1
EXHIBIT 10.16
LOAN FACILITY AGREEMENT
BY AND AMONG
FLOWERS INDUSTRIES, INC.,
SUNTRUST BANK, ATLANTA
AND
EACH OF THE PARTICIPANTS PARTY HERETO
DATED AS OF NOVEMBER 5, 1999
2
AMENDED AND RESTATED
LOAN FACILITY AGREEMENT
Table of Contents
PAGE
ARTICLE I. DEFINITIONS.................................................................................2
SECTION 1.01. Definitions...............................................................................2
SECTION 1.02. Accounting Terms.........................................................................18
ARTICLE II. LOAN FACILITY; COMMITMENT TO MAKE LOANS....................................................18
SECTION 2.01. Loan Facility............................................................................18
SECTION 2.02. Conveyance of Participant's Interest.....................................................19
SECTION 2.03. Funding of Loans; Swing Line; Funding of Participant's Interest in Loans.................20
SECTION 2.04. Fees ....................................................................................22
SECTION 2.05. Interest on Funded Participant's Interest................................................22
SECTION 2.06. Payments and Computations, Etc...........................................................23
SECTION 2.07. Voluntary Reduction of the Unutilized Commitment.........................................24
SECTION 2.08. Extension of Commitment..................................................................24
SECTION 2.09. Pro Rata Treatment.......................................................................25
SECTION 2.10. Sharing of Setoffs.......................................................................25
ARTICLE III DISTRIBUTION OF PAYMENTS...................................................................26
SECTION 3.01. Flowers' Servicing Obligations with Respect to Loans; Collateral; Non-Recourse...........26
SECTION 3.02. Bank's Obligations with Respect to Loans and Collateral..................................27
SECTION 3.03. Application of Payments..................................................................27
SECTION 3.04. Servicing Report and Distributor Status Report...........................................28
ARTICLE IV. REQUIREMENTS OF NOTES......................................................................28
SECTION 4.01. Notes....................................................................................28
SECTION 4.02. Repurchase of Ineligible Notes...........................................................30
ARTICLE V. REPURCHASE OBLIGATION OF FLOWERS WITH RESPECT TO DEFAULTED LOANS...........................31
SECTION 5.01. Repurchase Obligation of Flowers.........................................................31
SECTION 5.02. Transfer of Notes........................................................................31
SECTION 5.03. Reliance on Repurchase Obligation........................................................32
SECTION 5.04. Certain Waivers..........................................................................32
SECTION 5.05. Bankruptcy Rescission....................................................................33
ARTICLE VI. CONDITIONS OF LOANS........................................................................33
3
ARTICLE VII. REPRESENTATIONS AND WARRANTIES.............................................................34
SECTION 7.01. Corporate Existence and Power............................................................34
SECTION 7.02. Corporate and Governmental Authorization; No Contravention...............................34
SECTION 7.03. Binding Effect...........................................................................35
SECTION 7.04. Financial Information....................................................................35
SECTION 7.05. No Litigation............................................................................35
SECTION 7.06. Compliance with ERISA....................................................................35
SECTION 7.07. Compliance with Laws; Payment of Taxes...................................................35
SECTION 7.08. Subsidiaries.............................................................................36
SECTION 7.09. Investment Company Act...................................................................36
SECTION 7.10. Public Utility Holding Company Act.......................................................36
SECTION 7.11. Ownership of Property; Liens.............................................................37
SECTION 7.12. No Default...............................................................................37
SECTION 7.13. Full Disclosure..........................................................................37
SECTION 7.14. Environmental Matters....................................................................37
SECTION 7.15. Capital Stock............................................................................38
SECTION 7.16. Margin Stock.............................................................................38
SECTION 7.17. Insurance................................................................................38
SECTION 7.18. Notes; Books and Records.................................................................38
SECTION 7.19. Y2K Plan.................................................................................39
ARTICLE VIII. COVENANTS..................................................................................39
SECTION 8.01. Information..............................................................................39
SECTION 8.02. Inspection of Property, Books and Records................................................41
SECTION 8.03. Maintenance of Existence.................................................................42
SECTION 8.04. Consolidations, Mergers and Sales of Assets..............................................42
SECTION 8.05. Use of Proceeds..........................................................................43
SECTION 8.06. Compliance with Laws; Payment of Taxes...................................................43
SECTION 8.07. Insurance................................................................................44
SECTION 8.08. Change in Fiscal Year....................................................................44
SECTION 8.09. Maintenance of Property..................................................................44
SECTION 8.10. Environmental Notices....................................................................44
SECTION 8.11. Environmental Matters....................................................................44
SECTION 8.12. Environmental Release....................................................................45
SECTION 8.13. Transactions with Affiliates.............................................................45
SECTION 8.14. Loans or Advances........................................................................45
SECTION 8.15. Investments..............................................................................46
SECTION 8.16. Negative Pledge..........................................................................46
SECTION 8.17. Adjusted Fixed Charges Coverage Ratio....................................................48
SECTION 8.18. Leverage Ratio...........................................................................48
SECTION 8.19. Minimum Consolidated Net Worth...........................................................49
SECTION 8.20. Minimum Adjusted Consolidated EBDITA.....................................................49
SECTION 8.21. Subsidiary Borrowings....................................................................49
iii
4
SECTION 8.22. Collateral Protection Covenants..........................................................49
SECTION 8.23. Separateness from Unrestricted Subsidiaries..............................................50
SECTION 8.24. Year 2000 Compliance.....................................................................51
ARTICLE IX. EVENTS OF DEFAULT AND ESCROW FUNDING OBLIGATION............................................52
SECTION 9.01. Events of Default........................................................................52
SECTION 9.02. Remedies on Default......................................................................54
ARTICLE X. ESCROW FUNDING OBLIGATION AND ESCROW.......................................................56
SECTION 10.01 Appointment of Escrow Agent..............................................................56
SECTION 10.02 Deposit of Escrow Funds..................................................................56
SECTION 10.03 The Escrow Account.......................................................................56
SECTION 10.04 Payments of Repurchase Price for Defaulted Loans.........................................56
SECTION 10.05 Reduction of Amount in Escrow............................................................56
SECTION 10.06 Fees and Expenses of Escrow Agent........................................................57
SECTION 10.07 Liability of Escrow Agent................................................................57
ARTICLE XI. THE BANK...................................................................................58
SECTION 11.01. Appointment of the Bank as Agent.........................................................58
SECTION 11.02. Nature of Duties of the Bank.............................................................58
SECTION 11.03. Lack of Reliance on the Bank.............................................................59
SECTION 11.04. Certain Rights of the Bank...............................................................59
SECTION 11.05. Reliance by the Bank.....................................................................59
SECTION 11.06. Indemnification of the Bank..............................................................60
SECTION 11.07. The Bank in its Individual Capacity......................................................60
SECTION 11.08. Holders of Participation Certificates....................................................60
ARTICLE XII. MISCELLANEOUS..............................................................................60
SECTION 12.01. No Waiver................................................................................60
SECTION 12.02. Notices..................................................................................61
SECTION 12.03. Governing Law............................................................................61
SECTION 12.04. Survival of Representations and Warranties...............................................62
SECTION 12.05. Descriptive Headings.....................................................................62
SECTION 12.06. Severability.............................................................................62
SECTION 12.07. Time is of the Essence...................................................................62
SECTION 12.08. Counterparts.............................................................................62
SECTION 12.09. Payment of Costs.........................................................................62
SECTION 12.10. Benefit of Agreement; Assignments; Participations........................................63
SECTION 12.11. Third Party Beneficiaries................................................................64
SECTION 12.12. Cumulative Remedies; No Waiver...........................................................64
SECTION 12.13. Amendments; Consents.....................................................................64
SECTION 12.14. Set-Off..................................................................................65
SECTION 12.15. Indemnity................................................................................65
SECTION 12.16. Jurisdiction and Venue...................................................................65
iv
5
SECTION 12.17. Waiver of Jury Trial.....................................................................66
SECTION 12.18. Effect on Existing Loan Facility Agreement; Execution of New Loan Documents..............66
SECTION 12.19. Termination of Agreement.................................................................66
Exhibits:
Exhibit "A" - Form of Bank Note
Exhibit "B" - Form of Distributor's Agreement
Exhibit "C" - Form of Funding Approval Notice
Exhibit "D" - Form of Participation Certificate
Exhibit "E" - Form of Weekly Statement
Exhibit "F" - Form of Weekly Servicing Report to Participants
Exhibit "G" - Form of Opinion
Exhibit "H" - Form of Compliance Certificate
Schedules:
Schedule 5.01 - Quarterly Threshold Amount and Non-Guaranteed Amount
Schedule 7.08 - Subsidiaries
v
6
LOAN FACILITY AGREEMENT
THIS LOAN FACILITY AGREEMENT ("Agreement") is entered into as of the
5th day of November, 1999, by and among FLOWERS INDUSTRIES, INC. ("Flowers"), a
Georgia corporation having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, SUNTRUST BANK, ATLANTA a Georgia banking corporation
(the "Bank"), and SunTrust Bank, Atlanta and each of the other lending
institutions listed on the signature pages hereto (SunTrust Bank, Atlanta and
such lenders, together with any assignees thereof becoming "Participants"
pursuant to the terms of this Agreement, the "Participants").
WITNESSETH:
WHEREAS, Flowers has established a loan program with the Bank pursuant
to that certain Note Purchase, Loan Commitment and Servicing Agreement dated as
of September 20, 1996, as amended by that First Amendment to Note Purchase, Loan
Commitment and Servicing Agreement, dated as of January 2, 1997, as amended by
the Second Amendment to Note Purchase, Loan Commitment and Servicing Agreement,
dated as of January 15, 1997, as amended by the Third Amendment to Note
Purchase, Loan Commitment and Servicing Agreement, dated as of August 17, 1998,
as amended by the Fourth Amendment to Note Purchase, Loan Commitment and
Servicing Agreement, dated as of September 25, 1998, by the Bank and as amended
by the Fifth Amendment to Note Purchase, Loan Commitment and Servicing
Agreement, dated as of July 16, 1999, by and among Flowers and the Bank, and as
amended by the Sixth Amendment to Note Purchase Loan Commitment and Servicing
Agreement, dated as of October 8, 1999, by and among Flowers and the Bank (the
"Existing Loan Facility Agreement") to provide loans to certain distributors of
Flowers and its Subsidiaries;
WHEREAS, Flowers has requested that the Bank increase its Commitment
(as defined under the Existing Loan Facility Agreement) and make certain other
changes to the Existing Loan Facility Agreement, and the Bank is willing to do
so subject to the replacement of the Existing Loan Facility Agreement with this
Agreement, pursuant to which the Participants shall purchase participations in
the Commitment and the loans to distributors of Flowers and its Subsidiaries
outstanding thereunder, and subject to the other terms and conditions hereof;
WHEREAS, the Participants and the Bank desire Flowers to service all
such loans upon the terms and conditions set forth in the Servicing Agreement,
dated as of the date hereof, by and between Flowers and the Bank, as the same
may be amended, restated, supplemented or otherwise modified from time to time
(the "Servicing Agreement"); and
WHEREAS, Flowers is willing, subject to the limitations set forth
herein, to repurchase such loans upon the occurrence of certain events, and is
willing to escrow funds for such repurchase, all as more fully set forth below;
NOW, THEREFORE, upon the terms and conditions hereinafter stated, and
in consideration of the mutual premises set forth above and other adequate
consideration, the receipt
7
and sufficiency of which is hereby acknowledged, Flowers and the Bank agree that
the Existing Loan Facility Agreement is hereby replaced in its entirety by this
Agreement, and Flowers, the Bank and the Participants, intending to be legally
bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Definitions. In addition to the other terms defined
herein, the following terms used herein shall have the meanings herein specified
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
"Adjusted Consolidated EBITDA" means at any time the sum of the
following, determined on a consolidated basis for Flowers and its Restricted
Subsidiaries, at the end of each Fiscal Quarter: (i) Adjusted Consolidated Net
Income; plus (ii) Adjusted Consolidated Interest Expense; plus (iii) taxes on
income; plus (iv) depreciation; plus (v) amortization; plus (vi) without
duplication, other non-cash charges.
"Adjusted Consolidated Fixed Charges" means at any date the sum of (i)
Adjusted Consolidated Interest Expense for the 4 Fiscal Quarter period used in
the calculation of Adjusted Consolidated Net Income for the determination of
Adjusted EBILT, and (ii) all payment obligations of Flowers and the Restricted
Subsidiaries for such period under all operating leases and rental agreements.
"Adjusted Consolidated Interest Expense" for any period means interest,
whether expensed or capitalized, in respect of Indebtedness of Flowers or any of
the Restricted Subsidiaries outstanding during such period.
"Adjusted Consolidated Net Income" means, for any period, the Net
Income of Flowers and its Restricted Subsidiaries determined on a consolidated
basis, but excluding (i) extraordinary items, (ii) any equity interests of
Flowers or any Restricted Subsidiary in the unremitted earnings of any Person
that is not a Subsidiary, (iii) ▇▇▇▇ to market adjustments made in connection
with Flowers' commodities hedging program in accordance with GAAP and (iv)
non-recurring charges of $64,461,000 incurred in the 4th Fiscal Quarter of the
1998 Fiscal Year.
"Adjusted Consolidated Net Worth" means the Net Worth of Flowers and
the Subsidiaries, with all Unrestricted Subsidiaries being accounted for on an
equity basis of accounting, and otherwise determined on a consolidated basis in
accordance with GAAP.
"Adjusted Consolidated Total Assets" means, at any time, the total
assets of Flowers and its Restricted Subsidiaries, with any investments in
Unrestricted Subsidiaries included as assets as
2
8
if all Unrestricted Subsidiaries were being accounted for on an equity basis of
accounting, determined in all other respects on a consolidated basis in
accordance with GAAP.
"Adjusted Consolidated Total Debt" means the aggregate of all
Indebtedness (except that, for purposes of determining Adjusted Consolidated
Total Debt, letters of credit and similar instruments described in clause (e) of
the definition of Indebtedness shall be included only to the extent they have
maturities greater than 1 year) of Flowers and the Restricted Subsidiaries on a
consolidated basis in accordance with GAAP, excluding, however, any Convertible
Redeemable Capital Stock or Convertible Subordinated Debt if the current market
value of an equity security into which such Convertible Redeemable Capital Stock
or Convertible Subordinated Debt is convertible is greater than the conversion
price for such security.
"Adjusted EBILT" means at any date the sum of (i) Adjusted Consolidated
Net Income for any 4 of the last 6 Fiscal Quarters ending prior to the date of
measurement, such 4 Fiscal Quarters to be selected by Flowers, plus (ii) the sum
of Adjusted Consolidated Fixed Charges and taxes on income (including deferred
taxes) for the same 4 Fiscal Quarters.
"Adjusted Total Capitalization" means the sum of (i) Adjusted
Consolidated Total Debt and (ii) Adjusted Consolidated Net Worth.
"Affiliate" of any relevant Person means (i) any Person that directly,
or indirectly through one or more intermediaries, controls the relevant Person
(a "Controlling Person"), (ii) any Person (other than the relevant Person or a
Subsidiary of the relevant Person) which is controlled by or is under common
control with a Controlling Person, or (iii) any Person (other than a Subsidiary
of the relevant Person) of which the relevant Person owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" means this Loan Facility Agreement, either as originally
executed or as it may be from time to time supplemented, amended, renewed,
extended or otherwise modified.
"Authorized Signatory" means an officer of Flowers named in the most
recent Certificate Regarding Authorized Signatories delivered to the Bank.
"Business Day" means a day of the year on which commercial banks are
not required or authorized to close in Atlanta, Georgia.
"Capital Stock" means any nonredeemable capital stock of Flowers or any
Consolidated Subsidiary (to the extent issued to a Person other than Flowers),
whether common or preferred.
3
9
"Capitalized Lease" means any lease which is required to be capitalized
on the balance sheet of the lessee pursuant to GAAP but shall exclude any lease
which at the time of its incurrence was an operating lease for purposes of GAAP
as in effect at such time.
"CERCLA" means the Comprehensive Environmental Response compensation
and Liability Act, 42 U.S.C.ss.9601 et. seq. and its implementing regulations
and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Closing Certificate" means a certificate of an officer of Flowers
delivered pursuant to Section 6(g).
"Closing Date" means November 5, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Collateral" means the property of a Distributor subject to a security
interest or lien which secures a Loan, which shall include all accounts
receivable, inventory and other business assets of the Distributor, and all
property and assets of any guarantor subject to such a security interest or lien
in favor of the Bank as security for obligations incurred pursuant to its
guaranty.
"Collections" means, with respect to any Loan, all cash collections and
other cash proceeds received in connection therewith, including without
limitation, all Payments, Insurance Proceeds and Liquidation Proceeds.
"Commitment" has the meaning set forth in Section 2.01(b).
"Commitment Fee" has the meaning set forth in Section 2.04.
"Commitment Termination Date" has the meaning set forth in Section
2.01(b).
"Compliance Certificate" has the meaning set forth in Section 8.01(c).
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of Flowers in its consolidated financial statements as of such date.
"Consolidated Total Assets" means, at any time, the total assets of
Flowers and its Consolidated Subsidiaries, determined on a consolidated basis,
as set forth or reflected on the most recent consolidated balance sheet of
Flowers and its Consolidated Subsidiaries, prepared in accordance with GAAP.
4
10
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Flowers, are treated as a single employer
under Section 414 of the Code.
"Convertible Redeemable Capital Stock" means any Capital Stock that by
its terms (or by the terms of any agreement by which, or equity security into
which, it is convertible or for which it is exchangeable or any other agreement)
or upon the happening of any event matures or is or will become mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the option of the holder thereof, in whole or in part, or is exchangeable for
or convertible into an equity security of Flowers.
"Convertible Subordinated Debt" means any Indebtedness of Flowers (i)
which is and remains subordinated in right of payment to the obligations of
Flowers hereunder and (ii) which by its terms is exchangeable for or convertible
into an equity security of Flowers.
"Customary Practices" means Flowers' or any of the Selling
Subsidiaries' normal and customary practices with respect to the approval,
servicing and administration of the Loans, as in effect from time to time, which
practices shall be consistent with the standard approval, servicing and
administration policies employed by Flowers with respect to all Loans held by it
in its own portfolio as of the Closing Date, including without limitation, the
policies and procedures set forth in the Policies and Procedures Manual
delivered to the Bank on the Closing Date.
"Cut-Off Date" means (i) as of the Closing Date, November 5, 1999 and
(ii) with respect to each Statement delivered after the Closing Date, the second
preceding Saturday to the relevant Payment Date.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Interest" has the meaning set forth in Section 2.06(b).
"Defaulted Loan" has the meaning set forth in Section 5.01.
"Distributor" means a Person or Persons obligated on an outstanding
Loan, whether the Person that originally executed and delivered the Note and the
Distributor's Agreement underlying such Loan, or any Person or Persons that
assumes such Loan.
"Distributor Loan Documents" means (i) with respect to each Purchased
Loan, a loan application, a Note duly endorsed to the order of the Bank, a
recorded UCC-1 financing statement, a guaranty, if any, and a Distributor's
Agreement containing a security interest securing the Note, assigned to the
Bank, (ii) with respect to each Existing Loan, other than a Purchased Loan, a
loan application, a Note in favor of the Bank, a security agreement, a recorded
UCC-1 financing statement, a guaranty, if any, and a disbursement and set-off
authorization and (iii) with respect to
5
11
each Loan made on or after the Closing Date, a Note in favor of the Bank, and a
recorded UCC-1 financing statement.
"Distributor Loan File" means the files maintained by Flowers, which
shall include true and correct copies of the Distributor Loan Documents
pertaining to a particular Loan and any additional documents required to be
added to the Distributor Loan File pursuant to this Agreement.
"Distributor Loan Interest Rate" means the annual rate at which
interest accrues on any Loan, which rate shall be, in the case of any Purchased
Loan, the rate set forth in the Purchased Note and, in the case of any other
Loan, twelve percent (12.0%) per annum, calculated on the basis of a 360-day
year for the actual number of days elapsed (or 12.1667% per annum calculated on
the basis of a 365-day year for the actual number of days elapsed).
"Distributor Route" means, in respect of a Distributor for whom a Loan
is outstanding, the contractual right of such Distributor to distribute products
of Flowers or its Subsidiaries in a specified geographic location set forth in a
Distributor's Agreement, together with all "Distributor's Rights" (as such term
is defined therein) and the related accounts receivable, inventory and equipment
securing a Loan.
"Distributor's Agreement" means the contractual arrangement between
Flowers or one of the Selling Subsidiaries with a Distributor for whom a Loan is
outstanding whereby such Distributor agrees to distribute Flowers' product in a
specified geographic location and Flowers or one of its Subsidiaries agrees to
provide the Distributor with product and other services, including its
Proprietary Administrative Services, such agreement to be substantially in the
form of Exhibit "B" attached hereto.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Eligible Assignee" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof having total assets in excess
of $1,000,000,000.00 or any commercial finance or asset-based lending Affiliate
of any such commercial bank and (ii) any Participant.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of Flowers or any Restricted Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent, or written agreements with an
Environmental Agency or other entity arising from or in
6
12
any way associated with any Environmental Requirement, whether or not
incorporated in a judgment, decree or order.
"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to Flowers, any Restricted
Subsidiary or the Properties, including but not limited to any such requirement
under CERCLA or similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any provision
of ERISA shall also be deemed to be a reference to any successor provision or
provisions thereof.
"Escrow Account" shall have the meaning set forth in Section 10.02.
"Escrow Agent" shall have the meaning set forth in Section 10.01.
"Escrow Funding Obligation" shall mean Flowers' obligation to put
immediately available funds in escrow described in Article X in the amount of
the Maximum Recourse Amount at the time such escrow is required to be funded,
and the ongoing obligation of Flowers to increase such funds on the first day of
each Fiscal Quarter as set forth in Section 10.02.
"Event of Default" has the meaning set forth in Section 9.01.
"Existing Loan Facility Agreement" has the meaning set forth in the
Recital paragraphs to this Agreement.
"Existing Loan" means any of the Purchased Loans and the loans to
Distributors made by the Bank pursuant to the Existing Loan Facility Agreement
as in effect from time to time.
7
13
"Existing Note" means any of the Purchased Notes or the promissory
notes from the Distributors to the Bank substantially in the form attached to
the Existing Loan Facility Agreement as in effect from time to time.
"Federal Funds Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of Atlanta, or, if such rate
is not so published for any day that is a Business Day, the average quotations
for the day of such transactions received by the Bank from three federal funds
brokers of recognized standing selected by it.
"Fiscal Quarter" means any fiscal quarter of Flowers.
"Fiscal Year" means any fiscal year of Flowers.
"Flower's Credit Agreement" means that certain $500,000,000 Amended and
Restated Credit Agreement, dated as of January 30, 1998, among Flowers, the
Banks listed therein, Wachovia Bank, N.A., as Bank, Bank of Nova Scotia, as
Documentation Bank and NationsBank, N.A., as Syndications Bank, as from time to
time in effect.
"Flowers Security Agreement" means the Security Agreement, dated as of
September 20, 1996, executed by Flowers and certain of its Subsidiaries in favor
of the Bank, as amended by that certain First Amendment to Security Agreement,
dated as of the date hereof, by and among Flowers, such Subsidiaries and the
Bank.
"Funded Participant's Interest" means the aggregate outstanding amount
of Participant Fundings made by a Participant hereunder with respect to the
Loans, and shall include, with respect to the Bank, the aggregate outstanding
amount of Swing Line Loans made with respect to Loans.
"Funding Approval Notice" means a written notice from Flowers or a
Selling Subsidiary to the Bank setting forth an authorization for a Loan,
containing such information required by, and in substantially the form of,
Exhibit "C" attached hereto, appropriately completed.
"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"General Assignment" shall mean, collectively, each assignment from
each of Flowers and the Selling Subsidiaries, dated as of the Note Purchase
Date, assigning and transferring to the Bank each of the Purchased Loans and
collateral therefor owned by such Person.
8
14
"Guaranty" means, with respect to any Person, 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, dividends or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such Indebtedness or obligation or any
property constituting security therefore;
(b) to advance or supply funds (i) for the purchase or payment
of such Indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such Indebtedness or obligations;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of any other Person to make payment of the
Indebtedness or obligation; or
(d) otherwise to assure the owner of such Indebtedness or
obligations against loss in respect thereof.
