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EXHIBIT 10(AF)
WORTHINGTON FOODS, INC.
SPECIALTY FOODS INVESTMENT COMPANY
CREDIT AGREEMENT
Dated as of September 9, 1998
NATIONAL CITY BANK
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TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS.....................................................4
1.1. Defined Terms...................................................4
1.2. Accounting Terms...............................................10
1.3. Other Definitional Provisions..................................10
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENT AND LOANS.......................11
2.1. Commitment.....................................................11
2.2. Revolving Nature...............................................11
2.3. Types of Loans.................................................11
2.4. Procedures With Respect to Prime Loans.........................11
2.5. Procedures With Respect to LIBOR Loans and Fixed Loans.........10
2.6. Conversion of Loans............................................11
2.7. Conditions to Each Loan........................................12
2.8. Warranty.......................................................12
2.9. Note...........................................................13
2.10. Recordkeeping..................................................12
2.11. Interest Rates.................................................13
2.12. Interest Payment Dates.........................................13
2.13. Interest Periods...............................................13
2.14. Commitment Fee.................................................13
2.15. Termination or Reduction of Commitment.........................14
2.16. Optional Prepayments of Certain Loans..........................14
2.17. Computation of Interest and Fees...............................14
2.18. Payments.......................................................14
2.19. Use of Proceeds of Loans.......................................15
2.20. Security for Loans.............................................15
2.21. Increased Taxes and Costs......................................15
2.22. Changes in Circumstances.......................................16
2.23. Funding Losses.................................................16
ARTICLE 3. LETTERS OF CREDIT..............................................17
3.1. Letters of Credit Generally....................................17
3.2. Notice of Issuance.............................................17
3.3. Payment of Amounts Drawn Under Letters of Credit...............18
3.4. Compensation...................................................17
3.5. Obligations Absolute...........................................18
3.6. Increased Taxes and Costs and Changes in Circumstances.........18
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.................................18
4.1. Corporate Existence; Compliance with Law.......................18
4.2. Corporate Power; Authorization; Enforceable Obligations........20
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4.3. No Legal Bar...................................................19
4.4. No Material Litigation.........................................19
4.5. No Default or Event of Default.................................21
4.6. Federal Regulations............................................21
4.7 Investment Company Act.........................................21
4.8. Disclosure.....................................................19
4.9. Financial Condition............................................20
4.10. No Change......................................................22
4.11. Ownership of Property; Liens...................................22
4.12. Taxes..........................................................22
4.13. ERISA..........................................................22
4.14. Subsidiaries...................................................23
4.15. Year 2000 Compliant............................................21
4.16 Environmental..................................................24
4.17. Compliance with Occupational Safety and Health Act.............24
4.18 Patents, Trademarks and Licenses...............................24
ARTICLE 5. CONDITIONS PRECEDENT...........................................22
5.1. Conditions to Initial Loan.....................................22
5.2. Conditions to All Loans........................................26
ARTICLE 6. AFFIRMATIVE COVENANTS..........................................23
6.1. Financial Statements...........................................23
6.2. Certificates; Other Information................................27
6.3. Payment of Obligations.........................................28
6.4. Conduct of Business and Maintenance of Existence...............28
6.5. Maintenance of Property; Insurance.............................28
6.6. Inspection of Property; Books and Records; Discussions.........28
6.7. Notices........................................................29
6.8. Environmental Indemnification..................................26
ARTICLE 7. NEGATIVE COVENANTS.............................................30
7.1. Indebtedness...................................................30
7.2. Limitation on Liens............................................30
7.3. Prohibition of Fundamental Changes.............................31
7.4. Consolidated Adjusted Tangible Net Worth Tests.................32
7.5. Current Ratio..................................................32
7.6. Consolidated Working Capital...................................32
7.7. Compliance with ERISA..........................................32
7.8. No Change in Fiscal Year Period................................32
ARTICLE 8. EVENTS OF DEFAULT..............................................33
ARTICLE 9. MISCELLANEOUS..................................................35
9.1. Amendments, Etc................................................35
9.2. Notices........................................................35
9.3. No Waiver; Cumulative Remedies.................................36
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9.4. Survival of Representations and Warranties.....................36
9.5. Payment of Expenses and Taxes..................................36
9.6. Successors and Assigns.........................................37
9.7. Governing Law; No Third Party Rights...........................37
9.8. Adjustments; Set-off...........................................37
9.9. Joint and Several Obligations..................................38
9.10. Counterparts...................................................38
9.11. Effectiveness..................................................38
9.12. Severability...................................................38
SIGNATURES.................................................................39
SCHEDULES
Schedule 4.11 - Exceptions to Title to Property
Schedule 4.13 - ERISA Matters
Schedule 7.2(f) - Liens
EXHIBITS
Exhibit 2.9 - Form of Revolving Credit Note
Exhibit 2.20 - Form of Security Agreement
Exhibit 5.1(c) - Form of Legal Opinion
Exhibit 5.1(i) - Form of Borrowing Certificate
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement"), dated as of September 9,
1998, is by and between WORTHINGTON FOODS, INC., an Ohio corporation ("WFI"),
and SPECIALTY FOODS INVESTMENT COMPANY, a Delaware corporation and wholly owned
subsidiary of WFI ("SFI", and collectively with WFI, the "Borrowers"), on the
one hand, and NATIONAL CITY BANK, a national banking association (the "Bank"),
on the other hand.
The parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS.
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1.1 DEFINED TERMS. as used in this Agreement, the following terms
shall have the following meanings:
"AGREEMENT" shall have the meaning assigned to it in the
introductory paragraph of this Agreement.
"BANK" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
"BORROWERS" shall have the meaning assigned to it in the
introductory paragraph of this Agreement.
"BORROWING DATE" shall mean the date of any borrowing by the
Borrowers pursuant to this Agreement.
"BREAKEVEN PREPAYMENT PREMIUM" shall mean a premium based on the
principal amount of the prepaid Loan and computed for the remainder of
the applicable Interest Period at a rate equal to the excess, if any,
of the Bank's Cost of Funds on the date of the prepaid Loan over the
Reinvestment Rate at the time of the prepayment (discounted to the
present value in accordance with standard financial practice at a rate
equal to the Reinvestment Rate at the time of the prepayment).
"BUSINESS DAY" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Columbus, Ohio are authorized
or required by law to close.
"CAPITAL LEASE" shall mean a lease with respect to which the
lessee is required to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP and, in any event,
any lease (a) pursuant to which the lessee shall receive title to the
Property subject thereto at the expiration of such lease or shall have
the right or shall have an option to purchase the Property subject
thereto at a nominal amount or an amount less than a reasonable
estimate of the Fair Market Value of such Property at the date of such
purchase, (b) with respect to which the lessor shall have filed a
financing statement (other than for informational purposes with
respect to an operating lease), (c) with respect to which the present
value of all rental and other fixed payments due under such lease is
equal to or exceeds ninety percent (90%) of the remainder of (x) the
Fair Market Value of the Property subject thereto minus (y) the amount
of any related investment tax credit retained by the lessor under such
lease, or (d) the term of which approximate or exceeds seventy-five
percent (75%) of the reasonably estimated economic life of the
Property subject thereto.
"CLOSING DATE" shall mean the date of the first borrowing under
this Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, and all
regulations promulgated and rulings issued pursuant thereto, as
amended from time to time.
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"COMMITMENT" shall mean $25,000,000 or such lesser amount as may
be determined pursuant to Section 2.15.
"COMMITMENT FEE" shall have the meaning assigned to it in Section
2.14.
"COMMITMENT PERIOD" shall mean the period from and including the
Effective Date to but not including the Commitment Termination Date.
"COMMITMENT TERMINATION DATE" shall mean August 31, 2003.
"CONSOLIDATED ADJUSTED TANGIBLE NET WORTH" shall mean, at any
time, without duplication, the sum of the amounts which would be set
forth on the consolidated balance sheet of the Borrowers as of such
time in respect of (a) the par or stated value of all capital stock,
(b) capital surplus and (c) retained earnings, minus the sum of the
amounts set forth on such balance sheet in respect of the items which
are Excluded Net Worth Assets.
"CONSOLIDATED CURRENT ASSETS" shall mean, at a particular date,
all amounts which would be included under current assets on a
consolidated balance sheet of the Borrowers as at such date.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, at a particular
date, all amounts which would be included under current liabilities on
a consolidated balance sheet of the Borrowers as at such date,
including without limitation Indebtedness incurred hereunder and under
the Note.
"CONSOLIDATED NET INCOME" shall mean, for any fiscal period, net
earnings (but not loss) after income taxes of the Borrowers determined
on a consolidated basis.
"CONSOLIDATED TOTAL LIABILITIES" shall mean, at a particular
date, all amounts which would be included under liabilities on a
consolidated balance sheet of the Borrowers as at such date.
"CONSOLIDATED WORKING CAPITAL" shall mean, at any time, the
amount by which Consolidated Current Assets (excluding therefrom
prepaid expenses and other deferred assets of every type and
description) exceed Consolidated Current Liabilities.
"CONTINGENT OBLIGATION" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("Primary
Obligations") of any other Person (the "Primary Obligor") in any
manner, whether directly or indirectly, including without limitation
any obligation of such Person, whether or not contingent, (a) to
purchase any such Primary Obligation or any Property constituting
direct or indirect security therefor, (b) to advance or supply funds
(i) for the purchase or payment of any such Primary Obligation or (ii)
to maintain working capital or equity capital of the Primary Obligor
or otherwise to maintain the net worth or solvency of the Primary
Obligor, (c) to purchase Property, Securities or services primarily
for the purpose of assuring the owner of any such Primary Obligation
of the ability of the Primary Obligor to make payment of such Primary
Obligation or (d) otherwise to assure or hold harmless the owner of
such Primary Obligation against loss in respect thereof; PROVIDED,
HOWEVER, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of
the Primary Obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good
faith.
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of its Property is bound.
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"COST OF FUNDS" shall mean the Bank's cost of funds as determined
by the Bank in the exercise of its sole discretion, which shall be the
same cost of funds quoted to other customers of the Bank for
obligations of similar amount, maturity and loan structure to the
Loans hereunder.
"DEFAULT" shall mean any event specified in Article 8, whether or
not any requirement for the giving of notice, the lapse of time, or
both, or for the happening of any further condition, event or act has
been satisfied.
"DOLLARS" shall mean the lawful currency of the United States.
"EFFECTIVE DATE" shall mean the date as of which this Agreement
shall become effective pursuant to Section 9.11.
"ENVIRONMENTAL LAWS" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq., the Toxic Substances Control Act, 15 U.S.C. ss.2601,
et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
ss.6901, et seq., the Water Quality Act of 1987, 33 U.S.C. ss.1251, et
seq., and the Clean Air Act, 42 U.S.C. ss.7401, et seq., and any state
or local statute, ordinance, law, code, rule, regulation or order
regulating or imposing liability (including strict liability) or
standards of conduct regarding Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"EUROCURRENCY RESERVE PERCENTAGE" shall mean, with respect to any
day, the then applicable maximum percentage (expressed as a decimal)
prescribed by the Federal Reserve Board for determining reserve
requirements (including without limitation any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank
of the Federal Reserve System in respect of "Eurocurrency Liabilities"
pursuant to Regulation D or any other then applicable regulation of
the Federal Reserve Board which prescribes reserve requirements
applicable to "Eurocurrency Liabilities" as presently defined in said
Regulation D.
"EVENT OF DEFAULT" shall mean any of the events specified in
Article 8, PROVIDED that any requirement for the giving of notice or
the lapse of time, or both, or any other condition, event or act, has
been satisfied.
"EXCLUDED NET WORTH ASSETS" shall mean the following assets:
(a) Deferred assets, other than prepaid insurance and
prepaid taxes;
(b) Patents, copyrights, trademarks, trade names,
franchises, goodwill, experimental expense and other similar
intangible assets;
(c) Unamortized debt discount and expense; and
(d) Assets not listed in clause(a), clause(b) or clause(c)
above which would be characterized as intangible assets by GAAP.
"FAIR MARKET VALUE" shall mean, at any time with respect to
any Property, the sale value of such Property that would be
realized in an arm's-length sale at such time between an informed
and willing buyer, and an informed and willing seller, under no
compulsion to buy or sell, respectively.
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of
the Federal Reserve System or any successor thereto.
"FIXED LOAN" shall mean a Loan accruing interest at a rate
based on the Fixed Rate.
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"FIXED RATE" shall mean the rate of interest determined by
the Bank for a Fixed Loan pursuant to Section 2.5(b).
