should
Pledgors or any Pledged Entity become insolvent or make an assignment for the
benefit of creditors or should a receiver or trustee be appointed for all or any
significant part of Pledgors' or a Pledged Entity's assets, and shall continue
to be effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a "voidable
preference", "fraudulent conveyance", or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
16. Miscellaneous.
(a) Agent may execute any of its duties hereunder by or
through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
(b) Pledgors agree to promptly reimburse Agent for actual
out-of-pocket expenses, including, without limitation, reasonable
counsel fees, incurred by Agent in connection with the administration
and enforcement of this Agreement.
(c) Neither Agent, nor any of its respective officers,
directors, employees, agents or counsel shall be liable for any action
lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or
willful misconduct as finally determined by a court of competent
jurisdiction.
(d) THIS AGREEMENT SHALL BE BINDING UPON PLEDGORS AND THEIR
SUCCESSORS AND ASSIGNS (INCLUDING DEBTORS-IN-POSSESSION ON BEHALF OF
PLEDGORS), AND SHALL INURE TO THE BENEFIT OF, AND BE ENFORCEABLE BY,
AGENT AND ITS SUCCESSORS AND ASSIGNS, AND SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND NONE
OF THE TERMS OR PROVISIONS OF THIS AGREEMENT MAY BE WAIVED, ALTERED,
MODIFIED OR AMENDED EXCEPT IN WRITING DULY SIGNED FOR AND ON BEHALF OF
AGENT AND PLEDGORS.
17. Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or effect those
portions of this Agreement which are valid.
18. Notices. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
14
give or serve upon any other a communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person or
sent by registered or certified mail, return receipt requested, with proper
postage prepaid, or by facsimile transmission and confirmed by delivery of a
copy by personal delivery or United States Mail as otherwise provided herein:
(a) If to Agent, at:
General Electric Capital Corporation
000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Agway Account Manager
Fax No.: (000) 000-0000
With copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxxxxx Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
- and -
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel - Commercial Finance
Fax No.: (000) 000-0000
(b) If to any Pledgor, at:
Agway, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxx Ohligher
Fax No.: (000) 000-0000
With copies to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Fax No.: (000) 000-0000
15
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly served, given or delivered (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the United States Mail,
registered or certified mail, return receipt requested, with proper postage
prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States Mail as otherwise provided in this
Section 18, (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid, or (d) when delivered, if hand-delivered by
messenger. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication.
19. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
20. Counterparts. This Agreement may be executed in any number
of counterparts, which shall, collectively and separately, constitute one
agreement.
21. Benefit of Lenders. All security interests granted or
contemplated hereby shall be for the benefit of Agent and Lenders, and all
proceeds or payments realized from the Pledged Collateral in accordance herewith
shall be applied to the Obligations in accordance with the terms of the Credit
Agreement.
[signature page follows]
16
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
AGWAY, INC.
AGWAY FINANCIAL CORPORATION
AGWAY HOLDINGS INC.
FEED COMMODITIES INTERNATIONAL LLC
MILFORD FERTILIZER COMPANY LLC
XXXXXXXX AGRONOMIC CONSULTING SERVICE LLC
COUNTRY BEST-XXXXXXX LLC
AGWAY ENERGY PRODUCTS LLC
AGWAY ENERGY SERVICES-PA, INC.
AGWAY ENERGY SERVICES, INC.
By: /s/ XXXXX X. XXXXXXX
-----------------------------
Name: XXXXX X. XXXXXXX
-----------------------------
Title: TREASURER
----------------------------
AGWAY GENERAL AGENCY, INC.