In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. ss. 6901 et seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", pollutant", or "contaminant" as defined in CERCLA, or in
any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Indebtedness" with respect to any Person means, at any time, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising in
the ordinary course of business but
9
15
including all liabilities created or arising under any conditional sale
or other title retention agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capitalized Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of
a type described in any clauses (a) through (f) hereof.
"Ineligible Note" has the meaning set forth in Section 4.02.
"Insurance Proceeds" means proceeds of any insurance payable to Flowers
or a Selling Subsidiary in connection with a Distribution Route securing a Loan
unless such proceeds are released to the Distributor in accordance with
Customary Practices or are paid to Flowers or a Selling Subsidiary pursuant to a
liability policy.
"Interest Period" means, with respect to the calculation of LIBOR
hereunder, a period of one month, initially commencing on July 20, 1999;
provided that, (i) the first day of any Interest Period must be a Business Day,
(ii) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case the Interest Period
shall end on the next preceding Business Day, and (iii) the first day of each
succeeding Interest Period shall be the last day of the preceding Interest
Period.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guaranty or assumption of any obligation of such
Person or otherwise.
"Keebler" means Keebler Foods Company, a Delaware corporation with its
principal place of business in Elmhurst, Illinois.
"Keebler Acquisition" means, collectively, the acquisition by Flowers
(i) from Artal ▇▇▇▇▇▇▇▇▇ ▇.▇., pursuant to a Stock Purchase Agreement dated as
of January 28, 1998, of an
10
16
aggregate of 9,581,169 shares of common capital stock in Keebler, and (ii) from
Bermore Limited, pursuant to a Stock Purchase and Stockholder's Agreement dated
as of January 28, 1998, of an aggregate of 1,616,691 shares of common capital
stock in Keebler, as a result of which, after giving effect to the Keebler
Accession, Flowers will own approximately 51% of the common capital stock of
Keebler, on a fully-diluted basis.
"Leverage Ratio" means the ratio of Adjusted Consolidated Total Debt to
Adjusted Total Capitalization.
"LIBOR" means, for each Interest Period, the offered rate for deposits
in Dollars determined by the Bank for the Interest Period appearing on Telerate
Page 3750 as of 11:00 a.m. (London, England time) on the day that is two
Business Days prior to the first day of such Interest Period. If the foregoing
rate is unavailable from the Telerate for any reason, then such rate shall be
determined by the Bank from the Reuters Screen LIBO Page as of 11:00 a.m.
(London, England time) on the day that is two Business Days prior to the first
day of such Interest Period; if two or more of such rates appear on the Reuters
Screen LIBO Page, the rate shall be the arithmetic mean of such rates. If the
foregoing rate is also unavailable from the Reuters Screen for any reason, then
such rate shall be determined by the Bank on any other interest rate reporting
service of recognized standing designated in writing by the Bank to Flowers, in
any such case rounded, if necessary, to the next higher 1/16 of 1.0%, if the
rate is not such a multiple. If a Reserve Percentage becomes applicable, LIBOR
shall be appropriately adjusted.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Indebtedness or a
Guaranty, whether by consensual agreement or by operation of statute or other
law, or by any agreement, contingent or otherwise, to provide any of the
foregoing. For the purposes of this Agreement, Flowers or any Subsidiary shall
be deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease or other title retention agreement relating to such
asset.
"Liquidation Proceeds" means all amounts collected by Flowers or a
Selling Subsidiary, individually or as agent for the Bank, with respect to a
Defaulted Loan (other than Insurance Proceeds).
"Loan" means any of the Existing Loans or the New Loans.
"Loan Closing Date" means, with respect to any Loan, the date on which
the documents governing such Loan are executed and delivered and such Loan is
funded.
"Loan Default" means an occurrence with respect to a Loan which is
defined by the applicable Distributor Loan Documents to be an event of default.
11
17
"Loan Indebtedness" means all amounts due and payable by a Distributor
under the terms of the Distributor Loan Documents for a given Loan, including,
without limitation, outstanding principal, accrued interest, any commitment
fees, and all reasonable costs and expenses of any legal proceeding brought by
the Bank to collect any of the foregoing (including without limitation,
reasonable attorneys' fees actually incurred).
"Loan Payment Default" means the failure of a Distributor to make a
payment of principal, accrued interest thereon or any other amounts, within the
cure period following the due date therefor, as provided under the applicable
Loan Documents.
"Margin Stock" means "margin stock" as defined in Regulations T, U or X
of the Board of Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations issued
thereunder.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business or properties of Flowers and its
Consolidated Subsidiaries taken as a whole, (b) the rights and remedies of the
Bank under the Distributor Loan Documents generally, this Agreement, the
Servicing Agreement or the Flowers Security Agreement or the ability of Flowers
or any Selling Subsidiary to perform its obligations under the Distributor Loan
Documents generally, this Agreement, the Servicing Agreement or the Flowers
Security Agreement, as applicable, or (c) the legality, validity or
enforceability of the Distributor Loan Documents generally, this Agreement, the
Servicing Agreement or the Flowers Security Agreement.
"Material Subsidiary" means, as of each date of determination, any
Restricted Subsidiary that would at such time constitute a "significant
subsidiary" (as such term is defined in Regulation S-X of the Securities and
Exchange Commission as in effect on the Closing Date) of the Company.
"Maximum Commitment Amount" means $80,000,000, as such amount may be
reduced pursuant to Section 2.07.
"Maximum Recourse Amount" means, as of any date of determination, the
greater of (i) the Quarterly Threshold Amount in effect as of such date, and
(ii) (x) the aggregate Principal Balance of the Loans outstanding hereunder on
such date minus (y) the applicable Non-Guaranteed Amount as of such date.
"Mission Critical Systems and Equipment" means Flowers and its
Subsidiaries' hardware and software systems, and equipment relating to the
operation of its business and its general business plan, including, without
limitation, equipment in addition to computers, and with respect to which, the
failure to properly function would have a Material Adverse Effect.
12
18
"Multiemployer Plan" has the meaning set forth in Section 4001(a) (3)
of ERISA.
"Net Income" means, as applied to any Person for any Period the
aggregate amount of net income of such Person, after taxes, for such period, as
determined in accordance with GAAP.
"Net Proceeds of Capital Stock" means any proceeds received by Flowers
or a Consolidated Subsidiary in respect of the issuance of Capital Stock, after
deducting therefrom all reasonable and customary costs and expenses incurred by
Flowers or such Consolidated Subsidiary directly in connection with the issuance
of such Capital Stock.
"Net Worth" of any Person means the Total Assets of such Person less
all liabilities of such Person which would be shown as liabilities on a balance
sheet of such Person as of such time prepared in accordance with GAAP.
"New Loan" means any loan made by the Bank to a Distributor pursuant to
the terms hereof and of the Servicing Agreement, on or after the Closing Date.
"New Note" means a promissory note from a Distributor to the Bank
substantially in the form of Exhibit "A" attached hereto, evidencing a New Loan.
"Non-Guaranteed Amount" means, for any period, the amount set forth on
Schedule 5.01 for such period.
"Note Purchase Date" means September 20, 1996, the date on which the
Bank purchased the Purchased Notes from Flowers and the Selling Subsidiaries.
"Notes" means, collectively, the Existing Notes and the New Notes.
"Operating Profits" means, as applied to any Person for any period, the
operating income of such Person for such period, as determined in accordance
with GAAP.
"Participating Commitment" means the amount set forth opposite each
Participant's name on the signature pages hereof, as such amount may be modified
by assignment pursuant to the terms hereof; provided that, following the
termination of the Commitment, each Participant's Participating Commitment shall
be deemed to be its Pro Rata Share of the aggregate Loans.
"Participant Funding" means a funding by the Participants of their Pro
Rata Share of Loans.
"Participant Funding Request" has the meaning set forth in Section
2.03(b).
"Participant's Interest" has the meaning set forth in Section 2.02.
13
19
"Participant's Unused Commitment" means, with respect to any
Participant, the difference between such Participant's Participating Commitment
and such Participant's Funded Participant's Interest.
"Participation Certificate" means, a certificate issued by the Bank to
a Participant, substantially in the form of Exhibit "D" attached hereto,
evidencing such Participant's ownership interest conveyed hereunder.
"Payment" means any Scheduled Payment or Prepayment of a Loan.
"Payment Date" means the first Business Day of each calendar week.
"Payment Period" means (i) initially, the period commencing on the
Closing Date and ending on the date immediately prior to the next Payment Date
and (ii) thereafter, the period commencing on each Payment Date and ending on
the next Payment Date.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means commercial paper, certificates of deposit
or repurchase agreements of banks organized under the laws of the United States
with a long term debt rating of A+ or better by Standard & Poor's, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc. or ▇▇▇▇▇'▇ Investors Services, Inc., United States Treasury
bills and other obligations of the United States government, each with a term of
one year or less.
"Permitted Keebler Investments" means: (i) the Keebler Acquisition; and
(ii) additional shares of common capital stock in Keebler acquired from time to
time (a) from third parties in the open market, (b) from Bermore Limited and
Artal ▇▇▇▇▇▇▇▇▇ ▇.▇. in private transactions, (c) from management of Keebler in
private transactions and/or (d) from Keebler as part of an offering of stock by
Keebler (whether public or private), but in the case of this clause (d), only to
the extent necessary for Flowers to maintain ownership of at least 51% of the
common capital stock of Keebler, on a fully-diluted basis.
"Person" means an individual, a corporation, a partnership, an
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
14
20
"Preferred Stock" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the Payment of any amount upon liquidation or
dissolution of such corporation.
"Prepayment" means any full or partial prepayment of principal together
with accrued and unpaid interest thereon any Loan.
"Principal Balance" means, with respect to any Loan, the outstanding
principal balance of such Loan after application of any Payment, Insurance
Proceeds or Liquidation Proceeds received as of such date.
"Program Documents" means and include, as the context requires, this
Agreement, the Servicing Agreement, the Flowers Security Agreement, the General
Assignment, the Distributor Loan Documents and any and all other instruments,
agreements, documents and writings contemplated hereby or executed in connection
herewith or the Notes.
"Properties" means all real property owned, leased or otherwise used or
occupied by Flowers or any Restricted Subsidiary, wherever located.
"Proprietary Administrative Services" means all right, title and
interest of the Flowers and its Subsidiaries in and to all books, records,
computer software, customer lists, computer equipment and other personal
property used in connection with the proprietary administrative services
provided to the Distributors.
"Pro Rata Share" means, with respect to each of the Participants, the
percentage designated as such Participant's Pro Rata Share on the signature
pages hereof, as such percentage may change from time to time as a result of
assignments or amendments pursuant to this Agreement.
"Purchased Loans" shall mean all loans made by Flowers or any Selling
Subsidiary to their Distributors to finance the purchase of Distributor Routes
secured by a first priority lien on such Distributor Routes, and conveyed,
assigned and sold to Bank pursuant to the Existing Loan Facility Agreement.
"Purchased Notes" shall mean all promissory notes of Distributors
initially owned and held by Flowers and the Selling Subsidiaries evidencing
Purchased Loans.
"Quarterly Payment Date" means the last day of each calendar quarter.
"Quarterly Threshold Amount" means, for any period, the amount set
forth on Schedule 5.01 for such period.
"Repurchase Price" has the meaning set forth in Section 5.01.
15
21
"Required Participants" means, at any time, the Participants holding at
least 66 2/3% of the sum of (x) aggregate Funded Participant's Interests, plus
(y) the Participant's Unused Commitments, or, following the termination of the
Commitment, the Participants holding at least 66 2/3% of the aggregate
outstanding Funded Participant's Interests at such time.
"Reserve Percentage" means, for any day, the stated maximum rate
(expressed as a decimal) of all reserves required to be maintained with respect
to liabilities or assets consisting of or including "Eurocurrency liabilities,"
as prescribed by Regulation D of the Board of Governors of the Federal Reserve
System (or by any other governmental body having jurisdiction with respect
thereto), including, without limitation, any basic, marginal, emergency,
supplemental, special, transitional or other reserves, the rate so determined to
be rounded upward to the nearest whole multiple of 1/100 of 1%.
"Responsible Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of Flowers, and any other officer
of Flowers with responsibility for the administration of the relevant portion of
this Agreement or the Distributor Loan Documents.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referenced Person that is not an Unrestricted Subsidiary.
"Reuters Screen" means, when used in connection with any designated
page and LIBOR, the display page so designated on the Reuter Monitor Money Rates
Service (or such other page as may replace that page on that service for the
purpose of displaying rates comparable to LIBOR).
"Scheduled Payment" means the weekly payment of principal and interest
which is payable by a Distributor from time to time with respect to a Loan.
"Selling Subsidiary" means, on any date, each Subsidiary of Flowers in
respect of which there is outstanding on such date a Loan to one or more
Distributors of such Selling Subsidiary.
"Servicer" means Flowers unless and until Flowers is removed as
Servicer pursuant to the Servicing Agreement.
"Servicer Advance" has the meaning set forth in the Servicing Agreement
"Servicing Agreement" means that certain Servicing Agreement, dated as
of the date hereof, by and between Flowers and the Bank, as amended, restated,
supplemented or otherwise modified from time to time.
"Statement" means the weekly report prepared for the Bank by the
Servicer, substantially in the form of Exhibit "E" attached hereto.
16
22
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by Flowers.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended Fiscal Quarter of such Person,
based on the assumption that such Swap had terminated at the end of such Fiscal
Quarter, and in making such determination, if any agreement relating to such
Swap 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
obligation shall be the net amount so determined.
"Swing Line Loan" has the meaning set forth in Section 2.03(a).
"Telerate" means, when used in connection with any designated page and
LIBOR, the display page so designated on the Telerate, Inc. Service (or such
other page as may replace that page on that service for the purpose of
displaying rates comparable to LIBOR).
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the ordinary
course of Flowers' business and on a temporary basis.
"Total Assets" means, with respect to any Person at any time, the total
assets of such Person as set forth or reflected on the most recent consolidated
balance sheet of such Person, prepared in accordance with GAAP.
"Total Capitalization" means the sum of (i) Consolidated Total Debt and
(ii) Consolidated Net Worth.
"Unfunded Vested Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets applicable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the PBGC
or the Plan under Title IV of ERISA.
"Unrestricted Subsidiary" means, so long as Keebler is a Subsidiary,
Keebler, or any of its Subsidiaries, and "Unrestricted Subsidiaries" means,
collectively, Keebler and its Subsidiaries.
"Upfront Fee" has the meaning set forth in Section 2.4(a).
17
23
"Wholly Owned Subsidiary" means any Subsidiary all of the shares of
capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by Flowers.
"Y2K Plan" has the meaning set forth in Section 7.19.
"Year 2000 Compliant and Ready" means that (a) Flowers and its
Subsidiaries hardware and software systems with respect to the operation of its
business will, in all material respects: (i) handle date information involving
any and all dates before, during and after January 1, 2000, including accepting
input, providing output and performing date calculations in whole or in part;
(ii) operate, accurately without unscheduled interruption on and in respect of
any and all dates before, during and after January 1, 2000 and without any
change in performance; and (iii) store and provide date input information
without creating any ambiguity as to the century; and (b) Flowers has developed
alternative plans to ensure business continuity in the event of the failure of
any or all of items (i) through (iii) in clause (a) above in this definition.
SECTION 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed as having the respective meanings customary
under GAAP consistently applied from and after the date of this Agreement.
ARTICLE II.
LOAN FACILITY; COMMITMENT TO MAKE LOANS
SECTION 2.01. Loan Facility
(a) Subject to this Agreement becoming effective, all Existing Loans
are hereby deemed to be outstanding as Loans under the Commitment and this
Agreement.
(b) Subject to and upon the terms and conditions set forth in this
Agreement, the Bank hereby agrees to make Loans to such Distributors as may be
named by Flowers or any Selling Subsidiary in its Funding Approval Notices
received during the period on or after the Closing Date but prior to November 3,
2000 (as such period may be extended pursuant to Section 2.08 hereto, the
"Commitment Termination Date"), in an aggregate principal amount at any one time
outstanding not to exceed an amount equal to the Maximum Commitment Amount (the
"Commitment").
(c) Within the limits of the Commitment and in accordance with the
procedures set forth in the Servicing Agreement, Flowers may authorize the Bank
to make Loans under the terms of this Agreement for its Distributors in
accordance with its Customary Practices. Each Loan shall be for a term of not
more than ten (10) years, to be amortized in equal weekly payments of principal
and interest. Each Loan shall bear interest at a fixed rate per annum equal to
the
18
24
Distributor Loan Interest Rate. Each Loan may be prepaid at any time by the
Distributor without penalty or premium, but with interest accrued thereon on the
amount prepaid.
(d) The Bank's obligation to make a Loan under the Distributor Loan
Documents is subject to the fulfillment of the following conditions as of the
Loan Closing Date of such Loan:
(i) this Agreement and each of the other Program Documents
shall be in full force and effect;
(ii) the representations and warranties of Flowers contained
in Article VII hereof shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on the Loan Closing Date of such Loan;
(iii) the Bank shall have received a Funding Approval Notice
executed by Flowers or the appropriate Selling Subsidiary authorizing
such Loan, the original Note evidencing such Loan executed by the
Distributor and a copy of the UCC-1 Financing Statement executed by the
Distributor;
(iv) all precedents and conditions to the Loan specified in
the Servicing Agreement shall have been satisfied or waived by the
Bank; and
(v) no Event of Default or Default exists or would result
therefrom.
In addition, if the Subsidiary of Flowers which is party to the
Distributor's Agreement is not a Selling Subsidiary, Flowers shall cause such
Subsidiary to become a party to the Flowers Security Agreement and to execute
such UCC-1 financing statements as the Bank shall reasonably require in
connection therewith.
SECTION 2.02. Conveyance of Participant's Interest.
(a) The Bank hereby sells, assigns, transfers and conveys to the
Participants, without recourse or warranty, and each Participant hereby
purchases from the Bank, an undivided percentage ownership interest (which
percentage shall be equal to each Participant's Pro Rata Share) in (i) the
Commitment, (ii) the Loans, including, without limitation, the Existing Loans,
(iii) the benefit of the Collateral, (iv) all rights against any guarantor of
any Loan, including Flowers, (v) the Distributor Loan Documents, (vi) all rights
pursuant to any guaranty of the obligations of Flowers hereunder and (viii) all
right, title and interest to any payment or right to receive payment with
respect to the foregoing (collectively, the "Participant's Interest").
Notwithstanding the foregoing, each Participant's right to receive payments of
interest, commitment fees or other fees with respect to the Commitment and the
Loans shall not exceed the amounts which such Participant is entitled to receive
pursuant to the terms of this Agreement.
(b) In consideration of the entry by each Participant into this
Agreement and the obligation of each Participant hereunder, the Bank shall issue
a Participation Certificate to each
19
25
Participant on the Closing Date. Each Participation Certificate shall evidence
such Participant's Participating Commitment, and the Funded Participant's
Interest outstanding thereunder shall bear interest as hereinafter set forth and
shall be payable as hereinafter set forth.
(c) In accordance with the terms and conditions hereof, and in
consideration of the sale of the Participant's Interest to such Participant,
each Participant severally agrees from time to time, during the period
commencing on the Closing Date and ending on the Commitment Termination Date to
fund its Pro Rata Share of outstanding Loans made by the Bank to the
Distributors in an aggregate amount at any one time outstanding not to exceed
such Participant's Participating Commitment (subject to each Participant's
obligations pursuant to Section 2.03(d) hereof).
(d) The Bank (i) represents and warrants to each Participant that it is
the legal and beneficial owner of the Participant's Interest being conveyed to
such Participant, and that such Participant's Interest is free and clear of any
lien or other encumbrance; (ii) makes no representation or warranty to any
Participant, and assumes no responsibility with respect to, any statements,
warranties or representations made by Flowers or any of its Subsidiaries in or
in connection with this Agreement and the other Program Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto;
and (iii) makes no representation or warranty to any Participant, and assumes no
responsibility, with respect to the financial condition of the Flowers, any of
its Subsidiaries or any of the Distributors, or the performance or observance by
the Flowers, any of its Subsidiaries or any of the Distributors of any of their
obligations under this Agreement, any other Program Documents, any of the
Distributor Loan Documents or any other instrument or document furnished
pursuant hereto or thereto.
(e) Each Participant (i) confirms that it has received a copy of this
Agreement and the other Program Documents, together with copies of the financial
statements referred to in Section 7.04 of this Agreement and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Agreement; and (ii) agrees that it
will, independently and without reliance upon the Bank or any other Participant
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Program Documents.
SECTION 2.03. Funding of Loans; Swing Line; Funding of Participant's
Interest in Loans.
(a) The Bank shall fund Loans requested by Flowers in accordance with
the terms of the Funding Approval Notice, the applicable Distributor Loan
Documents and the Servicing Agreement. On the date of any such funding, the Bank
shall elect whether or not to require the Participants to fund their respective
Pro Rata Share of such Loan or Loans to be made on such date. In the event that
the Bank elects not to require the Participants to fund their Pro Rata Share of
the Loans on such date, the Bank shall make such Loans (each, a "Swing Line
Loan") to the
20
26
Distributors for the account of the Bank; provided that, the aggregate amount of
Swing Line Loans outstanding on any date shall not exceed $10,000,000 and
further provided that the sum of (x) the aggregate outstanding Swing Line Loans
plus (y) the aggregate outstanding Funded Participant's Interests (exclusive of
the Swing Line Loans) shall not exceed the Maximum Commitment Amount. If (i) any
Event of Default shall have occurred, (ii) after giving effect to any requested
Loan, the aggregate Swing Line Loans outstanding hereunder would exceed
$10,000,000, or (iii) the Bank otherwise determines in its sole discretion to
request a Participant Funding hereunder, then the Bank shall notify the
Participants pursuant to subsection (b) requesting a Participant Funding.
(b) In the event that the Bank desires that the Participants fund their
respective Pro Rata Shares of Loans made or outstanding pursuant to the
Distributor Loan Documents, the Bank shall deliver written or telecopy notice to
the Participants (or telephonic notice promptly confirmed in writing or by
telecopy) (a "Participant Funding Request") by no later than 10:00 a.m.
(Atlanta, Georgia time) on the date which is the requested date of the
Participant Funding which shall specify (x) the date of the Participant Funding,
which shall be a Business Day, and (y) each Participant's Pro Rata Share of the
Loans outstanding to be funded in connection with such Participant Funding.
(c) Each Participant shall make its Participant Funding in the amount
of its Pro Rata Share on the proposed date thereof by wire transfer of
immediately available funds to the Bank in Atlanta, Georgia by not later than
2:00 P.M. (Atlanta, Georgia time). Unless the Bank shall have received notice
from a Participant prior to the date of any Participant Funding that such
Participant will not make available to the Bank such Participant's Pro Rata
Share of such Participant Funding, the Bank may assume that the Participant has
made such portion available to the Bank on the date of such Participant Funding
in accordance with this subsection (c) and the Bank may, in reliance on such
assumption, make available to the Distributors a corresponding amount. If and to
the extent that such Participant shall not have made such portion available to
the Bank, such Participant and Flowers shall severally agree to repay the Bank
forthwith (on demand in the case of the Participant and within three (3) days of
such demand in the case of Flowers), without duplication, such amount with
interest at the Federal Funds Rate plus 2% per annum and, until such time as
such Participant has repaid to the Bank such amount, such Participant shall (i)
have no right to vote regarding any issue on which voting is required or
advisable under this Agreement or the other Program Documents, and (ii) shall
not be entitled to receive any payments of interest, fees or repayment of the
principal amount of such Loans which the Participant has failed to pay to the
Bank. If such Participant repays such amount to the Bank, then such amount shall
constitute part of such Participant's Funded Participant's Interest. If Flowers
repays such amount to the Bank, the Bank shall assign Notes back to Flowers in
accordance with Section 5.02 hereof in an aggregate principal amount as close
to, but not exceeding, the amount of such payment, and Flowers will be deemed to
have purchased a participation in the Funded Participant's Interest of the
non-paying Participant to the extent of the excess.