"GAAP" shall mean generally accepted accounting principles
in the United States in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any nation or
government, any state or other political subdivision thereof and
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"HAZARDOUS SUBSTANCES" shall mean and include all hazardous
and toxic substances, wastes, materials, compounds, pollutants
and contaminants (including without limitation asbestos,
polychlorinated biphenyls, and petroleum products) which are
included under or regulated by the Environmental Laws.
"HUNTINGTON" shall mean The Huntington National Bank,
Columbus, Ohio.
"HUNTINGTON LOAN AGREEMENT" shall mean the Second Amended
and Restated Loan Agreement dated as of June 15, 1993 between WFI
and Huntington, as amended.
"HUNTINGTON NOTE" shall mean the promissory note issued by
the Borrowers to Huntington and now outstanding under and
pursuant to the Huntington Loan Agreement.
"INDEBTEDNESS" shall mean, with respect to a Person at a
particular date, and without duplication, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price
of Property including all items of indebtedness or liability
which in accordance with GAAP would be included in determining
total liabilities as shown on the liabilities side of a balance
sheet of such Person as at such time, (b) the face amount of all
Letters of Credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder, (c) all
liabilities secured by any Lien on any Property owned by such
Person, to the extent attributable to such Person's interest in
such Property, even though such Person has not assumed or become
liable for the payment thereof, PROVIDED that, if such
indebtedness shall not have been assumed by such Person or if
such Person shall otherwise not be personally liable in respect
of such indebtedness, such indebtedness shall be deemed, for
purposes of this definition only, not to exceed the higher of the
then book value or Fair Market Value of the Property encumbered
by the Lien securing such indebtedness, (d) lease obligations of
such Person under Capital Leases, excluding any Capital Lease
entered into by any of the Borrowers for a Retail Store, and (e)
all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect
to Property acquired by such Person even though the rights and
remedies of the obligee thereunder in the event of default are
limited to repossession or sale of such Property; PROVIDED,
HOWEVER, that any indebtedness or liability of such Person which
constitutes deferred taxes or minority interest, as determined in
accordance with GAAP, shall be excluded from this definition of
Indebtedness.
"INDEMNIFIED LIABILITIES" shall have the meaning assigned to
it in Section 9.5.
"INITIAL MONTHLY PAYMENT DATE" shall mean September 30,
1998.
"INITIAL QUARTERLY PAYMENT DATE" shall mean December 31,
1998.
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor
Agreement of even date herewith between Principal and the Bank.
"INTEREST PERIOD" shall have the meaning assigned to it in
Section 2.13.
"LETTERS OF CREDIT" shall mean letters of credit (including
both standby and documentary trade letters of credit) issued by
the Bank under the Commitment pursuant to this Agreement.
"LETTERS OF CREDIT LIMIT" shall mean $5,000,000.
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"LETTERS OF CREDIT TERMINATION DATE" shall mean such day as
is 30 days prior to the Commitment Termination Date.
"LIBOR BUSINESS DAY" shall mean a day which is a Business
Day and on which dealings are carried on in the London interbank
LIBOR market.
"LIBOR LOAN" shall mean a Loan accruing interest at a rate
based on the LIBOR Rate (Reserve Adjusted).
"LIBOR RATE" shall mean, with respect to any LIBOR Loan for
any Interest Period, the rate PER ANNUM equal to the average of
the respective rates at which Dollar deposits in immediately
available funds are offered to the LIBOR office of the Bank two
LIBOR Business Days prior to the beginning of such Interest
Period by major prime banks in the New York interbank LIBOR
market at or about 10:00 a.m. New York time, for delivery on the
first day of such Interest Period, for the number of days
comprised therein, and in an amount equal or comparable to the
amount of the LIBOR Loan to which such Interest Period is to
apply.
"LIBOR RATE (RESERVE ADJUSTED)" shall mean, with respect to
any LIBOR Loan for any Interest Period, a rate PER ANNUM (rounded
upwards, if necessary, to the nearest 1/100%), determined
pursuant to the following formula:
LIBOR Rate = LIBOR Rate
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(Reserve 1 - Eurocurrency
Adjusted) Reserve Percentage
"LIEN" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner
of the Property, whether such interest is based on the common
law, statute or contract, and including without limitation any
mortgage, pledge, hypothecation, assignment, security interest,
lien, charge or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or
nature whatsoever. The term Lien shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and
encumbrances (including, with respect to stock, shareholder
agreements, voting trust agreements, buy-back agreements and all
similar arrangements) affecting Property. For the purpose of this
Agreement, a Borrower shall be deemed to be the owner of any
Property which it shall have acquired or holds subject to a
conditional sale agreement, Capital Lease or other arrangement
pursuant to which title to the Property shall have been retained
by or vested in some other Person for security purposes and such
retention or vesting shall be deemed to be a Lien.
"LOAN DOCUMENTS" shall mean this Agreement, the Note and the
Security Agreement, and all documents executed pursuant thereto
and/or in connection therewith, as the same may from time to time
be amended, modified or supplemented in accordance with the terms
herein and therein.
"LOANS" shall have the meaning assigned to it in Section
2.1.
"MONTHLY PAYMENT DATE" shall mean the last day of each
calendar month.
"MULTIEMPLOYER PLAN" shall mean a Plan which is a
"multiemployer pension plan" as defined in Section 4001(a)(3) of
ERISA.
"MULTIPLE EMPLOYER PLAN" shall mean any Single Employer Plan
in respect of which there are two (2) or more "contributing
sponsors", as such term is defined in Section 4001 of ERISA, at
least two (2) of which are not under common control.
"NEW LOAN" shall have the meaning assigned to it in Section
2.6.
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"NOTE" shall have the meaning assigned to it in Section 2.9.
"OLD LOAN" shall have the meaning assigned to it in Section
2.6.
"OUTSTANDING LETTERS OF CREDIT AMOUNTS" shall mean the
aggregate face amount of all outstanding Letters of Credit.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PERSON" shall mean and include an individual, a
partnership, a limited liability company, a corporation, a
business trust, a joint stock company, a trust, an unincorporated
association, a joint venture or other entity or a Governmental
Authority.
"PLAN" shall have the meaning assigned to it in Section
4.13.
"PREMISES" shall mean any real Property owned or leased by
the Borrowers.
"PRIMARY OBLIGATIONS" shall have the meaning assigned to it
in the definition of "Contingent Obligation" contained in this
Section 1.1.
"PRIMARY OBLIGOR" shall have the meaning assigned it in the
definition of "Contingent Obligation" contained in this Section
1.1.
"PRIME LOAN" shall mean a Loan accruing interest at a rate
determined by reference to the Prime Rate.
"PRIME RATE" shall mean the rate of interest in effect from
time to time which is publicly announced by the Bank from time to
time as its prime rate. Said prime rate is not necessarily nor is
it intended to be the lowest rate of interest charged by the Bank
in connection with extensions of credit.
"PRINCIPAL" shall mean Principal Life Insurance Company
(formerly named Principal Mutual Life Insurance Company) and its
permitted successors and assigns.
"PRINCIPAL INDEBTEDNESS" shall have the meaning assigned to
it in Section 7.1(b).
"PROPERTY" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, and whether tangible
or intangible.
"QUARTERLY DETERMINATION DATES" shall mean the last day of
each March, June, September and December commencing with December
31, 1998.
"QUARTERLY PAYMENT DATES" shall mean the last day of each
March, June, September and December.
"REINVESTMENT RATE" shall mean, when used with respect to
any period, a per annum rate of interest equal to the "bond
equivalent yield" for the most actively traded issues of United
States Treasury Bills, United States Treasury Notes, or United
States Treasury Bonds for a term similar to the remainder of the
applicable Interest Period.
"REPORTABLE EVENT" shall mean any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder with
respect to which the 30-day notice requirement to the PBGC has
not been waived.
"REQUIREMENTS OF LAW" shall mean, as to any Person, the
certificate or articles of incorporation and regulations or
by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination
of an arbitrator or a court or
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other Governmental Authority, in each case applicable to or binding
upon such Person or any of its Property or to which such Person or any
of its Property is subject.
"SECURITY" shall have the same meaning as in Section 2(l) of
the Securities Act of 1933, as amended.
"SECURITY AGREEMENT" shall have the meaning assigned to it
in Section 2.20.
"SFI" shall have the meaning assigned to it in the
introductory paragraph of this Agreement.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is not a
Multiemployer Plan.
"SUBSIDIARY" of a Person shall mean a corporation or limited
liability company with respect to which more than 50% of the
outstanding shares of stock or membership interests of each class
having ordinary voting power (other than stock or membership interests
having such power only by reason of the happening of a contingency) is
at the time owned by such Person or by one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such
Person.
"SUBSIDIARY GUARANTY DOCUMENTS" shall mean a Subsidiary's
guaranty of the Borrowers' obligations under the Loan Documents, in
form and substance reasonably satisfactory to the Bank, duly executed
by a duly authorized officer of such Subsidiary, together with
certified resolutions and an incumbency certificate for such
Subsidiary comparable to those required by Sections 5.1(d) and 5.1(e).
"SYSTEMS" shall mean all devices, systems, machinery,
information technology, computer software and hardware and other date
sensitive technology.
"TRANSFEREE" shall have the meaning assigned to it in
Section 9.6.
"UNITED STATES" shall mean the United States of America.
"WFI" shall have the meaning assigned to it in the
introductory paragraph of this Agreement.
"YEAR 2000 COMPLIANT", with respect to Systems, shall mean
that such Systems are designed to be used prior to, during and after
the Gregorian calendar year 2000 A.D. and will operate during each
such time period without error relating to date data, specifically
including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
1.2. ACCOUNTING TERMS. As used in this Agreement and in the other
Loan Documents and in any certificate, report or other document made or
delivered pursuant hereto and thereto, accounting terms not defined in Section
1.1 and accounting terms partly defined in Section 1.1 to the extent not
defined, shall have the respective meanings given to them under GAAP.
1.3. Other Definitional Provisions.
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(a) Unless otherwise defined therein, all terms defined in this
Agreement shall have the defined meanings when used in the Note and the other
Loan Documents and in any other certificate, report or document made or
delivered pursuant hereto or thereto.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
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ARTICLE 2. AMOUNT AND TERMS OF COMMITMENT AND LOANS.
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2.1. COMMITMENT. Subject to the terms and conditions of this
Agreement, the Bank agrees to make loans to the Borrowers on a revolving basis,
from time to time during the Commitment Period, in such amounts as the Borrowers
may from time to time request in accordance with Section 2.4, Section 2.5 or
Section 2.6 (such loans are herein called "Loans"); provided that the aggregate
principal amount which the Bank shall have outstanding hereunder on loan to the
Borrowers (including for this purpose the Outstanding Letters of Credit Amounts)
shall not at any time exceed the amount of the Commitment.
2.2. REVOLVING NATURE. The Loans are revolving in nature and, within
the limits set forth in Section 2.1 and subject to the other terms and
conditions of this Agreement, the Borrowers may borrow under Section 2.1, prepay
and reborrow at any time prior to the Commitment Termination Date.
2.3. TYPES OF LOANS. Each Loan shall be a Prime Loan, a LIBOR Loan or a
Fixed Loan, it being understood that: (a) Prime Loans shall be made as provided
in Section 2.4 and Section 2.6, (b) LIBOR Loans shall be made as provided in
Section 2.5 and Section 2.6 and (c) Fixed Loans shall be made as provided in
Section 2.5 and Section 2.6.
2.4. PROCEDURES WITH RESPECT TO PRIME LOANS. For Prime Loans, the
Borrowers shall give the Bank notice (which notice must be received by the Bank
prior to 3:00 p.m. Columbus, Ohio time on the requested Borrowing Date), which
notice shall state:
(a) The Loan comprising such borrowing is to be a Prime Loan;
(b) The requested Borrowing Date, which shall be a Business Day; and
(c) The aggregate principal amount of such borrowing, which shall be
in an amount equal to $10,000 or an integral multiple of $10,000.
Upon fulfillment of the applicable conditions set forth in Section 5.2, the Bank
shall provide to the Borrowers, at the Bank's office at the address applicable
for notices under Section 9.2, immediately available funds covering the
borrowing pursuant to this Section 2.4. No notice of borrowing given pursuant to
this Section 2.4 shall be revocable by the Borrowers at any time after its
receipt by the Bank.
