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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
As of June 29, 1996 and for the period then ended
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission file number 33-97752
VAN DE KAMP'S, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 43-1721518
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(State or Other Jurisdiction of Incorporation (IRS Employer Identification No.)
or Organization)
1000 St. Louis Union Station
St. Louis, Missouri 63103
(Address of Principal Executive Office)
(314) 241-0303
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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None
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Securities registered pursuant to Section 12(g) of the Act
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None (Title of Class)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing. (See
definition of Affiliate in Rule 405.) Not applicable.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
Shares Outstanding
September 20, 1996
Common stock, no par value 200
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PART I
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ITEM 1: BUSINESS
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Business History
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Van de Kamp's, Inc., a Delaware corporation (the "Company"), began operations on
September 19, 1995 when it acquired the Van de Kamp's(R) frozen seafood business
and certain frozen dessert product lines (together the "Businesses"and prior to
September 19, 1995, the "Predecessor") from The Pillsbury Company ("Pillsbury")
and Pet Incorporated ("Pet") (Pillsbury and Pet collectively referred to as the
"Sellers"). The Company acquired the Businesses from the Sellers for a purchase
price of $190 million. The Company acquired the inventories, property, plant and
equipment, and intangible assets of the Businesses and paid Pillsbury $2
million, a contractually agreed upon amount, to retain all of the Businesses'
current liabilities. The acquisition was financed by (i) an equity capital
contribution of approximately $70 million from its parent VDK Holdings, Inc., a
Delaware corporation ("Holdings"), (ii) senior subordinated notes in the amount
of $100 million, and (iii) the borrowing by the Company of $32 million under the
senior secured bank facilities. Holdings is wholly owned by VDK Foods LLC, a
Delaware limited liability company ("Foods").
On May 6, 1996, Van de Kamp's, Inc. expanded its operations by acquiring from
Campbell Soup Company ("CSC") the frozen seafood and frozen vegetable product
lines of Mrs. Paul's(R). The purchase price was $73.2 million. The Company
acquired the inventories, certain manufacturing equipment and intangible assets
of Mrs. Paul's(R). The acquisition was financed by (i) an equity capital
contribution of $15 million from Holdings, and (ii) the borrowing by the Company
of $60 million under its senior secured bank facilities.
On July 9, 1996, subsequent to the Company's fiscal year end, Van de Kamp's,
Inc. acquired substantially all of the assets of the frozen food division of The
Quaker Oats Company ("Quaker"). The assets acquired were the Celeste(R) brand
of frozen pizza and the Aunt Jemima(R) brand of frozen breakfast products
(together, "Quaker Frozen Food Business"). The Company purchased the Celeste(R)
trademark and was granted an exclusive, perpetual, transferable, royalty-free
license of the Aunt Jemima(R) trademark for use in the frozen breakfast products
business. Also included in the acquisition was the Jackson, Tennessee
manufacturing facility where the Company produces both product lines. The
Company intends to continue to utilize this facility for the Quaker Frozen Food
Business. The purchase price was $188 million which is subject to adjustments
upon completion of an audit of inventory as of the closing of the acquisition.
The acquisition was financed by (i) an equity capital contribution from Holdings
of $40 million, (ii) the borrowing by the Company of $135 million under its
senior secured bank facility, and (iii) a $20 million senior secured convertible
loan secured by cash collateral posted by Holdings. In the event the Company
has not disposed of certain assets by July 9, 1997, the cash collateral will be
contributed as equity to the Company and the senior secured convertible loan
will be repaid with the cash proceeds from the equity contribution.
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Products and Markets
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The Company produces and markets frozen seafood, frozen dessert products and
frozen vegetables under its principal trademarks, including Van de Kamp's(R),
Mrs. Paul's(R), Pet-Ritz(R), and Oronoque Orchards(R). Following the July 9,
1996 acquisition of the Quaker Frozen Food Business, the Company's product
portfolio expanded to include frozen pizza and frozen breakfast products which
are sold under the Celeste(R) and Aunt Jemima(R) brands, respectively. The raw
materials required to manufacture these products are all widely available from
numerous independent suppliers throughout the year.
The Company has recently introduced several new products. Under its Van de
Kamp's(R) and Mrs. Paul's(R) brands, the Company has introduced frozen grilled
and flavored baked fish fillet products. The Company has also introduced a new
kosher frozen pie shell under its Mrs. Paul's(R) trademark.
The Company's products are sold nationwide to supermarkets and other retailers.
The Company sells its products through a network of frozen food brokers to
wholesale and retail grocery accounts. The products are distributed either
directly to the customer or through independent wholesalers.
Industry
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Van de Kamp's, Inc. participates in the frozen convenience food category, which
includes other meal occasion alternatives. The retail market for frozen
convenience foods is primarily driven by consumers' desire for food that is
convenient, easy to prepare and relatively inexpensive. The Company's primary
product lines which compete in this industry segment are frozen seafood, frozen
desserts, frozen vegetables, frozen pizza and frozen breakfast products.
Competition
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The market for frozen convenience foods is large and competitive with numerous
brands and products. The Company has numerous competitors for its various
product lines and competes in all its markets with national and regional
companies. Competition is based primarily on price, quality and convenience.
Van de Kamp's Inc. produces and markets the leading retail brands of frozen
seafood in the United States. The Company's frozen seafood products compete
with other brands of frozen seafood and with alternative frozen convenience
foods such as frozen chicken nuggets, frozen pizza and frozen Mexican dishes.
The Company's frozen desserts are sold primarily in regional markets and
competition varies by region and product line. The competition includes
alternative dessert offerings as well as comparable products. The Company's
frozen vegetable product line competes against other frozen and non-frozen
products as a convenient side dish to main course meals. The Company's frozen
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pizza product offering competes with other frozen pizza manufacturers and home
delivered pizzas as well as main meal occasion alternatives. Van de Kamp's
frozen breakfast products compete with other frozen breakfast offerings as well
as non-frozen breakfast products.
Seasonality
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The Company has some seasonality among its product lines. Sales of frozen
seafood products tend to be higher over the period January through April, which
includes the Lenten period. In frozen desserts, sales are higher for cream pies
in May through August and for frozen pie shells during the November and December
holiday baking season. The Company has no material backlog orders.
Van de Kamp's, Inc. experiences peaks in its working capital cycle in
anticipation of its sales seasonality. The Company builds inventory during the
months of August through December in advance of the holiday baking season and
the Lenten period. In addition, there is an inventory increase in the spring in
advance of the cream pie selling season. Receivables tend to increase during
high seasonal sales months but decline to normal levels thereafter.
Employees
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As of September 20, 1996, the Company had a total of 992 employees. The hourly
employees at the Chambersburg, Pennsylvania manufacturing facility are
represented by the International Brotherhood of Teamsters. None of the Company's
other employees are represented by a union. Management believes that its
relations with its employees are generally excellent.
ITEM 2: PROPERTIES
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Van de Kamp's, Inc. owns and operates three manufacturing facilities that are
subject to security interests granted to the Company's senior lenders under its
senior secured bank facility. The Company manufactures frozen seafood products
out of a 116,000 square foot facility in Erie, Pennsylvania. Frozen dessert,
frozen vegetables and some frozen seafood products are manufactured at the
Company's 180,000 square foot facility in Chambersburg, Pennsylvania. In
connection with the July 1996 acquisition of the Quaker Frozen Food Business,
the Company acquired a 302,000 square foot manufacturing facility in Jackson,
Tennessee, which produces frozen pizza and frozen breakfast products. The
Company leases its approximately 11,500 square foot headquarters office in St.
Louis, Missouri pursuant to a lease that will expire during fiscal year 2001,
subject to one five year renewal option. The Company is in the process of
expanding its office space to approximately 23,700 square feet.
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All of the Company's facilities are generally in good physical condition, are
well maintained, and are suitable for the manufacture of the particular product
line for which it is used. The Company's facilities are currently operating with
excess capacity and management does not believe there exists any material
capacity constraints in the foreseeable future.
ITEM 3: LEGAL PROCEEDINGS
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The Company is subject to litigation in the ordinary course of business. In the
opinion of management, the ultimate outcome of any existing litigation would not
have a material adverse effect on the Company's financial condition or results
of operations.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not applicable.
PART II
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ITEM 5: MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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There is no established public trading market for the Registrant's common stock.
All of its issued and outstanding shares of common stock are owned by Holdings.
No cash dividends have been declared since the incorporation of the Company. The
Company is restricted under its senior secured bank facilities from declaring
dividends, with certain limited exceptions, including for payment of Holdings'
and Foods' taxes, to pay Holdings' and Foods' fees and expenses in connection
with acquisitions, and to make payments under Holdings' incentive compensation
plan.
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ITEM 6: SELECTED FINANCIAL DATA
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The selected financial data presented below, as of June 29, 1996 and for the
period September 19, 1995 through June 29, 1996 is derived from the Company's
audited financial statements. The selected financial data of the Predecessor for
the period July 1, 1995 through September 18, 1995 and for the years ended June
30, 1995, 1994 and 1993, is derived from the audited Combined Statements of
Income of the Predecessor. The selected financial data for the year ended June
30, 1992 is derived from the Predecessor's unaudited financial information. The
selected financial data should be read in conjunction with the Company's
financial statements and the Predecessor's Combined Statements of Income and
notes thereto included in Item 14.
<TABLE>
<CAPTION>
Van de Kamp's Inc. Predecessor
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Period September 19, | Period July 1, (Unaudited)
1995 through | 1995 through Year Ended Year Ended Year Ended Year Ended
(in thousands) June 29, 1996 | September 18, 1995 June 30, 1995 June 30, 1994 June 30, 1993 June 30, 1992
- -------------- --------------------- | ------------------- -------------- -------------- -------------- --------------
<S> <C> | <C> <C> <C> <C> <C>
|
Net sales $143,296 | $20,545 $149,359 $153,314 $159,004 $177,549
Gross profit 82,929 | 9,567 83,248 85,433 81,617 80,451
Operating income 12,348 | 274 15,988 18,619 16,549 (1)
Net income (439) | (122) 8,272 9,850 8,486 (1)
Total assets 305,499 | (2) (2) (2) (2) (2)
Long term debt $188,750 | (2) (2) (2) (2) (2)
</TABLE>
(1) Net income and operating income for the year ended June 30, 1992 are not
available on a comparable basis with other periods presented and therefore is
not contained herein.
(2) Total assets and Long term debt for the period ended September 18, 1995 and
the years ended June 30, 1995, 1994, 1993 and 1992 are not available. The
Sellers did not operate the Businesses as separate divisions or business
entities and therefore maintained debt and certain other components of assets
and liabilities on a consolidated basis. See Note 2 to the Combined Statement
of Operations of the Van de Kamp's and Frozen Dessert Product Lines of Pet
Incorporated contained in Item 14.
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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Results of Operations
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The following table sets forth (dollars in thousands) for the period indicated
the percentage which the items in the Statements of Operations bear to net sales
and the percentage change of such items compared to the indicated prior period.
Certain amounts from prior years have been reclassified to conform with the
Company's presentation. The Statement of Operations column for the period July
1, 1995 through June 29, 1996 combines the Company's operating period September
19, 1995 through June 29, 1996, including the operations of the Mrs. Paul's
business for the period May 6, 1996 through June 29, 1996, and the Predecessor
operating period of July 1, 1995 through September 18, 1995.
<TABLE>
<CAPTION>
Period to Period to
Period Period
Period July 1, Period July 1, Period July 1, Increase Increase
1995 through 1994 through 1993 through (Decrease) (Decrease)
June 29, 1996 June 30, 1995 June 30, 1994 1995 to 1996 1994 to 1995
------------------ ------------------ ------------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $164,357 100.0% $152,382 100.0% $156,380 100.0% 7.9% (2.6%)
Cost of goods sold 70,634 43.0 63,170 41.5 63,681 40.7 11.8 (0.8)
-------- ----- -------- ----- -------- ----- ---- -----
Gross profit 93,723 57.0 89,212 58.5 92,699 59.3 5.1 (3.8)
Selling, distribution and
marketing expenses:
Selling and distribution 18,744 11.4 17,340 11.4 18,937 12.1 8.1 (8.4)
Trade promotions 36,216 22.0 34,530 22.7 33,304 21.3 4.9 3.7
Consumer marketing 13,255 8.1 8,260 5.4 9,852 6.3 60.5 16.2
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Total selling, distribution and
marketing expenses 68,215 41.5 60,130 39.5 62,093 39.7 13.4 (3.2)
Amortization of goodwill and
other intangibles 4,912 3.0 3,305 2.2 3,305 2.1 48.6 0.0
General and administrative
expenses 6,637 4.0 9,789 6.4 8,682 5.6 (32.2) 12.8
Transition related costs 1,337 0.8 - - - - - -
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Total operating expenses 81,101 49.3 73,224 48.1 74,080 47.4 10.8 (1.2)
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Operating income 12,622 7.7 15,988 10.4 18,619 11.9 (21.1) (14.1)
Interest income (135) (0.1) - - - - - -
Interest expense 12,469 7.6 - - - - - -
Amortization of deferred
financing expense 607 0.4 - - - - - -
Other bank and financing expenses 79 0.0 - - - - - -
-------- ----- -------- ----- -------- ----- ------ -----
Income (loss) before income taxes (398) (0.2) 15,988 10.4 18,619 11.9 (102.5) (14.1)
Provision for income taxes 163 0.1 7,716 5.1 8,769 5.6 ( 97.9) (12.0)
-------- ----- -------- ----- -------- ----- ------ -----
Net income (loss) ($561) (0.3%) $ 8,272 5.3% $ 9,850 6.3% (106.8%) (16.0)
======== ===== ======== ===== ======== ===== ===== =====
</TABLE>
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Product Line Detail
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Net sales, gross profit and product profit before general and administrative
expenses and amortization expense for the major product lines are summarized
below:
<TABLE>
<CAPTION>
Frozen Seafood Business Frozen Dessert Business
---------------------------- --------------------------
1996 1995 1994 1996 1995 1994
------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales $129,463 $115,141 $112,719 $34,894 $37,241 $43,661
Gross profit 78,881 71,650 69,244 14,842 17,562 23,455
Product profit before general and
administrative expense and
amortization expense $ 23,577 $ 25,643 $ 24,364 $ 1,931 $ 3,439 $ 6,241
</TABLE>
FISCAL 1996 COMPARED TO FISCAL 1995
Net Sales
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Consolidated net sales increased $12.0 million to $164.4 million for the year
ended June 29, 1996. This was an increase of 7.9% from the prior year sales of
$152.4 million.
Frozen seafood sales increased $14.3 million, or 12.5%, due to incremental
advertising and promotional support for this segment of the business during the
key Lenten season and the acquisition of Mrs. Paul's. Seafood sales trailed
prior year levels in the first half of the fiscal year, which included two and
one-half months of Predecessor ownership, due to transition and start-up
difficulties associated with the Company's formation and its acquisition of the
business from Pillsbury. In the second half of the year, sales, excluding Mrs.
Paul's, exceeded prior year by $7.3 million. This sales increase was due to
higher volumes of $5.6 million associated with the increased advertising and
promotion support and a price increase instituted on selected seafood products
in December of 1995, which accounted for higher sales of $1.7 million.
Mrs. Paul's sales were $8.3 million during the Company's ownership period May 6
through June 29, 1996.
Sales of frozen dessert products decreased $2.3 million or 6.3%, due to lack of
sales and marketing support by the Sellers and increased competitive pressure in
the whipped topping segment. Frozen dessert sales rebounded in the June quarter,
increasing 3.4% over prior year, which was the result of key marketing
initiatives put into place to take advantage of the peak spring sales period.
Gross Profit
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Gross profit increased $4.5 million, or 5.1%, to $93.7 million from $89.2
million during the prior year.
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The gross profit on seafood products increased $7.2 million, or 10.1%. Increased
sales offset a gross margin decline of 1.3 percentage points. The decline in the
gross margin percentage was caused by higher fixed production costs during the
Predecessor ownership period. The gross margin during the Company's ownership
period increased by 0.3 percentage points versus prior year. Company results
were favorable in comparison to the prior year's results due to higher selling
prices and improvements in plant yield, throughput and overhead spending. These
improvements were partially offset by higher material costs and higher costs
embedded in purchased inventory which was manufactured during the Predecessor
ownership period.
Frozen dessert gross profit fell $2.7 million, or 15.5%, with a gross margin
decline of 4.6 percentage points. The decline was the result of product mix
changes, including a shift to lower margin private label sales, competitive
pricing in whipped toppings and higher packaging and ingredient costs.
Mrs. Paul's contributed $4.1 million in gross profit during the Company's
ownership period May 6 through June 29, 1996. The gross margin during that
period was 50.0%, reflecting CSC's higher production costs. Mrs. Paul's
products were produced by CSC during the fourth quarter in order to accumulate
sufficient inventory prior to the relocation of the production equipment from
CSC to the Company's Erie and Chambersburg facilities.
Selling, Distribution and Marketing Expenses
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Selling, distribution and marketing expenses for the year were 41.5% as a
percentage of sales versus 39.5% in the comparable period last year.
Approximately $4.0 million of the $8.1 million increase is the result of the
acquisition of Mrs. Paul's.
Selling and distribution expenses remained flat as a percentage of sales,
reflecting slightly higher freight and warehousing rates offset by a reduction
in brokerage expenses.
Trade promotions declined by 0.7 percentage points due to lower trade spending
during the Predecessor ownership period and a sales mix shift toward private
label frozen desserts, on which trade spending is negligible.
Consumer support increased $5.0 million, or 2.7 percentage points primarily due
to higher advertising and promotional spending. The majority of this increase,
or $4.1 million, was focused on the Company's seafood products. Consumer support
was the key driver behind successfully reversing historical sales trends and
returning seafood sales to growth.
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General and Administrative Expenses
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General and administrative expenses totaled $6.6 million for the year, or 4.0%
as a percentage of sales, which was $3.2 million lower than the prior year. This
amount included a first quarter corporate allocation from Pillsbury. Prior year
expense of $9.8 million was a combination of Pet and Pillsbury corporate
allocated expenses. The reduction in expenses reflected the lower overhead
spending associated with the Company's stand-alone structure as compared to
amounts allocated to the Businesses during the Predecessor ownership periods.
Transition Related Costs
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Transition related costs of $1.3 million consist of what management believes are
one-time costs incurred to establish Van de Kamp's, Inc. operations, including
expenditures to regain distribution of products that had been discontinued
during the transition of the Businesses and Mrs. Paul's from the Sellers and CSC
to the Company, relocation expenses, recruiting fees, sales training, computer
systems training, and other one-time transitional expenses.
Operating Income
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Operating income decreased $3.4 million, or 21.1%, to $12.6 million. In addition
to the factors noted above, amortization of goodwill and other intangibles
increased $1.6 million versus the prior year.
Interest Income/Expense
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Interest expense, net of interest income, was $12.3 million for the fiscal year
ending June 29, 1996, or 7.5% of sales. During Predecessor ownership periods,
debt and related interest expense were not allocated to the Businesses.
Income Taxes
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The provision for income taxes decreased to $0.2 million from $7.7 million in
the prior year. This decrease is primarily the result of lower earnings in the
current period as caused by matters previously discussed. The Company's
amortization of goodwill is deductible for tax purposes and therefore management
expects that the Company will experience a lower effective tax rate than existed
in the Predecessor ownership periods.
Net Income
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The Company incurred a $0.6 million loss for fiscal 1996 as compared to a profit
of $8.3 million for fiscal 1995 as a result of the factors noted above.
FISCAL 1995 COMPARED TO FISCAL 1994
Net Sales
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Net sales declined by 2.6% to $152.4 million from $156.4 million in 1994. Sales
of frozen seafood products increased by 2.1% to $115.1 million from $112.7
million in the prior year. Sales increases achieved by the ongoing roll out of
successful new products offset volume declines attributable to the
discontinuation of three unprofitable uncoated fillet products.
Sales of the frozen dessert product lines declined by 14.7% to $37.2 million
from $43.7 million in 1994. Sales increases in cobblers, cream pies and pie
crusts were offset by lower sales of whipped topping due to the loss of certain
private label customers and competitive pricing in the category.
Gross Profit
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Gross profit of $89.2 million was 3.8% lower than the gross profit in 1994 of
$92.7 million. As a percent of sales, the gross profit in 1995 was 58.5%, which
was below the 1994 level of 59.3%. The decline was due to higher unit fixed
costs, as such costs were spread over a lower sales base, and increases in raw
material costs, principally in packaging materials, offsetting continued
productivity improvements realized at the Erie manufacturing facility.
Selling, Distribution and Marketing Expenses
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In 1995, total selling, distribution and marketing expenses were $60.1 million
which was $2.0 million lower than the $62.1 million experienced in 1994. Selling
and distribution expenses were 11.4% as a percentage of sales in 1995 which was
below the prior year's 12.1% as a percentage of sales primarily due to
distribution savings arising from Pillsbury's acquisition of Pet.
Trade promotions increased to 22.7% as a percentage of sales in 1995 from 21.3%
in 1994 principally due to additional slotting expenditures associated with the
continued roll out of new seafood products and higher trade spending on cream
pie products.
In 1995, consumer marketing expenses decreased $1.6 million to $8.3 million.
Approximately half of the decline was attributable to lower television
advertising expenditures on frozen seafood products.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses were $9.8 million in 1995 compared to $8.7
million in 1994. These amounts represent both direct and indirect allocations
from Pet which were based on budgeted net sales. Fluctuations in the amount are
primarily attributable to changes from budgeted net sales.
Operating Income
- ----------------
Operating income decreased to $16.0 million in 1995 from $18.6 million in 1994
mainly due to lower sales levels and higher general and administrative expenses,
which were partially offset by reductions in consumer marketing.
Income Taxes
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The provision for income taxes of $7.7 million in 1995 represented an effective
tax rate of 48.3% compared to 47.1% in 1994.
Net Income
- ----------
Net income decreased to $8.3 million in 1995 compared to $9.8 million in 1994.
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Liquidity and Capital Resources
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At June 29, 1996, the Company had $88,750,000 of senior secured term debt and
$100,000,000 of senior subordinated notes outstanding. The interest rate on the
subordinated notes is 12%, with semi-annual interest payments which commenced in
March 1996. The senior secured term debt, of which $5 million will mature during
fiscal year 1997, bears interest at a spread to prime or Eurodollar base rates.
The weighted average interest rate at June 29, 1996 for the senior secured term
debt was 8.2%. Interest is generally payable quarterly and principal payments
are semi-annual.
The Company also has a $25 million senior secured revolving facility with no
outstanding balance at June 29, 1996. The available capacity under the revolving
facility is subject to limitations based on letters of credit.
For the nine and one-half months ended June 29, 1996, cash provided by
operations was $12.1 million. Net income before depreciation and amortization
accounted for $7.0 million of the operating cash flow and a decrease in working
capital, excluding cash and debt, contributed another $5.1 million. Accounts
receivable increased $16.8 million, including $4.2 million associated with Mrs.
Paul's. Inventory levels increased $5.0 million due to a planned inventory
increase necessary to facilitate the seafood production line relocation from
CSC's production facility to the Company's manufacturing facilities in Erie and
Chambersburg. These increases in current assets were offset by a $14.1 million
increase in accounts payable, including $2.3 million associated with Mrs.
Paul's, and a $13.4 million increase in accrued expenses, including $3.9 million
related to Mrs. Paul's.
For the nine and one-half months ended June 29, 1996, the Company spent $2.2
million on property, plant and equipment, $0.5 million of which was used to
initiate the relocation of the Mrs. Paul's production lines.
As of June 27, 1996, the Company had $4.0 million of cash and cash equivalents
and an unused commitment available under the senior secured revolving debt
facility, as adjusted for outstanding letters of credit, of $24.6 million. The
Company believes that the revolving debt facility, combined with internally
generated cash, is adequate to meet anticipated operating and capital
requirements of the existing business.
Other Information
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On July 9, 1996, subsequent to the Company's fiscal year end, Van de Kamp's,
Inc. acquired substantially all of the assets of the frozen food division of The
Quaker Oats Company ("Quaker"). The assets acquired were the Celeste(R) brand of
frozen pizza and the Aunt Jemima(R) brand of frozen breakfast products
(together, "Quaker Frozen Food Business"). The Company purchased the Celeste(R)
trademark and was granted an exclusive, perpetual, transferable, royalty-free
license of the Aunt Jemima(R) trademark for use in the frozen breakfast products
business. Also included in the acquisition was the Jackson, Tennessee
manufacturing facility where the Company produces both product lines. The
Company intends to continue to utilize this facility for the Quaker Frozen Food
Business. The purchase price was $188 million which is subject to adjustments
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upon completion of an audit of inventory as of the closing of the acquisition.
The acquisition was financed by (i) an equity capital contribution from Holdings
of $40 million, (ii) the borrowing by the Company of $135 million under its
senior secured bank facility, and (iii) a $20 million senior secured convertible
loan secured by cash collateral posted by Holdings. In the event the Company has
not disposed of certain assets by July 9, 1997, the cash collateral will be
contributed as equity to the Company and the senior secured convertible loan
will be repaid with the cash proceeds from the equity contribution. The
Company's Credit and Guarantee Agreement was amended as of July 9, 1996 to
provide for the additional senior secured debt facilities.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------ -------------------------------------------
Reference is made to Item 14.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------ ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
-12-
<PAGE>
PART III
- --------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------- --------------------------------------------------
The names, ages and positions of all directors and executive officers of Van de
Kamp's, Inc., as of September 20, 1996, are listed below, followed by a brief
account of their business experience for at least the past five years. All of
the officers and directors, with the exception of Timothy B. Andersen, have
served in their respective positions since the Company commenced operations on
September 19, 1995. Mr. Andersen has served in his position since his employment
on October 11, 1995. Directors and officers serve in their positions until their
resignation or removal. Officers serve at the pleasure of the Board of
Directors.
<TABLE>
<CAPTION>
Name Age Position(s)
- ---- --- -----------
<S> <C> <C>
Ian R. Wilson 66 Chairman of the Board of Directors
Thomas O. Ellinwood 41 President and Director
Ray Chung 48 Executive Vice President
James B. Ardrey 38 Executive Vice President and
Director
Timothy B. Andersen 42 Chief Financial Officer and Vice
President - Administration
Thomas J. Youngerman 45 Vice President - Sales
C. Renee Sloan 34 Vice President - Marketing
Olafur Gudmundsson 37 Vice President - Operations
M. Laurie Cummings 33 Vice President and Secretary
Peter Lamm 44 Director
Andrea Geisser 53 Director
Nicholas Dennis 49 Director
Clive A. Apsey 48 Director
Charles J. Delaney 36 Director
Robert V. Dale 59 Director
</TABLE>
-13-
<PAGE>
IAN R. WILSON - CHAIRMAN OF THE BOARD OF DIRECTORS
Mr. Wilson is the managing partner of Dartford Partnership, LLC ("Dartford"), a
private investment partnership focused on the food and beverage industries. Mr.
Wilson was formerly Chairman and Chief Executive Officer of Windmill Corporation
("Windmill"), a leading specialty miller and supplier of branded consumer
products which he founded in March 1989. Mr. Wilson was also formerly Chairman
and Chief Executive Officer of Wyndham Foods, Inc. ("Wyndham"), a major cookie
company he founded in 1985 and positioned as the leading popular priced cookie
company in the United States. From 1983 to 1984, Mr. Wilson was the Chairman and
Chief Executive Officer of Castle & Cooke (Dole), an international food and real
estate concern. Prior to Castle & Cooke, Mr. Wilson spent 25 years with The
Coca-Cola Company, initially in South Africa, where he was Plant Manager of
Johannesburg and later Vice President - Area Manager for Southern Africa, and
also served in a series of international operating management positions.
Ultimately, Mr. Wilson served as Vice Chairman of The Coca-Cola Company and
President of the Pacific Group. Mr. Wilson's past and present service as a
director includes membership on the boards of Novell, Inc., Revlon, Inc., Crown
Zellerbach Corporation, Castle & Cooke, Inc., Wilson Bottling Corporation,
Golden State Foods and New Age Beverages, Ltd.
THOMAS O. ELLINWOOD - PRESIDENT AND DIRECTOR
Mr. Ellinwood has been responsible for the management of the Van de Kamp's. Inc.
Businesses since Pet acquired the Businesses from Grand Metropolitan, PLC
("Grand Met") in October 1989, when he headed the acquisition and integration
team as Director/Marketing Manager. Mr. Ellinwood was Vice President and General
Manager of Pet from March 1992 until the Company acquired the Businesses.
Between 1990 and 1992, Mr. Ellinwood held the position of Vice President,
Marketing. Prior to Pet's acquisition of the Van de Kamp's, Inc. Businesses
from 1986 to 1989, Mr. Ellinwood held various positions of increasing
responsibility with Pet's sales and marketing departments. Mr. Ellinwood served
as General Manager of Omar, Inc., a privately-owned aerospace manufacturing
company from 1983 to 1986. From 1977 to 1983, Mr. Ellinwood was a pilot in the
U.S. Navy.
RAY CHUNG - EXECUTIVE VICE PRESIDENT
Mr. Chung is a partner in Dartford. Mr. Chung has previously served as a
Director, Executive Vice President and Chief Financial Officer of Windmill from
1989 to 1995 and as a Director, Executive Vice President and Chief Financial
Officer of Wyndham from 1985 to 1990. From May 1984 to September 1985, Mr. Chung
served as Vice President - Finance for the Kendall Company (Colgate-Palmolive).
Between 1981 and 1984, Mr. Chung served as Vice President - Finance for Riviana
Foods, Inc.
-14-
<PAGE>
JAMES B. ARDREY - EXECUTIVE VICE PRESIDENT AND DIRECTOR
Mr. Ardrey is a partner in Dartford. From January 1993 to February 1995, Mr.
Ardrey was a consultant to Windmill, conducting its divestiture program. Over
the period 1984 to 1992, Mr. Ardrey was an investment banker with Paine Webber
Incorporated, serving as Managing Director from 1990 to 1992. Prior to joining
Paine Webber, Mr. Ardrey was a consultant with Booz, Allen & Hamilton.
TIMOTHY B. ANDERSEN - CHIEF FINANCIAL OFFICER AND VICE PRESIDENT -
ADMINISTRATION
Prior to joining the Company in October 1995, Mr. Andersen was Vice President of
the Pet Integration Team for Grand Met/Pillsbury. From 1994 to 1995, he served
as Vice President - Finance of Alpo Pet Foods, Inc. Between 1992 and 1994 he was
Director of Financial Planning and Analysis and Controller for Pillsbury
Bakeries and Foodservice, Inc. From 1990 to 1991, Mr. Andersen served as
Director of the Food Sector Audit - North America for Grand Met/Pillsbury and
between 1988 and 1990 he was the Director of Freight Accounting for Burlington
Northern Railroad Co.
THOMAS J. YOUNGERMAN - VICE PRESIDENT - SALES
Mr. Youngerman joined Pet in August 1987 as Division Manager, Frozen Foods. He
subsequently held numerous positions until his promotion to National Vice
President of Sales in 1993. Prior to joining Pet, Mr. Youngerman was Director of
Special Marketing, Revlon International, New York, and he held several positions
with Trinity Marketing Corporation, a food brokerage company specializing in
sales to the military market.
C. RENEE SLOAN - VICE PRESIDENT - MARKETING
Ms. Sloan became Marketing Manager of the Van de Kamp's, Inc. Businesses in
1995. She joined Pet in 1991 as an Assistant Product Manager of the Businesses
and held marketing positions of increasing responsibility. Her responsibilities
have included advertising and consumer promotion, new product development and
execution, strategic brand management and financial management. She joined Pet
in 1990, working for the Branded Express Foods Group, marketing chilled,
prepared foods. Previously, she worked for Warner-Lambert American Chicle Group
as a Sales Representative, and for Kellogg Cereal Company for five years in
sales and marketing support functions.
OLAFUR GUDMUNDSSON - VICE PRESIDENT - OPERATIONS
Mr. Gudmundsson joined Pet in July 1991. Prior to joining Pet, he was employed
by Coldwater Seafood Corporation, the leading supplier of seafood to the food
service industry from 1982 to 1991.
-15-
<PAGE>
M. LAURIE CUMMINGS - VICE PRESIDENT AND SECRETARY
Ms. Cummings is a partner in Dartford. Ms. Cummings was Vice President,
Controller and Treasurer of Windmill from 1989 to 1995. Between 1987 and 1990,
Ms. Cummings was the Controller and Assistant Treasurer of Wyndham.
PETER LAMM - DIRECTOR
Mr. Lamm is President of Fenway Partners Management, Inc., the management
company for Fenway, a New York based direct investment firm for institutional
investors with a primary objective of acquiring controlling positions in leading
middle-market companies. From February 1982 to April 1994, Mr. Lamm was employed
by Butler Capital Corporation ("BCC"), most recently as Senior Direct Investment
Officer and a Managing Director. Until April 1994, Mr. Lamm was also a general
partner of the five limited partnerships managed by BCC. Mr. Lamm is also a
director of Central Tractor Farm & Country, Inc. as well as director of various
private corporations.
ANDREA GEISSER - DIRECTOR
Mr. Geisser is a Managing Director of Fenway Partners Management, Inc. From
February 1989 to June 1994, Mr. Geisser was employed by BCC as a Managing
Director. Until June 1994, Mr. Geisser was also a general partner of the five
limited partnerships that serve as the respective general partners of the five
investment limited partnerships managed by BCC. Prior to joining BCC, Mr.
Geisser was a Managing Director of Onex Investment Corporation, the largest
Canadian leveraged buyout company, and prior to that started the U.S. operations
of IFINT, a European investment company, where he was a Senior Vice President
and Director. Mr. Geisser is a director of Fusion Systems Corporation, a trustee
and member of the audit committee of Corporate Property Investors, a real estate
investment trust, and a director of various private corporations.
NICHOLAS DENNIS - DIRECTOR
Mr. Dennis has served as Chief Executive Officer of Tiger Oats, Limited ("Tiger
Oats") since 1994. From 1990 to 1994, Mr. Dennis served as Chief Executive
Officer of ICS Limited, a South African processor and marketer of perishable
foods. Prior to joining ICS Limited, Mr. Dennis was employed from 1982 to 1990
by Tiger Oats, where he held various positions of increasing responsibility,
with the last position that of division chairman. Previously, he worked for
Colgate-Palmolive, Germany. Mr. Dennis' past and present service as a director
includes membership on the boards of the following companies: Tiger Oats, ICS
Limited, C.G. Smith Limited, C.G. Smith Foods Limited, Adcock Ingram Limited,
Langeberg Holdings Limited, and Sea Harvest Limited.
-16-
<PAGE>
CLIVE A. APSEY - DIRECTOR
Mr. Apsey has served as Executive Chairman of Langeberg Foods, a division of
Tiger Oats, since 1990. From 1979 to 1990, Mr. Apsey served as Managing Director
of Jungle Oats Company, Cape Town, a subsidiary of Tiger Oats. Mr. Apsey's past
and present service as a director includes membership on the boards of the
following companies: Tiger Milling & Feeds Ltd., Tiger Foods Ltd., Tiger Oats,
Langeberg Foods, Ltd., Langeberg Holdings Ltd., Beacon Sweets and Chocolates
(Pty) Ltd. and Durban Confectionery Works (Pty) Ltd.
CHARLES J. DELANEY - DIRECTOR
Mr. Delaney has been President of UBS Capital LLC ("UBS") since January 1993 and
Managing Director in charge of the Leveraged Finance Group of the Corporate
Banking Division of Union Bank of Switzerland since May 1989. Mr. Delaney is
also a director of Specialty Foods Corporation, SDW Holding Corporation, RU
Corporation and Peoples Telephone Company, Inc.
ROBERT V. DALE - DIRECTOR
Mr. Dale is the President and a Director of Windy Hill Pet Food Company, Inc.