(d) Each Participant's obligations to fund its Pro Rata Share of any
requested Participant Funding shall be absolute and unconditional and shall not
be affected by any
21
27
circumstance, including, without limitation, (i) any setoff, counterclaim,
recoupment, defense, or other right which such Participant may have against the
Bank, Flowers or any Distributor or any other Person for any reason whatsoever,
(ii) the occurrence of any Default or Event of Default, (iii) the occurrence of
any Loan Default, (iv) the occurrence of any Repurchase Obligation pursuant to
Section 5.01 hereof, (v) any adverse change in the condition (financial or
otherwise) of Flowers or any other Subsidiary or any Distributor, (vi) the
acceleration or maturity of any Loan or Flowers' obligations hereunder or the
termination of the Commitment or the Participating Commitments after the making
of any Swing Line Loans, (vii) any breach of this Agreement by Flowers or any
other Participant, or (viii) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
(e) Notwithstanding the foregoing provisions of this Section 2.03, no
Participant shall be required to fund its Pro Rata Share of any requested
Participant Funding for purposes of refunding a Swing Line Loan pursuant to
subsection (d) above if a Loan Default with respect to the relevant Loan has
occurred and is continuing and, prior to the making by the Bank of such Swing
Line Loan, the Bank had received written notice from Flowers, the relevant
Distributor or any Participant specifying that such Loan Default had occurred
and was continuing (and identifying the same as a Loan Default, as the case may
be) which has not been cured or waived; provided that, in the case of a Loan
Default arising from a Default or Event of Default where the Participants are
not pursuing remedies, the Participants will be obligated to fund their
respective Pro Rata Shares of Swing Line Loans as long as the aggregate amount
of such Swing Line Loans does not exceed $5,000,000.
SECTION 2.04. Fees.
(a) Flowers shall pay to the Bank, for the ratable benefit of the
Participants, on the Closing Date, an upfront fee (the "Upfront Fee") in an
amount equal to $400,000. Promptly upon the Bank's receipt thereof, the Bank
shall promptly pay the Upfront Fee to the Participants, pro rata based on their
respective Pro Rata Shares.
(b) Flowers shall pay to the Bank, for the ratable benefit of the
Participants, quarterly in arrears on each Quarterly Payment Date, commencing on
September 30, 1999 and continuing thereafter, a commitment fee (the "Commitment
Fee") in an amount equal to one eighth of one percent per annum (0.125%) per
annum multiplied by the average daily amount of the Participant's Unused
Commitments during the calendar quarter ending on such Quarterly Payment Date,
for the period commencing on the Closing Date and ending on the Commitment
Termination Date, or such earlier date as the Participating Commitments shall
expire or terminate. Promptly upon the Bank's receipt thereof, the Bank shall
promptly pay the Commitment Fee to the Participants, pro rata based on their
respective Pro Rata Shares.
SECTION 2.05. Interest on Funded Participant's Interest.
(a) Subject to Section 2.06, the Bank shall pay to the Participants,
pro rata based upon their respective Pro Rata Shares, weekly in arrears on each
Payment Date, interest on the
22
28
Participant's Funded Participant's Interests in an amount equal to the sum of
(a) with respect to the average daily Maximum Recourse Amount for the week
ending on such Payment Date, the amount of interest which would have accrued
thereon during such week at a rate of interest equal to LIBOR plus one and
one-eighth of one percent (1.125%) per annum and (b) with respect to the
remaining aggregate Principal Balance of the Loans, the amount of interest which
would have accrued thereon during such week at a rate of interest equal to LIBOR
plus one and five-eighths of one percent (1.625%) per annum.
(b) Interest on the Participant's Funded Participant's Interests shall
be payable in arrears by the Bank to the Participants on each Payment Date,
commencing on November 8, 1999 and continuing thereafter, from and to the extent
of the sum of (x) interest payments received by the Bank on the Loans during the
week ending on such Payment Date and (y) other amounts received by the Bank
hereunder.
(c) In the event that the interest and other amounts received by the
Bank from Flowers and the Distributors during any week are insufficient to pay
the interest to the Participants required to be paid on any Payment Date
pursuant hereto and all other amounts required to be paid to the Bank and the
Participants during such week, Flowers shall, upon demand of the Bank,
immediately fund such difference to the Bank (with such payment allocated to
specific Loan Payment Defaults as agreed by Flowers and Bank) and if such
shortfall results from Loan Payment Defaults rather than interest rate
variances, either, at the election of the Flowers, (x) Flowers shall be
reimbursed by the Bank upon receipt of such amount from the applicable
Distributor, (y) the Loan Indebtedness of such Distributor shall be deemed to be
reduced by such amount for purposes of a repayment or purchase of such Defaulted
Loan by Flowers in accordance with the terms of this Agreement or (z) if elected
by Flowers and if such amount is sufficient to cure any Loan Payment Default,
such amount shall be deemed to have satisfied Flower's obligation to cure such
Loan Payment Default hereunder.
SECTION 2.06. Payments and Computations, Etc.
(a) All amounts to be paid by Flowers hereunder shall be paid no later
than 2:00 P.M. (Atlanta, Georgia time) on the day when due in same day funds to
office of the Bank located in Atlanta, Georgia.
(b) Flowers shall, to the extent permitted by law, pay to the Bank on
demand from time to time interest on any amount not paid by Flowers when due
hereunder (including its Escrow Funding Obligation) at an interest rate per
annum equal to two percent (2%) per annum above the otherwise applicable rate of
interest per annum (the "Default Interest").
(c) All computations of interest and other amounts due hereunder shall
be made on the basis of a year of 360 days and the actual number of days
elapsed. Whenever a payment which is to be made hereunder shall be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day.
23
29
SECTION 2.07. Voluntary Reduction of the Unutilized Commitment .
Upon at least three (3) Business Days' prior telephonic notice (promptly
confirmed in writing) to the Bank, Flowers shall have the right, without premium
or penalty, to terminate the Commitment, in part or in whole, provided that (i)
any such termination shall apply to permanently reduce the Commitment, (ii) any
such termination shall apply to proportionately and permanently reduce the
Participating Commitments of each of the Participants, (ii) any partial
termination pursuant to this Section 2.07 shall be in an amount of at least
$5,000,000 and integral multiples of $1,000,000, and (iii) the Commitment may
not be reduced if, as a result thereof, the amount of the Commitment would be
less than the aggregate sum of all outstanding Loans pursuant to such the
Commitment.
SECTION 2.08. Extension of Commitment.
(a) Flowers may, by written notice to the Bank (which shall promptly
deliver a copy to each Participant), given not more than sixty (60) days prior
to any anniversary to the date of this Agreement while the Commitment is in
effect, request that the Participants extend the then scheduled Commitment
Termination Date (the "Existing Date") for an additional 364-day period. Each
Participant shall, by notice to the Bank given within 15 days after receipt of
such request, advise Flowers and the Bank whether or not such Participant
consents to the extension request (and any Participant which does not respond
during such 15-day period shall be deemed to have advised Flowers and the Bank
that it will not agree to such extension.)
(b) In the event that on the 15th Business Day after receipt of the
notice delivered pursuant to subsection (a) above, all of the Participants shall
have agreed to extend their respective Participating Commitments, the Commitment
Termination Date shall be deemed to have been extended, effective as of the
Existing Date, to the date which is 364 days thereafter.
(c) In the event that, on the 15th Business Day after receipt of the
notice delivered pursuant to subsection (a) above, all of the Participants shall
not have agreed to extend their respective Participating Commitments, Flowers
and the Bank shall notify the consenting Participants ("Consenting
Participants") of the amount of the Participating Commitments of the
non-extending Participants ("Non-Consenting Participants") and such Consenting
Participants shall, by notice to Flowers and the Bank given within ten (10)
Business Days after receipt of such notice, advise Flowers and Bank whether or
not such Participant wishes to purchase all or a portion of the Participating
Commitments of the Non-Consenting Participants (and any Participant which does
not respond during such 10-Business Day period shall be deemed to have rejected
such offer). In the event that more than one Consenting Participant agrees to
purchase all or a portion of such Participating Commitments, Flowers and the
Bank shall allocate such Participating Commitments among such Consenting
Participants so as to preserve, to the extent possible, the relative pro rata
shares of the Consenting Participants of the Participating Commitments prior to
such extension request. If Consenting Participants do not elect to assume all of
the Participating Commitments of the Non-Consenting Participants, Flowers shall
have the right, subject to the terms and conditions of Section 12.10, to arrange
for one or more banks (any such bank being called a "New Participant"), to
purchase the Participating Commitment of any Non-Consenting
24
30
Participant. Each Non-Consenting Participant shall assign its Participating
Commitment and its Participant's Interest outstanding hereunder to the
Consenting Participant or New Participant purchasing such Participating
Commitment in accordance with Section 12.10, in return for payment in full of
all principal, interest and other amounts owing to such Non-Consenting
Participant hereunder, on or before the Existing Date and, as of the effective
date of such assignment, shall no longer be a party hereto, provided that each
New Participant shall be subject to the approval of the Bank (which approval
shall not be unreasonably withheld). If (and only if) Participants (including
New Participants) holding Participating Commitments representing at least an
amount equal to the greater of (x) the sum of all outstanding Loans and (y) 85%
of the aggregate Participating Commitments on the date of such extension request
shall have agreed to such extension by the Existing Date (the "Continuing
Participants"), then (i) the Commitment Termination Date shall be extended for
an additional 364-day period and (ii) the Participating Commitment of any
Non-Consenting Participant which has not been assigned to a Consenting
Participant or a New Participant shall terminate (with the result that the
amount of the Commitments shall be decreased proportionately by the amount of
such Participating Commitment), and all amounts owing to such Non-Consenting
Participant shall become due and payable, together with all interest accrued
thereon and all other amounts owed to such Non-Consenting Participant hereunder,
on the Existing Date applicable to such Participant without giving effect to any
extension of the Commitment Termination Date.
SECTION 2.09. Pro Rata Treatment.
Subject to the application of payments pursuant to Article III and except as
specifically provided therein, each payment of principal of any Funded
Participant's Interest, each payment of interest with respect to the Funded
Participant's Interest, each payment of the Commitment Fee and each reduction of
the Commitment shall be allocated pro rata among the Participants in accordance
with their respective applicable Pro Rata Share of the Commitment. Each
Participant agrees that in computing such Participant's portion of any Funded
Participant's Interest to be made hereunder, the Bank may, in its discretion,
round each Participant's percentage of such Participant Funding Request to the
next higher or lower whole dollar amount.
SECTION 2.10. Sharing of Setoffs.
Each Participant agrees that if it shall, in accordance with applicable law,
through the exercise of a right of banker's lien, setoff or counterclaim against
Flowers or any Distributor, or pursuant to a secured claim under Section 506 or
Title 11 of the United States Code or other security or interest arising from,
or in lieu of, such secured claim, received by the Participant under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, obtain payment (voluntary or involuntary) in respect of any Funded
Participant's Interest under this Agreement as a result of which the unpaid
principal portion of its Funded Participant's Interest shall be proportionately
less than the unpaid principal portion of the Funded Participant's Interest of
any other Participant, it shall be deemed simultaneously to have purchased from
such other Participant at face value, and shall promptly pay to such other
Participant the purchase price for, a participation in the Funded Participant's
Interest of such other Participant, so that the aggregate
25
31
unpaid principal amount of the Funded Participant's Interest and participations
in Funded Participant's Interests held by each Participant shall be in the same
proportion to the aggregate unpaid principal amount of all Funded Participant's
Interests then outstanding as the principal amount of its Purchases prior to
such exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Funded Participant's Interests outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that, if any such purchase or purchases or adjustments shall be made
pursuant to this Section and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustment restored
without interest. Flowers expressly consents to the foregoing arrangements and
agrees, to the extent permitted by applicable law, that any Participant holding
a Funded Participant's Interest or a participation in a Funded Participant's
Interest deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by Flowers to such Participant by reason thereof.
ARTICLE III.
FLOWERS' SERVICING OBLIGATIONS; BANK'S OBLIGATIONS;
DISTRIBUTION OF PAYMENTS
SECTION 3.01. Flowers' Servicing Obligations with Respect to Loans;
Collateral; Non-Recourse.
(a) Each of the Bank and the Participants acknowledges and agrees that
Flowers shall, for itself and for the benefit of the Bank and all Participants,
(i) document, close, manage, service, administer and collect the Loans in
accordance with the terms of this Agreement, the Servicing Agreement and its
Customary Practices, and shall have full power and authority to do or cause to
be done any and all things in connection with such management, servicing,
administration and collection which it may deem necessary or desirable and (ii)
distribute all funds collected with respect to the Loans.
(b) Notwithstanding anything in this Agreement to the contrary, each of
the Bank and the Participants acknowledges and agrees that Flowers shall have no
obligation to the Bank or the Participants with respect to (i) the creation,
perfection, priority or continuation of any Lien on any Collateral obtained by
the Bank with respect to the Loans at the request of Flowers or (ii) the
obtaining or retention of any guaranties of the Loans (other than to distribute
any proceeds therefrom in accordance with the terms of this Article III). Each
of the Bank and the Participants acknowledges and agrees that Flowers has the
right to release or modify the terms of, any Collateral or any guaranty of any
Loan.
(c) Each of the Bank and the Participants acknowledges and agrees that
Flowers, in accordance with its Customary Practices, is authorized to permit the
assumption of any Distributor Loan by a transferee of the Distributor's interest
in the related Distributor Route, pursuant to which such transferee becomes
liable under such Distributor Loan and reaffirms and assumes all
26
32
of the obligations of the Distributor under all of the Distributor Loan
Documents. In connection with any such assumption, none of the payment terms of
such Distributor Loan may be changed.
SECTION 3.02. Bank's Obligations with Respect to Loans and Collateral.
(a) Each of the Participants acknowledges and agrees that all payments
made to the Participants pursuant to this Agreement by the Bank shall be made
solely from amounts received by the Bank from Flowers, the Distributors and
other obligors or Collateral under the applicable Loan Documents, and the Bank
shall have no personal liability for any amounts payable to the Participants
hereunder.
(b) Each of the Participants acknowledges and agrees that the Bank
shall be relying solely upon Flowers for purposes of documenting, closing,
managing, servicing, administering and collecting the Loans in accordance with
the terms of this Agreement and the Servicing Agreement and exercising all
discretionary powers involved in such management, servicing, administration and
collection, and that the Bank shall have no personal liability for any of such
activities. Each of the Participants further acknowledges and agrees that the
Bank has no obligation to the Participants with respect to the creation,
perfection, priority or continuation of any Lien on any Collateral or with
respect to any guaranties requested by Flowers (other than to distribute the
proceeds received by the Bank therefrom to the Participants).
(c) Each of the Participants acknowledges and agrees that any payments
of delinquent payment fees received from the Distributors pursuant to the
Distributor Loan Agreements shall be for the sole account of the Bank and that
the Participants shall have no right to receive such payments unless an Event of
Default has occurred and is continuing; provided that, with respect to any
payments received from a Distributor, such payments shall be first applied to
pay all accrued but unpaid interest and principal and other fees due and owing
from such Distributor before application of such payment to any delinquent
payment fees.
(d) Each of the Participants acknowledges and agrees that all Liens
granted under the Distributor Loan Documents are granted to the Bank and that
only the Bank, with the consent of the Required Participants, has the right to
foreclose on any collateral for, or exercise any remedies under, the Distributor
Loan Documents.
SECTION 3.03. Application of Payments.
(a) Flowers shall collect all payments directly from the Distributors
and shall forward such payments to the Bank on each Payment Date, net of the
servicing fee owed under the terms of the Servicing Agreement. Each of the
Participants acknowledges and agrees that amounts received by the Bank are not
capable of being allocated to any specific Loan, and that the Bank shall apply
the amounts it receives as follows: (i) first, to the payment of accrued
interest on the Funded Participant's Interests hereunder, (ii) second, to the
payment of the fees owing to the Bank under the Servicing Agreement, (iii)
third, to the repayment of the Funded Participant's Interests
27
33
outstanding hereunder, and (iv) fourth, to the payment of all other amounts
owing to the Bank or any Participant hereunder.
(b) On each Quarterly Payment Date, Flowers shall pay the Commitment
Fee to the Bank, and the Bank shall distribute such amount to the Participants
pro rata in accordance with Section 2.04 hereof, with any remainder to be
applied as set forth in the Servicing Agreement.
(c) If not sooner repaid, all amounts due and payable to the Bank and
the Participants under the Program Documents shall be due and payable in full on
the Commitment Termination Date.
SECTION 3.04. Servicing Report and Distributor Status Report.
On each Payment Date, the Bank shall telecopy to the Participants, a
servicing report in the form of Exhibit "F" attached hereto (the "Servicing
Report").
ARTICLE IV.
REQUIREMENTS OF NOTES
SECTION 4.01. Notes. Each of the Purchased Notes purchased by the Bank
on the Note Purchase Date, each Note tendered by Flowers or a Selling Subsidiary
to the Bank as a condition precedent to an Existing Loan and each Note tendered
by Flowers or a Selling Subsidiary to the Bank hereunder as a condition
precedent to a Loan to be made on or after the Closing Date, shall meet on the
date of such tender each of the following applicable requirements:
(a) Each Purchased Note was originated by Flowers or the applicable
Selling Subsidiary in the ordinary course of business and in accordance with all
applicable laws;
(b) Each Note other than a Purchased Note was approved by Flowers or
the applicable Selling Subsidiary in accordance with its Customary Practices;
(c) Each Note provides for payment of interest at the Distributor Loan
Interest Rate;
(d) Each Note, by its terms, matures not more than ten years after the
date thereof;
(e) Each Note provides for weekly even amortization of principal and
interest;
(f) Each Loan and each of the related Distributor Loan Documents is a
legal, valid and binding obligation of the Distributor thereunder and is
enforceable in accordance with its terms by the holder thereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in general and
28
34
by general principles of equity, whether such enforcement is considered in a
proceeding at equity or in law;
(g) As to each Distributor Route underlying a Purchased Note,
immediately prior to assignment to the Bank, Flowers or the applicable Selling
Subsidiary had a first priority perfected security interest therein and had
legal title to and was the sole beneficial owner of the related Distributor Loan
Documents and the assignment to the Bank of the Purchased Loan and the
Distributor Loan Documents validly transferred the Purchased Loan, Distributor
Loan Documents and the first priority lien and security interest thereunder to
the Bank, free and clear of any Lien and it is not necessary under the laws of
the applicable jurisdiction to file notice of assignment of such Lien to the
Bank in the UCC records in order to maintain the perfection or priority thereof;
(h) Each Note is secured by a fully perfected, first priority security
interest in favor of the Bank in the Distributor Route of the Distributor;
(i) No Note or other Distributor Loan Document is subject to any right
of rescission, set-off, counterclaim or defense, including the defense of usury;
the operation of the terms of the Distributor Loan Documents or the exercise of
any right thereunder will not render such Note unenforceable in whole or in part
or subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto;
(j) Each Note and related Distributor Loan Documents are the only
contracts evidencing the transaction described therein and constitute the entire
agreement of the parties thereto with respect to such transaction and the
original of the Note, all Distributor Loan Documents, and other collateral
documents have been, or will be, upon request of the Bank, delivered to the
Bank, properly assigned, in the case of a Purchased Note;
(k) Each Note and related Distributor Loan Documents are genuine and
all signatures, names, descriptions of collateral, amounts and other facts and
statements therein and thereon are true and correct (including the applicable
Distributor Route number set forth on the Note);
(l) In the case of each Purchased Note, Flowers or the applicable
Selling Subsidiary has full power and authority to sell each Purchased Note and
the accompanying security therefor to the Bank and is not prohibited by
applicable law from making such a valid sale and assignment;
(m) No party is in default under any Note or any related Distributor
Loan Document;
(n) All disclosures required to be made under applicable federal and
state law have been properly and completely made with respect to each Note and
each Note is in full compliance with all applicable federal and state laws,
including without limitation, applicable state usury laws;
(o) Flowers has not consented to a sale, lease, transfer or encumbrance
of the collateral securing any Note or to any material adverse alteration in the
Distributor Route securing the same;
29
35
(p) Each Purchased Note has been endorsed to the order of the Bank, and
each Purchased Note allows for assignment thereof and accompanying security
therefor without notice to or consent from the Distributor;
(q) The proceeds of each Note has been used for commercial purposes and
not for the purchase of consumer and household goods;
(r) The Principal Balance of each Note does not exceed the "first
original purchase price" as such term is used in Section 3.01 of the
Distributor's Agreements; and
(s) In the case of each Note evidencing an Existing Loan, Flowers
maintains a Distributor Loan File containing one of each of the Distributor Loan
Documents, duly executed by the Distributor and each other party thereto,
substantially in the form of the Distributor Loan Documents attached as an
Exhibit to the Existing Loan Facility Agreement as in effect immediately prior
to the replacement thereof by this Agreement, and in the case of each Note
evidencing a Loan to be made on or after the Closing Date, Flowers maintains a
Distributor Loan File containing one of each of the Distributor Loan Documents,
duly executed by the Distributor and each other party thereto, substantially in
the form attached hereto as Exhibits.
SECTION 4.02. Repurchase of Ineligible Notes.
Flowers hereby acknowledges and agrees that the representation and warranty that
each of the Notes satisfies the applicable requirements of Section 4.01 shall
survive the purchase of the Purchased Notes by the Bank on the Note Purchase
Date and the making of any other Loan by the Bank either under the Existing Loan
Facility Agreement or hereunder and, in the case of the Purchased Notes, shall
inure to the benefit of the Bank regardless of any restrictive endorsement or
assignment. Flowers shall promptly give the Bank notice of any discovery that a
Note failed on the date of tender to the Bank (whether or not Flowers knew or
could have known of such failure at such date) to meet the applicable
requirements set forth above and if such failure is not remedied within thirty
(30) days after discovery thereof, Flowers shall, on the next Payment Date,
repurchase such Note (an "Ineligible Note") for the Repurchase Price thereof and
the Bank shall assign such Note to Flowers in accordance with Section 5.02
hereof. The Bank acknowledges and agrees that a misrepresentation by Flowers
pursuant to Section 7.18(a) or (b) shall not be a Default or Event of Default
under Section 9.01(d) hereof but shall only trigger Flowers' repurchase
obligation under this Section 4.02 (with the understanding that any
misrepresentation as to the Principal Balance of a Purchased Note pursuant to
Section 7.18(a) or (b) shall obligate Flowers to repurchase such Note at such
Principal Balance less any Payments received by the Bank with respect thereto).
Notwithstanding the foregoing, the obligation of Flowers set forth in this
Section 4.02 is separate and independent of the obligation of Flowers to
purchase Defaulted Loans pursuant to Article V and is not subject to the
limitations set forth therein. Moreover, any Repurchase Price paid by Flowers
pursuant hereto with respect to an Ineligible Loan (whether or not such
Ineligible Loan also constitutes a Defaulted Loan) shall not be included for
purposes of determining whether or not Flowers has paid the Maximum Recourse
Amount. Furthermore,
30
36
nothing in this Section 4.02 shall be deemed to limit Flowers' obligations
pursuant to any indemnity set forth herein.
ARTICLE V.
REPURCHASE OBLIGATION OF FLOWERS WITH RESPECT TO DEFAULTED LOANS
SECTION 5.01. Repurchase Obligation of Flowers.
Subject to the limitation set forth below, in the event that (a) any installment
of principal or interest on any Loan is not paid by the Distributor within sixty
(60) days after its due date (regardless of whether Flowers makes any Servicer
Advance with respect to such defaulted payment), or (b) any other event of
default as defined in any Note shall occur, then upon demand by the Bank,
Flowers shall repurchase said Loan (herein called a "Defaulted Loan" provided
that, if an Event of Default exists or Flowers has no current obligation to
repurchase Defaulted Loans hereunder, the term "Defaulted Loan" shall include
any Loan for which a payment event of default has occurred) for an amount equal
to the Principal Balance of such Defaulted Loan, plus accrued but unpaid
interest thereon (the "Repurchase Price") within three (3) Business Days after
demand by the Bank.
Notwithstanding the foregoing, the payments made by Flowers pursuant hereto to
repurchase Defaulted Loans pursuant to this Section 5.01 shall not at any time
exceed the Maximum Recourse Amount.