2.5. PROCEDURES WITH RESPECT TO LIBOR LOANS AND FIXED LOANS. LIBOR
Loans and Fixed Loans may be made from and after the date hereof and prior to
the Commitment Termination Date, PROVIDED that the maturity of any such LIBOR
Loans or Fixed Loans shall not extend past the Commitment Termination Date in
any event. Certain provisions with respect to LIBOR Loans and Fixed Loans are as
follows:
(a) For a LIBOR Loan, the Borrowers shall give the Bank notice (which
notice must be received by the Bank at least three LIBOR Business Days before
each requested LIBOR Loan borrowing), which notice shall state:
(i) The Loan comprising such borrowing is to be a LIBOR Loan;
(ii) The requested Borrowing Date, which shall be a LIBOR Business Day;
(iii) The aggregate principal amount of such borrowing, which shall be in an
amount equal to an integral multiple of $10,000 but shall not, in any
event, be less than $500,000; and
(iv) The duration of the Interest Period (see Section 2.13) with respect
thereto, which shall not end after the Commitment Termination Date in
any event.
(b) For a Fixed Loan, the Borrowers may from time to time request the
Bank to quote a Fixed Rate for a specified amount for a specified Interest
Period ending on or before the Commitment Termination Date, which Fixed Rate so
quoted by the Bank shall be equal to the Bank's Cost of Funds plus .80%. After
receiving any such quote the Borrowers may accept the same by giving the Bank
notice
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on or before the Borrowing Date of the requested Fixed Loan (provided that such
notice shall not be given later than 12:00 noon Columbus, Ohio time on the
Borrowing Date), which notice shall repeat the quoted Fixed Rate given by the
Bank and shall further state:
(i) The Loan comprising such borrowing is to be a Fixed Loan;
(ii) The requested Borrowing Date, which shall be a Business Day;
(iii) The aggregate principal amount of such borrowing, which
shall be in an amount equal to an integral multiple of $10,000 but
shall not, in any event, be less than $500,000; and
(iv) The duration of the Interest Period (see Section 2.13) with
respect thereto, which shall not end after the Commitment Termination
Date in any event.
Upon fulfillment of the applicable conditions set forth in Section 5.2, the Bank
shall provide to the Borrowers, at the Bank's office at the address applicable
for notices under Section 9.2, immediately available funds covering the
borrowing pursuant to this Section 2.5. No notice of borrowing given pursuant to
this Section 2.5 shall be revocable by the Borrowers at any time after its
receipt by the Bank.
2.6. CONVERSION OF LOANS. The Borrowers may convert all or any part of
any outstanding Prime Loan, LIBOR Loan or Fixed Loan (herein in this Section 2.6
called an "Old Loan") into another Prime Loan, LIBOR Loan or Fixed Loan of the
same type or of another of such types (herein in this Section 2.6 called a "New
Loan"), by giving advance notice thereof in accordance with the procedures set
forth in Section 2.4 or Section 2.5, whichever is applicable (which notice
shall, in addition to the matters specified in Section 2.4 or Section 2.5,
specify the type and amount of the Old Loan that is to be converted into the New
Loan which is requested pursuant to Section 2.4 or Section 2.5); provided that:
(a) no LIBOR Loan or Fixed Loan shall be converted on any day other than the
last day of the then-current Interest Period relating to such LIBOR Loan or
Fixed Loan (except as permitted under Section 2.16), (b) no LIBOR Loan or Fixed
Loan shall in any event have (and the Borrowers shall not in any event
designate) an Interest Period ending after the Commitment Termination Date, (c)
no New Loan of a particular type shall be less than the amount specified in
Section 2.4(c), Section 2.5(a)(iii) or Section 2.5(b)(iii) applicable to such
type and (d) no conversion shall be permitted hereunder when a Default or Event
of Default has occurred and is continuing. If, with respect to any Old Loan
which is a LIBOR Loan or Fixed Loan, the Borrowers do not give the notice
provided for in this Section 2.6, or no conversion with respect thereto shall be
permitted pursuant to the preceding sentence, the Borrowers shall be deemed to
have requested that such Old Loan be converted to a Prime Loan in the same
principal amount. In effecting each conversion, the Bank shall, on the
Borrowers' behalf, directly apply the proceeds of the New Loan to the payment of
the Old Loan, and only the excess (if any) of the proceeds of the New Loan over
the amount being repaid shall be directly paid over to the Borrowers. No notice
of conversion given pursuant to this Section 2.6 shall be revocable by the
Borrowers at any time after its receipt by the Bank.
2.7. CONDITIONS TO EACH LOAN. The Bank shall not have any obligation to
make (whether initially, pursuant to Section 2.4, pursuant to Section 2.5,
pursuant to Section 2.6 or otherwise) any Loan if the conditions precedent to
the making of such Loan specified in Section 5.2 shall have not been satisfied
or if a Default or Event of Default shall have occurred and be continuing or
will result therefrom.
2.8. WARRANTY. Each notice of borrowing referred to in Section 2.4,
Section 2.5 or Section 2.6 shall constitute a representation and warranty by the
Borrowers to the Bank that on the requested Borrowing Date no Default or Event
of Default shall have then occurred and be continuing or will result therefrom.
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2.9. NOTE. The Loans shall be evidenced by a joint and several
promissory note of the Borrowers (the "Note") substantially in the form set
forth in Exhibit 2.9, dated the Effective Date, payable to the order of the Bank
in a principal amount equal to the Commitment, it being expressly agreed that
all principal and all interest shall be payable at maturity (whether by
acceleration or otherwise).
2.10. RECORDKEEPING. The Bank may record on the schedule attached to
the Note or elsewhere in its records the date and amount of each Loan made by
the Bank, each repayment thereof and, in the case of each Loan other than a
Prime Loan, the dates on which the Interest Period for such Loan shall begin and
end. The amounts so recorded shall be rebuttable presumptive evidence of the
amounts owing and unpaid on the Note. The failure to so record any such amount
or any error in so recording any such amount shall not, however, limit or
otherwise affect the obligations of the Borrowers hereunder or under the Note to
repay the principal amount of the Loans together with all interest accruing
thereon.
2.11. INTEREST RATES. The unpaid principal amount from time to time
outstanding of the Note shall bear interest as follows:
(a) As to any unpaid principal amount representing Prime Loans: on
and from the Effective Date to the Commitment Termination Date, at a rate per
annum equal to the Prime Rate;
(b) As to any unpaid principal amount representing LIBOR Loans:
during each applicable Interest Period, at a rate per annum equal to the sum of
(i) the LIBOR Rate (Reserve Adjusted) applicable to such Interest Period, plus
(ii) .80%;
(c) As to any unpaid principal amount representing Fixed Loans:
during the Interest Period, at a rate PER ANNUM equal to the Fixed Rate for the
Interest Period; and
(d) Notwithstanding the provisions of the preceding clauses (a), (b)
or (c), all unpaid principal of any Loan shall bear interest after maturity
(whether by acceleration or otherwise) at a rate PER ANNUM equal to the higher
of the rate in effect prior to such maturity or the sum of (i) the Prime Rate
plus (ii) 2% (but not in any event less than the Prime Rate in effect as at such
maturity).
2.12. Interest Payment Dates. Subject to Section 2.17, all accrued
interest on all Prime Loans shall be payable monthly on each Monthly Payment
Date and at maturity (whether by acceleration or otherwise), commencing with the
Initial Monthly Payment Date. Subject to Section 2.17, all accrued interest on
each LIBOR Loan shall be payable on the last day of each Interest Period
relating to such Loan (PROVIDED that, with respect to any such LIBOR Loan having
an Interest Period greater than three months, all interest accrued thereon shall
be payable every three months and at maturity (whether by acceleration or
otherwise)). Subject to Section 2.17, all accrued interest on each Fixed Loan
shall be payable on the last day of each Interest Period relating to such Loan
(PROVIDED that, with respect to any such Fixed Loan having an Interest Period
greater than three months, all interest accrued thereon shall be payable monthly
on each Monthly Payment Date and at maturity (whether by acceleration or
otherwise)).
2.13. INTEREST PERIODS. Except as is hereinafter provided in this
Section 2.13, each period for the payment of interest on a Loan which is a LIBOR
Loan or Fixed Loan (the "Interest Period") shall commence on the date the Loan
is made, continued or converted and shall end on the date (a) which in the case
of a LIBOR Loan is one, two, three, four, six or twelve months thereafter, as
the Borrowers shall have specified in the Borrowers' related notice of borrowing
given pursuant to Section 2.5, and (b) which in the case of a Fixed Loan ends at
the end of the Interest Period specified pursuant to Section 2.5(b). Each
Interest Period which in the case of a LIBOR Loan would otherwise end on a day
which is not a LIBOR Business Day shall end on the next succeeding LIBOR
Business Day (unless the result would be to extend the Interest Period of a
LIBOR Loan to the next succeeding calendar month, in which case with respect to
such LIBOR Loan such Interest Period shall end on the next preceding LIBOR
Business Day). Each Interest Period which in the case of a Fixed Loan would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day.
2.14. COMMITMENT FEE. The Borrowers agree to pay to the Bank a
commitment fee (the "Commitment Fee") accruing from the Effective Date computed
at the rate of .20% PER ANNUM on the
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average daily unused portion of the Commitment. In computing the Commitment Fee,
the unused portion shall be reduced by the Outstanding Letters of Credit
Amounts. The Commitment Fee shall be payable quarterly (except that the initial
payment shall be for the period from the Effective Date through and including
December 31, 1998) in arrears on each Quarterly Payment Date, commencing with
the Initial Quarterly Payment Date, and ending on the Commitment Termination
Date.
2.15. TERMINATION OR REDUCTION OF COMMITMENT. The Borrowers shall have
the right, upon not less than three Business Days' prior notice to the Bank, to
terminate, or from time to time ratably reduce, the Commitment, provided that
(a) any reduction shall be accompanied by the ratable prepayment of the Note,
together with accrued interest thereon to the date of such prepayment, to the
extent, if any, that the aggregate unpaid principal amount thereof then
outstanding (including for this purpose any Outstanding Letters of Credit
Amounts) exceeds the amount of the Commitment as then reduced, together with the
payment of any unpaid Commitment Fee then accrued hereunder in respect of the
Commitment, (b) any termination shall be accompanied by prepayment in full of
the unpaid principal amount of the Note, together with accrued interest thereon
to the date of such prepayment and the payment of any unpaid Commitment Fee then
accrued hereunder in respect of the Commitment, and (c) no reduction or
termination may in any event reduce the Commitment to an amount less than the
Outstanding Letters of Credit Amounts plus the amount of any unmatured LIBOR
Loans and Fixed Loans except to the extent they can be and are prepaid as
provided in Section 2.16. Any such reduction of the Commitment shall be in an
aggregate amount of $500,000, or a whole multiple thereof. If not terminated
earlier, the Commitment shall automatically terminate on the Commitment
Termination Date.
2.16. OPTIONAL PREPAYMENTS OF CERTAIN LOANS. Prepayments of certain
Loans will be permitted, as follows:
(a) The Borrowers may, at their option, prepay the Prime Loans, without
premium or penalty, in whole or in part, upon notice to the Bank, not later than
3:00 p.m. Columbus, Ohio time on the date of prepayment, specifying the amount
of prepayment. Such notice shall be irrevocable and the payment amount specified
in such notice shall be due and payable on the date specified, together with
accrued interest to such date on the amount prepaid. Partial optional
prepayments of the Prime Loans shall be in an aggregate principal amount of at
least $10,000 or a whole multiple thereof.
(b) The Borrowers may, subject to payment of a Breakeven Prepayment
Premium with respect thereto, prepay (i) all (but not less than all) of any
LIBOR Loan having an Interest Period of twelve months or (ii) all (but not less
than all) of any Fixed Loan. The Bank's determination of the Breakeven
Prepayment Premium shall be conclusive absent manifest error. The Borrowers
acknowledge and agree that the Breakeven Prepayment Premium (a) constitutes
liquidated damages, (b) is a reasonable method of determining the Bank's
out-of-pocket loss in the applicable payment event and (c) is not a penalty.
2.17. COMPUTATION OF INTEREST AND FEES. Interest on the Loans and the
Note and all fees payable pursuant hereto shall be calculated on the basis of a
year of 360 days for the actual days elapsed. Any change in the interest rate on
the Loans resulting from a change in the Prime Rate shall become effective as of
the opening of business on the day on which such change in the Prime Rate shall
become effective. The Bank shall as soon as practicable notify the Borrowers of
the effective date and the amount of each such change in the Prime Rate.
2.18. PAYMENTS. All payments (including prepayments) to be made by the
Borrowers on account of principal of and interest on the Note and fees payable
pursuant hereto shall be made without set-off or counterclaim and shall be made
to the Bank at the Bank's office at the address applicable for notices under
Section 9.2, or at such other office as is designated from time to time by
notice from the Bank to the Borrowers, in each case in Dollars and in
immediately available funds. If any payment hereunder becomes due and payable on
a day other than a Business Day or LIBOR Business Day, whichever is applicable,
the due date for such payment shall be extended to the next succeeding Business
Day or LIBOR Business Day, whichever is applicable, and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension, unless the result of the foregoing in the case of a
LIBOR Loan would be to extend the due date of such LIBOR Loan to the next
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succeeding calendar month, in which case such due date shall end on the next
preceding LIBOR Business Day.
