SUPREMA SPECIALTIES, INC.
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NOTE AGREEMENT
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DATED AS OF MARCH 9, 1998
$10,500,000 16.5% SENIOR SUBORDINATED NOTES DUE MARCH 1, 2006
TABLE OF CONTENTS
(Not Part of Agreement)
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1. PAYMENTS...................................................................................... 1
1.1 Interest Payments.................................................................... 1
1.2 Capitalized Interest Amounts......................................................... 2
1.3 Scheduled Principal Payments......................................................... 2
1.4 Optional Principal Payments.......................................................... 3
1.5 Offer to Pay Upon Change in Management............................................... 4
1.6 Delivery of Subordinated Notes in Payment of Warrant Purchase Price.................. 5
1.7 Application of Payments; Payments Among Noteholders.................................. 5
1.8 Notation of Notes on Payment......................................................... 6
1.9 No Other Payments of Principal; Acquisition of Notes................................. 7
1.10 Manner of Payments................................................................... 7
2. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES................................................. 8
2.1 Registration of Notes................................................................ 8
2.2 Exchange of Notes.................................................................... 8
2.3 Replacement of Notes................................................................. 8
2.4 Issuance Taxes....................................................................... 9
3. GENERAL COVENANTS............................................................................. 9
3.1 Payment of Taxes and Claims.......................................................... 9
3.2 Maintenance of Properties; Corporate Existence; etc.................................. 10
3.3 Payment of Notes and Maintenance of Office........................................... 10
3.4 Pension Plans........................................................................ 11
3.5 Private Offering..................................................................... 11
3.6 Subsidiary Guaranty.................................................................. 11
4. FINANCIAL COVENANTS........................................................................... 12
4.1 Mergers and Consolidations........................................................... 12
4.2 Disposition of Assets, Subsidiary Stock.............................................. 13
4.3 Liens................................................................................ 15
4.4 Net Worth............................................................................ 17
4.5 Fixed Charge Coverage................................................................ 18
4.6 Ratio of Debt to Pro Forma Consolidated Cash Flow.................................... 18
4.7 Incurrence of Debt................................................................... 18
4.8 Restricted Payments, Restricted Repurchases and Restricted
Investments.......................................................................... 21
4.9 Seniority to Junior Subordinated Debt................................................ 22
4.10 Line of Business..................................................................... 22
4.11 Transactions with Affiliates......................................................... 23
5. REPORTING COVENANTS........................................................................... 23
5.1 Financial and Business Information................................................... 23
5.2 Extension of Time to File SEC Reports................................................ 26
5.3 Officer's Certificates............................................................... 26
5.4 Accountants' Certificates............................................................ 27
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TABLE OF CONTENTS (continued)
(Not Part of Agreement)
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5.5 Inspection........................................................................... 27
5.6 Confidential Information............................................................. 27
6. EVENTS OF DEFAULT............................................................................. 29
6.1 Events of Default.................................................................... 29
6.2 Default Remedies..................................................................... 31
6.3 Annulment of Acceleration of Notes................................................... 33
7. SUBORDINATION................................................................................. 34
7.1 General.............................................................................. 34
7.2 Insolvency........................................................................... 34
7.3 Proofs of Claim...................................................................... 34
7.4 Payment Default in Respect of Senior Debt............................................ 35
7.5 Significant Nonpayment Default in Respect of Senior Debt............................. 35
7.6 Enforcement Notice................................................................... 36
7.7 Standstill........................................................................... 36
7.8 Turnover of Payments................................................................. 37
7.9 Subordination Unaffected by Certain Events........................................... 37
7.10 Waiver and Consent................................................................... 38
7.11 Reinstatement of Subordination....................................................... 38
7.12 Obligations Not Impaired............................................................. 38
7.13 Payment of Senior Debt; Subrogation.................................................. 39
7.14 Reliance of Holders of Senior Debt................................................... 39
7.15 Identity of Holders of Senior Debt................................................... 39
7.16 Amendments to Senior Credit Facility................................................. 39
8. INTERPRETATION OF THIS AGREEMENT.............................................................. 40
8.1 Terms Defined........................................................................ 40
8.2 Other Definitions.................................................................... 62
8.3 Accounting Principles................................................................ 62
8.4 Directly or Indirectly............................................................... 63
8.5 Section Headings and Table of Contents and Construction.............................. 63
8.6 Governing Law........................................................................ 63
8.7 General Interest Provisions.......................................................... 63
9. MISCELLANEOUS................................................................................. 65
9.1 Communications....................................................................... 65
9.2 Reproduction of Documents............................................................ 65
9.3 Survival; Entire Agreement........................................................... 66
9.4 Successors and Assigns............................................................... 66
9.5 Amendment and Waiver................................................................. 66
9.6 Expenses............................................................................. 68
9.7 Waiver of Jury Trial; Consent to Jurisdiction, etc................................... 69
9.8 Execution in Counterpart............................................................. 70
Annex 1 -- Addresses of Purchasers; Payment Instructions
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TABLE OF CONTENTS (continued)
(Not Part of Agreement)
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Annex 2 -- Address of Company
Annex 3 -- Existing Liens, Debt and Investments
Attachment A -- Form of Note
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NOTE AGREEMENT
NOTE AGREEMENT, dated as of March 9, 1998, among SUPREMA SPECIALTIES, INC.,
a New York corporation (together with its successors and assigns, the
"Company"), ALBION ALLIANCE MEZZANINE FUND, L.P., and THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES (each, together with its successors and
assigns, a "Purchaser" and collectively, the "Purchasers").
RECITALS
WHEREAS, pursuant to the Securities Purchase Agreements, the Purchasers
have agreed to purchase from the Company, and the Company has agreed to sell to
the Purchasers, Ten Million Five Hundred Thousand Dollars ($10,500,000) in
aggregate principal amount of the Notes; and
WHEREAS, the Company and the Purchasers wish to enter into this Agreement
to govern the terms of the Notes;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties to this Agreement hereby agree as follows:
PAYMENTS
Interest Payments
Interest (computed on the basis of a 360-day year of twelve 30-day months)
shall accrue on the unpaid principal balance of the Notes from time to time
outstanding from and including the date thereof at the rate of sixteen and fifty
one-hundredths percent (16.5%) per annum, payable monthly on the first day of
each calendar month in each year (each an "Interest Payment Date"), commencing
April 1, 1998, until the principal thereof shall have become due and payable,
and to the extent permitted by law in respect of any Note on any overdue payment
of principal, any overdue payment of interest and any overdue payment of any
Prepayment Compensation Amount, payable, on demand, at a rate per annum equal to
the lesser of:
(a) the highest rate allowed by applicable law; and
(b) the greater of:
(i) eighteen and fifty one-hundredths percent (18.5%); and
(ii) the sum of two percent (2%) plus the rate of interest
publicly announced from time to time by Xxxxxx Guaranty Trust Company
of New York in New York, New York as its "base" or "prime" rate.
Capitalized Interest Amounts
On any Interest Payment Date on or prior to January 1, 2003, in lieu of
making the entire interest payment on a Note in cash, the Company shall:
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(b) pay on such Interest Payment Date, in cash, that portion of the
interest accrued on the outstanding principal amount of such Note to such
Interest Payment Date as would have accrued at the rate of twelve percent
(12.00%) per annum; and
(c) both:
(i) pay on such Interest Payment Date, in cash, none, any part or
all of the interest accrued on such principal to such Interest Payment
Date as would have accrued at the rate of four and fifty
one-hundredths percent (4.50%) per annum; and
(ii) add to the outstanding principal amount of such Notes on
such Interest Payment Date the portion of such interest as would have
accrued at the rate of four and fifty one-hundredths percent (4.50%)
per annum which is not paid in cash pursuant to the immediately
preceding clause (i) (each such addition with respect to any Note, a
"Capitalized Interest Amount").
Interest shall begin to accrue on each Capitalized Interest Amount beginning on
and including the Interest Payment Date on which such Capitalized Interest
Amount is added to the principal amount of the related Note, and such interest
shall accrue and be paid, together with the interest on the remaining principal
amount of the Note, in accordance with Section 1.1 and this Section 1.2.
Scheduled Principal Payments
(d) Payment of Capitalized Interest Amounts. The Company shall pay,
and there shall become due and payable, a principal amount of the Notes
equal to the sum of all Capitalized Interest Amounts theretofore added to
the principal amount of the Notes pursuant to Section 1.2(b)(ii) and
remaining unpaid at such time, on February 1, 2003, at one hundred percent
(100%) of the principal amount paid, together with interest accrued and
unpaid thereon to the date of payment.
(e) Required Principal Payments. The Company shall pay, and there
shall become due and payable, Three Million Five Hundred Thousand Dollars
($3,500,000) in principal amount of the Notes on March 1, 2004 and March 1,
2005, at one hundred percent (100%) of the principal amount paid, together
with interest accrued and unpaid thereon to the date of payment. The entire
principal of the Notes remaining outstanding on March 1, 2006, together
with interest accrued thereon, shall become due and payable on such date.
The payments required to be made on March 1, 2004 and March 1, 2005 and the
payment required to be made at maturity on March 1, 2006 are each
hereinafter referred to as a "Required Principal Payment."
Optional Principal Payments
Optional Principal Payments with Prepayment Compensation AmountThe
Company may pay the principal amount of the Notes in whole or in part, on
any Interest Payment Date, in multiples of One Hundred Thousand Dollars
($100,000) (or, if the aggregate outstanding principal amount of the Notes
is less than One Hundred Thousand Dollars ($100,000) at such time, then
such principal amount), together with:
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(i) interest on such principal amount then being paid accrued to
the payment date; and
(ii) an amount equal to the Prepayment Compensation Amount due at
such time in respect of the principal amount of the Notes being so
paid; provided, however, that any optional payment of the Notes
pursuant to this Section 1.4 of a principal amount of any Note not
exceeding the aggregate amount of all Capitalized Interest Amounts
theretofore added to the principal amount of the Notes pursuant to
Section 1.2(b)(ii) and remaining unpaid at such time shall be without
any Prepayment Compensation Amount.
Notice of Optional Payment The Company will give notice of any
optional payment of the Notes pursuant to this Section 1.2(b)(ii) to each
holder of Notes not less than thirty (30) days nor more than sixty (60)
days before the specified payment date, stating:
(iii) the specified payment date;
(iv) that such payment is to be made pursuant to this Section
1.4;
(v) the principal amount of each Note to be paid on such date;
(vi) the interest to be paid on each such Note, accrued to the
specified payment date;
(vii) the amounts and the due dates of the then remaining
Required Principal Payments determined after giving effect to such
payment;
(viii) the aggregate principal amount to be paid which is subject
to payment of a Prepayment Compensation Amount; and
(ix) if such payment is made prior to March 1, 2001, the
calculation (with details) of an estimated Standard Prepayment
Compensation Amount, if any (calculated as if the date of such notice
was the date of payment), due in connection with such payment; and, if
such payment is made on or after March 1, 2001, the Modified
Prepayment Compensation Amount; in each case, with respect to the
principal amount to be so paid, if any, which is subject to the
payment of such Prepayment Compensation Amount.
Notice of payment having been so given, the aggregate principal amount of
the Notes to be paid stated in such notice, together with the Prepayment
Compensation Amount determined as of the specified payment date, if any,
and interest thereon accrued to the specified payment date, shall become
due and payable on the specified payment date. If such payment is due prior
to March 1, 2001, then, two (2) Business Days prior to the making of such
payment, the Company shall deliver to each holder of Notes by facsimile
transmission (confirmed by nationwide overnight courier) a certificate of a
Senior Financial Officer specifying the details of the calculation of the
Standard Prepayment Compensation Amount as of the specified payment date,
and including a copy of the source of interest rate information used in the
calculation thereof.
Offer to Pay Upon Change in Management
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Offer in Respect of a Change in Management In the event of a Change in
Management, the Company will, within fifteen (15) Business Days after the
occurrence of such event, give notice of such Change in Management to each
holder of Notes. Such notice shall contain an irrevocable separate offer to
each holder of Notes to repurchase all, but not less than all, of the Notes
held by such holder on a date (the "Change in Management Payment Date")
specified in such notice that is not less than thirty (30) days and not
more than ninety (90) days after the date of such notice, at a purchase
price equal to one hundred one percent (101%) of the aggregate principal
amount thereof and all interest accrued and unpaid on the principal amount
thereof to the Change in Management Payment Date. Each such notice shall:
(x) be dated the date of the sending of such notice;
(xi) be executed by a Senior Officer;
(xii) specify, in reasonable detail, the nature and date of the
Change in Management;
(xiii) specify the Change in Management Payment Date;
(xiv) specify the principal amount of each Note outstanding;
(xv) specify the interest that would be due on each Note offered
to be paid, accrued to the Change in Management Payment Date; and
(xvi) specify that the Notes shall be prepaid at a purchase price
equal to one hundred one percent (101%) of the aggregate principal
amount thereof and all interest accrued and unpaid on the principal
amount thereof to the Change in Management Payment Date.
If the Company shall not have received a written response to such notice
from any holder of Notes within ten (10) Business Days after the date of
posting of such notice to such holder of Notes, then the Company shall
immediately send a second notice to each such holder of Notes.
Acceptance, Rejection Each holder of Notes shall have the option to
accept or reject such offered payment. In order to accept such offered
payment, a holder of Notes shall cause a notice of such acceptance to be
delivered to the Company at least five (5) days prior to the Change in
Management Payment Date. A failure to accept in writing such written offer
of payment as provided in this Section 1.5(b), or a written rejection of
such offered prepayment, shall be deemed to constitute a rejection of such
offer.
Payment The offered payment shall be made at one hundred one percent
(101%) of the principal amount of the Notes to be prepaid, together with
interest accrued to and determined as of the Change in Management Payment
Date.
0.1 Delivery of Subordinated Notes in Payment of Warrant Purchase Price.
The Warrant Agreement provides that a holder of Warrants may tender Notes
to the Company in partial or complete payment of the purchase price for the
shares of Common Stock
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issued upon exercise of the Warrants. Promptly following the receipt of any Note
so tendered, the Company shall immediately cancel and retire the same (and no
such Subordinated Note shall be reissued), and shall issue to the holder thereof
a new Note in the principal amount of such tendered Note remaining after
deduction of the principal amount thereof applied to payment of the purchase
price for the shares of Common Stock. For purposes of Rule 144 under the
Securities Act, 17 C.F.R. ss.230.144, the Company and each Purchaser agree that
a tender of Notes in payment of the exercise price in respect of the Warrants
shall not be deemed a prepayment of the Notes, but rather a conversion of such
Notes, pursuant to the terms of the Warrant Agreement and the Warrants, into
Common Stock.
Application of Payments; Payments Among Noteholders
Effect of Partial Payments on Required Payments Each payment of
principal of any Notes made pursuant to Section 1.4, Section 1.5 or Section
1.6 shall be applied, with respect to any Note being prepaid:
(i) first, to reduction of the Company's obligations to pay on
February 1, 2003 a principal amount of such Note being prepaid equal
to the sum of all Capitalized Interest Amounts theretofore added to
the principal amount of such Note pursuant to Section 1.2(b)(ii) and
remaining unpaid at such time; and
(ii) second, after payment in full of all unpaid Capitalized
Interest Amounts in respect of such Note, to reduce each of the then
remaining Required Principal Payments with respect to such Note by a
percentage equal to the quotient (expressed as a percentage) of:
(A) the aggregate principal amount of such Note being so
paid; divided by
(B) the aggregate principal amount of such Note outstanding
immediately following the application of such payment pursuant to
Section 1.7(a)(i) and immediately prior to the payment pursuant
to this Section 1.7(a)(ii).
For the avoidance of doubt, each Required Principal Payment of all Notes
pursuant to Section 1.3 shall be reduced by the aggregate amount, for all
Notes, of the reductions provided for in Section 1.7(a)(ii).
(a) Application Among Noteholders. If at the time that any payment of
interest by the Company is made pursuant to the provisions of Section 1.2
there is more than one Note outstanding, each of the aggregate amount of
the interest payment made in cash and the aggregate amount of interest
capitalized pursuant to Section 1.2 shall be allocated among the Notes at
the time outstanding pro rata in proportion to the respective unpaid
principal amounts of all such outstanding Notes, such that the proportion
of the individual interest payments in respect of each Note on the date
such interest is paid which is paid in cash is identical. If at the time
any payment of the principal of the Notes made pursuant to Section 1.3 or
Section 1.4 is due there is more than one Note outstanding, the aggregate
principal amount of each such required or optional partial payment of the
Notes shall be allocated among the Notes at the time outstanding pro rata
in proportion to the respective unpaid principal amounts of all such
outstanding Notes. If, at the time any payment of the principal of the
Notes made pursuant to Section 1.5 or
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Section 1.6 is due there is more than one Note outstanding, the aggregate
principal amount of each such payment of the Notes shall be allocated
solely to the Note or Notes so being paid.
Notation of Notes on Payment
Upon:
(b) any partial payment of a Note; or
(c) any Capitalized Interest Amount being added to the principal
amount of any Note pursuant to Section 1.2(b)(ii);
the holder of such Note may (but shall not be required to), at its option:
(i) surrender such Note to the Company pursuant to Section 2.2 in
exchange for a new Note in a principal amount equal to the principal amount
remaining unpaid on the surrendered Note;
(ii) make such Note available to the Company for notation thereon of
the portion of the principal so paid or so added to the principal amount
thereof in respect of capitalized interest; or
(iii) xxxx such Note with a notation thereon of the portion of the
principal so paid or so added to the principal amount thereof in respect of
capitalized interest.
In case the entire principal amount of any Note is paid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the paid principal amount of any Note.
No Other Payments of Principal; Acquisition of Notes
Except for payments of principal made in accordance with this Section 1,
the Company may not make any payment of principal in respect of the Notes. The
Company will not, and will not permit any Subsidiary or any Affiliate to,
directly or indirectly, acquire or make any offer to acquire any Notes.
Manner of Payments
Manner of PaymentThe Company shall pay all amounts payable with
respect to each Note (without any presentment of such Notes and without any
notation of such payment being made thereon) by crediting, by federal funds
bank wire transfer, the account of the holder thereof in any bank in the
United States of America as may be designated in writing by such holder, or
in such other manner as may be reasonably directed or to such other address
in the United States of America as may be reasonably designated in writing
by such holder (and as to which (absent subsequent notice from such holder
pursuant to this Section 1.10(a)) the Company may conclusively rely). Annex
1 shall be deemed to constitute notice, direction or designation (as
appropriate) by the Purchasers to the Company with respect to payments to
be made to the Purchasers as aforesaid. In the absence of such written
direction, all amounts payable with respect to each Note shall be paid by
check mailed and addressed to the registered holder of such
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Note at the address shown in the register maintained by the Company
pursuant to Section 2.1.