The parties expressly acknowledge and agree that the Maximum Recourse Amount
shall equal an increasing percentage of the aggregate Principal Balance of the
Loans during the term of this Agreement and that the parties shall recalculate
the Maximum Recourse Amount as of the first day of each Fiscal Quarter and
Flowers shall, (i) in the event that the Escrow Funding Obligation is in effect,
deposit any increased amount of the Maximum Recourse Amount into the Escrow
Account, or (ii) in the event that any Defaulted Loan has not been repurchased
hereunder due to Flowers having paid in full the Maximum Recourse Amount as of
an earlier date, repurchase any such Defaulted Loan up to such increased Maximum
Recourse Amount; provided that, Flowers shall not have any obligation to
purchase any such previously Defaulted Loan unless such Loan became a Defaulted
Loan within 180 days prior to such increase in the Maximum Recourse Amount and
was scheduled as a Defaulted Loan to the Bank in compliance with the Servicing
Agreement.
SECTION 5.02. Transfer of Notes.
Upon payment to the Bank of the Repurchase Price for each of the Notes
to be repurchased pursuant to Section 5.01, the Bank shall endorse the
repurchased Notes to Flowers without recourse or warranty of any nature, express
or implied and shall reassign to Flowers any Security Agreement, Uniform
Commercial Code Financing Statement or other collateral for such Note
31
37
being repurchased. The obligation of Flowers (as provided below) to repurchase a
Defaulted Loan or to fund the Escrow Account in the amount of all of the Notes
upon an Escrow Funding Obligation shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any Note to be
repurchased hereunder, or any other agreement or instrument relating thereto
(including, but not limited to, any guaranty thereof or any Security Agreement),
(b) any bankruptcy or insolvency of the Distributor or other obligor;
(c) any change in the time, manner or place of payment of, or in any
other term of, such Note, or any other amendment or waiver of, a consent to
departure from, such Defaulted Loan,
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, Flowers, in respect of its obligations
hereunder,
(e) the particular manner in which the Bank deals with the Distributor
or other endorsers or guarantors of the Notes, or
(f) any action taken by the Bank with respect to the security for the
Notes.
The parties hereby expressly agree that any action taken by the Bank in
violation of the Servicing Agreement will not limit, vitiate or otherwise affect
Flowers' obligations hereunder but the waivers set forth above shall not affect
Flowers' ability to bring a separate action at law to recover any actual damages
suffered by Flowers as a result of such breach by the Bank.
SECTION 5.03. Reliance on Repurchase Obligation.
Flowers expressly acknowledges and agrees that the Bank, in making its credit
decision with regard to the purchase of the Notes on the Note Purchase Date and
the establishment of the Commitment, and the Participants in making their
respective credit decisions with regard to the purchase of participations in the
Commitment and the Loans, have relied solely upon the repurchase obligation of
Flowers set forth above and the other obligations of Flowers hereunder and that
neither the Bank nor any Participant is under any obligation or duty to perform
any credit analysis or investigation with regard to the creditworthiness of any
Distributor.
SECTION 5.04. Certain Waivers.
Flowers hereby expressly waives, with respect to each of the Notes:
(a) presentment, protest, and notice of dishonor,
(b) promptness, diligence, notice of acceptance and any other notice,
32
38
(c) any defense to recovery by the Bank of deficiency after nonjudicial
sale of any Note, and
(d) any requirement that the Bank proceed against the Distributor, any
other obligor with respect to a Defaulted Loan or any collateral therefor prior
to making a repurchase demand hereunder.
SECTION 5.05. Bankruptcy Rescission.
If claim is ever made upon the Bank for repayment or recovery of any amount or
amounts received in payment or on account of any of the amounts paid by any
Distributor or Flowers hereunder, and the Bank repays all or part of said amount
by reason of any judgment, decree or order of any court or administrative body
having jurisdiction over the Bank or any of its property, then and in such event
Flowers shall be and remain liable to the Bank for the amounts so repaid or
recovered to the same extent as if such amount had never originally been paid to
the Bank.
ARTICLE VI.
CONDITIONS OF LOANS
The obligation of the Bank to establish the Commitment pursuant to this
Agreement is subject to the Bank having received the following, each dated as of
the Closing Date, in form and substance satisfactory to the Bank and (except as
to the Servicing Agreement) the Participants:
(a) A duly executed counterpart of this Agreement;
(b) A duly executed amendment to the Flowers Security Agreement;
(c) Duly executed amendments to the UCC-1 financing statements with
respect to Flowers and each of the Selling Subsidiaries, as appropriate;
(d) Copies of the organizational papers of Flowers and each of the
Selling Subsidiaries certified as true and correct by the Secretary of State of
the State of its incorporation (in the case of Flowers) or its Secretary or
Assistant Secretary (in the case of a Selling Subsidiary) and a certificate of
good standing from the Secretary of State of the State of its incorporation;
(e) A certificate of the Secretary or Assistant Secretary of Flowers
and each of the Selling Subsidiaries certifying (i) the names and true
signatures of the officers of Flowers, and each of the Selling Subsidiaries
authorized to execute this Agreement and the other documents to be delivered
hereunder, (ii) the bylaws of such Person, and (iii) the resolutions of the
Boards of Directors of such Person approving this Agreement and the transactions
contemplated hereby;
33
39
(f) A favorable written opinion of each of G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel for Flowers and the Selling Subsidiaries,
substantially in the form of Exhibit "G" hereto, addressing the transactions
contemplated hereby and such other matters as the Bank may reasonably request;
(g) A duly executed Closing Certificate of Flowers;
(h) A duly executed certificate of Flowers identifying the Authorized
Signatories for each such Person, in form and substance satisfactory to the
Bank; and
(i) All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents incident
hereto or delivered in connection therewith shall be satisfactory in form and
substance to the Bank.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
Flowers represents and warrants to the Bank and each Participant that:
SECTION 7.01. Corporate Existence and Power.
Flowers is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Georgia. Flowers is duly qualified to
transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, except for any failure to comply with the
foregoing which does not have and reasonably could not be expected to cause a
Material Adverse Effect, and has all corporate powers and all government
authorizations, licenses, consents and approvals required to engage in its
business and operations as now conducted, except for any failure to comply with
the foregoing which does not have and reasonably could not be expected to cause
a Material Adverse Effect.
SECTION 7.02. Corporate and Governmental Authorization; No
Contravention.
The execution, delivery and performance by Flowers and each of the Selling
Subsidiaries of this Agreement and the other Program Documents (i) are within
such entity's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) require no action by or in respect of or filing with,
any governmental body, agency or official, (iv) do not contravene, or constitute
a default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of such entity or of any material
agreement, judgment, injunction, order, decree or other instrument binding upon
Flowers, any Selling Subsidiary or any other Restricted Subsidiaries, and (v) do
not result in the creation or imposition of any Lien on any asset of Flowers,
any Selling Subsidiary or any other Restricted Subsidiaries (other than a Lien
in favor of the Bank).
34
40
SECTION 7.03. Binding Effect.
This Agreement constitutes a valid and binding agreement of Flowers enforceable
in accordance with its terms, and the Flowers Security Agreement and the other
Program Documents, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of Flowers and each of
the Selling Subsidiaries party thereto, enforceable in accordance with their
respective terms, provided that the enforceability hereof and thereof is subject
in each case to general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally.
SECTION 7.04. Financial Information.
(a) The consolidated balance sheet of Flowers and its Consolidated
Subsidiaries as of January 2, 1999 and the related consolidated statements of
income, shareholders' equity and cash flows for the Fiscal Year then ended,
reported on by PricewaterhouseCoopers LLP, copies of which have been delivered
to the Bank fairly present, in conformity with GAAP, the consolidated financial
position of Flowers and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such period stated.
(b) Since January 2, 1999, there has been no event, act, condition or
occurrence which has or reasonably could be expected to cause a Material Adverse
Effect.
SECTION 7.05. No Litigation.
There is no action, suit or proceeding pending, or to the knowledge of Flowers
threatened, against or affecting Flowers or any of its Restricted Subsidiaries
before any court or arbitrator or any governmental body, agency or official
which has or reasonably could be expected to have a Material Adverse Effect or
which in any manner draws into question the validity of this Agreement or the
Flowers Security Agreement or which in any manners draws into question the
validity of Distributor Loan Documents generally, whether directly, or by a
cause of action which could potentially be asserted against a significant
portion of the Distributor Loan Documents.
SECTION 7.06. Compliance with ERISA.
(a) Flowers and each member of the Controlled Group have fulfilled
their obligations under the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, and have not incurred any
liability to the PBGC or a Plan under Title IV of ERISA.
(b) Neither Flowers nor any member of the Controlled Group has incurred
any withdrawal liability with respect to any Multiemployer Plan under Title IV
of ERISA, and no such liability is expected to be incurred.
SECTION 7.07. Compliance with Laws; Payment of Taxes.
35
41
Flowers and, to the best of Flowers' knowledge, its Material Subsidiaries, are
in compliance with all applicable laws, regulations and similar requirements of
governmental authorities, except where such compliance is being contested in
good faith through appropriate proceedings or which does not have and reasonably
could not be expected to cause a Material Adverse Effect. There have been filed
on behalf of Flowers and its Material Subsidiaries all Federal, state and local
income, material excise, material property and other material tax returns which
are required to be filed by them and all taxes due pursuant to such returns or
pursuant to any assessment received by or on behalf of Flowers or any Material
Subsidiary have been paid, except where such payments are being contested in
good faith through appropriate proceedings or the failure to pay does not have
and reasonably could not be expected to cause a Material Adverse Effect. The
charges, accruals and reserves on the books of Flowers and its Material
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of Flowers, adequate. As of the Closing Date, United States income tax
returns of Flowers and its Material Subsidiaries have been examined and closed
through the 1996 Fiscal Year.
SECTION 7.08. Subsidiaries.
Each of Flowers' Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, is
duly qualified to transact business in every jurisdiction where, by the nature
of its business, such qualification is necessary, and has all corporate powers
and all governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, except for any failure to comply with
the foregoing which does not have and reasonably could not be expected to cause
a Material Adverse Effect. As of the Closing Date, Flowers has no Subsidiaries
except for those Subsidiaries listed on Schedule 7.08, which accurately sets
forth each such Subsidiary's complete name and jurisdiction of incorporation.
None of such Subsidiaries, other than those listed as such on Schedule 7.08, is
a Material Subsidiary as of the Closing Date. Within (15) fifteen days after any
Subsidiary becomes a Material Subsidiary, or the creation or acquisition of any
Subsidiary which becomes a Material Subsidiary, Flowers will send to the Bank
either a supplement to or replacement of Schedule 7.08 (showing such Subsidiary
and indicating that it is a Material Subsidiary), or a copy of Form 8-K sent to
the Securities and Exchange Commission, showing such Subsidiary as a Material
Subsidiary.
SECTION 7.09. Investment Company Act.
Neither Flowers nor any of its Subsidiaries is an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
SECTION 7.10. Public Utility Holding Company Act.
Neither Flowers nor any of its Subsidiaries is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a
36
42
"holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
SECTION 7.11. Ownership of Property; Liens.
Each of Flowers and its Material Subsidiaries has title to, or leasehold or
other interests in, its properties sufficient for the conduct of its business,
and none of such property is subject to any Lien except as permitted in Section
8.16.
SECTION 7.12. No Default.
Neither Flowers nor any of its Material Subsidiaries is in default under or with
respect to any agreement, instrument or undertaking to which it is a party or by
which it or any of its property is bound which has or reasonably could be
expected to cause a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
SECTION 7.13. Full Disclosure.
Flowers' annual report on Form 10-K for the fiscal year ended at January 2, 1999
and quarterly report on Form 10-Q for the fiscal quarter ended at April 24,
1999, copies of which have been furnished by Flowers to the Bank, did not, as of
the dates such Form 10-K and Form 10-Q were filed with the Securities and
Exchange Commission, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. From the date of
filing of such quarterly report through the date hereof, except for the Form 8-K
filed on July 29, 1999 with the Securities and Exchange Commission, Flowers has
not filed a current report on Form 8-K with the Securities and Exchange
Commission and, as of the date hereof, no event or condition exists which would
require such filing by Flowers pursuant to the Securities Exchange Act of 1934,
as amended, except for any such event or condition which has heretofore been
disclosed in writing to the Bank by delivery to the Bank of a Form 8-K.
SECTION 7.14. Environmental Matters.
(a) Neither Flowers nor any Restricted Subsidiary is subject to any
Environmental Liability which has or reasonably could be expected to cause a
Material Adverse Effect and, to the best of Flowers' knowledge, neither Flowers
nor any Restricted Subsidiary has been designated as a potentially responsible
party under CERCLA or under any state statute similar to CERCLA. To the best of
Flowers' knowledge, none of the Properties has been identified on any current or
proposed (i) National Priorities List under 40 C.F.R. 300, (ii) CERCLIS list or
(iii) any list arising from a state statute similar to CERCLA.
(b) To the best of Flowers' knowledge, no Hazardous Materials have been
or are being used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are
37
43
otherwise present at, on, in or under the Properties, or, to the best of the
knowledge of Flowers, at or from any adjacent site or facility, except for
Hazardous Materials, such as cleaning solvents, pesticides and other materials
used, produced, manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in material compliance with all
applicable Environmental Requirements.
(c) To the best of Flowers' knowledge, Flowers, and each of its
Restricted Subsidiaries and Affiliates, has procured all Environmental
Authorizations necessary for the conduct of its business, and is in compliance
with all Environmental Requirements in connection with the operation of the
Properties and Flowers', and each of its Restricted Subsidiary's and
Affiliate's, respective businesses, except where failure to comply does not have
and reasonably could not be expected to cause a Material Adverse Effect.
SECTION 7.15. Capital Stock.
All Capital Stock, debentures, bonds, notes and all other securities of Flowers
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws in all material respects, including but not limited to,
the "Blue Sky" laws of all applicable states and the federal securities laws,
except to the extent any failure with respect thereto would not have and
reasonably could not be expected to cause a Material Adverse Effect. The issued
shares of Capital Stock of Flowers' Wholly Owned Subsidiaries are owned by
Flowers free and clear of any Lien or adverse claim. At least a majority of the
issued shares of capital stock of each of Flowers' other Subsidiaries (other
than Wholly Owned Subsidiaries) is owned by Flowers free and clear of any Lien
or adverse claim.
SECTION 7.16. Margin Stock.
Neither Flowers nor any of its Subsidiaries is engaged principally, or as one of
its important activities, in the business of purchasing or carrying any Margin
Stock, and no part of the proceeds of any Loan made hereunder will be used to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock, or be used for any purpose which
violates, or which is inconsistent with, the provisions of Regulation T, U or X.
SECTION 7.17. Insurance.
Flowers and each of its Material Subsidiaries has (either in the name of Flowers
or in such Material Subsidiary's own name), with financially sound and reputable
insurance companies, insurance in at least such amounts (including deductibles,
co-insurance and self-insurance with respect to which adequate reserves are
maintained) and against at least such risks (including on all its property, and
public liability and worker's compensation) as are usually insured against in
the same general area by companies of established repute engaged in the same or
similar business and similarly situated.
SECTION 7.18. Notes; Books and Records.
38
44
(a) Each Purchased Note purchased by the Bank on September 20, 1996
and each other Note tendered by Flowers under the Existing Loan Facility
Agreement or this Agreement as a condition precedent for a Loan satisfies all of
the applicable requirements of Article IX of this Agreement.
(b) The information set forth on the "Distributor Loan Schedule"
delivered in connection with the Existing Loan Facility Agreement with respect
to the Principal Balance of each Purchased Note, all other such information was
true and correct in all material respects as of September 20, 1996.
(c) Flowers has marked, and has caused each of the Selling Subsidiaries
to ▇▇▇▇, their respective books and records to evidence that the Purchased Loans
were sold to the Bank as of September 20, 1996.
SECTION 7.19. Y2K Plan.
Flowers has developed its plan (the "Y2K Plan") for making the Mission Critical
Systems and Equipment Year 2000 Compliant and Ready. Flowers and its
Subsidiaries' have met the Y2K Plan milestones in all material respects such
that Flowers reasonably believes, after due diligence, that all Mission Critical
Systems and Equipment will be Year 2000 Compliant and Ready in accordance with
the Y2K Plan.
ARTICLE VIII.
COVENANTS
Until such time as the Commitment has been terminated or is no longer
in effect and the Bank no longer owns any Notes, Flowers will, unless the
Required Participants shall otherwise consent in writing:
SECTION 8.01. Information.
Deliver to the Bank:
(a) as soon as available and in any event within 90 days after the end
of each Fiscal Year,
(i) a consolidated balance sheet of Flowers and its
Consolidated Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income, shareholders' equity and
cash flows for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
certified by PricewaterhouseCoopers LLP or other independent public
accountants of nationally
39
45
recognized standing, with such certification to be free of exceptions
and qualifications not acceptable to the Participants; and
(ii) so long as there is an Unrestricted Subsidiary, a
consolidated balance sheet and statement of income for such periods
which accounts for the Unrestricted Subsidiaries using an equity basis
of accounting, in each case setting forth in each case in comparative
form the figures for the previous fiscal year, accompanied by a
restricted use report as to such balance sheet and income statement
from PricewaterhouseCoopers LLP or other independent public accountants
of nationally recognized standing, which report may be qualified on the
basis that the use of the equity basis of accounting does not conform
to GAAP and qualified as to the absence of a statement of cash flows
and as to the absence of footnotes and otherwise to be free of
exceptions and qualifications not acceptable to the Required Banks;
(b) as soon as available and in any event within 45 days after the end
of each of the first 3 Fiscal Quarters of each Fiscal Year:
(i) a consolidated balance sheet of the Flowers and its
Consolidated Subsidiaries as of the end of such Fiscal Quarter and the
related statement of income and statement of cash flows for such Fiscal
Quarter and for the portion of the Fiscal Year ended at the end of such
Fiscal Quarter, setting forth in each case in comparative form the
figures for the corresponding Fiscal Quarter and the corresponding
portion of the previous Fiscal Year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief accounting
officer of the Flowers;
(ii) so long as there is an Unrestricted Subsidiary, a
consolidated balance sheet and statement of income for such periods
which accounts for the Unrestricted Subsidiaries using an equity basis
of accounting, in each case setting forth in each case in comparative
form the figures for the corresponding Fiscal Quarter and the
corresponding portion of the previous Fiscal Year, all certified
(subject to normal year-end adjustments and to qualification based on
the use of the equity basis of accounting) as to fairness of
presentation, GAAP and consistency by the chief financial officer or
the chief accounting officer of the Flowers;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, a certificate,
substantially in the form of Exhibit H (a "Compliance Certificate"), of the
chief financial officer or the chief accounting officer of Flowers (i) setting
forth in reasonable detail the calculations required to establish whether
Flowers was in compliance with the requirements of Sections 8.13 through 8.20,
inclusive, on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which Flowers is taking or
proposes to take with respect thereto;
40
46
(d) simultaneously with the delivery of each set of annual financial
statements referred to in paragraph (a) above, a statement of the firm of
independent public accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to believe that any
Default under Sections 8.13 through 8.20, inclusive, existed on the date of such
financial statements;
(e) within five (5) Business Days after Flowers becomes aware of the
occurrence of any Default, a certificate of a senior financial officer or
accounting officer or the chief financial officer or the chief accounting
officer or the Treasurer of Flowers setting forth the details thereof and the
action which Flowers is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of Flowers
generally, copies of all financial statements, reports and proxy statements so
mailed;
(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and annual or quarterly reports which Flowers shall
have filed with the Securities and Exchange Commission;
(h) if and when any member of the Controlled Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such notice; or (iii)
receives notice from the PBGC under Title IV of ERISA of an intent to terminate
or appoint a trustee to administer any Plan, a copy of such notice; and
(i) at any time prior to January 1, 2000, within 5 Domestic Business
Days after Flowers becomes aware of any deviations from the Y2K Plan which would
cause compliance with the Y2K Plan to be delayed or not achieved, which delay or
failure to achieve would have or could reasonably be expected to cause a
Material Adverse Effect, a statement of the Chief Executive Officer, Chief
Financial Officer, or Chief Technology Officer setting forth the details thereof
and the action which Flowers is taking or proposes to take with respect thereto;
(j) promptly upon the receipt thereof at any time prior to January 1,
2000, a copy of any third party assessments of Flowers Y2K Plan together with
any recommendations made by such third party with respect to Year 2000
compliance; and
(k) from time to time such additional information regarding the
financial position or business of Flowers and its Subsidiaries (other than
non-public information as to the Unrestricted Subsidiaries) as the Bank, at the
request of any Participant, may reasonably request.
SECTION 8.02. Inspection of Property, Books and Records.
41
47
Flowers will (i) keep, and cause each Subsidiary to keep, proper books of record
and account in which full, true and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its business and
activities; and (ii) permit, and cause each Restricted Subsidiary to permit,
representatives of the Bank (x) at the Bank's expense and upon reasonable notice
and at a time reasonably convenient to Flowers (but in any event within 10 days
of such notice) prior to the occurrence and continuance of a Default and (y) at
Flowers' expense and without prior notice after the occurrence and continuance
of a Default, to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants. Flowers agrees to
cooperate and assist in such visits and inspections, in each case.
SECTION 8.03. Maintenance of Existence.
Flowers will at all times preserve and keep in full force and effect its
corporate existence. Subject to Section 8.04, Flowers will at all times preserve
and keep in full force and effect the corporate existence of each of its
Restricted Subsidiaries (unless merged into Flowers or a Restricted Subsidiary)
and all rights and franchises of Flowers and its Restricted Subsidiaries unless,
in the good faith judgment of Flowers, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right or franchise
would not, individually or in the aggregate, have and could not reasonably be
expected to cause a Material Adverse Effect. Flowers will, and will cause each
Restricted Subsidiary (subject to Section 8.04), at all times to carry on its
business in the food or beverage business or any related line of business.
SECTION 8.04. Consolidations, Mergers and Sales of Assets.
Flowers will not, nor will it permit any Material Subsidiary to, consolidate or
merge with or into, or sell, lease or otherwise transfer all or any substantial
part of its assets to, any other Person, or discontinue or eliminate any
business line or segment, provided that (a) Flowers may merge with another
Person if (i) such Person was organized under the laws of the United States of
America or one of its states, (ii) Flowers is the corporation surviving such
merger and (iii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing, (b) Subsidiaries of Flowers may merge
with one another, provided that in the case of a merger of a Restricted
Subsidiary with an Unrestricted Subsidiary, the Restricted Subsidiary is the
corporation surviving such merger, (c) other Persons may merge into or with
Subsidiaries to effect an acquisition permitted by Section 8.15 and (d) the
foregoing limitation on the sale, lease or other transfer of assets and on the
discontinuation or elimination of a Subsidiary or division shall not prohibit
(x) transfers of assets (including stock of a Restricted Subsidiary) to or among
Restricted Subsidiaries, (y) during any Fiscal Year, a transfer of assets other
than Margin Stock or the discontinuance or elimination of a Subsidiary or
division (in a single transaction or in a series of related transactions) unless
the aggregate assets to be so transferred or utilized in a Restricted Subsidiary
or division to be so discontinued, when combined with all other assets
transferred, and all other assets utilized in all other Restricted Subsidiaries
or divisions discontinued, in any Fiscal Year, constituted more than 15% of
Adjusted Consolidated Total Assets measured as of the end of the immediately
42
48
preceding Fiscal Year and (z) transfers of Margin Stock. Nothing in this Section
8.04 shall be interpreted to (i) limit or abridge the provisions of Section
2.09(a) of the Flowers Credit Agreement or (ii) restrict Flowers' ability to
dispose of (1) vehicles, (2) delivery routes, (3) assets obtained through
acquisitions of businesses or assets on or after the date hereof, provided that
proceeds of any such disposition shall be reinvested in Flowers by reducing
Indebtedness or by investing in operating assets, and (4) obsolete,
under-performing or non-core assets, disposition of which, in management's
judgment, would enhance the Flowers' operations and profitability, and
dispositions described in this sentence shall not be subject to, or included in
the computations under, clause (d) above.
SECTION 8.05. Use of Proceeds.
In the event that the transactions hereunder should be recharacterized as a
secured loan, the proceeds of the Purchase Price shall be used for general
corporate purposes, provided, that no portion of the proceeds of the Loans will
be used by Flowers or any Subsidiary (i) in connection with, whether directly or
indirectly, any tender offer for, or other acquisition of, stock of any
corporation with a view towards obtaining control of such other corporation,
unless such tender offer or other acquisition is to be made on a negotiated
basis with the approval of the Board of Directors of the Person to be acquired,
and the provisions of Section 8.16 would not be violated, (ii) directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any Margin Stock (other than the repurchase by Flowers of
its own Capital Stock), or (iii) for any purpose in violation of any applicable
law or regulation.