2.19. USE OF PROCEEDS OF LOANS. The proceeds of the Loans shall be used
by the Borrowers initially to repay in full all revolving credit loan amounts
outstanding under the Huntington Loan Agreement and the Huntington Note and
thereafter for their working capital requirements, capital expenditures and
other general corporate purposes.
2.20. SECURITY FOR LOANS. As security for the Loans, the Borrowers
shall grant to the Bank a security interest in all its accounts, inventory and
general intangibles and products and proceeds thereof, whether now owned or
hereafter acquired or created by the Borrowers. In connection therewith, the
Borrowers shall execute a security agreement (the "Security Agreement")
substantially in the form set forth in Exhibit 2.20 and, at the request of the
Bank, the Borrowers shall authorize and cause to be executed any and all other
documents which the Bank shall require in order to effect the foregoing. The
Bank agrees that it will share all the foregoing security pro rata with
Principal pursuant to the terms of the Intercreditor Agreement.
2.21. INCREASED TAXES AND COSTS. If the Bank shall have determined that
(a) Regulation D of the Federal Reserve Board, (b) the adoption of any
applicable law, rule or regulation, whether domestic or foreign, after the
Effective Date, (c) any change after the Effective Date in any applicable law,
rule or regulation, whether domestic or foreign, whether now or hereafter in
effect, and whether or not presently applicable to the Bank, or any change after
the Effective Date in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or (d) compliance by the Bank with any
request or directive issued after the Effective Date including any such request
or directive regarding capital adequacy (whether or not having the force of law)
of any such Governmental Authority, central bank or comparable agency:
(i) Shall subject the Bank to any tax, duty or other charge with
respect to the Loans, the Note or its obligation to make or maintain the Loans,
or shall change the basis of taxation of payments to the Bank of the principal
of or interest on the Loans or any other amounts due under this Agreement in
respect of the Loans or its obligation to make or maintain the Loans (except for
a change in the rate of tax on the overall net income of the Bank);
(ii) Shall impose, modify or deem applicable any reserve (including
without limitation any reserve imposed by the Federal Reserve Board), special
deposit, minimum capital, capital ratio or similar requirement against assets
of, deposits with or for the account of, or credit extended by, the Bank; or
(iii) Shall impose on the Bank any other condition affecting the Loans,
the Note or its obligation to make or maintain the Loans;
and the result of any of the foregoing is to increase the cost to or impose a
cost on the Bank of making or maintaining any Loan (other than Prime Loans) or
the Commitment, or reduce the amount of any rate of return on the Bank's capital
as a consequence thereof or any sum received or receivable by the Bank under
this Agreement or under the Note with respect thereto, by an amount deemed by
the Bank to be material, then from time to time, within 30 days after demand by
the Bank, the Borrowers shall pay to the Bank such additional amount or amounts
as will compensate the Bank for such costs, increased costs or reduction less
the amount, if any, of such costs, increased costs or reduction that is
reasonably attributable to unsafe or unsound banking practices of the Bank. The
Bank shall promptly notify the Borrowers of any event of which it has knowledge,
occurring after the Effective Date, which shall entitle the Bank to compensation
pursuant to this Section 2.21. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
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2.22. CHANGES IN CIRCUMSTANCES.
-------------------------
(a) If any of the matters described in clause (b), (c) or (d) of the
introductory portion of Section 2.21 shall make it unlawful or impossible for
the Bank to make, maintain or fund a type of Loan, then (i) the Bank shall
promptly notify the Borrowers of that fact (which notification shall be
accompanied by a statement from the Bank setting forth the basis therefor), (ii)
the obligation of the Bank to make or effect conversions into the type of Loans
made unlawful for the Bank shall, upon the effectiveness of such event, be
suspended for the duration of such unlawfulness, and (iii) on the last day of
the current Interest Period for Loans of such type or, in any event, if the Bank
so requests, on such earlier date as may be required by the relevant law,
regulation or interpretation, the Loans of such type then made by the Bank
shall, unless then repaid in full, together with accrued interest thereon,
automatically convert to Prime Loans.
(b) If, with respect to any Interest Period relating to a Loan:
(i) The Bank determines that deposits in Dollars in the
applicable amounts are not being offered in the relevant market for
such Interest Period; or
(ii) The Bank determines in its reasonable discretion that the
interest rate applicable to the Loan relating to such Interest Period
will not adequately and fairly reflect the cost to the Bank of
maintaining or funding the Loan;
the Bank shall give notice thereof to the Borrowers (which notice shall be
accompanied by a statement from the Bank setting forth the basis therefor),
whereupon the obligations of the Bank to make Loans of the affected type shall
be suspended until it notifies the Borrowers that the circumstances giving rise
to such suspension no longer exist.
2.23. FUNDING LOSSES. The Borrowers hereby agree that, upon demand by
the Bank (which demand shall be accompanied by a statement from the Bank setting
forth the basis for such demand), the Borrowers shall indemnify the Bank against
any reasonable amount of loss or expense which the Bank may reasonably sustain
or incur (including without limitation lost profits or any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Bank to fund or maintain LIBOR Loans or Fixed Loans), as
reasonably determined by the Bank, as a result of (a) any prepayment or
conversion of any such Loan on a date other than the last day of an Interest
Period for the Loan except where Section 2.16 applies thereto, or (b) any
failure of the Borrowers to borrow or convert any such Loan on the date
specified therefor in a notice of borrowing or conversion pursuant to this
Agreement; PROVIDED, HOWEVER, that the Borrowers shall indemnify the Bank
against lost profits only if such loss occurred as a result of an action or
failure to act of the Borrowers, and not if such loss occurred as a result of
any change in the law rendering certain such Loans unlawful.
ARTICLE 3. LETTERS OF CREDIT.
------------------
3.1. LETTERS OF CREDIT GENERALLY. The Borrowers may request, in
accordance with the provisions of this Section 3.1, that the Bank issue Letters
of Credit for the account of the Borrowers. With respect to such Letters of
Credit, (a) the Outstanding Letters of Credit Amounts may not at any time exceed
the Letters of Credit Limit), (b) the Letters of Credit shall have an expiration
date no later than the Letters of Credit Termination Date and (c) the aggregate
of the principal amount of the Loans outstanding from the Bank (including the
Outstanding Letters of Credit Amounts) may not exceed the Commitment then in
effect. The issuance of any Letter of Credit in accordance with the provisions
of this Section 3.1 shall be given effect in the calculation of and thereby
reduce the remaining Commitment available for the Loans (and shall also be given
effect in the calculation of and thus shall reduce the amount of the Commitment
Fee payable pursuant to Section 2.14), and shall require the satisfaction of
each condition set forth in Section 5.2 as if such issuance were the making of a
Loan.
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Each Letter of Credit may provide that the Bank may (but shall not be
required to) pay the beneficiary thereof upon the occurrence of a Default or
Event of Default and the acceleration of the maturity of the Loans or, if
payment is not then due to the beneficiary, provide for the deposit of funds in
an account to secure payment to the beneficiary and that any funds so deposited
shall be paid to the beneficiary of the Letter of Credit if conditions to such
payment are satisfied or returned to the Bank for the benefit of the Bank (or,
if all obligations of the Borrowers under this Agreement and the Note shall have
been indefeasibly paid in full, to the Borrowers) if no payment to the
beneficiary has been made and the final date available for drawings under the
Letter of Credit has passed. Each such payment or deposit of funds by the Bank
shall be treated for all purposes of this Agreement as a drawing duly honored by
the Bank under the related Letter of Credit.
3.2. NOTICE OF ISSUANCE. Whenever the Borrowers desire the issuance of
a Letter of Credit, they shall deliver to the Bank a written notice no later
than 1:00 p.m. Columbus, Ohio time at least three Business Days, or such shorter
period as may be agreed to by the Bank in any particular instance, in advance of
the proposed date of issuance. That notice shall specify (a) the type of Letter
of Credit (standby or documentary trade), (b) the proposed date of issuance
(which shall be a Business Day) of the Letter of Credit, (c) the face amount of
the Letter of Credit, (d) the expiration date of the Letter of Credit and (e)
the name and address of the beneficiary of the Letter of Credit. Prior to the
date of issuance, the Borrowers shall specify a precise description of the
documents and the verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit which, if presented by such beneficiary
prior to the expiration date of the Letter of Credit, would require the Bank to
make payment under the Letter of Credit; PROVIDED that the Bank, in its sole
reasonable judgment, may require changes in any such documents and certificates;
and PROVIDED, FURTHER, that no Letter of Credit shall require payment against a
conforming draft to be made thereunder on the same Business Day that such draft
is presented if such presentation is made after 11:00 a.m. Columbus, Ohio time
on such Business Day. In determining whether to pay under a Letter of Credit,
the Bank shall be responsible only to determine that the documents and
certificates required to be delivered under that Letter of Credit have been
delivered and that they comply on their face with the requirements of that
Letter of Credit.
3.3. PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. In the event of
any request for drawing under any Letter of Credit by the beneficiary thereof,
the Bank shall notify the Borrowers on or before the date on which the Bank
intends to honor such drawing, and the Borrowers shall reimburse the Bank on the
day on which such drawing is honored in an amount in same day funds equal to the
amount of such drawing; PROVIDED that, anything contained in this Agreement to
the contrary notwithstanding, (a) unless the Borrowers shall have notified the
Bank prior to 11:00 a.m. Columbus, Ohio time on the Business Day immediately
prior to the date of such drawing that the Borrowers intend to reimburse the
Bank for the amount of such drawing with funds other than the proceeds of Loans,
the Borrowers shall be deemed to have timely given a notice of borrowing to the
Bank pursuant to Section 2.4 requesting the Bank to make Loans which are Prime
Loans on the date on which such drawing is honored in an amount equal to the
amount of such drawing, and (b) subject to satisfaction or waiver of the
conditions specified in Section 5.2, the Bank shall, on the date of such
drawing, make Loans which are Prime Loans on the date on which such drawing is
honored in amount equal to the amount of such drawing, the proceeds of which
shall be applied directly by the Bank to reimburse the Bank for the amount of
such drawing.
3.4. COMPENSATION. The Borrowers agree to pay the following amounts to
the Bank with respect to Letters of Credit issued by the Bank:
(a) With respect to each Letter of Credit, an administrative fee established by
the Bank, payable upon the issuance of the Letter of Credit or at such other
time established by the Bank;
(b) With respect to drawings made under any Letter of Credit, interest, payable
on demand, on the amount paid by the Bank in respect of each such drawing from
the date of the drawing through the date such amount is reimbursed by the
Borrowers (including any such reimbursement out of the proceeds of Loans
pursuant to Section 3.3) at a rate which is at all times equal to 2% per annum
in excess of the Prime Rate;
(c) With respect to the issuance, amendment or transfer of each Letter of Credit
and each drawing made thereunder, negotiating, documentary and processing
charges in accordance with the Bank's standard schedule for such charges in
effect at the time of such issuance, amendment, transfer or drawing, as the case
may be; and
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(d) A fee computed at .80% per annum on the average daily balance of the
Outstanding Letters of Credit Amounts, which fee shall be payable quarterly on
the Quarterly Payment Dates.
3.5. OBLIGATIONS ABSOLUTE. The obligations of the Borrowers to
reimburse the Bank for drawings made under the Letters of Credit issued by the
Bank shall, other than in the case of gross negligence or willful misconduct on
the part of the Bank, be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances
including without limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter of Credit;
(b) The existence of any claim, set-off, defense or other right which
any of the Borrowers may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons or entities for whom any such
beneficiary or transferee may be acting), the Bank or any other Person, whether
in connection with this Agreement, the transactions contemplated herein or any
unrelated transaction;
(c) Any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(d) Payment by the Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of the Letter of Credit;
(e) Any other circumstance or happening whatsoever which is similar to
any of the foregoing; or
(f) The fact that a Default or Event of Default shall have occurred
and be continuing.
3.6. INCREASED TAXES AND COSTS AND CHANGES IN CIRCUMSTANCES. The
provisions of Section 2.21 and Section 2.22 shall apply to the issuance and
maintenance of Letters of Credit the same as if such Letters of Credit
themselves were Loans hereunder.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and to make
the Loans (including any issuances of Letters of Credit pursuant to Article 3),
the Borrowers hereby jointly and severally represent and warrant to the Bank
that:
4.1. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrowers
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, (b) has the corporate power and authority
and the legal right to own or lease and operate its Property, and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and the failure to qualify would have a material
adverse effect on the business, operations, Property or financial or other
condition of such Borrower and (d) is in compliance with all Requirements of
Law, except to the extent that the failure to comply therewith could not, in the
aggregate, have a material adverse effect on the business, operations, Property
or financial or other condition of the Borrowers taken as a whole, and could not
materially adversely affect the ability of the Borrowers to perform their
obligations under and in respect of this Agreement and the other Loan Documents.