Payments Due on HolidaysIf any payment due on, or with respect to, any
Note shall fall due on a day other than a Business Day, then such payment
shall be made on the first Business Day following the day on which such
payment shall have so fallen due; provided that if all or any portion of
such payment shall consist of a payment of interest, for purposes of
calculating such interest, such payment shall be deemed to have been
originally due on such first following Business Day, such interest shall
accrue and be payable to (but not including) the actual date of payment,
and the amount of the next succeeding interest payment shall be adjusted
accordingly.
Payments, When Received Any payment to be made to the holders of Notes
hereunder or under the Notes shall be deemed to have been made on the
Business Day such payment actually becomes available at such holder's bank
prior to the close of business of such bank, provided that interest for one
(1) day at the non-default interest rate of the Notes shall be due on the
amount of any such payment that actually becomes available to such holder
at such holder's bank after 1:00 pm (local time of such bank).
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
Registration of Notes
The Company will keep at its office, maintained pursuant to Section 3.3, a
register for the registration and transfer of Notes. The name and address of
each holder of one or more Notes, each transfer thereof made in accordance with
Section 2.2 and the name and address of each transferee of one or more Notes
shall be registered in such register. The Person in whose name any Note shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes hereof, and the Company shall not be affected by any notice or
knowledge to the contrary, other than in accordance with Section 2.2.
Exchange of Notes
Exchange of Notes Upon surrender of any Note at the office of the
Company maintained pursuant to Section 3.3, duly endorsed or accompanied by
a written instrument of transfer duly executed by the registered holder of
such Note or such holder's attorney duly authorized in writing, the Company
will execute and deliver, at the Company's expense (except as provided in
Section 2.2(c)), a new Note or Notes in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered
Note. Subject to Section 2.2(b), each such new Note shall be registered in
the name of such Person as such holder may request and shall be
substantially in the form of Attachment A. Each such new Note shall be
dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. Each such new Note shall carry
the same rights to unpaid interest and interest to accrue that were carried
by the Note so exchanged or transferred.
(d) Restrictions on Transfers. Notwithstanding the provisions of
Section 2.2(a), no holder shall be permitted to transfer any Note to (and
the Company shall not be required to register any purported or attempted
transfer of any Note to) any Person who is not a Permitted Investor. Notes
shall not be transferred in denominations of less than Two Hundred Fifty
Thousand Dollars ($250,000), provided that a holder of
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Notes may transfer its entire holding of Notes regardless of the principal
amount of such holder's Notes.
Costs The Company will pay the cost of delivering to or from such
holder's home office or custodian bank from or to the Company, insured to
the reasonable satisfaction of such holder, the surrendered Note and any
Note issued in substitution or replacement for the surrendered Note. The
Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes.
Replacement of Notes
Upon receipt by the Company from the registered holder of a Note of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Note (which evidence shall be, in the case of an
institutional investor, notice from such institutional investor of such loss,
theft, destruction or mutilation), and:
(e) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Company; provided, however, that if the holder of such
Note is a Purchaser, an institutional investor or a nominee of either, the
unsecured agreement of indemnity of such Purchaser or such institutional
investor (but not of any nominee therefor) shall be deemed to be
satisfactory; or
(f) in the case of mutilation, upon surrender and cancellation
thereof;
the Company at its own expense will execute and deliver, in lieu thereof, a
replacement Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
Issuance Taxes
The Company will pay all taxes (if any) due (but not, in any event, income
taxes) in connection with and as the result of the initial issuance and sale of
the Notes and in connection with any modification, waiver or amendment of this
Agreement or the Notes and shall save each holder of Notes harmless without
limitation as to time against any and all liabilities with respect to all such
taxes.
GENERAL COVENANTS
The Company covenants that on and after the Closing Date and so long as any
of the Notes shall be outstanding:
Payment of Taxes and Claims
The Company will, and will cause each Subsidiary to, pay before they become
delinquent:
(g) all taxes, assessments and governmental charges or levies imposed
upon it or its Property; and
(h) all claims or demands of materialmen, mechanics, carriers,
warehousemen, vendors, landlords and other like Persons that, if unpaid,
might result in the creation of a statutory, regulatory or common law Lien
upon its Property;
8
provided, that items of the foregoing description need not be paid so long as
such items are being actively contested in good faith and by appropriate
proceedings and reasonable book reserves in accordance with GAAP have been
established and maintained with respect thereto.
Maintenance of Properties; Corporate Existence; etc
The Company will, and will cause each Subsidiary to:
Property maintain its Property in good condition, ordinary wear and
tear and obsolescence excepted, and make all necessary renewals,
replacements, additions, betterments and improvements (as determined in
each case in the Company's judgment) thereto; provided, however, that this
Section 3.2(a) shall not prevent the Company or any Subsidiary from
discontinuing the operation and the maintenance of any of its Properties if
such discontinuance is desirable in the conduct of its business and such
discontinuance could not reasonably be expected to have a Material Adverse
Effect;
Insurance maintain, with financially sound and reputable insurers,
insurance with respect to its Property and business against such casualties
and contingencies, of such types and in such amounts as is customary in the
case of corporations of established reputations engaged in the same or a
similar business and similarly situated;
Financial Records keep proper books of record and account, in which
full and correct entries shall be made of all dealings and transactions of
or in relation to the Properties and business thereof, and which will
permit the production of financial statements in accordance with GAAP;
Corporate Existence and Rights do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, corporate rights (charter and statutory) and corporate
franchises except as permitted by Section 4.1;
Compliance with Law comply with all laws, ordinances and governmental
rules and regulations to which it is subject (including, without
limitation, any Environmental Protection Law) and obtain all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of its Properties and the conduct of its
business except for such violations and failures to obtain that, in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect; and
(i) Environmental Liabilities -- conduct its business so as not to
become subject to any liability under any Environmental Protection Law
that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
Payment of Notes and Maintenance of Office
The Company will punctually pay, or cause to be paid, the principal of and
interest (and Prepayment Compensation Amount, if any) on, the Notes, as and when
the same shall become due according to the terms hereof and of the Notes, and
will maintain an office at the address of the Company as provided in Section 9.1
where notices, presentations and demands in respect hereof or the Notes may be
made upon it. Such office will be maintained at such address until such time as
the Company notifies the holders of the Notes of any change of location of such
office, which will in any event be located within the United States of America.
Pension Plans
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Compliance The Company will, and will cause each ERISA Affiliate to,
at all times with respect to each Plan, comply with all applicable
provisions of ERISA and the IRC, except for such failures to comply that,
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
Prohibited Actions The Company will not, and will not permit any ERISA
Affiliate to:
(i) engage in any "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC) or
"reportable event" (as such term is defined in section 4043 of ERISA)
that could result in the imposition of a tax or penalty;
(ii) incur with respect to any Plan any "accumulated funding
deficiency" (as such term is defined in section 302 of ERISA), whether
or not waived;
(iii) terminate any Plan in a manner that could result in the
imposition of a Lien on the Property of the Company or any Subsidiary
pursuant to section 4068 of ERISA or the creation of any liability
under section 4062 of ERISA;
(iv) fail to make any payment required by section 515 of ERISA;
(v) incur any withdrawal liability under Title IV of ERISA with
respect to any Multiemployer Plan or any liability as a result of the
termination of any Multiemployer Plan; or
(vi) incur any liability or suffer the existence of any Lien on
the Property of the Company or any ERISA Affiliate, in either case
pursuant to Title I or Title IV of ERISA or pursuant to the penalty or
excise tax or security provisions of the IRC;
if the aggregate amount of the taxes, penalties, funding deficiencies,
interest, amounts secured by Liens, and other liabilities in respect of any
of the foregoing at any time could reasonably be expected to have a
Material Adverse Effect.
Private Offering
The Company will not, and will not permit any Person acting on its behalf
to, offer the Notes or any part thereof or any similar securities for issue or
sale to, or solicit any offer to acquire any of the same from, any Person so as
to bring the issuance and sale of the Notes within the provisions of section 5
of the Securities Act.
Subsidiary Guaranty
The Company will cause each Subsidiary that at any time becomes liable in
respect of any Guaranty of any of the obligations in respect of any Senior Debt
after the Closing Date to become (simultaneously or prior to becoming liable in
respect of such Guaranty of any of such obligations) a Guarantor under the
Subsidiary Guaranty by executing and delivering to each holder of Notes a
Joinder Agreement in the form attached to the Subsidiary Guaranty as Annex 2.
Each such Joinder Agreement shall be accompanied by copies of the constitutive
documents of such Subsidiary and corporate resolutions (or equivalent)
authorizing such transaction, in each case certified as true and correct by an
appropriate officer of such Subsidiary.
10
FINANCIAL COVENANTS
Mergers and Consolidations
The Company will not, and will not permit any Subsidiary to, merge with or
into or consolidate with any other Person, permit any other Person to merge or
consolidate with or into it or sell all or substantially all of its Property to
any other Person; provided, however, that the foregoing restriction does not
apply to the merger or consolidation of the Company with another corporation or
Transfer of all or substantially all of the Property of the Company to any other
Person if:
(j) the corporation that results from such merger or consolidation or
to which all or substantially all of the Property of the Company is
Transferred (the "Surviving Corporation") is organized under the laws of,
and conducts substantially all of its business and has substantially all of
its Properties within, the United States of America or any jurisdiction or
jurisdictions thereof;
(k) the due and punctual payment of the principal of and Prepayment
Compensation Amount, if any, and interest on all of the Notes, according to
their tenor, and the due and punctual performance and observance of all the
covenants in the Notes, this Agreement and each other Financing Document to
be performed or observed by the Company, are expressly assumed, or assumed
by operation of law, by the Surviving Corporation pursuant to such
assumption agreements and instruments in such forms as shall be approved
reasonably by the Required Holders, and the Company causes to be delivered
to each holder of Notes an opinion, satisfactory in form and substance to
the Required Holders, of independent counsel to the effect that such
agreements and instruments are enforceable in accordance with their terms;
(l) no Change in Management occurs as a result of such merger,
consolidation or Transfer; and
(m) immediately prior to, and immediately after the consummation of
the transaction, and after giving effect thereto, no Default or Event of
Default exists or would exist.
Notwithstanding the foregoing, a Subsidiary may merge into the Company so long
as the Company is the Surviving Corporation, and a Subsidiary may merge with or
into a Wholly-Owned Subsidiary, so long as the Wholly-Owned Subsidiary is the
Surviving Corporation. Disposition of Assets, Subsidiary Stock
Disposition of Assets The Company will not, and will not permit any
Subsidiary to, sell, lease as lessor, transfer or otherwise dispose of any
Property (collectively, "Transfers"), except:
(i) Transfers of inventory and of unnecessary, obsolete or
worn-out assets, in each case in the ordinary course of business of
the Company or such Subsidiary;
(ii) Transfers from a Subsidiary to the Company or a Wholly-Owned
Subsidiary;
11
(iii) Transfers of Property by the Company or a Subsidiary in a
Sale- Leaseback Transaction which are substantially immediately
thereafter leased by the Company or a Subsidiary in such
Sale-Leaseback Transaction;
(iv) any other Transfer at any time of any Property to a Person
for an Acceptable Consideration if the conditions specified in each of
the following clauses (A) and (B) would be satisfied with respect to
such Transfer:
(A) the sum of:
(I) the book value of such Property at the time of
Transfer; plus
(II) the aggregate book value of all other Property
Transferred, other than in Excluded Transfers, after the
Closing Date:
would not exceed twenty-five percent (25%) of Consolidated Total
Assets measured as of the last day of the immediately preceding fiscal
quarter of the Company; and
(B) immediately before and after the consummation of
the Transfer, and after giving effect thereto, no Default or
Event of Default would exist; and
(v) any other Transfer of Property to the extent that the entire
proceeds of such Transfer, net of reasonable and ordinary transaction
costs and expenses incurred and actually paid in connection with such
Transfer, within three hundred sixty-five (365) days after such
Transfer are applied by the Company or such Subsidiary:
(A) to purchase, or to a commitment to purchase, productive
tangible Property for use in the conduct of the business of the
Company and the Subsidiaries as such businesses were conducted on
the Closing Date, which Property is similar in type to the
Property Transferred; or
(B) to pay or prepay a principal amount of Debt of the
Company or any Subsidiary (other than Junior Subordinated Debt)
equal to the amount of such net proceeds; and, in connection with
any such payment, the Company shall pay all accrued interest
thereon and any premium or make-whole amount required to be paid
in connection therewith; provided, however, that in the event
that any Debt so prepaid is not Senior Debt, then the Company
shall prepay, together with such prepayment of such other Debt, a
proportional and ratable principal amount of the Notes pursuant
to the provisions of Section 1.4.
Disposition of Subsidiary Stock The Company will not, and will not
permit any Subsidiary to, sell or otherwise dispose of any shares of the
stock or Rights of a Subsidiary (such stock and Rights herein called
"Subsidiary Stock"), nor will any Subsidiary issue, sell or otherwise
dispose of any shares of, or Rights to purchase shares
12
of, its own Subsidiary Stock; provided, however, that the foregoing
restrictions do not apply to:
(vi) Transfers by the Company or a Subsidiary of shares of
Subsidiary Stock to the Company or a Wholly-Owned Subsidiary;
(vii) the issuance by a Subsidiary of shares of its own
Subsidiary Stock to the Company or a Wholly-Owned Subsidiary;
(viii) the issuance by a Subsidiary of directors' qualifying
shares;
(ix) the issuance by a Subsidiary of shares of its own Subsidiary
Stock in the form of a dividend payable in such shares, or the other
issuance by a Subsidiary of shares of its own Subsidiary Stock;
provided, however, that, in each case, the Company's direct or
indirect percentage ownership of no class of the Voting Stock or of
any other Subsidiary Stock of such Subsidiary is decreased as a result
of such issuance; or
(x) the Transfer of all of the Subsidiary Stock of a Subsidiary
owned by the Company and its other Subsidiaries if:
(A) such Transfer satisfies the requirements of Section
4.2(a)(iv) or Section 4.2(a)(v);
(B) in connection with such Transfer, the entire Investment
(whether represented by stock, Debt, claims or otherwise) of the
Company and its other Subsidiaries in such Subsidiary is
Transferred to a Person other than the Company or a Subsidiary
not being simultaneously disposed of; and
(C) the Subsidiary being disposed of has no continuing
Investment in any other Subsidiary not being simultaneously
disposed of or in the Company.
For purposes of determining the book value of assets constituting
Subsidiary Stock being Transferred as provided in clause (v) above, such
book value shall be deemed to be the aggregate book value of the assets of
the Subsidiary that shall have issued such Subsidiary Stock.
Liens
Negative Pledge The Company will not, and will not permit any
Subsidiary to, cause or permit, or agree or consent to cause or permit in
the future (upon the happening of a contingency or otherwise), any of their
Property, whether now owned or hereafter acquired, at any time to be
subject to a Lien except:
Closing Date Liens Liens in existence on the Closing Date and
described in Part 4.3 of Annex 3;
Ordinary Course Business Liens
13
Performance Bonds Liens incurred or deposits made in the ordinary
course of business:
(I) in connection with workers' compensation, unemployment
insurance, social security and other like laws; and
(II) to secure the performance of letters of credit, bids,
tenders, sales contracts, leases, statutory obligations, surety
and performance bonds (of a type other than set forth in Section
4.3(a)(iii) and other similar obligations not incurred in
connection with the borrowing of money, the obtaining of advances
or the payment of the deferred purchase price of Property;
Real Estate Liens in the nature of reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other similar title exceptions or
encumbrances affecting real property; provided, however, that such
exceptions and encumbrances do not in the aggregate materially detract
from the value of said Properties or materially interfere with the use
of such Properties in the ordinary conduct of the business of the
Company and the Subsidiaries; and
Taxes, etc. Liens securing taxes, assessments or governmental
charges or levies or the claims or demands of materialmen, mechanics,
carriers, warehousemen, vendors, landlords and other like Persons;
provided, however, that the payment thereof is not required by
Section 3.1;
Judicial Liens Liens arising from judicial attachments and judgments,
securing appeal bonds or supersedeas bonds, and arising in connection with
court proceedings (including, without limitation, surety bonds and letters
of credit or any other instrument serving a similar purpose); provided,
however, that the execution or other enforcement of such Liens is
effectively stayed, that the claims secured thereby are being actively
contested in good faith and by appropriate proceedings, that adequate
reserves have been made against such claims and that the aggregate amount
so secured will not at any time exceed One Million Dollars ($1,000,000);
Intergroup Liens Liens on Property of a Subsidiary; provided, however,
that such Liens secure only obligations owing to the Company or a
Wholly-Owned Subsidiary;
(xi) Acquisition/Purchase Money Liens -- any Lien (x) on Property
acquired or constructed by the Company or any Subsidiary or leased by the
Company or any Subsidiary as lessee under any Capital Lease; or (y)
existing on Property owned by any Person at the time such Person became a
Subsidiary or merges or consolidates with the Company (including, without
limitation, by means of a Capital Lease); provided, however, that such
Lien:
14
(A) (I) secures Debt incurred to pay all or a portion of the related
purchase price or construction costs of such Property or the Capital
Stock of any acquired Subsidiary and no other Debt; provided, further,
that such purchase price or construction costs shall not exceed the
Fair Market Value of such Property or such Capital Stock, determined
at the time of the creation of such Lien;
(II) is created contemporaneously with, or within one hundred
twenty (120) days of, such acquisition or construction;
(III) encumbers only Property so purchased, constructed or
acquired after the Closing Date; and
(IV) is not, after the creation thereof, extended to any other
Property; or
(B) (I) existed on Property of any Person at the time of acquisition
thereof by the Company or a Subsidiary or at the time such Person is
merged or consolidated into or with the Company or a Subsidiary
(whether or not the Debt secured thereby is assumed by the Company or
such Subsidiary); provided, further, that such Debt does not exceed
the lesser of the acquisition cost or the Fair Market Value of such
Property, as determined at the date of the acquisition thereof; and
(II) shall not extend to or cover any Property other than the
Property subject to such Lien at the time of any such acquisition;
and provided further that, in the case of each of clause (A) and clause (B)
above, immediately prior to the incurrence of, and after giving effect to
the incurrence of, any Debt secured by the Liens referred to in such
clauses, no Default or Event of Default exists or would exist; and
Liens Securing Senior Debt Liens securing Senior Debt and not
otherwise permitted by clauses (i) through (v), inclusive, of this Section
4.3(a).