Mr. Dale was formerly President of Martha White Foods, a baking mix and flour
division of Windmill. Prior to this, he was President of Beatrice Specialty
Products Division, which bought Martha White in 1975. Mr. Dale's past and
present service as a director includes membership on the Boards of Third
National Bank of Nashville, Cracker Barrel Old Country Stores and Zatarain's
Seasonings. He has served as President of the National Soft Wheat Millers
Association and President of the American Corn Millers Federation.
ITEM 11: EXECUTIVE COMPENSATION
- ------- ----------------------
The following Summary Compensation Table sets forth the compensation received by
the Company's President and other executive officers whose aggregate annual
salary and bonuses exceeded $100,000 during the period ended June 29, 1996 and
as if fiscal 1996 was a full twelve month period.
-17-
<PAGE>
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
Other
Name and Principal Salary Bonus Compensation
Position as of June 29, 1996 Year (Annualized) (Annualized) (Annualized)
- --------------------------------- ---- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Thomas O. Ellinwood 1996 $175,000 $112,500 $14,375
President and Director
Timothy B. Andersen 1996 $125,000 $ 52,500 $37,875
Chief Financial Officer and
Vice President - Administration
C. Renee Sloan 1996 $125,000 $ 52,500 $ 8,875
Vice President - Marketing
Thomas J. Youngerman 1996 $125,000 $ 52,500 $ 8,875
Vice President - Sales
Olafur Gudmundsson 1996 $125,000 $ 52,500 $49,350
Vice President - Operations
</TABLE>
Other compensation for Messrs. Andersen and Gudmundsson includes $14,000 and
$40,475, respectively, of relocation expenses. In addition, other compensation
includes Company contributions on behalf of the officers to profit sharing and
savings plans.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Members of the compensation committee of the Board of Directors of the Company
are Messrs. Ian R. Wilson, Peter Lamm and Charles J. Delaney. Mr. Wilson serves
as chairman of the compensation committee.
The Company is party to a Management Services Agreement, as described in Item
13, with Dartford, who is a member of Foods. Mr. Wilson is the managing partner
of Dartford.
The Company entered into a Computer Services Agreement with Windy Hill Pet Food
Company ("Windy Hill") pursuant to which Windy Hill provides computer support
services to Van de Kamp's, Inc. for an annual fee of $216,000. Dartford (of
which Mr. Wilson is the managing partner) and its partners own 24% of Windy
Hill. Mr. Wilson is the Chairman of the Board of Directors of the Company and
of Windy Hill.
As of September 20, 1996, Van de Kamp's, Inc. has paid to certain members of
Foods, who are also represented on the Board of Directors and beneficial owners,
fees for services rendered in connection with the acquisitions and related
financing of the Company's acquisitions. These fees, as discussed in Item 13,
included $1,950,000 paid to Dartford, of which Mr. Wilson is the managing
partner; $1,474,000 paid to Fenway, of which Mr. Lamm is the president of the
general partner of Fenway; $294,000 paid to UBS, whose president is Mr. Delaney.
-18-
<PAGE>
Employment Agreements
- ---------------------
The Company entered into an employment agreement with Thomas O. Ellinwood to
serve as President of the Company on September 19, 1995, which was subsequently
amended as of July 1, 1996. The agreement provides for a three year term;
however, commencing on the first anniversary date after September 19, 1995 and
each anniversary thereafter, the term will automatically be extended (the
"Automatic Extension") for one additional year so that the term ends three years
after the latest anniversary after September 19, 1995, unless notice by either
the Company or Mr. Ellinwood to terminate is given 30 days prior to the
Automatic Extension. Under his employment agreement, as amended, Mr. Ellinwood
will receive an annual base salary of $225,000 (subject to annual adjustment)
during the term of the agreement and will be eligible to receive a bonus of up
to 70% of his base salary based upon certain earnings criteria. If the Company
terminates Mr. Ellinwood's employment for any reason other than (i) for acts of
dishonesty detrimental to the best interests of the Company, (ii) for a
conviction of a felony, (iii) for willful malfeasance or gross negligence in the
performance of his duties, (iv) for repeated failure to follow instructions of
the Board of Directors and the Company, or (v) for the occurrence of permanent
disability or death prior to a Change of Control (as defined below), the Company
is required to pay him the greater of (i) 200% of his base salary then in
effect, or (ii) the base salary he would have been entitled to receive through
the end of the current term of the employment agreement. If such termination
occurs after a Change of Control, the Company is required to pay him 200% of his
base salary then in effect. Under Mr. Ellinwood's employment agreement, the
term "Change of Control" is defined as (i) the sale, exchange or other
disposition of (A) more than 50% of the issued and outstanding shares of the
Company, (B) more than 50% of the issued and outstanding shares of Holdings, or
(C) more than 50% of the units of limited liability company interests in Foods,
in each case to or with a person or entity other than the Company, Holdings,
Foods, or an affiliate of any of them, or (ii) the merger, consolidation, or
other business combination of the Company, Holdings or Foods with or into
another entity other than the Company, Holdings, or Foods or an affiliate of any
of them. Mr. Ellinwood's employment agreement also provides that for one year
following his termination of employment with the Company, Mr. Ellinwood may not
compete with, or solicit employees, from the Company.
The Company also entered into employment agreements with Timothy B. Andersen,
Thomas J. Youngerman, C. Renee Sloan, and Olafur Gudmundsson (collectively, the
"Vice Presidents") effective September 19, 1995, with the exception of Mr.
Andersen whose employment agreement was effective as of October 11, 1995. Each
of the employment agreements, as amended as of July 1, 1996, with the Vice
Presidents (the "Employment Agreements") has a three year term and contains
among other things, a one year noncompetition covenant which prohibits such Vice
Presidents from competing with, and soliciting employees from, the Company.
Under the Employment Agreements, as amended, the base salary for each of the
Vice Presidents is $140,000 (subject to annual adjustment) and each Vice
President is eligible to receive a bonus of up to 60% of his base salary based
upon certain earnings criteria. If the Company terminates any one of the Vice
-19-
<PAGE>
Presidents' employment without cause, the Company will be required to pay to
such Vice President the greater of (i) 100% of such Vice President's base salary
then in effect, or (ii) the base salary such Vice President would have been
entitled to receive through the end of the term of such Vice President's
employment agreement.
Directors' Compensation
- -----------------------
Directors, all of whom are officers, employees or otherwise affiliates of the
Company, have not, as of September 20, 1996, and are not expected in the future
to receive compensation for their services as directors. Directors of the
Company are entitled to reimbursement of their reasonable out-of-pocket expenses
in connection with their travel to and attendance at meetings of the Board of
Directors or committees thereof.
Long Term Incentive Compensation Plan
- -------------------------------------
VDK Foods LLC has initiated the preparation of an Incentive Compensation Plan
(the "Plan") as a means by which Key Personnel (defined as employees and other
specific designated persons) of the Company, and/or affiliated with the Company,
may be given an opportunity to benefit from the appreciation in the value of the
Company. As of September 20, 1996, the Plan has not been finalized. However,
the intent of the Plan and the corresponding summary principal terms that are
discussed below are not expected to change materially. The effective date of
the Plan will be as of September 19, 1995. The final Plan document is required
to be approved by the Board of Member Managers of Foods and by at least 75% of
the investors holding Class B and Class C limited liability company interests in
VDK Foods LLC.
The Key Personnel will be issued various types of incentive compensation units
(the "Units)" in the Plan as a means to participate in the valuation of the
Company, as determined based on certain formulae in the Plan document. The Units
are subject to forfeiture based on the failure to meet vesting requirements,
specified earnings targets, and/or rates of return targets for certain investors
in Foods. Pursuant to the Plan document, the Units will have special valuation
and payment provisions upon a change of control or initial public offering of
the Company's or Holdings' stock (the "IPO").
Upon a change of control or IPO, the Units will be valued and amounts will be
paid to Unit holders according to various factors, such as the type of
triggering event and the amount of proceeds paid to the Foods' investors. In
general, there will be no payment on the Units until the Foods' investors have
received a designated return on their investments. The payment to Unit holders
may be cash and/or non-cash securities, depending on the triggering event and
the type of distribution received by Foods' investors. In addition, the Plan
will gross-up payments to the Unit holders in certain events relating to (i)
any excise tax due under federal income tax rules, and (ii) any tax on the Units
in excess of capital gains tax rates.
The total amount due under the Plan, if any, is subject to the rates of return
and forfeiture factors discussed above. Based on the current valuation of the
Company as calculated pursuant to the Plan, there is no basis to record an
accrual for compensation expense at this time. To the extent any amounts are
deemed accruable under the Plan in the future, such amounts will be a liability
of Foods as the sponsor of the Plan. However, because the Plan is for the
benefit of Key Personnel of the Company, any expense to be recognized under the
Plan will be pushed down to the Company, and
-20-
<PAGE>
will be recorded by the Company as expense and as additional paid in capital
from its parent over the applicable vesting periods.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------- --------------------------------------------------------------
All of the outstanding capital stock of the Company is held by Holdings and all
of the outstanding capital stock of Holdings is held by Foods. The Class B and
Class C common limited liability company interests ("Common LLC Securities") are
the only classes of Foods' limited liability company interests that currently
possess voting rights. As of September 20, 1996, there were 94,877 issued and
outstanding shares of Foods' Common LLC Securities. The following table sets
forth certain information regarding the beneficial ownership of the Common LLC
Securities of Foods, as of September 20, 1996, by each person who beneficially
owns more than 5% of Foods' Common LLC Securities, by directors and certain
executive officers of the Company, individually, and by the directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number of Percentage
Common LLC Common LLC
Name and Address of Beneficial Owner Securities/(1)/ Securities/(1)/
- ------------------------------------ ---------------- ----------------
<S> <C> <C>
5% STOCKHOLDERS:
Fenway Partners Capital Fund, L.P./(2)/ 50,754.4 53.5%
152 West 57th Street
New York, New York 10019
Tiger Oats Limited /(3)/ 18,218.7 19.2%
85 Bute Lane
Sandown, Sandton 2196
Republic of South Africa
UBS Capital LLC/(4)/ 18,218.7 19.2%
299 Park Avenue
New York, New York 10171
Dartford Partnership, LLC/(5)/ 6,537.1 6.9%
801 Montgomery Street, Suite 400
San Francisco, California 94133
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
COMMON LLC COMMON LLC
OFFICERS AND DIRECTORS: SECURITIES SECURITIES
----------- -------------
<S> <C> <C>
Ian R. Wilson/(5)/ 6,537.1 6.9%
Thomas O. Ellinwood 214.3 0.2%
Ray Chung/(5)/ 6,537.1 6.9%
James B. Ardrey/(5)/ 6,537.1 6.9%
Timothy B. Andersen 72.9 0.1%
Thomas J. Youngerman 72.9 0.1%
C. Renee Sloan 72.9 0.1%
Olafur Gudmundsson 72.9 0.1%
M. Laurie Cummings/(5)/ 6,537.1 6.9%
Peter Lamm/(2)/ 50,754.4 53.5%
Andrea Geisser/(2)/ 50,754.4 53.5%
Nicholas Dennis/(3)/ 18,218.7 19.2%
Clive A. Apsey/(3)/ 18,218.7 19.2%
Charles J. Delaney/(4)/ 18,218.7 19.2%
All directors and executive 94,238.8 99.3%
officers of the Company as a group (14 persons)
</TABLE>
_________________________
/(1)/ As used in this table, beneficial ownership means the sole or shared
power to vote, or to direct the voting of a security, or the sole or
share power to dispose, or direct the disposition, of a security.
/(2)/ The general partner of Fenway is Fenway Partners, L.P., a Delaware
limited partnership, whose general partner is Fenway Partners
Management, Inc., a Delaware corporation. Messrs. Peter Lamm and
Andrea Geisser are directors and officers of Fenway Partners
Management Inc., and as such may be deemed to have the power to vote
or dispose of the Foods' Common LLC Securities held by Fenway. Each of
Messrs. Lamm and Geisser disclaims the existence of a group and
disclaims beneficial ownership of Foods' Common LLC Securities held by
Fenway.
/(3)/ As of August 31, 1996, Tiger Oats' shares are held by Gloriande
(Luxembourg) SarL, a corporation organized under the laws of
Luxembourg ("Gloriande"), which is the record owner of Foods' Common
LLC Securities. Gloriande is an indirect wholly-owned subsidiary of
Tiger Oats. Prior to August 31, 1996, Tiger Oats' shares were held by
National Sun Industries, Inc., a North Dakota corporation ("National
Sun") and an indirect wholly-owned subsidiary of Tiger Oats. The
shares of capital stock of Tiger Oats are traded publicly on the
Johannesburg Stock Exchange. Tiger Oats has been granted a right of
first offer with respect to a sale of the Company. Mr. Nicholas Dennis
is the Chief Executive Officer and Managing Director and Mr. Clive A.
Apsey is a director of Tiger Oats and as such may be deemed to have
the shared power to vote or dispose of the Foods' Common LLC
Securities held by Tiger Oats. Each of Messrs. Apsey and Dennis
disclaims the existence of a group and disclaims beneficial ownership
of Foods' Common LLC securities held by Tiger Oats.
-22-
<PAGE>
(4) UBS is a wholly-owned indirect subsidiary of Union Bank of
Switzerland. The shares of capital stock of Union Bank of Switzerland
are publicly held. Mr. Charles J. Delaney, a director of Holdings and
the Company, is the President of UBS and disclaims beneficial
ownership of Foods' Common LLC Securities held by UBS.
(5) Mr. Ian Wilson is the managing partner and Mr. James B. Ardrey, Mr.
Ray Chung and Ms. M. Laurie Cummings are each partners of Dartford,
and as such they may be deemed to have the power to vote or dispose of
Foods' Common LLC Securities held by Dartford and as such, together
with Messrs. Wilson, Ardrey, and Chung and Ms. Cummings may be deemed
to have the power to vote and dispose of Foods' Common LLC Securities
held by Dartford. Each of Messrs. Wilson, Ardrey, and Chung and Ms.
Cummings disclaims the existence of a group and disclaims beneficial
ownership of Foods' Common LLC Securities held by Dartford.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
During 1996, Van de Kamp's, Inc. has maintained business relationships and
engaged in certain transactions as described below.
The Company entered into a Management Services Agreement with Dartford pursuant
to which Dartford provides consulting services and management oversight on
financial and operational matters. The annual management fee prior to the
acquisition of Mrs. Paul's was $700,000. Subsequent to the Mrs. Paul's
acquisition, the annual management fee was increased to $1,200,000. Following
the acquisition of the Quaker Frozen Food Business on July 9, 1996, the annual
management fee paid to Dartford is $1.8 million. The terms of the Management
Services Agreement were negotiated on an arms-length basis between Dartford and
the other equity investors. Dartford partners include Mr. Ian R. Wilson, Mr. Ray
Chung, Mr. James B. Ardrey and Ms. M. Laurie Cummings, who are directors and/or
executive officers of the Company.
The Company entered into a Computer Services Agreement with Windy Hill Pet Food
Company ("Windy Hill") pursuant to which Windy Hill provides computer support
services to Van de Kamp's, Inc. for an annual fee of $216,000. Dartford and its
partners own 24% of Windy Hill. Mr. Ian Wilson is the Chairman of the Board of
Directors of the Company and of Windy Hill. Mr. Robert Dale, who is a director
of the Company, is the President and a director of Windy Hill. The Computer
Services Agreement was entered into with Windy Hill after considering proposals
from non-affiliated companies. The terms agreed to with Windy Hill are more
favorable to the Company than those offered by the non-affiliated companies.
As of September 20, 1996, Van de Kamp's, Inc. has paid to certain members of VDK
Foods LLC, who are also represented on the board of directors and beneficial
owners, fees for services rendered in connection with the acquisitions and
related financing of the Company's acquisitions. The aggregate amount paid was
$4,012,000 and was funded by the proceeds of the financings. Of this
$4,012,000, $1,950,000 was paid to Dartford (whose partners include executive
officers and directors as described in Item 10); $1,474,000 was paid to Fenway,
whose general partner's directors and officers are Mr. Peter Lamm and Mr.
Andrea Geisser (both directors of the Company); $294,000 was paid to National
Sun, an indirect wholly-owned subsidiary of Tiger Oats which has as its Chief
Executive Officer and Managing Director Mr. Nicholas Dennis, and which has as a
director Mr. Clive A. Apsey (both directors of the Company); and $294,000 was
paid to UBS, whose president is Mr. Charles J. Delaney (a director of the
Company). The fee amounts were negotiated among the equity investors.
-23-
<PAGE>
On September 19, 1995, Mr. Thomas O. Ellinwood, the President of the Company,
and Mr. Thomas J. Youngerman, Mr. Olafur Gudmundsson, and Ms. C. Renee Sloan,
Vice Presidents of the Company, executed promissory notes in favor of the
Company in exchange for monies borrowed to assist in the capitalization of their
limited liability company interests held in Foods. The promissory notes mature
September 30, 1998 with required annual payments. Interest is due and payable
quarterly at the rate of 8.5% per annum. The aggregate balance outstanding as of
June 29, 1996, on the promissory notes is $305,000. Mr. Ellinwood's promissory
note has a face value of $125,000. Messrs. Youngerman and Gudmundsson and Ms.
Sloan each have promissory notes with face values of $60,000.
-24-
<PAGE>
PART IV
- -------
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
------------------------------------------------------------------------
(a) 1. a. Financial Statements of the Company
Report of Price Waterhouse LLP 32
Balance Sheet 33
Statement of Operations 34
Statement of Changes in Stockholder's Equity 35
Statement of Cash Flows 36
Notes to Financial Statements 37 through 51
b. Financial Statements of Predecessor
Van de Kamp's and Frozen Dessert Product Lines of Pet
Incorporated:
Report of Price Waterhouse LLP 52
Combined Statements of Income 53
Notes to Combined Statements of Income 54 through 56
2. Financial Statement Schedule.
Schedule IX - Valuation Reserves 57
-25-
<PAGE>
3. Exhibits
Exhibit
Number Exhibit
- ------- -------
2.1 Asset Purchase Agreement, dated as of July 7, 1995 among Van de
Kamp's, Inc., the Pillsbury Company and Pet Incorporated
(incorporated by reference to Exhibit 2.1 to Van de Kamp's,
Inc.'s Form S-4 filed on October 4, 1995 (the "S-4").
2.2 Agreement and Amendment No. 1, dated September 19, 1995, to the
Asset Purchase Agreement among Van de Kamp's, Inc., the Pillsbury
Company and Pet Incorporated (incorporated by reference to
Exhibit 2.2 to the S-4).
2.3 Asset Purchase and Sales Agreement, dated as of January 17, 1996,
between Shellfish Acquisition Company, LLC ("Shellfish") and
Campbell Soup Company ("Campbell") (the text of which and
Exhibits to which are incorporated by reference to Exhibit 2.1 to
Van de Kamp's, Inc.'s Form 10-Q for the quarter ended March 30,
1996 and a list of the contents of the schedules of which is
incorporated by reference to Exhibit 2.1 to Van de Kamp's, Inc.'s
Form 8-K dated May 6, 1996).
2.4 Asset Purchase Agreement, dated as of January 17, 1996, between
Van de Kamp's, Inc. and Shellfish (incorporated by reference to
Exhibit 2.2 to Van de Kamp's, Inc.'s Form 10-Q for the quarter
ended March 30, 1996).
2.5 Asset Purchase and Sales Agreement, dated as of May 15, 1996
between Van de Kamp's, Inc. and the Quaker Oats Company
("Quaker") (incorporated by reference to Exhibit 2.1 to Van de
Kamp's, Inc.'s Form 8-K dated July 9, 1996).
2.6 Supplement No. 1 to Asset Purchase and Sales Agreement, dated as
of July 9, 1996, between Van de Kamp's, Inc. and Quaker
(incorporated by reference to Exhibit 2.2 to Van de Kamp's,
Inc.'s Form 8-K dated July 9. 1996).
3.1 Certificate of Incorporation of Van de Kamp's, Inc., with
amendments thereto (incorporated by reference to Exhibit 3.1 to
the S-4).
3.2 Amended and Restated By-Laws of Van de Kamp's, Inc. (incorporated
by reference to Exhibit 3.2 to the S-4).
4.1 Indenture, dated as of September 15, 1995, between Van de Kamp's,
Inc. and Harris Trust and Savings Bank (incorporated by reference
to Exhibit 4.1 to the S-4).
4.2 Global Note, dated September 19, 1995, issued by Van de Kamp's,
Inc. to the Depository Trust Company and registered in the name
of Cede & Co. in the principal amount of $100,000,000
(incorporated by reference to Exhibit 4.2 to the S-4).
-26-
<PAGE>
4.3 Exchange and Registration Rights Agreement, dated September 19,
1995 between Van de Kamp's, Inc. and Chemical Securities Inc.
(incorporated by reference to Exhibit 4.3 to the S-4).
10.1 Guarantee and Collateral Agreement, dated September 19, 1995,
among VDK Holdings, Inc., Van de Kamp's, Inc., the subsidiary
grantors named therein and Chemical Bank as agent (incorporated
by reference to Exhibit 10-19 to the S-4).
10.2 Security Agreement, dated as of September 19, 1995, made by Van
de Kamp's, Inc., in favor of Chemical Bank (incorporated by
reference to Exhibit 10.20 to the S-4).
10.3 Employment Agreement, dated as of September 19, 1995, by and
between Thomas O. Ellinwood and Van de Kamp's, Inc. (incorporated
by reference to Exhibit 10.21 to the S-4).
10.4 Amendment No. 1 to Ellinwood Employment Agreement, dated as of
July 1, 1996, between Thomas O. Ellinwood and Van de Kamp's, Inc.
10.5 Employment Agreement, dated as of September 19, 1995, by and
between Olafur Gudmundsson and Van de Kamp's, Inc. (incorporated
by reference to Exhibit 10.22 to the S-4).
10.6 Amendment No. 1 to Gudmundsson Employment Agreement, dated as of
July 1, 1996 between Olafur Gudmundsson and Van de Kamp's, Inc.
10.7 Employment Agreement, dated as of September 19, 1995 by and
between C. Renee Sloan and Van de Kamp's, Inc. (incorporated by
reference to Exhibit 10.23 to the S- 4).
10.8 Amendment No. 1 to Sloan Employment Agreement, dated as of July
1, 1996, between C. Renee Sloan and Van de Kamp's, Inc.
10.9 Employment Agreement, dated as of September 19, 1995 by and
between Thomas J. Youngerman and Van de Kamp's, Inc.
(incorporated by reference to Exhibit 10.24 to the S-4).
10.10 Amendment No. 1 to Youngerman Employment Agreement, dated July 1,
1996, between Thomas J. Youngerman and Van de Kamp's, Inc.
10.11 Employment Agreement, dated as of October 11, 1995, between Van
de Kamp's, Inc. and Timothy B. Andersen (incorporated by
reference to Exhibit 10.1 to Van de Kamp's, Inc.'s Form 10-Q for
quarter ended March 30, 1996).
10.12 Amendment No. 1 to Andersen Employment Agreement, dated as of
July 1, 1996, between Timothy B. Andersen and Van de Kamp's, Inc.
-27-
<PAGE>
10.13 Computer Services Agreement, dated as of September 5, 1995, between
Windy Hill Pet Food Company LLC and Van de Kamp's, Inc. (incorporated
by reference to Exhibit 10.26 to the S-4).
10.14 License Agreement, dated as of February 21, 1979, between General Host
Corporation and VDK Acquisition Corporation (incorporated by reference
to Exhibit 10.27 to the S-4).
10.15 License Agreement, dated as of October 14, 1978, between General Host
Corporation and Van de Kamp's Dutch Bakeries (incorporated by
reference to Exhibit 10.28 to the S-4).
10.16 Agreement, dated March 31, 1994, between Van de Kamp's, Seafood and
Ore-Ida Foods, Inc. (incorporated by reference to Exhibit 10.29 to the
S-4).
10.17 Purchase Agreement, dated September 14, 1995, between Van de Kamp's,
Inc. and Chemical Securities Inc. (incorporated by reference to
Exhibit 10.30 to the S-4).
10.18 Co-Pack Agreement, dated May 6, 1996 between Campbell and Shellfish.
10.19 Buyer's Non-Recourse Promissory Note, dated May 6, 1996 issued by
Shellfish in favor of Campbell.
10.20 First Amendment to Guarantee and Collateral Agreement, dated May 6,
1996 between Van de Kamp's, Inc. and VDK Holdings, Inc. in favor of
Chemical Bank, as agent for the several banks and other financial
institutions from time to time parties to the Amended and Restated
Credit and Guarantee Agreement.
10.21 Second Amended and Restated Credit and Guarantee Agreement, dated as
of July 9, 1996 among VDK Holdings, Inc., Van de Kamp's, Inc., the
banks and other financial institutions named as parties thereto and
The Chase Manhattan Bank, NA., as agent.
10.22 First Amendment, dated as of August 28, 1996, to the Second Amended
and Restated Credit and Guarantee Agreement among VDK Holdings, Inc.,
Van de Kamp's, Inc., the banks and other financial institutions named
as parties thereto and the Chase Manhattan Bank, NA, as Agent.
10.23 Second Amendment to Guarantee and Collateral Agreement, dated July 9,
1996, between Van de Kamp's, Inc. and VDK Holdings, Inc. in favor of
The Chase Manhattan Bank, NA., as agent for the several banks and
other financial institutions.
10.24 Trademark License Agreement, dated July 9, 1996 between Quaker, The
Quaker Oats Company of Canada Limited and Van de Kamp's, Inc.
(incorporated by reference to Exhibit H to Exhibit 2.1 to Van de
Kamp's, Inc.'s Form 8-K dated July 9. 1996).
-28-
<PAGE>
10.25 Patent License Agreement, dated July 9, 1996, between Quaker and Van
de Kamp's, Inc. (incorporated by reference to Exhibit K to Exhibit 2.1
to Van de Kamp's, Inc.'s Form 8-K dated July 9, 1996).
10.26 Shared Technology License Agreement, dated July 9, 1996, Between
Quaker and Van de Kamp's, (incorporated by reference to Exhibit M to
Exhibit 2.1 to Van de Kamp's, Inc.'s Form 8-K dated July 9, 1996).
10.27 McDonald's Co-Pack Agreement, dated July 9, 1996, by Quaker and Van de
Kamp's, Inc. (incorporated by reference to Exhibit L to Exhibit 2.1 to
Van de Kamp's, Inc.'s Form 8-K dated July 9, 1996).
10.28 Senior Convertible Loan Credit and Guarantee Agreement, dated as of
July 9, 1996, among VDK Holdings, Inc., Van de Kamp's, Inc., the banks
and other financial institutions named as parties thereto and The
Chase Manhattan Bank, NA., as agent.
10.29 Cash Collateral Agreement, dated July 9, 1996, between VDK Holdings,
Inc. and The Chase Manhattan Bank, NA., as agent.
12.1 Statements Re: Computation of Ratios.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal (incorporated by reference to Exhibit
99.1 to the Second Amendment, filed on November 14, 1995, to the S-4).
99.2 Form of Notice of Guarantee delivery (incorporated by reference to
Exhibit 99.2 to the Second Amendment, filed on November 14, 1995, to
the S-4).
99.3 Form of Exchange Agency Agreement to be entered into by Van de Kamp's,
Inc. and Harris Trust and Savings Bank (incorporated by reference to
Exhibit 99.3 to the First Amendment, filed on November 8, 1995, to
the S-4).
-29-
<PAGE>
(b) A report on Form 8-K was filed on May 6, 1996; Items 2 and 7 were reported.
No financial statements were filed with this filing.
A report on Form 8-KA was filed May 6, 1996; Items 2 and 7 were reported.
Unaudited pro forma Statements of Income for the year ended June 30, 1995
and for the nine months ended March 30, 1996 were included with this
filing. A pro forma Balance Sheet as of March 30, 1996 was also included
with this filing.
A report on Form 8-K was filed on July 9, 1996; Items 2 and 7 were
reported. No financial statements were filed with this filing.
A report on Form 8-KA was filed on July 9, 1996; Items 2 and 7 were
reported. Audited Statements of Certain Assets and Liabilities as of June
30, 1996, 1995 and 1994, and the related Statements of Revenues and
Expenses for the twelve months ended June 30, 1996, 1995 and 1994,
Statements in Changes in Equity for the twelve months ended June 30, 1996,
1995 and 1994, and Statements of Cash Flows for the twelve months ended
June 30, 1996, 1995 and 1994 were included with this July 9, 1996 filing.
Unaudited pro forma Statements of Operations for the year ended June 30,
1996 were also included with this filing. A pro forma balance sheet as of
June 30, 1996 was also included with this filing.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules - The response to this portion of Item 14 is
submitted as a separate section of this report.
-30-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
VAN DE KAMP'S, INC.
By: /s/ Thomas O. Ellinwood
-------------------------------
Thomas O. Ellinwood - President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on September 27, 1996.
/s/ Thomas O. Ellinwood President and Director
- ------------------------------ (Principal Executive Officer)
Thomas O. Ellinwood
/s/ Timothy B. Andersen Chief Financial Officer and
- ------------------------------ Vice President - Administration
Timothy B. Andersen (Principal Financial Officer and
Principal Accounting Officer)
/s/ Ian R. Wilson Chairman of the Board of Directors
- ------------------------------
Ian R. Wilson
/s/ James B. Ardrey Director
- ------------------------------
James B. Ardrey
/s/ Peter Lamm Director
- ------------------------------
Peter Lamm
/s/ Andrea Geisser Director
- ------------------------------
Andrea Geisser
- ------------------------------ Director
Nicholas Dennis
/s/ Clive A. Apsey
- ------------------------------ Director
Clive A. Apsey
- ------------------------------ Director
Charles J. Delaney
/s/ Robert V. Dale Director
- ------------------------------
Robert V. Dale
-31-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Van de Kamp's, Inc.
In our opinion, the financial statements listed in the index appearing under
Item 14(a)1.a. and Item 14(a)2. on page 25, present fairly, in all material
respects, the financial position of Van de Kamp's, Inc. (the Company) at June
29, 1996, and September 19, 1995 (commencement of operations), and the results
of its operations and its cash flows for the period September 19, 1995 through
June 29, 1996 in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Price Waterhouse, LLP
San Francisco, California
September 25, 1996
-32-
<PAGE>
VAN DE KAMP'S, INC.
BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
Commencement
of Operations
June 29, September 19,
1996 1995
-------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,040 $ 355
Accounts receivable (Net of $190 allowance) 16,250 -
Accounts receivable - other (Note 4) 506 -
Inventories (Note 5) 30,202 19,518
Prepaid expenses 724 585
Current deferred tax asset (Note 11) 3,373 -
-------- --------
Total current assets 55,095 20,458
Property, plant and equipment, net (Note 6) 35,943 30,350
Goodwill and other intangible assets (Note 7) 203,736 144,367
Other assets 10,725 8,561
-------- --------
Total assets $305,499 $203,736
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long term debt (Note 9) $ 5,000 $ 1,250
Senior secured revolving debt facility - 2,000
Accounts payable 14,144 318
Accrued liabilities (Note 8) 15,789 2,498
Current deferred tax liability (Note 11) 143 -
-------- --------
Total current liabilities 35,076 6,066
Deferred tax liability (Note 11) 2,997 -
Senior secured term debt (Note 9) 83,750 28,750
Senior subordinated notes (Note 9) 100,000 100,000
-------- --------
Total liabilities 221,823 134,816
-------- --------
Stockholder's equity:
Common stock, no par value
Paid in capital 84,115 68,920
Accumulated deficit (439) -
-------- --------
Total stockholder's equity 83,676 68,920
-------- --------
Total liabilities and stockholder's equity $305,499 $203,736
======== ========
</TABLE>
See accompanying notes to financial statements.
-33-
<PAGE>
VAN DE KAMP'S, INC.
STATEMENT OF OPERATIONS
(dollars in thousands)
<TABLE>
<CAPTION>
Operating Period
September 19,
1995 through
June 29, 1996
---------------
<S> <C>
Net sales $143,296
Cost of goods sold 60,367
-------
Gross profit 82,929
Selling, distribution and marketing expenses:
Selling and distribution 15,901
Trade promotions 32,517
Consumer marketing 11,336
-------
Total selling, distribution and marketing expenses 59,754
Amortization of goodwill and other intangibles 4,223
General and administrative expenses 5,267
Transition related costs (Note 10) 1,337
-------
Total operating expenses 70,581
-------
Operating income 12,348
Interest income (135)
Interest expense 12,469
Amortization of deferred financing expense 607
Other bank and financing expenses 79
-------
Loss before income taxes (672)
Income tax benefit (233)
-------
Net loss $ (439)
=======
</TABLE>
See accompanying notes to financial statements.
-34-
<PAGE>
VAN DE KAMP'S, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
Operating Period September 19, 1995 through June 29, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
Common Additional
Stock Paid-in Accumulated
Shares Capital Deficit Total
------ --------- ----------- -------
<S> <C> <C> <C> <C>
Balance at September 19, 1995 200 $68,920 $ - $68,920
Capital contribution (Note 16) - 15,000 - 15,000
Notes receivable from officers (Note 14) - 195 - 195
Net loss - - (439) (439)
------ --------- ---------- -------
Balance at June 29, 1996 200 $84,115 $(439) $83,676
====== ========= ========== =======
</TABLE>
See accompanying notes to financial statements.
-35-
<PAGE>
VAN DE KAMP'S, INC.
STATEMENT OF CASH FLOWS
Operating Period September 19, 1995 through June 29, 1996
(dollars in thousands)
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss $ (439)
Adjustments to reconcile net loss to cash provided (used) in operating
activities:
Depreciation and amortization 7,454
Deferred income taxes (233)
Change in assets and liabilities, net of effects of businesses
acquired:
(Increase) in accounts receivable (16,756)
(Increase) in inventories (4,980)
(Increase) in prepaid expenses (139)
Increase in accounts payable 14,144
Increase in accrued expenses 13,366
(Increase) in other assets (316)
---------
Net cash provided by operating activities 12,101
---------
Cash flows from investing activities:
Additions to property, plant and equipment (2,204)
Payment for acquisition of businesses (Note 2) (268,035)
---------
Net cash used in investing activities (270,239)
---------
Cash flows from financing activities:
Proceeds from senior secured revolving and term debt 97,150
Proceeds from senior subordinated notes 100,000
Payment of borrowings (8,400)
Capital contributions from Holdings (Note 16) 84,115
Debt issuance costs (10,687)
---------
Net cash provided by financing activities 262,178
---------
Increase in cash and cash equivalents 4,040
Cash and cash equivalents, beginning of period -
---------
Cash and cash equivalents, end of period $ 4,040
=========
</TABLE>
Supplemental Cash Flow Disclosure
Cash paid during period ended June 29, 1996:
Interest $7,738,000
==========
See accompanying notes to financial statements.
-36-
<PAGE>
NOTE 1 - THE COMPANY
ORGANIZATION
Van de Kamp's, Inc. (the "Company"), a Delaware corporation, is a privately held
frozen food company. The Company commenced operations on September 19, 1995,
when it acquired the frozen seafood and frozen dessert businesses of The
Pillsbury Company and Pet Incorporated. The Company is a wholly owned subsidiary
of VDK Holdings, Inc. ("Holdings"), also a Delaware corporation. Holdings is
wholly owned by VDK Foods LLC ("Foods") a Delaware limited liability company.
The Company was initially capitalized with a capital infusion from Holdings,
which was contributed by Foods (Note 16), and senior secured debt and senior
subordinated notes (Note 9).
OPERATIONS
The Company produces and markets frozen seafood and frozen dessert products
which are sold across the United States. The products are manufactured out of
two manufacturing facilities in Erie and Chambersburg, Pennsylvania. The
principal trademarks under which the products are sold are Van de Kamp's(R),
Pet-Ritz(R), Oronoque Orchards(R) and Mrs. Paul's(R).