4.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each of
the Borrowers has the corporate power and authority to make, deliver and perform
this Agreement and the other Loan Documents and to borrow hereunder and each of
the Borrowers has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and the other Loan
Documents. No consent or authorization of, filing with or other act by or in
respect of any other Person is
20
required in connection with the borrowings hereunder or with the execution,
delivery or performance by the Borrowers, or the validity or enforceability
against the Borrowers, of this Agreement and the other Loan Documents. All
consents and authorizations of, filings with and other acts by or in respect of
any other Person required in connection with the execution, delivery or
performance by the Borrowers, or the validity or enforceability against the
Borrowers, of this Agreement and the other Loan Documents have been obtained or
performed and are in full force and effect. This Agreement has been, and the
other Loan Documents will be, duly executed and delivered on behalf of the
Borrowers. This Agreement constitutes, and the other Loan Documents when
executed and delivered will constitute, a legal, valid and binding obligation of
the Borrowers, enforceable against the Borrowers in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting creditors'
rights generally and except as enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity).
4.3. NO LEGAL BAR. The execution, delivery and performance by the
Borrowers of this Agreement and the other Loan Documents will not violate any
Requirements of Law or any Contractual Obligation applicable to or binding upon
any of the Borrowers or any of its respective Properties or assets and will not
result in the creation or imposition of any Lien on any of its respective
Properties or assets pursuant to the provisions of any Requirements of Law
applicable to it or any of its respective Contractual Obligations, except to the
extent that such violation or the creation or imposition of any such Lien would
not, in the aggregate, have a material adverse effect on the business,
operations, Property or financial or other condition of the Borrowers taken as a
whole, and could not materially adversely affect the ability of the Borrowers to
perform their obligations under and in respect of this Agreement and the other
Loan Documents.
4.4. NO MATERIAL LITIGATION. No litigation or proceeding or, to the
knowledge of the Borrowers, investigation of or before any arbitrator or
Governmental Authority, is pending or, to the knowledge of the Borrowers,
threatened by or against any of the Borrowers or against any of its respective
properties or revenues (a) with respect to this Agreement or any of the other
Loan Documents or any of the transactions contemplated hereby or thereby or (b)
which, if adversely determined, would have a material adverse effect on the
business, operations, Property or financial or other condition of the Borrowers
taken as a whole.
4.5. NO DEFAULT OR EVENT OF DEFAULT. None of the Borrowers is in
default in the payment or performance of any of its Contractual Obligations
(except as to such default which would not have a material adverse effect upon
the business, operations, Property or financial or other condition of the
Borrowers taken as a whole), and no Default or Event of Default has occurred and
is continuing. None of the Borrowers is in default under any order, award or
decree of any Governmental Authority or arbitrator binding upon or affecting it
or by which any of its Properties or assets may be bound or affected (except as
to such default which would not have a material adverse effect upon the
business, operations, Property or financial or other condition of the Borrowers
taken as a whole).
4.6. FEDERAL REGULATIONS. None of the Borrowers is engaged, nor will
any of the Borrowers engage, principally or as one of its important activities,
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect. No part of the proceeds of any Loans will be
used for any purpose which violates, or which would be inconsistent with, the
provisions of Regulation U of the Federal Reserve Board. No part of the proceeds
of any Loans will be used for "purchasing" or "carrying" "margin stock" as so
defined or for any purpose which violates, or which would be inconsistent with,
the provisions of the Regulations of the Federal Reserve Board.
4.7. INVESTMENT COMPANY ACT. None of the Borrowers is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
4.8. DISCLOSURE. No representation or warranty made by any of the
Borrowers in this Agreement or any of the other Loan Documents or in any other
document furnished to the Bank from time to time in connection herewith or
therewith, as of the date of such document, contains any untrue
21
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading.
4.9. FINANCIAL CONDITION. The consolidated balance sheet of the
Borrowers as at December 31, 1997, and the related consolidated statements of
income, stockholders' equity and cash flows for the year then ended, certified
by Ernst & Young LLP, and the unaudited consolidated balance sheet of the
Borrowers as of June 30, 1998 and the related unaudited consolidated statement
of income of the Borrowers for the six-months' period then ended, copies of
which financial statements have been furnished to the Bank, present fairly the
consolidated financial position of the Borrowers as at such dates and the
results of their operations for such periods. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the period involved, except
for the absence of notes and normal year-end audit adjustments required with
respect to such June 30, 1998 financial statements.
4.10. NO CHANGE. Since June 30, 1998, there has been no material
adverse change in the business, operations, Property or financial or other
condition of the Borrowers taken as a whole.
4.11. OWNERSHIP OF PROPERTY; LIENS. Except as set forth on Schedule
4.11, except for Liens that are not material and except for any changes which
have occurred in the ordinary course of business of the Borrowers, each of the
Borrowers has good record title in fee simple to, or valid and subsisting
leasehold interests in, all of their respective real Property, and good title to
all their respective other Property, reflected on the balance sheets referred to
in Section 4.9.
4.12. TAXES. Each of the Borrowers has filed or caused to be filed all
tax returns which, to the knowledge of the Borrowers, are required to have been
filed, and has paid all taxes shown to be due and payable on said returns, all
assessments made against it or any of its Property and all other taxes, fees or
other charges imposed on it or any of its Property by any Governmental Authority
(other than those the amount or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrowers); and no
tax liens have been filed and, to the knowledge of the Borrowers, no claims are
being asserted with respect to any such taxes, fees or other charges.
4.13. ERISA.
-----
(a) Except as set forth on Schedule 4.13, none of the Borrowers is a
party to, makes or is required to make employer contributions to, or has any
current or future obligation or liability with respect to, any pension,
profit-sharing, retirement, deferred compensation, bonus, stock purchase,
severance, hospitalization, medical insurance, life insurance, vacation policy
or other employee benefit plan, agreement, arrangement or understanding
maintained for the benefit of its current or former employees (a "Plan"). Each
Plan set forth or described on Schedule 4.13 is, except to the extent stated
therein, in full force and effect in accordance with its terms and complies in
all material respects with all applicable laws. Neither of the Borrowers is in
default under any Plan and, except as set forth on Schedule 4.13, to the
knowledge of the Borrowers, no other party is in default thereunder. The
Borrowers have made or provided for all payments due under or with respect to
each Plan to date, and all amounts properly accrued to date as liabilities of
the Borrowers under each Plan in the current plan years have been recorded on
the books of the Borrowers. Each Plan listed on Schedule 4.13 that is intended
to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and each trust
established under a Plan that is intended to be exempt from taxation under
Section 501(a) or (c) of the Code has been determined by the Internal Revenue
Service to be so exempt, and nothing has occurred which would cause the loss of
such qualifications or exemptions. None of the Plans is a Multiple Employer Plan
or a Multiemployer Plan, and none of the Borrowers has made any contributions to
or participated in any Multiple Employer Plan or Multiemployer Plan within the
last five years.
22
(b) Except as set forth on Schedule 4.13, to the knowledge of the
Borrowers, the Borrowers have satisfied all material reporting and disclosure
requirements and all other material requirements applicable to them under the
Code or ERISA, and the Department of Labor and the Internal Revenue Service
regulations promulgated thereunder, with respect to the Plans. Except as set
forth on Schedule 4.13, there are no material actions, suits or asserted claims
pending and served on any of the Borrowers (other than routine claims for
benefits) or, to the knowledge of any of the Borrowers, threatened, against any
Plan or against the assets of any Plan. No Plan which is subject to Part III of
Subtitle B of Title I of ERISA or Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in ERISA), whether or not waived.
No Plan that is or was subject to Title IV of ERISA has been terminated, no
proceeding has been initiated to terminate any such Plan, and none of the
Borrowers has incurred, nor reasonably expects to incur, any liability to the
PBGC, except for required premium payments, none of which payments is overdue.
(c) The present value of all accrued benefits (whether or not vested)
under each Plan subject to Title IV of ERISA did not exceed, as of January 1,
1998, and does not exceed as of the Effective Date, the then current Fair Market
Value of the assets of such Plan by more than the amount set forth on Schedule
4.13. For purposes of determining the present value of accrued benefits under
the Plans, the actuarial assumptions and methods used under each Plan for the
most recent Plan valuation shall be used.
(d) With respect to each Plan that is an "employee benefit plan",
within the meaning of Section 3(3) of ERISA, true and complete copies of (i) the
documents embodying the Plan, any related trust and all amendments thereto, (ii)
the summary plan description and all modifications thereto, (iii) the last filed
Annual Report (Form 5500 Series) and Schedules A and B thereto, (iv) the most
recent Internal Revenue Service determination letter, if applicable, (v) the
most recent actuarial valuation report, if any, and (vi) the most recent annual
and periodic financial statements, have been delivered or made available to the
Bank and are correct in all material respects.
4.14. SUBSIDIARIES. SFI is a Subsidiary of WFI, and otherwise the
Borrowers have no Subsidiaries.
4.15. YEAR 2000 COMPLIANT. With respect to being Year 2000 Compliant:
-------------------
(a) All Systems necessary for the Borrowers to carry on their business
as presently conducted and as contemplated to be conducted in the future are
Year 2000 Complaint or will be Year 2000 Compliant within a period of time
calculated to result in no material disruption of any of the Borrowers' business
operations.
(b) The Borrowers have: (i) undertaken a detailed inventory, review and
assessment of all areas within their business and operations that could be
adversely affected by the failure of the Borrowers to be Year 2000 Compliant on
a timely basis, (ii) developed a detailed plan and time line for becoming Year
2000 Compliant on a timely basis and (iii) to date implemented that plan in
accordance with that timetable in all material respects.
(c) The Borrowers have made written inquiry of each of their key
suppliers, vendors and customers, as to whether such persons have initiated
programs to become Year 2000 Compliant, and on the basis of such inquiries, the
Borrowers reasonably believe that all such persons will be or become Year 2000
Compliant.
4.16 ENVIRONMENTAL. The Borrowers (a) have no actual knowledge of the
permanent placement, burial or disposal of any Hazardous Substances on any
Premises, of any spills, releases, discharges, leaks or disposal of Hazardous
Substances that have occurred or are presently occurring on, under or onto any
Premises, or of any spills, releases, discharges, leaks or disposal of Hazardous
Substances that have occurred or are occurring off any Premises as a result of
the Borrowers' improvement, operation or use of any Premises which would result
in non-compliance with any of the Environmental Laws; (b) have been in
compliance with all applicable Environmental Laws; (c) know of no pending or
threatened environmental civil, criminal or administrative proceedings against
the Borrowers relating to Hazardous Substances; (d) know of no facts or
circumstances that would give rise
23
to any future civil, criminal or administrative proceeding against the Borrowers
relating to Hazardous Substances; and (e) will not permit any of their
employees, agents, contractors, subcontractors or any other person occupying or
present on any Premises to generate, manufacture, store, dispose or release on,
about or under any Premises any Hazardous Substances which would result in the
Premises not complying with the Environmental Laws.
4.17. COMPLIANCE WITH OCCUPATIONAL SAFETY AND HEALTH ACT. The Borrowers
are not in violation of any requirement of any applicable occupational safety
and health act or any standard, rule or order promulgated pursuant thereto or
any regulation prescribed pursuant thereto, the violation of which involves the
possibility of a material adverse effect on (a) the business, operations,
Property or financial or other condition of the Borrowers or (b) the ability of
the Borrowers to perform this Agreement.
4.18 PATENTS, TRADEMARKS AND LICENSES. The Borrowers own all patents,
trademarks, service marks, trade names, copyrights, permits and licenses, or
rights with respect to the foregoing, necessary for the present and planned
future conduct of their business, without any known conflict with the rights of
others.
ARTICLE 5. CONDITIONS PRECEDENT.
---------------------
5.1. CONDITIONS TO INITIAL LOAN. The obligation of the Bank to make the
initial Loan shall be subject to the fulfillment prior to or contemporaneously
with the making of such Loan of the following conditions to the satisfaction of
the Bank:
(a) NOTE. The Bank shall have received the Note conforming to the
requirements hereof and duly executed by the duly authorized officers of the
Borrowers.
(b) SECURITY AGREEMENT AND INTERCREDITOR AGREEMENT. The Borrowers shall
have executed and delivered to the Bank the Security Agreement and financing
statements and any other documents requested by the Bank in connection
therewith, and the Bank and Principal shall have executed and delivered to each
other the Intercreditor Agreement.