SECTION 8.06. Compliance with Laws; Payment of Taxes.
(a) Flowers will, and will cause each of its Material Subsidiaries and
each member of the Controlled Group to, comply with applicable laws (including
but not limited to ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where the necessity of
such compliance is being contested in good faith through appropriate proceedings
diligently pursued or if failure to comply does not have and reasonably could
not be expected to cause a Material Adverse Effect. Flowers will, and will cause
each of its Material Subsidiaries to, pay promptly when due all taxes,
assessments, governmental charges, claims for labor, supplies, rent and other
obligations which, if unpaid, might become a lien against the property of
Flowers or any Restricted Subsidiary, except liabilities being contested in good
faith and against which, if requested by the Bank, Flowers will set up reserves
in accordance with GAAP and liabilities the nonpayment of which would not have
and reasonably could not be expected to cause a Material Adverse Effect.
(b) Flowers shall not permit the aggregate complete or partial
withdrawal liability under Title IV of ERISA with respect to Multiemployer Plans
incurred by Flowers and members of the Controlled Group to exceed $5,000,000 at
any time. For purposes of this Section 8.06(b), the amount of withdrawal
liability of Flowers and members of the Controlled Group at any date shall be
the aggregate present value of the amount claimed to have been incurred less any
portion thereof which Flowers and members of the Controlled Group have paid or
as to which Flowers
43
49
reasonably believes, after appropriate consideration of possible adjustments
arising under Sections 4219 and 4221 of ERISA, it and members of the Controlled
Group will have no liability, provided that Flowers shall obtain prompt written
advice from independent actuarial consultants supporting such determination.
Flowers agrees (i) once in each year, beginning with the 1999 Fiscal Year, to
request a current statement of the withdrawal liability of Flowers and members
of the Controlled Group from each Multiemployer Plan, if any, and (ii) to
transmit a copy of such statement to the Bank within fifteen (15) days after
Flowers receives the same.
SECTION 8.07. Insurance.
Flowers will maintain, and will cause each of its Material Subsidiaries to
maintain (either in the name of Flowers or in such Material Subsidiary's own
name), with financially sound and reputable insurance companies, insurance on
all its property in at least such amounts (including deductibles, co-insurance
and self-insurance, if adequate reserves are maintained with respect thereto)
and against at least such risks (including on all its property, and public
liability and worker's compensation) as are usually insured against in the same
general area by companies of established repute engaged in the same or similar
business and similarly situated.
SECTION 8.08. Change in Fiscal Year.
Flowers will not change its Fiscal Year without the consent of the Bank, which
shall not be unreasonably withheld (taking into consideration for such purpose
the effect, if any, such change would have on the financial covenants contained
in this Agreement).
SECTION 8.09. Maintenance of Property.
Flowers shall, and shall cause each Restricted Subsidiary to, maintain all of
its properties and assets in good condition, repair and working order, ordinary
wear and tear excepted, except where any failure would not have and could not
reasonably be expected to cause a Material Adverse Effect.
SECTION 8.10. Environmental Notices.
Flowers shall furnish to the Bank prompt written notice of all Environmental
Liabilities, pending, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and Environmental
Releases of which Flowers shall have received actual notice or have actual
knowledge at, on, in, under or in any way affecting the Properties, and all
facts, events, or conditions that could lead to any of the foregoing, if the
amount of liability or of remediation cost to Flowers has or reasonably could be
expected to cause a Material Adverse Effect.
SECTION 8.11. Environmental Matters.
44
50
Flowers and its Material Subsidiaries will not, and will not knowingly permit
any Third Party to, use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, or otherwise handle, or ship or
transport to or from the Properties any Hazardous Materials in violation of
applicable Environmental Requirements, except to the extent that failure to
comply would not have and reasonably could not be expected to cause a Material
Adverse Effect.
SECTION 8.12. Environmental Release.
Flowers agrees that upon its becoming aware of the occurrence of an
Environmental Release, except for any Environmental Release which occurred in
substantial compliance with all Environmental Requirements, at or on any of the
Properties it will act promptly to determine the extent of, and to take such
remedial action to eliminate, any such Environmental Release, whether or not
ordered or otherwise directed to do so by any Environmental Authority, except to
the extent that failure to take remedial action would not have and reasonably
could not be expected to cause a Material Adverse Effect.
SECTION 8.13. Transactions with Affiliates.
Neither Flowers nor any of its Material Subsidiaries shall enter into, or be a
party to, any transaction with any Affiliate of Flowers or such Material
Subsidiary (which Affiliate is not Flowers or a Restricted Subsidiary, other
than a Person in which Flowers or such Material Subsidiary owns less than a
majority interest and which, if it were a Restricted Subsidiary, would not be a
Material Subsidiary), except as permitted by law and in the ordinary course of
business and pursuant to reasonable terms which either (x) are no less favorable
to Flowers or such Material Subsidiary than would be obtained in a comparable
arm's length transaction with a Person which is not an Affiliate or (y) have
been approved by a majority of the Board of Directors of Flowers or such
Material Subsidiary; provided, that the foregoing shall not affect the ability
of Flowers or any Material Subsidiary to determine, in its sole discretion, the
amount or form of executive or director compensation from time to time.
SECTION 8.14. Loans or Advances.
Neither Flowers nor any of its Material Subsidiaries shall make loans or
advances to any Person except as permitted by Section 8.16 and except: (i) loans
or advances to employees not exceeding $10,000,000 in the aggregate principal
amount outstanding at any time, in each case made in the ordinary course of
business and consistent with practices existing on the Closing Date; (ii)
deposits required by government agencies or public utilities; (iii) loans or
advances to and among Flowers and its Wholly Owned Subsidiaries; and (iv) other
loans or advances in an aggregate amount outstanding which, together with
Investments permitted by clause (vi) other loans or advances, to Persons other
than the Unrestricted Subsidiaries (loans and advances to Unrestricted
Subsidiaries not being permitted), in an aggregate amount outstanding which,
together with Investments permitted by clause (vi) of Section 8.15 do not exceed
15% of Adjusted Consolidated Total Assets as of the last day of the immediately
preceding Fiscal Quarter; provided that after
45
51
giving effect to the making of any loans, advances, or deposits permitted by
this Section, no Default shall be in existence or be created thereby.
SECTION 8.15. Investments.
Neither Flowers nor any of its Restricted Subsidiaries shall make Investments in
any Person except as permitted by Section 8.14 and except Investments in (i)
direct obligations of the United States Government maturing within one year,
(ii) certificates of deposit issued by a commercial bank whose credit is
satisfactory to the Bank, (iii) commercial paper rated A1 or the equivalent
thereof by Standard & Poor's Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. or
P1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc. and in either
case maturing within 6 months after the date of acquisition; (iv) tender bonds
the payment of the principal of and interest on which is fully supported by a
letter of credit issued by a United States bank whose long-term certificates of
deposit are rated at least AA or the equivalent thereof by Standard & Poor's
Corporation and Aa or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc.;
(v) Investments by Flowers or any Restricted Subsidiary in the stock (or other
ownership interests) or assets of any Person in the food or beverage business or
any related line of business and/or (vi) other Investments in an aggregate
amount outstanding which, together with loans and advances permitted by clause
(iv) of Section 8.14, do not exceed 15% of Adjusted Consolidated Total Assets as
of the last day of the immediately preceding Fiscal Quarter, and which, as to
Investments in Keebler, constitute Permitted Keebler Investments; provided,
however, immediately after giving effect to the making of any Investment, no
Default shall have occurred and be continuing.
SECTION 8.16. Negative Pledge.
Neither Flowers nor any Restricted Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by it, except:
(a) Liens existing on January 30, 1998, securing Indebtedness
outstanding on such date in an aggregate principal amount not exceeding
$24,000,000;
(b) any Lien existing on any specific fixed asset of any corporation at
the time such corporation becomes a Restricted Subsidiary and not created in
contemplation of such event;
(c) any Lien on any specific fixed asset (real or personal) securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring or constructing such asset, provided that such Lien
attaches to such asset concurrently with or within 18 months after the
acquisition or completion of construction thereof;
(d) any Lien on any specific fixed asset of any corporation existing at
the time such corporation is merged or consolidated with or into Flowers or a
Restricted Subsidiary and not created in contemplation of such event;
46
52
(e) any Lien existing on any specific fixed asset prior to the
acquisition thereof by Flowers or a Restricted Subsidiary and not created in
contemplation of such acquisition;
(f) Liens on assets of a Restricted Subsidiary securing Indebtedness
owing by any Restricted Subsidiary to Flowers or by any Restricted Subsidiary to
another Restricted Subsidiary;
(g) any Lien arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any Lien permitted by any of the
foregoing paragraphs of this Section, provided that (i) such Indebtedness is not
secured by any additional assets, and (ii) the amount of such Indebtedness
secured by any such Lien is not increased;
(h) Liens incidental to the conduct of its business or the ownership of
its assets which (i) do not secure Indebtedness and (ii) do not in the aggregate
materially detract from the value of its assets or materially impair the use
thereof in the operation of its business;
(i) Liens imposed by any governmental authority for taxes, assessments
or charges not yet delinquent or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the books of Flowers or any of its Subsidiaries, as the case may be, in
accordance with GAAP;
(j) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business (whether or not
statutory) which are not overdue for a period of more than 30 days or which are
being contested in good faith and by appropriate proceedings, for which a
reserve or other appropriate provisions, if any, as shall be required by GAAP
shall have been made;
(k) Liens, pledges or deposits to secure non-delinquent obligations
under worker's compensation, unemployment insurance and other social security
legislation and Liens arising from the pledge by Flowers or any of its
Subsidiaries of industrial revenue bonds or other instruments to secure
reimbursement obligations under letters of credit issued to support the payment
of such bonds or instruments;
(1) Liens on capital stock of or other ownership interests in any
Person not a Restricted Subsidiary of Flowers securing Indebtedness of such
Person;
(m) Liens resulting from progress payments or partial payments under
United States government contracts or subcontracts;
(n) Liens arising from legal proceedings, so long as such proceedings
are being contested in good faith by appropriate proceedings diligently
conducted and so long as execution is stayed on all judgments resulting from any
such proceedings;
(o) any Lien on Margin Stock;
47
53
(p) grants of security and rights of setoff in deposit or credit
accounts, including demand, savings, passbook, share draft or like accounts,
certificates of deposit, money market accounts, items held for collection or
deposit, commercial paper, negotiable instruments and similar accounts and
instruments held at banks or financial institutions to secure the payment or
reimbursement under overdraft, acceptance and similar facilities and rights of
setoff, banker's liens and other similar rights arising solely by operation of
law;
(q) Liens arising from the pledge by Flowers or any of its Subsidiaries
of industrial revenue bonds or similar instruments to secure reimbursement
obligations under letters of credit issued to support the payment of such bonds;
and
(r) Liens not otherwise permitted by the foregoing paragraphs of this
Section securing Indebtedness (other than indebtedness represented by the Notes)
in an aggregate principal amount at any time outstanding which, together with
the aggregate amount of Indebtedness of Restricted Subsidiaries permitted by
Section 8.20(iv), does not exceed 20% of Adjusted Consolidated Net Worth as of
the last day of the immediately preceding Fiscal Quarter.
SECTION 8.17. Adjusted Fixed Charges Coverage Ratio.
At the end of each Fiscal Quarter, commencing with the third Fiscal
Quarter of the 1999 Fiscal Year, the ratio of Adjusted EBILT to Adjusted
Consolidated Fixed Charges shall at all times be greater than ratio set forth
below for each Fiscal Quarter of each Fiscal Year set forth below:
Adjusted Fixed Charges
Fiscal Quarter Fiscal Year Coverage Ratio
Third 1999 1.50 to 1.0
Fourth 1999 1.45 to 1.0
First 2000 1.20 to 1.0
Second 2000 1.10 to 1.0
Third 2000 1.20 to 1.0
Fourth 2000 1.50 to 1.0
First 2001 1.65 to 1.0
Second 2001 1.65 to 1.0
Third 2001 1.75 to 1.0
Fourth 2001
and thereafter 2.00 to 1.0
SECTION 8.18. Leverage Ratio.
The Leverage Ratio shall at all times be less than (i) through and
including the third Fiscal Quarter of Fiscal Year 2000, 0.65 to 1.0 and (ii)
during and after the fourth Fiscal Quarter of Fiscal Year 2000, 0.60 to 1.0.
48
54
SECTION 8.19. Minimum Consolidated Net Worth.
Adjusted Consolidated Net Worth will at no time be less than $487,569,000, plus
the sum of (x) 50% of the cumulative Net Proceeds of Capital Stock received
during any period after April 27, 1998, plus (y) 50% of any equity resulting
from a conversion of Indebtedness of Flowers during any period after April 27,
1998, less (z) any amount of equity of Flowers repurchased during any period
after April 27, 1998, calculated quarterly at the end of each Fiscal Quarter.
SECTION 8.20. Minimum Adjusted Consolidated EBIDTA.
At the end of each Fiscal Quarter, commencing with the Fourth Fiscal
Quarter of Fiscal Year 1999, Adjusted Consolidated EBITDA shall at all times be
greater than amount set forth below for each Fiscal Quarter of each Fiscal Year
set forth below:
Fiscal Quarter Fiscal Year Adjusted Consolidated EBITDA
Fourth 1999 $32,000,000
First 2000 $32,000,000
Second 2000 $29,000,000
Third 2000 $44,000,000
Fourth 2000 $63,000,000
SECTION 8.21. Subsidiary Borrowings.
Flowers shall not permit any Restricted Subsidiary to become liable for any
Indebtedness, whether secured or unsecured, except: (i) such of the foregoing as
is owed to Flowers or another Wholly-Owned Subsidiary; (ii) Indebtedness or
obligations secured by Liens permitted by Section 8.16; (iii) Indebtedness or
obligations of a Subsidiary outstanding at the time such Subsidiary becomes a
Subsidiary, provided that (a) such Indebtedness shall not have been incurred in
contemplation of such Subsidiary becoming a Subsidiary, and (b) immediately
after such Subsidiary becomes a Subsidiary, no Default or Event of Default shall
exist, and provided, further, that such Indebtedness may not be extended,
renewed, or refunded except as otherwise permitted by this Agreement; and (iv)
other Indebtedness which, when combined with the total of the Indebtedness
secured by all Liens permitted by Section 8.16(r), without duplication, does not
exceed 20% of Adjusted Consolidated Net Worth as of the last day of the
immediately preceding Fiscal Quarter.
SECTION 8.22. Collateral Protection Covenants.
In addition to the covenants set forth above, and notwithstanding whether or not
any of the following would be otherwise permitted thereby, Flowers, in express
acknowledgment that the Bank and each Participant has entered into this
Agreement and the transactions contemplated hereby in express reliance upon
Flowers covenants set forth herein to continue to administer and
49
55
operate the Distributor Routes in accordance with its Customary Practices,
Flowers hereby covenants and agrees that it shall, and shall cause each of its
Subsidiaries to:
(a) Not in any Fiscal Year, terminate or discontinue more than
one-third of the Distributor Routes for which there is an outstanding Loan
hereunder;
(b) Comply in all material respects with the terms of the Distributor's
Agreement and administer the terms thereof in good faith and in accordance with
Flowers' Customary Practices;
(c) Not amend or materially modify the terms of the Distributor's
Agreements or any other Distributor Loan Document without the prior written
consent of the Bank; provided that, unless an Event of Default has occurred and
is continuing or Flowers has no current liability under the repurchase
obligation set forth in Section 4.01, Flowers may terminate any Distributor
Route in accordance with its Customary Practices as long as Flowers provides the
Bank written notice thereof within sixty (60) days thereafter and Flowers
otherwise acts in good faith to sell the Distributor Route in accordance with
its Customary Practices; if an Event of Default has occurred and is continuing
or Flowers has no repurchase obligation pursuant to Section 4.01, Flowers shall
not terminate any Distributor Route without the prior written consent of the
Bank;
(d) Not sell, transfer, lease or otherwise dispose of any of its right,
title and interest in and to the Distributor's Agreements or other Distributor
Loan Documents, the Proprietary Administrative Services, the trademarks used in
connection with the Distributor's Agreements, or the stock of any Selling
Subsidiary who is party to a Distribution Agreement pledged to the Bank pursuant
to the Program Documents;
(e) Not offer, directly or indirectly, any competing loan facility for
the purposes of refinancing the Loans hereunder unless such refinancing
opportunity is offered to all Distributors on an equal basis;
(f) With respect to a Defaulted Loan, where an Event of Default has
occurred and is continuing or Flowers has no current repurchase obligation
pursuant to Section 4.01, waive any right of first refusal with respect to a
sale of the Distributor Route by the Bank in a public foreclosure sale (provided
Flowers is provided notice and an opportunity to appear at the sale) or any
right to approve or otherwise block a sale of the Distributor Route by the Bank.
Without otherwise limiting the remedies of the Bank upon an Event of Default,
including, without limitation, the right to bring a breach of contract action
for failure of Flowers to comply with any other provision of this Section 8.21,
the Bank acknowledges and agrees that any breach by Flowers of the covenant set
forth in Section 8.21(a) above shall not provide the Bank with any claim for
damages against Flowers or any Selling Subsidiary in respect of any Loan once
Flowers no longer has the obligation hereunder to repurchase Defaulted Loans.
SECTION 8.23. Separateness from Unrestricted Subsidiaries.
50
56
Flowers shall conduct its business and operations in accordance with the
following provisions:
(a) maintain books and records and bank accounts separate from those of
the Unrestricted Subsidiaries;
(b) maintain its bank accounts and all its other assets separate from
those of the Unrestricted Subsidiaries;
(c) hold itself out to creditors and the public as a legal entity
separate and distinct from the Unrestricted Subsidiaries;
(d) prepare separate tax returns and financial statements showing it as
a separate member of a consolidated group of which the Unrestricted Subsidiaries
also are members;
(e) allocate and charge fairly and reasonably any common employee or
overhead shared with any of the Unrestricted Subsidiaries;
(f) transact all business with Unrestricted Subsidiaries on an arm's
length basis and enter into transactions with Unrestricted Subsidiaries only on
a commercially reasonable basis;
(g) conduct business in its own name and use separate stationery,
invoices and checks;
(h) not commingle its assets or funds with those of any Unrestricted
Subsidiary;
(i) not assume, Guarantee or pay the Indebtedness of any Unrestricted
Subsidiary;
(j) pay its own liabilities and expenses only out of its own funds, and
not pay any liabilities and expenses of any of the Unrestricted Subsidiaries;
(k) pay salaries of its own employees from its own funds, and not pay
salaries of the employees of any Unrestricted Subsidiary;
(l) not hold out its credit as being available to satisfy the
obligations of any Unrestricted Subsidiary;
(m) not make loans to any Unrestricted Subsidiary or buy or hold
evidence of indebtedness issued by any Unrestricted Subsidiary;
(n) not pledge its assets for the benefit of any Unrestricted
Subsidiary; and
(o) correct any known misunderstanding regarding its identity as being
separate from the Unrestricted Subsidiaries.
SECTION 8.24. Year 2000 Compliance.
51
57
Flowers will meet the milestones as to all Mission Critical Systems and
Equipment contained in the Y2K Plan (other than testing) on or before October
15, 1999, and will have all Mission Critical Systems and Equipment Year 2000
Compliant and Ready (including all internal and external testing), on or before
November 1, 1999, except where failure to meet the milestones would not have or
could not reasonably be expected to cause a Material Adverse Effect.
ARTICLE IX.
EVENTS OF DEFAULT AND ESCROW FUNDING OBLIGATION
SECTION 9.01. Events of Default.
Any one or more of the following shall constitute an Event of Default hereunder:
(a) Flowers fails to pay when due any repurchase obligation, Servicer
Advance, or its Escrow Funding Obligation, or other payment due and payable
hereunder within five (5) days of its due date; or
(b) Flowers shall fail to observe or perform any covenant contained in:
(i) Sections 8.01(e), 8.01(i), 8.01(j), 8.02(ii), 8.03 through 8.05, inclusive,
Sections 8.17 through 8.19, inclusive, and Sections 8.20 or 8.24; or (ii)
Sections 8.14, 8.15 or 8.21, and with respect to this clause (ii) such failure
shall not have been cured within 10 days after the earlier to occur of (1)
written notice thereof has been given to Flowers by the Bank at the request of
any Participant or (2) any Responsible Officer of Flowers otherwise becomes
aware of any such failure; or
(c) Flowers shall fail to observe or perform any covenant or agreement
contained or incorporated by reference in this Agreement (other than those
covered by paragraph (a) or (b) above) or the Servicing Agreement and such
failure shall not have been cured within 30 days after the earlier to occur of
(i) written notice thereof has been given to Flowers by the Bank or (ii) any
Responsible Officer of Flowers otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or statement made by
Flowers or any Selling Subsidiary in Article VII of this Agreement, in the
Servicing Agreement or in any certificate, financial statement or other document
delivered pursuant to this Agreement (other than any representation, warranty,
certification or statement set forth in Section 7.18(a) or (b) hereof or which
relates, and to the extent it relates, to a Distributor or the Distributor Loan
Documents of a Distributor, the breach of which shall be governed by Section
4.02 hereof) shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or
(e) Flowers or any Material Subsidiary shall fail to make any payment
in respect of Indebtedness in an aggregate amount outstanding in excess of
$10,000,000 (other than hereunder) when due or within any applicable grace
period; or
52
58
(f) any event or condition shall occur which results in the
acceleration of the maturity of Indebtedness or, as a result of any event of
default, there is a requirement for the mandatory purchase or sale of property
subject to any "synthetic lease" (meaning a lease transaction under which the
obligations of Flowers are treated as debt for tax purposes but not under GAAP)
and/or the payment of any final rent payment or guaranteed residual amount with
respect thereto (any such obligation to purchase or sell property or pay a final
rent payment or guaranteed residual amount under a synthetic lease as a result
of an event of default thereunder being a "synthetic lease obligation") in an
aggregate amount outstanding in excess of $10,000,000 of Flowers or any Material
Subsidiary (including, without limitation, any required mandatory prepayment or
"put" of such Indebtedness or, as a result of an event of default, a synthetic
lease obligation, to Flowers or any Material Subsidiary) or enables (or, with
the giving of notice or lapse of time or both, would enable) the holders of such
Indebtedness or commitment therefor or lessor under any such synthetic lease or
any Person acting on such holders' or lessor's behalf to accelerate the maturity
thereof or terminate any such commitment or to require, as a result of an event
of default, the purchase or sale of such property or the payment of any other
synthetic lease obligation (including, without limitation, any required
mandatory prepayment or "put" of such Indebtedness or synthetic lease obligation
to Flowers or any Material Subsidiary); or
(g) Flowers or any Material Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced against
Flowers or any Material Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against Flowers or any Material Subsidiary under the
federal bankruptcy laws as now or hereafter in effect; or
(i) Flowers or any member of the Controlled Group shall fail to pay
when due any amount of $2,000,000 or greater which it shall have become liable
to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by Flowers, any
member of the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans to enforce Section 515 or
53
59
4219 (c) (5) of ERISA and such proceeding shall not have been dismissed within
30 days thereafter; or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated, in each case if the amount of Unfunded Vested Liabilities is in
excess of $10,000,000; or
(j) one or more judgments or orders for the payment of money in an
aggregate amount in excess of $20,000,000 shall be rendered against Flowers or
any Material Subsidiary and such judgment or order shall continue unbonded,
undischarged, unsatisfied and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against Flowers or any Material
Subsidiary under Section 6323 of the Code, if the amount involved is in excess
of $20,000,000, or a lien of the PBGC shall be filed against Flowers or any
Material Subsidiary under Section 4068 of ERISA and in either case such lien
shall remain undischarged for a period of 25 days after the date of filing, if
the amount involved is in excess of $10,000,000; or
(1) in any 12 month period or less, (i) 50% or more of the members of
the full Board of Directors of Flowers shall have resigned or been removed or
replaced, or (ii) any Person or "Group" (as defined in Section 2(d) (3) of the
Securities Exchange Act of 1934, as amended) (other than an employee benefit or
stock ownership plan of Flowers) shall have acquired, during such period,
directly or indirectly, more than 30% of the capital stock (whether common or
preferred or a combination thereof) of Flowers, provided that Flowers' purchase
of treasury shares of shares of its capital stock outstanding on the date hereof
which results in one or more of Flowers' shareholders of record as of the date
of this Agreement owning 30% or more of Flowers' Capital Stock shall not
constitute an acquisition for purposes of this Section 9.01(l); or
(m) the occurrence of any event, act, occurrence, or condition which
either has or which reasonably could be expected to cause a Material Adverse
Effect; or
(n) in the event that this Agreement is deemed to constitute a security
agreement, any security interest granted to the Bank herein or therein is
invalid or unenforceable; or
(o) the Flowers Security Agreement shall fail to grant a valid,
enforceable first priority security interest in the collateral described herein.