NOTE 2 - BUSINESS ACQUISITIONS
VAN DE KAMP'S AND FROZEN DESSERT PRODUCT LINES
On September 19, 1995 (commencement of operations), Van de Kamp's, Inc. acquired
the assets of the frozen seafood business (which operated as Van de Kamp's) and
the frozen dessert product lines (together the "Businesses") from The Pillsbury
Company and Pet Incorporated (collectively, the "Sellers"). The Company
manufactures frozen seafood products out of its Erie, Pennsylvania production
facility and its frozen dessert product line is produced out of its
Chambersburg, Pennsylvania manufacturing facility.
The Company acquired the inventories, property, plant and equipment and
intangible assets of the Businesses for a purchase price of $190 million. The
Company paid The Pillsbury Company $2 million, a contractually agreed upon
amount, to retain all of the current liabilities of the Businesses. The
acquisition was accounted for by the purchase method of accounting. The purchase
agreement contains customary representations, warranties and covenants by each
of the Sellers and the Company.
-37-
<PAGE>
The acquisition was financed by (i) an equity capital contribution from Holdings
of approximately $70 million, (ii) the proceeds from the issuance of
$100 million of senior subordinated notes (Note 9), and (iii) the borrowing by
the Company of $30 million and $2 million of senior secured tranche A debt and
senior secured revolving debt, respectively, under the senior secured bank
facilities (Note 9).
The cost to acquire the Businesses has been allocated to tangible and intangible
assets acquired as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Cash paid to acquire Businesses $190,000
Cash paid for disposition of current liabilities 2,000
Other acquisition costs 2,235
--------
194,235
Costs assigned to tangible assets (49,868)
--------
Cost attributable to intangible assets $144,367
========
</TABLE>
MRS. PAUL'S
On May 6, 1996, Van de Kamp's, Inc. acquired substantially all the assets of the
Mrs. Paul's frozen food business from Campbell Soup Company ("CSC"). Mrs. Paul's
frozen food business includes frozen seafood and frozen vegetable products which
are manufactured at both of the Company's production facilities.
The Company acquired the inventories, certain manufacturing equipment and
intangible assets from CSC. The manufacturing equipment was removed from a CSC
facility with certain production lines installed in each of the Company's Erie
and Chambersburg production plants. The purchase price was $73.2 million which
included a contractually agreed upon payment related to inventories. The
acquisition was accounted for by using the purchase method of accounting. The
allocation of purchase price has not been finalized; however, any changes are
not expected to be material. The purchase agreement contains customary
representations, warranties and covenants by each of CSC and the Company.
The acquisition was financed by (i) an equity capital contribution from Holdings
of $15 million, and (ii) the borrowing by the Company of $20 million
and $40 million of senior secured tranche A debt and senior secured tranche B
debt, respectively, under the senior secured bank facilities (Note 9).
-38-
<PAGE>
The cost to acquire Mrs. Paul's has been allocated to tangible and intangible
assets acquired, as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Cash paid to acquire assets $ 73,203
Other acquisition costs 2,001
--------
75,204
Costs assigned to tangible assets (11,716)
--------
Cost attributable to intangible assets $ 63,488
========
</TABLE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined financial information reflects the
historical net sales and income before income taxes of the Company as if both
acquisitions had occurred on July 1, 1995 (in thousands):
<TABLE>
<CAPTION>
Year ended
June 30, 1996
-------------
<S> <C>
Net sales $235,513
========
Income before income taxes $ 3,943
========
</TABLE>
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
The policies utilized by the Company in the preparation of the financial
statements conform to generally accepted accounting principles and require
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities. Actual amounts could differ from these estimates and
assumptions. The Company uses the accrual basis of accounting in the preparation
of its financial statements.
-39-
<PAGE>
FISCAL YEAR
The Company's fiscal year ends on the last Saturday of June. Accordingly, the
results of operations reflect activity for the period September 19, 1995
(commencement of operations) through June 29, 1996. The Company has presented
balance sheets as of June 29, 1996 and September 19, 1995. The balance sheet as
of September 19, 1995 reflects the acquisition of the Businessess as of that
date but is prior to commencement of operations. The Company's cash flows
reflect activity for the period September 19, 1995 to June 29, 1996.
CASH
The Company considers all highly liquid financial instruments with a maturity of
three months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market value. Cost is determined
using the first-in first-out (FIFO) method. Inventories include the cost of raw
materials, packaging, labor and manufacturing overhead.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the individual assets ranging from five to thirty years. Costs
which improve an asset or extend its useful life are capitalized, while repairs
and maintenance costs are expensed as incurred.
INTANGIBLE ASSETS
Intangible assets include goodwill, trademarks and various identifiable
intangible assets purchased by the Company. Goodwill is being amortized over
forty years using the straight-line method. Other intangible assets are being
amortized using the straight-line method over periods ranging from five to forty
years. Amortization of goodwill and other intangible assets charged against
income during the year ended June 29, 1996 was $4,152,000.
IMPAIRMENT OF LONG-LIVED ASSETS
Upon commencement of operations, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 121 (FAS 121), Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
FAS 121 requires the Company to review long-lived assets and certain
identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The assessment of impairment is based on the estimated undiscounted
future cash flows from operating activities compared with the carrying value of
the assets. If the undiscounted future cash flows of an asset are less than the
carrying value, a write-down would be recorded, measured by the amount of the
difference between the carrying value of the asset and the fair value of the
asset. Management believes that there has been no impairment at June 29, 1996.
-40-
<PAGE>
OTHER ASSETS
Other assets consist of deferred loan acquisition costs, systems development
costs, and other miscellaneous assets. Deferred loan acquisition costs of the
senior subordinated notes are being amortized using the interest method over the
term of the respective notes. Deferred loan acquisition costs of the senior
secured debt are being amortized using the straight-line method over the terms
of the related debt tranches. Aggregate amortization of deferred loan
acquisition costs charged against income in the period ended June 29, 1996 was
$607,000.
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
For purposes of financial reporting, the Company has determined that the fair
value of financial instruments approximates book value at June 29, 1996, based
on terms currently available to the Company in financial markets. The Company's
senior subordinated notes have an interest rate of 12% and the fair value is
assumed to be equivalent to the settlement value.
CONCENTRATION OF CREDIT RISK
The Company sells its products to supermarkets and other retailers. The Company
performs ongoing credit evaluations of its customers and generally does not
require collateral. The Company maintains reserves for potential credit losses
and had no significant concentration of credit risk at June 29, 1996.
INCOME TAXES
The Company records income taxes in accordance with the provisions of FAS 109
"Accounting for Income Taxes". This method of accounting for income taxes uses
an asset and liability approach which requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of assets and
liabilities.
NOTE 4 - ACCOUNTS RECEIVABLE - OTHER
Accounts Receivable - Other consist of the following (in thousands):
<TABLE>
<CAPTION>
June 29, 1996 September 19, 1995
------------- ------------------
<S> <C> <C>
The Pillsbury Company $320 -
Miscellaneous 186 -
---- ----
$506 -
==== ====
</TABLE>
The balance due from The Pillsbury Company is comprised of accounts receivable
collected by them on behalf of the Company.
-41-
<PAGE>
NOTE 5 - INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
June 29, 1996 September 19, 1995
------------- ------------------
<S> <C> <C>
Raw materials $ 6,856 $ 4,648
Packaging supplies 2,022 1,358
Finished goods 21,324 13,512
------- -------
$30,202 $19,518
======= =======
</TABLE>
At June 29, 1996, the Company had commitments to purchase raw materials
aggregating approximately $3,190,000.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (in thousands):
<TABLE>
<CAPTION>
June 29, 1996 September 19, 1995
------------- ------------------
<S> <C> <C>
Land $ 700 $ 700
Machinery and equipment 31,105 25,015
Buildings and improvements 5,155 4,635
Construction-in-progress 1,607 -
------- -------
38,567 30,350
Less accumulated depreciation (2,624) -
------- -------
$35,943 $30,350
======= =======
</TABLE>
At June 29, 1996, the Company had commitments for facility construction and
related machinery and equipment purchases aggregating approximately $500,000.
-42-
<PAGE>
NOTE 7 - INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands):
<TABLE>
<CAPTION>
June 29, 1996 September 19, 1995
-------------- ------------------
<S> <C> <C>
Goodwill $103,553 $ 72,172
Trademarks 84,200 56,700
Other intangibles 20,135 15,495
-------- --------
207,888 144,367
Less accumulated amortization (4,152) -
-------- --------
$203,736 $144,367
======== ========
</TABLE>
NOTE 8 - ACCRUED LIABILITIES
Accrued liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
June 29, 1996 September 19, 1995
------------- ------------------
<S> <C> <C>
Closing costs - $2,298
Interest $ 4,732 -
Promotional accruals 4,781 -
Other 6,276 200
------- ------
Total $15,789 $2,498
======= ======
</TABLE>
NOTE 9 - LONG TERM DEBT
Long term debt at June 29, 1996 is comprised of the following (in thousands):
<TABLE>
<CAPTION>
SENIOR SECURED DEBT
<S> <C>
Senior secured tranche A debt - interest rate of 8.0% at
June 29, 1996; principal due in semi-annual installments
through September 19, 2001; floating interest rate at the
prime rate plus 1.5%, or alternatively, the one, three or
six month Euro dollar rate plus 2.5% payable quarterly or
at the termination of the Euro dollar contract interest period $ 48,750
Senior secured tranche B debt - interest rate of 8.5% at
June 29, 1996; principal due in semi-annual installments
through April 30, 2003; floating interest at the prime
rate plus 2.0% or, alternatively, the one, three or six
month Euro dollar rate plus 3.0% payable quarterly dollar
or at the termination of the Euro contract interest period 40,000
SENIOR SUBORDINATED NOTES
Senior subordinated notes issued September 15, 1995 at par value
of $100,000,000; coupon interest rate of 12% with interest payable
each March 15 and September 15; matures on September 15, 2005 100,000
Less: current portion (5,000)
--------
Long term debt $183,750
========
</TABLE>
-43-
<PAGE>
Annual principal payments for the next five years and thereafter are as
follows (in thousands):
1997 $ 5,000
1998 7,000
1999 9,000
2000 11,250
2001 12,750
Thereafter 143,750
--------
$188,750
========
SENIOR SECURED DEBT
On September 19, 1995, the Company and Holdings entered into the VDK
Holdings, Inc. Credit and Guarantee Agreement (the "Agreement") with
several banks for $30,000,000 of senior secured term and revolving debt.
The proceeds from the debt were used to acquire the Businesses, pay fees
and expenses and fund working capital. The debt is guaranteed by Holdings
and the Company and its subsidiaries. The Agreement contains optional
prepayment provisions with no premium. Substantially all assets of the
Company are pledged as collateral for the debt.
In conjunction with the Mrs. Paul's acquisition, the Company amended the
Agreement, dated as of May 6, 1996, to provide for additional borrowings of
$48,750,000 under senior secured tranche B debt and an increase of
$18,750,000 to the original senior secured tranche A debt. Proceeds from
the additional borrowings were used to acquire the Mrs. Paul's business,
pay fees and expenses and to provide the working capital requirements
related to the Mrs. Paul's acquisition.
The Agreement includes $25,000,000 of available borrowing under a revolving
debt facility, subject to limitations based on letters of credit. At June
29, 1996, the Company had no outstanding balance under the revolver;
however, unused borrowing availability was $24,625,000 after adjustment for
previously issued letters of credit. The Agreement requires a commitment
fee of 0.5% per annum payable quarterly on the unused portions of the
revolving debt facility.
The Agreement includes restrictive covenants which limit additional
borrowing, cash dividends, and capital expenditures while also requiring
the Company to maintain certain financial ratios. The Company was in
compliance with these covenants at June 29, 1996.
-44-
<PAGE>
SENIOR SUBORDINATED NOTES
On September 19, 1995, the Company issued $100,000,000 of senior
subordinated notes (the "Notes") registered under the Securities Act of
1933. The proceeds were used to fund the acquisition of the Businesses. The
Notes may be redeemed at any time prior to September 15, 2000. The
prepayment redemption price would be equal to 100% of the principal plus a
premium equal to the greater of (i) 1% of the principal amount and (ii) the
excess of (a) present value at time of redemption plus required interest
payments due on the Notes through September 15, 2000 over (b) principal
amount of Notes. The indenture includes restrictive covenants which limit
additional borrowing, cash dividends, the sale of assets, mergers and the
sale of stock. The Company was in compliance with these covenants at June
29, 1996.
NOTE 10 - TRANSITION RELATED COSTS
Transition related costs consist of what management believes are one-time
costs incurred to establish the Company's operations, including
expenditures to regain distribution of products that had been discontinued
during the transition of the Businesses and Mrs. Paul's from the Sellers
and CSC to Van de Kamp's, Inc., relocation expenses, recruiting fees, sales
training, computer systems training and other one-time transitional
expenses. Transition related costs for the period ended June 29, 1996 were
$1,337,000.
NOTE 11 - INCOME TAXES
The Company is included in the consolidated federal income tax return of
Holdings. State income tax returns are filed by Holdings and the Company on
a separate company basis or on a combined basis depending on the particular
rules in each state. The Company's income tax provision is computed as if
all income tax returns were filed on a stand alone basis.
-45-
<PAGE>
The provision for income taxes is summarized as follows (in thousands):
<TABLE>
<CAPTION>
Period Ended
June 29, 1996
-------------
<S> <C>
Current tax expense:
Federal $ -
State -
-------------
Total current provision $ -
=============
Deferred tax expense:
Federal $ (196)
State (37)
-------------
Total deferred provision $ (233)
=============
Total provision for income taxes $ (233)
=============
Deferred tax assets (liabilities) are comprised of the following (in thousands):
June 29, 1996
-------------
Deferred tax assets - current
Loss carryforwards $ 1,697
Promotion reserves 1,305
Other 371
-------------
Total deferred tax assets - current 3,373
-------------
Deferred tax liabilities - current
Inventory reserves (130)
Deferred state taxes (13)
-------------
Total deferred tax liabilities - current (143)
Deferred tax liabilities - long term
Goodwill (1,961)
Depreciation (1,036)
-------------
Total deferred tax liabilities - long term (2,997)
-------------
Total deferred tax liabilities (3,140)
-------------
Net deferred tax assets $ 233
=============
</TABLE>
-46-
<PAGE>
The Company has not recorded a valuation allowance for its deferred tax assets.
Management believes the deferred tax assets are more likely than not to be
realized.
At June 29, 1996, the Company has federal net operating loss carryforwards of
approximately $4,242. These losses can be used to offset future taxable income
through the year 2011. The Company is a loss corporation as defined in section
382 of the Internal Revenue Code. Therefore, if certain substantial changes of
the Company's ownership should occur, there could be significant annual
limitations of the amount of net operating loss carryforwards which can be
utilized.
The provision for income taxes differs from the amount of income tax determined
by applying the applicable U.S. statutory federal income tax rate to pretax
income as a result of the following differences.
<TABLE>
<CAPTION>
Period ended
June 29, 1996
-------------
<S> <C>
Provision for income taxes at U.S. statutory rate $ (229)
Increase (decrease) in tax resulting from:
Nondeductible expenses 20
Deferred state taxes, net of federal benefit (24)
-------------
$ (233)
=============
</TABLE>
-47-
<PAGE>
NOTE 12 - LEASES
The Company leases certain facilities, machinery and equipment under operating
lease agreements with varying terms and conditions. The leases are
noncancellable operating leases which expire on various dates through 2001.
Future annual minimum lease payments under these leases are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
Minimum
Lease
Years ending June 30, Payments
- -------------------- --------
<S> <C>
1997 $ 328
1998 302
1999 323
2000 323
2001 323
Thereafter -
------
$1,599
======
</TABLE>
Rent expense was $173,000 for the period ended June 29, 1996.
NOTE 13 - SAVINGS PLANS
The Company offers a retirement savings plan to its nonunion employees in the
form of 401(k) and profit sharing plans. Under the 401(k) plan, employee
contributions up to 3% of total compensation are matched by the Company, with
vesting occurring ratably over a five year period. Profit sharing contributions
of 2% of compensation are made on behalf of all nonunion employees on an annual
basis. Profit sharing contributions also vest ratably over a five year period.
The Company's contributions to the 401(k) and profit sharing plan for the
period ended June 29, 1996 were $115,000 and $102,000, respectively.
-48-
<PAGE>
NOTE 14 - RELATED PARTY TRANSACTIONS
The Company has a Management Services Agreement with Dartford Partnership, LLC
("Dartford") to provide consulting services and management oversight on
financial and operational matters. The Company paid fees totaling $631,000 to
Dartford, a member of Foods, during the period ended June 29, 1996. The annual
management fee prior to the acquisition of Mrs. Paul's was $700,000 and was
$1,200,000 thereafter. The charge is included in general and administrative
expenses in the Statement of Operations.
The Company paid certain members of Foods fees totaling $1,963,000 during the
period ended June 29, 1996. The fees were paid for services provided in
identifying, negotiating and consummating the Company's acquisitions. The fees
were included in the costs of the acquisitions.
On September 19, 1995, Mr. Thomas O. Ellinwood, the President of the Company,
and Mr. Thomas J. Youngerman, Mr. Olafur Gudmundsson and Ms. C. Renee Sloan,
Vice Presidents of the Company, executed promissory notes in favor of the
Company in exchange for monies borrowed to assist in the capitalization of their
limited liability company interests held with VDK Foods LLC. The promissory
notes mature September 30, 1998 with required annual payments. Interest is due
and payable quarterly at the rate of 8.5% per annum. The aggregate balance
outstanding on the promissory notes was $305,000 and $500,000 at June 29, 1996
and September 19, 1995, respectively. This amount has been recorded as a
reduction to paid-in capital and is reflected as such on the Statement of
Changes in Stockholder's Equity.
NOTE 15 - LONG TERM INCENTIVE COMPENSATION PLAN
VDK Foods LLC has initiated the preparation of an Incentive Compensation Plan
(the "Plan") as a means by which Key Personnel (defined as employees and other
specific designated persons) of the Company, and/or affiliated with the Company,
may be given an opportunity to benefit from the appreciation in the value of the
Company. As of September 20, 1996, the Plan has not been finalized. However, the
intent of the Plan and the corresponding summary principal terms that are
discussed below are not expected to change materially. The effective date of the
Plan will be as of September 19, 1995. The final Plan document is required to be
approved by the Board of Member Managers of Foods and by at least 75% of the
investors holding Class B and Class C limited liability company interests in VDK
Foods LLC.
The Key Personnel will be issued various types of incentive compensation units
(the "Units") in the Plan as a means to participate in the valuation of the
Company, as determined based on certain formulae in the Plan document. The
Units are subject to forfeiture based on the failure to meet vesting
requirements, specified earnings targets, and/or rates of return targets for
certain investors in Foods. Pursuant to the Plan document, the Units will have
special valuation and payment provisions upon a change of control or initial
public offering of the Company's or Holdings' stock (the "IPO").
Upon a change of control or IPO, the Units will be valued and amounts will be
paid to Unit holders according to various factors, such as the type of
triggering event and the amount of proceeds paid to the Foods' investors. In
general, there will be no payment on the Units until the Foods' investors have
received a designated return on their investments. The payment to Unit holders
may be cash and/or non-cash securities, depending on the type of distribution
received by Foods' investors. In addition, the Plan will gross-up payments to
the Unit holders in certain events relating to: (i) any excise tax due under
federal income tax rules, and (ii) any tax on the Units in excess of capital
gains tax rates.
The total amount due under the Plan, if any, is subject to the rates of return
and forfeiture factors discussed above. Based on the current valuation of the
Company as calculated pursuant to the Plan, there is no basis to record an
accrual for compensation expense at this time. To the extent any amounts are
deemed accruable under the Plan in the future, such amounts will be a liability
of Foods as the sponsor of the Plan. However, because the Plan is for the
benefit of Key Personnel of the Company, any expense to be recognized under the
Plan will be pushed down to the Company and will be recorded by the Company as
expense and additional paid in capital from its parent over the applicable
vesting periods.
<PAGE>
NOTE 16 - STOCKHOLDER'S EQUITY
The authorized capital stock of the Company consists of 200 shares of common
stock, no par value, all of which are issued and outstanding and held by VDK
Holdings, Inc. All of the capital stock of Holdings is held by VDK Foods LLC.
NOTE 17 - COMMITMENTS AND CONTINGENCIES
The Company is subject to litigation in the ordinary course of business. In the
opinion of management, the ultimate outcome of any existing litigation would not
have a material adverse effect on the Company's financial condition or results
of operations.
NOTE 18 - SUBSEQUENT EVENTS
Acquisition
- -----------
On July 9, 1996, subsequent to the Company's fiscal year end, Van de Kamp's,
Inc. acquired substantially all of the assets of the frozen food division of The
Quaker Oats Company ("Quaker"). The assets acquired were the Celeste(R) brand of
frozen pizza and the Aunt Jemima(R) brand of frozen breakfast products
(together, "Quaker Frozen Food Business"). The Company purchased the Celeste(R)
trademark and was granted an
-49-
<PAGE>
exclusive, perpetual, transferable, royalty-free license of the Aunt Jemima(R)
trademark for use in the frozen breakfast products business. Also included in
the acquisition was the Jackson, Tennessee manufacturing facility where the
Company produces both product lines. The Company intends to continue to utilize
this facility for the Quaker Frozen Food Business. The purchase price was $188
million which is subject to adjustments upon completion of an audit of inventory
as of the closing of the acquisition. The acquisition will be accounted for by
the purchase method of accounting. The acquisition was financed by (i) an equity
capital contribution from Holdings of $40 million, (ii) the borrowing by the
Company of $135 million under its senior secured bank facility, and (iii) a $20
million senior secured convertible loan secured by cash collateral posted by
Holdings. In the event the Company has not disposed of certain assets by July 9,
1997, the cash collateral will be contributed as equity to the Company and the
senior secured convertible loan will be repaid with the cash proceeds from the
equity contribution.
The unaudited pro forma combined condensed balance sheet of the Company and the
Quaker Frozen Food Business as of June, 29, 1996 after giving effect to certain
pro forma adjustments is as follows (in thousands):
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets $ 64,314
Property and equipment, net 81,412
Goodwill and other intangibles 342,362
Other assets 16,049
--------
$504,137
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities $ 61,814
Long term liabilities 317,247
Stockholder's equity 125,076
--------
$504,137
========
</TABLE>
The following unaudited pro forma combined results of operations of the Company
and the Quaker Frozen Food Business, together with the other acquisitions made
by the Company, for the period ended June 29, 1996 gives pro forma effect to the
acquisitions as though the acquisitions occurred as of July 1, 1995 (in
thousands):
Net sales $399,818
========
Net income $ 6,991
========
The foregoing unaudited pro forma results of operations reflect one year's
amortization of the goodwill and other intangibles resulting from the
acquisition of the assets of Quaker Frozen Food Business. The allocation of
purchase price has not been finalized and therefore, goodwill may change;
however, any changes are not expected to be material.
-50-
<PAGE>
Interest Rate Collar Agreement
- ------------------------------
The Company entered into an interest rate collar agreement (the "Collar") on
August 22, 1996, in order to reduce the impact of changes in interest rates on
its floating rate term debt. The amount covered under the Collar is $70
million and the term is three years. The Collar consists of a floor rate and a
cap rate. The current effective cap rate is set at 9.0%, provided that if on any
reset date the floating rate is equal to or greater than 10.5%, the cap rate for
that respective reset period will be 10.5%. The effective floor rate is set at
8.25%. The applicable rates are set quarterly with the first reset date on
October 29, 1996. The cost of the Collar was $98,000 and will be recorded as an
other asset and amortized over the life of the Collar.
-51-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder of
Pet Incorporated
In our opinion, the accompanying combined statements of income of Van de Kamp's
frozen seafoods business and frozen dessert product lines (the Businesses),
comprising businesses of Pet Incorporated (the Company), present fairly, in all
material respects, results of operations of the Businesses for the period July
1, 1995 through September 18, 1995 and for the years ended June 30, 1995 and
1994 in conformity with generally accepted accounting principles. These
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these statements based on our audits.
We conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether these statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall presentation of these statements. We believe that our
audits of these statements provide a reasonable basis for the opinion expressed
above.
As explained in Note 1, Van de Kamp's, Inc. acquired the assets of the
Businesses from The Pillsbury Company and Pet Incorporated on September 19,
1995.
Price Waterhouse LLP
San Francisco, California
July 22, 1996
-52-
<PAGE>
VAN DE KAMP'S AND FROZEN DESSERT
PRODUCT LINES OF PET INCORPORATED
COMBINED STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
July 1, 1995 through September 19, 1995 For the Years Ended June 30,
--------------------------------------- ---------------------------
1995 1994
------------- ------------
(in thousands)
<S> <C> <C> <C>
Net sales........................................ $20,545 $149,359 $153,314
Cost of goods sold............................... 10,978 66,111 67,881
------ -------- --------
Gross profit................................. 9,567 83,248 85,433
------ -------- --------
Selling, distribution and marketing expenses:
Selling and distribution........................ 1,616 11,376 11,671
Trade promotions................................ 3,699 34,530 33,304
Consumer marketing.............................. 1,919 8,260 9,852
------ -------- --------
Total selling, distribution and marketing
expenses..................................... 7,234 54,166 54,827
Amortization of goodwill......................... 689 3,305 3,305
General and administrative expenses.............. 1,370 9,789 8,682
------ -------- --------
Total operating expenses...................... 9,293 67,260 66,814
------ -------- --------
Income from operations before income taxes.... 274 15,988 18,619
Provision for income taxes....................... 396 7,716 8,769
------ -------- --------
Net income (loss)............................. $ (122) $ 8,272 $ 9,850
====== ======== ========
</TABLE>
See notes to the combined statements.
-53-
<PAGE>
VAN DE KAMP'S AND FROZEN DESSERT
PRODUCT LINES OF THE PILLSBURY COMPANY AND PET INCORPORATED
NOTES TO THE COMBINED STATEMENTS OF INCOME
1. THE ENTITY
The Van de Kamp's frozen seafoods business (VDK) and certain frozen dessert
product lines (Desserts, together with VDK referred to as the "Businesses"),
were owned by Pet Incorporated (Pet) which had operated as a stand alone entity
from April 1, 1991 through February 8, 1995, upon which date Pet was acquired as
a wholly-owned subsidiary of The Pillsbury Company (Pillsbury), an indirect
wholly-owned subsidiary of Grand Metropolitan PLC, a company incorporated in
England. In accordance with the Asset Purchase Agreement dated as of July 7,
1995 (the Agreement), Pillsbury and Pet agreed to sell and transfer certain
assets of the Businesses to Van de Kamp's, Inc. VDK produces and markets branded
frozen seafood in the United States. The Desserts businesses represent frozen
dessert lines consisting of Pet-Ritz brand cream pies and cobblers, Oronoque
Orchards brand pie crusts and private label whipped toppings. Assets acquired by
Van de Kamp's, Inc. on September 19, 1995 were limited to inventories, property,
plant and equipment, and the intangible assets of the Businesses. No other
assets were acquired and no liabilities of the Businesses were assumed.
The historical net sales of the Businesses represented approximately 10% of
Pet's consolidated net sales in recent years. Of the Businesses' net sales for
the period July 1, 1995 through September 18, 1995 and the years ended June 30,
1995 and 1994, approximately 67.7%, 75.6% and 74.6%, respectively, relate to
VDK, with the remainder relating to Desserts.
2. BASIS OF PRESENTATION
The combined statements of income of the Businesses were derived from the
accounting records of Pillsbury and Pet and have been presented on a Pet
historical cost basis. Purchase accounting adjustments reflecting the Pillsbury
basis after February 8, 1995, in conjunction with the acquisition of Pet, were
not pushed down to the asset balances of the Businesses and are not reflected in
the related financial information presented herein.
The combined statements of income include revenue and expenses directly
attributable to the manufacture and sale of the Businesses' products as well as
the allocation of general and administrative expenses (see Note 3). However,
Pillsbury and Pet maintained all debt and notes payable on a consolidated basis
to fund and manage all product lines and businesses; debt and related interest
expense were not allocated to individual product lines. Accordingly, no interest
expense for these Businesses is included in the combined statements of income
presented herein.
Full financial statements, including complete historical balance sheets and
statements of cash flows, of the Businesses have not been presented. Neither
Pillsbury nor Pet operated these product lines as separate divisions or business
entities. Accordingly, it is not practicable to separate other components of
assets, liabilities or cash flows related specifically to these product lines.
The financial information in these statements is not necessarily indicative of
results that would have occurred if the Businesses had been a separate stand
alone entity during the periods presented or of future results of the
Businesses.
3. SUMMARY OF ACCOUNTING POLICIES
- Revenue recognition -- Revenue from the sale of the Businesses' products
is recognized upon shipment to the customer. Costs and related expenses to
manufacture the Businesses' products are recorded as costs of goods sold
when the related revenue is recognized.
- Allocation of general and administrative expenses -- Prior to the
acquisition by Pillsbury, Pet provided various general and administrative
services to the Businesses including quality control, quality
-54-
<PAGE>
assurance, engineering, cost accounting, labor relations,
product development, computer processing systems, treasury, legal,
employee benefits, human resources, insurance and corporate
facilities and management. These expenses were allocated to all of
Pet's product lines, including the Businesses, based primarily on
budgeted sales. Upon conversion to Pillsbury's systems as of May 1,
1995, similar costs for the months of May and June of 1995 and
during the period ended September 18, 1995 were allocated from
Pillsbury on a consistent basis.
- Warehousing costs -- Warehousing costs, including internal and
external costs, of $1,176, $4,248 and $4,612 for the period July 1,
1995 through September 18, 1995 and the years ended June 30, 1995
and 1994, respectively, are reflected in cost of goods sold.
- Selling, distribution and marketing expenses -- Pet aggregates its
selling, distribution and marketing expenses into three categories.
Selling and distribution expenses include costs of the outside
brokerage network and outbound freight. Trade promotions represent
promotional incentives offered to retailers. Consumer marketing
expense is comprised of costs for advertising and coupon placements
and related processing.
- Property, plant and equipment -- Property, plant and equipment are
stated at cost and depreciation is computed using the straight line
method at annual rates of 2% to 20%. Expenditures for improvements
which substantially extend the useful life or increase the capacity
of assets, including interest during the construction period, are
capitalized. Capital expenditures for the Businesses were $0, $1,884
and $2,075 for the period July 1, 1995 to September 18, 1995 and the
years ended June 30, 1995 and 1994, respectively. Ordinary repairs
and maintenance are expensed as incurred. When property, plant and
equipment are sold or retired, cost and accumulated depreciation are
removed from the accounts and gains and losses are recorded in
income. Depreciation expense for the Businesses was $653, $3,016,
and $2,902 for the period July 1, 1995 through September 18, 1995
and for the years ended for June 30, 1995 and 1994, respectively.
- Goodwill -- Goodwill consists of the excess of cost over the fair
market value of net tangible assets acquired. Goodwill is being
amortized on a straight-line basis over 40 years.
4. PROVISION FOR INCOME TAXES
The Businesses have been included in the combined federal and certain state
tax returns of Pet through February 8, 1995 and included with those of
Pillsbury through September 18, 1995. The provision for income taxes
included in these statements has been calculated based upon statutory rates
applied to pre-tax income adjusted for goodwill amortization and may not
necessarily be indicative of the Businesses' tax expense on a stand alone
basis.
-55-
<PAGE>
The items which gave rise to differences between the income taxes provided in
the statement of income and income taxes computed at the U.S. statutory rate are
summarized below (in thousands):
<TABLE>
<CAPTION>
JULY 1, 1995
THROUGH SEPTEMBER JUNE 30,
18, 1995 1995 1994
----------------- ---------------- ----------------
$ % $ % $ %
---- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Income tax expense computed at
statutory rate................................. $ 96 35.0 $5,595 35.0 $6,516 35.0
State income taxes, net of federal
income tax benefit............................. 14 5.0 799 5.0 931 5.0
Goodwill amortization........................... 286 4.4 1,322 8.3 1,322 7.1
---- ---- ------ ---- ------ ----
Provision for income taxes...................... $396 44.4 $7,716 48.3 $8,769 47.1
==== ==== ====== ==== ====== ====
</TABLE>
-56-
<PAGE>
Schedule IX - Valuation Reserves
- --------------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
----------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts Deductions of Year
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts $ - $ 190,000 - $ - $ 190,000
</TABLE>
-57-
<PAGE>
Exhibit Index
Exhibit
Number Exhibit
2.1 Asset Purchase Agreement, dated as of July 7, 1995 among Van de
Kamp's, Inc., the Pillsbury Company and Pet Incorporated
(incorporated by reference to Exhibit 2.1 to Van de Kamp's,
Inc.'s Form S-4 filed on October 4, 1995 (the "S-4").
2.2 Agreement and Amendment No. 1, dated September 19, 1995, to the
Asset Purchase Agreement among Van de Kamp's, Inc., the Pillsbury
Company and Pet Incorporated (incorporated by reference to
Exhibit 2.2 to the S-4).
2.3 Asset Purchase and Sales Agreement, dated as of January 17, 1996,
between Shellfish Acquisition Company, LLC ("Shellfish") and
Campbell Soup Company ("Campbell") (the text of which and
Exhibits to which are incorporated by reference to Exhibit 2.1 to
Van de Kamp's, Inc.'s Form 10-Q for the quarter ended March 30,
1996 and a list of the contents of the schedules of which is
incorporated by reference to Exhibit 2.1 to Van de Kamp's, Inc.'s
Form 8-K dated May 6, 1996).
2.4 Asset Purchase Agreement, dated as of January 17, 1996, between
Van de Kamp's, Inc. and Shellfish (incorporated by reference to
Exhibit 2.2 to Van de Kamp's, Inc.'s Form 10-Q for the quarter
ended March 30, 1996).
2.5 Asset Purchase and Sales Agreement, dated as of May 15, 1996
between Van de Kamp's, Inc. and the Quaker Oats Company
("Quaker") (incorporated by reference to Exhibit 2.1 to Van de
Kamp's, Inc.'s Form 8-K dated July 9, 1996).
2.6 Supplement No. 1 to Asset Purchase and Sales Agreement, dated as
of July 9, 1996, between Van de Kamp's, Inc. and Quaker
(incorporated by reference to Exhibit 2.2 to Van de Kamp's,
Inc.'s Form 8-K dated July 9. 1996).
3.1 Certificate of Incorporation of Van de Kamp's, Inc., with
amendments thereto (incorporated by reference to Exhibit 3.1 to
the S-4).
3.2 Amended and Restated By-Laws of Van de Kamp's, Inc. (incorporated
by reference to Exhibit 3.2 to the S-4).
4.1 Indenture, dated as of September 15, 1995, between Van de Kamp's,
Inc. and Harris Trust and Savings Bank (incorporated by reference
to Exhibit 4.1 to the S-4).
4.2 Global Note, dated September 19, 1995, issued by Van de Kamp's,
Inc. to the Depository Trust Company and registered in the name
of Cede & Co. in the principal amount of $100,000,000
(incorporated by reference to Exhibit 4.2 to the S-4).
1
<PAGE>
4.3 Exchange and Registration Rights Agreement, dated September 19,
1995 between Van de Kamp's, Inc. and Chemical Securities Inc.
(incorporated by reference to Exhibit 4.3 to the S-4).
10.1 Guarantee and Collateral Agreement, dated September 19, 1995,
among VDK Holdings, Inc., Van de Kamp's, Inc., the subsidiary
grantors named therein and Chemical Bank as agent (incorporated
by reference to Exhibit 10-19 to the S-4).
10.2 Security Agreement, dated as of September 19, 1995, made by Van
de Kamp's, Inc., in favor of Chemical Bank (incorporated by
reference to Exhibit 10.20 to the S-4).
10.3 Employment Agreement, dated as of September 19, 1995, by and
between Thomas O. Ellinwood and Van de Kamp's, Inc. (incorporated
by reference to Exhibit 10.21 to the S-4).
10.4 Amendment No. 1 to Ellinwood Employment Agreement, dated as of
July 1, 1996, between Thomas O. Ellinwood and Van de Kamp's, Inc.
10.5 Employment Agreement, dated as of September 19, 1995, by and
between Olafur Gudmundsson and Van de Kamp's, Inc. (incorporated
by reference to Exhibit 10.22 to the S-4).