COUNTRY BEST XXXXX, LLC
By: /s/ XXXXX X. XXXXXXX
----------------------------
Name: XXXXX X. XXXXXXX
----------------------------
Title: ASST. TREASURER
----------------------------
GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT
By: /s/ XXXXXX XXXX
----------------------------
Name: XXXXXX XXXX
-----------------------------
Its Duly Authorized Signatory
INTELLECTUAL PROPERTY SECURITY AGREEMENT
----------------------------------------
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of
March 28, 2001, is made by Agway, Inc., a Delaware corporation ("Agway"), Agway
Holdings Inc., a Delaware corporation ("AHI"), Agway Financial Corporation, a
Delaware corporation ("AFC"), Feed Commodities International LLC, a limited
liability company organized under the laws of the state of Delaware ("FCI"),
Milford Fertilizer Company LLC, a limited liability company organized under the
laws of the state of Delaware ("MFC"), Xxxxxxxx Agronomic Consulting Service
LLC, a limited liability company organized under the laws of the state of
Delaware ("BACS"), Agway General Agency, Inc. a New York corporation ("AGA"),
Country Best Xxxxx, LLC, a limited liability company organized under the laws of
the state of Delaware ("CBA"), Country Best-Xxxxxxx LLC, a limited liability
company organized under the laws of the state of Delaware ("CBD"), Agway Energy
Products LLC, a limited liability company organized under the laws of the state
of Delaware ("AEP"), Agway Energy Services-PA, Inc., a Delaware corporation
("AESPA"), and Agway Energy Services, Inc., a Delaware corporation ("AES");
(Agway, AHI, AFC, FCI, MFC, BACS, AGA, CBA, CBD, AEP, AESPA and AES are,
together, "Grantor") in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a New
York corporation, in its capacity as agent for Lenders ("Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement dated as of
the date hereof by and among Grantor, the Persons named therein as Credit
Parties, Agent and the Persons signatory thereto from time to time as Lenders
(including all annexes, exhibits or schedules thereto, as from time to time
amended, restated, supplemented or otherwise modified, the "Credit Agreement"),
Lenders have agreed to make the Loans and to incur Letter of Credit Obligations
for the benefit of Grantor; and
WHEREAS, Lenders are willing to make the Loans and to incur
the Letter of Credit Obligations as provided for in the Credit Agreement, but
only upon the condition, among others, that Grantor shall have executed and
delivered to Agent this Intellectual Property Security Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Grantor hereby agrees
as follows:
1. DEFINED TERMS. All capitalized terms used but not otherwise
defined herein have the meanings given to them in Annex A to the Credit
Agreement.
2. GRANT OF SECURITY INTEREST IN INTELLECTUAL PROPERTY
COLLATERAL. To secure the complete and timely payment of all the Obligations of
Grantor now or hereafter existing from time to time, Grantor hereby pledges and
grants to Agent, on behalf of itself and Lenders, a continuing first priority
security interest in all of Grantor's right, title and interest in, to and under
the following, whether presently existing or hereafter created or acquired
(collectively, the "Intellectual Property Collateral"):
(a) all of its Patents and Patent Licenses to which it
is a party including those referred to on Schedule I hereto;
(b) all of its Trademarks and Trademark Licenses to
which it is a party including those referred to on Schedule II hereto;
(c) all of its Copyrights and Copyright Licenses to
which it is a party including those referred to on Schedule III hereto;
(d) all reissues, continuations or extensions of the
foregoing;
(e) all goodwill of the business connected with the use
of, and symbolized by, each Patent, each Patent License, each Trademark, each
Trademark License, each Copyright and each Copyright License; and
(f) all products and proceeds of the foregoing,
including, without limitation, any claim by Grantor against third parties for
past, present or future (i) infringement or dilution of any Patent or Patent
licensed under any Patent License, (ii) injury to the goodwill associated with
any Patent or any Patent licensed under any Patent License, (iii) infringement
or dilution of any Trademark or Trademark licensed under any Trademark License,
(iv) injury to the goodwill associated with any Trademark or any Trademark
licensed under any Trademark License, (v) infringement or dilution of any
Copyright or Copyright licensed under any Copyright License, and (vi) injury to
the goodwill associated with any Copyright or any Copyright licensed under any
Copyright License.
3. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants that Grantor does not have any interest in, or title to, any Patent,
Trademark or Copyright except as set forth in Schedule I, Schedule II and
Schedule III, respectively, hereto. This Intellectual Property Security
Agreement is effective to create a valid and continuing Lien on and, upon the
filing hereof with the United States Patent and Trademark Office and the United
States Copyright Office, perfected security interests in favor of Agent in all
of Grantor's Patents, Trademarks and Copyrights and such perfected security
interests are enforceable as such as against any and all creditors of, and
purchasers from, Grantor. Upon filing of this Intellectual Property Security
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office and the filing of appropriate financing statements
listed on Schedule I to the Security Agreement, all action necessary or
desirable to protect and perfect Agent's Lien on Grantor's Patents, Trademarks
and Copyrights shall have been duly taken.