SECTION 9.02. Remedies on Default.
(a) Upon the occurrence and during the continuation of an Event of
Default (other than an Event of Default described in Section 9.01(g) or (h)),
the Bank may, with the consent of the Required Participants, and upon the
written request of the Required Participants, shall, take any or all of the
following actions, without prejudice to the rights of the Servicer or any
Participant to enforce its claims against Flowers, any other Credit Party, any
Distributor or other obligor with respect to any Loan: (i) declare the
Commitment terminated, whereupon the Commitment shall terminate immediately and
any unpaid Commitment Fee shall forthwith become due and payable
54
60
without any other notice of any kind (with the express understanding that such
termination of the Commitment shall not result in a termination of the
Participating Commitments of each Participant), (ii) demand that Flowers honor
its Escrow Funding Obligation, by placing in escrow with the Bank the Repurchase
Price for each of the Notes then held by the Bank (subject to the limitations of
the Maximum Recourse Amount), without presentment, demand, protest or any other
notice of any kind, all of which are expressly waived, (iii) replace Flowers as
the Servicer of the Notes under the Servicing Agreement with the Bank or any of
its agents, representatives or appointees and (iv) take any other action and
exercise any other remedy available by contract or at law, all of which shall be
cumulative.
(b) Upon the occurrence of an Event of Default under Section 9.01(g) or
(h), (i) all obligations of the Bank to Flowers, including, without limitation,
the Commitment shall automatically terminate and any unpaid Commitment Fee shall
forthwith become due and payable without any other notice of any kind with the
express understanding that such termination of the Commitment shall not result
in a termination of the Participating Commitments of each Participant), (ii) the
obligation of Flowers to honor its Escrow Funding Obligation, by placing in
escrow with the Bank the Repurchase Price for each of the Notes then held by the
Bank (subject to the limitations of the Maximum Recourse Amount) hereof, shall
be immediately due and payable, without presentment, demand, protest, or any
other notice of any kind, all of which are expressly waived, (iii) the Bank
shall automatically replace Flowers as the Servicer with respect to the Notes
under the Servicing Agreement and (iv) the Bank may take any other action and
exercise any other remedy available by contract or at law, all of which shall be
cumulative.
(c) Upon the occurrence of an Event of Default and acceleration of the
Escrow Funding Obligation as provided in (a) or (b) above, the Bank may pursue
any remedy available under this Agreement or any other Program Document, or
available at law or in equity, all of which shall be cumulative.
(d) All payments with respect to this Agreement received by the Bank or
any after the occurrence of an Event of Default and acceleration of the
repurchase obligation, shall be applied (i) first to the costs and expenses
(including attorneys' fees and disbursements) incurred by the Bank as a result
of the Event of Default and to the payment of any fees owing to the Bank as
Servicer under the Servicing Agreement, (ii) second, to the payment of
Commitment Fee, if any, owing to the Participants hereunder, (iii) third, to the
payment of accrued interest on the Funded Participant's Interests hereunder,
(iv) fourth, to the payment of the fees owing to the Bank under the Servicing
Agreement, (v) fifth, to the payment of the fees owing to the Servicer under the
Servicing Agreement, (vi) sixth to the repayment of the Funded Participant's
Interests outstanding hereunder, (vii) seventh, to the payment of all other
amounts owing to the Bank or any Participant hereunder, and (viii) eighth, to
such Persons as may be legally entitled thereto.
55
61
ARTICLE X.
ESCROW FUNDING OBLIGATION AND ESCROW
SECTION 10.01 Appointment of Escrow Agent. Flowers hereby appoints,
authorizes and directs the Bank, as Escrow Agent (in such capacity herein called
the "Escrow Agent,") to act as escrow agent to receive, hold, invest and
distribute the escrow funds deposited with the Escrow Agent pursuant to the
terms and conditions hereof.
SECTION 10.02 Deposit of Escrow Funds. In the event
Flowers has an obligation to comply with its Escrow Funding Obligation, Flowers
will deposit immediately available funds, in an amount not to exceed the Maximum
Recourse Amount, with the Escrow Agent in an escrow account established by the
Escrow Agent for the purposes of this Agreement (the "Escrow Account").
On the first day of each Fiscal Quarter, Flowers shall recalculate the
Maximum Recourse Amount in accordance with Section 5.01 and deposit any
increased amount of the Maximum Recourse Amount resulting from such calculation
with the Escrow Agent on such date, together with any amounts used by the Bank
to satisfy the repurchase obligation of Flowers with respect to any Ineligible
Note.
SECTION 10.03 The Escrow Account. All escrow funds delivered to the
Escrow Agent pursuant hereto shall be held by the Escrow Agent in the Escrow
Account, and the Escrow Agent shall invest any cash held by it in Permitted
Investments for the benefit of Flowers.
SECTION 10.04 Payments of Repurchase Price for Defaulted Loans. The
Escrow Agent is authorized to pay the Bank from the escrowed funds all amounts
due on Defaulted Loans and, to the extent not paid by Flowers in accordance with
Section 4.02, Ineligible Notes.
SECTION 10.05 Reduction of Amount in Escrow. (a) Quarterly, beginning
90 days after Flowers complies with its Escrow Funding Obligation, the Escrow
Agent will pay to Flowers all amounts in the Escrow Account in excess of the
then outstanding Maximum Recourse Amount.
(b) After all the Notes have been paid in full and this Agreement
terminated, the Escrow Agent shall pay all amounts contained in the Escrow
Account to Flowers, after deducting any fees payable for its escrow services.
56
62
SECTION 10.06 Fees and Expenses of Escrow Agent. The customary fees and
expenses of the Escrow Agent shall be paid by Flowers, and the Escrow Agent is
authorized to deduct such fees and expenses from the funds in the Escrow Account
prior to making any other payments permitted hereunder.
SECTION 10.07 Liability of Escrow Agent.
(a) Liability Limitations. In performing any of its duties
under this Agreement, or upon the claimed failure to perform its duties
hereunder, Escrow Agent shall not be liable to anyone for any damages, losses,
or expenses which any of them may incur as a result of the Escrow Agent so
acting, or failing to act; provided, however, Escrow Agent shall be liable for
damages arising out of its willful default or gross negligence under this
Agreement. Accordingly, Escrow Agent shall not incur any such liability with
respect to (i) any action taken or omitted to be taken in good faith upon advice
of its counsel given with respect to any questions relating to the duties and
responsibilities of the Escrow Agent hereunder or (ii) to any action taken or
omitted to be taken in reliance upon any document; including any written notice
or instructions provided for in this Agreement, not only as to its due execution
and to the validity and effectiveness of its provisions but also as to the truth
and accuracy of any information contained therein, which the Escrow Agent shall
in good faith believe to be genuine, to have been signed or presented by the
purported proper person or persons and to conform with the provisions of this
Agreement. Written instructions provided to Escrow Agent hereunder by the Bank
shall be signed by an authorized representative(s) of the Bank. The Escrow Agent
makes no representations and shall not be liable for any deficiencies in any
deposit made under the Agreement. The Escrow Agent shall make no disbursement,
investment or other use of funds until and unless it has collected funds. The
Escrow Agent shall not be liable for collection items until the proceeds of the
same in actual cash have been received or the Federal Reserve has given the
Escrow Agent credit for the funds.
(b) Indemnification. Flowers hereby agrees to indemnify and
hold harmless the Escrow Agent from and against any and all losses, claims,
damages, liabilities and expenses, including without limitations, reasonable
costs of investigation and counsel fees and disbursements (both at the trial and
appellate levels) which may be imposed on the Escrow Agent or incurred by it in
connection with its acceptance of its appointment as Escrow Agent hereunder or
the performance of its duties hereunder, including, without limitation, any
litigation arising from this Agreement or involving the subject matter thereof.
The indemnity provisions of this paragraph (b) shall survive the termination of
this Agreement and the resignation or removal of the Escrow Agent.
(c) Disputes. In the event of a dispute between any of the
parties hereto as to the proper disposition of funds or other property held by
the Escrow Agent, the Escrow Agent shall continue to hold the same undisbursed
until such time as the disputing parties agree in writing as to a proper
disposition of such funds or the property. If such arrangement is not
forthcoming, the Escrow Agent shall be entitled to tender into the registry or
custody of any court
57
63
of competent jurisdiction all money or property in its hands under the terms of
this agreement, whereupon the parties hereto agree the Escrow Agent shall be
discharged from all further duties under this Agreement. The filing of any such
legal proceedings shall not deprive the Escrow Agent of its compensation earned
prior to such filing.
(d) Duties and Responsibilities. The duties and
responsibilities of the Escrow Agent hereunder shall be limited to those
expressly set forth in this Agreement, and the Escrow Agent shall not be bound
in any way by any other contract or agreement by or among the Bank, the
Participants and Flowers whether or not the Escrow Agent has knowledge of any
such contract or agreement or the terms and conditions thereof.
(e) Attachment. If all or any part of the escrowed funds is
attached, garnished or levied upon, pursuant to any court order, or if the
delivery thereof shall be stayed or enjoined by a court order, or any other
order, judgment or decree shall be made or entered by any court of competent
jurisdiction effecting the escrowed funds or any part thereof or any act of the
Escrow Agent, then the Escrow Agent is hereby authorized to obey and comply with
such writ, order, judgment or decree so entered or issued; and if the Escrow
Agent obeys or complies with any such writ, order, judgment or decree, then it
shall not be liable to any other party hereto or any other person by reason of
such compliance.
ARTICLE XI.
THE BANK
SECTION 11.01. Appointment of the Bank as Agent.
To the extent of its ownership interest in the Loans, each Participant hereby
designates Bank as its agent to administer all matters concerning the Loans and
to act as herein specified. Each Participant hereby irrevocably authorizes the
Bank to take such actions on its behalf under the provisions of this Agreement,
the other Program Documents, and all other instruments and agreements referred
to herein or therein, and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Bank by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Bank may perform any of its duties hereunder by or
through its agents or employees.
SECTION 11.02. Nature of Duties of the Bank.
The Bank shall have no duties or responsibilities except those expressly set
forth in this Agreement and the other Program Documents. None of the Bank nor
any of its respective officers, directors, employees or agents shall be liable
for any action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful misconduct.
The Bank shall not have by reason of this Agreement a fiduciary relationship in
respect of any Participant; and nothing in this Agreement, express or implied,
is intended to or
58
64
shall be so construed as to impose upon the Bank any obligations in respect of
this Agreement or the other Program Documents except as expressly set forth
herein.
SECTION 11.03. Lack of Reliance on the Bank
(a) Independently and without reliance upon the Bank, each Participant,
to the extent it deems appropriate, has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of Flowers
and its Subsidiaries in connection with the taking or not taking of any action
in connection herewith, and (ii) its own appraisal of the creditworthiness of
Flowers and its Subsidiaries, and, except as expressly provided in this
Agreement, the Bank shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Participant with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter.
(b) The Bank shall not be responsible to any Participant for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, priority or sufficiency of this Agreement, any Program Document,
any Distributor Loan Document or any other documents contemplated hereby or
thereby, or the financial condition of Flowers, any of its Subsidiaries or any
Distributor, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or the other documents contemplated hereby or thereby, or the
financial condition of Flowers, any of its Subsidiaries or any Distributor, or
the existence or possible existence of any Default or Event of Default.
SECTION 11.04. Certain Rights of the Bank.
If the Bank shall request instructions from the Required Participants with
respect to any action or actions (including the failure to act) in connection
with this Agreement, the Bank shall be entitled to refrain from such act or
taking such act, unless and until the Bank shall have received instructions from
the Required Participants; and the Bank shall not incur liability in any Person
by reason of so refraining. Without limiting the foregoing, no Participant shall
have any right of action whatsoever against the Bank as a result of the Bank
acting or refraining from acting hereunder in accordance with the instructions
of the Required Participants.
SECTION 11.05. Reliance by the Bank.
The Bank shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing, resolution, notice, statement, certificate, telex,
teletype or telecopier message, cable gram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person. The Bank
may consult with legal counsel (including counsel for any Credit Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted
59
65
to be taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
SECTION 11.06. Indemnification of the Bank.
To the extent the Bank is not reimbursed and indemnified by Flowers, each
Participant will reimburse and indemnify the Bank, ratably according to the
respective Pro Rata Shares, in either case, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Bank in performing its duties hereunder, in any way relating to or
arising out of this Agreement or the other Program Documents; provided that no
Participant shall be liable to the Bank for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Bank's gross negligence or willful
misconduct.
SECTION 11.07. The Bank in its Individual Capacity.
With respect to its obligations under this Agreement and the amounts advanced by
it, the Bank shall have the same rights and powers hereunder as any other
Participant and may exercise the same as though it were not performing the
duties specified herein; and the terms "Participants", "Required Participants",
or any similar terms shall, unless the context clearly otherwise indicates,
include the Bank in its individual capacity. The Bank may accept deposits from,
lend money to, and generally engage in any kind of banking, trust, financial
advisory or other business with Flowers or its Subsidiaries or any affiliate of
Flowers and its Subsidiaries as if it were not performing the duties specified
herein, and may accept fees and other consideration from Flowers and its
Subsidiaries for services in connection with this Agreement and otherwise
without having to account for the same to the Participants.
SECTION 11.08. Holders of Participation Certificates.
The Bank may deem and treat the payee of any Participation Certificate as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Bank. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Participation Certificate
shall be conclusive and binding on any subsequent holder, transferee or assignee
of such Participation Certificate or of any Participation Certificate or
Certificates issued in exchange therefor.
ARTICLE XII.
MISCELLANEOUS
SECTION 12.01. No Waiver.
60
66
No delay or failure on the part of the Bank in the exercise of any right, power
or privilege granted under this Agreement, under any other Program Document, or
available at law or in equity, shall impair any such right, power or privilege
or be construed as a waiver of any Event of Default or any acquiescence therein.
No single or partial exercise of any such right, power or privilege shall
preclude the further exercise of such right, power or privilege. No waiver shall
be valid against the Bank unless made in writing and signed by the Bank, and
then only to the extent expressly specified therein.
SECTION 12.02. Notices.
Unless otherwise provided herein, all notices, requests and other communications
provided for hereunder shall be in writing (including bank wire, telex, telecopy
or similar teletransmission or writing) and shall be given at the following
addresses:
(1) If to the Bank, SunTrust Bank, Atlanta
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Strategic Partner Programs
Center Code 1923
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(2) If to Flowers, Flowers Industries, Inc.
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ 19 South
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice, request or other communication shall be effective (i) if given
by telecopy, when such telecopy is transmitted to the telecopy number specified
above and the appropriate answerback is received, (ii) if given by mail, upon
the earlier of receipt or the third Business Day after such communication is
deposited in the United States mails, registered or certified, with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means
(including, without limitation, by air courier), when delivered at the address
specified herein. Flowers or the Bank may change its address for notice purposes
by notice to the other parties in the manner provided herein.
SECTION 12.03. Governing Law.
61
67
This Agreement and all other Loan Documents shall be governed by and interpreted
in accordance with the laws of the State of Georgia.
SECTION 12.04. Survival of Representations and Warranties.
All representations and warranties contained herein or made by or furnished on
behalf of Flowers or the Selling Subsidiaries in connection herewith shall
survive the execution and delivery of this Agreement and all other Program
Documents.
SECTION 12.05. Descriptive Headings.
The descriptive headings of the several sections of this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
SECTION 12.06. Severability.
If any part of any provision contained in this Agreement or in any other Loan
Document shall be invalid or unenforceable under applicable law, said part shall
be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts of said provision or the remaining provisions.
SECTION 12.07. Time is of the Essence.
Time is of the essence in interpreting and performing this Agreement and all
other Loan Documents.
SECTION 12.08. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which, taken together, shall
constitute one and the same instrument.
SECTION 12.09. Payment of Costs.
Flowers shall pay all costs, expenses, taxes and fees (i) incurred by the Bank
in connection with the preparation, execution and delivery of this Agreement and
all other Program Documents including, without limitation, the costs and
professional fees of counsel for the Bank, Messrs. King & Spalding, whether or
not the transaction contemplated hereby shall be consummated, and any and all
stamp, intangible or other taxes that may be payable or determined in the future
to be payable in connection therewith; (ii) incurred by the Bank in connection
with the preparation, execution and delivery of any waiver, amendment or consent
by the Bank relating to the Program Documents, including, without limitation,
the costs and professional fees of counsel for the Bank; and (iii) incurred by
the Bank and the Participants in enforcing the Program Documents at any time
that an Event of Default has occurred and is continuing, including, without
limitation, attorneys' fees and expenses of counsel for the Bank and the
Participants.
62
68
SECTION 12.10. Benefit of Agreement; Assignments; Participations.
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto, provided that Flowers may not assign or transfer any of its interest
hereunder without the prior written consent of the Participants.
(b) Any Participant may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Participant.
(c) Each Participant may assign all of its interests, rights and
obligations under this Agreement (including all of its Participating Commitments
and the Funded Participant's Interest at the time owing to it and the
Participation Certificates held by it) to any Eligible Assignee; provided,
however, that (i) the Flowers and the Bank shall each have given its prior
written consent to such assignment (which consent shall not be unreasonably
withheld or delayed) unless such assignment is an Affiliate of the assigning
Participant or, in the case of the Flowers, unless an Event of Default has
occurred and is continuing hereunder, (ii) unless the Participant is assigning
its entire Participating Commitment, the amount of the Participating Commitment
of the assigning Participant subject to each assignment (determined as of the
date the assignment and acceptance with respect to such assignment is delivered
to the Bank) shall not be less than the lesser of (x) 50% of its original
Participating Commitment or (y) $5,000,000 and (iii) the parties to each such
assignment shall execute and deliver to the Bank an Assignment and Acceptance,
together with the Participation Certificate subject to such assignment and,
unless such assignment is to an Affiliate of such Participant, a processing and
recordation fee of $3,000. Within ten (10) Business Days after receipt of the
notice and the Assignment and Acceptance, Bank shall execute and deliver, in
exchange for the surrendered Participation Certificate, a new Participation
Certificate to the order of the assignor and such assignee in a principal amount
equal to the applicable Participating Commitment retained and assumed by it,
respectively, pursuant to such Assignment and Acceptance. Such new Participation
Certificate shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Participation Certificate, shall be dated
the date of the surrendered Participation Certificate which it replaces, and
shall otherwise be in substantially the form attached hereto.
(d) Each Participant may, without the consent of Flowers or the Bank,
sell sub-participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Participating Commitment and the Funded Participant's Interest
owing to it), provided, however, that (i) no Participant may sell a
sub-participation in its Participating Commitment (after giving effect to any
permitted assignment hereof) unless it retains an aggregate exposure of 25% of
its original Participating Commitment; provided, however, sales of
sub-participations to an Affiliate of such Participant shall not be included in
such calculation; provided, further, however, no such maximum amount shall be
applicable to any such sub-participation sold at any time there exists an Event
of Default hereunder, (ii) such Participant's obligations under this Agreement
shall remain unchanged, (iii)
63
69
such Participant shall remain solely responsible to the other parties hereto for
the performance of such obligations, and (iv) the sub-participating bank or
other entity shall not be entitled to the benefit (except through its selling
Participant) of the cost protection provisions contained in Article II of this
Agreement, (v) Flowers, Bank and the other Participants shall continue to deal
solely and directly with each Participant in connection with such Participant's
rights and obligations under this Agreement and the other Program Documents, and
(vi) in no event shall a selling Participant be obligated to the sub-participant
to take or refrain from taking any action hereunder except that such Participant
may agree that it will not (except as provided below), without the consent of
the sub-participant, agree to (A) the extension of any date fixed for the
payment of principal of or interest on the Funded Participant's Interests, (B)
the decrease of the amount of any principal, interest or fees due on any date
fixed for the payment thereof with respect to the Funded Participant's
Interests; (C) the increase in the committed amount of the Funded Participant's
Interests; (D) any decrease in the rate at which either interest is payable
thereon or (if the Participant is entitled to any part thereof) fee is payable
hereunder from the rate at which the Participant is entitled to receive interest
or fee (as the case may be) in respect of such participation, or (E) the release
of any guaranty given to support payment of Funded Participant's Interests (but
excluding any guaranty which is a Distributor Loan Document). Each Participant
shall promptly notify in writing the Bank and the Flowers of any sale of a
sub-participation hereunder and shall certify to Flowers and Bank its compliance
with the terms hereof.
SECTION 12.11. Third Party Beneficiaries.
No persons shall be deemed to be third party beneficiaries of this Agreement.
Except as otherwise expressly provided for in this Agreement, this Agreement is
solely for the benefit of Flowers and the Bank and their respective successors
and assigns, and no other person shall have any right, benefit, priority or
interest under, or because of the existence of, this Agreement.
SECTION 12.12. Cumulative Remedies; No Waiver.
The rights, powers, and remedies of the Bank provided herein or in any other
Program Document are cumulative and not exclusive of any right, power, or remedy
provided by law or equity.
SECTION 12.13. Amendments; Consents.
No amendment, modification, supplement, termination, or waiver of any provision
of this Agreement or any other Program Document, and no consent to any departure
by Flowers or any of their respective Subsidiaries therefrom, may in any event
be effective unless in writing signed by the Required Participants, and then
only in the specific instance and for the specific purpose given; provided that
no amendment, waiver or consent shall, unless in writing and signed by all the
Participants do any of the following: (i) waive any of the conditions specified
in Section 2.1 or Article IV, (ii) increase the Participating Commitments or
contractual obligations of the Participants to the Bank or Flowers under this
Agreement, (iii) reduce the principal of, or interest on, the Participation
Certificates or any fees hereunder, (iv) postpone any date fixed for the payment
in respect of principal of, or interest on, the Participation Certificates or
any fees
64
70
hereunder, (v) agree to release Flowers from its Escrow Funding Obligation, (vi)
modify the definition of "Required Participants," or (vii) modify this Section
12.13. Notwithstanding the foregoing, no amendment, waiver or consent shall,
unless in writing and signed by the Bank in addition to the Participants
required hereinabove to take such action, affect the rights or duties of the
Bank under this Agreement or under any other Program Document or Distributor
Loan Document. In addition, notwithstanding the foregoing, the Bank and Flowers
may, without the consent of or notice to the Participants, enter into
amendments, modifications or waivers with respect to the Servicing Agreement as
long as such amendments or modifications do not conflict with the terms of this
Agreement.
SECTION 12.14. Set-Off.
Upon the occurrence and during the continuation of an Event of Default, Flowers
authorizes each Participant, without notice or demand, to apply any indebtedness
due or to become due to Flowers from such Participant in satisfaction of any of
the indebtedness, liabilities or obligations of Flowers under this Agreement or
under any other Program Document, including, without limitation, the right to
set-off against any deposits or other cash collateral of Flowers held by
Participant.
SECTION 12.15. Indemnity.
Flowers agrees to protect, indemnify and save harmless the Bank and each
Participant (but not any sub-participants purchasing sub-participations pursuant
to Section 12.10(d) hereof) and all directors, officers, employees and agents of
the Bank and each Participant ( the "Indemnified Parties"), from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to or in connection with the execution and delivery of
this Agreement, the purchase or the making of the Loans or any of them or the
purchase of the Participant's Interests or any of them, the enforcement,
performance and administration of this Agreement or any powers granted to the
Bank or any Participant hereunder or under any Program Documents, any failure of
any representation and warranty of Flowers hereunder, any failure of Flowers or
any Selling Subsidiary to comply with the covenants set forth herein or the
terms of the Distributor Loan Documents, arising out of the relationship between
Flowers and its Subsidiaries and the Distributors or otherwise unless arising
solely from the gross negligence or willful or intentional misconduct of such
Indemnified Party as determined by a court of competent jurisdiction. The
indemnity contained in this section shall survive the termination of this
Agreement.