Equal and Ratable Lien; Equitable LienIn case any Property shall be
subjected to a Lien in violation of Section 4.3(a), the Company will forthwith
make or cause to be made, to the fullest extent permitted by applicable law,
provision whereby the Notes will be secured equally and ratably as to such
Property with all other obligations secured thereby pursuant to such agreements
and instruments as shall be approved by the Required Holders, and the Company
will promptly cause to be delivered to each holder of a Note an opinion of
independent counsel satisfactory to the Required Holders to the effect that such
agreements and instruments are enforceable in accordance with their terms, and
in any event the Notes shall have the benefit, to the full extent that, and with
such priority as, the holders of Notes may be entitled under applicable law, of
an equitable Lien on such Property (and any proceeds thereof) securing the
Notes. Such violation of Section 4.3(a)will constitute an Event of Default
hereunder, whether or not
15
any such provision is made or any equitable Lien is created pursuant to
this Section 4.3(a).
Construction Nothing in this Section 4.3 shall be construed to permit
the incurrence or existence of any Debt not otherwise permitted by this
Agreement. Nothing in this Agreement that permits the incurrence or
existence of any Debt shall be construed to permit the incurrence or
existence of a Lien securing such Debt unless such Lien is permitted by
Section 4.3(a).
Net Worth
The Company will not at any time permit Consolidated Net Worth to be less
than an amount equal to the sum of:
(n) Ten Million Dollars ($10,000,000); plus
(o) for each fiscal year of the Company ending after December 31,
1997, the greater of:
(i) Zero Dollars ($0); and
(ii) fifty percent (50%) of Consolidated Net Earnings determined
in respect of such fiscal year.
Fixed Charge Coverage
The Company will not permit at any time during any period specified below
the Consolidated Fixed Charge Coverage Ratio for the period of four (4) full
consecutive fiscal quarters of the Company then most recently ended, measured as
at the end of the most recently ended fiscal quarter of the Company, to be less
than the ratio set forth opposite such period:
================================================================================
Period: Ratio:
================================================================================
From and including the Closing up to and 1.25 to 1.00
including June 30, 2001
--------------------------------------------------------------------------------
From and including July 1, 2001 up to and 1.50 to 1.00
including June 30, 2003
--------------------------------------------------------------------------------
From and including July 1, 2003 and 2.00 to 1.00
thereafter
================================================================================
Ratio of Debt to Pro Forma Consolidated Cash Flow
The Company will not at any time permit the ratio of:
(p) Consolidated Total Debt as of such time; to
(q) Pro Forma Consolidated Cash Flow for the period consisting of the
four (4) full consecutive fiscal quarters of the Company most recently
ended at such time;
to be greater than the ratio set forth opposite the relevant period during which
such time occurs as provided below:
16
================================================================================
Period: Ratio:
================================================================================
From the Closing Date up to and including 5.00 to 1.00
June 30, 2001
--------------------------------------------------------------------------------
From and including July 1, 2001 up to and 4.00 to 1.00
including June 30, 2003
--------------------------------------------------------------------------------
From and including July 1, 2003 and 3.00 to 1.00
thereafter
================================================================================
Incurrence of Debt
(r) Permitted Revolving Credit Debt. The Company will not incur or
create any Debt pursuant to an Acceptable Revolving Credit Facility unless,
at the time of and after giving effect to the incurrence thereof, both:
(i) the aggregate amount of Debt (other than the Letter of
Credit) outstanding in respect of all Acceptable Revolving Credit
Facilities would not exceed the greater of:
(A) the Borrowing Base; and
(B) in the case of the Senior Credit Facility, a principal
amount which, together with any fees not provided for in the
Senior Credit Agreement as in effect on the date hereof, does not
exceed Twenty-Seven Million Five Hundred Thousand Dollars
($27,500,000); and
(ii) the face amount of the Letter of Credit would not exceed
Four Hundred Thousand Dollars ($400,000);
provided, however, that the Refinancing of any Permitted Revolving Credit
Debt with the proceeds of Debt incurred under a Refinanced Acceptable
Revolving Credit Facility, in and of itself, shall not be deemed to be an
incurrence or creation of Debt pursuant to this Section 4.7(a), except to
the extent that the principal amount of Debt under the Refinanced
Acceptable Revolving Credit Facility exceeds the principal amount of
Permitted Revolving Credit Debt so Refinanced, and all such Debt incurred
under a Refinanced Acceptable Revolving Credit Facility, to the extent
applied to the repayment of Permitted Revolving Credit Debt in connection
with such Refinancing, shall be deemed to be Permitted Revolving Credit
Debt.
(s) Other Permitted Debt. The Company will not, and will not permit
any Subsidiary to, directly or indirectly, create, incur, assume,
guarantee, or otherwise become directly or indirectly liable with respect
to, any Debt other than:
(i) the Notes and the Subsidiary Guaranty;
(ii) Debt of a Subsidiary owing to the Company or a Wholly-Owned
Subsidiary;
17
(iii) Permitted Revolving Credit Debt, and (subject to Section
3.6) Guaranties thereof by Subsidiaries;
(iv) Debt incurred or created to Refinance any of the Debt
outstanding on the Closing Date and listed on Part 4.7(b) of Annex 3,
so long as:
(A) the principal amount of Debt incurred to Refinance any
such Debt outstanding on the Closing Date does not exceed the
principal amount of Debt being Refinanced; and
(B) no Lien on Property of the Company or any Subsidiary
which secures such Debt incurred to Refinance any such Debt
outstanding on the Closing Date shall extend to any Property of
the Company or any Subsidiary which was not, prior to such
Refinancing, subject to a Lien securing the Debt so being
Refinanced;
and
(v) any other Debt of the Company, provided that on the date the
Company incurs such Debt, and immediately after giving effect thereto
and the concurrent retirement of any other Debt, the ratio of:
(A) the difference of:
(I) Consolidated Total Debt; minus
(II) the aggregate amount of all Permitted Revolving
Credit Debt actually outstanding on such date; to
(B) Pro Forma Consolidated Cash Flow for the period
consisting of the four (4) full consecutive fiscal quarters of
the Company then most recently ended;
would not be greater than the ratio set forth opposite the relevant
period as provided below:
================================================================================
Period: Ratio:
================================================================================
From the Closing Date up to and including 2.70 to 1.00
June 30, 2001
--------------------------------------------------------------------------------
From and including July 1, 2001 up to and 2.50 to 1.00
including June 30, 2003
--------------------------------------------------------------------------------
From and including July 1, 2003 and 2.20 to 1.00
thereafter
================================================================================
and provided further, that the Company shall have delivered to each
holder of Notes, at least three (3) Business Days prior to the
incurrence thereof, a
18
certificate of a Senior Financial Officer establishing that such Debt
may be incurred in compliance with the provisions of this Section
4.7(b)(v).
For the avoidance of doubt, any incurrence or creation of Debt by
the Company pursuant to a revolving credit or similar agreement under
any agreement or instrument other than an Acceptable Revolving Credit
Facility, and the incurrence or creation of Debt by the Company
pursuant to an Acceptable Revolving Credit Facility which, at the time
of such incurrence or creation, exceeds the maximum amount permitted
pursuant to Section 4.7(a), shall be considered an incurrence of Debt
for purposes of this Section 4.7(b)(v) on the date so incurred or
created.
Restricted Payments, Restricted Repurchases and Restricted Investments
Limit on Restricted Payments, Restricted Investments and
Restricted Repurchases The Company will not, nor will it permit any
Subsidiary to, at any time, declare or make or incur any liability to
declare or make any Restricted Payment or any Restricted Repurchase,
or make or authorize, or permit any Subsidiary to make or authorize,
any Restricted Investment unless, immediately after giving effect to
the proposed Restricted Payment or Restricted Investment:
(vi) no Default or an Event of Default would exist; and
(vii) the sum of
(A) the aggregate amount of Restricted Investments
existing on the Closing Date, together with the aggregate
amount of Restricted Investments made since the Closing Date
(valued in each case at acquisition cost); plus
(B) the aggregate amount of Restricted Payments made
during the period commencing on the Closing Date and ending
on the date of, and after giving effect to, such proposed
Restricted Payment or Restricted Investment; plus
(C) the aggregate amount of Restricted Repurchases made
during the period commencing on the Closing Date and ending
on the date of, and after giving effect to, such proposed
Restricted Payment or Restricted Investment;
would not exceed the sum of:
(I) One Million Six Hundred Thousand Dollars
($1,600,000); plus
(II) fifty percent (50%) of Consolidated Net Earnings
in respect of the period beginning on the Closing Date and
ending on the last day of the calendar month then most
recently ended (or minus one hundred percent (100%) of
Consolidated Net Earnings for such period if Consolidated
Net Earnings for such period is a loss); plus
19
(III) the aggregate amount of net cash proceeds
received by the Company from the sale of Specified Stock
made after the Closing Date; provided, however, that the
amount of any such proceeds not applied within one hundred
eighty (180) days after the receipt of such proceeds to the
making of a Restricted Payment or Restricted Investment
shall not be counted for purposes of this clause (III); plus
(IV) the aggregate amount of net cash proceeds received
after the Closing Date by the Company or any Subsidiary from
the sale or liquidation, or as a result of the final
maturity, of any Restricted Investment.
Special Permission for Restricted Repurchases Notwithstanding the
provisions of Section 4.8(a), the Company or any Subsidiary may at any
time declare or make or incur any liability to declare or make any
Restricted Repurchase, so long as, immediately after giving effect to
the proposed Restricted Repurchase:
(viii) no Default or an Event of Default would exist; and
(ix) the aggregate amount of Restricted Repurchases made
during the period commencing on the Closing Date and ending on
the date of, and after giving effect to, such proposed Restricted
Repurchase would not exceed One Million Six Hundred Thousand
Dollars ($1,600,000).
Other Matters For the purpose of making computations under
Section 4.8(a) and Section 4.8(b), Restricted Payments made, and
Restricted Repurchases effected, solely by issuance of Common Stock
shall in each case be excluded. Any Person that becomes a Subsidiary
after the Closing Date shall be deemed to have made, at the time it
becomes a Subsidiary, all Restricted Investments of such Person
existing immediately after it becomes a Subsidiary.
Seniority to Junior Subordinated Debt
The Company will not, and will not permit any Subsidiary to, incur, assume
or Guaranty any Debt which is subordinated in right of payment to any other Debt
of the Company or any Subsidiary unless such Debt is also subordinated in right
of payment to the obligations of the Company in respect of the Notes and this
Agreement on terms reasonably acceptable to the Required Holders in their
discretion. The Company will not, and will not permit any Subsidiary to, incur
or create any Debt in favor of an Affiliate or another Subsidiary (other than
Debt in favor of the Company or a Wholly-Owned Subsidiary which is a Subsidiary
Guarantor) unless such Debt is also subordinated in right of payment to the
obligations of the Company in respect of the Notes and this Agreement on terms
reasonably acceptable to the Required Holders in their discretion.
Line of Business
The Company will not, and will not permit any Subsidiary to, engage in any
business if, as a result, the general nature of the business in which the
Company and the Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company and the Subsidiaries, taken as a whole, are engaged on the
20
Closing Date as described in the Confidential Private Placement Memorandum dated
October 1997, prepared by Fleet Corporate Finance.
Transactions with Affiliates
The Company will not, and will not permit any Subsidiary to, enter into any
transaction, including, without limitation, the purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate, except
in the ordinary course of and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
REPORTING COVENANTS
Financial and Business Information
The Company shall deliver to each holder of Notes:
Quarterly Financial Statementsas soon as practicable after the end of
each quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), and in any
event within forty-five (45) days thereafter:
(x) a consolidated balance sheet as at the end of such quarter;
and
(xi) consolidated statements of income and cash flows for such
quarter and (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter;
for the Company and the Subsidiaries, setting forth in each case, in
comparative form, the financial statements for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP applicable to quarterly financial statements generally, and
certified as complete and correct by a Senior Financial Officer, and
accompanied by the certificate required by Section 5.3; provided, that
timely delivery of copies of the Company's Quarterly Report on Form 10-Q
filed with the SEC shall be deemed to satisfy the requirements of this
Section 5.1(a) so long as such Quarterly Report contains or is accompanied
by the information specified in this Section 5.1(a);
Annual Financial Statements as soon as practicable after the end of
each fiscal year of the Company, and in any event within ninety (90) days
thereafter:
(xii) a consolidated balance sheet as at the end of such year;
and
(xiii) consolidated statements of income, stockholders' equity
and cash flows for such year;
for the Company and the Subsidiaries, setting forth, in comparative form,
the financial statement for the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP, and accompanied by:
(A) an audit report thereon of independent certified public
accountants of recognized national standing, which report shall state
without qualification (including, without limitation, qualifications
related to the scope of the audit, the
21
compliance of the audit with generally accepted auditing standards, or
the ability of the Company or a material subsidiary thereof to
continue as a going concern), that such financial statements have been
prepared and are in conformity with GAAP; and
(B) the certificates required by Section 5.3 and Section 5.4;
provided, that timely delivery of the Company's Annual Report on Form 10-K
for such fiscal year filed with the SEC shall be deemed to satisfy the
requirements of this Section 5.1(b) so long as such Annual Report contains
or is accompanied by the reports and other information otherwise specified
in this Section 5.1(b);
(t) Borrowing Base Certificate -- promptly upon the request of any
holder of Notes, any Borrowing Base Certificate required to be delivered or
to have been delivered to the Senior Agent;
SEC and Other Reportspromptly upon their becoming available, and in
any event within fifteen (15) days thereafter:
(i) each financial statement, report, notice or proxy statement
sent by the Company to stockholders generally;
(ii) each regular or periodic report (including, without
limitation, each Form 10-K, Form 10-Q and Form 8-K), any registration
statement which shall have become effective, and each final prospectus
and all amendments thereto filed by the Company or any Subsidiary with
the SEC; and
(iii) all press releases and other statements made available by
the Company or any Subsidiary to the public concerning material
developments in the business of the Company or the Subsidiaries;
Notice of Default or Event of Default within two (2) Business Days of
becoming aware:
(iv) of the existence of any condition or event which constitutes
a Default or an Event of Default; or
(v) that the holder of any Note, or of any Debt, shall have given
notice or taken any other action with respect to a claimed Default,
Event of Default or default or event of default;
a notice specifying the nature of the claimed Default, Event of Default or
default or event of default and the notice given or action taken (if any)
by such holder and what action the Company is taking or proposes to take
with respect thereto;
ERISA
(vi) within two (2) Business Days of becoming aware of the
occurrence of any "reportable event" (as such term is defined in
section 4043 of ERISA) for which notice thereof has not been waived
pursuant to regulations of the DOL or
22
"prohibited transaction" (as such term is defined in section 406 of
ERISA or section 4975 of the IRC) in connection with any Plan or any
trust created thereunder, a notice specifying the nature thereof, what
action the Company is taking or proposes to take with respect thereto,
and, when known, any action taken by the Internal Revenue Service, the
DOL or the PBGC with respect thereto; and
(vii) prompt notice of and, where applicable, a description of:
(A) any notice from the PBGC in respect of the commencement
of any proceedings pursuant to section 4042 of ERISA to terminate
any Plan or for the appointment of a trustee to administer any
Plan, and any distress termination notice delivered to the PBGC
under section 4041 of ERISA in respect of any Plan, and any
determination of the PBGC in respect thereof;
(B) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA, any Multiemployer
Plan becoming "insolvent" (as such term is defined in section
4245 of ERISA) under Title IV of ERISA, or the whole or partial
withdrawal of the Company or any ERISA Affiliate from any
Multiemployer Plan and the withdrawal liability incurred in
connection therewith; or
(C) the occurrence of any event, transaction or condition
that could result in the incurrence of any liability of the
Company or any ERISA Affiliate or the imposition of a Lien on the
Property of the Company or any ERISA Affiliate, in either case
pursuant to Title I or Title IV of ERISA or pursuant to the
penalty or excise tax or security provisions of the IRC;
provided, however, that the Company shall not be required to deliver any
such notice at any time when the aggregate amount of the actual or
potential liability of the Company and the Subsidiaries in respect of all
such events at such time could not reasonably be expected to have a
Material Adverse Effect;
Auditor's Reports promptly upon receipt thereof, a copy of each report
or management letter submitted to the Company or any Subsidiary by
independent accountants in connection with any annual, interim or special
audit made of the books of the Company or any Subsidiary;
Actions, Proceedings promptly after the commencement of any action or
proceeding relating to the Company or any Subsidiary in any court or before
any Governmental Authority or arbitration board or tribunal as to which
there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect, a notice specifying the nature and period of existence
thereof and what action the Company is taking or proposes to take with
respect thereto;
Other Creditors promptly upon the reasonable request of any holder of
Notes, copies of any statement, report or certificate furnished to any
holder of Debt to the extent
23
that the information contained in such statement, report or certificate has
not already been delivered to each holder of Notes;
Rule 144A promptly upon the request of any holder of Notes,
information required to permit the holder to comply with 17 C.F.R.
ss.230.144A, as amended from time to time, in connection with a transfer of
any Note; and
Requested Information with reasonable promptness, such other data and
information as from time to time may be reasonably requested by any holder
of Notes.
Extension of Time to File SEC Reports
If the rules and regulations of the SEC under the Exchange Act and the
rules and regulations of the NASDAQ National Market are amended to extend the
deadline for delivery to the SEC and the NASDAQ National Market of Quarterly
Reports on Form 10-Q (or any successor form) beyond the forty-five (45) days
following the end of each fiscal quarter of the Company (other than its last
fiscal quarter) as currently required, then the forty-five (45) day period
within which quarterly financial statements are required to be delivered in
accordance with the provisions of Section 5.1(a) shall be similarly extended. If
the rules and regulations of the SEC under the Exchange Act and the rules and
regulations of the NASDAQ National Market are amended to extend the deadline for
delivery to the SEC and the NASDAQ National Market of Annual Reports on Form
10-K (or any successor form) beyond the ninety (90) days following the end of
the Company's fiscal year as currently required, then the ninety (90) day period
within which annual financial statements are required to be delivered in
accordance with the provisions of Section 5.1(b) shall be similarly extended.
Officer's Certificates
Each set of financial statements delivered to each holder of Notes pursuant
to Section 5.1(a) or Section 5.1(b) shall be accompanied by a certificate of a
Senior Financial Officer, setting forth:
Covenant Compliance the financial information (including detailed
calculations and a detailed computation of Consolidated Cash Flow for the
relevant period) required in order to establish whether the Company was in
compliance with the requirements of Section 4 (in each case where such
Section imposes numerical financial requirements) as of the end of the
period covered by the financial statements then being furnished (including
with respect to such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Section, and the calculation of the
amount, ratio or percentage then in existence); and
Event of Default a statement that the signer has reviewed the relevant
terms hereof and has made, or caused to be made, under his or her
supervision or authority, a review of the transactions and conditions of
the Company and the Subsidiaries from the beginning of the accounting
period covered by the income statements being delivered therewith to the
date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed
or exists, specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with respect
thereto.