10.6 Amendment No. 1 to Gudmundsson Employment Agreement, dated as of
July 1, 1996 between Olafur Gudmundsson and Van de Kamp's, Inc.
10.7 Employment Agreement, dated as of September 19, 1995 by and
between C. Renee Sloan and Van de Kamp's, Inc. (incorporated by
reference to Exhibit 10.23 to the S- 4).
10.8 Amendment No. 1 to Sloan Employment Agreement, dated as of July
1, 1996, between C. Renee Sloan and Van de Kamp's, Inc.
10.9 Employment Agreement, dated as of September 19, 1995 by and
between Thomas J. Youngerman and Van de Kamp's, Inc.
(incorporated by reference to Exhibit 10.24 to the S-4).
10.10 Amendment No. 1 to Youngerman Employment Agreement, dated July 1,
1996, between Thomas J. Youngerman and Van de Kamp's, Inc.
10.11 Employment Agreement, dated as of October 11, 1995, between Van
de Kamp's, Inc. and Timothy B. Andersen (incorporated by
reference to Exhibit 10.1 to Van de Kamp's, Inc.'s Form 10-Q for
quarter ended March 30, 1996).
10.12 Amendment No. 1 to Andersen Employment Agreement, dated as of
July 1, 1996, between Timothy B. Andersen and Van de Kamp's, Inc.
2
<PAGE>
10.13 Computer Services Agreement, dated as of September 5, 1995, between
Windy Hill Pet Food Company LLC and Van de Kamp's, Inc. (incorporated
by reference to Exhibit 10.26 to the S-4).
10.14 License Agreement, dated as of February 21, 1979, between General Host
Corporation and VDK Acquisition Corporation (incorporated by reference
to Exhibit 10.27 to the S-4).
10.15 License Agreement, dated as of October 14, 1978, between General Host
Corporation and Van de Kamp's Dutch Bakeries (incorporated by
reference to Exhibit 10.28 to the S-4).
10.16 Agreement, dated March 31, 1994, between Van de Kamp's, Seafood and
Ore-Ida Foods, Inc. (incorporated by reference to Exhibit 10.29 to the
S-4).
10.17 Purchase Agreement, dated September 14, 1995, between Van de Kamp's,
Inc. and Chemical Securities Inc. (incorporated by reference to
Exhibit 10.30 to the S-4).
10.18 Co-Pack Agreement, dated May 6, 1996 between Campbell and Shellfish.
10.19 Buyer's Non-Recourse Promissory Note, dated May 6, 1996 issued by
Shellfish in favor of Campbell.
10.20 First Amendment to Guarantee and Collateral Agreement, dated May 6,
1996 between Van de Kamp's, Inc. and VDK Holdings, Inc. in favor of
Chemical Bank, as agent for the several banks and other financial
institutions from time to time parties to the Amended and Restated
Credit and Guarantee Agreement.
10.21 Second Amended and Restated Credit and Guarantee Agreement, dated as
of July 9, 1996 among VDK Holdings, Inc., Van de Kamp's, Inc., the
banks and other financial institutions named as parties thereto and
The Chase Manhattan Bank, NA., as agent.
10.22 First Amendment, dated as of August 28, 1996, to the Second Amended
and Restated Credit and Guarantee Agreement among VDK Holdings, Inc.,
Van de Kamp's, Inc., the banks and other financial institutions named
as parties thereto and the Chase Manhattan Bank, NA, as Agent.
10.23 Second Amendment to Guarantee and Collateral Agreement, dated July 9,
1996, between Van de Kamp's, Inc. and VDK Holdings, Inc. in favor of
The Chase Manhattan Bank, NA., as agent for the several banks and
other financial institutions.
10.24 Trademark License Agreement, dated July 9, 1996 between Quaker, The
Quaker Oats Company of Canada Limited and Van de Kamp's, Inc.
(incorporated by reference to Exhibit H to Exhibit 2.1 to Van de
Kamp's, Inc.'s Form 8-K dated July 9. 1996).
3
<PAGE>
10.25 Patent License Agreement, dated July 9, 1996, between Quaker and Van
de Kamp's, Inc. (incorporated by reference to Exhibit K to Exhibit 2.1
to Van de Kamp's, Inc.'s Form 8-K dated July 9, 1996).
10.26 Shared Technology License Agreement, dated July 9, 1996, Between
Quaker and Van de Kamp's, (incorporated by reference to Exhibit M to
Exhibit 2.1 to Van de Kamp's, Inc.'s Form 8-K dated July 9, 1996).
10.27 McDonald's Co-Pack Agreement, dated July 9, 1996, by Quaker and Van de
Kamp's, Inc. (incorporated by reference to Exhibit L to Exhibit 2.1 to
Van de Kamp's, Inc.'s Form 8-K dated July 9, 1996).
10.28 Senior Convertible Loan Credit and Guarantee Agreement, dated as of
July 9, 1996, among VDK Holdings, Inc., Van de Kamp's, Inc., the banks
and other financial institutions named as parties thereto and The
Chase Manhattan Bank, NA., as agent.
10.29 Cash Collateral Agreement, dated July 9, 1996, between VDK Holdings,
Inc. and The Chase Manhattan Bank, NA., as agent.
12.1 Statements Re: Computation of Ratios.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal (incorporated by reference to Exhibit
99.1 to the Second Amendment, filed on November 14, 1995, to the S-4).
99.2 Form of Notice of Guarantee delivery (incorporated by reference to
Exhibit 99.2 to the Second Amendment, filed on November 14, 1995, to
the S-4).
99.3 Form of Exchange Agency Agreement to be entered into by Van de Kamp's,
Inc. and Harris Trust and Savings Bank (incorporated by reference to
Exhibit 99.3 to the First Amendment, filed on November 8, 1995, to
the S-4).
4
<PAGE>
EXHIBIT 10.4
AMENDMENT NO. 1 TO THE
ELLINWOOD EMPLOYMENT AGREEMENT
------------------------------
AMENDMENT NO. 1, dated as of July 1, 1996, between VAN DE KAMP'S,
INC., a Delaware corporation (the "COMPANY"), and THOMAS O. ELLINWOOD (the
"EMPLOYEE").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Employee entered into an Employment
Agreement, dated as of September 19, 1995 (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Company and the Employee desire to amend the Employment
Agreement as set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Base Salary. Section 4(a) of the Employment
Agreement is hereby amended by deleting "$175,000" and inserting in lieu thereof
"$225,000".
2. Effective Date. The foregoing amendment shall be effective for
the periods from and after July 1, 1996.
3. Remaining Terms. Except as expressly amended by this Amendment
No. 1, all remaining terms of the Employment Agreement shall continue in full
force and effect.
4. Counterparts. This Amendment No. 1 may be executed in one or
more counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment No. 1 as of the date first written above.
VAN DE KAMP'S, INC.
By:/s/ Ian Wilson
--------------------------------------
Name: Ian Wilson
Title: Chairman of the Board of
Directors
/s/ Thomas O. Ellinwood
-----------------------------------------
THOMAS O. ELLINWOOD
<PAGE>
EXHIBIT 10.6
AMENDMENT NO. 1 TO THE
GUDMUNDSSON EMPLOYMENT AGREEMENT
--------------------------------
AMENDMENT NO. 1, dated as of July 1, 1996, between VAN DE KAMP'S,
INC., a Delaware corporation (the "COMPANY"), and OLAFUR GUDMUNDSSON (the
"EMPLOYEE").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Employee entered into an Employment
Agreement, dated as of September 19, 1995 (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Company and the Employee desire to amend certain terms of
the Employment Agreement as set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Base Salary. Section 4(a) of the Employment
Agreement is hereby amended by deleting "$125,000" and inserting in lieu thereof
"$140,000".
2. Amendment to Base Bonus. Section 4(b) of the Employment
Agreement is hereby amended by:
(i) in Section 4(b)(i), deleting "15%" and inserting in lieu
thereof "20%";
(ii) in Section 4(b)(ii), deleting "22.5%" and inserting in
lieu thereof "30%"; and
(iii) in Section 4(b)(iii), deleting "30%" and inserting in lieu
thereof "40%".
3. Effective Date. The foregoing amendments shall be effective for
the periods from and after July 1, 1996.
4. Remaining Terms. Except as expressly amended by this Amendment
No. 1, all remaining terms of the Employment Agreement shall continue in full
force and effect.
<PAGE>
5. Counterparts. This Amendment No. 1 may be executed in one or
more counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment No. 1 as of the date first written above.
VAN DE KAMP'S, INC.
By:/s/ Ian Wilson
--------------------------------------
Name: Ian Wilson
Title: Chairman of the Board of
Directors
/s/ Olafur Gudmundsson
--------------------------------------
OLAFUR GUDMUNDSSON
-2-
<PAGE>
EXHIBIT 10.8
AMENDMENT NO. 1 TO THE
SLOAN EMPLOYMENT AGREEMENT
--------------------------
AMENDMENT NO. 1, dated as of July 1, 1996, between VAN DE KAMP'S,
INC., a Delaware corporation (the "COMPANY"), and C. RENEE SLOAN (the
"EMPLOYEE").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Employee entered into an Employment
Agreement, dated as of September 19, 1995 (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Company and the Employee desire to amend certain terms of
the Employment Agreement as set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Base Salary. Section 4(a) of the Employment
Agreement is hereby amended by deleting "$125,000" and inserting in lieu thereof
"$140,000".
2. Amendment to Base Bonus. Section 4(b) of the Employment
Agreement is hereby amended by:
(i) in Section 4(b)(i), deleting "15%" and inserting in lieu
thereof "20%";
(ii) in Section 4(b)(ii), deleting "22.5%" and inserting in
lieu thereof "30%"; and
(iii) in Section 4(b)(iii), deleting "30%" and inserting in lieu
thereof "40%".
3. Effective Date. The foregoing amendments shall be effective for
the periods from and after July 1, 1996.
4. Remaining Terms. Except as expressly amended by this Amendment
No. 1, all remaining terms of the Employment Agreement shall continue in full
force and effect.
<PAGE>
5. Counterparts. This Amendment No. 1 may be executed in one or
more counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment No. 1 as of the date first written above.
VAN DE KAMP'S, INC.
By:/s/ Ian Wilson
--------------------------------------
Name: Ian Wilson
Title: Chairman of the Board of
Directors
/s/ C. Renee Sloan
-----------------------------------------
C. RENEE SLOAN
-2-
<PAGE>
EXHIBIT 10.10
AMENDMENT NO. 1 TO THE
YOUNGERMAN EMPLOYMENT AGREEMENT
AMENDMENT NO. 1, dated as of July 1, 1996, between VAN DE KAMP'S,
INC., a Delaware corporation (the "COMPANY"), and THOMAS J. YOUNGERMAN (the
"EMPLOYEE").
W I T N E S S E T H:
WHEREAS, the Company and the Employee entered into an Employment
Agreement, dated as of September 19, 1995 (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Company and the Employee desire to amend certain terms of
the Employment Agreement as set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Base Salary. Section 4(a) of the Employment
Agreement is hereby amended by deleting "$125,000" and inserting in lieu thereof
"$140,000".
2. Amendment to Base Bonus. Section 4(b) of the Employment
Agreement is hereby amended by:
(i) in Section 4(b)(i), deleting "15%" and inserting in lieu
thereof "20%";
(ii) in Section 4(b)(ii), deleting "22.5%" and inserting in lieu
thereof "30%"; and
(iii) in Section 4(b)(iii), deleting "30%" and inserting in lieu
thereof "40%".
3. Effective Date. The foregoing amendments shall be effective for
the periods from and after July 1, 1996.
4. Remaining Terms. Except as expressly amended by this Amendment
No. 1, all remaining terms of the Employment Agreement shall continue in full
force and effect.
<PAGE>
5. Counterparts. This Amendment No. 1 may be executed in one or
more counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment No. 1 as of the date first written above.
VAN DE KAMP'S, INC.
By: /s/ Ian Wilson
---------------------------------------
Name: Ian Wilson
Title: Chairman of the Board of
Directors
/s/ Thomas J. Youngerman
--------------------------------------------
THOMAS J. YOUNGERMAN
-2-
<PAGE>
EXHIBIT 10.12
AMENDMENT NO. 1 TO THE
ANDERSEN EMPLOYMENT AGREEMENT
-----------------------------
AMENDMENT NO. 1, dated as of July 1, 1996, between VAN DE KAMP'S,
INC., a Delaware corporation (the "COMPANY"), and TIMOTHY B. ANDERSEN (the
"EMPLOYEE").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Employee entered into an Employment
Agreement, dated as of October 11, 1995 (the "EMPLOYMENT AGREEMENT"); and
WHEREAS, the Company and the Employee desire to amend certain terms of
the Employment Agreement as set forth herein:
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to Base Salary. Section 4(a) of the Employment
Agreement is hereby amended by deleting "$125,000" and inserting in lieu thereof
"$140,000".
2. Amendment to Base Bonus. Section 4(b) of the Employment
Agreement is hereby amended by:
(i) in Section 4(b)(i), deleting "15%" and inserting in lieu
thereof "20%";
(ii) in Section 4(b)(ii), deleting "22.5%" and inserting in
lieu thereof "30%"; and
(iii) in Section 4(b)(iii), deleting "30%" and inserting in lieu
thereof "40%".
3. Effective Date. The foregoing amendments shall be effective for
the periods from and after July 1, 1996.
4. Remaining Terms. Except as expressly amended by this Amendment
No. 1, all remaining terms of the Employment Agreement shall continue in full
force and effect.
<PAGE>
5. Counterparts. This Amendment No. 1 may be executed in one or
more counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment No. 1 as of the date first written above.
VAN DE KAMP'S, INC.
By:/s/ Ian Wilson
--------------------------------------
Name: Ian Wilson
Title: Chairman of the Board of
Directors
/s/ Timothy B. Andersen
-----------------------------------------
TIMOTHY B. ANDERSEN
-2-
<PAGE>
EXHIBIT 10.18
CO-PACK AGREEMENT
THIS CO-PACK AGREEMENT (the "Agreement") is dated as of May 6, 1996. The
parties are CAMPBELL SOUP COMPANY, a New Jersey corporation, whose address is
Campbell Place, Camden, New Jersey 08103 ("Seller") and SHELLFISH ACQUISITION
COMPANY, LLC, a Delaware limited liability company, whose address is c/o
Dartford Partnership L.L.C., 801 Montgomery Street, Suite 400, San Francisco,
California 94133 ("Buyer").
BACKGROUND
Buyer desires to purchase from Seller certain products.
Seller desires to manufacture and sell such products to Buyer on the terms and
conditions set forth below.
Intending to be legally bound, Buyer and Seller agree as follows:
TERMS AND CONDITIONS
1. Defined Terms.
Capitalized terms that are not defined herein shall have the meanings
ascribed to them in the Asset Purchase and Sale Agreement, dated as of
January 17, 1996, between Buyer and Seller.
2. Products.
Products mean those frozen fried coated seafood and specialty vegetable
products set forth on Exhibit A.
3. Term of Agreement.
The term of this Agreement shall commence on May 6,1996 and shall continue
for a period of ninety (90) days (the "Co-Pack Period"). Buyer may extend
the Co-Pack Period for an additional 30 days on terms to be agreed upon by
Buyer and Seller, provided Buyer notifies Seller in writing of its intent
to extend the term at least 30 days prior to the expiration of the Co-Pack
Period.
4. Manufacture and Supply of Product.
During the Co-Pack Period and subject to the terms and conditions hereof,
Seller will (i) manufacture, package and sell to Buyer Products; (ii)
transport, store and
<PAGE>
distribute Products through Seller or third party or Buyer warehouses to
Buyer's brokers and/or customers; and (iii) store Buyer's inventory of raw
materials and work in process ("Buyer's Materials").
5. Fees.
a. Manufacturing Cost.
1. Ingredient and packaging costs will be billed at actual
(yielded) cost of production consisting of invoice price for
materials plus freight and storage.
2. Labor and variable expense costs will be billed based on the
schedule set forth on Exhibit A for each Product. This schedule
is based on total production over the Co-Pack Period of seven
hundred fifty thousand (750,000) cases (the "Minimum Product
Amount"). If Buyer does not purchase the Minimum Product Amount
during the Co-Pack Period, Buyer will pay Seller an additional
charge of $0.50 per case for every case manufactured under
750,000 cases, which sum shall be payable fifteen (15) days after
the expiration of the Co-Pack Period.
3. Fixed plant overhead will be billed at the rate of $147,000
per month and prorated for any partial month during the term of
this Agreement.
b. Distribution Cost.
1. Buyer will pay Seller (i) a fee of $.70 per case for
freight from the Omaha plant to a Seller distribution
center and all distribution center storage and handling
costs (this expense will be billed monthly based on the
number of cases sold), and (ii) the full cost of
freight charges for shipment of Product from Seller
distribution centers to customers (the amount will be
based on case cube on the truck as determined by
Seller's outside freight payment agency, and this
expense will be billed monthly). In addition, Seller
will continue to offer customers an $.08 case
distribution allowance for full truckloads of product,
and Buyer will be charged its proportionate share of
such allowance.
2. If Product is shipped directly from a Seller
manufacturing site to a Buyer distribution center,
Seller will invoice Buyer for all charges incurred in
connection
2
<PAGE>
with such transfer. At Buyer's option, these shipments
will be on wood pallets which will be billed to Buyer
at the rate of $6 per pallet. These cases will not be
maintained in Seller's inventory system.
6. Payment.
Payment for the fees incurred and set forth in Paragraph 5 above will be
handled through the monthly cash settlement process, the format of which is
set forth on
Exhibit B and the mechanics of which are more fully set forth in the
Transition
Services Agreement dated as of May 6, 1996, between Buyer and Seller.
7. Procurement and Inventory.
a. Seller will use Buyer's supply of Inventories for the manufacture
of Product.
b. Seller will perform the purchasing function for all necessary
ingredient and packaging materials based on projections supplied
and/or approved by Buyer. Notwithstanding the foregoing, all
necessary purchases of fish shall be at the direction of Buyer.
Seller will not be liable for production shortfalls due to
unavailability of or delays in the supply of fish to Seller by Buyer.
Buyer will, at Buyer's expense, promptly arrange for new packaging
which identifies Buyer as the manufacturer of Product for all Product
manufactured during the Co-Pack Period. Buyer agrees that immediately
after approval from all Governmental Entities are obtained, it will
take all necessary action to change film so that the packaging can be
revised. Seller will continue to pack Products using existing
packaging until Buyer's new packaging arrives.
8. Manufacturing/Storage/Delivery.
a. Seller will manufacture the Products as required by Buyer's
monthly production plan, the first month of which will be based on
Seller's estimate of production requirements. Buyer will use best
efforts to deliver production plans to Seller for each remaining month
during the Co-Pack Period, specifying the type and quantity of each
Product to be delivered, at least twenty (20) days in advance of the
start of such month and will deliver final production plans at least
five (5) business days in advance of the start of such month ("Buyer's
Final Production Schedule"). Buyer will be responsible for purchasing
all quantities of Products ordered pursuant to Buyer's Final
Production Schedule. Seller will not be responsible for any product
shortages due to Buyer's sales forecasting errors.
3
<PAGE>
b. Seller will store Products and Buyer Materials at existing Seller
plants and distribution centers and third party and Buyer warehouses.
Buyer shall have free access to all locations where Products are
stored for the purpose of inspection, counting and monitoring
shipments and shipping records. Seller will be responsible for all
damages/disappearances that take place while Product and Buyer
Materials are stored in Seller controlled distribution centers. Buyer
will use its best efforts to remove all Product and Buyer Materials
from all Seller facilities or third party warehouses on or before the
expiration of the Co-Pack Period. If any Product or Buyer Materials
remain in Seller's facilities or third party warehouses more than 15
days after the expiration of the Co-Pack Period, Buyer will pay Seller
a storage fee of $.20 per case per month for Product and $5.00 per
pallet space per month for Buyer Materials.
c. Shipments from Seller's distribution centers to customers will be
consistent with current practice (i.e., Product will be shipped on the
same trucks with other of Seller's frozen products).
9. Specifications; Quality Assurance and Samples.
a. Seller will manufacture Product in accordance with Seller's
existing quality requirements for the manufacture of such Product as
of the commencement of the Co-Pack Period and in accordance with all
applicable federal, state and local government regulations or
requirements (the "Product Specifications"). Buyer acknowledges and
agrees that Seller has no obligation to do any product development
work under this Agreement.
b. Seller will package Product in accordance with Seller's existing
packaging standards and specifications as of the commencement of the
Co-Pack Period and in accordance with all applicable federal, state
and local government regulations and requirements (the "Packaging
Specifications"). Buyer acknowledges and agrees that Seller has no
obligation to do any packaging design or redesign work under this
Agreement.
c. Buyer shall have the right to have its Quality Control
representative make periodic inspections during normal working hours.
Buyer's Quality Control representative will have the right to review
the processing and packaging of the Products, the finished goods
inventory, the equipment used to manufacture Product, quality control
records, and the packaging and ingredient storage area. This
provision is limited to those areas and records of Seller involving
Buyer's Products only.
d. Seller will provide Buyer with production samples of the Products
upon Buyer's reasonable request. Seller will also provide copies of
production
4
<PAGE>
records at Buyer's reasonable request. Sales samples will be provided
when requested at Buyer's expense.
10. Conformance to the Products Coding/Laws and Regulations.
-------------------------------------------------------
Seller warrants that the Products delivered to Buyer under this Agreement
will not be adulterated or misbranded within the meaning of the Federal
Food, Drug and Cosmetic Act, as amended, including, but not limited to, the
Food Additives Amendment of 1958, and will not be an article which may not,
under the provisions of Sections 404 and 505 of the Act, be introduced into
interstate commerce.
11. Acceptance.
----------
Buyer shall not be deemed to have accepted the Products delivered unless
the Products meet the Product Specifications and Packaging Specifications.
Any Product that has been packed but does not meet Product Specifications
or Packaging Specifications may not be sold to any source without written
approval of Buyer. Buyer has the right to reject any Product that does not
meet Product Specifications or Packaging Specifications.
12. Equipment.
---------
(a) Seller will perform routine maintenance, at a level and in a
manner as historically performed by Seller, on all machinery and
equipment used for manufacturing Product ("Equipment"). Buyer shall
be fully responsible for all non-routine or otherwise extraordinary
repairs or maintenance, and for any replacement of Equipment, as
needed.
(b) Seller may use Buyer's Equipment for the production of fish
products for Swanson dinners, subject to availability in light of
Seller's or Buyer's production requirements. Seller will pay Buyer
$0.031 per pound for minced production and $0.025 per pound for fillet
production.
13. Right to Designate Change.
-------------------------
Buyer reserves the right (but shall have no obligation) to introduce
improvements or new formulations for the Products at any time during the
Co-Pack Period, provided such improvements or new formulations are
communicated to Seller with sufficient lead time and Buyer assumes any
additional expense incurred in implementing such changes. Buyer also
reserves the right to introduce new packaging for the Products during the
Co-Pack Period, provided Buyer provides sufficient lead time, any such
packaging identifies Buyer as the manufacturer of Product and Buyer assumes
any additional expense incurred in implementing such change. Seller will
use all
5
<PAGE>
reasonable diligence and its best efforts to effect any such changes
designated by Buyer within a reasonable time.
14. Insurance.
---------
Buyer will, at its expense, insure the Equipment on or before the
commencement of the Co-Pack Period.
15. Confidentiality.
---------------
a. Seller will keep in confidence any information supplied to Buyer,
either before or after the date of this Agreement, regarding formulas,
specifications, packaging concepts and customer lists relating
exclusively to the Mrs. Paul's Business. Seller agrees not to use
such information for other uses during or after the Co-Pack Period.
Buyer's confidential information will be and remain the sole property
of Buyer and its assigns. Seller hereby agrees that it will use the
same degree of care which it normally uses to protect its own
confidential information to prevent disclosing to third parties
Buyer's confidential information. Notwithstanding the foregoing, this
paragraph will not apply to any information which Seller can
demonstrate was, at the time of disclosure of it, in the public domain
through no fault of Seller, was received by Seller after disclosure to
it from a third party who had a lawful right to disclose such
information to Seller; or was independently developed by Seller,
provided that such Buyer confidential information was not sold by
Seller to Buyer.
b. During the term of this Agreement, Buyer and its employees may
from time to time have access to confidential information relating to
the operation of Seller and its affiliates other than the Mrs. Paul's
Business. Buyer agrees that such confidential information shall be
retained in strict confidence and not disclosed to any third party;
provided that confidential information shall not include information
that: (i) is known or becomes known to the general public through no
violation of this Agreement; (ii) was in Buyer's possession prior to
its being furnished to Buyer by or on behalf of Seller; (iii) becomes
available to Buyer from a source other than Seller, provided that such
source is not known by Buyer to be bound by a confidentiality
agreement with, or by a fiduciary or legal obligation to, Seller or
any other party with respect to such information; or (iv) Buyer can
prove was independently developed by it without use of the
confidential information. Buyer shall inform its agents and employees
of the confidential nature of the Seller's confidential information
and shall be responsible for the breach of any provision of this
Section 15 by its agents or employees.
6
<PAGE>
c. The provisions of this Section 15 shall remain in full force and
effect in accordance with their terms for a period of three (3) years
from the date this Agreement expires or is earlier terminated.
16. Termination For Breach or Default.
---------------------------------
In the event either party is in breach or default of any of its obligations
under this Agreement, the other party may give written notice to the party
in breach or default, after which the party in breach or default shall have
an opportunity to cure the breach or default within 30 days of the receipt
of such notice. The notice shall describe the breach or default to be
cured. If such breach or default is not cured within such 30-day period,
this Agreement may be terminated, without liability, at the election of the
non-defaulting party.
17. Indemnification.
---------------
Seller agrees to indemnify and hold Buyer harmless against any and all
claims, liabilities, loss, expenses (including legal costs) or demands
arising out of or in connection with the Products except to the extent such
claims, liabilities, loss, damages, demands or expense are caused by
Buyer's negligence. Buyer shall give Seller notice of any claim against
Buyer which may give rise to Seller's indemnification obligation
hereunder. Buyer and Seller will jointly decide how best to defend against
such claims.
18. Trademarks.
----------
Nothing herein contained shall be deemed to give either party any claim or
right in the labels or in the trademarks of the other during or after the
Co-Pack Period.
19. Force Majeure.
-------------
a. Failure of performance of any obligation under this Agreement by
either party, if occasioned by Act of God, strike or lockout, public
enemy, fire, explosion, perils of the sea, flood, drought, war, riot,
sabotage, accident, embargo or circumstance of like or different
character beyond the control of the failing party shall not subject
either party to any liability to the other party.
b. If, by reason of the provision of this Paragraph 19, either party
is substantially prevented from performing for a period of 30
consecutive days or more, the party able to perform may cancel this
Agreement by giving written notice to that effect to the other party.
In such event, this Agreement will be concluded, without liability,
upon the notice on the part of either party.
20. Assignment.
----------
7
<PAGE>
This Agreement may not be assigned by Seller. Buyer may assign this
Agreement to Van de Kamp's, Inc.
21. Entire Agreement.
----------------
This instrument constitutes the entire Agreement between the parties with
respect to the supply by Seller of Products to Buyer and supersedes all
prior written or oral understandings between the parties. No modifications
of this Agreement whatsoever will be effective unless in writing and signed
by both parties.
22. Counterparts.
------------
This Agreement may be executed in counterparts, each of which shall be an
original and all of which together shall constitute one and the same
instrument.
23. Notices.
-------
All notices, requests, demands or other communications under this Agreement
shall be in writing and shall be deemed to have been given on the date of
service if served personally on the party to whom notice is to be given, or
on the third day after mailing if mailed to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid,
and properly addressed, or upon receipt of "good" transmission if sent by
telecopy, as follows:
To Seller: Campbell Soup Company
Campbell Place
Camden, New Jersey 08103-1799
Attention: Corporate Secretary
with a copy to: Linda A. Lipscomb, Esquire
Deputy General Counsel
Campbell Soup Company
Campbell Place
Camden, New Jersey 08103-1799
To Buyer: Shellfish Acquisition Company, LLC
c/o Dartford Partnership, L.L.C.
801 Montgomery Street, Suite 400
San Francisco, California 94133
Attn: President
8
<PAGE>
with a copy to: Richards & O'Neil, LLP
885 Third Avenue
New York, New York 10022
Attn: Craigh Leonard
Any party may change its address for purposes of this section by giving the
other party written notice of the new address in the manner set forth above.
24. No Waiver.
No waiver of any of the provisions of this Agreement shall be deemed a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver. If any provision of this Agreement is held ineffective
for any reason, the other provisions of this Agreement shall remain effective.
25. Governing Law.
This Agreement shall be interpreted and construed in accordance with New Jersey
law and that law shall apply to any claim that arises from or is in any way
related to this Agreement or the performance of this Agreement.
26. Arbitration and Limitation of Damages.
Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof, shall be settled in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction hereof. In no event
shall either party claim or be entitled to receive an award of punitive or
exemplary damages, whether in contract, tort or otherwise, and both parties
hereby irrevocably waive any such claim or award. (This limitation of damages
does not, however, in any way, limit Buyer's right to seek recovery under the
Indemnity section of this Agreement.)
9
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement as
of the date first written above.
CAMPBELL SOUP COMPANY
/s/ Kathleen MacDonnell
By: ____________________________________
Name: Kathleen MacDonnell
Title: President, Frozen Foods Group
SHELLFISH ACQUISITION COMPANY, LLC
/s/ James B. Ardrey
By: _____________________________________
Name: James B. Ardrey
Title: Member
10
<PAGE>
EXHIBIT A
MRS. PAUL'S KITCHENS
<TABLE>
<CAPTION>
PROJECTED FOR FINISHED GOODS
PRODUCTION CO-PACKING SHIPPED TO CUSTOMER
CASES RATE
----------------------- ---------------------
I/V FREIGHT & STORAGE
---------------------
<S> <C> <C> <C>
10179 BATTER DIPPED 4,000 $7.280 $0.700
10207 C.C. FLT (4)-8 OZ. 67,000 $1.572 $0.700
10208 C.C. FLT (7)-11.9 OZ. 82,000 $2.302 $0.700
10213 BAT DIP COD FILLETS 75,000 $3.320 $0.700
10214 C.C (10-6.7 OZ. 53,000 $2.090 $0.700
10215 C.C. (16)-10.6 OZ. 94,000 $2.776 $0.700
10230 C.C. FLT (10-19.2 OZ. 24,000 $3.283 $0.700
10231 C.C. FLT (10) 22,500 $2.389 $0.700
10232 LT COD 26,500 $2.498 $0.700
10233 LT FLOUNDER 49,000 $2.517 $0.700
10234 LT SOLE 14,500 $2.508 $0.700
10235 LT. HADDOCK 19,500 $2.498 $0.700
10243 C.C. (30)-20.1 OZ. 30,500 $4.304 $0.700
10244 C.C. (30)-8 PACK 12,500 $2.859 $0.700
10291 MPK FISH SANDWICH - $2.842 $0.700
11116 LT FILLETS & BUTTER SAUCE 16,500 $1.866 $0.700
11189 LT BAT STK-(16) 19,500 $6.466 $0.700
TRADITIONAL 610,000
10178 MINCED STICK 4,000 $6.712 $0.700
11127 MINCED FISH STKS 164,000 $3.313 $0.700
11128 MINCED FILLETS 29,000 $3.972 $0.700
11198 MINCED FLT 38,000 $1.558 $0.700
11199 10 COUNT MINCED STK 69,000 $1.970 $0.700
BUDGET 304,000
11101 DEV CRABS (2) 78,000 $1.527 $0.700
11102 FAM DEV CRABS 5 18,500 $2.888 $0.700
11103 DEV CRAB MIN 10,000 $1.961 $0.700
11105 FRIED SCALLOPS 14,000 $2.101 $0.700
11109 FISH CAKES 49,000 $1.742 $0.700
11117 FRIED CLAMS - - $0.700
SPECIALTY SEAFOOD 169,500
11133 CANDIED YAMS 85,000 $1.528 $0.700
11135 ONION RINGS-8 OZ. 43,000 $1.815 $0.700
11137 EGGPLANT PARMIGIANA 24,500 $1.809 $0.700
11140 CORN FRITTER 5,500 $2.744 $0.700
11141 APPLE FRITTER 4,000 $2.798 $0.700
11142 SWEETS & APPLES 17,000 $2.215 $0.700
11144 FAMILY YAMS 20,500 $1.849 $0.700
11145 ONION RINGS-14 OZ. 10,500 $2.328 $0.700
SPECIALTY VEGETABLE 210,000 $0.700
10280 HTHY TRSRS STKS 10 $0.700
10281 HTHY TRSRS FILL 2 $0.700
10282 HTHY TRSRS STKS 16 $0.700
10284 HTHY TRSRS FILL 4 $0.700
11129 FISH NUGGETS $0.700
11163 BTR MINCED PRT $0.700
11130 KIDS SHAPES $0.700
10160 SHRIMP GARLIC HERB $0.700
10182 SHRIMP SPEC RECIPE $0.700
OTHER
---------
GRAND TOTAL 1,293,600
</TABLE>
<PAGE>
EXHIBIT B
Following is a sample cash settlement worksheet:
<TABLE>
<CAPTION>
EBIT $
<S> <C>
ADD OR SUBTRACT:
Finished Product Shipped to Buyer -
distribution centers.
Net Change in F.P. Inv. Acct. +/-
Net Change in Ingred., Pack. +/-
and Non-Ingred. Invent. Accts.
Net Change in Accts. Rec. +/-
Net Change in Liab. +/-
Transition Service Fee -248,000
BUYER OWES
---------
</TABLE>
<PAGE>
EXHIBIT 10.19
NON-RECOURSE PROMISSORY NOTE
$72,884,548 May 6, 1996
SHELLFISH ACQUISITION COMPANY, LLC ("Maker"), for value received and
intending to be legally bound, hereby promises to pay to the order of CAMPBELL
SOUP COMPANY ("Payee"), at Payee's office at Campbell Place, New Jersey or at
such other office as Payee designates in writing to Maker, the principal sum of
$72,884,548, together with all accrued but unpaid interest, as described below.
Payments of principal and interest hereunder shall be in such coin or currency
of the United States of America as at the time of payment is legal tender for
the payment of public and private debts.
This Note was issued by Maker contemporaneously with the closing of
the purchase and sale of certain assets of Payee under the Asset Purchase and
Sale Agreement dated as of January 17, 1996 between Payee and Maker.
Notwithstanding any promise of the Maker to pay any amounts hereunder or any
other provision hereof, as the sole recourse for the payment of all amounts
payable hereunder, Maker has caused to be delivered to Payee an irrevocable
standby letter of credit (the "Letter of Credit") issued by Bank of Montreal
(the "Bank"). Other than its right to draw under such Letter of Credit, Payee
shall have no recourse against Maker for payment of any amounts under this Note,
that is, Payee shall look solely to such Letter of Credit for the payment of all
amounts owed under this Note, and no property or assets of the Maker nor any of
the Maker's officers, directors, shareholders or principals shall be subject to
levy, execution or other enforcement procedure for any payment required to be
made under this Note or for the performance or observance of any obligations
contained herein.
This Note shall be due and payable on August 22, 1996.
Maker promises to pay interest (calculated based on the actual number
of days elapsed in a year of 360 days) on the unpaid principal amount of this
Note at an annual rate of 5.3125%. Such interest shall be due and payable upon
payment of the principal amount hereof.
This Note may not be prepaid prior to maturity and is not subject to
acceleration by the Payee.
No amendment, modification or waiver of any provision of this Note nor
consent to any departure by Maker therefrom shall be effective unless the same
shall be in writing and signed by the Bank and the Payee and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
Maker hereby waives any requirements of presentment for payment,
notice of dishonor, notice of protest and protests.