SECTION 12.16. Jurisdiction and Venue.
Flowers agrees, without power of revocation, that any civil suit or action
brought against it as a result of any of its obligations under this Agreement or
under any other Program Document may be brought against it either in the
Superior Court of ▇▇▇▇▇▇ County, Georgia, or in the United States District Court
for the Northern District of Georgia, and Flowers hereby irrevocably submits to
the jurisdiction of such courts and irrevocably waives, to the fullest extent
permitted by law,
65
71
any objections that it may now or hereafter have to the laying of the venue of
such civil suit or action and any claim that such civil suit or action has been
brought in an inconvenient forum, and Flowers agrees that final judgment in any
such civil suit or action shall be conclusive and binding upon it and shall be
enforceable against it by suit upon such judgment in any court of competent
jurisdiction.
SECTION 12.17. Waiver of Jury Trial.
To the extent permitted by applicable law, Flowers hereby waives the right to
trial by jury.
SECTION 12.18. Effect on Existing Loan Facility Agreement; Execution of
New Loan Documents.
Upon the Closing Date, all "Loans" (as defined under the Existing Loan Facility
Agreement) outstanding pursuant to the Existing Loan Facility Agreement shall be
deemed to be Loans outstanding hereunder, and the Existing Loan Facility
Agreement shall be of no further force and effect, except to the extent that all
indemnities set forth therein are deemed to expressly survive the termination
thereof.
SECTION 12.19. Termination of Agreement.
This Agreement shall terminate, except as otherwise provided herein, upon the
indefeasible payment in full of all amounts owing to the Bank pursuant to the
Program Documents and the termination of the Commitment.
66
72
WITNESS the hand and seal of the parties hereto through their duly
authorized officers, as of the date first above written.
FLOWERS INDUSTRIES, INC.
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Attest:
-------------------------------------
[Corporate Seal] Name:
--------------------------------
Title:
-------------------------------
73
Address for Notices: SUNTRUST BANK, ATLANTA, as the
Bank and as a Participant
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇.▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇ ▇▇▇▇▇▇ By:
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ --------------------------------
Name:
---------------------------
Title:
-------------------------
Participating Commitment: $60,000,000
Pro Rata Share: 75%
[SIGNATURE PAGE TO LOAN FACILITY AGREEMENT]
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ "RABOBANK NEDERLAND,"
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ BRANCH, as a Participant
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Services Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ By:
-----------------------------
with a copy to: Name:
------------------------
Title:
-----------------------
Rabobank Nederland
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ -----------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Name:
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇ ------------------------
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ Title:
-----------------------
Participating Commitment: $20,000,000
Pro Rata Share: 25%
[SIGNATURE PAGE TO LOAN FACILITY AGREEMENT]
75
SCHEDULE 5.01
Quarterly Threshold Amount and Non-Guaranteed Amount
QUARTERLY QUARTERLY NON-
STEP UP THRESHOLD GUARANTEED
QUARTER, YEAR & DATE AMOUNT AMOUNT AMOUNT
4th FY 1999 (1/1/00) $ 36,620,000 $ 43,380,000
Total FY 1999 5,520,000 $ 36,620,000 $ 43,380,000
1st FY 2000 (4/22/00) 1,520,000 $ 38,140,000 $ 41,860,000
2nd FY 2000 (7/15/00) 1,520,000 $ 39,660,000 $ 40,340,000
3rd FY 2000 (10/7/00) 1,520,000 $ 41,180,000 $ 38,820,000
4th FY 2000 (12/30/00) 1,520,000 $ 42,700,000 $ 37,300,000
Total FY 2000 6,080,000 $ 42,700,000 $ 37,300,000
1st FY 2001 (4/21/01) 1,620,000 $ 44,320,000 $ 35,680,000
2nd FY 2001 (7/14/01) 1,620,000 $ 45,940,000 $ 34,060,000
3rd FY 2001 (10/6/01) 1,620,000 $ 47,560,000 $ 32,440,000
4th FY 2001 (12/29/01) 1,620,000 $ 49,180,000 $ 30,820,000
Total FY 2001 6,480,000 $ 49,180,000 $ 30,820,000
1st FY 2002 (4/20/02) 1,720,000 $ 50,900,000 $ 29,100,000
2nd FY 2002 (7/13/02) 1,720,000 $ 52,620,000 $ 27,380,000
3rd FY 2002 (10/5/02) 1,720,000 $ 54,340,000 $ 25,660,000
4th FY 2002 (12/28/02) 1,720,000 $ 56,060,000 $ 23,940,000
Total FY 2002 6,880,000 $ 56,060,000 $ 23,940,000
1st FY 2003 (4/19/03) 1,820,000 $ 57,880,000 $ 22,120,000
2nd FY 2003 (7/12/03) 1,820,000 $ 59,700,000 $ 20,300,000
3rd FY 2003 (10/4/03) 1,820,000 $ 61,520,000 $ 18,480,000
4th FY 2003 (1/3/04) 1,820,000 $ 63,340,000 $ 16,660,000
Total FY 2003 7,280,000 $ 63,340,000 $ 16,660,000
76
1st FY 2004 (4/24/04) 1,820,000 $ 65,160,000 $ 14,840,000
2nd FY 2004 (7/17/04) 1,820,000 $ 66,980,000 $ 13,020,000
3rd FY 2004 (10/9/04) 1,820,000 $ 68,800,000 $ 11,200,000
4th FY 2004 (1/1/05) 1,820,000 $ 70,620,000 $ 9,380,000
Total FY 2004 7,280,000 $ 70,620,000 $ 9,380,000
1st FY 2005 (4/23/05) 845,000 $ 71,465,000 $ 8,535,000
2nd FY 2005 (7/16/05) 845,000 $ 72,310,000 $ 7,690,000
3rd FY 2005 (10/8/05) 845,000 $ 73,155,000 $ 6,845,000
4th FY 2005 (12/31/05) 845,000 $ 74,000,000 $ 6,000,000
Total FY 2005 3,380,000 $ 74,000,000 $ 6,000,000
Total 74,000,000
77
SCHEDULE 7.08
Subsidiaries
[To be provided by Flowers]
78
FIRST AMENDMENT TO LOAN FACILITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN FACILITY AGREEMENT ("Amendment") made as
of this 29th day of December, 1999, by and between FLOWERS INDUSTRIES, INC., a
Georgia corporation having its principal office in Thomasville, Georgia
("Flowers"), and SUNTRUST BANK, ATLANTA, a Georgia banking corporation, having
its principal office in Atlanta, Georgia ("SunTrust") and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND," New York Branch
("Rabobank") (SunTrust and Rabobank, together with any assignees thereof
becoming "Participants" pursuant to the terms of the Loan Facility Agreement,
the "Participants").
W I T N E S S E T H :
WHEREAS, Flowers and the Participants are parties to that certain Loan
Facility Agreement dated as of November 5, 1999 (as heretofore amended or
modified, the "Agreement"; all terms used herein without definition shall have
the meanings set forth in the Agreement); and
WHEREAS, Flowers has requested that the Participants amend the
Agreement as set forth herein, and the Participants are willing to so agree,
subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which hereby is acknowledged, the
parties hereby agree that the Agreement is hereby amended as follows:
1. Unless otherwise specifically defined herein, each term used
herein which is defined in the Agreement shall have the meaning assigned to such
term in the Agreement. Each reference to "hereof", "hereunder", "herein" and
"hereby" and each other similar reference and each reference to "this Agreement"
and each other similar reference contained in the Agreement shall from and after
the date hereof refer to the Agreement as amended hereby.
2. Section 8.01 (a)of the Agreement is hereby amended by adding
the following new clause (iii) to the end thereof;
(iii) simultaneously with the delivery of each set of
financial statements referred to in clauses (i) and (ii) above, a copy
of the auditor's management letter furnished to Flowers by such
independent public accountants; and
3. Section 8.17 of the Agreement hereby is deleted in its
entirety and the following is substituted therefor:
SECTION 8.17. Adjusted Fixed Charges Coverage Ratio
79
At the end of each Fiscal Quarter, commencing with the third
Fiscal Quarter of the 1999 Fiscal Year, the ratio of Adjusted EBILT to
Adjusted Consolidated Fixed Charges shall at all times be greater than
the ratio set forth below for each Fiscal Quarter of each Fiscal Year
set forth below:
Adjusted Fixed Charges
Fiscal Quarter Fiscal Year Coverage Ratio
-------------- ----------- --------------
Third 1999 1.50 to 1.0
Fourth 1999 1.30 to 1.0
First 2000 1.20 to 1.0
Second 2000 1.10 to 1.0
Third 2000 1.20 to 1.0
Fourth 2000 1.50 to 1.0
First 2001 1.65 to 1.0
Second 2001 1.65 to 1.0
Third 2001 1.75 to 1.0
Fourth 2001
and thereafter 2.00 to 1.0
4. Section 8.20 of the Agreement hereby is deleted in its
entirety and the following is substituted therefor:
SECTION 8.20. Minimum Adjusted Consolidated EBIDTA.
At the end of each Fiscal Quarter, commencing with the Fourth
Fiscal Quarter of Fiscal Year 1999, Adjusted Consolidated EBITDA shall
at all times be greater than the amount set forth below for each Fiscal
Quarter of each Fiscal Year set forth below:
Fiscal Quarter Fiscal Year Adjusted Consolidated EBITDA
-------------- ----------- ----------------------------
Fourth 1999 $15,000,000
First 2000 $32,000,000
Second 2000 $29,000,000
Third 2000 $44,000,000
Fourth 2000 $63,000,000
5. Except for the amendments and agreements expressly set forth
above, the Agreement shall remain unchanged and in full force and effect.
Flowers acknowledges and expressly agrees that the Participants reserve the
right to, and do in fact, require strict compliance with the terms and
provisions of the Agreement, as amended by this Amendment.
6. Flowers hereby affirms and restates as of the date hereof all
covenants set forth in
80
the Agreement, as amended hereby, and such covenants are incorporated by
reference herein as if set forth herein directly.
7. Except as expressly amended herein, all terms, covenants and
conditions of the Agreement and all other Loan Documents shall remain in full
force and effect. The parties hereto do expressly ratify and confirm the
Agreement as amended herein.
8. Flowers hereby agrees that nothing herein shall constitute a
waiver by the Participants of any Default or Event of Default, whether known or
unknown, which may exist under the Agreement. Flowers hereby further agrees that
no action, inaction or agreement by the Participants, including without
limitation, any indulgence, waiver, consent or agreement altering the provisions
of the Agreement which may have occurred with respect to the non-payment of any
obligation during the terms of the Agreement or any portion thereof, or any
other matter relating to the Agreement, shall require or imply any future
indulgence, waiver, or agreement by the Participants. In addition, Flowers
acknowledges and agrees that it has no knowledge of any defenses, counterclaims,
offsets or objections in its favor against the Participants with regard to any
of the obligations due under the terms of the Agreement or any other Program
Document as of the date of this Amendment.
9. This Amendment shall be binding upon and inure to the benefit
of the parties hereto, their respective successors, successors-in-titles, and
assigns.
10. This Amendment sets forth the entire understanding of the
parties with respect to the matters set forth herein, and shall supersede any
prior negotiations or agreements, whether written or oral, with respect thereto.
11. This Amendment shall be governed by and construed in
accordance with the laws of the State of Georgia.
12. This Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts, each of which shall be deemed an
original and all of which, taken together, shall be deemed to constitute one and
the same instrument. Delivery of an executed counterpart of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.
81
IN WITNESS WHEREOF, the parties hereto have executed this Amendment through
their authorized officers as of the date first above written.
FLOWERS INDUSTRIES, INC.
By:
Name:
--------------------------
Title:
-------------------------
Attest:
Name:
--------------------------
Title:
-------------------------
[CORPORATE SEAL]
82
Address for Notices: SUNTRUST BANK, ATLANTA, as the
Bank and as a Participant
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇.▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇ ▇▇▇▇▇▇ By:
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ -----------------------------
Name:
Title:
Participating Commitment: $60,000,000
Pro Rata Share: 75%
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ "RABOBANK NEDERLAND,"
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ BRANCH, as a Participant
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Services Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ By:
------------------------------
Name:
with a copy to: Title:
Rabobank Nederland
One Atlantic Center, Suite 3450 By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ -----------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Name:
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇ Title:
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Participating Commitment: $20,000,000
Pro Rata Share: 25%
L-6
84
SECOND AMENDMENT TO LOAN FACILITY AGREEMENT
THIS SECOND AMENDMENT TO LOAN FACILITY AGREEMENT ("Amendment") made as of
this 30th day of March, 2000, by and among FLOWERS INDUSTRIES, INC., a Georgia
corporation having its principal office in Thomasville, Georgia ("Flowers"),
SUNTRUST BANK, formerly known as SunTrust Bank, Atlanta, a Georgia banking
corporation, having its principal office in Atlanta, Georgia ("SunTrust") and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK NEDERLAND," New
York Branch ("Rabobank", together with SunTrust, the "Participants").
W I T N E S S E T H :
WHEREAS, Flowers and the Participants are parties to that certain Loan
Facility Agreement dated as of November 5, 1999, as amended by that certain
First Amendment to Loan Facility Agreement dated as of December 29, 1999 (as so
amended, the "Agreement"; all terms used herein without definition shall have
the meanings set forth in the Agreement); and
WHEREAS, Flowers has requested that the Participants amend the Agreement as
set forth herein, and the Participants are willing to so agree, subject to the
terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which hereby is acknowledged, the
parties hereby agree that the Agreement is hereby amended as follows:
1. Unless otherwise specifically defined herein, each term used herein
which is defined in the Agreement shall have the meaning assigned to such term
in the Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby"
and each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the Agreement shall from and after the date
hereof refer to the Agreement as amended hereby.
2. Section 1.01 of the Agreement hereby is amended by deleting the
definitions of "Adjusted Consolidated Fixed Charges", "Adjusted Consolidated Net
Income", "Adjusted EBILT", "Flower's Credit Agreement", and "Net Proceeds of
Capital Stock" in their entirety and replacing such definitions in Section 1.01
with the following definitions in the appropriate alphabetical order:
"Adjusted Consolidated Fixed Charges" means at any date the sum of (i)
Adjusted Consolidated Interest Expense for the Fiscal Year to date or 4
Fiscal Quarter period (as applicable) used in the calculation of Adjusted
Consolidated Net Income for the determination of Adjusted EBILTDA, and (ii)
all payment obligations of Flowers and its Restricted Subsidiaries for such
period under all operating leases and rental agreements.
85
"Adjusted Consolidated Net Income" means, for any period, the Net
Income of Flowers and its Restricted Subsidiaries determined on a
consolidated basis, including (without duplication) any cash dividends
received from Keebler or any other Investment, but excluding (i)
extraordinary items, (ii) any equity interests of Flowers or any Restricted
Subsidiary in the unremitted earnings of any Person that is not a
Subsidiary, (iii) ▇▇▇▇-to-market adjustments made in connection with
Flowers' commodities hedging program in accordance with GAAP, and (iv)
gains and losses from sales of assets outside the ordinary course of
business.
"Adjusted EBILTDA" means at any date the sum of (i) Adjusted
Consolidated Net Income for the Fiscal Year to date (when calculated as of
the end of the second and third Fiscal Quarters of the 2000 Fiscal Year) or
the 4 Fiscal Quarters ending on or prior to the date of measurement (when
calculated as of the end of the fourth Fiscal Quarter of the 2000 Fiscal
Year and thereafter), plus (ii) the sum of Adjusted Consolidated Fixed
Charges and taxes on income (including deferred taxes), depreciation and
amortization for the same Fiscal Year to date or 4 Fiscal Quarters (as
applicable).
"Flowers Credit Agreement" means that certain $500,000,000 Second
Amended and Restated Credit Agreement, dated as of March 30, 2000, among
Flowers, the banks listed therein, Wachovia Bank, N.A., as Agent, The Bank
of Nova Scotia, as Documentation Bank and Bank of America, N.A., as
Syndications Agent, as from time to time in effect.
"Net Proceeds of Capital Stock" means any cash proceeds received by
Flowers or a Restricted Subsidiary in respect of the issuance of Capital
Stock, after deducting therefrom all reasonable and customary costs and
expenses incurred by Flowers or such Consolidated Subsidiary directly in
connection with the issuance of such Capital Stock.
3. Section 1.01 of the Credit Agreement hereby is amended by adding the
following new definitions of "Borrowing Base", "Capital Expenditures", "Fiscal
Period", "Indebtedness for Borrowed Money", "New Capitalized Lease Obligations",
"New Indebtedness for Borrowed Money", "Permitted Refinancing Indebtedness",
"Permitted Refinancing Leases", "Restricted Payments", "Second Amendment
Effective Date", "Synthetic Lease" and "Synthetic Lease Obligations" in
appropriate alphabetical order:
"Borrowing Base" means the sum on the last day of any Fiscal Period,
as shown on the balance sheet of Flowers for such date (except as to clause
(iv) below), of:
(i) 80% of the net book value of all accounts receivable (net of
all reserves) of Flowers and its Restricted Subsidiaries, calculated
in accordance with GAAP;
-2-
86
(ii) 50% of the book value of all inventory of Flowers and its
Restricted Subsidiaries, calculated in accordance with GAAP;
(iii) 50% of the net book value of all tangible property, plant
and equipment of Flowers and its Restricted Subsidiaries,
calculated in accordance with GAAP; and
(iv) 60% of the product of (a) the average per share closing
price of Keebler common stock during such Fiscal Period times (b)
the number of shares of such stock owned by Flowers, as of such
date.
"Capital Expenditures" means for any period the sum of all capital
expenditures incurred during such period by Flowers and its Restricted
Subsidiaries, as determined in accordance with GAAP.
"Fiscal Period" means each fiscal period of Flowers, consisting of
approximately four weeks, Flowers having thirteen such fiscal periods in
each Fiscal Year.
"Indebtedness for Borrowed Money" means Indebtedness of the types
described in clauses (a) and (d) of the definition of Indebtedness.
"New Capitalized Leases" means Capitalized Leases which are entered
into on or after the Second Amendment Effective Date, other than Permitted
Refinancing Leases; provided, that any Synthetic Lease which is in
existence on the Second Amendment Effective Date and is not a Permitted
Refinancing Lease shall not constitute a New Capitalized Lease, regardless
of any classification or reclassification thereof at any time for purposes
of GAAP.
"New Indebtedness for Borrowed Money" means Indebtedness for Borrowed
Money which is incurred on or after the Second Amendment Effective Date,
other than Permitted Refinancing Indebtedness.
"Permitted Refinancing Indebtedness" means Indebtedness for Borrowed
Money which is incurred on or after the Second Amendment Effective Date
solely to refinance Indebtedness for Borrowed Money which existed prior to
the Second Amendment Effective Date, so long as the principal amount is not
increased or the maturity shortened to a date prior to January 1, 2004,
such Indebtedness for Borrowed Money is not secured by a Lien on any assets
of Flowers or any of its Subsidiaries, other than a Lien on assets, if any,
which as of the Second Amendment Effective Date secured the Indebtedness
for Borrowed Money being refinanced, and the credit or other agreement
governing such Indebtedness for Borrowed Money does not contain any
financial, negative or affirmative covenants (other than collateral related
covenants, where collateral is permitted
-3-
87
pursuant to this definition) which are more restrictive in any material
respect on Flowers or any of its Subsidiaries than those contained in this
Agreement.
"Permitted Refinancing Leases" means Capitalized Leases which are
entered into on or after the Second Amendment Effective Date solely to
refinance Capitalized Leases or Synthetic Leases which existed prior to the
Second Amendment Effective Date, so long as the principal component of the
base rent obligations thereunder are not increased or the maturity
shortened to a date prior to January 1, 2004, such Capitalized Leases are
not secured by a Lien on any assets of Flowers or any of its Subsidiaries,
other than a Lien on assets, if any, which as of the Second Amendment
Effective Date secured the obligations under the Capitalized Lease or
Synthetic Lease being refinanced, and lease agreement, participation
agreement, guaranty or other agreement governing such Capitalized Lease
does not contain any financial, negative or affirmative covenants (other
than collateral related covenants, where collateral is permitted pursuant
to this definition) which are more restrictive in any material respect on
Flowers or any of its Subsidiaries than those contained in this Agreement.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of Flowers' Capital Stock (except dividends payable solely in
shares of its Capital Stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (a) any shares of
Flowers' Capital Stock (except shares acquired upon the conversion thereof
into other shares of its Capital Stock) or (b) any option, warrant or other
right to acquire shares of Flowers Capital Stock.
"Second Amendment Effective Date" means March 30, 2000.
"Synthetic Lease" means a lease of property which is intended to be
classified as an operating lease in accordance with GAAP, but with respect
to which it is intended that the lessee be treated as the owner of the
property subject thereto for purposes of federal income tax.
"Synthetic Lease Obligations" means the principal component of the
base rent obligations of a Person as lessee under a Synthetic Lease.
4. Section 1.01 of the Agreement is further amended by deleting the
definitions of "Mission Critical Systems and ▇▇▇▇▇▇▇▇▇," "▇▇▇ Plan" and "Year
2000 Compliant and Ready."
5. Section 7.16 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 7.16 Margin Stock.
-4-
88
Neither Flowers nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of purchasing or
carrying any Margin Stock (other than its ownership stock in Keebler), and
no part of the proceeds of any Loan made hereunder will be used for any
purpose which violates, or which is inconsistent with, the provisions of
Regulation T, U or X.
6. Section 7.19 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 7.19 INTENTIONALLY OMITTED
7. Section 8.01(c) of the Agreement hereby is deleted in its entirety and
the following is substituted therefor:
(c) simultaneously with the delivery of each set of financial statements
referred to in paragraphs (a) and (b) above, a certificate, substantially
in the form of Exhibit H (a "Compliance Certificate"), of the chief
financial officer or the chief accounting officer of Flowers (i) setting
forth in reasonable detail the calculations required to establish whether
Flowers was in compliance with the requirements of Sections 8.13 through
8.20, inclusive, and Section 8.26 on the date of such financial statements
and (ii) stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and the
action which Flowers is taking or proposes to take with respect thereto;
8. Section 8.01(i) of the Agreement hereby is deleted in its entirety and
the following is substituted therefor:
(i) INTENTIONALLY OMITTED.
-5-
89
9. Section 8.01(j) of the Agreement hereby is deleted in its entirety and
the following is substituted therefor:
(j) within 15 days after the receipt thereof, a copy of the report of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Consulting to Flowers rendered pursuant to engagement
letter dated January 12, 2000; and
10. Section 8.04 of the Agreement is hereby amended by deleting subsection
8.04(d)(z) in its entirety and replacing said subsection with the following:
(z) transfers of (but not Liens on) Margin Stock.
11. Section 8.14 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 8.14 Loans or Advances.
Neither Flowers nor any of its Material Subsidiaries shall make loans
or advances to any Person except as permitted by Section 8.16 and except:
(i) loans or advances to employees not exceeding $10,000,000 in the
aggregate principal amount outstanding at any time, in each case made in
the ordinary course of business and consistent with practices existing on
the Second Amendment Effective Date; (ii) deposits required by government
agencies or public utilities; (iii) loans or advances to and among Flowers
and its Wholly Owned Subsidiaries; and (iv) other loans or advances, to
Persons other than the Unrestricted Subsidiaries (loans and advances to
Unrestricted Subsidiaries not being permitted), in an aggregate amount
outstanding which do not exceed 15% of Adjusted Consolidated Total Assets
as of the last day of the immediately preceding Fiscal Quarter; provided
that after giving effect to the making of any loans, advances or deposits
permitted by this Section, no Default shall be in existence or be created
thereby.