Accountants' Certificates
24
Each set of annual financial statements delivered pursuant to Section
5.1(b) shall be accompanied by a certificate of the accountants who were engaged
to audit such financial statements, stating that they have reviewed this
Agreement and stating further, whether, in making their audit, such accountants
have become aware of any condition or event that then constitutes a Default or
an Event of Default, and, if such accountants are aware that any such condition
or event then exists, specifying the nature and period of existence thereof.
Inspection
The Company will permit the representatives of each holder of Notes to
visit and inspect any of the Properties of the Company or any of the
Subsidiaries, to examine all their respective books of account, records, reports
and other papers, to make copies and extracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the finances and affairs of the Company
and the Subsidiaries) all at such reasonable times and as often as may be
reasonably requested. At all times during which there exists a Default or Event
of Default, expenses incurred by the holders of the Notes in connection with
this Section 5.5 shall be paid in accordance with Section 9.6(b).
Confidential Information
Each holder of Notes, by its acceptance thereof, agrees that it will
maintain the confidentiality of all Confidential Information in accordance with
procedures adopted by such holder in good faith to protect confidential
information of third parties delivered to such holder; provided, however, that
any holder of Notes may deliver or disclose Confidential Information to:
(u) such holder's directors, officers, trustees, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates
to the administration of the investment represented by the Notes held by
such holder);
(v) such holder's financial advisors and other professional advisors
who agree to hold confidential the Confidential Information substantially
in accordance with the terms of this Section 5.6;
(w) any other holder of any Note;
(x) any institutional investor to which such holder sells or offers to
sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 5.6);
(y) any Person from which such holder offers to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt
of such Confidential Information to be bound by the provisions of this
Section 5.6);
(z) any federal, state or local regulatory authority having
jurisdiction over such holder;
(aa) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that
requires access to information about the investment portfolio of such
holder; or
25
(ab) any other Person to which such delivery or disclosure may be
necessary or appropriate:
(i) to effect compliance with any law, rule, regulation or order
applicable to such holder;
(ii) in response to any subpoena or other legal process;
provided, however, that each holder agrees to use its reasonable best
efforts to inform the Company of the service upon it of such subpoena
or legal process, and to reasonably cooperate with the Company should
the Company wish (at the Company's expense) to seek a protective order
or similar relief relating to such disclosure; or
(iii) in connection with any litigation to which such holder and
the Company or any Subsidiary are parties; provided, however, that
such holder shall use its reasonable efforts to preserve the
confidentiality of the Confidential Information to the extent not
necessary to prosecute or defend such litigation; or
(iv) if an Event of Default has occurred and is continuing, to
the extent such holder may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies of such holder in respect of
such holder's Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 5.6 as
though it were a party to this Agreement. On reasonable request by the Company
in connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 5.6.
EVENTS OF DEFAULT
Events of Default
An "Event of Default" exists at any time if any of the following both
occurs and is continuing thereafter for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):
Payments on Notes
Principal or Prepayment Compensation Amount Payments the Company
fails to make any payment of principal or Prepayment Compensation
Amount on any Note on or before the date such payment is due; or
Interest Payments the Company fails to make any payment of
interest on any Note on or before five (5) Business Days after the
date such payment is due;
Other Defaults
Financial Covenant Defaults the Company or any Subsidiary fails
to comply with any provision of Section 4; or
26
Other Defaults the Company or any Subsidiary fails to comply with
any other provision hereof, and such failure continues for more than
thirty (30) days after such failure shall first become known to any
Senior Officer;
Warranties or Representations any warranty, representation or other
statement by or on behalf of the Company contained in the Securities
Purchase Agreements, this Agreement, the Notes, the Subsidiary Guaranty and
any other agreement, certificate or instrument executed pursuant to the
terms of each of the foregoing, or in any written amendment, supplement,
modification or waiver with respect to any such agreement or document or in
any instrument furnished in compliance herewith or therewith or in
reference hereto or thereto, shall have been false or misleading in any
material respect when made;
Acceleration of Debt either:
(v) the Company or any Subsidiary fails to make, when due, at maturity
or otherwise, any payment or payments in respect of any Debt, which payment
or payments aggregate Three Million Dollars ($3,000,000) or more, and any
grace period provided with respect thereto shall have expired; or
(vi) any event shall occur or any condition shall exist in respect of
Debt, or under any agreement securing or relating to such Debt, and in
either case, as a result thereof:
(A) the maturity of such Debt, or a portion thereof, is
accelerated; or
(B) any one or more of the holders thereof or a trustee therefor
is permitted to require the Company or any Subsidiary to repurchase
such Debt from the holders thereof, and any such trustee or holder
exercises such option;
provided that the aggregate amount of all obligations in respect of all
such Debt exceeds at such time Three Million Dollars ($3,000,000);
Insolvency
Involuntary Bankruptcy Proceedings
(C) a receiver, liquidator, custodian or trustee of the Company
or any Subsidiary, or of all or any substantial part of the Property
of either, is appointed by court order and such order remains in
effect for more than sixty (60) days; or an order for relief is
entered with respect to the Company or any Subsidiary, or the Company
or any Subsidiary is adjudicated a bankrupt or insolvent;
(D) all or any substantial part of the Property of the Company or
any Subsidiary is sequestered by court order and such order remains in
effect for more than sixty (60) days; or
27
(E) a petition is filed against the Company or any Subsidiary
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, and is not dismissed
within sixty (60) days after such filing;
Voluntary Petitions the Company or any Subsidiary files a petition in
voluntary bankruptcy or seeks relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation law of any jurisdiction, whether now or hereafter in effect,
or consents to the filing of any petition against it under any such law; or
Assignments for Benefit of Creditors, etc. the Company or a Subsidiary
makes an assignment for the benefit of its creditors, or admits in writing
its inability, or fails, to pay its debts generally as they become due, or
consents to the appointment of a receiver, liquidator or trustee of the
Company or a Subsidiary or of all or a substantial part of its Property; or
Undischarged Final Judgments a final, non-appealable judgment or final,
non-appealable judgments for the payment of money aggregating in excess of One
Million Dollars ($1,000,000) is or are outstanding against one or more of the
Company and the Subsidiaries and any one of such judgments shall have been
outstanding for more than sixty (60) days from the date of its entry and shall
not have been discharged in full or stayed; or
Subsidiary Guaranty(vii) the Subsidiary Guaranty shall cease to be in full
force and effect or shall be declared by a court or other Governmental
Authority of competent jurisdiction to be void, voidable or unenforceable
against any Subsidiary Guarantor,
(viii) the validity or enforceability of the Subsidiary Guaranty
against any Subsidiary Guarantor shall be contested by such Subsidiary
Guarantor, the Company or any Affiliate, or
(ix) any Subsidiary Guarantor, the Company or any Affiliate shall deny
that such Subsidiary Guarantor has any further liability or obligation
under the Subsidiary Guaranty.
Default Remedies
Acceleration of Maturity of Notes
Acceleration on Event of Default
Automatic If any Event of Default specified in Section
6.1(e) shall exist, all of the Notes at the time outstanding
shall automatically become immediately due and payable together
with interest accrued thereon and, to the extent permitted by
law, the Prepayment Compensation Amount at such time with respect
to the principal amount of such Notes, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived.
28
By Action of Holders Subject to Section 7.6 and Section 7.7,
if any Event of Default other than those specified in Section
6.1(a) shall exist, the Required Holders may exercise any right,
power or Remedy permitted to such holder or holders by law, and
shall have, in particular, without limiting the generality of the
foregoing, the right to declare the entire principal of, and all
interest accrued on, all the Notes then outstanding to be, and
such Notes shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, and the Company
shall forthwith pay to the holder or holders of all the Notes
then outstanding the entire principal of, and interest accrued
on, the Notes and, to the extent permitted by law, the Prepayment
Compensation Amount at such time with respect to such principal
amount of such Notes.
Acceleration on Payment Default Subject to Section 7.6 and
Section 7.7, during the existence of an Event of Default described in
Section 6.1(a), and irrespective of whether the Notes then outstanding
shall have become due and payable pursuant to Section 6.2(a)(i)(B),
any holder of Notes who or which shall have not consented to any
waiver with respect to such Event of Default may, at his or its
option, by notice in writing to the Company, declare the Notes then
held by such holder to be, and such Notes shall thereupon become,
forthwith due and payable together with all interest accrued thereon,
without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, and the Company shall
forthwith pay to such holder the entire principal of and interest
accrued on such Notes and, to the extent permitted by law, the
Prepayment Compensation Amount at such time with respect to such
principal amount of such Notes.
Valuable Rights The Company acknowledges, and the parties hereto
agree, that the right of each holder to maintain its investment in the
Notes free from repayment by the Company (except as herein specifically
provided for) is a valuable right and that the provision for payment of a
Prepayment Compensation Amount by the Company in the event that the Notes
are prepaid or are accelerated as a result of an Event of Default is
intended to provide compensation for the deprivation of such right under
such circumstances.
Other Remedies During the existence of an Event of Default and
irrespective of whether the Notes then outstanding shall become due and
payable pursuant to Section 6.2(a), and irrespective of whether any holder
of Notes then outstanding shall otherwise have pursued or be pursuing any
other rights or Remedies, subject to Section 7.6 and Section 7.7, any
holder of Notes may proceed to protect and enforce its rights hereunder and
under such Notes by exercising such Remedies as are available to such
holder in respect thereof under applicable law, either by suit in equity or
by action at law, or both, whether for specific performance of any
agreement contained herein or in aid of the exercise of any power granted
herein; provided, however, that the maturity of such holder's Notes may be
accelerated only in accordance with Section 6.2(a).
Nonwaiver; Remedies Cumulative No course of dealing on the part of any
holder of Notes nor any delay or failure on the part of any holder of Notes
to exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers
29
and Remedies. All rights and Remedies of each holder of Notes hereunder and
under applicable law are cumulative to, and not exclusive of, any other
rights or Remedies any such holder of Notes would otherwise have.
SubordinationThe rights of the holders of the Notes to receive
payments in respect of this Agreement and the Notes, and to exercise any
Remedies, solely as between the holders of the Notes and the holders of the
Senior Debt, shall be subject in all respects to the provisions of Section
7; provided, however, that all such rights shall remain unconditional and
absolute as between the holders of the Notes and the Company.
Annulment of Acceleration of Notes
(ac) Annulment at Holders' Option. If a declaration is made pursuant
to Section 6.2(a)(i)(B), then and in every such case, the holders of
sixty-six and two-thirds percent (66 2/3%) in principal amount of the Notes
at the time outstanding (exclusive of Notes then owned by any one or more
of the Company, any Subsidiary or any Affiliate) may, by written instrument
filed with the Company, rescind and annul such declaration, and the
consequences thereof; provided, however, that at the time such declaration
is annulled and rescinded:
(i) no judgment or decree shall have been entered for the payment
of any moneys due on or pursuant hereto or the Notes;
(ii) all arrears of interest upon all of the Notes and all of the
other sums payable hereunder and under the Notes (except any principal
of, or interest or Prepayment Compensation Amount on, the Notes which
shall have become due and payable by reason of such declaration under
Section 6.2(a)(i)(B)) shall have been duly paid; and
(iii) each and every other Default and Event of Default shall
have been waived pursuant to Section 9.5 or otherwise made good or
cured;
and provided further that no such rescission and annulment shall extend to
or affect any subsequent Default or Event of Default or impair any right
consequent thereon.
(ad) Required Annulment. If a declaration is made pursuant to Section
6.2(a)(i)(B) arising solely out of an Event of Default described in Section
6.1(d) regarding the Senior Debt, then and in every such case, if the
holders of the Senior Debt waive such default in respect of the Senior Debt
or such default is cured, and the holders of the Senior Debt rescind or
annul any and all accelerations of the maturity of all or any portion of
the Senior Debt and any required or demanded repurchase of all or any
portion thereof, then, upon written notice to the holders of the Notes of
such events with respect to the Senior Debt, any declaration made pursuant
to Section 6.2(a)(i)(B), and the consequences thereof, shall automatically
and without any further action on the part of the holders of the Notes, be
annulled and rescinded; provided, however, that at the time such
declaration is deemed annulled and rescinded:
(i) no judgment or decree shall have been entered for the payment
of any moneys due on or pursuant hereto or the Notes;
(ii) no other Default and Event of Default shall be continuing;
30
and provided further that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereon.
SUBORDINATION
General
The Subordinated Debt is subordinate and junior in right of payment to all
Senior Debt to the extent provided in this Section 7.
Insolvency
In the event of:
(ae) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding
relating to the Company, its creditors or its Property;
(af) any proceeding for the liquidation, dissolution or other
winding-up of the Company, voluntary or involuntary, whether or not
involving insolvency or bankruptcy proceedings;
(ag) any assignment by the Company for the benefit of creditors; or
(ah) any other marshalling of the assets of the Company;
all Senior Debt shall first be paid in full, in cash or cash equivalents, before
any payment or distribution, whether in cash, Securities or other Property,
shall be made to any holder of any Subordinated Debt on account of any
Subordinated Debt. Any payment or distribution, whether in cash, Securities or
other Property (other than Securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the extent provided in this Section 7 with respect to
Subordinated Debt, to the payment of all Senior Debt at the time outstanding and
to any Securities issued in respect thereof under any such plan of
reorganization or readjustment), which would otherwise (but for this Section 7)
be payable or deliverable in respect of Subordinated Debt shall be paid or
delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders until all Senior Debt shall have
been paid in full, in cash or cash equivalents.
Proofs of Claim
If any holder of Subordinated Debt does not file a proper claim or proof of
debt therefor prior to twenty (20) days before the expiration of the time to
file such claim or proof, then the Senior Agent is hereby authorized and
empowered (but not obligated) as the agent and attorney-in-fact for such holder
for the specific and limited purpose set forth in this Section 7.3 to file such
claim or proof for or on behalf of such holder; provided, however, that the
Senior Agent shall have, prior to taking any such action, given fifteen (15)
days prior written notice (which notice may be given up to sixty (60) days prior
to the expiration of the time to file such claim) to such holder of Subordinated
Debt it intends to file such claim or proof of debt. In no event may the Senior
Agent or any holder of the Senior Debt vote any claim on behalf of any holder of
the Subordinated Debt, and such agency and appointment of attorney-in-fact shall
not extend to any such right to vote any such claim.
Payment Default in Respect of Senior Debt
31
If:
(ai) the Company shall default in the payment of any principal of or
premium, if any, or interest on any Senior Debt (a "Senior Payment
Default") when the same becomes due and payable, whether at maturity, at a
date fixed for prepayment, by declaration of acceleration or otherwise; and
(aj) the Company receives from the Senior Agent written notice (a
"Payment Default Notice") of the happening of such Senior Payment Default,
stating that such notice is a payment blockage notice pursuant to this
Section 7.4;
then no direct or indirect payment (in cash, Property or Securities or by
set-off or otherwise) shall be made or agreed to be made on account of any
Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in respect
of any redemption, retirement, purchase, prepayment or other acquisition or
payment of any Subordinated Debt, unless and until such Senior Payment Default
shall have been cured or waived or otherwise shall have ceased to exist.
The Company shall give prompt written notice to each holder of Subordinated
Debt of its receipt of any Payment Default Notice under this Section 7.4.
Significant Nonpayment Default in Respect of Senior Debt
If:
(ak) any Significant Nonpayment Default shall have occurred; and
(al) the Company receives from the Senior Agent written notice (a
"Nonpayment Default Notice") of the happening of such Significant
Nonpayment Default, stating that such notice is a payment blockage notice
pursuant to this Section 7.5;
no direct or indirect payment (in cash, property or Securities or by set-off or
otherwise) shall be made or agreed to be made for or on account of any
Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in respect
of any redemption, retirement, repurchase, prepayment, purchase or other
acquisition or payment of any Subordinated Debt, for a period (each, a "Payment
Blockage Period") commencing on the date the Nonpayment Default Notice is
delivered to the Company and ending on the Payment Blockage Period Termination
Date; provided, however, that:
(i) only three (3) such Payment Blockage Periods may arise in any
period of three hundred sixty-five (365) consecutive days;
(ii) no more than six (6) Payment Blockage Periods may arise in the
aggregate;
(iii) Payment Blockage Periods may not be in effect for more than one
hundred fifty (150) days during any period of three hundred sixty-five
(365) consecutive days, and any Payment Blockage Period in effect on the
one hundred fifty-first (151st) day (whether or not such days are or were
consecutive) in any period of three hundred sixty-five (365) consecutive
days, such Payment Blockage Period shall terminate immediately; and
32
(iv) no Payment Blockage Period may be imposed as a result of any
Significant Nonpayment Default which served as the basis for or was
continuing during a previous Payment Blockage Period.
All payments in respect of Subordinated Debt postponed during any Payment
Blockage Period shall be immediately due and payable upon the Payment Blockage
Period Termination Date thereof (together with such additional interest as is
provided for herein and in the Notes for late payment of principal, Prepayment
Compensation Amount and interest).
The Company shall give prompt written notice to each holder of Subordinated
Debt of its receipt of any Nonpayment Default Notice under this Section 7.5.
0.2 Enforcement Notice.
If, at any time during which the Senior Credit Facility is in effect, any
holder or holders of Notes elect to exercise any Remedies in respect of any
Event of Default, such holder or holders shall deliver to the Company and to the
Senior Agent written notice (an "Enforcement Notice") specifying the Event or
Events of Default which are the basis for the exercise of such Remedies and
stating the holder or holders intends to exercise Remedies; provided, however,
that the failure to deliver such Enforcement Notice to the Senior Agent shall
not affect the validity of the Enforcement Notice as between such holder or
holders and the Company.