2
4. COVENANTS. Grantor covenants and agrees with Agent, on
behalf of itself and Lenders, that from and after the date of this Intellectual
Property Security Agreement and until the Termination Date:
(a) Grantor shall notify Agent immediately if it knows
or has reason to know that any application or registration relating to any
Patent, Trademark or Copyright (now or hereafter existing) material to the
operation of such Grantor's business may become abandoned, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding
Grantor's ownership of any such Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.
(b) Within 45 days after the end of each Fiscal Quarter,
Grantors shall provide Agent a list of any applications for the registration of
any Patent, Trademark or Copyright filed by any Credit Party with the United
States Patent and Trademark Office, The United States Copyright Office or any
similar office or agency in the prior Fiscal Quarter, and, upon request of
Agent, Grantor shall execute and deliver a supplement hereto (in form and
substance satisfactory to Agent) to evidence Agent's Lien on such Patent,
Trademark or Copyright, and the General Intangibles of Grantor relating thereto
or represented thereby.
(c) Grantor shall take all actions necessary or
requested by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the Patents,
Trademarks or Copyrights (now or hereafter existing) material to the operation
of such Grantor's business, including the filing of applications for renewal,
affidavits of use, affidavits of noncontestability and opposition and
interference and cancellation proceedings.
(d) In the event that any of the Intellectual Property
Collateral is infringed upon, or misappropriated or diluted by a third party,
Grantor shall notify Agent promptly after Grantor learns thereof. Grantor shall,
unless it shall reasonably determine that such Intellectual Property Collateral
is in no way material to the conduct of its business or operations, promptly xxx
for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and shall take such
other actions as Agent shall deem appropriate under the circumstances to protect
such Intellectual Property Collateral.
5. SECURITY AGREEMENT. The security interests granted pursuant
to this Intellectual Property Security Agreement are granted in conjunction with
the security interests granted to Agent pursuant to the Security Agreement.
Grantor hereby acknowledges and affirms that the rights and remedies of Agent
with respect to the security interest in the Intellectual Property Collateral
made and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if fully
set forth herein.
3
6. REINSTATEMENT. This Intellectual Property Security
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against Grantor for liquidation or
reorganization, should Grantor become insolvent or make an assignment for the
benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
7. NOTICES. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication shall or
may be given to or served upon any of the parties by any other party, or
whenever any of the parties desires to give and serve upon any other party any
communication with respect to this Intellectual Property Security Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given in the manner, and deemed
received, as provided for in the Credit Agreement.
8. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section
6 hereof, this Intellectual Property Security Agreement shall terminate upon the
Termination Date.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
4
IN WITNESS WHEREOF, Grantor has caused this Intellectual
Property Security Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.
AGWAY, INC.
AGWAY HOLDINGS INC.
AGWAY FINANCIAL CORPORATION FEED COMMODITIES
INTERNATIONAL LLC MILFORD FERTILIZER COMPANY LLC
XXXXXXXX AGRONOMIC CONSULTING SERVICE LLC COUNTRY
BEST-XXXXXXX LLC AGWAY ENERGY PRODUCTS LLC AGWAY
ENERGY SERVICES-PA, INC. AGWAY ENERGY SERVICES, INC.
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------------
Name: XXXXX X. XXXXXXX
Title: TREASURER
AGWAY GENERAL AGENCY, INC.
COUNTRY BEST XXXXX, LLC
By: /s/ XXXXX X. XXXXXXX
--------------------------------------------------
Name: XXXXX X. XXXXXXX
Title: ASST. TREASURER
ACCEPTED and ACKNOWLEDGED by:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
By: /s/ XXXXXX XXXX
--------------------------------------------------
Name: XXXXXX XXXX
Its: Duly Authorized Signatory