<PAGE>
Payment of this Note shall not be subject to any counterclaim, setoff,
recoupment or defense of any kind by or in the right of Maker, and Maker hereby
expressly and irrevocably waives any right Maker may now or at any time in the
future have to bring or assert any such counterclaim, setoff, recoupment or
defense. It is the intention of Maker and the Payee in this regard that this
Note represents an independent obligation payable solely from the Letter of
Credit and that no actions, rights, or obligations of Maker, Payee or any other
party may affect any amount payable under this Note without the consent of the
Bank.
This Note shall be deemed to be a contract made under the laws of the
State of New York and shall be construed in accordance with the laws of said
State, without giving effect to principles of conflicts of laws.
The terms hereof shall inure to the benefit of Payee and its
successors and assigns, including subsequent holders hereof.
SHELLFISH ACQUISITION COMPANY, LLC
By: /s/ James B. Ardrey
-------------------------------
Attest:
/s/ Craigh Leonard
- -----------------------
Secretary
<PAGE>
EXHIBIT 10.20
FIRST AMENDMENT
TO
GUARANTEE AND COLLATERAL AGREEMENT
FIRST AMENDMENT, dated as of May 6, 1996 (this "Amendment"), to the
Guarantee and Collateral Agreement, dated as of September 19, 1995, (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Guarantee and Collateral Agreement"), made by each of the signatories hereto
(the "Grantors"), in favor of Chemical Bank, as agent (in such capacity, the
"Agent") for the several banks and other financial institutions (the "Lenders")
from time to time parties to the Amended and Restated Credit and Guarantee
Agreement, dated as of May __, 1996 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among VDK
Holdings, Inc., a Delaware corporation ("Holdings"), Van de Kamp's, Inc., a
Delaware corporation (the "Borrower"), the Lenders and the Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, effective as of the date hereof the parties thereto have agreed to
amend and restate the Existing Credit Agreement;
WHEREAS, contemporaneously with the amendment and restatement of the
Existing Credit Agreement, the Borrower is acquiring the assets of the Mrs.
Paul's Business with, inter alia, the proceeds of loans made to the Borrower
by the Lenders under the Credit Agreement;
WHEREAS, the Borrower is a member of an affiliated group of companies that
includes each other Grantor;
WHEREAS, each such Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
and
WHEREAS, it is a condition precedent to the effectiveness of the amendment
and restatement of the Credit Agreement and of the Lenders' agreement to make
their additional loans to the Borrower that the Borrower and the other Grantors
shall have entered into this Amendment;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto,
the Grantors and the Agent hereby agree as follows:
<PAGE>
2
SECTION 1. Definitions. As used in this Amendment, terms defined in the
preamble hereof and the recitals hereto are used herein as so defined and terms
defined in the Credit Agreement are used herein as therein defined.
SECTION 2. Amendment of Schedules.
----------------------
(a) Schedule 3 to the Guarantee and Collateral Agreement is hereby amended
by adding thereto the Filings and Other Actions Required to Perfect Security
Interests listed on Schedule 3 hereto.
(b) Schedule 5 to the Guarantee and Collateral Agreement is hereby amended
by adding thereto the Locations of Inventory and Equipment listed on Schedule 5
hereto.
(c) Schedule 6 to the Guarantee and Collateral Agreement is hereby amended
by adding thereto the Patent and Patent Licenses and Trademarks and Trademark
Licenses listed on Schedule 6 hereto.
(d) Schedule 7 to the Guarantee and Collateral Agreement is hereby amended
by adding thereto the Contracts listed on Schedule 7 hereto.
[(e) Schedule 8 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Vehicles listed on Schedule 8 hereto.]
SECTION 3. Pledge; Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, each Grantor hereby
delivers to the Agent, for the ratable benefit of the Lenders, the Pledged Stock
listed on Schedule 2 hereto and all Proceeds and products thereof, and grants to
the Agent for the ratable benefit of the Lenders a security interest in all of
the Collateral acquired by such Grantor in connection with, or in which such
Grantor has any right, title or interest as a result of, the Acquisition. Such
grant shall be governed by the terms and conditions of the Guarantee and
Collateral Agreement.
SECTION 4. Representations and Warranties. To induce the Agent and the
Lenders to enter into the amendment and restatement of the Credit Agreement and
to agree to the amendments therein, each Grantor hereby represents and warrants
to the Agent and each Lender that after giving effect to the Acquisition:
(a) Representations and Warranties. Each of the representations and
warranties contained in Section 4 of the Guarantee and Collateral Agreement, as
amended hereby, are true and correct on and as of the Effective Date and as of
each other date hereafter contemplated by such Section 4 as if made on and as of
such date.
(b) Real Property. Such Grantor does not, on the Effective Date, own any
material real property which is not subject to the Lien of the Mortgages.
<PAGE>
3
SECTION 5. Continuing Effect of Guarantee and Collateral Agreement. This
Amendment shall not constitute an amendment or waiver of any provision of the
Guarantee and Collateral Agreement not expressly referred to herein and shall
not be construed as an amendment, waiver or consent to any action on the part of
any Grantor that would require an amendment, waiver or consent of the Agent or
the Lenders except as expressly stated herein. Except as expressly amended
hereby, the provisions of the Guarantee and Collateral Agreement are and shall
remain in full force and effect.
SECTION 6. Counterparts. This Amendment may be executed by the parties
hereto on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
<PAGE>
4
IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be
duly executed and delivered as of the date first above written.
VDK HOLDINGS, INC.
By: /s/ Jamie B. Ardrey
---------------------------------
Title:
VAN DE KAMP'S, INC.
By: /s/ Jamie B. Ardrey
---------------------------------
Title:
<PAGE>
Schedule 2
----------
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Class of Stock No. of
Grantor Issuer Stock Certificate No. Shares
- ------- ------ -------- --------------- ------
<S> <C> <C> <C> <C>
N/A
</TABLE>
<PAGE>
Schedule 3
----------
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
UCC Filings - The Borrower
--------------------------
Kansas
------
Secretary of State
Massachusetts
-------------
Secretary of the Commonwealth
Gloucester City Clerk
Connecticut
-----------
Secretary of State
Nebraska
--------
Secretary of State
Douglas County Register of Deeds
Pennsylvania
------------
Secretary of the Commonwealth (previously filed)
Chester County Prothonotary
South Carolina
--------------
Secretary of State
California
----------
Secretary of State (previously filed)
Missouri
--------
Secretary of State (previously filed)
St. Louis City Recorder of Deeds (previously filed)
<PAGE>
Patents and Trademark Filings
-----------------------------
Mrs. Paul's Patent and Trademark Security Agreement to
be filed in the United States Patent and Trademark Office
Actions with respect to Pledged Stock
-------------------------------------
None
Other Actions
-------------
None
<PAGE>
Schedule 5
----------
LOCATION OF INVENTORY AND EQUIPMENT
<TABLE>
<CAPTION>
Grantor Locations
- ------- ---------
<S> <C>
Equipment
- ---------
Borrower Campbell Soup Company
1202 Douglas
Omaha, NE 68101
Inventory (Ingredients)
- -----------------------
Borrower Millard KC
2350 98th Street
Edwardsville, KS 66113
Atlantic Reefer
8 Pond Road
Gloucester, MA 01930-1833
Louis Dreyfus
PO Box 7717
Wilton, CT 06897-7717
Mid America
4430 S 110th Street
Omaha, NE 68137
US Cold
4302 S 30th Street
Omaha, NE 68107
AY Bldg
105 S 12th Street
Omaha, NE 68101
Plant Two
1015 Davenport
Omaha, NE 68101
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Grantor Locations
- ------- ---------
<S> <C>
Inventory (Finished Product)
- ----------------------------
Borrower Northeast Distribution Center
8 Lee Blvd
Malvern, PA 19355
Southeast Distribution Center
1900 Corporate Way (PO Box 1713)
Sumter, SC 29150
Midwest Distribution Center
10711 Olive Street
Omaha, NE 68128
West Coast Distribution Center
2050 Lapham Drive
Modesto, CA 95354
</TABLE>
<PAGE>
Schedule 6
----------
PATENTS AND PATENT LICENSES
License for Patent Number 5,266,340 dated November 30, 1993, granted pursuant to
Section 7.2(b) of the Asset Purchase and Sale Agreement between Shellfish
Acquisition Company, LLC and Campbell Soup Company dated as of January 17, 1996,
assigned to Borrower pursuant to the Assignment and Assumption Agreement, dated
May __, 1996, between Shellfish Acquisition Company, LLC and Van de Kamp's, Inc.
TRADEMARKS AND TRADEMARK LICENSES
MRS. PAUL'S AND RELATED TRADEMARK
REGISTRATIONS/APPLICATIONS
<TABLE>
<CAPTION>
=====================================================================================================
MARK TERRITORY APPLN. NO. REG. NO. REGISTRATION STATUS
---- --------- ---------- -------- DATE ------
------------
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mrs. Paul's United States 663,544 June 24, 1958 Registered
- ------------------------------------------------------------------------------------------------------
Create A Sauce Mix United States 1,202,912 July 27, 1982 Registered
- ------------------------------------------------------------------------------------------------------
Healthy Treasures United States 1,766,856 April 20, 1993 Registered
- ------------------------------------------------------------------------------------------------------
Sea Pals United States 1,805,466 November 16, 1993 Registered
- ------------------------------------------------------------------------------------------------------
Create A Sauce Mix United States 945,494 October 17, 1972 Registered
- ------------------------------------------------------------------------------------------------------
Beach Haven United States 1,136,344 May 27, 1980 Registered
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's (Stylized) United States 949,434 December 26, 1972 Registered
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 6 (p.2)
----------
<TABLE>
<CAPTION>
======================================================================================================
MARK TERRITORY APPLN. NO. REG. NO. REGISTRATION STATUS
---- --------- ---------- -------- DATE ------
------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Serial No.
Mrs. Paul's & Design 1 United States 74/723266 Filed 8/31/95 Pending
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's Canada* 422,878 February 7, 1994 Registered
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's China* 262,476 September 10, 1986 Registered
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's China* 267,458 October 30, 1986 Registered
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's Japan* 2,018,008 January 26, 1988 Registered
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's Mexico* 373,668 March 12, 1990 Registered
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's Oman* 5092 Filed December 29, Pending
1990
- ------------------------------------------------------------------------------------------------------
Mrs. Paul's (Stylized) Saudi Arabia* 142/63 June 22, 1986 Renewing
Registration
- ------------------------------------------------------------------------------------------------------
United Arab
Mrs. Paul's Emirates* 10717 Filed May 22, 1995 Pending
- ------------------------------------------------------------------------------------------------------
United Arab
Mrs. Paul's Emirates* 10718 Filed May 22, 1995 Pending
======================================================================================================
</TABLE>
- -----------------------------
/*/ Notwithstanding anything to the contrary, Borrower makes no representations
or warranties of any kind whatsoever as to the foreign trademarks and
Borrower has purchased the foreign trademarks on an "AS IS, WHERE IS"
basis.
<PAGE>
Schedule 7
----------
CONTRACTS
1. Asset Purchase Agreement, dated as of January 17, 1996, between Van de
Kamp's, Inc. and Shellfish Acquisition Company, LLC
2. Asset Purchase Agreement, dated as of January 17, 1996, between Campbell
Soup Company and Shellfish Acquisition Company, LLC assigned to Borrower
pursuant to the Assignment and Assumption Agreement, dated May __, 1996,
between Van de Kamp's, Inc. and Shellfish Acquisition Company, LLC
3. Transition Services Agreement, dated May __, 1996, between Campbell Soup
Company and Shellfish Acquisition Company, LLC and Co-Pack Agreement, dated
May __, 1996, between Campbell Soup Company and Shellfish Acquisition
Company, LLC each assigned to Borrower pursuant to the Assignment and
Assumption Agreement, dated May __, 1996, between Van de Kamp's, Inc. and
Shellfish Acquisition Company, LLC. (Re: Assumed Liabilities (other than
the Buyer note and the MPK Indemnity))
<PAGE>
Schedule 8
----------
VEHICLES
NONE
<PAGE>
EXECUTION COPY
EXHIBIT 10.21
VDK HOLDINGS, INC.
VAN DE KAMP'S, INC.
--------------------------------------------------
$248,750,000
SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
dated as of July 9, 1996
--------------------------------------------------
THE CHASE MANHATTAN BANK, N.A.,
as Agent
<PAGE>
TABLE OF CONTENTS
Page
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. DEFINITIONS...................................................... 2
1.1 Defined Terms.................................................... 2
1.2 Other Definitional Provisions; Financial Calculations............ 29
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS........................ 30
2.1 Tranche A Term Loans, Tranche B Term Loans and Tranche C Term
Loans........................................................... 30
2.2 Procedure for Additional Term Loan Borrowing..................... 31
2.3 Repayment of Tranche A Term Loans, Tranche B Term Loans and
Tranche C Term Loans............................................ 32
2.4 Evidence of Tranche A Term Loan, Tranche B Term Loan and Tranche
C Term Loan Debt................................................ 34
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS................. 36
3.1 Revolving Credit Commitments..................................... 36
3.2 Procedure for Revolving Credit Borrowing......................... 36
3.3 Commitment and Other Fees........................................ 37
3.4 Termination or Reduction of Commitments.......................... 37
3.5 Repayment of Revolving Credit Loans; Evidence of Debt............ 37
3.6 Swing Line Commitment............................................ 38
3.7 Repayment of Swing Line Loans; Evidence of Debt.................. 39
3.8 Procedure for Borrowing Swing Line Loans......................... 39
3.9 Swing Line Loan Participations................................... 40
3.10 L/C Commitment................................................... 41
3.11 Procedure for Issuance of Letters of Credit...................... 42
3.12 Fees, Commissions and Other Charges.............................. 42
3.13 L/C Participations............................................... 43
3.14 Reimbursement Obligation of the Borrower......................... 44
3.15 Obligations Absolute............................................. 44
3.16 Letter of Credit Payments........................................ 45
3.17 Application...................................................... 45
3.18 Quarterly Reports................................................ 45
SECTION 4. GENERAL PROVISIONS APPLICABLE TO EXTENSIONS OF CREDIT............ 45
4.1 Optional and Mandatory Prepayments............................... 45
4.2 Conversion and Continuation Options.............................. 48
4.3 Minimum Amounts and Maximum Number of Tranches................... 48
4.4 Interest Rates and Payment Dates................................. 49
4.5 Computation of Interest and Fees................................. 49
</TABLE>
-i-
<PAGE>
Page
<TABLE>
<CAPTION>
<S> <C>
4.6 Inability to Determine Interest Rate............................. 49
4.7 Pro Rata Treatment and Payments.................................. 50
4.8 Illegality....................................................... 51
4.9 Requirements of Law.............................................. 51
4.10 Taxes............................................................ 53
4.11 Indemnity........................................................ 55
4.12 Change of Lending Office; Filing of Certificates or Documents.... 56
4.13 Replacement Lenders.............................................. 56
SECTION 5. REPRESENTATIONS AND WARRANTIES................................... 56
5.1 Financial Condition.............................................. 56
5.2 No Change........................................................ 58
5.3 Existence; Compliance with Law................................... 58
5.4 Power; Authorization; Enforceable Obligations.................... 58
5.5 No Legal Bar..................................................... 59
5.6 No Material Litigation........................................... 59
5.7 No Default....................................................... 60
5.8 Ownership of Property; Liens..................................... 60
5.9 Intellectual Property............................................ 60
5.10 No Burdensome Restrictions....................................... 61
5.11 Taxes............................................................ 61
5.12 Federal Regulations.............................................. 61
5.13 ERISA............................................................ 62
5.14 Investment Company Act; Other Regulations........................ 62
5.15 Subsidiaries..................................................... 62
5.16 Purpose of Loans................................................. 62
5.17 Environmental Matters............................................ 63
5.18 Regulation H..................................................... 63
5.19 Accuracy of Information.......................................... 64
5.20 Solvency......................................................... 64
5.21 Aunt Jemima/Celeste Acquisition Agreement........................ 64
5.22 Security Documents............................................... 64
SECTION 6. CONDITIONS PRECEDENT............................................. 65
6.1 Conditions to Effectiveness of Amended and Restated Credit and
Guarantee Agreement and to Making of Additional Term Loans...... 65
6.2 Conditions to Each Extension of Credit........................... 72
SECTION 7. AFFIRMATIVE COVENANTS............................................ 73
7.1 Financial Statements............................................. 73
7.2 Certificates; Other Information.................................. 74
7.3 Payment of Obligations........................................... 75
7.4 Conduct of Business; Maintenance of Existence;
Compliance with Laws............................................ 76
7.5 Maintenance of Property; Insurance............................... 76
</TABLE>
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7.6 Inspection of Property; Books and Records; Discussions........... 76
7.7 Notices.......................................................... 76
7.8 Environmental Laws............................................... 77
7.9 Maintenance of Liens of the Security Documents................... 77
7.10 Pledge of After Acquired Property; Additional Guarantors......... 78
7.11 Interest Rate Protection......................................... 78
SECTION 8. NEGATIVE COVENANTS............................................... 79
8.1 Financial Condition Covenants.................................... 79
8.2 Limitation on Indebtedness....................................... 80
8.3 Limitation on Liens.............................................. 82
8.4 Limitation on Guarantee Obligations.............................. 83
8.5 Limitation on Fundamental Changes................................ 84
8.6 Limitation on Sale of Assets..................................... 84
8.7 Limitation on Restricted Payments................................ 85
8.8 Limitation on Capital Expenditures............................... 86
8.9 Limitation on Investments, Loans and Advances.................... 87
8.10 Limitation on Optional Payments and Modifications of Debt
Instruments and other Obligations............................... 88
8.11 Limitation on Transactions with Affiliates....................... 88
8.12 Limitation on Sales and Leasebacks............................... 88
8.13 Limitation on Changes in Fiscal Year............................. 89
8.14 Limitation on Lines of Business.................................. 89
SECTION 9. NEGATIVE COVENANTS OF HOLDINGS................................... 89
9.1 Limitation on Holdings' Activities............................... 89
9.2 Restricted Payments.............................................. 90
9.3 Net Proceeds..................................................... 90
9.4 Dividends........................................................ 90
SECTION 10. GUARANTEE........................................................ 90
10.1 Guarantee........................................................ 90
10.2 No Subrogation, Contribution, Reimbursement or Indemnity......... 91
10.3 Amendments, etc. with respect to the Obligations;
Waiver of Rights................................................ 91
10.4 Guarantee Absolute and Unconditional............................. 92
10.5 Reinstatement.................................................... 93
10.6 Payments......................................................... 93
SECTION 11. EVENTS OF DEFAULT................................................ 93
SECTION 12. THE AGENT........................................................ 97
12.1 Appointment...................................................... 97
12.2 Delegation of Duties............................................. 97
12.3 Exculpatory Provisions........................................... 97
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12.4 Reliance by Agent.............................................. 97
12.5 Notice of Default.............................................. 98
12.6 Non-Reliance on Agent and Other Lenders........................ 98
12.7 Indemnification................................................ 98
12.8 Agent in Its Individual Capacity............................... 99
12.9 Successor Agent................................................ 99
SECTION 13. MISCELLANEOUS................................................ 99
13.1 Amendments and Waivers......................................... 99
13.2 Notices........................................................ 101
13.3 No Waiver; Cumulative Remedies................................. 102
13.4 Survival of Representations and Warranties..................... 102
13.5 Payment of Expenses and Taxes.................................. 102
13.6 Successors and Assigns; Participations and Assignments......... 103
13.7 Adjustments; Set-off; Proceeds of Collateral................... 105
13.8 Counterparts................................................... 106
13.9 Severability................................................... 106
13.10 Integration................................................... 106
13.11 GOVERNING LAW................................................. 107
13.12 Submission To Jurisdiction; Waivers........................... 107
13.13 Acknowledgements.............................................. 107
13.14 WAIVERS OF JURY TRIAL......................................... 108
13.15 Consent to Amendment of VDK Foods Agreement................... 108
</TABLE>
ANNEXES:
Annex A Pricing Grid for Revolving Credit Loans and Term Loans
SCHEDULES:
1.1 Commitments, Addresses and Lending Offices
5.1(a) Material Changes - Loan Parties
5.1(b) Material Changes - Aunt Jemima/Celeste
5.4 Consents
5.6 Litigation
5.8 Real Property
6.1(f) Sources and Uses of Funds
6.1(x) Property Subject to Appraisal
8.3(e) Easements, Licenses, Etc.
8.3(g) Existing Liens
8.9(e) Securities Held by Borrower or any Subsidiary
8.11(ix) Affiliate Transactions
<PAGE>
EXHIBITS:
A Form of Chambersburg Mortgage Second Amendment
B Form of Erie Mortgage Second Amendment
C Form of GCA Second Amendment
D Form of Aunt Jemima/Celeste Patent and Trademark Security Agreement
E Form of Subsidiary Lockbox Agreement
F Form of Swing Line Loan Participation Certificate
G Form of VDK Foods Acknowledgement and Consent
H Form of Tranche A Term Note
I Form of Tranche B Term Note
J Form of Tranche C Term Note
K Form of Revolving Credit Note
L Form of Swing Line Note
M Form of Borrowing Certificate
N Form of Assignment and Acceptance
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT, dated as of
July 9, 1996, among VDK HOLDINGS, INC., a Delaware corporation ("Holdings"), VAN
DE KAMP'S, INC., a Delaware corporation (the "Borrower"), the several banks and
other financial institutions from time to time parties to this Agreement
(collectively, the "Lenders"; individually, a "Lender") and THE CHASE MANHATTAN
BANK, N.A., a national banking association, as agent for the Lenders hereunder.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Holdings, the Borrower, the Agent (as defined below) and certain
banks and other financial institutions (the "Existing Lenders") are parties to
the Amended and Restated Credit and Guarantee Agreement, dated as of May 6, 1996
(as amended and waived to the date hereof, the "Existing Credit Agreement"),
pursuant to which the Existing Lenders made loans to, and acquired
participations in letters of credit for the account of, the Borrower to enable
the Borrower to consummate the transactions contemplated by the Asset Purchase
Agreement (as defined below) and the Acquisition Agreement (as defined below);
WHEREAS, the Borrower has entered into an Asset Purchase and Sale
Agreement, dated as of May 15, 1996 (as supplemented by the supplement dated as
of July __, 1996, the "Aunt Jemima/Celeste Acquisition Agreement"), with The
Quaker Oats Company, a New Jersey corporation ("Quaker Oats"), pursuant to which
the Borrower has agreed to purchase, and Quaker Oats has agreed to sell,
substantially all of the assets comprising the Aunt Jemima/Celeste Business (as
defined below), upon the terms and subject to the conditions set forth therein
(the "Aunt Jemima/Celeste Acquisition");
WHEREAS, in connection with the Aunt Jemima/Celeste Acquisition, VDK
Foods, LLC, a Delaware limited liability company ("VDK Foods") and the parent of
Holdings, will issue at least $60,000,000 of additional limited liability
company interests;
WHEREAS, in connection with the Aunt Jemima/Celeste Acquisition, VDK
Foods will make a capital contribution of at least $40,000,000 to Holdings and
make a loan of at least $20,000,000 to Holdings;
WHEREAS, in connection with the Aunt Jemima/Celeste Acquisition, Holdings
will make a capital contribution of at least $40,000,000 to the Borrower;
WHEREAS, in connection with the Aunt Jemima/Celeste Acquisition, the
Borrower is to receive an additional $20,000,000 in cash from loans under a
senior convertible loan (the "Senior Convertible Loan"), which loans will be
guaranteed by Holdings and which guarantee will be cash collateralized by
Holdings;
WHEREAS, the Borrower and Holdings have requested that the Agent, the
Existing Lenders and the New Lenders (as hereinafter defined) amend and restate
the Existing Credit Agreement to, inter alia, provide (i) a $45,000,000 increase
in the Borrower's outstanding Tranche A Term Loan Facility, (ii) a $40,000,000
increase in the Borrower's outstanding Tranche B Term Loan Facility and (iii) a
new Tranche C Term Loan Facility in an aggregate principal amount of $50,000,000
(the "Tranche C Term Loan Facility"), to finance the Aunt
<PAGE>
2
Jemima/Celeste Acquisition, to pay related fees and expenses and to provide for
the working capital requirements of the Aunt Jemima/Celeste Business after the
Aunt Jemima/Celeste Acquisition and the other businesses of the Borrower; and
WHEREAS, the Agent and the Lenders are willing to so amend and restate
the Existing Credit Agreement, but only on the terms and conditions hereof;
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, effective as of the Effective Date (as hereinafter
defined), the parties hereto hereby amend and restate the Existing Credit
Agreement as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect
on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Agent as its prime rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by the Agent in
connection with extensions of credit to debtors); "Base CD Rate" shall mean
the sum of (a) the product of (i) the Three-Month Secondary CD Rate and
(ii) a fraction, the numerator of which is one and the denominator of which
is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors through the public
information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; "C/D Assessment
Rate" shall mean, for any day, the annual assessment rate in effect on such
day which is payable by a member of the Bank Insurance Fund maintained by
the FDIC classified as well-capitalized and within supervisory subgroup "B"
(or a comparable successor assessment risk classification) within the
meaning of 12 C.F.R. (S) 327.4 (or any successor provision) to the FDIC for
the FDIC's insuring time deposits at offices of such institution in the
United States; "C/D Reserve Percentage" shall mean, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of
<PAGE>
3
Governors, for determining the maximum reserve requirement for a Depositary
Institution (as defined in Regulation D of the Board of Governors) in
respect of new non-personal time deposits in Dollars having a maturity of
30 days or more; and "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for the day
of such transactions received by the Agent from three federal funds brokers
of recognized standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Three-Month Secondary CD Rate, the C/D
Assessment Rate, the C/D Reserve Percentage or the Federal Funds Effective
Rate shall be effective as of the opening of business on the effective day
of such change in the Prime Rate, the Three-Month Secondary CD Rate, the
C/D Assessment Rate, the C/D Reserve Percentage or the Federal Funds
Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Acquisition": the collective reference to the Mrs. Paul's Acquisition
and the Shellfish Acquisition.
"Acquisition Agreement": the collective reference to the Mrs. Paul's
Acquisition Agreement and the Shellfish Acquisition Agreement.
"Additional Term Loans": the collective reference to the Additional
Tranche A Term Loans, the Additional Tranche B Term Loans and the Tranche C
Term Loans.
"Additional Term Loan Commitments": the collective reference to the
Additional Tranche A Term Loan Commitments, the Additional Tranche B Term
Loan Commitments and the Tranche C Term Loan Commitments.
"Additional Tranche A Term Loan": as defined in subsection 2.1(a);
collectively, the "Additional Tranche A Term Loans".
"Additional Tranche A Term Loan Commitment": as to any Lender, its
obligation, if any, to make an Additional Tranche A Term Loan to the
Borrower in an amount equal to the amount set forth opposite such Lender's
name in Schedule 1.1 under the heading "Additional Tranche A Term Loan
Commitment", as such amount may be reduced from time to time pursuant to
this Agreement or as such amount may be adjusted from time to time pursuant
to subsection 13.6; collectively, as to all such Lenders, the "Additional
Tranche A Term Loan Commitments".
"Additional Tranche B Term Loan": as defined in subsection 2.1(b);
collectively, the "Additional Tranche B Term Loans".
"Additional Tranche B Term Loan Commitment": as to any Lender, its
obligation, if any, to make an Additional Tranche B Term Loan to the
Borrower in an amount equal
<PAGE>
4
to the amount set forth opposite such Lender's name in Schedule 1.1 under
the heading "Additional Tranche B Term Loan Commitment", as such amount may
be reduced from time to time pursuant to this Agreement or as such amount
may be adjusted from time to time pursuant to subsection 13.6;
collectively, as to all such Lenders, the "Additional Tranche B Term Loan
Commitments".
"Adjustment Date": the first Business Day following receipt by the Agent
of both (i) the financial statements required to be delivered pursuant to
subsection 7.1(a) or 7.1(b), as the case may be, for the most recently
completed fiscal period and (ii) the certificate required to be delivered
pursuant to subsection 7.2(b) with respect to such fiscal period.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"After-Acquired Mortgage Property": any parcel (or adjoining parcels) of
real property (including any leaseholds) acquired by any Loan Party after
the Closing Date.
"Agent": The Chase Manhattan Bank, N.A., together with its affiliates,
as the arranger of the Commitments and as the agent for the Lenders under
this Agreement and the other Loan Documents, and any successor thereto
pursuant to subsection 12.9.
"Aggregate Revolving Credit Outstandings": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Revolving
Credit Lender then outstanding, plus (b) such Revolving Credit Lender's
Revolving Credit Commitment Percentage of all Swing Line Loans made by the
Swing Line Lender then outstanding, provided that for purposes of
calculating Available Revolving Credit Commitments pursuant to Section 3.3
such amount shall be zero, plus (c) such Revolving Credit Lender's
Revolving Credit Commitment Percentage of the L/C Obligations then
outstanding.
"Agreement": the Existing Credit Agreement, as amended and restated by
this Second Amended and Restated Credit and Guarantee Agreement, as further
amended, supplemented or otherwise modified from time to time.
"Applicable Margin": (i) in the case of the Revolving Credit Loans and
the Tranche A Term Loans, 1.50% if such Loans are ABR Loans and 2.50% if
such Loans are Eurodollar Loans, provided that, from and after the first
anniversary of the Effective Date, the Applicable Margin with respect to
Revolving Credit Loans and Tranche A Term Loans will be adjusted, on each
Adjustment Date based upon the Consolidated Cash Interest Expense Ratio
and the ratio of Consolidated Total Debt at the last day of the 12-month
period ended on the date of the financial statements relating to such
Adjustment
<PAGE>
5
Date to Consolidated EBITDA for such period as determined from such
financial statements, to the Applicable Margin set forth on Annex A hereto
opposite the level for which the Consolidated Cash Interest Expense Ratio
as so determined satisfies the criteria on Annex A under the heading
"Consolidated Cash Interest Expense Ratio" and for which the ratio of
Consolidated Total Debt to Consolidated EBITDA as so determined satisfies
the corresponding criteria set forth under the heading "Ratio of
Consolidated Total Debt to Consolidated EBITDA", and provided, further,
that (a) in the event that the financial statements required to be
delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the
related certificate required pursuant to subsection 7.2(b), are not
delivered when due, then if such financial statements are not delivered
prior to the date upon which the resultant Default shall become an Event of
Default, then, effective upon such Default becoming an Event of Default,
during the period from the date upon which such financial statements were
required to be delivered until one Business Day following the date upon
which they actually are delivered, the Applicable Margin with respect to
Revolving Credit Loans and Tranche A Term Loans shall be 1.50%, if such
Loans are ABR Loans, and 2.50%, if such Loans are Eurodollar Loans, and (b)
if on any Adjustment Date, the Consolidated Cash Interest Expense Ratio and
the ratio of Consolidated Total Debt to Consolidated EBITDA as so
determined would result in different Applicable Margins, the higher
Applicable Margin shall govern, (ii) in the case of the Tranche B Term
Loans, 2.00% if such Loans are ABR Loans and 3.00% if such Loans are
Eurodollar Loans and (iii) in the case of the Tranche C Term Loans, 2.25%
if such Loans are ABR Loans and 3.25% if such Loans are Eurodollar Loans.
"Application": an application, in such form as the Issuing Bank may
specify from time to time, requesting the Issuing Bank to open a Letter of
Credit.
"Asset Purchase": the purchase by the Borrower from the Sellers of
substantially all of the assets comprising the Businesses, upon the terms
and subject to the conditions set forth in the Asset Purchase Agreement.
"Asset Purchase Agreement": the Asset Purchase Agreement, dated as of
July 7, 1995, among Pillsbury, Pet and the Borrower.
"Asset Sale": as to any Person, any sale or other disposition (including
any Sale/Leaseback Transaction and any mortgage or lease of real property
other than any mortgage made by such Person in order to finance the
acquisition of additional real property) subsequent to the Closing Date of
any property of such Person.
"Assignee": as defined in subsection 13.6(c).
"Aunt Jemima Business": the Aunt Jemima/Celeste Business, other than the
Celeste Business.
"Aunt Jemima/Celeste Acquisition": as defined in the recitals to this
Agreement.
<PAGE>
6
"Aunt Jemima/Celeste Acquisition Agreement": as defined in the recitals
to this Agreement.
"Aunt Jemima/Celeste Acquisition Documents": collectively, the Aunt
Jemima/Celeste Acquisition Agreement and any other documents effectuating
the Aunt Jemima/Celeste Acquisition.
"Aunt Jemima/Celeste Business": the Business (as defined in the Aunt
Jemima/Celeste Acquisition Agreement).
"Aunt Jemima/Celeste Intellectual Property": as defined in subsection
5.9.
"Aunt Jemima/Celeste Patent and Trademark Security Agreement": the
Patent and Trademark Security Agreement, dated as of the Effective Date,
substantially in the form of Exhibit D, made by the Borrower in favor of
the Agent, as the same may be amended, supplemented or otherwise modified
from time to time.
"Aunt Jemima/Celeste Transition Services Agreement": the Transition
Services Agreement, dated as of July __, 1996, between the Borrower and
Quaker Oats.
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) the
amount of such Revolving Credit Lender's Revolving Credit Commitment at
such time over (b) such Revolving Credit Lender's Aggregate Revolving
Credit Outstandings at such time; collectively, as to all the Revolving
Credit Lenders, the "Available Revolving Credit Commitments".
"Benefitted Lender": as defined in subsection 13.7(a).
"Board of Governors": the Board of Governors of the Federal Reserve
System and any Governmental Authority which succeeds to the powers and
functions thereof.
"Borrower": as defined in the Preamble to this Agreement.
"Borrower Lockbox Agreement": each of (i) the Lockbox Agreement, dated
as of September 19, 1995, among Chemical Bank, the Borrower and the Agent,
and (ii) the Lockbox Agreement, dated as of September 19, 1995, among First
National Bank of Chicago, the Borrower and the Agent, as each may be
amended, supplemented or otherwise modified from time to time
(collectively, the "Borrower Lockbox Agreements").
"Borrower Mortgage": each of (i) the Open-End Mortgage and Security
Agreement, dated as of September 19, 1995, made by the Borrower in favor
of the Agent with respect to property located in Erie, Pennsylvania, as
amended by the Erie Mortgage Amendments, (ii) the Open-End Mortgage and
Security Agreement, dated as of September 19, 1995, made by the Borrower in
favor of the Agent with respect to property located in Chambersburg,
Pennsylvania, as amended by the Chambersburg Mortgage Amendments, and (iii)
each Mortgage to be executed and delivered by the Borrower, substantially
in the
<PAGE>
7
form of the other Borrower Mortgages or in such other form as the Agent
shall reasonably require, with respect to (A) each other parcel of real
property listed on Schedule 5.8 for which the Agent requests a Mortgage and
(B) each parcel of After-Acquired Mortgage Property for which a mortgage is
granted to the Agent pursuant to subsection 7.10, in each case as the same
may be amended, supplemented or otherwise modified from time to time
(collectively, the "Borrower Mortgages").
"Borrower Patent and Trademark Security Agreement": the Patent and
Trademark Security Agreement, dated as of September 19, 1995, made by the
Borrower in favor of the Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Borrower Security Documents": collectively, the Borrower Lockbox
Agreements, the Borrower Mortgages, the Mortgage Amendments, the Borrower
Patent and Trademark Security Agreement, the Mrs. Paul's Patent and
Trademark Security Agreement, the Aunt Jemima/Celeste Patent and Trademark
Security Agreement, the Concentration Account Agreement, the Guarantee and
Collateral Agreement and the GCA Amendments.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.2, 3.2 or 3.8 as a date on which the Borrower requests the
Lenders to make Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"Businesses": the collective reference to the Van de Kamp's Frozen
Seafood Business (as used in the Asset Purchase Agreement) and the Desserts
Business.
"Campbell Soup": Campbell Soup Company, a New Jersey corporation.