Standstill
Notwithstanding anything contained in this Agreement or any other Financing
Document to the contrary, for so long as any amount is outstanding under the
Senior Credit Facility, no holder of any Subordinated Debt may exercise any
Remedies in respect thereof (and no acceleration or purported acceleration
pursuant to Section 6.2(a)(i)(B) or Section 6.2(a)(ii) shall become effective)
during any period (a "Standstill Period") commencing on the first date the
holders of the Subordinated Debt, but for the provisions of this Section 7,
would have been entitled to accelerate the maturity of the Subordinated Debt
pursuant to Section 6.2(a)(i)(B) or Section 6.2(a)(ii) and ending upon the
earliest of:
(a) the date which is ten (10) days after the Enforcement Notice is
delivered to the Company and the Senior Agent pursuant to Section 7.6;
provided, however, that if any Payment Blockage Period is in effect on such
tenth (10th) day after the Enforcement Notice is so delivered, this clause
(a) shall be ineffective to terminate such Standstill Period;
(b) in the event that a Payment Blockage is in effect on the date
which is ten (10) days after the Enforcement Notice is delivered to the
Company and the Senior Agent pursuant to Section 7.6, the Payment Blockage
Period Termination Date relating to the Significant Nonpayment Default
giving rise to such Payment Blockage Period;
(c) the date that any holder of any Senior Debt commences the exercise
of any Remedies in respect of such Debt; and
(d) the first date upon which any of the Events of Default described
in Section 6.1(e) shall have occurred and be continuing beyond any period
of grace specified therein; and, in such event, the automatic acceleration
of the Notes contemplated in
33
respect of such Event of Default pursuant to Section 6.2(a)(i)(A) shall
occur immediately upon the termination of the Standstill Period.
Turnover of Payments
If:
(e) any payment or distribution shall be paid to or collected or
received by any holders of Subordinated Debt in contravention of any of the
terms of this Section 7; and
(f) the Senior Agent shall have notified the holders of Subordinated
Debt in writing, within thirty (30) days after the date such payment or
distribution is made, of the facts by reason of which such payment or
collection or receipt so contravenes this Section 7 or constituted a
Significant Nonpayment Default;
then such holders of Subordinated Debt will deliver such payment or
distribution, to the extent necessary to pay all such Senior Debt in full, in
cash or cash equivalents, to the Senior Agent, on behalf of the holders of the
Senior Debt, and, until so delivered, the same shall be held in trust by such
holders of Subordinated Debt as the property of the holders of such Senior Debt.
If any amount is delivered to the Senior Agent pursuant to this Section 7.8,
whether or not such amounts have been applied to the payment of Senior Debt, and
the outstanding Senior Debt shall thereafter be paid in full, in cash or cash
equivalents, by the Company or otherwise other than pursuant to this Section
7.8, the holders of Senior Debt shall return to such holders of Subordinated
Debt an amount equal to the amount delivered to such holders of Senior Debt
pursuant to this Section 7.8, so long as after the return of such amounts the
Senior Debt shall remain paid in full, in cash or cash equivalents.
Subordination Unaffected by Certain Events
The rights set forth in this Section 7 of the holders of the Senior Debt as
against each holder of Subordinated Debt shall remain in full force and effect
without regard to, and shall not be impaired by:
(g) any act or failure to act on the part of the Company;
(h) any extension or indulgence in respect of any payment or
prepayment of the Senior Debt or any part therefor in respect of any other
amount payable to any holder of Senior Debt;
(i) any amendment, modification, restatement, refinancing or waiver
of, or addition or supplement to, or deletion from, or compromise, release,
consent or other action in respect of, any of the terms of any Senior Debt
or any other agreement which may be relating to any Senior Debt, other than
such as would cause all or any portion of such Debt to fail to meet the
definition of "Senior Debt;"
(j) any exercise or non-exercise by any holder of Senior Debt of any
right, power, privilege or remedy under or in respect of any Senior Debt or
Subordinated Debt or any waiver of any such right, power, privilege or
remedy or any default in respect of any Senior Debt or the Subordinated
Debt, any dealing with or action against any collateral security therefor
or any receipt by any holder of Senior Debt of any security, or any failure
by any holder of Senior Debt to perfect a security interest in, or any
release by any such of Senior Debt of, any security for the payment of any
Senior Debt;
34
(k) any merger or consolidation of the Company or any of the
Subsidiaries into or with any of the Subsidiaries or into or with any
Person, or any Transfer of any or all of the Property of the Company or any
of the Subsidiaries to any other Person; or
(l) the absence of any notice to, or knowledge by, any holder of
Subordinated Debt of the existence or occurrence of any of the matters or
events set forth in the foregoing clauses (a) through (e).
Waiver and Consent
Each holder of Subordinated Debt waives any and all notices of the
acceptance of the provisions of this Section 7 or of the creation, renewal,
extension or accrual, now or at any time in the future, of any Senior Debt.
Reinstatement of Subordination
The obligations of each holder of Subordinated Debt under the provisions
set forth in this Section 7 shall continue to be effective, or be reinstated, as
the case may be, as to any payment in respect of any Senior Debt that is
rescinded or must otherwise be returned by the holder of such Senior Debt upon
the occurrence or as a result of any bankruptcy or judicial proceeding, all as
though such payment had not been made.
Obligations Not Impaired
Nothing contained in this Section 7 shall impair, as between the Company
and any holder of Subordinated Debt, the obligation of the Company to pay to
such holder the principal thereof and Prepayment Compensation Amount, if any,
and interest thereon as and when the same shall become due and payable in
accordance with the terms thereof and to comply with each and every provision of
the Notes and this Agreement or prevent any holder of any Subordinated Debt from
exercising all rights, powers and remedies otherwise permitted by applicable law
or under this Agreement, all subject to the rights of the holders of the Senior
Debt to receive cash, Securities or other Property otherwise payable or
deliverable to the holders of Subordinated Debt.
Payment of Senior Debt; Subrogation
Upon the payment in full of all Senior Debt, the holders of Subordinated
Debt shall be subrogated to all rights of any holder of Senior Debt to receive
any further payments or distributions applicable to the Senior Debt until the
Subordinated Debt shall have been paid in full, and such payments or
distributions received by the holders of Subordinated Debt by reason of such
subrogation, of cash, Securities or other Property which otherwise would be paid
or distributed to the holders of Senior Debt, shall, as between the Company and
its creditors other than the holders of Senior Debt, on the one hand, and the
holders of Subordinated Debt, on the other hand, be deemed to be a payment by
the Company on account of Senior Debt and not on account of Subordinated Debt.
Reliance of Holders of Senior Debt
Each holder of Subordinated Debt by its acceptance thereof shall be deemed
to acknowledge and agree that the foregoing subordination provisions are, and
are intended to be, an inducement to and a consideration of each holder of any
Senior Debt, whether such Senior Debt was created or acquired before or after
the creation of Subordinated Debt, to acquire and hold, or to continue to hold,
such Senior Debt, and such holder of Senior Debt shall be deemed conclusively to
have relied on such subordination provisions in acquiring and holding, or in
continuing to hold, such Senior Debt. Each such holder of Senior Debt is
intended to be, and
35
is, a third party beneficiary of this Section 7. Each holder of Subordinated
Debt acknowledges and agrees that the provisions set forth in this Section 7
shall be enforceable against such Persons by the holders of the Senior Debt.
Notwithstanding anything contained in this Agreement or any other Financing
Document to the contrary, none of the provisions of this Section 7 (including,
without limitation, this Section 7.14) may, directly or indirectly, be amended,
modified, supplemented or waived without the prior written consent of the Senior
Agent, on behalf of the holders of the Senior Debt.
Identity of Holders of Senior Debt
Upon the request of any holder of Subordinated Debt, the Company shall
deliver to such holder a list of all holders of Senior Debt outstanding at such
time, providing the name and address of each such holder of Senior Debt and the
principal amount of Senior Debt held by each such holder; provided, however,
that, if any holder of Senior Debt shall have appointed an agent or other
representative with respect to the Senior Debt held by it, the Company may
provide the name and address of such agent or representative in lieu of the name
and address of such holder of Senior Debt.
Amendments to Senior Credit Facility
Notwithstanding the other provisions of this Section 7, no amendment to or
Refinancing of the Senior Debt or any agreement or instrument related thereto
shall be effective as to the holders of the Subordinated Debt or be entitled to
the benefits of this Section 7 without the consent of each holder of Notes to
the extent that such amendment would prohibit directly the Company or any
Subsidiary from making scheduled payments in respect of the Subordinated Debt in
any manner which is not specifically set forth in the Senior Credit Agreement,
as in effect on the Closing Date.
INTERPRETATION OF THIS AGREEMENT
Terms Defined
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
Acceptable Consideration -- means, with respect to any Transfer of any
asset of the Company or any Subsidiary, cash consideration, promissory notes or
such other non-cash consideration (or any combination of the foregoing) as is,
in each case, determined by the Board of Directors, in its good faith opinion,
to be in the best interests of the Company and to reflect the Fair Market Value
of such asset.
Acceptable Revolving Credit Facility -- means and includes a revolving
credit agreement or similar agreement:
(a) pursuant to which the lender commits to permit the Company,
subject to the conditions therein, to obtain from time to time thereunder
loans or advances of cash, letters of credit or bankers acceptances and
periodically repay the same; and
(b) the obligations under which are secured by a Lien upon (among any
other Property subject to such Lien) all or substantially all Inventory and
Receivables of the Company and the Subsidiaries which are included in
calculating the Borrowing Base.
Affiliate -- means and includes, at any time, each Person (other than a
Subsidiary):
36
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company;
(b) that beneficially owns or holds five percent (5%) or more of any
class of the Voting Stock of the Company;
(c) five percent (5%) or more of the Voting Stock (or in the case of a
Person that is not a corporation, five percent (5%) or more of the equity
interest) of which is beneficially owned or held by the Company; or
(d) that is an officer or director of the Company;
at such time; provided, however, that neither of the Purchasers nor any of their
affiliates shall be deemed to be an "Affiliate," and no Person holding any one
or more of the Notes or Warrants shall be deemed to be an "Affiliate" solely by
virtue of the ownership of such securities. As used in this definition:
control -- means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
Agreement, this -- and references thereto shall mean this Note Agreement as
it may from time to time be amended or supplemented.
Applicable Interest Law -- means any present or future law (including,
without limitation, the laws of the State of New York and the United States of
America) which has application to the interest and other charges pursuant to
this Agreement and the Notes.
Board of Directors -- means, at any time, the board of directors of the
Company or any or any committee thereof that, in the instance, shall have the
lawful power to exercise the power and authority of such board of directors.
Borrowing Base -- means the sum of:
(a) eighty percent (80%) of Eligible Receivables aged less than
ninety-one days; plus
(b) any amount of the Xxxxxxxxx Receivables not exceeding Four Hundred
Thousand Dollars ($400,000); plus
(c) the lesser of:
(i) forty percent (40%) of the book value of raw materials,
work-in-progress and finished goods Inventory, exclusive of any
Inventory warehoused at any warehouse location for which the lender
under the Acceptable Revolving Credit Facility has not received a
warehouse Lien waiver in form and substance acceptable to such lender,
subordinating the warehouseman's Lien to the Lien of such lender; and
37
(ii) fifty percent (50%) of the Debt outstanding under such
Acceptable Revolving Credit Facility.
So long as:
(A) there has been no bad faith on the part of either the Company or
the Senior Agent in the preparation of the Borrowing Base Certificate;
(B) the Borrowing Base Certificate contains no manifest error;
(C) such Borrowing Base Certificate was completed no more than
thirty-five (35) days prior to the date of determination; and
(D) such Borrowing Base Certificate measures the Borrowing Base as of
a date no more than fifty (50) days prior to the date of determination;
then the Borrowing Base at any time shall be deemed to be the amount set forth
on the most recent Borrowing Base Certificate delivered to the Senior Agent. In
all other cases, the Borrowing Base shall equal the actual Borrowing Base on the
date of determination.
Business Day -- means a day other than a Saturday, a Sunday or a day on
which banks in the State of New York are required or permitted by law (other
than a general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
Capital Lease -- means, at any time, a lease of any Property with respect
to which the lessee is required to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
Capital Stock -- means any class of preferred, common or other capital
stock, share capital or similar equity interest of a Person including, without
limitation, any partnership interest in any partnership or limited partnership
and any membership interest in any limited liability company.
Capitalized Interest Amount -- Section 1.2.
Change in Management -- means, at any time, an occurrence or event, or
failure of an event to occur, as a result of which:
(a) Xxxx Xxxxxxxxx either: shall fail to hold the position and title
of President and Chief Executive Officer of the Company at such time; shall
fail to have the responsibilities and duties attendant to such offices and
such responsibilities and duties as were regularly performed by him on the
Closing Date; or shall become unable (including, without limitation, by
death or disability lasting longer than one hundred twenty (120) days) to
perform or discharge such duties; or
(b) Xxxx Xxxxxxxx either: shall fail to hold the position or title of
Executive Vice President of the Company at such time; shall fail to have
the responsibilities and duties attendant to such office and such
responsibilities and duties as were regularly performed by him on the
Closing Date; or shall become unable (including, without limitation, by
38
death or disability lasting longer than one hundred twenty (120) days) to
perform or discharge such duties;
in each case, regardless of the reason for such occurrence or event, or failure
of any event to occur.
Change in Management Payment Date -- Section 1.5(a).
Closing Date -- means the date any Notes are first sold.
Common Stock -- means the Common Stock, par value $.01 per share, of the
Company.
Company -- the introductory paragraph.
Confidential Information -- means information delivered to any holder of
Notes by or on behalf of the Company or any Subsidiary in connection with the
transactions contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by such holder as being confidential
information of the Company or such Subsidiary; provided, however, that such term
does not include information that:
(a) was publicly known or otherwise known to such holder prior to the
time of such disclosure;
(b) subsequently becomes publicly known through no act or omission by
such holder or any Person acting on behalf of such holder;
(c) otherwise becomes known to such holder other than through:
(i) disclosure by the Company or any Subsidiary; or
(ii) disclosure to such holder which, to such holder's actual
knowledge, was made to such holder by any Person in violation of a
duty of confidentiality to the Company or any Subsidiary; or
(d) constitutes financial statements delivered to such holder under
Section 5.1 that are otherwise publicly available.
Consolidated Cash Flow -- means, for any period, the sum of:
(a) Consolidated Net Earnings; plus
(b) Consolidated Interest Expense; plus
(c) Consolidated Tax Expense; plus
(d) Consolidated Depreciation Expense; plus
39
(e) all other non-cash charges (determined on a consolidated basis for
such period, but only to the extent included in the determination of
Consolidated Net Earnings for such period); plus
(f) for purposes of the twelve (12) month period immediately following
the Closing Date only, the amount of loss incurred by the Company from the
redemption of the CoreStates Securities and the aggregate amount of
investment banking and legal fees paid by the Company in connection with
the issuance of the Notes, in each case, solely to the extent deducted from
revenues of the Company and the Subsidiaries in computing Consolidated Net
Earnings during such period;
in each case determined in respect of such period.
Consolidated Cash Flow Available for Fixed Charges -- means, with respect
to any period, without duplication, the sum of:
(a) Consolidated Cash Flow for such period; plus
(b) Consolidated Rental Expense for such period.
Consolidated Depreciation Expense -- means, for any period, the amount of
depreciation and amortization expense (including, without limitation, expenses
associated with marketing service agreements, retail licensing agreements,
sale-and-leaseback transactions and deferred financing charges) of the Company
and the Subsidiaries, determined on a consolidated basis for such period, but
only to the extent deducted from revenues of the Company and the Subsidiaries in
computing Consolidated Net Earnings for such period.
Consolidated Fixed Charge Coverage Ratio -- means, for any period, the
ratio of Consolidated Cash Flow Available for Fixed Charges to Consolidated
Fixed Charges, determined in each case in respect of such period.
Consolidated Fixed Charges -- means, for any period, an amount equal to the
sum of:
(a) Consolidated Interest Expense; plus
(b) Consolidated Rental Expense;
determined in respect of such period.
Consolidated Interest Expense -- means, for any period, the amount of
interest accrued on, or with respect to, interest bearing obligations of the
Company and the Subsidiaries, including, without limitation, amortization of
debt discount, imputed interest on Capital Leases and interest on the Notes and
other Debt, determined on a consolidated basis for such period, but only to the
extent deducted from revenues of the Company and the Subsidiaries in computing
Consolidated Net Earnings for such period. For purposes of calculating
Consolidated Interest Expense, the Capitalized Interest Amount paid in respect
of the Notes on any Interest Payment Date shall not be included.
40
Consolidated Net Earnings -- means, for any period, net income of the
Company and the Subsidiaries for such period, as determined on a consolidated
basis in accordance with GAAP, but excluding:
(a) any gain or loss arising from the sale of capital assets or any
write-up or write-down of assets, other than in the ordinary course of
business;
(b) earnings or losses of any Subsidiary accrued prior to the date it
became a Subsidiary;
(c) earnings or losses of any Person, substantially all the assets of
which have been acquired in any manner, realized by such other Person prior
to the date of such acquisition;
(d) earnings or losses of any Person (other than a Subsidiary) in
which the Company or any Subsidiary shall have an ownership interest unless
such net earnings shall have actually been received by the Company or such
Subsidiary in the form of cash distributions;
(e) any portion of the net earnings of any Subsidiary that for any
reason is unavailable for payment of dividends to the Company or any other
Subsidiary or that cannot be freely converted into United States dollars;
(f) the earnings or losses of any Person to which assets of the
Company shall have been sold, transferred or disposed of, or into which the
Company shall have merged, prior to the date of such transaction;
(g) any gain or loss arising from the acquisition of any Securities of
the Company or any Subsidiary;
(h) reversal of any extraordinary, unusual or nonrecurring contingency
reserves not created during such period; and
(i) other extraordinary gains or losses.
Consolidated Net Worth -- means, at any time, the stockholders' equity as
would be reflected on a balance sheet of the Company and the Subsidiaries
prepared on a consolidated basis in accordance with GAAP at such time.
Consolidated Rental Expense -- means, for any period, an amount equal to
Operating Rental Expense of the Company and the Subsidiaries, determined on a
consolidated basis for such period, but only to the extent included in the
determination of Consolidated Net Earnings for such period.
Consolidated Tax Expense -- means, for any period, the amount of tax
expense of the Company and the Subsidiaries in respect of federal and state
taxes imposed on or measured by income or excess profits, to the extent, but
only to the extent, deducted from revenues of the Company and the Subsidiaries
in computing Consolidated Net Earnings for such period.
41
Consolidated Total Assets -- means, at any time, all assets of the Company
and the Subsidiaries which would be shown as assets on a consolidated balance
sheet of the Company and the Subsidiaries as of such time prepared in accordance
with GAAP.
Consolidated Total Debt -- means, at any time, an amount equal to all Debt
of the Company and the Subsidiaries, determined on a consolidated basis at such
time.
CoreStates Securities -- means, collectively, the 11.75% senior
subordinated notes due September 30, 2001 and related warrant issued by the
Company to CoreStates Enterprise Fund.