(c) LEGAL OPINION OF COUNSEL. The Bank shall have received the opinion,
dated the Closing Date, of Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP, counsel to the
Borrowers, in substantially the form of Exhibit 5.1(c).
(d) CORPORATE PROCEEDINGS. The Bank shall have received a copy of the
resolutions of the Board of Directors of each of the Borrowers authorizing (i)
the execution, delivery and performance by each of the Borrowers of this
Agreement and the other Loan Documents, (ii) the consummation of the
transactions contemplated hereby and thereby and (iii) the borrowings provided
for herein, certified by the appropriate Secretary or Assistant Secretary of
each of the Borrowers on the Closing Date. Such certificate shall state that the
resolutions set forth therein have not been amended, modified, revoked or
rescinded as of the date of such certificate.
(e) INCUMBENCY CERTIFICATES. The Bank shall have received a certificate
of the Secretary or an Assistant Secretary of each of the Borrowers, dated the
Closing Date, as to the incumbency and signature of the officer or officers
signing this Agreement and the other Loan Documents on its behalf and any
certificate or other document to be delivered pursuant hereto or thereto,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(f) NO LEGAL RESTRAINTS. There shall be no injunction, writ,
preliminary restraining order or any order of any nature issued by any
Governmental Authority directing that the transactions provided for in this
Agreement or the other Loan Documents or any of them not be consummated as
herein or therein provided.
(g) FINANCIAL INFORMATION. The Bank shall have received copies of the
financial statements referred to in Section 4.9.
24
(h) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Borrowers in this Agreement and the other Loan Documents, and the
representations and warranties made by any of the Borrowers which are contained
in any certificate, document or financial or other statement furnished in
connection herewith or therewith, shall be true and correct in all material
respects on and as of the Closing Date after giving effect to the initial Loan.
(i) BORROWING CERTIFICATE. The Bank shall have received a borrowing
certificate, dated the Closing Date, substantially in the form of Exhibit
5.1(i), executed by the duly authorized officers of the Borrowers.
(j) Huntington Loan Agreement and Note. The Borrowers shall have repaid
in full, or shall repay in full as of the time of the initial Loan with proceeds
of the initial Loan, all outstanding loans and any other amounts owing under the
Huntington Loan Agreement and the Huntington Note. The Borrowers shall also have
terminated the Huntington Loan Agreement and the Huntington Note and all
security agreements and other documents relating thereto.
(k) ADDITIONAL MATTERS. All corporate and other proceedings and all
other documents and legal matters in connection with the transactions
contemplated by the Loan Documents shall be satisfactory in form and substance
to the Bank and its counsel.
5.2. CONDITIONS TO ALL LOANS. The obligation of the Bank to make any
Loan (including the initial Loan on the Closing Date) is subject to fulfillment
of the following conditions precedent to the satisfaction of the Bank:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by the Borrowers in this Agreement and the other Loan Documents, and the
representations and warranties made by any of the Borrowers which are contained
in any certificate, document or financial or other statement furnished at any
time under or in connection herewith or therewith, shall be true and correct in
all material respects on and as of the Borrowing Date for such Loan after giving
effect to such Loan, as if made on and as of such date unless stated to relate
to a specific earlier date.
(b) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing on such Borrowing Date or after giving
effect to each Loan to be made on such Borrowing Date.
(c) LITIGATION. No suit, action, investigation, inquiry or other
proceeding by any Governmental Authority or other Person or any other legal or
administrative proceeding shall be pending or threatened which questions the
validity or legality of the transactions contemplated by the Loan Documents, or
seeks damages in connection therewith.
(d) SUBSIDIARY GUARANTY DOCUMENTS. The Bank shall have received
Subsidiary Guaranty Documents from each Subsidiary created subsequent to the
Effective Date.
Each borrowing hereunder shall be deemed a representation and warranty jointly
and severally by the Borrowers to the effect that the conditions set forth in
clauses (a), (b), (c) and (d) above are satisfied.
ARTICLE 6. AFFIRMATIVE COVENANTS.
---------------------
The Borrowers hereby jointly and severally agree that, so long as the
Commitment remains in effect or the Note or any Letter of Credit issued
hereunder remains outstanding and unpaid or any other amount is owing to the
Bank hereunder, the Borrowers shall:
6.1. FINANCIAL STATEMENTS. Furnish to the Bank:
(a) As soon as available, but in any event not later than 90 days after
the end of each fiscal year of the Borrowers, a copy of the consolidated balance
sheet of the Borrowers as at the end of such fiscal year and the related
consolidated statements of income and stockholders' equity and cash flows of
25
the Borrowers for such fiscal year, setting forth in each case in comparative
form the figures for the previous year, reported on without a "going concern" or
like qualification or exception, or qualification arising out of the scope of
the audit, by Ernst & Young LLP or other independent certified public
accountants of nationally recognized standing acceptable to the Bank.
(b) As soon as available, but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of the
Borrowers, a copy of the unaudited consolidated balance sheet of the Borrowers
as at the end of each such quarter and the related unaudited consolidated
statement of income of the Borrowers for such quarterly period and the portion
of the fiscal year through the end of such quarter, setting forth in each case
in the form required by Form 10-Q under the Securities Exchange Act of 1934, as
amended, the figures for the corresponding period of the previous year, and
certified by the chief financial officer of the Borrowers as being fairly stated
in all material respects, and (ii) such other financial information with respect
to the Borrowers, certified by the chief financial officer of the Borrowers as
being fairly stated in all material respects, as the Bank may request, such
information not to be unreasonably withheld by the Borrowers.
All such financial statements referred to in clauses (a) and (b) of this Section
6.1 shall present fairly the consolidated financial position of the Borrowers as
at such date and shall be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein (subject, in
the case of unaudited interim statements, to the absence of notes and to normal
year-end audit adjustments).
6.2. CERTIFICATES; OTHER INFORMATION. Furnish to the Bank:
(a) Concurrently with the delivery of the financial statements referred
to in clause (a) of Section 6.1, a certificate of such accountants who certify
such financial statements, stating that they have reviewed this Agreement and
stating further, whether, in making their audit, such accountants have become
aware of any condition or event which then constitutes a Default or Event of
Default and, if such accountants are aware that any such condition or event then
exists, specifying the nature and period of existence thereof;
(b) Concurrently with the delivery of the financial statements referred
to in clauses (a) and (b) of Section 6.1, a certificate of the chief financial
officer of each of the Borrowers (i) stating that, to the best of such officer's
knowledge, such Borrower during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in the
Loan Documents to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate, (ii) showing in detail as of the end of the
related fiscal period the calculations supporting such statement in respect of
Sections 7.4, 7.5 and 7.6 and (iii) stating that all such consolidated financial
statements present fairly the consolidated financial position of the Borrowers
and have been prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (subject, in the case of
unaudited interim statements, to the absence of notes and to normal year-end
audit adjustments);
(c) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made available
generally by WFI to its security holders, all regular and periodic reports and
all final registration statements and final prospectuses, if any, filed by the
Borrowers with any securities exchange or with the Securities and Exchange
Commission or any Governmental Authority succeeding to any of its functions; and
(d) Promptly, such additional financial and other information as the
Bank may from time to time reasonably request.
6.3. PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all of
their obligations and liabilities of whatever nature, except when the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrowers.
26
6.4. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as conducted by them, and preserve,
renew and keep in full force and effect their corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of their business, except as otherwise permitted
by Section 7.3; and comply with all material applicable Requirements of Law
except to the extent that the failure to comply therewith would not, in the
aggregate, have a material adverse effect on the business, operations, Property
or financial or other condition of the Borrowers taken as a whole.
6.5. MAINTENANCE OF PROPERTY; INSURANCE. Keep all Property useful and
necessary in their business in good working order and condition (ordinary wear
and tear excepted); maintain with financially sound and reputable insurance
companies insurance on all their Property in at least such amounts and against
at least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business and furnish to the Bank,
upon written request, full information as to the insurance carried.
6.6. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of record and account in which entries in conformity with GAAP and
all Requirements of Law shall be made of all dealings and transactions in
relation to their business and activities; and permit representatives of the
Bank to visit and inspect any of their Properties and examine and make abstracts
from any of their books and records at any reasonable time and as often as may
reasonably be desired, and to discuss the business, operations, Properties and
financial and other condition of the Borrowers with officers and employees of
the Borrowers and with their independent certified public accountants.
6.7. NOTICES. Promptly give notice to the Bank:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any instrument or
other agreement of any of the Borrowers which default or event of default could
have a material adverse effect on the business, operations, Property or
financial or other condition of the Borrowers taken as a whole or (ii)
litigation, investigation or proceeding which may exist at any time between any
of the Borrowers and any Governmental Authority, which in any such case, if
adversely determined, would have a material adverse effect on the business,
operations, Property or financial or other condition of the Borrowers taken as a
whole;
(c) of any litigation or proceeding affecting any of the Borrowers
(i) in which the amount claimed is $100,000 or more and not covered by insurance
or (ii) in which injunctive or similar relief is sought which, if obtained,
would have a material adverse effect on the business, operations, Property or
financial or other condition of the Borrowers taken as a whole; and
(d) of the following events, as soon as practicable after, and in any
event within 30 days after, either of the Borrowers knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any Single
Employer Plan which Reportable Event could have a material adverse effect on the
business, operations, Property or financial or other condition of the Borrowers
taken as a whole, or (ii) the institution of proceedings or the taking or
expected taking of any other action by the PBGC or either of the Borrowers to
terminate, withdraw or partially withdraw from any Plan and, with respect to a
Multiemployer Plan, the "reorganization" or "insolvency" of the Plan (as those
terms are defined in Sections 4241 and 4245 of ERISA, respectively) in each of
the foregoing cases which could have a material adverse effect on the business,
operations, Property or financial or other condition of the Borrowers taken as a
whole, and, in addition to such notice, deliver to the Bank whichever of the
following may be applicable: (A) a certificate of the chief financial officer of
each of the Borrowers setting forth details as to such Reportable Event and the
action that the Borrowers propose to take with respect thereto, together with a
copy of any notice of such Reportable Event that may be required to be filed
with the PBGC, or (B) any notice delivered by the PBGC evidencing its intent to
institute such proceedings or any notice to the PBGC that such Plan is to be
terminated, as the case may be.
Each notice given pursuant to this Section 6.7 shall be accompanied by a
statement of the chief executive officer or chief financial officer of each of
the Borrowers setting forth details of the
27
occurrence referred to therein and stating what action each of the Borrowers
proposes to take with respect thereto.
6.8. ENVIRONMENTAL INDEMNIFICATION. The Borrowers hereby indemnify and
hold harmless the Bank against and from any loss, damage, cost, expense or
liability (including strict liability) directly or indirectly arising out of or
attributable to the generation, storage, release, threatened release, discharge,
disposal or presence (whether prior to or during the term of the Loans) of
Hazardous Substances on, under or about the Premises (whether by the Borrowers
or any employees, agents, contractors or subcontractors of the Borrowers or any
predecessor in title or any third persons occupying or present on the Premises),
or the breach of any of the representations and warranties regarding the
Premises, including without limitation: (a) those damages or expenses arising
under the Environmental Laws; (b) the costs of any required or necessary repair,
cleanup or detoxification of the Premises, including the soil and ground water
thereof, and the preparation and implementation of any closure, remedial or
other required plans; (c) damage to any natural resources; and (d) all
reasonable costs and expenses incurred by the Bank in connection with clauses
(a), (b) and (c), including without limitation reasonable attorneys' fees. Such
indemnification shall not apply to any losses, liabilities, damages, injuries,
expenses or costs which: (i) arise from the gross negligence or willful
misconduct of the Bank or (ii) relate to Hazardous Substances placed or disposed
of on the Premises after the Bank acquires title to the Premises through
foreclosure or otherwise.
ARTICLE 7. NEGATIVE COVENANTS.
-------------------
The Borrowers hereby jointly and severally agree that, so long as the
Commitment remains in effect or the Note or any Letter of Credit issued
hereunder remains outstanding and unpaid or any other amount is owing to the
Bank hereunder, the Borrowers shall not, directly or indirectly:
7.1. INDEBTEDNESS. Create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness under the Note;
(b) Indebtedness to Principal in an amount not exceeding
$6,000,000 (the "Principal Indebtedness");
(c) Indebtedness incurred in connection with trade and other
accounts payable in the ordinary course of business and in accordance with
customary trade terms;
(d) Indebtedness under Capital Leases, conditional sale agreements
and other purchase money financing agreements entered into to finance capital
expenditures;
(e) Indebtedness between the Borrowers; and
(f) Indebtedness incurred in connection with the Liens permitted
pursuant to Section 7.2.