"Capital Expenditures": as to any Person for any period, the aggregate
amount paid or accrued by such Person and its Subsidiaries for the rental,
lease, purchase (including by way of the acquisition of securities of a
Person), construction or use of any property during such period, the value
or cost of which, in accordance with GAAP, would appear on such Person's
consolidated balance sheet in the category of property, plant or equipment
at the end of such period, excluding any such expenditure made to restore,
replace or rebuild property to the condition of such property immediately
prior to any damage, loss, destruction or condemnation of such property, to
the extent such expenditure is made with insurance proceeds or condemnation
awards relating to any such damage, loss, destruction or condemnation,
provided that Capital Expenditures shall not include expenditures up to an
aggregate amount equal to the portion of the purchase price for any
Permitted Acquisition that would otherwise be treated as a Capital
Expenditure.
"Capital Stock": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and
all equivalent ownership
<PAGE>
8
interests in a Person (other than a corporation) and any and all warrants
or options to purchase any of the foregoing.
"Cash Collateral": as defined in subsection 9.1.
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States Government, or any agency or
instrumentality thereof, having maturities of not more than one year from
the date of acquisition; (b) marketable general obligations issued by any
state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition
thereof, having a credit rating of "A" or better from either Standard &
Poor's Ratings Group or Moody's Investors Service, Inc.; (c) certificates
of deposit, time deposits, eurodollar time deposits, overnight bank
deposits or bankers' acceptances having maturities of not more than one
year from the date of acquisition thereof of any Lender, or of any domestic
commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least A or the equivalent thereof by Standard &
Poor's Ratings Group, or A or the equivalent thereof by Moody's Investors
Service, Inc., and having capital and surplus in excess of $500,000,000;
(d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (a), (b) and (c)
entered into with any bank meeting the qualifications specified in clause
(c) above; (e) commercial paper rated at the time of acquisition thereof at
least A-2 or the equivalent thereof by Standard & Poor's Ratings Group or
P-2 or the equivalent thereof by Moody's Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of
investments, and in either case maturing within 270 days after the date of
acquisition thereof; (f) interests in any investment company which invests
solely in instruments of the type specified in clauses (a) through (e)
above; and (g) other investment instruments approved in writing by the
Required Lenders and offered by any Lender or by any financial institution
which has a combined capital and surplus of not less than $100,000,000.
"Celeste Business": the frozen pizza business that the Borrower purchased
from Quaker Oats pursuant to the Aunt Jemima/Celeste Acquisition Agreement.
"Celeste Sale": any sale or series of sales by the Borrower of all or
substantially all of the Celeste Business.
"Chambersburg Mortgage Amendments": the collective reference to the
Chambersburg Mortgage First Amendment and the Chambersburg Mortgage Second
Amendment.
"Chambersburg Mortgage First Amendment": the First Amendment, dated as
of May 6, 1996, to the Open-End Mortgage and Security Agreement, dated as
of September 19, 1995, made by the Borrower in favor of the Agent with
respect to property located in Chambersburg, Pennsylvania.
<PAGE>
9
"Chambersburg Mortgage Second Amendment": the Second Amendment, dated as
of the Effective Date, to the Open-End Mortgage and Security Agreement,
dated as of September 19, 1995, made by the Borrower in favor of the Agent
with respect to property located in Chambersburg, Pennsylvania, which
amendment shall be substantially in the form of Exhibit A.
"Chase": The Chase Manhattan Bank, N.A., a national banking association.
"Closing Date": September 19, 1995.
"Code": the Internal Revenue Code of 1986, as amended from time to time.
"Collateral": all assets of the Loan Parties, now owned or hereinafter
acquired, upon which a Lien is purported to be created by any Security
Document.
"Commercial Letter of Credit": as defined in subsection 3.10(b)(i)(2).
"Commitment": with respect to any Lender, the collective reference to
such Lender's Tranche A Term Loan Commitment, Tranche B Term Loan
Commitment, Tranche C Term Loan Commitment and/or Revolving Credit
Commitment; collectively, as to all the Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, the percentage
which (i) the sum of (a) such Lender's then Available Revolving Credit
Commitment and other unused Commitments (other than Revolving Credit
Commitments) plus (b) such Lender's Loans (other than Swing Line Loans)
then outstanding plus (c) the product of such Lender's Revolving Credit
Commitment Percentage times the sum of (I) the Swing Line Loans then
outstanding and (II) the L/C Obligations then outstanding then constitutes
of (ii) the sum of (x) the aggregate Available Revolving Credit Commitments
of the Revolving Credit Lenders and the other unused Commitments of all the
Lenders (other than Revolving Credit Commitments) plus (y) the aggregate
principal amount of Loans of all the Lenders then outstanding plus (z) the
aggregate Revolving Credit L/C Obligations of all the Lenders then
outstanding.
"Commonly Controlled Entity": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414(b) or (c) of the
Code or, solely for purposes of determining liability under Section 412 of
the Code, which is treated as a single employer under Section 414 (b), (c),
(m) or (o) of the Code.
"Concentration Account Agreement": the Concentration Account Agreement,
dated as of September 19, 1995, between the Borrower and the Agent, as the
same may be amended, supplemented or otherwise modified from time to time.
<PAGE>
10
"Consolidated Cash Interest Expense": for any period, Consolidated
Interest Expense paid in cash during such period.
"Consolidated Cash Interest Expense Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Cash Interest
Expense for such period.
"Consolidated Current Assets": as to any Person at any time, the current
assets (other than cash and Cash Equivalents) of such Person and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities": as to any Person at any time, the
current liabilities of such Person and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, but excluding all short-term
Indebtedness for borrowed money and the current portion of any long-term
Indebtedness of such Person or its Subsidiaries, in each case to the extent
otherwise included therein, and any current taxes payable and any current
portion of deferred taxes.
"Consolidated EBITDA": for any period, the Consolidated Net Income for
such period, plus, to the extent deducted in determining such Consolidated
Net Income, (i) Consolidated Interest Expense, (ii) depreciation, (iii)
depletion, (iv) amortization, (v) all Federal, state, local and foreign
income taxes, (vi) all other non-cash expenses and (vii) any extraordinary
and unusual losses, and, minus, to the extent added in determining such
Consolidated Net Income, (i) any non-cash income or non-cash gains and (ii)
any extraordinary and unusual gains, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Fixed Charges": for any period, the sum of (i)
Consolidated Cash Interest Expense, (ii) scheduled amortization of
Indebtedness of the Borrower and its Subsidiaries for such period and
discount or premium relating to any such Indebtedness for such period,
whether expensed or capitalized, (iii) cash taxes and (iv) Capital
Expenditures, in each case determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense": for any period, the net interest
expense of the Borrower and its Subsidiaries for such period (including any
interest income during such period) as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Net Income": for any period, the net income of the
Borrower and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, but excluding from the
determination of Consolidated Net Income (without duplication) (a) the
income (or loss) of any Person in which any other Person (other than the
Borrower or any of the Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid in
cash to the Borrower or any of its Subsidiaries by such Person during such
period and (b) the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary of the Borrower or is merged
<PAGE>
11
into or consolidated with the Borrower or any of its Subsidiaries or the
date such Person's assets are acquired by the Borrower or any of its
Subsidiaries.
"Consolidated Total Debt": at any date of determination, all Indebtedness
of the Borrower and its Subsidiaries outstanding at such date of
determination as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Working Capital": the excess of Consolidated Current Assets
over Consolidated Current Liabilities.
"Contractual Obligation": as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking
to which such Person is a party or by which it or any of its property is
bound.
"CSC": CSC Brands, Inc., a Delaware corporation and an affiliate of
Campbell Soup.
"CSI": Chase Securities Inc., a Delaware corporation.
"Currency Rate Protection Agreements": as to any Person, all foreign
exchange contracts, currency swap agreements or other similar agreements or
arrangements entered into in the ordinary course of business by such Person
designed to protect such Person against fluctuations in currency values.
"Dartford": Dartford Partnership L.L.C., a Delaware limited liability
company.
"Default": any of the events specified in Section 11, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Desserts Business": as defined in the Asset Purchase Agreement.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Effective Date": the date (on or before July 31, 1996) on which the
conditions precedent set forth in subsection 6.1 shall be satisfied or
waived.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning the protection of the environment or the
protection of human health as it relates to the protection of the
environment, as now or may at any time hereafter be in effect.
"Environmental Permits": all permits, licenses, registrations,
notifications, exemptions, and other authorizations required under
Environmental Laws.
<PAGE>
12
"Equity Interest": Capital Stock and all warrants, options or other
rights to acquire Capital Stock, (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Erie Mortgage Amendments": the collective reference to the Erie Mortgage
First Amendment and the Erie Mortgage Second Amendment.
"Erie Mortgage First Amendment": the First Amendment, dated as of May 6,
1996, to the Open-End Mortgage and Security Agreement, dated as of
September 19, 1995, made by the Borrower in favor of the Agent with respect
to property located in Erie, Pennsylvania.
"Erie Mortgage Second Amendment": the Second Amendment, dated as of the
Effective Date, to the Open-End Mortgage and Security Agreement, dated as
of September 19, 1995, made by the Borrower in favor of the Agent with
respect to property located in Erie, Pennsylvania, which amendment shall be
substantially in the form of Exhibit B.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board of
Governors) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
rate at which Chase is offered Dollar deposits at or about 10:00 A.M., New
York City time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar and foreign
currency and exchange operations in respect of its Eurodollar Loans are
then being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of its Eurodollar Loan to be outstanding during such Interest
Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
<PAGE>
13
Eurodollar Base Rate
-----------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 11, provided
that all requirements for the giving of notice, the lapse of time, or both,
and any other conditions, have been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess of
(a) the sum, without duplication, of (i) Consolidated EBITDA for such
fiscal year, (ii) the amount of any refund received by the Borrower and its
Subsidiaries during such fiscal year on taxes paid by the Borrower and its
Subsidiaries, (iii) cash dividends, cash interest and other similar cash
payments received by the Borrower during such fiscal year in respect of
investments to the extent not included in Consolidated Net Income to
determine Consolidated EBITDA for such fiscal year, (iv) extraordinary cash
gains to the extent subtracted or otherwise not included in Consolidated
EBITDA for such fiscal year and (v) cash generated (if any) by the decrease
(if any) in Consolidated Working Capital of the Borrower for such fiscal
year, over (b) the sum, without duplication, of (i) the aggregate amount of
cash Capital Expenditures made by the Borrower and its Subsidiaries during
such fiscal year and permitted hereunder, (ii) the aggregate amount of all
reductions of the Revolving Credit Commitments (to the extent such
reductions are accompanied by prepayment of Revolving Credit Loans, Swing
Line Loans and/or L/C Obligations) or payments or prepayments of the Term
Loans during such fiscal year other than pursuant to subsection 4.1(b) or
4.1(c), (iii) the aggregate amount of payments of principal in respect of
any Indebtedness (other than under this Agreement) permitted hereunder
during such fiscal year, (iv) cash interest expense of the Borrower and its
Subsidiaries for such fiscal year, (v) taxes actually paid in such fiscal
year or to be paid in the subsequent fiscal year on account of such fiscal
year to the extent added to Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year, (vi) extraordinary cash losses to
the extent added to Consolidated EBITDA for such fiscal year, (vii) the
aggregate amount of cash used for Permitted Acquisitions made by the
Borrower and its Subsidiaries during such fiscal year pursuant to
subsection 8.9(i), (viii) dividends or other direct payments paid by the
Borrower to or for the benefit of Holdings to the extent permitted by
subsection 8.7 to the extent not subtracted in the determination of
Consolidated Net Income of the Borrower for such fiscal year and (ix) the
increase (if any) in Consolidated Working Capital of the Borrower for such
fiscal year.
"Excess Cash Flow Percentage": 75%, provided that, commencing with the
Borrower's fiscal year ending June 30, 1999, so long as (i) the
Consolidated Cash Interest Expense Ratio for the period of four consecutive
fiscal quarters ended the last day of the fiscal quarter immediately
preceding the date of such prepayment exceeds 2.25 to 1.00 and (ii) the
ratio of Consolidated Total Debt at the last day of the fiscal quarter
immediately preceding the date of such prepayment to Consolidated EBITDA
for the period of four consecutive fiscal quarters ending on such date is
less than 3.75 to 1.00, the Excess Cash Flow Percentage with respect to
Term Loans and Revolving Credit Commitments shall be 50%.
<PAGE>
14
"Existing Credit Agreement": as defined in the recitals to this
Agreement.
"Existing Lenders": as defined in the recitals to this Agreement.
"Existing Tranche A Term Loans": as defined in subsection 2.1(a).
"Existing Tranche B Term Loans": as defined in subsection 2.1(b).
"Existing Term Loans": the collective reference to the Existing Tranche A
Term Loans and the Existing Tranche B Term Loans.
"Extension of Credit": with respect to any Lender, (a) the making of a
Loan by such Lender and (b) if such Lender is a Revolving Credit Lender,
the issuance of a Letter of Credit; with respect to all the Lenders, the
"Extensions of Credit".
"FDIC": the Federal Deposit Insurance Corporation and any Governmental
Authority which succeeds to the powers and functions thereof.
"Federal Funds Effective Rate": as defined in the definition of ABR.
"Fenway": Fenway Partners Capital Fund, L.P., a Delaware limited
partnership.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Foreign Subsidiary": any Subsidiary of the Borrower organized under the
laws of any jurisdiction outside the United States of America.
"Funded Indebtedness": all Indebtedness of the Borrower under this
Agreement and the Senior Subordinated Note Indenture.
"GAAP": generally accepted accounting principles in the United States of
America in effect from time to time (subject to subsection 1.2(e)).
"GCA Amendments": the collective reference to the GCA First Amendment
and the GCA Second Amendment.
"GCA First Amendment": the First Amendment, dated as of May 6, 1996, to
the Guarantee and Collateral Agreement, dated as of September 19, 1995,
made by Holdings, the Borrower and each Subsidiary in favor of the Agent.
"GCA Second Amendment": the Second Amendment, dated as of the Effective
Date, to the Guarantee and Collateral Agreement, dated as of September 19,
1995, made by
<PAGE>
15
Holdings, the Borrower and each Subsidiary in favor of the Agent, which
amendment shall be substantially in the form of Exhibit C.
"Governmental Authority": 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.
"Guarantee": the guarantee contained in Section 10 or the Guarantee and
Collateral Agreement; collectively, the "Guarantees".
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement, dated as of September 19, 1995, made by Holdings, the Borrower
and each Subsidiary in favor of the Agent, as amended by the GCA
Amendments, and as the same may be further amended, supplemented or
otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "Guaranteeing Person"), any
obligation of (a) the Guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit) to induce the
creation of which the Guaranteeing Person has issued a reimbursement,
counter indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, lease, dividend or other obligation
(the "Primary Obligations") of any other third Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of the Guaranteeing Person, whether or not
contingent, (i) to purchase any such Primary Obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such Primary Obligation
or (2) to maintain working capital or equity capital of the Primary Obligor
or otherwise to maintain the net worth or solvency of the Primary Obligor,
(iii) 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 (iv)
otherwise to assure or hold harmless the owner of any such Primary
Obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any Guaranteeing Person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount of the
Primary Obligation in respect of which such Guarantee Obligation is made
and (b) the maximum amount for which such Guaranteeing Person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such Primary Obligation and the maximum amount for which
such Guaranteeing Person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
Guaranteeing Person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.
"Guarantors": Holdings and each Subsidiary (other than Foreign
Subsidiaries) of the Borrower.
<PAGE>
16
"Hazardous Materials": any petroleum (including crude oil or any fraction
thereof) or petroleum products, polychlorinated biphenyls, urea-
formaldehyde insulation, asbestos and asbestos-containing materials,
pollutants, contaminants, and all other materials and substances including
but not limited to radioactive materials regulated pursuant to any
Environmental Laws or that could result in liability under any
Environmental Law.
"Holdings": as defined in the Preamble to this Agreement.
"Indebtedness": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities
incurred in the ordinary course of business, payable in accordance with
customary practices and not more than 90 days past due, unless being
contested in good faith by appropriate proceedings), (b) any other
indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (c) all obligations of such Person under Financing
Leases, (d) all obligations of such Person under Rate Protection
Agreements, (e) all obligations of such Person in respect of letters of
credit (whether or not drawn), acceptances and similar obligations issued
or created for the account of such Person (other than Letters of Credit),
and (f) all indebtedness of others of the types described in (a) through
(e) above secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the
payment thereof (the amount of such indebtedness with respect to such
Person being deemed to be the lesser of the value of such property or the
amount of indebtedness of others so secured).
"Information Memorandum": as defined in subsection 5.19.
"Insolvency": with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": as defined in subsection 5.9.
"Interest Payment Date": (a) as to ABR Loans, the last day of each
March, June, September and December, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest
Period and (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or conversion
date, as the case may be, with respect to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and
<PAGE>
17
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Business Days prior
to the last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;
(2) no Interest Period that would otherwise extend beyond the
Termination Date, in the case of Revolving Credit Loans or Tranche A Term
Loans, beyond the Tranche B Term Loan Termination Date, in the case of
the Tranche B Term Loans, or beyond the Tranche C Term Loan Termination
Date, in the case of the Tranche C Term Loans, shall be selected by the
Borrower;
(3) any Interest Period pertaining to a Eurodollar Loan that begins on
the last Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month;
and
(4) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period
for such Eurodollar Loan.
"Interest Rate Protection Agreements": as to any Person, all interest
rate swaps, caps or collar agreements or similar arrangements entered into
by such Person providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally or
under specific contingencies.
"Investment": as defined in subsection 8.9.
"Investors": collectively, Dartford, Fenway, National Sun Industries,
UBS, Thomas O. Ellinwood, Thomas J. Youngerman, C. Renee Sloan and Olafur
Gudmundsson and any Permitted Transferee of Dartford, Fenway, National Sun
Industries or UBS.
"Issuing Bank": Chase or any of its Affiliates, in its capacity as
issuer of any Letter of Credit.
"L/C Commitment": $7,500,000.
<PAGE>
18
"L/C Fee Payment Date": the last day of each March, June, September and
December.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not been reimbursed pursuant to subsection 3.14.
"L/C Participants": collectively, all the Revolving Credit Lenders other
than the Issuing Bank.
"Lenders": as defined in the Preamble to this Agreement.
"Letters of Credit": collectively, Commercial Letters of Credit and
Standby Letters of Credit.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Financing Lease having substantially the same economic effect as
any of the foregoing).
"Limited Liability Interest": a limited liability company interest of
VDK Foods.
"Loan": any Tranche A Term Loan, Tranche B Term Loan, Tranche C Term
Loan, Revolving Credit Loan or Swing Line Loan; collectively, the "Loans".
"Loan Documents": this Agreement, any Notes, the Guarantees, the
Applications, the Security Documents, the VDK Foods Agreement and the VDK
Foods Acknowledgement and Consent.
"Loan Participants": as defined in subsection 13.6(b).
"Loan Parties": the Borrower, Holdings, VDK Foods and each Subsidiary of
the Borrower which is a party to a Loan Document.
"Lockbox Agreements": collectively, the Borrower Lockbox Agreements and
any Subsidiary Lockbox Agreements.
"Material Adverse Effect": a material adverse effect on (a) the Aunt
Jemima/Celeste Acquisition, (b) the business, assets, operations, property
or condition (financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole or (c) the validity or enforceability of this Agreement or
any of the other Loan Documents or the rights or remedies of the Agent or
the Lenders hereunder or thereunder.
<PAGE>
19
"Mortgage Amendments": collectively, the Chambersburg Mortgage
Amendments and the Erie Mortgage Amendments.
"Mortgaged Property": the real properties owned or leased by the Loan
Parties as specified on Schedule 5.8 that are subject to a Mortgage.
"Mortgages": collectively, the Borrower Mortgages and the Subsidiary
Mortgages.
"Mrs. Paul's Acquisition": the purchase of substantially all of the
assets comprising the Mrs. Paul's Business upon the terms and subject to
the conditions set forth in the Mrs. Paul's Acquisition Agreement.
"Mrs. Paul's Acquisition Agreement": the Asset Purchase Agreement, dated
as of January 17, 1996, between the Borrower and Shellfish.
"Mrs. Paul's Business": as defined in the Shellfish Acquisition
Agreement.
"Mrs. Paul's Co-Pack Agreement": the Co-Pack Agreement, dated as of May
6, 1996, between the Borrower and Campbell Soup.
"Mrs. Paul's Intellectual Property": as defined in subsection 5.9.
"Mrs. Paul's Patent and Trademark Security Agreement": the Patent and
Trademark Security Agreement, dated as of May 6, 1996, made by the Borrower
in favor of the Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
"Mrs. Paul's Transition Services Agreement": the Transition Services
Agreement, dated as of May 6, 1996, between the Borrower and Campbell Soup.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"National Sun Industries": National Sun Industries, Inc., a North Dakota
corporation.
"Net Proceeds": with respect to any Person, (a) with respect to any Asset
Sale by such Person, the cash proceeds (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received) of such Asset Sale net of (i)
attorneys' fees, accountants' fees, investment banking fees, survey costs,
title insurance premiums, and related search and recording charges,
transfer taxes, deed or mortgage recording taxes, required debt payments
(other than pursuant hereto), other customary expenses, amounts required to
be applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset which is the subject of such Asset Sale
(other than any Lien in favor of the Agent for the benefit of the Lenders)
and brokerage, consultant and other customary fees actually incurred in
connection therewith
<PAGE>
20
and (ii) taxes paid or payable as a result thereof and (b) with respect to
any issuance of equity securities or the incurrence of any Indebtedness by
such Person subsequent to the Closing Date, the cash proceeds received from
such issuance or incurrence net of investment banking fees, legal fees,
accountants fees, underwriting discounts and commissions and other
customary fees and expenses and other reasonable costs and expenses
actually incurred in connection therewith.
"New Lender": any Lender which (i) is a party to this Agreement on the
Effective Date which is not an Existing Lender or (ii) is an Existing
Lender having an Additional Tranche A Term Loan Commitment, an Additional
Tranche B Term Loan Commitment or a Tranche C Term Loan Commitment.
"New Lending Office": as defined in subsection 4.10(b).
"Non-Excluded Taxes": as defined in subsection 4.10(a).
"Notes": collectively, the Swing Line Note, Revolving Credit Notes,
Tranche A Term Notes, Tranche B Term Notes and Tranche C Term Notes, if
any.
"Obligations": the unpaid principal of and interest on the Loans and all
other obligations and liabilities of the Borrower to the Agent and the
Lenders (including, without limitation, interest accruing at the then
applicable rate provided in this Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided in this
Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, the other Loan Documents, any Rate Protection Agreement entered
into by the Borrower with any Lender or any Affiliate of any Lender
permitted under subsection 7.11, any cash management services agreement
entered into by the Borrower with any Lender or any Affiliate of any Lender
or any other document made, delivered or given in connection herewith or
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to
the Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of this Agreement, any other Loan Document or any
such Rate Protection Agreement or cash management services agreement
entered into by the Borrower with any Lender or any Affiliate of any
Lender).
"Obsolete Property": any property of the Borrower or any of its
Subsidiaries which is obsolete, outdated or worn out or the useful life of
which has ended, in each case in the good faith determination of the
Borrower.
<PAGE>
21
"PBGC": the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA and any Governmental Authority which
succeeds to the powers and functions thereof.
"Permitted Acquisition": any acquisition of all or substantially all the
assets of, or shares or other Equity Interests in, a Person or division or
line of business of a Person or other significant assets of a Person if
immediately after giving effect thereto: (a) no Default or Event of
Default shall have occurred and be continuing or would result therefrom,
(b) all transactions related thereto shall be consummated in all material
respects in accordance with applicable laws, (c) all actions required to be
taken, if any, with respect to such acquired or newly formed Subsidiary
under subsection 7.10 shall have been taken and (d)(i) the Borrower shall
be in compliance, on a pro forma basis after giving effect to such
acquisition or formation, with the covenants contained in subsection 8.1
recomputed as at the last day of the most recently ended fiscal quarter of
the Borrower as if such acquisition had occurred on the first day of each
relevant period for testing such compliance, and the Borrower shall have
delivered to the Agent an officers' certificate to such effect, together
with all relevant financial information for such Subsidiary or assets (to
the extent reasonably available), and (ii) after giving effect to such
transaction, any acquired or newly formed Subsidiary shall not be liable
for any Indebtedness (except for Indebtedness permitted by subsection 8.2).
"Permitted Acquisition Amount": $5,000,000, provided that (i) so long as
(A) the Consolidated Cash Interest Expense Ratio for the period of four
consecutive fiscal quarters ended the last day of the fiscal quarter
immediately preceding the date of such Permitted Acquisition exceeds 2.00
to 1.00 and (B) the ratio of Consolidated Total Debt at the last day of the
fiscal quarter immediately preceding the date of such Permitted Acquisition
to Consolidated EBITDA for the period of four consecutive fiscal quarters
ending on such date is less than 4.5 to 1.00, the Permitted Acquisition
Amount shall be $10,000,000, and (ii) so long as (A) the Consolidated Cash
Interest Expense Ratio for the period of four consecutive fiscal quarters
ended the last day of the fiscal quarter immediately preceding the date of
such Permitted Acquisition exceeds 2.75 to 1.00 and (B) the ratio of
Consolidated Total Debt at the last day of the fiscal quarter immediately
preceding the date of such Permitted Acquisition to Consolidated EBITDA for
the period of four consecutive fiscal quarters ending on such date is less
than 3.5 to 1.00, the Permitted Acquisition Amount shall be $15,000,000.
"Permitted Transferee": with respect to Dartford, Fenway, National Sun
Industries or UBS, any Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with, Dartford, Fenway,
National Sun Industries or UBS, respectively.
"Person": an individual, partnership, corporation, business trust, joint
stock company, limited liability company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Pet": Pet Incorporated, a Delaware corporation.
<PAGE>
22
"Pet Intellectual Property": as defined in the Asset Purchase Agreement.
"Pillsbury": The Pillsbury Company, a Delaware corporation.
"Plan": at a particular time, any employee benefit plan which is covered
by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"Prepayment Account": as defined in subsection 4.1(d).
"Primary Obligations": as defined in the definition of "Guarantee
Obligation" contained in this subsection 1.1.
"Primary Obligor": as defined in the definition of "Guarantee
Obligation" contained in this subsection 1.1.
"Properties": as defined in subsection 5.17.
"Quaker Oats": as defined in the recitals to this Agreement.
"Quaker Oats Financial Statements": as defined in subsection 5.1(b).
"Rate Protection Agreements": collectively, any Currency Rate Protection
Agreements and Interest Rate Protection Agreements.
"Refunded Swing Line Loans": as defined in subsection 3.8(b).
"Register": as defined in subsection 13.6(d).
"Regulation D": Regulation D of the Board of Governors as in effect from
time to time.
"Regulation G": Regulation G of the Board of Governors as in effect from
time to time.
"Regulation H": Regulation H of the Board of Governors as in effect from
time to time.
"Regulation U": Regulation U of the Board of Governors as in effect from
time to time.
"Regulation X": Regulation X of the Board of Governors as in effect from
time to time.
<PAGE>
23
"Reimbursement Obligation": the obligation of the Borrower to reimburse
the Issuing Bank pursuant to subsection 3.14(a) for amounts drawn under
Letters of Credit.
"Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of
ERISA.
"Replacement Asset": any property acquired by the Borrower or any of its
Subsidiaries subsequent to the Closing Date which replaces Obsolete
Property of the same type and utility as the property acquired.
"Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. (S)
2615.
"Required Lenders": at any time, Lenders the Commitment Percentages of
which aggregate more than 50%.
"Required Transaction Lenders": at any time of determination thereof,
each New Lender and each Lender at such time under the Existing Credit
Agreement.
"Requirement of Law": as to any Person, the Certificate of Incorporation
and 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 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.
"Responsible Officer": as to any Person, the chief executive officer and
the president of such Person or, with respect to financial matters, the
chief financial officer of such Person or, in either case, such other
executive officers as may be designated from time to time by such Person in
writing to the Agent.
"Restricted Payments": as defined in subsection 8.7.
"Revolving Credit Commitment": with respect to any Lender, its
obligation to make Revolving Credit Loans and/or issue or participate in
Letters of Credit issued on behalf of the Borrower and/or make or
participate in Swing Line Loans made to the Borrower in an amount not to
exceed the amount set forth opposite such Lender's name on Schedule 1.1
under the heading "Revolving Credit Commitment", as such amount may be
reduced from time to time pursuant to this Agreement or as such amount may
be adjusted from time to time pursuant to subsection 13.6; collectively, as
to all such Lenders, the "Revolving Credit Commitments".
"Revolving Credit Commitment Percentage": as to any Revolving Credit
Lender at any time, the percentage which (i) the sum of (a) such Revolving
Credit Lender's then unused Revolving Credit Commitment plus (b) such
Revolving Credit Lender's Revolving Credit Loans then outstanding plus (c)
the product of the percentage of the Revolving
<PAGE>
24
Credit Commitments of all the Revolving Credit Lenders then constituted by
such Revolving Credit Lender's Revolving Credit Commitment times the sum of
(I) the Swing Line Loans then outstanding and (II) the L/C Obligations then
outstanding then constitutes of (ii) the sum of (w) the aggregate
outstanding then unused Revolving Credit Commitments of all the Revolving
Credit Lenders plus (x) the aggregate principal amount of Revolving Credit
Loans of all the Revolving Credit Lenders then outstanding plus (y) the
aggregate L/C Obligations then outstanding plus (z) the Swing Line Loans
then outstanding.
"Revolving Credit Commitment Period": the period from and including the
Closing Date to but not including the Termination Date or such earlier date
on which the Revolving Credit Commitments shall terminate as provided
herein.
"Revolving Credit Fee Percentage": as defined in subsection 3.12(b).
"Revolving Credit Lender": any Lender with an unused Revolving Credit
Commitment hereunder and/or any Revolving Credit Loans outstanding
hereunder; collectively, the "Revolving Credit Lenders".
"Revolving Credit Loans": as defined in subsection 3.1(a).
"Revolving Credit Note": as defined in subsection 3.5(e).
"Sale/Leaseback Transaction": as defined in subsection 8.12.
"SEC": the Securities and Exchange Commission or any Governmental
Authority which succeeds to the powers and functions thereof.
"Security Documents": collectively, the Concentration Account Agreement,
the Guarantee and Collateral Agreement, the GCA Amendments, the Lockbox
Agreements, the Mortgages, the Mortgage Amendments, the Borrower Patent and
Trademark Security Agreement, the Mrs. Paul's Patent and Trademark Security
Agreement, the Aunt Jemima/Celeste Patent and Trademark Security Agreement
and all other security documents hereafter delivered to the Agent granting
a Lien on any asset or assets of any Person to secure the Obligations or to
secure any guarantee of any such Obligations and, including, without
limitation, any such document delivered pursuant to subsection 7.10.
"Sellers": the collective reference to Pillsbury and Pet.
"Senior Convertible Loan": as defined in the recitals to this Agreement.
"Senior Convertible Loan Agreement": the Senior Convertible Loan Credit
and Guarantee Agreement, dated as of July 9, 1996, among Holdings, the
Borrower, the several banks and other financial institutions from time to
time parties thereto and Chase, as agent, as the same may be amended,
supplemented or otherwise modified from time to time.
<PAGE>
25
"Senior Subordinated Note Indenture": the Indenture, dated as of
September 15, 1995, between the Borrower and Harris Trust and Savings Bank,
as trustee, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with subsection 8.10.
"Senior Subordinated Notes": $100,000,000 of the Borrower's 12% Senior
Subordinated Notes due 2005.
"Shellfish": Shellfish Acquisition Company, LLC, a Delaware limited
liability company.
"Shellfish Acquisition": the purchase of substantially all of the assets
comprising the Mrs. Paul's Business upon the terms and subject to the
conditions set forth in the Shellfish Acquisition Agreement.
"Shellfish Acquisition Agreement": the Asset Purchase and Sale
Agreement, dated as of January 17, 1996, between Shellfish and Campbell
Soup.
"Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount that
will be required to pay all "liabilities of such Person, contingent or
otherwise", as of such date (as such quoted terms are determined in
accordance with applicable Federal and state laws governing determinations
of the insolvency of debtors) as such debts become absolute and matured,
(b) such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (c) such Person
will be able to pay its debts as they mature, taking into account the
timing of and amounts of cash to be received by such Person and the timing
of and amounts of cash to be payable on or in respect of indebtedness of
such Person; in each case after giving effect to (A) as of the Effective
Date the making of the extensions of credit to be made on the Effective
Date and the application of the proceeds of such extensions of credit and
(B) on any date after the Effective Date, the making of any extension of
credit to be made on such date and the application of the proceeds of such
extension of credit. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (y) right to an equitable remedy
for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
"Standby Letter of Credit": as defined in subsection 3.10(b)(i)(1).
<PAGE>
26
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Subsidiary Lockbox Agreement": each Lockbox Agreement executed and
delivered by a Subsidiary pursuant to the Guarantee and Collateral
Agreement, substantially in the form of Exhibit E or in such other form as
shall be reasonably acceptable to the Agent, as the same may be amended,
supplemented or otherwise modified from time to time (collectively, the
"Subsidiary Lockbox Agreements").
"Subsidiary Mortgage": each Mortgage to be executed and delivered by a
Subsidiary, substantially in the form of the Borrower Mortgages, with such
changes as the Agent shall deem necessary or desirable in order (i) to
provide that such Subsidiary is the Mortgagor, (ii) to comply with and/or
provide for specific laws of the jurisdictions in which the property to be
encumbered is located, and (iii) to assure that the Agent has a perfected
Lien on the property to be encumbered thereby securing such Subsidiary's
Obligations (as such term is defined in the Guarantee and Collateral
Agreement), or in such other form as the Agent shall reasonably require,
with respect to (i) each parcel of real property listed on Schedule 5.8 for
which the Agent requests a Mortgage and (ii) each parcel of After-Acquired
Mortgage Property for which a mortgage is granted to the Agent pursuant to
subsection 7.10, in each case as the same may be amended, supplemented or
otherwise modified from time to time (collectively, the "Subsidiary
Mortgages").
"Swing Line Commitment": the obligation of the Swing Line Lender to make
Swing Line Loans pursuant to subsection 3.6 in an aggregate amount at any
one time outstanding not to exceed $5,000,000.
"Swing Line Lender": as defined in subsection 3.6.
"Swing Line Loan Participation Certificate": a certificate substantially
in the form of Exhibit F.
---------
"Swing Line Loans": as defined in subsection 3.6.
"Swing Line Note": as defined in subsection 3.7(e).
"Swing Line Participation Amount": as defined in subsection 3.9(b).
<PAGE>
27
"Term Loan Lender": any Lender with an unused Additional Term Loan
Commitment hereunder and/or any Term Loans outstanding hereunder;
collectively, the "Term Loan Lenders".
"Term Loans": the collective reference to the Additional Term Loans and
the Existing Term Loans.
"Term Note": as defined in subsection 2.4(d); collectively, the "Term
Notes".
"Termination Date": September 19, 2001.
"Tranche": collectively, Eurodollar Loans the then current Interest
Periods with respect to all of which begin on the same date and end on the
same later date (whether or not such Loans shall originally have been made
on the same day); Tranches may be identified as "Eurodollar Tranches".
"Tranche A Term Loans": as defined in subsection 2.1(a); collectively,
the "Tranche A Term Loans".
"Tranche A Term Loan Commitment": as to any Lender, its obligation to
make an Additional Tranche A Term Loan to the Borrower in an amount equal
to the amount set forth opposite such Lender's name in Schedule 1.1 under
the heading "Additional Tranche A Term Loan Commitment" and/or to maintain
its Existing Tranche A Term Loans as provided in subsection 2.1(a), as such
amounts may be reduced from time to time pursuant to this Agreement or as
such amounts may be adjusted from time to time pursuant to subsection 13.6;
collectively, as to all such Lenders, the "Tranche A Term Loan
Commitments".