Debt -- with respect to any Person, means, without duplication, the
liabilities of such Person with respect to:
(a) Borrowed Money -- borrowed money;
(b) Deferred Purchase Price of Property -- the deferred purchase price
of Property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement with
respect to any such Property);
(c) Secured Liabilities -- borrowed money secured by any Lien existing
on Property owned by such Person (whether or not such liabilities have been
assumed);
(d) Capital Leases -- Capital Leases of such Person;
(e) Letters of Credit -- letters of credit, bankers acceptances or
similar instruments serving a similar function issued or accepted by banks
and other financial institutions for the account of such Person (whether or
not representing obligations for borrowed money), other than undrawn trade
letters of credit in the ordinary course of business;
(f) Swaps -- Swaps of such Person; and
(g) Guarantees -- any Guaranty of such Person of any obligation or
liability of another Person of obligations of the type listed in clause (a)
through clause (f) of this definition of Debt;
provided that, with respect to the Company, Debt shall not include any unfunded
obligations which may now or hereafter exist with respect to Company's Plans.
As used in this definition,
Swaps -- means, with respect to any Person, obligations with respect
to interest rate swaps and currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency, except that if any agreement relating to such
obligation provides for the netting of amounts payable by and to such
Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the
amount of such obligations shall be the net amount thereof. The aggregate
net obligation of Swaps at any time shall be the aggregate amount of the
obligations of such Person under all
42
Swaps assuming all such Swaps had been terminated by such Person as of the
end of the then most recently ended fiscal quarter of such Person. If such
net aggregate obligation shall be an amount owing to such Person, then the
amount shall be deemed to be Zero Dollars ($0).
Unless the context otherwise requires, "Debt" means Debt of the Company or of a
Subsidiary.
Default -- means any event which, with the giving of notice or the passage
of time, or both, would become an Event of Default.
DOL -- means the United States Department of Labor and any successor
agency.
Eligible Receivables -- has the meaning set forth in the Senior Credit
Agreement, as in effect on the date hereof, but after giving effect to any
amendments (but only such amendment or amendments) thereto as would not have the
effect, individually or in the aggregate, of materially increasing the Borrowing
Base.
Environmental Protection Law -- means any law, statute or regulation
enacted by any Governmental Authority in connection with or relating to the
protection or regulation of the environment, including, without limitation,
those laws, statutes and regulations regulating the disposal, removal,
production, storing, refining, handling, transferring, processing or
transporting of Hazardous Materials and any applicable orders, decrees or
judgments issued by any court of competent jurisdiction in connection with any
of the foregoing.
ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
ERISA Affiliate -- means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the IRC.
Event of Default -- Section 6.1.
Exchange Act -- means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations of the SEC thereunder.
Excluded Transfers -- means Transfers referred to in clauses (i), (ii) and
(iii) of Section 4.2 (a).
Fair Market Value -- means, with respect to any Property, the sale value of
such Property that would be realized in an arm's-length sale at such time
between an informed and willing buyer, and an informed and willing seller, under
no compulsion to buy or sell, respectively.
Financing Documents -- means and includes this Agreement, the Securities
Purchase Agreements, the Notes, Subsidiary Guaranty, the Warrant Agreement, the
Warrant certificates and the other agreements, certificates and instruments to
be executed pursuant to the terms of each of the foregoing, as each may be
amended, restated or otherwise modified from time to time.
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the
43
Financial Accounting Standards Board and in such statements, opinions and
pronouncements of such other entities with respect to financial accounting of
for-profit entities as shall be accepted by a substantial segment of the
accounting profession in the United States.
Governmental Authority -- means:
(a) the government of:
(i) the United States of America and any state or other political
subdivision thereof; or
(ii) any other jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or that asserts
any jurisdiction over the conduct of the affairs of, or the Property
of, the Company or any such Subsidiary; and
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
Guaranty -- means with respect to any Person (for the purposes of this
definition, the "Guarantor") any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection)
of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend
or other obligation of any other Person (the "Primary Obligor") in any manner,
whether directly or indirectly, including, without limitation, obligations
incurred through an agreement, contingent or otherwise, by the Guarantor:
(a) to purchase such indebtedness or obligation or any Property
constituting security therefor;
(b) to advance or supply funds
(i) for the purchase or payment of such indebtedness, dividend or
obligation; or
(ii) to maintain working capital or other balance sheet condition
or any income statement condition of the Primary Obligor or otherwise
to advance or make available funds for the purchase or payment of such
indebtedness, dividend or obligation;
(c) to lease Property or to purchase securities or other Property or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the Primary Obligor to make
payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or obligation of
the Primary Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty, in connection with any
computation of indebtedness or other liability:
44
(i) in each case where the obligation that is the subject of such
Guaranty is in the nature of indebtedness for money borrowed it shall be
assumed that the amount of the Guaranty is the amount of the direct
obligation then outstanding; and
(ii) in each case where the obligation that is the subject of such
Guaranty is not in the nature of indebtedness for money borrowed it shall
be assumed that the amount of the Guaranty is the amount (if any) of the
direct obligation that is then due.
Hazardous Material -- means all or any of the following:
(a) substances that are defined or listed in, or otherwise classified
pursuant to, any applicable Environmental Protection Laws as "hazardous
substances", "hazardous materials", "hazardous wastes", "toxic substances"
or any other formulation intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, reproductive toxicity, "TLCP toxicity" or "EP
toxicity";
(b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters
and other wastes associated with the exploration, development or production
of crude oil, natural gas or geothermal resources;
(c) any flammable substances or explosives or any radioactive
materials;
(d) asbestos or urea formaldehyde in any form; and
(e) dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
Interest Payment Date -- Section 1.1.
Investments -- means all investments, made in cash or by delivery of
Property, by the Company and the Subsidiaries:
(a) in any Person, whether by acquisition of stock, Debt or other
obligation or Security, or by loan, Guaranty, advance or capital
contribution, or otherwise; or
(b) in any Property.
IRC -- means the Internal Revenue Code of 1986, together with all rules and
regulations promulgated pursuant thereto, as amended from time to time.
Junior Subordinated Debt -- means any Debt of the Company or any Subsidiary
which is:
(a) issued on or after the date of this Agreement and which is
expressly subordinated in right of payment to any Debt of the Company; or
(b) owing to any Subsidiary or any Affiliate.
45
Lien -- means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property (for purposes of this
definition, the "Owner"), whether such interest is based on the common law,
statute or contract, and includes but is not limited to:
(a) the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to
give any of the foregoing;
(b) reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting real Property;
(c) stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements affecting the Owner's rights in
stock owned by the Owner; and
(d) any interest in any Property held by the Owner evidenced by a
conditional sale agreement, Capital Lease or other arrangement pursuant to
which title to such Property has been retained by or vested in some other
Person for security purposes.
The term "Lien" does not include negative pledge clauses in loan agreements and
equal and ratable security clauses in loan agreements.
Material Adverse Effect -- means, with respect to any event or circumstance
(either individually or in the aggregate with all other events and
circumstances), an effect caused thereby or resulting therefrom that would be
materially adverse as to, or in respect of:
(a) the business, operations, profits, financial condition or
Properties of the Company and the Subsidiaries, taken as a whole;
(b) the ability of the Company and the Subsidiary Guarantors, taken as
a whole, to perform their respective obligations under any Financing
Document to which they are a party; or
(c) the validity or enforceability of any of the Financing Documents.
Maximum Legal Rate of Interest -- means the maximum rate of interest that a
holder of Notes may from time to time legally charge the Company by agreement
and in regard to which the Company would be prevented successfully from raising
the claim or defense of usury under the Applicable Interest Law as now or
hereafter construed by courts having appropriate jurisdiction.
Modified Prepayment Compensation Amount -- means, with respect to Prepaid
Principal and the date the payment thereof is due, an amount equal to the
applicable percentage set out below of the Prepaid Principal:
================================================================================
If Prepayment Occurs During
the Period Specified Below: Percentage of Prepaid Principal:
================================================================================
46
================================================================================
--------------------------------------------------------------------------------
From and including March 1, 2001 up to 7.50%
and including February 28, 2002
--------------------------------------------------------------------------------
From and including March 1, 2002 up to 5.00%
and including February 28, 2003
--------------------------------------------------------------------------------
From and including March 1, 2003 up to 2.50%
and including February 28, 2004
--------------------------------------------------------------------------------
On or after March 1, 2004 0.0%
================================================================================
Multiemployer Plan -- means any "multiemployer plan" (as defined in section
3(37) of ERISA) in respect of which the Company or any ERISA Affiliate is an
"employer" (as such term is defined in section 3 of ERISA).
NASDAQ -- means the NASDAQ Stock Market, Inc., a subsidiary of the NASD.
NASDAQ National Market -- has the meaning ascribed thereto in Rule 4200(r)
of NASDAQ.
Nonpayment Default Notice -- Section 7.5(b).
Note -- means and includes each 16.5% Senior Subordinated Note due March 1,
2006 issued pursuant to this Agreement.
Operating Lease -- means, with respect to any Person, any lease other than
a Capital Lease.
Operating Rental Expense -- means, for any Person for any period, all fixed
payments which the lessee is required to make by the terms of any Operating
Lease during such period but shall not include amounts required to be paid in
respect of maintenance, repairs, income taxes, property taxes, insurance,
assessments or other similar charges or additional rentals (in excess of fixed
minimums) based upon a percentage of gross receipts.
Payment Blockage Period -- Section 7.5.
Payment Blockage Period Termination Date -- means, with respect to any
Significant Nonpayment Default, the earliest of:
(a) the passing of a number of days equal to the difference of:
(i) one hundred fifty (150) days; minus
(ii) the aggregate number of days during the three hundred
sixty-five (365) calendar days immediately preceding the date upon
which the Nonpayment Default Notice relating to such Significant
Nonpayment Default during which a payment blockage pursuant to Section
7.5 has been in effect with respect to any other Significant
Nonpayment Default;
since the earlier of:
47
(A) the date upon which the Nonpayment Default Notice was
given; and
(B) the date that any Standstill Period arising out of such
Significant Payment Default commenced;
(b) the date on which such Significant Nonpayment Default shall
have been cured or waived in writing (whether by amendment of any
provision of the Senior Credit Agreement or otherwise) or shall have
ceased to exist;
(c) the date such Payment Blockage Period shall have been
terminated by written notice to the Company from the Senior Agent; and
(d) the date of the repayment in full in cash or cash equivalents
of the Senior Debt and the termination of any commitment to make any
further loans or advances in respect of the Senior Debt.
Payment Default Notice -- Section 7.4.
PBGC -- means the Pension Benefit Guaranty Corporation, or any other Person
succeeding to the duties thereof.
Permitted Investor -- means and includes any Person:
(a) which is a Purchaser;
(b) in connection with the liquidation, dissolution, termination or
other event with respect to any holder of Notes which requires any holder
of Notes to distribute the Notes to the stockholders, shareholders, members
or partners of such holder, each such stockholder, shareholder, member or
partner; or
(c) (i) which meets the criteria for an "accredited investor," as set
forth in either Rule 501(a)(1), Rule 501(a)(2), Rule 501(a)(3), Rule
501(a)(7) or Rule 501(a)(8), in each case, under the Securities Act;
and
(ii) which is not engaged principally in the production or
distribution of dairy products.
Permitted Revolving Credit Debt -- means and includes all Debt incurred
pursuant to an Acceptable Revolving Credit Facility which, at the time of
incurrence thereof, was incurred in compliance with Section 4.7(a).
Person -- means an individual, partnership, corporation, limited liability
company, joint venture, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Plan -- means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the
48
Company or any ERISA Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
Prepaid Principal -- means any portion of the principal amount of any Note
being paid for any reason (including, without limitation, acceleration, optional
payment or mandatory payment required because of the occurrence of a
contingency) prior to its regularly scheduled maturity date.
Prepayment Compensation Amount -- at any time, means:
(a) if such time is prior to March 1, 2001, the Standard Prepayment
Compensation Amount; and
(b) if such time is on or after March 1, 2001, the Modified Prepayment
Compensation Amount.
Pro Forma Consolidated Cash Flow -- means, for any period, Consolidated
Cash Flow for such period; provided, however, that for purposes of calculations
made under Section 4.6 or Section 4.7(b)(v), if:
(a) the proceeds of any Consolidated Debt included in such calculation
made under Section 4.6 or Section 4.7(b)(v) were applied by the Company
either:
(i) to purchase or acquire all of the Capital Stock of any
Person, or all or substantially all of the Property of any Person,
which, as a result of such purchase or acquisition, became a
Subsidiary; or
(ii) as the consideration paid to the former holders of the
Capital Stock of any Person which is merged into the Company or any
Subsidiary; and
(b) both:
(i) audited historical balance sheets, statements of operations
and statements of cash flows are available for a period of one (1)
full fiscal year of the acquired Person ending not more than sixteen
(16) calendar months prior to the date of such acquisition are
available to the Company and the holders of the Notes; and
(ii) either such audited historical financial statements referred
to in clause (i) (whether or not expressly prepared in connection with
such acquisition), or quarterly unaudited balance sheets, statements
of operations and statements of cash flows for such Person prepared in
accordance with GAAP, in conformity with the accounting principles
applied to such audited financial statements of such acquired Person
(subject to year-end adjustments) and which have been the subject of a
review by such acquired Person's independent certified public
accountants in accordance with the provisions of Statement of Auditing
Standards No. 71 (or any successor standard generally accepted by the
accounting profession) covering the period for which Pro Forma
Consolidated Cash Flow is being calculated, are available to the
Company and the holders of the Notes; and
49
(c) such transaction occurred after the first day of such period;
then Pro Forma Consolidated Cash Flow shall be calculated assuming that such
transaction occurred on the first day of such period, and that such acquired
Person was a Subsidiary for the entire period.
Property -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
Purchasers -- the introductory paragraph.
Refinancing -- means and includes, with respect to any Debt, any renewal,
extension, replacement, refinancing or refunding of such Debt; and the terms
"Refinance" and "Refinanced" have correlative meanings.
Remedies -- means and includes, with respect to any Debt (including,
without limitation, the Senior Debt and the Subordinated Debt):
(a) the acceleration of the maturity of any of such Debt;
(b) the exercise of any put right or other similar right to require
the Company or any Subsidiary to repurchase any of such Debt prior to the
stated maturity thereof;
(c) the collection or commencement of proceedings against the Company,
any Subsidiary or any other Person obligated on such Debt or any of their
respective Property, to enforce or collect any of such Debt;
(d) taking possession of or foreclosing upon (whether by judicial
proceedings or otherwise) any Liens or other collateral security for such
Debt; or causing a marshalling of any Property of the Company or any
Subsidiary;
(e) the making of a demand in respect of any Guaranty given by the
Company or any Subsidiary of such Debt; or
(f) exercising any other remedies with respect to such Debt or any
claim with respect thereto.
Required Holders -- means, at any time, the holders of not less than
sixty-six and two-thirds percent (66 2/3%) in principal amount of the Notes at
the time outstanding (exclusive of Notes then owned by any one or more of the
Company, any Subsidiary or any Affiliate).
Required Principal Payment -- Section 1.3(b).
Restricted Investment -- means, at any time, all Investments except the
following:
(a) Property (including, without limitation, real Property and
interests therein) to be used in the ordinary course of business and
current assets arising from the sale of goods and services in the ordinary
course of business of the Company and the Subsidiaries;
50
(b) Investments in one or more Subsidiaries or any corporation that
concurrently with such Investment becomes a Subsidiary;
(c) Investments in direct obligations of the United States of America,
any agency thereof or obligations guaranteed by the United States of
America, so long as such obligations are backed by the full faith and
credit of the United States of America; provided that such obligations
mature within three (3) years from the date of acquisition thereof;
(d) Investments in any obligation of any state or municipality thereof
given either of the two (2) highest ratings by at least one credit rating
agency of recognized national standing and maturing within three (3) years
from the date of acquisition;
(e) Investments in certificates of deposit or banker's acceptances
given one (1) of the two (2) the highest ratings by at least one credit
rating agency of recognized national standing, issued by a bank or trust
company organized under the laws of the United States of America or any
state thereof having capital, surplus and undivided profits aggregating at
least One Hundred Million Dollars ($100,000,000) and maturing within one
(1) year from the date of acquisition;
(f) Investments in money market mutual funds that invest solely in
so-called "money market" instruments maturing not more than one year after
the acquisition thereof and given one of the two (2) the highest ratings by
at least one credit rating agency of recognized national standing;
(g) Investments in commercial paper given either of the two (2)
highest ratings by at least one credit rating agency of recognized national
standing and maturing not more than two hundred seventy (270) days from the
date of creation thereof; and
(h) Investments outstanding on the Closing Date and listed on Part
8.1RI(g) of Annex 3.
Investments shall be valued at cost less any net return of capital through the
sale or liquidation thereof or other return of capital thereon.
Restricted Payment -- means and includes:
(a) any dividend or other distribution, direct or indirect, on account
of any shares of Capital Stock (including, without limitation, the Common
Stock) or Rights of the Company, now or hereafter outstanding, except:
(i) a dividend payable solely in shares of Common Stock; or
(ii) a dividend or other distribution of Common Stock or other
Securities pursuant to the applicable provisions of the Rights
Agreement, as in effect on the date hereof;
(b) any dividend or other distribution, direct or indirect, on account
of any shares of Capital Stock or Rights of any Subsidiary, now or
hereafter outstanding, except:
51
(i) a dividend payable solely in shares of common stock of such
Subsidiary; or
(ii) to the extent that such dividend or distribution is,
directly or indirectly, payable to the Company; and
(c) any payment, whether in respect of principal, premium, interest,
fees, expenses or otherwise, in respect of, or any redemption, retirement,
purchase or other acquisition, direct or indirect, of, any Junior
Subordinated Debt.
Restricted Repurchase -- means and includes:
(a) any redemption, retirement, purchase or other acquisition, direct
or indirect, of any shares of Capital Stock or Rights of the Company now or
hereafter outstanding, except:
(i) in the case of Rights, the retirement of such Rights by
virtue of the exercise or conversion thereof into Common Stock; or
(ii) a redemption of Share Purchase Rights of the Company
pursuant to the redemption provisions of the Rights Agreement; or
(b) any redemption, retirement, purchase or other acquisition, direct
or indirect, of any shares of Capital Stock or Rights of any Subsidiary now
or hereafter outstanding, except to the extent that such redemption,
retirement, purchase or other acquisition is made from, and the payment in
respect of such redemption, retirement, purchase or other acquisition is
paid, directly or indirectly, to the Company.