7.2. LIMITATION ON LIENS. Create, incur, assume or suffer to exist any
Lien upon any of their Property, assets, income or profits, whether now owned or
hereafter acquired, except:
(a) Liens for taxes not yet due or, in the case of real estate taxes,
not yet the subject of interest and penalties for the nonpayment thereof, or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the books of the
Borrowers in accordance with GAAP;
(b) Carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's, vendors' or other like Liens arising in the ordinary course of
business (i) which are not overdue for a period of more than 60 days or (ii)
which are being contested in good faith and by appropriate proceedings if
28
adequate reserves with respect thereto are maintained on the books of the
Borrowers in accordance with GAAP, and in addition thereto any such Liens
arising in the ordinary course of business other than those described in clauses
(i) and (ii) which do not in the aggregate exceed $100,000;
(c) Pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) Deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) Easements, rights-of-way, landlords' liens, zoning and similar
restrictions and other similar encumbrances or title defects incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount, and which do not in any case materially detract from the value of the
Property subject thereto or interfere with the ordinary conduct of the business
of either of the Borrowers;
(f) Liens in existence on the Effective Date and securing the
Principal Indebtedness and other liens in existence on the Effective Date and
disclosed in Schedule 7.2(f), provided that such Liens are not spread to cover
any additional Property and the principal amount of Indebtedness secured thereby
is not increased;
(g) Liens for Capital Leases, conditional sale agreements and other
purchase money financing agreements entered into to finance capital
expenditures;
(h) Liens in favor of the Bank;
(i) Mortgage Liens granted after the Effective Date on real Property
to secure financing for the acquisition or development of or construction of
improvements on such real Property; and
(j) Purchase money Liens granted to the seller of Property to finance
all or part of the purchase price therefor.
7.3. PROHIBITION OF FUNDAMENTAL CHANGES. Enter into any transaction of
sale, acquisition or merger or consolidation or amalgamation, or liquidate in
one transaction or in a series of transactions, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, in a single transaction or in a series of related
transactions, all or substantially all of its Property or assets, or make any
fundamental change in the present method of conducting business except:
(a) The sale of inventory in the ordinary course of business of the
Borrowers consistent with the current practices of the Borrowers;
(b) SFI or any other Subsidiary may be merged or consolidated with or
into WFI;
(c) SFI or any other Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or otherwise) to
WFI; and
(d) The creation and maintenance of one or more Subsidiaries created
subsequent to the Effective Date, provided each such Subsidiary has provided to
the Bank its Subsidiary Guaranty Documents.
7.4. CONSOLIDATED ADJUSTED TANGIBLE NET WORTH TESTS. Permit (a)
Consolidated Adjusted Tangible Net Worth at any Quarterly Determination Date to
be less than $45,000,000 plus 50% of the Consolidated Net Income for all years
beginning with 1998 which are prior to the year in which falls the applicable
Quarterly Determination Date (thus, for Quarterly Determination Dates which fall
in 1998, none of the Consolidated Net Income from 1997 and prior thereto would
be included, for Quarterly Determination Dates which fall in 1999 50% of the
Consolidated Net Income for 1998 would be included, for Quarterly Determination
Dates which fall in 2000 50% of the aggregate Consolidated Net Income
29
for both 1998 and 1999 would be included, and so on) or (b) the ratio of
Consolidated Total Liabilities to Consolidated Adjusted Tangible Net Worth at
any Quarterly Determination Date to be greater than 1.50 to 1.00.
7.5. CURRENT RATIO. Permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities at any Quarterly Determination Date to be less
than 1.25 to 1.00.
7.6. CONSOLIDATED WORKING CAPITAL. Permit the Consolidated Working
Capital at any Quarterly Determination Date to be less than $10,000,000.
7.7. COMPLIANCE WITH ERISA. (a) Terminate any Plan so as to result in
any material liability to the PBGC, (b) engage in any "prohibited transaction"
(as defined in Section 4975 of the Code) involving any Plan which would result
in a material liability for an excise tax or civil penalty in connection
therewith, (c) incur or suffer to exist any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Plan, or (d) allow or suffer to exist any event or condition which
presents a material risk of incurring a material liability to the PBGC by reason
of termination of any such Plan.
7.8. NO CHANGE IN FISCAL YEAR PERIOD. Change its fiscal year period
without the prior written consent of the Bank.
ARTICLE 8. EVENTS OF DEFAULT.
Upon the occurrence of any of the following events (an "Event of
Default"):
(a) The Borrowers shall fail to pay (i) any principal of any Loan when
due (whether at the stated maturity, by acceleration or otherwise) in accordance
with the terms hereof or of the Note or (ii) any interest on the Note or any fee
or any other amount payable hereunder within five days after any such amount
becomes due;
(b) Any representation or warranty made or deemed made by any one or
more of the Borrowers in this Agreement or any other Loan Document or contained
in any certificate, document or financial or other statement furnished at any
time under or in connection herewith or therewith shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
(c) Either of the Borrowers shall default in the observance or
performance of any covenant or agreement contained in Article 6 and such default
shall continue unremedied for a period of 30 days;
(d) Either of the Borrowers shall default in the observance or
performance of any provision contained in Article 7 or any other covenant or
agreement contained in any Loan Document and such default shall continue
unremedied for a period of 30 days after notice from the Bank;
(e) Either of the Borrowers (i) shall default in any payment of
principal of or interest on any Indebtedness or in the payment of any Contingent
Obligations beyond the period of grace (not to exceed 30 days), if any, provided
in the instrument or agreement under which such Indebtedness or Contingent
Obligation was created or (ii) shall default in the observance or performance of
any agreement or condition relating to any such Indebtedness or Contingent
Obligation or contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Contingent Obligation (or a trustee or bank on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, any such Indebtedness or Contingent Obligation to become due prior to
its stated maturity (any applicable grace period having expired);
(f) (i) Either of the Borrowers shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment,
30
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or either of the Borrowers shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against either of the
Borrowers any case, proceeding or other action of a nature referred to in clause
(i) above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) is not dismissed, discharged, stayed or
bonded within 90 days; or (iii) there shall be commenced against either of the
Borrowers any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets, which results in the entry of an order for any
such relief which shall not have been vacated, discharged, stayed or bonded
pending appeal within 90 days from the entry thereof and which shall involve in
the aggregate a liability (to the extent not paid or covered by insurance) of
more than $100,000 at any one time outstanding; or (iv) either of the Borrowers
shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii)
above; or (v) either of the Borrowers shall generally not pay its debts as they
become due;
(g) (i) Either of the Borrowers (or any officer or director thereof)
shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA
or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA) shall exist with respect to any
Single Employer Plan, (iii) with respect to any Multiemployer Plan, either
Borrower fails to make a contribution required to be made thereto, or withdraws
therefrom, where in either event the liability of either Borrower is in excess
of $100,000, (iv) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable Event or
institution of proceedings is, in the reasonable opinion of the Bank, likely to
result in the termination of such Plan for purposes of Title IV of ERISA, and,
in the case of a Reportable Event, the continuance of such Reportable Event
unremedied for ten days after notice of such Reportable Event pursuant to
Section 4043(a), (c) or (d) of ERISA is given or the continuance of such
proceedings for ten days after commencement thereof, as the case may be, (v) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA, or (vi)
any other similar event or condition shall occur or exist with respect to any
Plan; and in each case in clauses (i) through (vi) above, in the opinion of the
Bank, such event or condition, together with all other such events or conditions
in clauses (i) through (vi) above, if any, would subject either or both of the
Borrowers to any tax, penalty or other liabilities under ERISA in the aggregate
material in relation to the business, operations, Property or financial or other
condition of the Borrowers taken as a whole;
(h) One or more judgments or decrees shall be entered against either
of the Borrowers and shall not be dismissed, discharged, stayed or bonded within
a period of 60 days and shall involve in the aggregate a liability (to the
extent not paid or covered by insurance) of more than $100,000 at any one time
outstanding; or
(i) (i) Any one or more of the Borrowers shall fail to make any
payment (beyond any applicable grace period with respect thereto) due on any
Indebtedness or Security in an aggregate amount in excess of $10,000 or (ii) any
event shall occur or any condition shall exist in respect of any such
Indebtedness or Security of the Borrowers, or under any agreement securing or
relating to such Indebtedness or Security, the effect of which is (A) to cause
(or permit any holder of such Indebtedness or Security or a trustee to cause)
such Indebtedness or Security, or a portion thereof, to become due prior to its
stated maturity or prior to its regularly scheduled date or dates of payment, or
(B) to permit the holder of any Security (other than common stock of either of
the Borrowers) or a trustee to elect a majority of the directors on the board of
directors of either of the Borrowers;
then, and in any such event, (a) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above, automatically the Commitment shall
immediately terminate and the Loans (with accrued interest thereon) and all
other amounts owing under and in respect of this Agreement and the Note shall
immediately become due and payable, and (b) if such event is any other Event of
Default, so long as any such Event of Default shall be continuing, either of the
following actions may be taken: (i) the Bank may, by notice to the Borrowers,
declare the Commitment to be terminated forthwith, whereupon the Commitment
shall immediately
31
terminate; and (ii) the Bank may, by notice of default to the Borrowers, declare
the Loans (with accrued interest thereon) and all other amounts owing under and
in respect of this Agreement and the Note to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Except as expressly
provided above in this Article 8, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
ARTICLE 9. MISCELLANEOUS.
--------------
9.1. AMENDMENTS, ETC. The Loan Documents to which the Borrowers are
parties may not be changed, amended, waived, discharged or terminated unless
such change, amendment, waiver, discharge or termination is in writing signed by
the Borrowers and the Bank. Any such waiver and any such amendment, supplement
or modification shall be binding upon the Borrowers, the Bank and all future
holders of the Note. In the case of any waiver, the Borrowers and the Bank shall
be restored to their former position and rights hereunder and under the Note,
and any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
9.2. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including telex
or facsimile) and, unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered by hand, or three Business Days
after being deposited in the mail, postage prepaid, or, in the case of telex or
facsimile notice, when sent, answer back received, addressed as follows, or to
such other address as may be hereafter notified by the respective parties hereto
and any future holders of the Note:
Borrowers: Worthington Foods, Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Executive Vice President and
Chief Financial Officer
With a copy to: Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxxxx, Esq.
Bank: National City Bank
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Senior Vice President
With a copy to: Squire, Xxxxxxx & Xxxxxxx L.L.P.
00 Xxxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
PROVIDED that any notice, request or demand to or upon the Bank pursuant to
Articles 2 and 3 shall not be effective until received by the Bank.
9.3. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Bank, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The
32
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
9.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of the Loan Documents.
9.5. PAYMENT OF EXPENSES AND TAXES. Each of the Borrowers and the Bank
agrees to be responsible for and pay all of its own out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of this Agreement and the other Loan Documents and any other documents prepared
in connection herewith and therewith, and the consummation of the transactions
contemplated hereby and thereby, including without limitation the reasonable
fees and disbursements of their own counsel, provided that the Bank agrees to
reimburse the Borrowers for up to $2,000 of fees payable by the Borrowers to
their counsel in connection therewith. The Borrowers agree to (a) pay or
reimburse the Bank for all its reasonable out-of-pocket costs and expenses
incurred hereafter in connection with any amendment, supplement or modification
to this Agreement and the other Loan Documents and any other documents prepared
in connection herewith and therewith, including without limitation the
reasonable fees and disbursements of counsel to the Bank, (b) to pay or
reimburse the Bank for all its costs and expenses incurred in connection with,
and to pay, indemnify and hold harmless the Bank against and from, any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
arising out of or in connection with the enforcement or preservation of any
rights under the Loan Documents and any such other documents, including without
limitation reasonable fees and disbursements of counsel to the Bank, (c) to pay,
indemnify and hold harmless the Bank against and from any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement and the other Loan Documents and any such other documents, and
(d) to pay, indemnify and hold harmless the Bank against and from any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever arising
out of or in connection with the use or the proposed use of the proceeds of the
Loans (all of the foregoing, collectively, the "Indemnified Liabilities"),
PROVIDED that the Borrowers shall have no obligation hereunder for Indemnified
Liabilities with respect to the Bank arising from (i) the gross negligence or
willful misconduct of the Bank, (ii) legal proceedings commenced against the
Bank by any Security holder or creditor of the Bank, arising out of and based
upon rights afforded any such Security holder or creditor solely in its capacity
as such, or (iii) legal proceedings commenced against the Bank by any
Transferee. The agreements in this Section 9.5 shall survive repayment of the
Note and all other amounts payable hereunder.