"Tranche A Term Loan Commitment Percentage": as to any Tranche A Term
Loan Lender at any time, the percentage of the aggregate Tranche A Term
Loan Commitments then constituted by such Tranche A Term Loan Lender's
Tranche A Term Loan Commitments (or, after the Tranche A Term Loans are
made, the percentage of the aggregate Tranche A Term Loans then constituted
by such Tranche A Term Loan Lender's Tranche A Term Loans).
"Tranche A Term Loan Lender": any Lender with an unused Tranche A Term
Loan Commitment hereunder and/or any Tranche A Term Loans outstanding
hereunder; collectively, the "Tranche A Term Loan Lenders".
"Tranche A Term Loan Termination Date": September 19, 2001 or, if such
date is not a Business Day, the Business Day next preceding such date.
"Tranche A Term Note": as defined in subsection 2.4(d); collectively,
the "Tranche A Term Notes".
<PAGE>
28
"Tranche B Term Loan": as defined in subsection 2.1(b); collectively,
the "Tranche B Term Loans".
"Tranche B Term Loan Commitment": as to any Tranche B Term Loan Lender,
its obligation to make an Additional Tranche B Term Loan to the Borrower in
an amount equal to the amount set forth opposite such Lender's name in
Schedule 1.1 under the heading "Additional Tranche B Term Loan Commitment"
and/or to maintain its Existing Tranche B Term Loans as provided in
subsection 2.1(b), as such amounts may be reduced from time to time
pursuant to this Agreement or as such amounts may be adjusted from time to
time pursuant to subsection 13.6; collectively, as to all such Tranche B
Term Loan Lenders, the "Tranche B Term Loan Commitments".
"Tranche B Term Loan Commitment Percentage": as to any Tranche B Term
Loan Lender at any time, the percentage of the aggregate Tranche B Term
Loan Commitments then constituted by such Tranche B Term Loan Lender's
Tranche B Term Loan Commitments (or, after the Tranche B Term Loans are
made, the percentage of the aggregate Tranche B Term Loans then constituted
by such Tranche B Term Loan Lender's Tranche B Term Loans).
"Tranche B Term Loan Lender": any Lender with an unused Tranche B Term
Loan Commitment hereunder and/or any Tranche B Term Loans outstanding
hereunder; collectively, the "Tranche B Term Loan Lenders".
"Tranche B Term Loan Termination Date": April 30, 2003 or, if such date
is not a Business Day, the Business Day next preceding such date.
"Tranche B Term Note": as defined in subsection 2.4(d); collectively,
the "Tranche B Term Notes".
"Tranche C Term Loan": as defined in subsection 2.1(c); collectively,
the "Tranche C Term Loans".
"Tranche C Term Loan Commitment": as to any Tranche C Term Loan Lender,
its obligation to make a Tranche C Term Loan to the Borrower in an amount
equal to the amount set forth opposite such Lender's name in Schedule 1.1
under the heading "Tranche C Term Loan Commitment", as such amount may be
reduced from time to time pursuant to this Agreement or as such amount may
be adjusted from time to time pursuant to subsection 13.6; collectively, as
to all such Tranche C Term Loan Lenders, the "Tranche C Term Loan
Commitments".
"Tranche C Term Loan Commitment Percentage": as to any Tranche C Term
Loan Lender at any time, the percentage of the aggregate Tranche C Term
Loan Commitments then constituted by such Tranche C Term Loan Lender's
Tranche C Term Loan Commitments (or, after the Tranche C Term Loans are
made, the percentage of the
<PAGE>
29
aggregate Tranche C Term Loans then constituted by such Tranche C Term
Loan Lender's Tranche C Term Loans).
"Tranche C Term Loan Lender": any Lender with an unused Tranche C Term
Loan Commitment hereunder and/or any Tranche C Term Loans outstanding
hereunder; collectively, the "Tranche C Term Loan Lenders".
"Tranche C Term Loan Termination Date": September 30, 2003 or, if such
date is not a Business Day, the Business Day next preceding such date.
"Tranche C Term Note": as defined in subsection 2.4(d); collectively,
the "Tranche C Term Notes".
"Transferee": as defined in subsection 13.6(f).
"Transition Services Agreement": the letter agreement Re: Transitional
Services, dated September 19, 1995, among the Borrower, Pet and Pillsbury.
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.
"UBS": UBS Capital LLC, a New York limited liability company.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"VDK Foods": as defined in the recitals to this Agreement.
"VDK Foods Acknowledgement and Consent": an Acknowledgement and Consent
to be executed and delivered by VDK Foods substantially in the form of
Exhibit G.
"VDK Foods Agreement": the VDK Foods Agreement, dated as of September
19, 1995, made by VDK Foods in favor of the Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
1.2 Other Definitional Provisions; Financial Calculations. (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
<PAGE>
30
(c) 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, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Notwithstanding anything to the contrary herein, for purposes of
making all calculations in connection with the covenants contained in Section 8,
all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP as in effect on
the date of this Agreement consistently applied. In the event of any material
difference at any time between GAAP in effect on the date of this Agreement and
GAAP from time to time in effect, the certificate of a Responsible Officer
required pursuant to subsection 7.2(b)(ii) shall include a reconciliation of the
calculations required thereby with the financial statements being delivered with
such certificate.
(f) The parties hereto acknowledge that the Borrower has no Subsidiaries
as of the date hereof. However, references in this Agreement to Subsidiaries of
the Borrower and to consolidated and consolidating financial statements have
been included in case the Borrower has any Subsidiaries in the future.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans.
(a) The Borrower acknowledges and confirms that certain of the Existing Lenders
have made Tranche A Term Loans (collectively, the "Existing Tranche A Term
Loans") to it under the Existing Credit Agreement in an aggregate principal
amount currently outstanding of $48,750,000. The Borrower hereby represents,
warrants, agrees, covenants and reaffirms that: (i) it has no (and it
permanently and irrevocably waives, and releases the Agent and the Lenders from,
any, to the extent arising on or prior to the Effective Date) defense, setoff,
claim or counterclaim against the Agent or any Lender in regard to its
Obligations in respect of the Existing Tranche A Term Loans and (ii) reaffirms
its obligation to pay the Existing Tranche A Term Loans in accordance with the
terms and provisions of this Agreement and the other Loan Documents. Subject to
the terms and conditions hereof, each Tranche A Term Loan Lender severally
agrees to maintain its Existing Tranche A Term Loans and to make additional
Tranche A Term Loans (an "Additional Tranche A Term Loan"; collectively, the
"Additional Tranche A Term Loans") to the Borrower on the Effective Date in an
amount not to exceed the amount of the Additional Tranche A Term Loan Commitment
of such Tranche A Term Loan Lender then in effect. From and after the Effective
Date, the Existing Tranche A Term Loans and the Additional Tranche A Term Loans
of each Lender shall be treated as one Tranche A Term Loan (a "Tranche A Term
Loan") for purposes of this Agreement.
(b) The Borrower acknowledges and confirms that certain of the Existing
Lenders have made Tranche B Term Loans (collectively, the "Existing Tranche B
Term Loans") to it
<PAGE>
31
under the Existing Credit Agreement in an aggregate principal amount currently
outstanding of $40,000,000. The Borrower hereby represents, warrants, agrees,
covenants and reaffirms that: (i) it has no (and it permanently and irrevocably
waives, and releases the Agent and the Lenders from, any, to the extent arising
on or prior to the Effective Date) defense, setoff, claim or counterclaim
against the Agent or any Lender in regard to its Obligations in respect of the
Existing Tranche B Term Loans and (ii) reaffirms its obligation to pay the
Existing Tranche B Term Loans in accordance with the terms and provisions of
this Agreement and the other Loan Documents. Subject to the terms and conditions
hereof, each Tranche B Term Loan Lender severally agrees to maintain its
Existing Tranche B Term Loans and to make additional Tranche B Term Loans (an
"Additional Tranche B Term Loan"; collectively, the "Additional Tranche B Term
Loans") to the Borrower on the Effective Date in an amount not to exceed the
amount of the Additional Tranche B Term Loan Commitment of such Tranche B Term
Loan Lender then in effect. From and after the Effective Date, the Existing
Tranche B Term Loans and the Additional Tranche B Term Loans of each Lender
shall be treated as one Tranche B Term Loan (a "Tranche B Term Loan") for
purposes of this Agreement.
(c) Subject to the terms and conditions hereof, each Tranche C Term Loan
Lender severally agrees to make a term loan (a "Tranche C Term Loan";
collectively, the "Tranche C Term Loans", and together with the Additional
Tranche A Term Loans and the Additional Tranche B Term Loans, the "Additional
Term Loans") to the Borrower on the Effective Date in an amount not to exceed
the amount of the Tranche C Term Loan Commitment of such Tranche C Term Loan
Lender then in effect.
(d) The Tranche A Term Loans, Tranche B Term Loans and Tranche C Term
Loans may from time to time be (i) Eurodollar Loans, (ii) ABR Loans or (iii) a
combination thereof, as determined by the Borrower and notified to the Agent in
accordance with subsections 2.2 and 4.2; provided that the Additional Term Loans
made on the Effective Date shall be made as ABR Loans.
2.2 Procedure for Additional Term Loan Borrowing. The Borrower hereby
requests (i) an Additional Tranche A Term Loan borrowing on the Effective Date
in an amount equal to the aggregate amount of the Additional Tranche A Term Loan
Commitments of the Tranche A Term Loan Lenders, (ii) an Additional Tranche B
Term Loan borrowing on the Effective Date in an amount equal to the aggregate
amount of the Additional Tranche B Term Loan Commitments of the Tranche B Term
Loan Lenders and (iii) a Tranche C Term Loan borrowing on the Effective Date in
an amount equal to the aggregate amount of the Tranche C Term Loan Commitments
of the Tranche C Term Loan Lenders. The Additional Tranche A Term Loans,
Additional Tranche B Term Loans and Tranche C Term Loans made on the Effective
Date shall initially be ABR Loans. Each Tranche A Term Loan Lender will make the
amount of its pro rata share of the Additional Tranche A Term Loans available to
the Agent for the account of the Borrower at the office of the Agent specified
in subsection 13.2 prior to 10:00 A.M., New York City time, on the Effective
Date in Dollars and in funds immediately available to the Agent. Each Tranche B
Term Loan Lender will make the amount of its pro rata share of the Additional
Tranche B Term Loans available to the Agent for the account of the Borrower at
the office of the Agent specified in subsection 13.2 prior to 10:00 A.M., New
York City time, on the Effective Date in Dollars and in funds immediately
available to the Agent. Each Tranche C Term Loan
<PAGE>
32
Lender will make the amount of its pro rata share of the Tranche C Term Loans
available to the Agent for the account of the Borrower at the office of the
Agent specified in subsection 13.2 prior to 10:00 A.M., New York City time, on
the Effective Date in Dollars and in funds immediately available to the Agent.
The Agent shall credit the account of the Borrower by 11:00 A.M., New York City
time, on the Effective Date, on the books of such office of the Agent or such
other account as specified by the Borrower with the aggregate of the amounts
made available to the Agent by the Tranche A Term Loan Lenders, Tranche B Term
Loan Lenders and Tranche C Term Loan Lenders and in like funds as received by
the Agent.
2.3 Repayment of Tranche A Term Loans, Tranche B Term Loans and Tranche C
Term Loans. (a) The Borrower hereby unconditionally promises to pay to the Agent
for the account of each Tranche A Term Loan Lender the principal amount of the
Tranche A Term Loans made by such Tranche A Term Loan Lender in eleven
consecutive semi-annual installments, payable on the last day of March and
September of each calendar year commencing September 30, 1996 (or such earlier
date on which the Tranche A Term Loans become due and payable pursuant to
Section 11), each of which installments on any such date shall be in an amount
equal to such Tranche A Term Loan Lender's Term Loan Commitment Percentage of
the amount set forth below opposite such installment, provided that the final
installment of the Tranche A Term Loans shall be payable on the Termination
Date:
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
September 30, 1996 $3,500,000
March 31, 1997 $4,500,000
September 30, 1997 $5,500,000
March 31, 1998 $6,500,000
September 30, 1998 $7,500,000
March 31, 1999 $8,500,000
September 30, 1999 $10,000,000
March 31, 2000 $11,250,000
September 30, 2000 $11,625,000
March 31, 2001 $12,125,000
September 19, 2001 $12,750,000.
</TABLE>
The Borrower hereby further agrees to pay to the Agent for the account of each
Tranche A Term Loan Lender interest on the unpaid principal amount of the
Tranche A Term Loans from time to time outstanding from the Closing Date (or
such later date on which such Tranche A Term Loan was made, as the case may be)
until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 4.4.
(b) The Borrower hereby unconditionally promises to pay to the Agent for
the account of each Tranche B Term Loan Lender the principal amount of the
Tranche B Term Loans made by such Tranche B Term Loan Lender in fourteen
consecutive semi-annual installments, payable on the last day of March and
September of each calendar year commencing September 30, 1996 (or such earlier
date on which the Tranche B Term Loans become due and payable pursuant to
Section 11), each of which installments on any such date shall be in an amount
equal to such
<PAGE>
33
Tranche B Term Loan Lender's Tranche B Term Loan Commitment Percentage of the
amount set forth below opposite such installment, provided that the final
installment of the Tranche B Term Loans shall be payable on the Tranche B Term
Loan Termination Date:
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
September 30, 1996 $500,000
March 31, 1997 $500,000
September 30, 1997 $500,000
March 31, 1998 $500,000
September 30, 1998 $500,000
March 31, 1999 $500,000
September 30, 1999 $500,000
March 31, 2000 $500,000
September 30, 2000 $500,000
March 31, 2001 $500,000
September 30, 2001 $1,000,000
March 31, 2002 $20,000,000
September 30, 2002 $27,000,000
April 30, 2003 $27,000,000
</TABLE>
The Borrower hereby further agrees to pay to the Agent for the account of each
Tranche B Term Loan Lender interest on the unpaid principal amount of the
Tranche B Term Loans from time to time outstanding from May 6, 1996 (or such
later date on which such Tranche B Term Loan was made) until payment in full
thereof at the rates per annum, and on the dates, set forth in subsection 4.4.
(c) The Borrower hereby unconditionally promises to pay to the Agent for
the account of each Tranche C Term Loan Lender the principal amount of the
Tranche C Term Loans made by such Tranche C Term Loan Lender in fifteen
consecutive semi-annual installments, payable on the last day of March and
September of each calendar year commencing September 30, 1996 (or such earlier
date on which the Tranche C Term Loans become due and payable pursuant to
Section 11), each of which installments on any such date shall be in an amount
equal to such Tranche C Term Loan Lender's Tranche C Term Loan Commitment
Percentage of the amount set forth below opposite such installment, provided
that the final installment of the Tranche C Term Loans shall be payable on the
Tranche C Term Loan Termination Date:
<TABLE>
<CAPTION>
Installment Amount
----------- ------
<S> <C>
September 30, 1996 $250,000
March 31, 1997 $250,000
September 30, 1997 $250,000
March 31, 1998 $250,000
September 30, 1998 $250,000
March 31, 1999 $250,000
September 30, 1999 $250,000
</TABLE>
<PAGE>
34
<TABLE>
<CAPTION>
<S> <C>
March 31, 2000 $250,000
September 30, 2000 $250,000
March 31, 2001 $250,000
September 30, 2001 $250,000
March 31, 2002 $250,000
September 30, 2002 $250,000
March 31, 2003 $250,000
September 30, 2003 $46,500,000
</TABLE>
The Borrower hereby further agrees to pay to the Agent for the account of each
Tranche C Term Loan Lender interest on the unpaid principal amount of the
Tranche C Term Loans from time to time outstanding from the Effective Date (or
such later date on which such Tranche C Term Loan was made) until payment in
full thereof at the rates per annum, and on the dates, set forth in subsection
4.4.
2.4 Evidence of Tranche A Term Loan, Tranche B Term Loan and Tranche C
Term Loan Debt. (a) Each Tranche A Term Loan Lender, Tranche B Term Loan Lender
and Tranche C Term Loan Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Tranche A Term Loan Lender, Tranche B Term Loan Lender or Tranche C Term Loan
Lender resulting from the Tranche A Term Loan, Tranche B Term Loan or Tranche C
Term Loan, as the case may be, made by such Tranche A Term Loan Lender, Tranche
B Term Loan Lender or Tranche C Term Loan Lender, including the amounts of
principal and interest payable and paid to such Tranche A Term Loan Lender,
Tranche B Term Loan Lender or Tranche C Term Loan Lender from time to time under
this Agreement.
(b) The Agent shall record in the Register, with separate subaccounts
therein for each Tranche A Term Loan Lender, Tranche B Term Loan Lender and
Tranche C Term Loan Lender, (i) the amount of each Tranche A Term Loan, Tranche
B Term Loan and Tranche C Term Loan made hereunder, the Type thereof and, in the
case of Eurodollar Loans, each Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Tranche A Term Loan Lender, Tranche B Term Loan Lender
and each Tranche C Term Loan Lender hereunder and (iii) both the amount of any
sum received by the Agent hereunder from the Borrower and each Tranche A Term
Loan Lender's, Tranche B Term Loan Lender's or Tranche C Term Loan Lender's, as
the case may be, share thereof, if any.
(c) The entries made in the Register pursuant to subsection 2.4(b)
shall, to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Tranche A Term Loan Lender, Tranche B
Term Loan Lender or Tranche C Term Loan Lender to maintain any account pursuant
to subsection 2.4(a) or the Agent to make recordings in the Register pursuant to
subsection 2.4(b), or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Tranche A
Term Loan, Tranche B Term Loan or Tranche C Term Loan, as the case may be, made
to the Borrower by such Tranche A Term Loan Lender, Tranche B Term Loan Lender
or Tranche C Term Loan Lender in accordance with the terms of this Agreement.
<PAGE>
35
(d) The Borrower agrees that, upon the request to the Agent by any
Tranche A Term Loan Lender, Tranche B Term Loan Lender or Tranche C Term Loan
Lender, which request is communicated to the Borrower, the Borrower will execute
and deliver (i) to such Tranche A Term Loan Lender upon the return to the
Borrower of the note, if any, that the Borrower previously issued to such
Tranche A Term Loan Lender evidencing such Tranche A Term Loan Lender's Existing
Tranche A Term Loan, a promissory note of the Borrower dated the Closing Date,
or such later date on which such Tranche A Term Loan was made, as the case may
be (if such Tranche A Term Loan Lender had any Tranche A Term Loans outstanding
on and prior to the Effective Date), or the Effective Date (if such Tranche A
Term Loan Lender did not have any Tranche A Term Loans outstanding on and prior
to the Effective Date) evidencing the Tranche A Term Loans made by such Tranche
A Term Loan Lender, substantially in the form of Exhibit H (a "Tranche A Term
Note"), payable to the order of such Tranche A Term Loan Lender and in a
principal amount equal to the unpaid principal amount of the Tranche A Term
Loans (including such Tranche A Term Loan Lender's Existing Tranche A Term Loan
and Additional Tranche A Term Loan) made by such Tranche A Term Loan Lender,
(ii) to such Tranche B Term Loan Lender upon the return to the Borrower of the
note, if any, that the Borrower previously issued to such Tranche B Term Loan
Lender evidencing such Tranche B Term Loan Lender's Existing Tranche B Term
Loan, a promissory note of the Borrower dated May 6, 1996 (if such Tranche B
Term Loan Lender had any Tranche B Term Loans outstanding on and prior to the
Effective Date) or the Effective Date (if such Tranche B Term Loan Lender did
not have any Tranche B Term Loans outstanding on and prior to the Effective
Date) evidencing the Tranche B Term Loans made by such Tranche B Term Loan
Lender, substantially in the form of Exhibit I (a "Tranche B Term Note"),
payable to the order of such Tranche B Term Loan Lender and in a principal
amount equal to the unpaid principal amount of the Tranche B Term Loans
(including such Tranche B Term Loan Lender's Existing Tranche B Term Loan and
Additional Tranche B Term Loan) made by such Tranche B Term Loan Lender and/or
(iii) to such Tranche C Term Loan Lender a promissory note of the Borrower dated
the Effective Date evidencing the Tranche C Term Loans made by such Tranche C
Term Loan Lender, substantially in the form of Exhibit J (a "Tranche C Term
Note"), payable to the order of such Tranche C Term Loan Lender and in a
principal amount equal to the unpaid principal amount of the Tranche C Term Loan
made by such Tranche C Term Loan Lender. Each Tranche A Term Loan Lender,
Tranche B Term Loan Lender and each Tranche C Term Loan Lender is hereby
authorized to record the date, Type and amount of each Tranche A Term Loan,
Tranche B Term Loan or Tranche C Term Loan, as the case may be, made by such
Tranche A Term Loan Lender, Tranche B Term Loan Lender or Tranche C Term Loan
Lender, the date and amount of each payment or prepayment of principal thereof,
each continuation thereof, each conversion of all or a portion thereof to
another Type and, in the case of Eurodollar Loans, the length of each Interest
Period and Eurodollar Rate with respect thereto, on the schedule (or any
continuation of the schedule) annexed to and constituting a part of its Tranche
A Term Note, Tranche B Term Note or its Tranche C Term Note, as the case may be,
and any such recordation shall, to the extent permitted by applicable law,
constitute prima facie evidence of the accuracy of the information so recorded,
provided that the failure to make any such recordation (or any error therein)
shall not affect the obligation of the Borrower to repay (with applicable
interest) the Tranche A Term Loans, the Tranche B Term Loans or the Tranche C
Term Loans, as the case may be, made to the Borrower in accordance with the
terms of this Agreement.
<PAGE>
36
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 Revolving Credit Commitments. (a) The Borrower acknowledges and
confirms that it has as of the Effective Date no outstanding Revolving Credit
Loans under the Existing Credit Agreement. The Borrower hereby represents,
warrants, agrees, covenants and reaffirms that: (i) it has no (and it
permanently and irrevocably waives, and releases the Agent and the Lenders from,
any, to the extent arising on or prior to the Effective Date) defense, setoff,
claim or counterclaim against the Agent or any Lender in regard to its
Obligations in respect of such existing Revolving Credit Loans and (ii)
reaffirms its obligation to pay such existing Revolving Credit Loans in
accordance with the terms and provisions of this Agreement and the other Loan
Documents. Subject to the terms and conditions hereof, each Revolving Credit
Lender severally agrees to make revolving credit loans (collectively, "Revolving
Credit Loans") to the Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Revolving Credit Lender's Revolving Credit Commitment
Percentage of (i) the then outstanding Swing Line Loans and (ii) the then
outstanding L/C Obligations, does not exceed the amount of such Revolving Credit
Lender's Revolving Credit Commitment. During the Revolving Credit Commitment
Period, the Borrower may use the Revolving Credit Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all
in accordance with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) ABR Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Agent in accordance with subsections 3.2 and 4.2;
provided that no Revolving Credit Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Termination Date.
3.2 Procedure for Revolving Credit Borrowing. The Borrower may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, provided that the Borrower shall give the Agent
irrevocable notice (which notice must be received by the Agent prior to 12:00
Noon, New York City time, (a) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Revolving Credit Loans are
to be initially Eurodollar Loans, or (b) one Business Day prior to the requested
Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, ABR Loans or a combination thereof and (iv) if the borrowing is to be
entirely or partly of Eurodollar Loans, the respective amounts of each such Type
of Loan and the lengths of the initial Interest Periods therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in the
case of ABR Loans, $500,000 or a whole multiple of $100,000 in excess thereof
(or, if the then Available Revolving Credit Commitments are less than $500,000,
such lesser amount) and (y) in the case of Eurodollar Loans, $1,000,000 or a
whole multiple of $500,000 in excess thereof. Upon receipt of any such notice
from the Borrower, the Agent shall promptly notify each Revolving Credit Lender
thereof. Each Revolving Credit Lender will make the amount of its pro rata share
of each borrowing available to the Agent for the account of the Borrower at the
office of the Agent specified in subsection 13.2 prior to 2:00 P.M., New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Agent. Such borrowing will then be made available to the
Borrower by the Agent crediting the account of the Borrower on
<PAGE>
37
the books of such office prior to 3:00 P.M., New York City time, on such
Borrowing Date with the aggregate of the amounts made available to the Agent by
the Lenders and in like funds as received by the Agent.
3.3 Commitment and Other Fees. (a) The Borrower agrees to pay to the
Agent for the account of each Revolving Credit Lender a commitment fee for the
period from and including the first day of the Revolving Credit Commitment
Period to the Termination Date, computed at the rate of 1/2 of 1% per annum on
the average daily amount of the Available Revolving Credit Commitment of such
Revolving Credit Lender during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and December
and on the Termination Date or such earlier date as the Revolving Credit
Commitments shall terminate as provided herein, commencing on the first of such
dates to occur after the Closing Date.
(b) The Borrower agrees to pay to Chase the amounts and fees set forth
in the Fee Letter dated June 25, 1996 among Chemical Bank, CSI and the Borrower
in the amounts and on the dates set forth therein.
3.4 Termination or Reduction of Commitments. The Borrower shall have
the right, upon not less than one Business Day's prior notice to the Agent, to
terminate the Revolving Credit Commitments or, from time to time, to reduce the
amount of the Revolving Credit Commitments, provided that no such termination or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans made on the effective date thereof,
the aggregate principal amount of the Revolving Credit Loans then outstanding,
when added to the then outstanding L/C Obligations and Swing Line Loans, would
exceed the Revolving Credit Commitments then in effect. Any such reduction
shall be in an amount equal to $500,000 or a whole multiple of $100,000 in
excess thereof and shall reduce permanently the Revolving Credit Commitments
then in effect.
3.5 Repayment of Revolving Credit Loans; Evidence of Debt. (a) The
Borrower hereby unconditionally promises to pay to the Agent for the account of
each Revolving Credit Lender the then unpaid principal amount of each Revolving
Credit Loan of such Revolving Credit Lender on the Termination Date (or such
earlier date on which the Revolving Credit Loans become due and payable pursuant
to Section 11). The Borrower hereby further agrees to pay to the Agent for the
account of each Revolving Credit Lender interest on the unpaid principal amount
of the Revolving Credit Loans from time to time outstanding from the Closing
Date until payment in full thereof at the rates per annum, and on the dates, set
forth in subsection 4.4.
(b) Each Revolving Credit Lender shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of the Borrower to
such Revolving Credit Lender resulting from each Revolving Credit Loan of such
Revolving Credit Lender from time to time, including the amounts of principal
and interest payable and paid to such Revolving Credit Lender from time to time
under this Agreement.
(c) The Agent shall record in the Register, with separate subaccounts
for each Revolving Credit Lender, (i) the amount and Borrowing Date of each
Revolving Credit Loan
<PAGE>
38
made hereunder, the Type thereof and each Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Revolving Credit Lender hereunder and
(iii) both the amount of any sum received by the Agent hereunder from the
Borrower and each Revolving Credit Lender's share thereof.
(d) The entries made in the Register pursuant to subsection 3.5(c)
shall, to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Revolving Credit Lender to maintain
any account pursuant to subsection 3.5(b) or the Agent to make recordings in the
Register pursuant to subsection 3.5(c), or any error therein, shall not in any
manner affect the obligation of the Borrower to repay (with applicable interest)
the Revolving Credit Loans made to such Borrower by such Revolving Credit Lender
in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Agent by any
Revolving Credit Lender, which request is communicated to the Borrower, the
Borrower will execute and deliver to such Revolving Credit Lender a promissory
note of the Borrower dated the Closing Date evidencing the Revolving Credit
Loans of such Revolving Credit Lender, substantially in the form of Exhibit K
with appropriate insertions as to date and principal amount (a "Revolving Credit
Note"). Each Revolving Credit Lender is hereby authorized to record the date,
Type and amount of each Revolving Credit Loan made by such Revolving Credit
Lender, the date and amount of each payment or prepayment of principal thereof,
each continuation thereof, each conversion of all or a portion thereof to
another Type and, in the case of Eurodollar Loans, the length of each Interest
Period and Eurodollar Rate with respect thereto, on the schedule (or any
continuation of the schedule) annexed to and constituting a part of its
Revolving Credit Note, and any such recordation shall, to the extent permitted
by applicable law, constitute prima facie evidence of the accuracy of the
information so recorded, provided that the failure to make any such recordation
(or any error therein) shall not affect the obligation of the Borrower to repay
(with applicable interest) the Revolving Credit Loans made to the Borrower in
accordance with the terms of this Agreement.
3.6 Swing Line Commitment. Subject to the terms and conditions hereof,
Chase (in such capacity, the "Swing Line Lender") agrees to make a portion of
the Revolving Credit Commitments available to the Borrower during the Revolving
Credit Commitment Period by making swing line loans ("Swing Line Loans") to the
Borrower in an aggregate principal amount not to exceed at any one time
outstanding the Swing Line Commitment; provided that (a) the aggregate principal
amount of Swing Line Loans outstanding at any time shall not exceed the Swing
Line Commitment then in effect and (b) the Borrower shall not request, and the
Swing Line Lender shall not make, any Swing Line Loan if, after giving effect to
the making of such Swing Line Loan, the Aggregate Revolving Credit Outstandings
of all the Revolving Credit Lenders would exceed the Revolving Credit
Commitments at such time. During the Revolving Credit Commitment Period, the
Borrower may use the Swing Line Commitment by borrowing, repaying and
reborrowing Swing Line Loans all in accordance with the terms and conditions
hereof. Swing Line Loans may be ABR Loans only.
<PAGE>
39
3.7 Repayment of Swing Line Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Agent for the account of the Swing
Line Lender the then unpaid principal amount of the Swing Line Loans on the
Termination Date (or such earlier date on which the Swing Line Loans become due
and payable pursuant to Section 11). The Borrower hereby further agrees to pay
to the Agent for the account of the Swing Line Lender interest on the unpaid
principal amount of the Swing Line Loans from time to time outstanding from the
Closing Date until payment in full thereof at the rates per annum, and on the
dates, set forth in subsection 4.4.
(b) The Swing Line Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to the
Swing Line Lender resulting from the Swing Line Loans made by the Swing Line
Lender from time to time, including the amounts of principal and interest
payable and paid to the Swing Line Lender from time to time under this
Agreement.
(c) The Agent shall record in the Register (i) the amount and Borrowing
Date of each Swing Line Loan made hereunder, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to the
Swing Line Lender hereunder and (iii) the amount of any sum received by the
Agent hereunder in respect of Swing Line Loans.
(d) The entries made in the Register pursuant to subsection 3.7(c)
shall, to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of the Swing Line Lender to maintain any
account pursuant to subsection 3.7(b) or the Agent to make recordings in the
Register pursuant to subsection 3.7(c), or any error therein, shall not in any
manner affect the obligation of the Borrower to repay (with applicable interest)
the Swing Line Loans made to the Borrower by the Swing Line Lender in accordance
with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Agent by the Swing
Line Lender, which request is communicated to the Borrower, the Borrower will
execute and deliver to the Swing Line Lender a promissory note of the Borrower,
dated the Closing Date, evidencing the Swing Line Loans of the Swing Line
Lender, substantially in the form of Exhibit L with appropriate insertions as to
date and principal amount (a "Swing Line Note"). The Swing Line Lender is
hereby authorized to record the date and amount of each Swing Line Loan made by
the Swing Line Lender and the date and amount of each payment or prepayment of
principal thereof on the schedule annexed to and constituting a part of the
Swing Line Note, and any such recordation shall, to the extent permitted by
applicable law, constitute prima facie evidence of the accuracy of the
information so recorded, provided that the failure to make any such recordation
(or any error therein) shall not affect the obligation of the Borrower to repay
(with applicable interest) the Swing Line Loans made to the Borrower by the
Swing Line Lender in accordance with the terms of this Agreement.
3.8 Procedure for Borrowing Swing Line Loans. (a) Whenever the Borrower
desires that the Swing Line Lender make Swing Line Loans under subsection 3.6,
it shall give the Swing Line Lender irrevocable telephonic notice confirmed
promptly in writing (which telephonic notice
<PAGE>
40
must be received by the Swing Line Lender not later than 12:00 Noon, New York
City time, on the proposed Borrowing Date), specifying (i) the amount to be
borrowed and (ii) the requested Borrowing Date (which shall be a Business Day
during the Revolving Credit Commitment Period). Each borrowing under the Swing
Line Commitment shall be in a minimum amount of $150,000 or a whole multiple of
$50,000 in excess thereof. Not later than 2:00 P.M., New York City time, on the
Borrowing Date specified in a notice in respect of Swing Line Loans, the Swing
Line Lender shall make available to the Agent for the account of the Borrower at
the office of the Agent specified in subsection 13.2 an amount in immediately
available funds equal to the amount of the Swing Line Loan to be made by the
Swing Line Lender. The Agent shall make the proceeds of such Swing Line Loan
available to the Borrower not later than 3:00 P.M., New York City time, on such
Borrowing Date by crediting the account of the Borrower, on the books of such
office, with such proceeds in immediately available funds.
(b) The Swing Line Lender, at any time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs the
Swing Line Lender to act on its behalf) request each Revolving Credit Lender
including the Swing Line Lender, to make a Revolving Credit Loan in an amount
equal to such Lender's Revolving Credit Commitment Percentage of the amount of
the Swing Line Loans outstanding on the date such notice is given (the "Refunded
Swing Line Loans"). Unless any of the events described in Section 11(f) shall
have occurred (in which event the procedures of subsection 3.9(b) shall apply)
each Revolving Credit Lender shall make the proceeds of its Revolving Credit
Loan available to the Agent for the account of the Swing Line Lender at the
office of the Agent specified in subsection 13.2 prior to 12:00 Noon, New York
City time, in funds immediately available on the Business Day next succeeding
the date such notice is given. The proceeds of such Revolving Credit Loans
shall be immediately applied to repay the Refunded Swing Line Loans. Effective
on the day such Revolving Credit Loans are made, the portion of the Swing Line
Loans so paid shall no longer be outstanding as Swing Line Loans, shall no
longer be due under any Swing Line Note and shall be due under the respective
Revolving Credit Loans issued to the Revolving Credit Lenders in accordance with
their respective Revolving Credit Commitment Percentages. The Borrower
authorizes the Swing Line Lender to charge the Borrower's accounts with the
Agent (up to the amount available in each such account) in order to immediately
pay the amount of such Refunded Swing Line Loans to the extent amounts received
from the Revolving Credit Lenders are not sufficient to repay in full such
Refunded Swing Line Loans.
3.9 Swing Line Loan Participations. (a) Notwithstanding anything herein
to the contrary, the Swing Line Lender shall not be obligated to make any Swing
Line Loans if a Default under Section 11(a) or an Event of Default shall have
occurred and be continuing. The Swing Line Lender shall notify the Borrower of
such election not to make any Swing Line Loans unless the Event of Default is of
the type specified in Section 11(f).
(b) If prior to the repayment of any Swing Line Loan or the making of
Revolving Credit Loans pursuant to subsection 3.8(b), one of the events
described in Section 11(f) shall have occurred, each Revolving Credit Lender
shall on the date such Revolving Credit Loan was to have been made pursuant to
the notice in subsection 3.8(a) purchase an undivided participating interest in
the Refunded Swing Line Loans in an amount equal to such Revolving Credit
Lender's Revolving Credit Commitment Percentage of the aggregate principal
amount of Swing Line Loans
<PAGE>
41
then outstanding (the "Swing Line Participation Amount"). On the date of such
purchase, each Revolving Credit Lender shall transfer to the Swing Line Lender,
in immediately available funds, such Revolving Credit Lender's Swing Line
Participation Amount and upon receipt thereof the Swing Line Lender shall
deliver to such Revolving Credit Lender a Swing Line Loan Participation
Certificate dated the date of the Swing Line Lender's receipt of such funds and
in an amount equal to such Revolving Credit Lender's Swing Line Participation
Amount.
(c) Whenever, at any time after the Swing Line Lender has received from
any Revolving Credit Lender such Revolving Credit Lender's Swing Line
Participation Amount, the Swing Line Lender receives any payment on account of
the Swing Line Loans, the Swing Line Lender will distribute to such Revolving
Credit Lender its pro rata share of such payment (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
Revolving Credit Lender's participating interest was outstanding and funded);
provided, however, that in the event that such payment received by the Swing
Line Lender is required to be returned, such Revolving Credit Lender will return
to the Swing Line Lender any portion thereof previously distributed to it by the
Swing Line Lender.