Right -- with respect to any class of Capital Stock (including, without
limitation, Common Stock) of the Company or any Subsidiary, means and includes:
(a) any warrant (including, without limitation, any Warrant) or any
option (including, without limitation, employee stock options) to acquire
any such Capital Stock;
(b) any right issued to holders of such Capital Stock, permitting such
holders to subscribe to shares of any such Capital Stock or Rights
(pursuant to a rights offering or otherwise);
(c) any right to acquire such Capital Stock pursuant to the provisions
of any Security (including, without limitation, any Series A Preferred
Stock, as and when issued) convertible or exchangeable into such Capital
Stock; and
(d) any similar right permitting the holder thereof to subscribe for
or purchase shares of such Capital Stock.
Rights Agreement -- means the Rights Agreement, dated as of March 6, 1996,
between the Company and Continental Stock Transfer & Trust Company, as Rights
Agent.
Sale-Leaseback Transaction -- means any transaction or series of related
transactions in which the Company or a Subsidiary sells or conveys any of its
Property to any Person (other
52
than the Company, a Subsidiary or an Affiliate) and substantially concurrently
with such sale or conveyance, rents or leases as lessee all or substantially all
of such Property so sold or conveyed.
SEC -- means, at any time, the Securities and Exchange Commission or any
other federal agency at such time administering the Securities Act.
Securities Act -- means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Securities Purchase Agreements -- means the separate Securities Purchase
Agreements each dated as of March 9, 1998, between the Company and each of the
respective Purchasers, relating to the offering and sale of the Notes and the
Warrants.
Security -- means "security" as defined by section 2(1) of the Securities
Act.
Senior Agent -- means, for so long as the Senior Credit Agreement remains
outstanding, Fleet Bank, N.A., as agent in respect of the Senior Credit
Agreement, and thereafter, any one agent or lender in respect of the Senior
Credit Facility, or representative of either, designated in writing to each
holder of Notes by the predecessor Senior Agent and the Company as being the
"Senior Agent".
Senior Credit Agreement -- means the Amended and Restated Revolving Loan,
Guaranty and Security Agreement, dated January 5, 1998, between the Company,
Suprema Specialties West, Inc., a California corporation, Suprema Specialties
Northeast, a New York corporation, and Fleet Bank, N.A., as amended by that
certain letter agreement, dated January 28, 1998, between the Company and Fleet
Bank, N.A. and that certain letter agreement, dated February 23, 1998, between
the Company and Fleet Bank, N.A., and as thereafter amended in compliance with
the provisions of Section 7.16.
Senior Credit Facility -- means and includes:
(a) the Senior Credit Agreement; and
(b) any Acceptable Revolving Credit Facility, which Acceptable
Revolving Credit Facility has Refinanced the Senior Debt governed by the
terms of a Senior Credit Facility which both the Company and the Senior
Agent under the predecessor Senior Credit Facility (or, if no such other
agreement is then in effect, by the Company) have designated in writing to
each holder of Notes as being the "Senior Credit Facility;" provided,
however, that, by making such designation, the predecessor Senior Credit
Facility shall cease to be the Senior Credit Facility (but any Debt
outstanding or incurred thereunder shall continue to be Senior Debt for so
long as such Debt meets the definition thereof).
Senior Debt -- means and includes all obligations, liabilities and
indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal, interest (including interest accruing
after the filing of a petition under the Bankruptcy Code, whether or not
allowed), fees, expenses, indemnification or otherwise, in respect of:
53
(a) the Senior Credit Facility, in a principal amount which, together
with any fees not provided for in the Senior Credit Agreement as in effect
on the date hereof, does not exceed a maximum commitment amount of
Twenty-Seven Million Five Hundred Thousand Dollars ($27,500,000);
(b) Debt and other obligations (including, without limitation,
obligations to make payments of Operating Lease Expense to Fleet Bank,
N.A., arising out of Operating Leases entered into in connection with
Sale-Leaseback Transactions with Fleet Bank, N.A.) outstanding on the
Closing Date and listed as "Senior Debt" on Part 4.7(b) of Annex 3
(c) all Permitted Revolving Credit Debt; and
(d) any other Debt of the Company (including, without limitation,
additional Debt owing to the Senior Agent) other than Permitted Revolving
Credit Debt, incurred in compliance with all provisions of this Agreement;
provided, however, that the Company shall have delivered to each holder of
Notes, at least three (3) Business Days prior to the incurrence thereof, a
certificate of a Senior Financial Officer establishing that such Debt may
be incurred in compliance with the provisions of Section 4.7(b)(v).
Notwithstanding the foregoing, in no event shall "Senior Debt" include any
Junior Subordinated Debt.
Senior Financial Officer -- means any one of the chief financial officer,
the treasurer and the principal accounting officer of the Company.
Senior Officer -- means any one of the chairman of the board of directors,
the chief executive officer, the chief operating officer, and the president, of
the Company.
Senior Payment Default -- Section 7.4(a).
Series A Preferred Stock -- means the Series A Convertible Preferred Stock,
par value $.10 per share, of the Company.
Share Purchase Rights -- means the Common Stock purchase rights issued
pursuant to the Rights Agreement.
Significant Nonpayment Default -- means and includes:
(a) an event of default under the Senior Credit Facility in respect of
the failure of the Company to comply with any material covenant or
agreement in respect of the Senior Credit Facility (it being understood
that the provisions of Sections 10.14 through 10.21, inclusive, Section
10.27 and Section 10.30 of the Senior Credit Agreement, as in effect on the
date hereof, are "material covenants" for such purpose); and
(b) an event of default in respect of the Senior Credit Facility
arising out of any Event of Default in respect of this Agreement.
Specified Stock -- means and includes:
54
(a) the Common Stock; and
(b) any class of Capital Stock of the Company which:
(i) is convertible into Common Stock;
(ii) does not, pursuant to its terms or the terms of any
ancillary agreement or document, require the Company or any Subsidiary
to redeem all or any portion thereof at any time, whether or not
conditioned upon the happening of a contingency, prior to July 1,
2006; and
(iv) does not, pursuant to its terms or the terms of any
ancillary agreement or document, confer upon the holders thereof any
right in respect of the failure of the Company to pay any dividend in
respect thereof (other than cumulation of such dividends or the right
to nominate or otherwise select or participate in the selction of one
or more directors of the Company).
Standard Prepayment Compensation Amount -- means, with respect to Prepaid
Principal and the date the payment thereof is due (the "Payment Date") an amount
equal to the excess (if any) of the Present Value of the Prepaid Cash Flows over
the amount of such Prepaid Principal, determined in respect of such Prepaid
Principal as of such Payment Date. As used in this definition:
Present Value of the Prepaid Cash Flows -- means the sum of the
present values of the then remaining scheduled payments of principal and
interest that would have been payable in respect of such Prepaid Principal
but that are no longer payable as a result of the early payment of such
Prepaid Principal. In determining such present values:
(i) the amount of interest accrued through and including the day
immediately preceding such Payment Date on such Prepaid Principal
since the scheduled interest payment date immediately preceding such
Payment Date shall be deducted from the first of such payments of
interest; and
(ii) a discount rate per annum equal to the Make-Whole Discount
Rate determined with respect to such Prepaid Principal and such
Payment Date divided by twelve (12), and a discount period of one (1)
month, shall be used.
Make-Whole Discount Rate -- means the sum of:
(i) one (1) percent (1.00%) per annum; plus
(ii) the per annum percentage rate (rounded to the nearest three
(3) decimal places) equal to the bond equivalent yield to maturity
derived from the Bloomberg Rate, or if the Bloomberg Rate is not then
available, the Applicable H.15 Rate, determined as of the date that is
two (2) Business Days prior to such Payment Date.
Applicable H.15 -- means, at any time, the United States Federal
Reserve Statistical Release H.15(519) then most recently published and
available to the public, or if such publication is not available, then any
other source of current information in
55
respect of interest rates on securities of the United States of America
that is generally available and, in the reasonable judgment of the Required
Holders, provides information reasonably comparable to the H.15(519)
report.
Applicable H.15 Rate -- means, at any time, the then most current
annual yield to maturity of the hypothetical United States Treasury
obligation listed in the Applicable H.15 with a Treasury Constant Maturity
(as such term is defined in such Applicable H.15) equal to the Weighted
Average Life to Maturity of such Prepaid Principal. If no such United
States Treasury obligation with a Treasury Constant Maturity corresponding
exactly to such Weighted Average Life to Maturity is listed, then the
yields for the two (2) then most current hypothetical United States
Treasury obligations with Treasury Constant Maturities most closely
corresponding to such Weighted Average Life to Maturity (one (1) with a
longer maturity and one (1) with a shorter maturity, if available) shall be
calculated pursuant to the immediately preceding sentence and the
Make-Whole Discount Rate shall be interpolated or extrapolated from such
yields on a straight-line basis.
Bloomberg Rate - means the per annum yield reported on the Bloomberg
Financial Markets System at 10:00 a.m. (New York time) on the second (2nd)
Business Day preceding such Payment Date for United States government
securities having a maturity (rounded to the nearest month) corresponding
to the Weighted Average Life to Maturity of such Prepaid Principal. Page
USD shall be used as the source of such yields, or if not then available,
such other screen available on the Bloomberg Financial Markets System as
shall, in the opinion of the Required Holders, provide equivalent
information.
Treasury Constant Maturity -- has the meaning specified in the
Applicable H.15.
Weighted Average Life to Maturity -- means the number of years
(calculated to the nearest one-twelfth (1/12th)) obtained by dividing the
Remaining Dollar-Years of such Prepaid Principal by such Prepaid Principal,
determined as of such Payment Date.
Remaining Dollar-Years -- means the result obtained by:
(a) multiplying, in the case of each then remaining scheduled
payment of principal that would have been payable in respect of
Prepaid Principal but is no longer payable as a result of the payment
of such Prepaid Principal;
(i) an amount equal to such scheduled payment of principal;
by
(ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such Payment Date and the
date such scheduled principal payment would be due if such
Prepaid Principal had not been so prepaid; and
(b) calculating the sum of each of the products obtained in the
preceding subsection (a).
Standstill Period -- Section 7.7.
56
Subordinated Debt -- means and includes all obligations, liabilities and
indebtedness of the Company now or hereafter existing, whether fixed or
contingent, and whether for principal, interest (including interest accruing
after the filing of a petition under the Bankruptcy Code, to the extent
allowed), fees, expenses, indemnification or otherwise, in respect of this
Agreement and the Notes.
Subsidiary -- means a corporation of which the Company owns, directly or
indirectly, more than fifty percent (50%) (by number of votes) of each class of
Voting Stock.
Subsidiary Guaranty -- means the Unconditional Guaranty, dated as of the
date hereof, entered into by Suprema Specialties West, Inc. and Suprema
Specialties Northeast, Inc., as may be amended, restated or otherwise modified
from time to time in accordance with the terms thereof.
Subsidiary Stock -- Section 4.2(b).
Surviving Corporation -- Section 4.1(a).
Transfers -- Section 4.2(a).
Voting Stock -- means, with respect to any corporation, any shares of stock
of such corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective of whether
at the time any stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency), and, in the case of
the Company, shall include the Common Stock. Except as otherwise provided,
references herein to "Voting Stock" shall mean Voting Stock of the Company.
Warrant -- means each warrant to purchase Common Stock issued pursuant to
the Warrant Agreement.
Warrant Agreement -- means the Warrant Agreement, dated as of March 9,
1998, among the Company and the Purchasers, pursuant to which the Warrants were
issued.
Wholly-Owned Subsidiary -- means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity Securities (except directors' qualifying
shares) and Voting Stock of which are owned by any one or more of the Company
and the Company's other Wholly-Owned Subsidiaries at such time. Other
Definitions
The following terms shall have the respective meanings ascribed to such
terms in the Senior Credit Agreement, as in effect on the Closing Date and
without giving effect to any amendment to the Senior Credit Agreement subsequent
to the date thereof:
Xxxxxxxxx Receivables Letter of Credit
Borrowing Base Certificate Receivables
Inventory
Accounting Principles
57
GenerallyUnless otherwise provided herein, all financial statements
delivered in connection herewith will be prepared in accordance with GAAP.
Where the character or amount of any asset or liability or item of income
or expense, or any consolidation or other accounting computation is
required to be made for any purpose hereunder, it shall be done in
accordance with GAAP; provided, however, that if any term defined herein
includes or excludes amounts, items or concepts that would not be included
in or excluded from such term if such term were defined with reference
solely to GAAP, such term will be deemed to include or exclude such
amounts, items or concepts as set forth herein.
ConsolidationWhenever accounting amounts of a group of Persons are to
be determined "on a consolidated basis" it shall mean that, as to balance
sheet amounts to be determined as of a specific time, the amount that would
appear on a consolidated balance sheet of such Persons prepared as of such
time, and as to income statement amounts to be determined for a specific
period, the amount that would appear on a consolidated income statement of
such Persons prepared in respect of such period, in each case with all
transactions among such Persons eliminated, and prepared in accordance with
GAAP except as otherwise required hereby.
CurrencyWith respect to any determination, consolidation or accounting
computation required hereby, any amounts not denominated in the currency in
which this Agreement specifies shall be converted to such currency in
accordance with the requirements of GAAP (as such requirements relate to
such determination, consolidation or computation) and, if no such
requirements shall exist, converted to such currency in accordance with
normal banking procedures, at the closing rate as reported in The Wall
Street Journal published most recently as of the date of such
determination, consolidation or computation or, if no such quotation shall
then be available, as quoted on such date by any bank or trust company
reasonably acceptable to the Required Holders.
Directly or Indirectly
Where any provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, including
actions taken by or on behalf of any partnership in which such Person is a
general partner.
Section Headings and Table of Contents and Construction
Section Headings and Table of Contents, etc The titles of the Sections
of this Agreement and the Table of Contents of this Agreement appear as a
matter of convenience only, do not constitute a part hereof and shall not
affect the construction hereof. The words "herein," "hereof," "hereunder"
and "hereto" refer to this Agreement as a whole and not to any particular
Section or other subdivision. References to Sections are, unless otherwise
specified, references to Sections of this Agreement. References to Annexes
and Exhibits are, unless otherwise specified, references to Annexes and
Exhibits attached to this Agreement.
ConstructionEach covenant contained herein shall be construed (absent
an express contrary provision herein) as being independent of each other
covenant contained herein, and compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance
with one or more other covenants.
58
Governing Law
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ANY CONFLICTS OF LAW RULES WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF
ANY OTHER JURISDICTION. IN ADDITION, THE PARTIES HERETO SELECT, TO THE EXTENT
THEY MAY LAWFULLY DO SO, THE INTERNAL LAWS OF THE STATE OF NEW YORK AS THE
APPLICABLE INTEREST LAW.
General Interest Provisions
(m) Interest in Respect of the Notes. It is the intention of the
Company and the Purchasers to conform strictly to the Applicable Interest
Law. Accordingly, it is agreed that, notwithstanding any provisions to the
contrary in this Agreement or in the Notes, the aggregate of all interest,
and any other charges or consideration constituting interest under the
Applicable Interest Law that is taken, reserved, contracted for, charged or
received pursuant to this Agreement or the Notes shall under no
circumstances exceed the maximum amount of interest allowed by the
Applicable Interest Law. If any such excess interest is ever charged,
received or collected on account of or relating to this Agreement and the
Notes (including any charge or amount which is not denominated as
"interest" but is legally deemed to be interest under Applicable Interest
Law), then in such event:
(i) the provisions of this Section 8.7 shall govern and control;
(ii) the Company shall not be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount of
interest allowed by the Applicable Interest Law;
(iii) any excess shall be deemed a mistake and cancelled
automatically and, if theretofore paid, shall be credited to the
principal amount of the Notes by the holders thereof, and if the
principal balance of the Notes is paid in full, any remaining excess
shall be forthwith paid to the Company; and
(iv) the effective rate of interest shall be automatically
subject to reduction to the Maximum Legal Rate of Interest.
If at any time thereafter, the Maximum Legal Rate of Interest is increased,
then, to the extent that it shall be permissible under the Applicable
Interest Law, the Company shall forthwith pay to the holders of the Notes,
on a pro rata basis, all amounts of such excess interest that the holders
of the Notes would have been entitled to receive pursuant to the terms of
this Agreement and the Notes had such increased Maximum Legal Rate of
Interest been in effect at all times when such excess interest accrued. To
the extent permitted by the Applicable Interest Law, all sums paid or
agreed to be paid to the holders of the Notes for the use, forbearance or
detention of the indebtedness evidenced thereby shall be amortized,
prorated, allocated and spread throughout the full term of the Notes.
(n) Effect of Issuance of Notes Together with Warrants. The Company
and the Purchasers agree, to the extent permitted by the Applicable
Interest Law, that, for
59
purposes of computing the interest in respect of the Notes under the
Applicable Interest Law:
(i) the aggregate purchase price of the Notes shall equal the
difference of:
(A) Ten Million Five Hundred Thousand Dollars; minus
(B) the amount of original issue discount attributable to
the Notes in respect of the issuance of the Warrants together
with the Notes (but not any original issue discount attributable
at any time to the capitalization of interest in respect of the
Notes);
(ii) the amount of original issue discount attributable to the
Notes in respect of the issuance of the Warrants shall be deemed to be
the purchase price of the Warrants;
(iii) the Warrants and the Notes shall be deemed to have been
separately issued for the respective purchase prices set forth above;
and
(iv) no portion of the return, if any, to the holders of the
Warrants in respect of their investment therein shall be deemed to be
interest in respect of the Notes.
MISCELLANEOUS
Communications
Method; AddressAll communications hereunder or under the Notes shall
be in writing and shall be delivered either by nationwide overnight courier
or by facsimile transmission (confirmed by delivery by nationwide overnight
courier sent on the day of the sending of such facsimile transmission).
Communications to the Company shall be addressed as set forth on Annex 2,
or at such other address of which the Company shall have notified each
holder of Notes. Communications to the holders of the Notes shall be
addressed as set forth on Annex 1 by such holder, or at such other address
of which such holder shall have notified the Company (and the Company shall
record such address in the register for the registration and transfer of
Notes maintained pursuant to Section 2.1).
When GivenAny communication addressed and delivered as herein provided
shall be deemed to be received when actually delivered to the address of
the addressee (whether or not delivery is accepted) or received by the
telecopy machine of the recipient. Any communication not so addressed and
delivered shall be ineffective.
Service of ProcessNotwithstanding the foregoing provisions of this
Section 9.1, service of process in any suit, action or proceeding arising
out of or relating to this agreement or any document, agreement or
transaction contemplated hereby, or any action or proceeding to execute or
otherwise enforce any judgment in respect of any breach hereunder or under
any document or agreement contemplated hereby, shall be delivered in the
manner provided in Section 9.7(c).