12. Section 8.15 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 8.15 Investments.
Neither Flowers nor any of its Restricted Subsidiaries shall make
Investments in any Person except as permitted by Section 8.14 and except
Investments in (i) direct obligations of the United States Government
maturing within one year, (ii) certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Agent, (iii) commercial
paper rated A1 or the equivalent thereof by Standard & Poor's Ratings
Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. or P1 or the equivalent thereof by
▇▇▇▇▇'▇ Investors Service, Inc. and in either case maturing within 6 months
after the date of acquisition; (iv) tender
-6-
90
bonds the payment of the principal of and interest on which is fully
supported by a letter of credit issued by a United States bank whose
long-term certificates of deposit are rated at least AA or the equivalent
thereof by Standard & Poor's Corporation and Aa or the equivalent thereof
by ▇▇▇▇▇'▇ Investors Service, Inc.; (v) Investments by Flowers or any
Restricted Subsidiary in the stock (or other ownership interests) of
Persons which are Restricted Subsidiaries as of the Second Amendment
Effective Date and/or (vi) Permitted Keebler Investments; provided,
however, immediately after giving effect to the making of any Investment,
no Default shall have occurred and be continuing.
13. Section 8.16(o) of the Agreement hereby is deleted in its entirety and
the following is substituted therefor:
(o) Liens in favor of the Participants to secure the Escrow Funding
Obligation and other obligations of Flowers under this Agreement and (if
applicable) under any other agreement pertaining to Indebtedness which is
required to be equally and ratably secured by any Lien securing the Escrow
Funding Obligation and such other obligations;
14. Section 8.17 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 8.17. Adjusted Fixed Charges Coverage Ratio
At the end of each Fiscal Quarter, commencing with the second Fiscal
Quarter of the 2000 Fiscal Year, the ratio of Adjusted EBILTDA to Adjusted
Consolidated Fixed Charges shall at all times be equal to or greater than
the ratio set forth below for such Fiscal Quarter of each Fiscal Year set
forth below:
Adjusted Fixed Charges
Fiscal Quarter Fiscal Year Coverage Ratio
-------------- ----------- --------------
Second 2000 1.10 to 1.0
Third 2000 1.15 to 1.0
Fourth 2000 1.20 to 1.0
First 2001 1.25 to 1.0
Second 2001 1.25 to 1.0
Third 2001 1.25 to 1.0
Fourth 2001
and thereafter 1.50 to 1.0
15. Section 8.18 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 8.18 Leverage Ratio. The Leverage Ratio shall at all times be
equal to or less than 0.65 to 1.0.
-7-
91
16. Section 8.20 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 8.20 Adjusted Consolidated EBITDA. At the end of each Fiscal
Quarter, commencing with the first Fiscal Quarter of the 2000 Fiscal Year,
Adjusted Consolidated EBITDA shall at all times be equal to or greater than
the amount set forth below for each Fiscal Quarter of each Fiscal Year set
forth below, and shall be calculated (i) at the end of each Fiscal Quarter
in the 2000 Fiscal Year, for such Fiscal Quarter only, and (ii) at the end
of each Fiscal Quarter thereafter, for the 4 Fiscal Quarter period then
ending.
Adjusted
Fiscal Quarter Fiscal Year Consolidated EBITDA
-------------- ----------- -------------------
First 2000 $ 26,500,000
Second 2000 $ 18,500,000
Third 2000 $ 24,500,000
Fourth 2000 $ 25,000,000
First 2001 $105,000,000
Second 2001 $105,000,000
Third 2001 $115,000,000
Fourth 2001 $115,000,000
First and thereafter 2002 $125,000,000
17. Section 8.21 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 8.21 Subsidiary Borrowings.
Flowers shall not permit any Restricted Subsidiary to become liable
for any Indebtedness, whether secured or unsecured, except: (i) such of the
foregoing as is owed to Flowers or another Wholly-Owned Subsidiary; (ii)
Indebtedness or obligations secured by Liens permitted by Section 8.16;
(iii) Indebtedness or obligations of a Subsidiary outstanding at the time
such Subsidiary becomes a Subsidiary, provided that (a) such Indebtedness
shall not have been incurred in contemplation of such Subsidiary becoming a
Subsidiary, and (b) immediately after such Subsidiary becomes a Subsidiary,
no Default or Event of Default shall exist, and provided, further, that
such Indebtedness may not be extended, renewed, or refunded except as
otherwise permitted by this Agreement; and (iv) subject to the provisions
of Section 8.25, other Indebtedness which, when combined with the total of
the Indebtedness secured by all Liens permitted by Section 8.16(r), without
duplication, does not exceed 20% of Adjusted
-8-
92
Consolidated Net Worth as of the last day of the immediately preceding
Fiscal Quarter.
18. Section 8.24 of the Agreement hereby is deleted in its entirety and the
following is substituted therefor:
SECTION 8.24 Borrowing Base.
At the end of each Fiscal Period, the sum of (i) all Indebtedness
(including the Loans under the Flowers Credit Agreement and the obligations
of Flowers under this Agreement in an amount equal to the Maximum Recourse
Amount) of Flowers and its Restricted Subsidiaries plus (ii) all Synthetic
Lease Obligations of Flowers and its Restricted Subsidiaries shall not
exceed the Borrowing Base, and within 10 Domestic Business Days after the
end of such Fiscal Period, Flowers shall furnish to the Bank a certificate,
in reasonable detail, showing the calculations with respect thereto.
19. A new Section 8.25 hereby is added, as follows:
SECTION 8.25 New Indebtedness for Money Borrowed and New Capitalized
Leases.
Flowers shall not, and Flowers shall not permit its Restricted
Subsidiaries to, incur any New Indebtedness for Money Borrowed or New
Capitalized Leases, provided, that, so long as no Default or Event of
Default is in existence or would be created thereby: (i) New Indebtedness
for Money Borrowed may be issued in any amount, subject to the provisions
of Section 8.21, so long as the indenture, agreement, instrument or other
agreement related thereto does not directly or indirectly prohibit or
restrain, or have the effect of prohibiting or restraining, or imposing
materially adverse conditions on, the ability of Flowers or its Restricted
Subsidiaries to create any Lien on any of its assets in favor of the
Participants to secure the Escrow Funding Obligation and other obligations
owed by Flowers to the Participants under this Agreement and under any
other agreement pertaining to Indebtedness which must be equally and
ratably secured by any Lien securing the Escrow Funding Obligation and such
other obligations (the foregoing being collectively referred to as a
"Negative Pledge Clause"); (ii) subject to the provisions of Section 8.21,
New Indebtedness for Money Borrowed may be incurred pursuant to a working
capital line up to $50,000,000 (which does not contain a Negative Pledge
Clause); and (iii) New Capitalized Leases may be entered into up to an
aggregate of $25,000,000 which do not contain a Negative Pledge Clause
(except as to the assets being leased pursuant thereto).
20. A new Section 8.26 hereby is added, as follows:
SECTION 8.26 Capital Expenditures.
-9-
93
Flowers shall not, and Flowers shall not permit its Restricted
Subsidiaries to, incur Capital Expenditures in any Fiscal Year, except that
Capital Expenditures may be incurred up to an aggregate amount not
exceeding (x) $40,000,000 in the 2000 Fiscal Year and (y) $37,500,000 in
any Fiscal Year thereafter, provided that after giving effect to the
incurrence of any Capital Expenditures permitted by this Section, no
Default shall be in existence or be created thereby.
21. A new Section 8.27 hereby is added, as follows:
SECTION 8.27 Restricted Payments. Flowers will not declare any
Restricted Payment during any Fiscal Year unless, as of the date of such
declaration, no Default or Event of Default is in existence or would be
created thereby by the making of such payment, and: (i) with respect to
Restricted Payments consisting of repurchases of stock in Flowers from any
employee of Flowers or any Restricted Subsidiary whose such employment is
being or has been terminated (whether voluntarily or involuntarily),
repurchases for an aggregate amount for all such employees not exceeding
$2,500,000 in any Fiscal Year; and (ii) with respect to all other
Restricted Payments, on a pro forma basis, based upon Flowers' good faith
estimates (taking into account circumstances then known to it), after
giving effect to such declaration and the payment thereof, and taking into
account any additional Indebtedness anticipated in good faith by Flowers to
be incurred in connection therewith during the relevant period and other
Indebtedness anticipated in good faith by Flowers to be incurred during the
relevant period, together with interest expense during the relevant period
on all such anticipated Indebtedness, both as of (x) the end of the current
Fiscal Period and (y) the end of the current Fiscal Quarter, (1) no Default
or Event of Default would be in existence or created thereby, (2) the sum
of the Unused Commitments less any Swing Loans and Money Market Loans then
outstanding, (as such terms are defined in the Flowers Credit Agreement)
would be at least $15,000,000 and (3) the amount by which the Borrowing
Base would exceed the sum of all Indebtedness plus (without duplication)
all Synthetic Lease Obligations would be at least $15,000,000. Prior to
declaring any Restricted Payments pursuant hereto, Flowers shall furnish to
the Bank a certificate, in reasonable detail, showing the calculations with
respect to the foregoing.
22. Section 9.01(b) of the Agreement hereby is deleted in its entirety and
the following is substituted therefor:
(b) Flowers shall fail to observe or perform any covenant contained in: (i)
Sections 8.01(e), 8.02(ii), 8.03 through 8.05, inclusive, Sections 8.17
through 8.19, inclusive, Sections 8.20 or 8.25 through 8.27, inclusive; or
(ii) Section 8.24, and, with respect to this clause (ii) such failure shall
not have been cured within 10 days after the earlier to occur of (1)
delivery to the Bank of the certificate
-10-
94
required to be furnished pursuant to Section 8.24 and (2)
the date such certificate was required to be so delivered pursuant to
Section 8.24; or (ii) Sections 8.14, 8.15 or 8.21, and with respect to
this clause (ii) such failure shall not have been cured within 10 days
after the earlier to occur of (1) written notice thereof has been
given to Flowers by the Bank at the request of any Participant or (2)
any Responsible Officer of Flowers otherwise becomes aware of any such
failure; or
23. Exhibit H, Compliance Certificate to the Agreement, is hereby
deleted in its entirety and Exhibit H attached hereto is substituted therefor.
24. Upon SunTrust's receipt of (i) executed signature pages from all
parties to this Amendment, and (ii) an amendment fee in the amount of $420,000,
all amendments to the Participation Agreement made herein shall become
effective as of the Second Amendment Effective Date, unless expressly stated to
become effective as of any other date. Such amendment fee shall be distributed
to all Participants that execute this Amendment pro rata based on their
respective interests.
25. Except for the amendments and agreements expressly set forth above,
the Agreement shall remain unchanged and in full force and effect. Flowers
acknowledges and expressly agrees that the Participants reserve the right to,
and do in fact, require strict compliance with the terms and provisions of the
Agreement, as amended by this Amendment.
26. Flowers hereby affirms and restates as of the date hereof all
covenants set forth in the Agreement, as amended hereby, and such covenants are
incorporated by reference herein as if set forth herein directly.
27. Except as expressly amended herein, all terms, covenants and
conditions of the Agreement and all other Loan Documents shall remain in full
force and effect. The parties hereto do expressly ratify and confirm the
Agreement as amended herein.
28. Flowers hereby agrees that nothing herein shall constitute a
waiver by the Participants of any Default or Event of Default, whether known or
unknown, which may exist under the Agreement. Flowers hereby further agrees
that no action, inaction or agreement by the Participants, including without
limitation, any indulgence, waiver, consent or agreement altering the
provisions of the Agreement which may have occurred with respect to the
non-payment of any obligation during the terms of the Agreement or any portion
thereof, or any other matter relating to the Agreement, shall require or imply
any future indulgence, waiver, or agreement by the Participants. In addition,
Flowers acknowledges and agrees that it has no knowledge of any defenses,
counterclaims, offsets or objections in its favor against the Participants with
regard to any of the obligations due under the terms of the Agreement or any
other Program Document as of the date of this Amendment.
29. This Amendment shall be binding upon and inure to the benefit of
the parties hereto, their respective successors, successors-in-titles, and
assigns.
-11-
95
30. This Amendment sets forth the entire understanding of the parties
with respect to the matters set forth herein, and shall supersede any prior
negotiations or agreements, whether written or oral, with respect thereto.
31. This Amendment shall be governed by and construed in accordance
with the laws of the State of Georgia.
32. This Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts, each of which shall be deemed an
original and all of which, taken together, shall be deemed to constitute one
and the same instrument. Delivery of an executed counterpart of this Amendment
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart hereof.
-12-
96
IN WITNESS WHEREOF, the parties hereto have executed this Amendment through
their authorized officers as of the date first above written.
FLOWERS INDUSTRIES, INC.
By:
--------------------------------
Name:
---------------------------
Title:
---------------------------
Attest:
-----------------------------
Name:
-------------------------
Title:
-------------------------
[CORPORATE SEAL]
97
Address for Notices: SUNTRUST BANK, formerly known as
SunTrust Bank, Atlanta, as the Bank
and as a Participant
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇.▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Ms. ▇▇▇ ▇▇▇▇▇▇ By:
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ -------------------------------
Name:
Participating Commitment: $60,000,000 Title:
Pro Rata Share: 75%
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇.▇.,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ "RABOBANK NEDERLAND,"
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ BRANCH, as a Participant
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Services Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ By:
----------------------------
with a copy to: Name:
Title:
Rabobank Nederland
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ----------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Name:
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇ Title:
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Participating Commitment: $20,000,000
Pro Rata Share: 25%
99
EXHIBIT H
COMPLIANCE CERTIFICATE
Reference is made to the Loan Facility Agreement dated as of November
5, 1999, and as amended by that certain First Amendment to Loan Facility
Agreement dated as of December 29, 1999 (among Flowers Industries, Inc.,
SunTrust Bank, formerly known as SunTrust Bank, Atlanta a Georgia banking
corporation (the "Bank"), and SunTrust Bank and each of the other lending
institutions listed on the signature pages thereto (SunTrust Bank, Atlanta and
such lenders, together with any assignees thereof becoming "Participants"
pursuant to the terms of the Loan Facility Agreement, the "Participants").
Capitalized terms used herein shall have the meanings ascribed thereto in the
Loan Facility Agreement.
Pursuant to Section 8.01(c) of the Loan Facility Agreement, , the duly
authorized of Flowers Industries, Inc., hereby (A) certifies to the Agent and
the Banks that the information contained in the Compliance Check List attached
hereto is true, accurate and complete as of , , (B) certifies to the Bank that
no Default is in existence on and as of the date hereof and (C) restates and
reaffirms that the representations and warranties contained in Article VII of
the Loan Facility Agreement are true on and as of the date hereof as though
restated on and as of this date.
FLOWERS INDUSTRIES, INC.
By:
----------------------------------------
Title:
100
COMPLIANCE CHECK LIST
Flowers Industries, Inc.
-------------------------
--------------, -----
1. Loans and Advances (Section 8.14)
Neither Flowers nor any of its Material Subsidiaries shall make loans
or advances to any Person except as permitted by Section 5.16 and
except: (i) loans or advances to employees not exceeding $10,000,000
in the aggregate principal amount outstanding at any time, in each
case made in the ordinary course of business and consistent with
practices existing on the Closing Date; (ii) deposits required by
government agencies or public utilities; (iii) loans or advances to
and among Flowers and its Wholly Owned Subsidiaries; and (iv) other
loans or advances, to Persons other than the Unrestricted Subsidiaries
(loans and advances to Unrestricted Subsidiaries not being permitted),
in an aggregate amount outstanding which do not exceed 15% of Adjusted
Consolidated Total Assets as of the last day of the immediately
preceding Fiscal Quarter; provided that after giving effect to the
making of any loans, advances or deposits permitted by this Section,
no Default shall be in existence or be created thereby.
(a) loans and advances to employees $
--------------
(b) lesser of (a) and $10,000,000 $
--------------
(c) other loans and advances not
permitted by clauses (i) through (iii),
inclusive(1) $
--------------
(d) Adjusted Consolidated Total Assets $
--------------
(e) 15% of (d) $
--------------
Limitation (d) may not exceed (e)
--------
(1) Loans and advances to the Unrestricted Subsidiaries are not permitted
and may not be included in this category.
101
2. Negative Pledge (Section 8.16)
(a) Amount of Indebtedness secured by Liens
permitted by Sections 8.16(a)
through 8.16(g), inclusive, and
(l) and (n) Schedule - 1 $
-----------
(b) Amount of Debt secured by Liens not
permitted by Section (q) Schedule - 1 $
-----------
(c) Aggregate amount of Indebtedness of
Restricted Subsidiaries permitted
by Section 8.20(iv) $
-----------
(d) Sum of (b) and (c) $
-----------
(e) Adjusted Consolidated Net Worth $
-----------
(f) 20% of (e) $
-----------
Limitation (d) may not exceed (f)
102
3. Adjusted Fixed Charge Coverage Ratio (Section 8.17)
At the end of each Fiscal Quarter, commencing with the second Fiscal Quarter of
the 2000 Fiscal Year, the ratio of Adjusted EBILTDA to Adjusted Consolidated
Fixed Charges shall at all times be equal to or greater than the ratio set
forth below for such Fiscal Quarter of each Fiscal Year set forth below:
Adjusted Fixed Charges
Fiscal Quarter Fiscal Year Coverage Ratio
-------------- ----------- --------------
Second 2000 1.10 to 1.0
Third 2000 1.15 to 1.0
Fourth 2000 1.20 to 1.0
First 2001 1.25 to 1.0
Second 2001 1.25 to 1.0
Third 2001 1.25 to 1.0
Fourth 2001
and thereafter 1.50 to 1.0
(a) Adjusted Consolidated Net Income
Schedule 2 $
--------------
(b) Adjusted Consolidated Interest
Expense - Schedule 2 $
--------------
(c) payments on operating leases
and rental agreements $
--------------
(d) taxes - Schedule 2 $
--------------
(e) depreciation - Schedule 2 $
--------------
(f) amortization - Schedule 2 $
--------------
(g) sum of (a) plus (b) plus (c)
plus (d) plus (e) plus (f) $
--------------
$
(h) sum of (b) plus (c) --------------
Ratio of (g) to (h) --------------
Requirement [> 1.10 to 1.0]
[> 1.15 to 1.0]
[> 1.20 to 1.0]
[> 1.25 to 1.0]
[> 1.50 to 1.0]
103
4. Leverage Ratio (Section 8.18)
The Leverage Ratio shall at all times be equal to or less than 0.65 to
1.0.
(a) Adjusted Consolidated Total Debt
Schedule - 4 $
--------------
(b) Adjusted Consolidated Net Worth $
--------------
(c) Sum of (a) plus (b) $
--------------
Ratio of (a) to (c)
--------------
Requirement 0.65 to 1.00
104
5. Minimum Adjusted Consolidated Net Worth (Section 8.19)
Adjusted Consolidated Net Worth will at no time be less than
$487,569,000, plus the sum of (x) 50% of the cumulative Net Proceeds of
Capital Stock received during any period after April 27, 1998, plus (y)
50% of any equity resulting from a conversion of Indebtedness of
Flowers during any period after April 27, 1998, less (z) any amount of
equity of Flowers repurchased during any period after April 27, 1998,
calculated quarterly at the end of each Fiscal Quarter.
(a) cumulative Net Capital Proceeds since
April 27, 1998 $__________
(b) 50% of (a) $__________
(c) equity resulting from Indebtedness
conversion since April 27, 1998 $__________
(d) amount of equity repurchased
since April 27, 1998 $__________
(e) (c) less (d) $__________
(f) 50% of (e) $__________
(g) sum of $487,589,000, plus (b),
plus (f) $__________
(h) Adjusted Consolidated Net Worth $__________
Limitation (h) may not be less than (g)
105
6. Adjusted Consolidated EBITDA (Section 8.20)
At the end of each Fiscal Quarter, commencing with the first Fiscal
Quarter of the 2000 Fiscal Year, Adjusted Consolidated EBITDA shall at
all times be equal to or greater than the amount set forth below for
each Fiscal Quarter of each Fiscal Year set forth below, and shall be
calculated (i) at the end of each Fiscal Quarter in the 2000 Fiscal
Year, for such Fiscal Quarter only, and (ii) at the end of each Fiscal
Quarter thereafter, for the 4 Fiscal Quarter period then ending.
Adjusted
Fiscal Quarter Fiscal Year Consolidated
-------------- ----------- ------------
EBITDA
------
First 2000 $ 26,500,000
Second 2000 $ 18,500,000
Third 2000 $ 24,500,000
Fourth 2000 $ 25,000,000
First 2001 $105,000,000
Second 2001 $105,000,000
Third 2001 $115,000,000
Fourth 2001 $115,000,000
First and thereafter 2002 $125,000,000
Adjusted Consolidated EBITDA
Schedule - 5 $__________
7. Capital Expenditures (Section 8.26)
Flowers shall not, and Flowers shall not permit its Restricted
Subsidiaries to, incur Capital Expenditures in any Fiscal Year, except
that Capital Expenditures may be incurred up to an aggregate amount not
exceeding (x) $40,000,000 in the 2000 Fiscal Year and (y) $37,500,000
in any Fiscal Year thereafter, provided that after giving effect to the
incurrence of any Capital Expenditures permitted by this Section, no
Default shall be in existence or be created thereby.
(a) Capital Expenditures incurred in Fiscal Year to date: $_______
Limitation: (a) may not exceed $25,000,000 in the 2000 Fiscal
Year and $37,500,000 in any Fiscal Year thereafter
106
Schedule - 1
(a)
Liens Securing Debt In The Principal
Amount of $50,000 or More which are
Not Permitted by Sections 8.16(a)
through 8.16(g), inclusive, and
(l), (n) and (p)
Relevant Provision of
Description of Lien Amount of Debt Secured Section 8.16 Permitting Same
------------------- ---------------------- ----------------------------
1. $
---------------- -------------------- ---------------------
2. $
---------------- -------------------- ---------------------
3. $
---------------- -------------------- ---------------------
4. $
---------------- -------------------- ---------------------
5. $
---------------- -------------------- ---------------------
6. $
---------------- -------------------- ---------------------
7. $
---------------- -------------------- ---------------------
8. $
---------------- -------------------- ---------------------
9. $
---------------- -------------------- ---------------------
(b) Aggregate Amount of Other Liens Securing Debt which are Not Permitted
by Sections 8.16(a) through 8.16(g), inclusive
and (l), (n) and (p) $__________
(c) Aggregate Amount of All Debt Secured
by Liens $__________
107
Schedule - 2
Adjusted Fixed Charge Coverage(2)
Adjusted Consolidated Net Income for:
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
Total $__________
Adjusted Consolidated Interest Expense for:
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
Total $__________
Operating Leases and Rentals for:
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
Total $__________
Taxes for:
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
Total $__________
Depreciation for:
--------------------
2 Include Restricted Subsidiaries Only, and include only Fiscal Year to
date for calculation at end of second and third Fiscal Quarter of 2000
Fiscal Year
108
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
Total $__________
Amortization for:
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
_____ quarter _____ $__________
Total $__________
109
Schedule - 4
Adjusted Consolidated Total Debt
INTEREST
RATE MATURITY TOTAL
-------- -------- -----
(a) Unsecured Borrowed Money
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Unsecured Borrowed Money $__________
(b) Deferred Purchase Price
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Deferred Purchase Price $__________
(c) Capitalized Leases
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Capitalized Leases $__________
(d) Secured Borrowed Money
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Secured Borrowed Money $__________
(e) Letters of Credit and Similar Instruments(3)
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Letters of Credit and Similar Instruments $__________
(f) Swaps
----------------
(3) Include only if have maturities of greater than 1 year
110
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Swaps $__________
(g) Guaranties
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Guaranties $__________
(h) Convertible Redeemable Capital Stock(4)
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Convertible Redeemable Capital Stock $__________
(i) Convertible Subordinated Debt(2)
==================== ---------- ---------- $__________
==================== ---------- ---------- $__________
Total Convertible Subordinated Debt $__________
ADJUSTED CONSOLIDATED TOTAL DEBT-sum of (a) plus (b) plus (c) plus (d) plus (e)
plus (f) plus (g) less (h) less (i) $__________
----------------
(4) Include only if current market value of an equity security into which it is
convertible is greater than the conversion price for such security.
111
Schedule - 5
Adjusted Consolidated EBITDA (5)
Adjusted Consolidated Net Income for:
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
Total $__________
Adjusted Consolidated Interest Expense for:
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
Total $__________
Taxes for:
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
Total $__________
Depreciation for:
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
Total $__________
Amortization for:
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
Total $__________
Other Non-cash Charges for:
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
__________ quarter __________ $__________
Total
(5) Include Restricted Subsidiaries Only and for each Fiscal Quarter of the
2000 Fiscal Year, include only calculation for such Fiscal Quarter