9.6. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents and any certificate or other document delivered pursuant hereto and
thereto shall be binding upon and inure benefit of the Borrowers, the Bank, all
future holders of the Note and their respective successors and assigns, except
that the Borrowers may not assign or transfer any of their rights under this
Agreement or any other Loan Documents without the prior written consent of the
Bank. The Borrowers acknowledge that the Bank may at any time sell, assign,
transfer or grant participations in the Loans to other financial institutions
(each a "Transferee"). The Borrowers agree that each Transferee may exercise all
rights of payment (including without limitation rights of set-off) with respect
to the portion of the Loans held by it as fully as if such Transferee were the
direct holder thereof.
9.7. GOVERNING LAW; NO THIRD PARTY RIGHTS. This Agreement and the other
Loan Documents and the rights and obligations of the parties under this
Agreement and the other Loan Documents shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Ohio. This Agreement is
solely for the benefit of the parties hereto 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.
33
9.8. ADJUSTMENTS; SET-OFF. In addition to any rights or remedies of the
Bank provided by law, upon the occurrence of any Event of Default or upon all of
the Loans becoming or being declared to be due pursuant to Article 8, the Bank
is hereby irrevocably authorized without notice to the Borrowers (any such
notice being expressly waived) to set-off and appropriate and apply all deposits
(general and special, time or demand, provisional or final) in any currency and
other indebtedness at any time held or owing by the Bank to or for the credit or
the account of the Borrowers against and on account of any obligations,
liabilities and claims of the Borrowers to the Bank and in such amounts as the
Bank may elect, although such obligations, liabilities and claims may be
contingent or unmatured, provided that any such application of deposits shall be
made first against obligations, liabilities and claims under the Loan Documents.
The Bank shall promptly give the Borrowers notice of any set-off, provided that
the failure to give such notice shall not affect the validity of such set-off.
9.9. JOINT AND SEVERAL OBLIGATIONS. All indebtedness, liabilities and
obligations of the Borrowers under this Agreement and the other Loan Documents,
including without limitation all principal, interest, fees and costs and
expenses, shall be joint and several, regardless of whether they are referred to
as joint and several herein or therein, and each Borrower shall be liable for
all such indebtedness, liabilities and obligations of either of the Borrowers,
and the Bank shall have the right, in its sole discretion, to pursue its
remedies against either Borrower without the need to pursue its remedies against
the other Borrower. Notwithstanding anything herein to the contrary,
indebtedness, obligations and liabilities of either Borrower referred to herein
or in the other Loan Documents shall be interpreted to be the joint and several
indebtedness, obligations and liabilities of both Borrowers.
9.10. COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
9.11. EFFECTIVENESS. This Agreement shall become effective and binding
upon the Borrowers and the Bank as of the date of this Agreement.
9.12. SEVERABILITY. Any provision of this Agreement which is
prohibited, invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, invalidity or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition, invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction or
any other provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
WORTHINGTON FOODS, INC. NATIONAL CITY BANK
By: By:
-------------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President and Title: Senior Vice President
Chief Financial Officer
SPECIALTY FOODS INVESTMENT COMPANY
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Treasurer
34
FIRST AMENDMENT TO LOAN DOCUMENTS
This First Amendment to Loan Documents (this "Amendment") is entered
into effective as of January 14, 1999 by and between WORTHINGTON FOODS, INC., an
Ohio corporation ("WFI"), and SPECIALTY FOODS INVESTMENT COMPANY, a Delaware
corporation and wholly owned subsidiary of WFI ("SFI," and collectively with
WFI, the "Borrowers"), on the one hand, and NATIONAL CITY BANK, a national
banking association (the "Bank"), on the other hand, who hereby agree as set
forth below.
BACKGROUND INFORMATION
----------------------
A. The Borrowers and the Bank executed and delivered to each other that
certain Credit Agreement dated as of September 9, 1998 (the "Credit Agreement").
B. Concurrently with the execution and delivery of the Credit
Agreement, the Borrowers executed and delivered to the Bank that certain
Revolving Credit Note in the principal amount of $25,000,000 in favor of the
Bank (the "Note").
C. The Borrowers' obligations to pay to the Bank the principal and
interest under the Note, along with all other Obligations, are secured pursuant
to that certain Security Agreement executed by the Borrowers and delivered to
the Bank concurrently with the execution and delivery of the Credit Agreement
and the Note (the "Security Agreement," and collectively with the Credit
Agreement and the Note, the "Loan Documents").
D. The Borrowers and the Bank desire to amend and otherwise express
agreement with respect to the Loan Documents as hereafter set forth.
E. All terms used but not defined herein shall be given the meanings
ascribed thereto in the Loan Documents.
STATEMENT OF AGREEMENT
----------------------
Section 1. AMENDMENT OF THE CREDIT AGREEMENT. Section 1.1 of the
Credit Agreement is hereby amended by changing the dollar amount expressed in
the definition of "Commitment" from "$25,000,000" to "$30,000,000."
Section 2. AGREEMENT REGARDING THE CREDIT AGREEMENT. The Borrowers
hereby jointly and severally agree, represent and warrant to the Bank that all
of the Borrowers' representations and warranties set forth in Article 4 of the
Credit Agreement are accurate as of the date of this Amendment, with the "Loan
Documents" as referred to in said Article 4, for this purpose, including the
Loan Documents as amended by this Amendment.
Section 3. AMENDMENT OF THE NOTE. The Note is hereby amended by
changing "$25,000,000.00" and "Twenty-Five Million Dollars ($25,000,000.00),"
respectively, to "$30,000,000.00" and "Thirty Million Dollars
($30,000,000.00)," respectively, where they appear therein.
Section 4. AMENDMENT OF THE SECURITY AGREEMENT. The Security Agreement
is hereby amended by changing the reference therein from "$25,000,000.00" to
"$30,000,000.00."
35
Section 5. AGREEMENT REGARDING THE SECURITY AGREEMENT. The Borrowers
hereby agree, represent and warrant to the Bank that all of the Borrower's
representations and warranties set forth in Section 1 of the Security Agreement
are accurate as of the date of this Amendment.
Section 6. MISCELLANEOUS PROVISIONS. The following miscellaneous
provisions apply to this Amendment:
(a) No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated or waived
except in a writing signed by the parties thereto.
(b) The Loan Documents as amended herein shall be binding upon
and shall inure to the benefit of the Borrowers and the Bank
and their successors and assigns, provided, however, the
Borrowers may not assign any of their rights or delegate any
of their obligations under the Loan Documents and any
purported assignment or delegation shall be void.
(c) This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio without giving
effect to conflicts of law principles.
(d) This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original and all of which
together shall constitute one and the same document.
Signature pages may be detached from the counterparts and
attached to a single copy of this Amendment to physically
form one document.
(e) This Amendment is an amendment only and not a novation.
Except for the amendments herein, the Loan Documents, and
all the terms and conditions thereof, shall be and remain in
full force and effect with the amendments herein deemed to
be incorporated therein. This Amendment shall not release or
affect the liability of any guarantor, surety or endorser of
the Note or release any owner of collateral securing the
Note. The validity, priority and enforceability of the Note
shall not be impaired hereby.
36
IN WITNESS WHEREOF, this Amendment is executed effective as of the date
first above written.
BORROWERS: BANK:
--------- -----
WORTHINGTON FOODS, INC. NATIONAL CITY BANK
By: By:
----------------------------- --------------------------------
Name: Name:
--------------------------- ------------------------------
Title: Title:
-------------------------- -----------------------------
SPECIALTY FOODS INVESTMENT COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
37
SECOND AMENDMENT TO LOAN DOCUMENTS
This Second Amendment to Loan Documents (this "Second Amendment") is
entered into effective as of March ____, 1999 by and between WORTHINGTON FOODS,
INC., an Ohio corporation ("WFI"), and SPECIALTY FOODS INVESTMENT COMPANY, a
Delaware corporation and wholly owned subsidiary of WFI ("SFI," and collectively
with WFI, the "Borrowers"), on the one hand, and NATIONAL CITY BANK, a national
banking association (the "Bank"), on the other hand, who hereby agree as set
forth below.
BACKGROUND INFORMATION
----------------------
A. The Borrowers and the Bank executed and delivered to each other that
certain Credit Agreement dated as of September 9, 1998 (the "Credit Agreement").
B. Concurrently with the execution and delivery of the Credit
Agreement, the Borrowers executed and delivered to the Bank that certain
Revolving Credit Note in the principal amount of $25,000,000 in favor of the
Bank (the "Note").
C. The Borrowers' obligations to pay to the Bank the principal and
interest under the Note, along with all other Obligations, are secured pursuant
to that certain Security Agreement executed by the Borrowers and delivered to
the Bank concurrently with the execution and delivery of the Credit Agreement
and the Note (the "Security Agreement," and collectively with the Credit
Agreement and the Note, the "Loan Documents").
D. The Borrowers and the Bank executed and delivered to each other that
certain First Amendment to Loan Documents dated as of January 14, 1999 amending
the Loan Documents (the "First Amendment").
E. The Borrowers and the Bank desire to further amend and otherwise
express agreement with respect to the Loan Documents, as amended by the First
Amendment (the "First Amended Loan Documents"), as hereafter set forth.
F. All terms used but not defined herein shall be given the meanings
ascribed thereto in the First Amended Loan Documents.
STATEMENT OF AGREEMENT
----------------------
Section 7. Amendment of the Credit Agreement.
---------------------------------------------
(a) Section 1.1 of the Credit Agreement, as amended by the First
Amendment, is hereby amended by changing the dollar amount expressed
in the definition of "Commitment" from "$30,000,000" to "$35,000,000."
(b) Section 7.6 of the Credit Agreement is hereby amended to read
as follows:
"7.6 CONSOLIDATED WORKING CAPITAL. Permit the Consolidated
Working Capital to be less than $10,000,000 at the first Quarterly
Determination Date (December 31, 1998) or $20,000,000 at any Quarterly
Determination Date thereafter."
Section 2. AGREEMENT REGARDING THE CREDIT AGREEMENT. The Borrowers
hereby jointly and severally agree, represent and warrant to the Bank that all
of the Borrowers' representations and
38
warranties set forth in Article 4 of the Credit Agreement are accurate as of the
date of this Second Amendment, with the "Loan Documents" as referred to in said
Article 4, for this purpose, including the First Amended Loan Documents as
amended by this Second Amendment.
Section 3. AMENDMENT OF THE NOTE. The Note, as amended by the First
Amendment (the "First Amended Note"), is hereby amended by changing
"$30,000,000.00" and "Thirty Million Dollars ($30,000,000.00),"
respectively, to "$35,000,000.00" and "Thirty-Five Million Dollars
($35,000,000.00)," respectively, where they appear therein.
Section 4. AMENDMENT OF THE SECURITY AGREEMENT. The Security Agreement,
as amended by the First Amendment, is hereby amended by changing the reference
therein from "$30,000,000.00" to "$35,000,000.00."
Section 5. AGREEMENT REGARDING THE SECURITY AGREEMENT. The Borrowers
hereby agree, represent and warrant to the Bank that all of the Borrowers'
representations and warranties set forth in Section 1 of the Security Agreement
are accurate as of the date of this Second Amendment.
Section 6. MISCELLANEOUS PROVISIONS. The following miscellaneous
provisions apply to this Second Amendment:
(f) No provision of the First Amended Loan Documents as modified
herein may be changed, discharged, supplemented, terminated
or waived except in a writing signed by the parties thereto.
(g) The First Amended Loan Documents as amended herein shall be
binding upon and shall inure to the benefit of the Borrowers
and the Bank and their successors and assigns, provided,
however, the Borrowers may not assign any of their rights or
delegate any of their obligations under the First Amended
Loan Documents as amended herein and any purported
assignment or delegation shall be void.
(h) This Second Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio without giving
effect to conflicts of law principles.
(i) This Second Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same
document. Signature pages may be detached from the
counterparts and attached to a single copy of this Second
Amendment to physically form one document.
(j) This Second Amendment is an amendment only and not a
novation. Except for the amendments herein, the First
Amended Loan Documents, and all the terms and conditions
thereof, shall be and remain in full force and effect with
the amendments herein deemed to be incorporated therein.
This Second Amendment shall not release or affect the
liability of any guarantor, surety or endorser of the First
Amended Note or release any owner of collateral securing the
First Amended Note. The validity, priority and
enforceability of the First Amended Note shall not be
impaired hereby.
39
IN WITNESS WHEREOF, this Second Amendment is executed effective as of
the date first above written.
BORROWERS: BANK:
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WORTHINGTON FOODS, INC. NATIONAL CITY BANK
By: By:
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Name: Name:
---------------------------- -----------------------------
Title: Title:
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SPECIALTY FOODS INVESTMENT COMPANY
By:
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Name:
----------------------------
Title:
---------------------------