Reproduction of Documents
60
This Agreement and all documents relating hereto, including, without
limitation, consents, waivers and modifications that may hereafter be executed,
documents received by the Purchasers at the closing of its purchase of the Notes
(except the Notes themselves), and financial statements, certificates and other
information previously or hereafter furnished to any holder of Notes, may be
reproduced by the Company or any holder of Notes by means of any photographic,
photostatic, microfilm, micro-card, miniature photographic, digital or other
similar process and each holder of Notes may destroy any original document so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by the
Company or such holder of Notes in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. Nothing in this Section 9.2 shall prohibit
the Company or any holder of Notes from contesting the accuracy or validity of
any such reproduction.
Survival; Entire Agreement
All warranties, representations, certifications and covenants contained
herein, in the Securities Purchase Agreements or in any certificate or other
instrument delivered hereunder shall be considered to have been relied upon by
the other parties hereto and shall survive the delivery to the Purchasers of the
Notes regardless of any investigation made by or on behalf of any party hereto.
All statements in any certificate or other instrument delivered pursuant to the
terms hereof or of the Securities Purchase Agreements shall constitute
warranties and representations hereunder. All obligations hereunder (other than
payment of the Notes, but including, without limitation, reimbursement
obligations in respect of costs, expenses and fees) shall survive the payment of
the Notes and the termination hereof. Subject to the preceding sentence, this
Agreement, the Notes and the other Financing Documents embody the entire
agreement and understanding between the Company and the Purchasers, and
supersede all prior agreements and understandings, relating to the subject
matter hereof.
Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder whether or not an express assignment to
such holder of rights hereunder shall have been made by the Purchasers or their
respective successors or assigns. Anything contained in this Section 9.4
notwithstanding, the Company may not assign any of its respective rights, duties
or obligations hereunder or under any of the other Financing Documents without
the prior written consent of all holders of Notes. For purposes of the avoidance
of doubt, any holder of a Note shall be permitted to pledge or otherwise xxxxx x
Xxxx in and to such Note (including, without limitation, pledging such Note to a
trustee for the benefit of certain secured noteholders pursuant to documents
relating to the financing of such holder or to one or more banks or other
institutions providing financing in connection with the purchase by such holder
of such Note); provided, however, that any such pledgee or holder of a Lien
shall not be considered a holder hereunder until it shall have foreclosed upon
such Note in accordance with applicable law and informed the Company, in
writing, of the same.
Amendment and Waiver
RequirementsThis Agreement may be amended, and the observance of any
term hereof may be waived, with (and only with) the written consent of the
Company and the Required Holders; provided, however, that no such amendment
or waiver shall, without
61
the written consent of the holders of all Notes (exclusive of Notes held by
the Company, any Subsidiary or any Affiliate) at the time outstanding;
(v) change the amount or time of any prepayment or payment of
principal or Prepayment Compensation Amount or the rate or time of
payment of interest;
(vi) amend or waive the provisions of Section 6.1, Section 6.2,
Section 6.3 or Section 7, or amend or waive any defined term to the
extent used therein;
(vii) amend or waive the definition of "Required Holders" or
otherwise amend the percentage of Notes required to be held by holders
of Notes consenting to any action under this Agreement; or
(viii) amend or waive this Section 9.5 or amend or waive any
defined term to the extent used herein.
The holder of any Note may specify that any such written consent executed
by it shall be effective only with respect to a portion of the Notes held
by it (in which case it shall specify, by dollar amount, the aggregate
principal amount of Notes with respect to which such consent shall be
effective) and in the event of any such specification such holder shall be
deemed to have executed such written consent only with respect to the
portion of the Notes so specified.
No amendment, supplement or modification of the provisions of Section
7, or any defined term to the extent used therein, shall be effective to
any holder of Senior Debt who has not consented to such amendment,
supplement or modification.
Solicitation of Noteholders
SolicitationEach holder of the Notes (irrespective of the amount
of Notes then owned by it) shall be provided by the Company with all
material information provided by the Company to any other holder of
Notes with respect to any proposed waiver or amendment of any of the
provisions hereof or the Notes. Executed or true and correct copies of
any amendment or waiver effected pursuant to the provisions of this
Section 9.5 shall be delivered by the Company to each holder of
outstanding Notes forthwith following the date on which such amendment
or waiver becomes effective.
PaymentThe Company shall not, nor shall any Subsidiary or
Affiliate, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any of the provisions
hereof or of the Notes unless such remuneration is concurrently paid,
or security is concurrently granted, on the same terms, ratably to the
holders of all Notes then outstanding.
62
Scope of Consent Any amendment or waiver made pursuant to this
Section 9.5 by a holder of Notes that has transferred or has agreed to
transfer its Notes to the Company, any Subsidiary or any Affiliate and
has provided or has agreed to provide such amendment or waiver as a
condition to such transfer shall be void and of no force and effect
except solely as to such holder, and any amendments effected or
waivers granted that would not have been or would not be so effected
or granted but for such amendment or waiver (and the amendments or
waivers of all other holders of Notes that were acquired under the
same or similar conditions) shall be void and of no force and effect,
retroactive to the date such amendment or waiver initially took or
takes effect, except solely as to such holder.
Binding EffectExcept as provided in Section 9.5(b)(iii), any amendment
or waiver consented to as provided in this Section 9.5 shall apply equally
to all holders of Notes and shall be binding upon them and upon each future
holder of any Note and upon the Company whether or not such Note shall have
been marked to indicate such amendment or waiver. No such amendment or
waiver shall extend to or affect any obligation, covenant, agreement,
Default or Event of Default not expressly amended or waived or impair any
right consequent thereon.
Expenses
Amendments and WaiversThe Company shall pay when billed the reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the
holders of the Notes in connection with the consideration, negotiation,
preparation or execution of any amendments, waivers, consents, standstill
agreements and other similar agreements with respect to this Agreement or
any other Financing Document (whether or not any such amendments, waivers,
consents, standstill agreements or other similar agreements are executed).
Restructuring and Workout, InspectionsAt any time when the Company and
the holders of Notes are conducting restructuring or workout negotiations
in respect hereof, or a Default or Event of Default exists, the Company
shall pay when billed the reasonable costs and expenses (including
reasonable attorneys' fees and the fees of professional advisors) incurred
by the holders of the Notes in connection with the assessment, analysis or
enforcement of any rights or remedies that are or may be available to the
holders of Notes, including, without limitation, in connection with
inspections made pursuant to Section 5.5; provided, however, that at all
other times inspections will be at the expense of the inspecting holder of
Notes.
CollectionIf the Company shall fail to pay when due any principal of,
or Prepayment Compensation Amount or interest on, any Note, the Company
shall pay to each holder of Notes, to the extent permitted by law, such
amounts as shall be sufficient to cover the costs and expenses, including
but not limited to reasonable attorneys' fees, incurred by such holder in
collecting any sums due on such Note.
Waiver of Jury Trial; Consent to Jurisdiction, etc
Waiver of Jury TrialTHE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN
63
CONNECTION WITH THIS AGREEMENT OR ANY OF THE DOCUMENTS, AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY.
Consent to JurisdictionANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR ANY OF THE DOCUMENTS, AGREEMENTS OR
TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER THIS
AGREEMENT OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY MAY BE BROUGHT
BY SUCH PARTY IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK COUNTY, NEW
YORK, OR ANY NEW YORK STATE COURT LOCATED IN NEW YORK COUNTY, NEW YORK AS
SUCH PARTY MAY IN ITS SOLE DISCRETION ELECT, AND BY THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY SUBMIT TO THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF
EACH SUCH COURT, AND EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AND
AGREES NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE
IN PERSONAM JURISDICTION OF ANY SUCH COURT. IN ADDITION, EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY DOCUMENT, AGREEMENT OR TRANSACTION CONTEMPLATED HEREBY BROUGHT IN
ANY SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
Service of ProcessEACH PARTY HERETO IRREVOCABLY AGREES THAT PROCESS
PERSONALLY SERVED OR SERVED BY U.S. REGISTERED MAIL AT THE ADDRESSES
PROVIDED HEREIN FOR NOTICES SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY
LAW, ADEQUATE SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT, AGREEMENT OR
TRANSACTION CONTEMPLATED HEREBY, OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR UNDER
ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY. RECEIPT OF PROCESS SO SERVED
SHALL BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED
BY THE UNITED STATES POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE.
Other ForumsNOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF ANY HOLDER OF NOTES TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN
ANY MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE
COMPANY IN SUCH OTHER JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE
PERMITTED BY APPLICABLE LAW.
Execution in Counterpart
This Agreement may be executed in one or more counterparts and shall be
effective when at least one counterpart shall have been executed by each party
hereto, and each set of
64
counterparts that, collectively, show execution by each party hereto shall
constitute one duplicate original.
[Remainder of page intentionally blank. Next page is signature page.]
65
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered by one of its duly authorized
officers or representatives.
SUPREMA SPECIALTIES, INC.
By:
---------------------------------------------
Name:
Title:
ALBION ALLIANCE MEZZANINE FUND,
L.P.
By: Albion Alliance LLC, its General Partner
By:
---------------------------------------------
Name:
Title:
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By:
---------------------------------------------
Name:
Title:
ANNEX 1
ADDRESSES OF PURCHASERS; PAYMENT INSTRUCTIONS
=========================================================================================================
Purchaser Name ALBION ALLIANCE MEZZANINE FUND, L.P.
---------------------------------------------------------------------------------------------------------
Name in which Note is ALBION ALLIANCE MEZZANINE FUND, L.P.
Registered
---------------------------------------------------------------------------------------------------------
Subordinated Note R-1: $8,500,000
Registration Number;
Principal Amount of Note
---------------------------------------------------------------------------------------------------------
Payments on Account of
Note
Method Federal Funds Wire Transfer
Account Information Chase Manhattan Bank, N.A.
Xxx Xxxx, Xxx Xxxx 00000
ABA # 021 000 021
For the Account: Albion Alliance Mezzanine Fund, L.P.
Account #000-0-000000
---------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: SUPREMA SPECIALTIES, INC.
Description of
Security: 16.5% Senior Subordinated Notes
due March 1, 2006
PPN: 86859F A* 8
Due Date and Application (as among
principal, premium and interest) of
the payment being made:
---------------------------------------------------------------------------------------------------------
Address for Notices Related Albion Alliance Mezzanine Fund, L.P.
to Payments c/o Alliance Capital Management, L.P.
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Cash Operations
---------------------------------------------------------------------------------------------------------
Address for All Other Albion Alliance Mezzanine Fund, L.P.
Notices c/o Albion Alliance LLC
1345 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Xx.
(000) 000-0000 - Phone
(000) 000-0000 - Fax
---------------------------------------------------------------------------------------------------------
Xxxxx 0-0
XXXXX 0
XXXXXXXXX XX XXXXXXXXXX; PAYMENT INSTRUCTIONS (Cont.)
=========================================================================================================
Purchaser Name ALBION ALLIANCE MEZZANINE FUND, L.P.
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
Other Instructions Signature Page Format:
ALBION ALLIANCE MEZZANINE FUND, L.P.
By: Albion Alliance LLC, its General Partner
By___________________________
Name:
Title:
---------------------------------------------------------------------------------------------------------
Tax Identification Number 00-0000000
=========================================================================================================
Annex 1-2
ANNEX 1
ADDRESSES OF PURCHASERS; PAYMENT INSTRUCTIONS (Cont.)
=========================================================================================================
Purchaser Name THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
---------------------------------------------------------------------------------------------------------
Name in which Note is THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
Registered UNITED STATES
---------------------------------------------------------------------------------------------------------
Subordinated Note R-2: $2,000,000
Registration Number;
Principal Amount of Note
---------------------------------------------------------------------------------------------------------
Payments on Account of
Note
Method Federal Funds Wire Transfer
Account Information The Chase Manhattan Bank, N.A.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA # 021 000 021
For the Account: The Equitable Life Assurance Society of
the United States
Account No. 000-0-000000
---------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: SUPREMA SPECIALTIES, INC.
Description of
Security: 16.5% Senior Subordinated Notes
due March 1, 2006
PPN: 86859F A* 8
Due Date and Application (as among
principal, premium and interest) of
the payment being made:
---------------------------------------------------------------------------------------------------------
Address for Notices Related The Equitable Life Assurance Society of
to Payments the United States
c/o Alliance Capital Management, L.P.
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Treasury Services
---------------------------------------------------------------------------------------------------------
Annex 1-3
ANNEX 1
ADDRESSES OF PURCHASERS; PAYMENT INSTRUCTIONS (Cont.)
=========================================================================================================
Purchaser Name THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
---------------------------------------------------------------------------------------------------------
Address for All Other The Equitable Life Assurance Society of
Notices the United States
c/o Alliance Capital Management, L.P.
1345 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Alliance Corporate Finance Group Inc.
(000) 000-0000 - Phone
(000) 000-0000 - Fax
---------------------------------------------------------------------------------------------------------
Other Instructions Signature Page Format:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
By___________________________
Name:
Title:
---------------------------------------------------------------------------------------------------------
Tax Identification Number 00-0000000
=========================================================================================================
Annex 1-4
ANNEX 2
ADDRESS OF COMPANY
Suprema Specialties
000 Xxxx 00xx Xxxxxx
X.X. Xxx 000 Xxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: President
Attachment 2-1
ANNEX 3
EXISTING LIENS, DEBT AND INVESTMENTS
Part 4.3; Existing Liens
[TO BE PROVIDED BY THE COMPANY]
Part 4.7(d); Existing Debt
[TO BE PROVIDED BY THE COMPANY]
Part 8.1RI(g); Existing Investments
[TO BE PROVIDED BY THE COMPANY]
Annex 3-1
ATTACHMENT A
[FORM OF NOTE]
THE NOTE AGREEMENT REFERRED TO IN THIS NOTE CONTAINS, AMONG OTHER THINGS,
PROVISIONS WHICH LIMIT THE TRANSFER OF THIS SECURITY. A COPY OF THE NOTE
AGREEMENT IS AVAILABLE FROM THE COMPANY UPON REQUEST.
SUPREMA SPECIALTIES, INC.
16.5% SENIOR SUBORDINATED NOTE DUE MARCH 1, 2006
No. R-__ PPN: 86859F A* 8
$__________ ______________ __, ____
SUPREMA SPECIALTIES, INC. (together with its successors, the "Company"), a
New York corporation, for value received, hereby promises to pay to ______ or
registered assigns the principal sum of ______ DOLLARS ($______) on March 1,
2006, and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the unpaid principal balance hereof from the date of this Note
at the rate of sixteen and fifty one-hundredths percent (16.5%) per annum, in
arrears, monthly on the first day of each calendar month in each year,
commencing on the later of April 1, 1998 and the payment date next succeeding
the date hereof, until the principal amount hereof shall become due and payable;
and to pay on demand interest on any overdue principal (including any overdue
partial payment of principal and principal payable at the maturity hereof) and
Prepayment Compensation Amount, if any, and (to the extent permitted by
applicable law) on any overdue installment of interest (the due date of such
payments to be determined without giving effect to any grace period), at a rate
per annum equal to the lesser of (a) the highest rate allowed by applicable law
and (b) the greater of (i) eighteen and fifty one-hundredths percent (18.5%),
and (ii) two percent (2%) over the rate of interest publicly announced from time
to time by Xxxxxx Guaranty Trust Company of New York in New York, New York as
its "base" or "prime" rate. The Company may pay a portion of such scheduled
interest payments by adding it to the outstanding principal amount of this Note,
in lieu of paying such interest in cash, all as further provided in Section 1.2
of the Note Agreement (defined below).
Payments of principal, Prepayment Compensation Amount, if any, and interest
shall be made in such coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and private debts to
the registered holder hereof at the address shown in the register maintained by
the Company for such purpose, in the manner provided in the Note Agreement
(defined below).
This Note is one of an issue of Notes of the Company issued in an aggregate
principal amount limited to Ten Million Five Hundred Thousand Dollars
($10,500,000) pursuant to the Note Agreement (as may be amended, restated or
otherwise modified from time to time, the "Note Agreement"), dated as of March
9, 1998, among the Company and the purchasers listed on Annex 1 thereto. The
holder of this Note is entitled to the benefits of the Note Agreement. This Note
is subject to the terms of the Note Agreement, and such terms are incorporated
herein by reference. Capitalized terms used herein and not defined herein have
the meanings specified in the Note Agreement.
Attachment A-1
As provided in the Note Agreement, this Note is subject to prepayment, in
whole or in part, in certain cases without a Prepayment Compensation Amount and
in other cases with a Prepayment Compensation Amount, on the terms and subject
to the conditions set forth in the Note Agreement. The holder of this Note, on
the terms and subject to the conditions set forth in the Note Agreement, may
elect to have the Company prepay the entire principal amount of this Note
(together with any applicable Prepayment Compensation Amount) in connection with
a Change in Management. All of the principal of this Note (together with any
applicable Prepayment Compensation Amount) may, under certain circumstances, be
declared due and payable in the manner and with the effect provided in the Note
Agreement.
The holder of this Note is hereby authorized by the Company to record (in
good faith) in its manual or data processing records, and/or on Schedule A
annexed to this Note, the date and amount of each addition of capitalized
interest to principal, and the date and amount of each repayment of such
principal and each payment of interest on account of such outstanding principal.
In the absence of manifest error, such records and Schedule shall be conclusive
as to the outstanding principal amount of this Note and the payment of interest
accrued hereunder; provided, that the failure to make any such record entry with
respect to any addition of capitalized interest to principal or any payment of
principal or interest shall not limit or otherwise affect the obligations of the
Company under this Note.
The Notes and all other obligations of the Company under the Note Agreement
have been unconditionally guarantied by certain Subsidiaries pursuant to the
Unconditional Guaranty, dated as of March 9, 1998.
This Note is a registered Note and is transferable only by surrender at the
principal office of the Company as specified in the Note Agreement, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
THE OBLIGATIONS EVIDENCED BY THIS NOTE ARE SUBORDINATED TO THE SENIOR DEBT
ON THE TERMS PROVIDED IN THE NOTE AGREEMENT.
THIS NOTE AND THE NOTE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SUPREMA SPECIALTIES, INC.
By:
---------------------------------
Name:
Title:
Attachment A-2
SCHEDULE A TO NOTE NO. R-___
===================================================================================================================================
Date of Cash Original Amount of Amount of Amount of Aggregate
Interest Payment Balance of Interest Paid in Interest Added Principal Unpaid
or Principal Principal Cash to Principal Prepaid Balance of
Addition or Principal
Payment/Initials
of Person
Making Entry
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Attachment A-3