(d) Each Revolving Credit Lender's obligation to purchase participating
interests pursuant to subsection 3.9(b) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such
Revolving Credit Lender or the Borrower may have against the Swing Line Lender,
the Borrower or any other Person for any reason whatsoever; (ii) the occurrence
or continuance of a Default or an Event of Default; (iii) any adverse change in
the condition (financial or otherwise) of the Borrower; (iv) any breach of this
Agreement or any other Loan Document by any of the Loan Parties or any other
Lender; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing.
3.10 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Bank, in reliance on the agreements of the other Revolving Credit
Lenders set forth in subsection 3.13(a), agrees to issue Letters of Credit for
the account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
Issuing Bank; provided that the Issuing Bank shall have no obligation to, and
shall not, issue any Letter of Credit if, after giving effect to such issuance,
(i) the L/C Obligations would exceed the L/C Commitment or (ii) the Available
Revolving Credit Commitments would be less than zero.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars and shall be either (1) a standby letter
of credit issued to support obligations of the Borrower, contingent or
otherwise, in connection with the working capital and business needs of
the Borrower in the ordinary course of business (a "Standby Letter of
Credit") or (2) a commercial letter of credit issued in respect of the
purchase of goods or services by the Borrower and its Subsidiaries in the
ordinary course of business (a "Commercial Letter of Credit");
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(ii) expire no later than the earlier of (A) five Business Days prior
to the Termination Date and (B) one year after the date of issuance
thereof, provided that, subject to clause (A) above, any such Letter of
Credit may, at the request of the Borrower as set forth in the applicable
Application or prior to expiration thereof, be automatically renewed on
each anniversary of the issuance thereof for an additional period of one
year unless the Issuing Bank shall have given 60 days' prior written
notice to the Borrower and the beneficiary of such Letter of Credit that
such Letter of Credit will not be renewed; and
(iii) have a face amount equal to at least $100,000.
(c) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.
(d) The Issuing Bank shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.11 Procedure for Issuance of Letters of Credit. The Borrower may from
time to time request that the Issuing Bank issue a Letter of Credit by
delivering to the Issuing Bank at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may request. The Issuing Bank shall notify the Revolving Credit
Lenders promptly of the receipt of any request pursuant to the immediately
preceding sentence. Upon receipt of any Application, the Issuing Bank will
process such Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Bank be required to issue any Letter
of Credit earlier than three Business Days after its receipt of the Application
therefor and all such other certificates, documents and other papers and
information relating thereto) by issuing the original of such Letter of Credit
to the beneficiary thereof or as otherwise may be agreed by the Issuing Bank and
the Borrower. The Issuing Bank shall furnish a copy of such Letter of Credit to
the Agent and the Borrower promptly following the issuance thereof.
3.12 Fees, Commissions and Other Charges. (a) The Borrower shall pay to
the Agent, for the account of the Issuing Bank, a fronting fee with respect to
each Letter of Credit, computed for the period from the date of issuance of such
Letter of Credit or the immediately preceding L/C Fee Payment Date, as the case
may be, to the next L/C Fee Payment Date to occur thereafter at a rate per annum
equal to 1/4 of 1%, calculated on the basis of a 360-day year for actual days
elapsed, of the aggregate amount available to be drawn under such Letter of
Credit during the period for which such fee is calculated. Such fronting fee
shall be payable in arrears on each L/C Fee Payment Date to occur after the
issuance of such Letter of Credit and on the Termination Date and shall be
nonrefundable.
(b) The Borrower shall pay to the Agent, for the account of the L/C
Participants and the Issuing Bank, a letter of credit commission with respect to
each Letter of Credit, computed
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43
for the period from the date of issuance of such Letter of Credit or the
immediately preceding L/C Fee Payment Date, as the case may be, to the next L/C
Fee Payment Date to occur thereafter at a rate per annum equal to the Applicable
Margin for Revolving Credit Loans that are Eurodollar Loans in effect from time
to time (the "Revolving Credit Fee Percentage"), calculated on the basis of a
360-day year for actual days elapsed, of the aggregate amount available to be
drawn under such Letter of Credit during the period for which such fee is
calculated, to be shared ratably among the L/C Participants in accordance with
their respective Revolving Credit Commitment Percentages. Such commissions shall
be payable in arrears on each L/C Fee Payment Date to occur after the issuance
of such Letter of Credit and shall be nonrefundable.
(c) In addition to the foregoing fees and commissions, the Borrower shall
pay or reimburse the Issuing Bank for such normal and customary costs and
expenses as are incurred or charged by the Issuing Bank in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.
(d) The Agent shall, promptly following its receipt thereof, distribute
to the Issuing Bank and the L/C Participants all fees and commissions received
by the Agent for their respective accounts pursuant to this subsection.
3.13 L/C Participations. (a) The Issuing Bank irrevocably agrees to grant
and hereby grants to each L/C Participant, and, in order to induce the Issuing
Bank to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Bank, on the terms and conditions hereinafter stated, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
Revolving Credit Commitment Percentage in the Issuing Bank's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Bank thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Bank that, if a draft is paid under any
Letter of Credit for which the Issuing Bank is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Bank upon demand at the Issuing Bank's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Credit Commitment Percentage of the amount of such draft, or any part thereof,
which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Bank pursuant to subsection 3.13(a) in respect of any unreimbursed
portion of any payment made by the Issuing Bank under any Letter of Credit is
paid to the Issuing Bank within three Business Days after the date such payment
is due, such L/C Participant shall pay to the Issuing Bank on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate, during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Bank, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to subsection
3.13(a) is not in fact made available to the Issuing Bank by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Bank shall be entitled to recover from such L/C Participant, on demand,
such amount with interest thereon calculated from such due date at the rate per
annum applicable to ABR Loans hereunder. A
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44
certificate of the Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
(c) Whenever, at any time after the Issuing Bank has made payment under
any Letter of Credit and has received from any L/C Participant its pro rata
share of such payment in accordance with subsection 3.13(a), the Issuing Bank
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Bank), or any payment of interest on account thereof, the Issuing Bank
will distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by the Issuing Bank
shall be required to be returned by the Issuing Bank, such L/C Participant shall
return to the Issuing Bank the portion thereof previously distributed by the
Issuing Bank to it.
3.14 Reimbursement Obligation of the Borrower. (a) The Issuing Bank shall
notify the Borrower promptly of each drawing under a Letter of Credit. The
Borrower agrees to reimburse the Issuing Bank on each date on which the Issuing
Bank notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Bank for the amount of (i) such draft
so paid and (ii) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Bank in connection with such payment. Each such payment shall be
made to the Issuing Bank at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining unpaid by
the Borrower under this subsection 3.14 (i) from the date the draft presented
under the affected Letter of Credit is paid to the date on which the Borrower is
required to pay such amounts pursuant to paragraph (a) of this subsection, at
the rate which would then be payable on any Revolving Credit Loans that are ABR
Loans, and (ii) thereafter, until payment in full, at the rate which would be
payable on any outstanding Revolving Credit Loans that are ABR Loans which were
then overdue.
(c) Each drawing under any Letter of Credit shall constitute a request by
the Borrower to the Agent for a borrowing pursuant to subsection 3.2 of ABR
Loans in the amount of such drawing (but without any requirement for compliance
with the prior notice or minimum borrowing amount provisions of subsection 3.2
or the conditions set forth in subsection 6.2). The Borrowing Date with respect
to such borrowing shall be the date of such drawing and each Revolving Credit
Lender shall make its Revolving Credit Commitment Percentage of such borrowing
available to the Agent on such date to be used to repay the Reimbursement
Obligation created by such drawing. The Issuing Bank shall notify the Revolving
Credit Lenders promptly of each drawing under a Letter of Credit to be
reimbursed pursuant to this subsection 3.14(c).
3.15 Obligations Absolute. (a) The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Bank, any Lender or any
beneficiary of a Letter of Credit.
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45
(b) The Borrower also agrees with the Issuing Bank and the Lenders that,
subject to subsection 3.15(d), neither the Issuing Bank nor any Lender shall be
responsible for, and the Borrower's Reimbursement Obligations under subsection
3.14(a) shall not be affected by, among other things, (i) the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
(iii) any claims whatsoever of the Borrower against any beneficiary of such
Letter of Credit or any such transferee.
(c) The Issuing Bank shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors, omissions, interruptions or delays caused by the Issuing Bank's gross
negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by the Issuing
Bank under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards of care specified in the Uniform Customs, and
to the extent not inconsistent therewith, the Uniform Commercial Code of the
State of New York, shall be binding on the Borrower and shall not result in any
liability of the Issuing Bank to the Borrower.
3.16 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Bank shall, within a reasonable
time after its receipt thereof, examine all documents purporting to represent a
demand for payment under such Letter of Credit to ascertain that the same appear
on their face to be in conformity with the terms and conditions of such Letter
of Credit. The Issuing Bank shall also promptly notify the Borrower of the date
and amount thereof. The responsibility of the Issuing Bank to the Borrower in
connection with any draft presented for payment under any Letter of Credit
shall, in addition to any payment obligation expressly provided for in such
Letter of Credit, be limited to determining that the documents (including each
draft) delivered under such Letter of Credit in connection with such presentment
are in conformity with such Letter of Credit.
3.17 Application. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 3, the provisions of this Section 3 shall apply.
3.18 Quarterly Reports. The Issuing Bank shall furnish to each
Revolving Credit Lender a quarterly report with respect to Letters of Credit
issued or outstanding during such quarter and any drawings thereunder.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO EXTENSIONS OF CREDIT
4.1 Optional and Mandatory Prepayments. (a) The Borrower may at any
time and from time to time prepay the Loans, in whole or in part, without
premium or penalty, upon irrevocable notice to the Agent prior to 11:00 A.M.,
New York City time, one Business Day prior
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46
to such prepayment, specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if
of a combination thereof, the amount allocable to each. Upon receipt of any such
notice the Agent shall notify each affected Lender thereof on the date of
receipt of such notice. If any such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with any amounts payable pursuant to subsection 4.11 and, in the case of
prepayments of the Term Loans only, accrued interest to such date on the amount
prepaid. Prepayments of the Term Loans pursuant to this subsection 4.1(a) shall
be applied to the prepayment of the Tranche A Term Loans, Tranche B Term Loans
and the Tranche C Term Loans pro rata. Partial prepayments of the Tranche A Term
Loans, Tranche B Term Loans and Tranche C Term Loans pursuant to this subsection
4.1(a) shall be applied to the remaining installments of principal thereof pro
rata. Amounts prepaid on account of the Term Loans may not be reborrowed.
Partial prepayments shall be in an aggregate principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof.
(b) If with respect to any fiscal year of the Borrower, commencing with
its fiscal year ending June 30, 1996, the Borrower shall have Excess Cash Flow
for such fiscal year, (i) the Term Loans shall be prepaid in an aggregate amount
equal to the Excess Cash Flow Percentage of such Excess Cash Flow and (ii) after
the Term Loans shall have been prepaid in full, the Revolving Credit Commitments
shall be permanently reduced in an aggregate amount equal to the Excess Cash
Flow Percentage of such Excess Cash Flow. The Revolving Credit Loans and Swing
Line Loans shall be prepaid and the Letters of Credit shall be cash
collateralized or replaced to the extent such extensions of credit exceed the
amount of the Revolving Credit Commitments as so reduced. Each such prepayment
shall be made on or before the date which is 90 days after the end of such
fiscal year.
(c) Unless the Required Lenders otherwise agree, the Term Loans shall be
prepaid and, after the Term Loans shall have been prepaid in full, the Revolving
Credit Commitments shall be permanently reduced with 100% of the Net Proceeds of
(i) any Indebtedness incurred by any Loan Party on or after the Closing Date
(other than (A) the Senior Subordinated Notes, (B) any Indebtedness permitted
pursuant to subsection 8.2 (other than subsection 8.2(d)), (C) the Senior
Convertible Loan and (D) the unsecured loan referred to in subsection
6.1(c)(iii)) and (ii) the sale or issuance of Capital Stock by VDK Foods or any
of its Subsidiaries on or after the Closing Date (other than (A) the issuance of
additional shares of Capital Stock by the Borrower or any of its Subsidiaries to
Holdings or any of its Subsidiaries (provided that such shares of Capital Stock
are pledged to the Agent, for the benefit of the Lenders, pursuant to the
Guarantee and Collateral Agreement) and (B) as contemplated by subsection
6.1(c)) and (iii) any Asset Sale by the Borrower or any of its Subsidiaries,
(other than any Asset Sale permitted pursuant to (x) subsection 8.6(a) to the
extent the assets disposed of in such Asset Sale are replaced with Replacement
Assets within 120 days following the date of such Asset Sale or (y) subsection
8.6(d)), provided that, if the Net Proceeds realized from any such Asset Sale
(or series of related Asset Sales) are less than $500,000, such Net Proceeds
shall not be applied to the prepayment of the Term Loans and the permanent
reduction of the Revolving Credit Commitments pursuant to this subsection until
such time as the aggregate amount of such Net Proceeds exceeds $1,000,000, and
then if the Net Proceeds realized from any such Asset Sale (or series of related
Asset Sales) are at least equal to $100,000, such Net Proceeds shall be applied
to the prepayment
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of the Term Loans and the permanent reduction of the Revolving Credit
Commitments pursuant to this subsection, and provided further that, Net Proceeds
of the Celeste Sale in excess of $45,000,000 shall be used, to the extent
required, to prepay the Senior Convertible Loan. Each such prepayment shall be
made on or before the date which is two Business Days after the date any Loan
Party receives such Net Proceeds.
(d) Prepayments of the Term Loans pursuant to subsection 4.1(b) and
4.1(c) shall be applied to the prepayment of the Tranche A Term Loans, the
Tranche B Term Loans and the Tranche C Term Loans pro rata and shall be applied
to the remaining installments thereof on a pro rata basis. If, after giving
effect to any permanent reduction in the Revolving Credit Commitments pursuant
to subsection 4.1(b) or 4.1(c), the aggregate principal amount of the Revolving
Credit Loans then outstanding, when added to the then outstanding L/C
Obligations and Swing Line Loans, would exceed the Revolving Credit Commitments
as so reduced, then the Revolving Credit Loans and Swing Line Loans shall be
prepaid and the Letters of Credit shall be cash collateralized or replaced to
the extent of such excess. Prepayments of outstanding Revolving Credit Loans
pursuant to this subsection 4.1(d) shall be applied to the prepayment of such
Revolving Credit Loans pro rata. Amounts to be applied pursuant to this
subsection 4.1(d) to the prepayment of Term Loans, Revolving Credit Loans and/or
Swing Line Loans shall be applied, as applicable, first to reduce outstanding
Term Loans, Revolving Credit Loans and/or Swing Line Loans which are ABR Loans.
Any amounts remaining after each such application shall, at the option of the
Borrower, be applied to prepay Term Loans and/or Revolving Credit Loans which
are Eurodollar Loans immediately and/or shall be deposited in the Prepayment
Account (as defined below). The Agent shall apply any cash deposited in the
Prepayment Account (i) allocable to Tranche A Term Loans to prepay Tranche A
Term Loans which are Eurodollar Loans, (ii) allocable to Tranche B Term Loans to
prepay Tranche B Term Loans which are Eurodollar Loans, (iii) allocable to
Tranche C Term Loans to prepay Tranche C Term Loans which are Eurodollar Loans
and (iv) allocable to Revolving Credit Loans to prepay Revolving Credit Loans
which are Eurodollar Loans, in each case on the last day of the respective
Interest Periods therefor (or, at the direction of the Borrower, on any earlier
date) until all outstanding Term Loans and/or Revolving Credit Loans which are
Eurodollar Loans have been prepaid or until all cash on deposit in the
Prepayment Account (including, without limitation, interest earned thereon) with
respect to such Loans has been exhausted. For purposes of this Agreement, the
term "Prepayment Account" shall mean an account established by the Borrower with
the Agent and over which the Agent shall have exclusive dominion and control,
including the right of withdrawal for application in accordance with this
subsection 4.1(d). The Agent will, at the request of the Borrower, invest
amounts on deposit in the Prepayment Account in Cash Equivalents that mature
prior to the last day of the applicable Interest Periods of the Eurodollar Loans
to be prepaid, provided that (i) the Agent shall not be required to make any
investment that, in its sole judgment, would require or cause the Agent to be
in, or would result in any, violation of any Requirement of Law and (ii) the
Agent shall have no obligation to invest amounts on deposit in the Prepayment
Account if a Default or Event of Default shall have occurred and be continuing.
The Borrower shall indemnify the Agent for any losses relating to the
investments so that the amount available to prepay Eurodollar Loans on the last
day of the applicable Interest Periods therefor is not less than the amount that
would have been available had no investments been made. Other than any interest
earned on such investments, the Prepayment Account shall not bear interest.
Interest or profits, if any, on such investments shall
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be deposited and reinvested and disbursed as described above. If the maturity of
the Loans has been accelerated pursuant to Section 11, the Agent shall first
apply all amounts on deposit in the Prepayment Account to prepay the outstanding
Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans pro rata
and, then, to prepay any outstanding Revolving Credit Loans. The Borrower hereby
grants to the Agent, for its benefit and the benefit of the Lenders, a security
interest in the Prepayment Account to secure the Obligations.
4.2 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to ABR Loans by giving the Agent
at least one Business Day's prior irrevocable notice of such election, provided
that any such conversion of Eurodollar Loans may only be made on the last day of
an Interest Period with respect thereto (or on any other day if on the date of
such conversion the Borrower pays to the Agent for the account of the applicable
Lenders accrued interest on such Eurodollar Loans to the date of such conversion
together with all amounts payable under subsection 4.11). The Borrower may elect
from time to time to convert ABR Loans to Eurodollar Loans by giving the Agent
at least three Business Days' prior irrevocable notice of such election. Any
such notice of conversion to Eurodollar Loans shall specify the length of the
initial Interest Period or Interest Periods therefor. Upon receipt of any such
notice the Agent shall promptly notify each affected Lender thereof. All or any
part of outstanding Eurodollar Loans and ABR Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a Eurodollar Loan when
any Event of Default has occurred and is continuing and the Agent has or the
Required Lenders have determined that such a conversion is not appropriate and
(ii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Termination Date (in the case of conversions of Revolving
Credit Loans) or the date of the final installment of principal of the
respective Term Loans (in the case of conversions of any Term Loans).
(b) Any Eurodollar Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
notice to the Agent, in accordance with the applicable provisions of the term
"Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no Eurodollar Loan
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Agent has or the Required Lenders have determined that such a
continuation is not appropriate or (ii) after the date that is one month prior
to the Termination Date (in the case of continuations of Revolving Credit Loans)
or the date of the final installment of principal of the respective Term Loans
(in the case of continuations of any Term Loans) and provided, further, that if
the Borrower shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to ABR Loans on the last
day of such then expiring Interest Period.
4.3 Minimum Amounts and Maximum Number of Tranches. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or
a whole multiple of $500,000 in excess thereof. In no event shall there be more
than seven Eurodollar Tranches outstanding at any time.
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49
4.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall
bear interest for each day during each Interest Period with respect thereto at a
rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise, but taking into account any applicable grace period
under Section 11(a)), such overdue amount shall bear interest at a rate per
annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of overdue interest, commitment fees or
other amounts due and payable hereunder, the rate described in subsection 4.4(b)
plus 2%, in each case from the date of such non-payment until such amount is
paid in full (after as well as before judgment).
(d) Interest shall be payable in Dollars and in arrears on each Interest
Payment Date and the Termination Date, provided that interest accruing pursuant
to subsection 4.4(c) shall be payable from time to time on demand.
4.5 Computation of Interest and Fees. (a) Commitment fees and interest
shall be calculated on the basis of a 360-day year for the actual days elapsed,
except that whenever interest is calculated on the basis of the Prime Rate,
interest shall be calculated on the basis of a 365- (or 366-, as the case may
be) day year for the actual days elapsed. The Agent shall as soon as
practicable, notify the Borrower and the affected Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the ABR or the Eurocurrency Reserve Requirement shall become effective
as of the opening of business on the day on which such change becomes effective.
The Agent shall, as soon as practicable, notify the Borrower and the affected
Lenders of the effective date and the amount of each such change in interest
rate.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrower and
the Lenders in the absence of manifest error. The Agent shall, at the request of
the Borrower, deliver to the Borrower a statement showing the quotations used by
the Agent in determining any interest rate pursuant to subsection 4.4(a).
4.6 Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or
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(b) the Agent shall have received notice from the Required Lenders that
the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the affected Lenders as soon as practicable thereafter. If such notice is given
(x) any Eurodollar Loans requested to be made on the first day of such Interest
Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
converted to or continued as ABR Loans and (z) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to ABR Loans.
Until such notice has been withdrawn by the Agent, no further Eurodollar Loans
shall be made or continued as such, nor shall the Borrower have the right to
convert ABR Loans to Eurodollar Loans.
4.7 Pro Rata Treatment and Payments. (a) All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 P.M., New York City time, on the
due date thereof to the Agent, for the account of the Revolving Credit Lenders
or the Term Loan Lenders, as the case may be, at the Agent's office specified in
subsection 13.2, in Dollars and in immediately available funds. Payments
received by the Agent after such time shall be deemed to have been received on
the next Business Day. The Agent shall distribute such payments to the Lenders
entitled to receive the same promptly upon receipt in like funds as received. If
any payment hereunder (other than payments on the Eurodollar Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day (and, with respect to payments of principal, interest
shall be payable thereon at the then applicable rate during such extension)
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day. If, and to the extent that, on any Business Day the
Agent receives any payment hereunder or under the other Loan Documents
(including any such payment representing a realization upon the Collateral), and
such payment is not sufficient to pay in full all principal, interest and fees
then due and payable hereunder, the Agent shall apply such payment ratably to
all such amounts then due and payable.
(b) Unless the Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its portion of such borrowing available to the Agent, the Agent may
assume that such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective
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51
Rate for the period until such Lender makes such amount immediately available to
the Agent. A certificate of the Agent submitted to any Lender with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error. If such Lender's portion of such borrowing is not made available
to the Agent by such Lender within three Business Days of such Borrowing Date,
the Agent shall also be entitled to recover such amount with interest thereon at
the rate per annum applicable to ABR Loans hereunder, on demand, from the
Borrower, without prejudice to any right or claim the Borrower may have against
such Lender.
(c) Each borrowing by the Borrower of Revolving Credit Loans shall be
made ratably from the Revolving Credit Lenders in accordance with their
respective Revolving Credit Commitment Percentages. Any reduction of the
Revolving Credit Commitments shall be made ratably among the Revolving Credit
Lenders, in accordance with their respective Revolving Credit Commitment
Percentages.
4.8 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, then such Lender shall give
notice of such illegality to the Agent and the Borrower. Upon such adoption or
change, (a) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans
shall forthwith be suspended until such time as it shall no longer be unlawful
for such Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to ABR Loans on the respective last days
of the then current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion of a Eurodollar Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to subsection 4.11. Any Lender giving notice
pursuant to the first sentence of this subsection shall notify the Agent and the
Borrower at such time as the circumstances giving rise to the initial notice
shall cease to exist.
4.9 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Closing Date:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Note, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for Non-
Excluded Taxes, changes in the rate of tax on the overall net income of
such Lender and taxes imposed as a result of any future, present or
former connection between the Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection
arising solely from the Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement
or any Note));
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52
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by, deposits
or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Lender which is not otherwise included in the determination of the
Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall, within 10 Business Days
after receipt by the Borrower of such Lender's written demand (with a copy to
the Agent), pay such Lender such additional amount or amounts as will compensate
such Lender for such increased cost or reduced amount receivable. If any Lender
has demanded compensation under this subsection 4.9(a) with respect to any
Eurodollar Loan, the Borrower shall have the option to convert immediately such
Eurodollar Loan into an ABR Loan until the circumstances giving rise to such
demand for compensation no longer apply; provided, that (i) no such conversion
shall affect the Borrower's obligation to pay compensation as provided herein
which is due with respect to the period prior to such conversion and (ii) on the
date of such conversion the Borrower shall pay to the Agent for the benefit of
the relevant Lender accrued interest on such Eurodollar Loan to the date of
conversion, together with any amounts payable pursuant to subsection 4.11.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, in each case made subsequent to the Closing Date, shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder or under any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
within 10 Business Days after receipt by the Borrower of such Lender's written
demand (with a copy to the Agent), the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to subsection 4.9(a) or (b), it shall promptly notify the Borrower
(with a copy to the Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Lender to the Borrower (with a copy to the Agent)
shall be conclusive in the absence of manifest error. The Borrower shall not be
obligated to compensate any Lender pursuant to this subsection 4.9 for amounts
accruing prior to the date which is 180 days before such Lender notifies the
Borrower of such event, provided that such notice need not include a computation
of amounts in respect thereof. The agreements
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53
in this subsection shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
4.10 Taxes. (a) All payments made by the Borrower under this Agreement
and any Notes shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes, franchise taxes (imposed in
lieu of net income taxes) and capital taxes imposed on the Agent or any Lender
(or Transferee) as a result of any future, present or former connection between
the Agent or such Lender (or Transferee) and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Lender (or Transferee) having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
Note or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the Agent or any
Lender (or Transferee) hereunder or under any Note, the amounts so payable to
the Agent or such Lender (or Transferee) shall be increased ("increased
amounts") by the amounts necessary so that after making all required deductions
and withholdings (including, without limitation, the payment of all Non-Excluded
Taxes) the Agent or such Lender (or Transferee) receives the amounts equal to
the interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any Non-Excluded Taxes are payable
by the Borrower, the Borrower shall promptly send to the Agent for its own
account or for the account of such Lender (or Transferee), as the case may be, a
certified copy of an original official receipt received by the Borrower showing
payment thereof or other evidence of remittance of Non-Excluded Taxes reasonably
acceptable to the Agent. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the Agent the
required receipts or other reasonably acceptable evidence, the Borrower shall
indemnify the Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent or any Lender as a result of any
such failure. The Borrower will indemnify each Lender (or Transferee) and the
Agent for the amount of Non-Excluded Taxes paid by such Lender (or Transferee)
or the Agent, as the case may be, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. The agreements
in this subsection 4.10 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
(b) Each Lender (and each Transferee) that is not incorporated or
organized under the laws of the United States of America or a state thereof
shall:
(i) in the case of a Lender or a Transferee that is a "bank" under
Section 881(c)(3)(A) of the Code:
(A) on or before the date it becomes a party to this Agreement (or,
in the case of a Loan Participant, on or before the date such Loan
Participant becomes a Loan Participant hereunder) and on or before the
date, if any, such Lender (or Transferee) changes its applicable lending
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54
office (a "New Lending Office"), deliver to the Borrower and the Agent
(y) two properly completed and duly executed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, and (z) an Internal Revenue Service Form W-8
or W-9, or successor applicable form, as the case may be;
(B) deliver to the Borrower and the Agent two further properly
completed and duly executed copies of any such form or certification
on or before the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Borrower or upon the request of the Borrower or the Agent; and
(C) obtain such extensions of time for filing and completing such
forms or certifications as may reasonably be requested by the
Borrower;
(ii) in the case of a Lender or a Transferee that is not a "bank"
under Section 881(c)(3)(A) of the Code:
(A) on or before the date it becomes a party to this Agreement (or,
in the case of a Loan Participant, on or before the date such Loan
Participant becomes a Loan Participant hereunder) deliver to the
Borrower and the Agent (I) a statement under penalties of perjury that
such Lender (x) is not a "bank" under Section 881(c)(3)(A) of the
Code, is not subject to regulatory or other legal requirements as a
bank in any jurisdiction, and has not been treated as a bank for
purposes of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a rating agency
or qualification for any exemption from tax, securities law or other
legal requirements, (y) is not a 10-percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code and
(z) is not a controlled foreign corporation receiving interest from a
related person within the meaning of Section 881(c)(3)(C) of the Code
and (II) a properly completed and duly executed Internal Revenue
Service Form W-8 or applicable successor form;
(B) deliver to the Borrower and the Agent two further properly
completed and duly executed copies of said Form W-8, or any successor
applicable form on or before the date that any such Form W-8 expires
or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Borrower or upon the request of the Borrower; and
(C) obtain such extensions of time for filing and completing such
forms or certifications as may be reasonably requested by the Borrower
or the Agent;
unless in any such case any change in law or regulation has occurred subsequent
to the date such Lender (or Transferee) became a party to this Agreement (or in
the case of a Loan Participant, the date such Loan Participant became a Loan
Participant hereunder) which renders all such
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55
forms inapplicable or which would prevent such Lender from properly completing
and executing any such form with respect to it and such Lender so advises the
Borrower and the Agent in writing no later than 15 calendar days before any
payment hereunder or under any Note is due. Each such Lender (and each
Transferee) shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9 delivered pursuant to subsection 4.10(b)(i), that it is entitled
to an exemption from United States backup withholding tax.
(c) The Borrower shall not be required to indemnify any Lender (or
Transferee), or to pay any increased amounts to any Lender (or Transferee) in
respect of any Non-Excluded Tax, pursuant to this subsection 4.10 to the extent
that (i) any obligation to withhold or deduct amounts with respect to tax
existed on the date such Lender (or Transferee) became a party to this Agreement
(or, in the case of a Transferee that is a Loan Participant, on the date such
Loan Participant became a Loan Participant hereunder) or, with respect to
payments to a New Lending Office, the date such Lender (or Transferee)
designated such New Lending Office with respect to a Loan; provided, however,
that this clause (i) shall not apply to any Transferee or New Lending Office
that becomes a Transferee or New Lending Office as a result of an assignment,
participation, transfer or designation made at the written request of the
Borrower, or (ii) any Lender (or Transferee) fails to comply in full with the
provisions of subsection 4.10(b) hereof.
(d) If a Lender (or Transferee) or the Agent shall become aware that it
is entitled to claim a refund from a Governmental Authority in respect of Non-
Excluded Taxes as to which it has been indemnified by the Borrower, or with
respect to which the Borrower has paid increased amounts, pursuant to this
subsection 4.10, it shall promptly notify the Borrower of the availability of
such refund claim and shall make the appropriate claim to such Governmental
Authority for such refund. If a Lender (or Transferee) or the Agent receives a
refund (including pursuant to a claim for refund made pursuant to the preceding
sentence) in respect of any Non-Excluded Tax as to which it has been indemnified
by the Borrower, or with respect to which the Borrower has paid increased
amounts, pursuant to this subsection 4.10, it shall within 30 days from the date
of such receipt pay over such refund to the Borrower, net of all out-of-pocket
third-party expenses of such Lender (or Transferee) or the Agent.
4.11 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans or converting
any Eurodollar Loans to ABR Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such
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56
failure) in each case at the applicable rate of interest for such Loans provided
for herein over (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
4.12 Change of Lending Office; Filing of Certificates or Documents.
Each Lender agrees that if it makes any demand for payment, or becomes entitled
to any increased amounts, under subsection 4.8, 4.10 or 4.11(a) or if any
adoption or change of the type described in subsection 4.9 shall occur with
respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to designate
a different lending office or file any certificate or document reasonably
requested in writing by the Borrower if such action would reduce or obviate the
need for the Borrower to make payments under subsection 4.8, 4.10 or 4.11(a) or
would eliminate or reduce the effect of any adoption or change described in
subsection 4.9.
4.13 Replacement Lenders. In the event that the Borrower becomes
obligated to pay additional amounts or increased amounts to, or receives notice
from, any Lender pursuant to subsection 4.8, 4.9 or 4.10 then, unless such
Lender has theretofore removed or cured the conditions which result in the
obligation to pay such additional amounts or increased amounts, the Borrower
may, on ten Business Days' prior written notice to the Agent and such Lender,
cause such Lender to (and such Lender shall) assign pursuant to subsection
13.6(c) all of its rights and obligations under this Agreement to another bank
or financial institution which is willing to become a Lender and is acceptable
(which acceptance shall not be unreasonably withheld) to the Agent, for a
purchase price equal to the outstanding principal amount of the Loans payable to
such Lender plus any accrued but unpaid interest on such Loans, any accrued but
unpaid commitment fees in respect of such Lender's Commitment and any other
amounts payable to such Lender under this Agreement (including, without
limitation, amounts payable under subsection 4.11).
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to amend and restate the Existing
Credit Agreement and to maintain and make their respective Loans and issue or
participate in the Letters of Credit, Holdings and the Borrower hereby represent
and warrant to the Agent and each Lender that:
5.1 Financial Condition. (a) The unaudited balance sheets of the
Borrower as at March 30, 1996 and the related unaudited statements of income and
changes in stockholders' equity and of cash flows of the Borrower for the
operating period from September 19, 1995 through March 30, 1996, copies of which
have heretofore been furnished to each Lender, present fairly in all material
respects the financial condition of the Borrower as at such dates, and the
results of its operations and its cash flows for the operating period from
September 19, 1995 through March 30, 1996 (subject to normal year-end audit
adjustments). All such financial
<PAGE>
57
statements have been prepared in accordance with GAAP consistently applied
throughout the periods presented. At the date of the most recent balance sheet
referred to above, the Borrower did not have any material liability or material
obligation which would be required to be included in the financial statements
referred to in this subsection in accordance with GAAP which was not so
included. Except as reflected in the financial statements referred to in this
subsection 5.1 or as set forth on Schedule 5.1(a), during the period from March
30, 1996 to and including the date hereof there has been no sale, transfer or
other disposition by any Loan Party of any material part of its business or
property, no material liabilities were incurred by any Loan Party and there has
been no purchase or other acquisition of any business or property (including any
capital stock of any other Person) by any Loan Party material in relation to the
financial condition of the Borrower at March 30, 1996.
(b) Copies of the Statement of Inventory and Net Property of the
Business as of December 31, 1995 and Financial Summary - Direct Contribution of
the Business for the years ended December 31, 1995, December 31, 1994 and
December 31, 1993; Financial Summary - Direct Contribution for the domestic
retail portion of the Business (excluding Canadian and Food Service Results) for
the quarter ended March 31, 1996 and for the month ended April 30, 1996; and
Statement of Net Sales for the Canadian and Food Service portions of the
Business for the quarter ended March 31, 1996 and for the month ended April 30,
1996 (collectively, the "Quaker Oats Financial Statements") have been furnished
to each Lender. Except as noted in the Quaker Oats Financial Statements, or
otherwise in Schedule 2.11 to the Aunt Jemima/Celeste Acquisition Agreement, the
Quaker Oats Financial Statements: (i) were prepared from the books and records
of Quaker Oats; (ii) except as set forth in Section 2.11 (b)(i) of the Aunt
Jemima/Celeste Acquisition Agreement, have been prepared in accordance with U.S.
GAAP, applied on a consistent basis for all periods presented, have been
prepared by means of following consistent application of internal accounting
practices in use by Quaker Oats, and along with other pertinent financial
records of Quaker Oats have been used to prepare Quaker Oats' consolidated
financial statements, and fairly present, in all material respects, the
inventory and net property of the Aunt Jemima/Celeste Business as of the date
set forth therein and the direct contribution of the Aunt Jemima/Celeste
Business for the period indicated in accordance with U.S. GAAP; and (iii) the
books, records and accounts relating to the Aunt Jemima/Celeste Business are
accurate and complete in all material respects. To the knowledge of Borrower,
Holdings and VDK Foods, neither Quaker Oats nor any of its consolidated
Subsidiaries had, on the date of each Quaker Oats Financial Statement, any
material liability or material obligation with respect to the Aunt
Jemima/Celeste Business which Borrower is assuming pursuant to the Aunt
Jemima/Celeste Acquisition Agreement or for which Borrower could otherwise be
liable and which would be required to be included in such Quaker Oats Financial
Statement in accordance with GAAP which was not so included. Except as reflected
in the financial statements referred to in this subsection 5.1 or as set forth
on Schedule 5.1(b), during the period from May 31, 1996 to and including the
date hereof there has been no sale, transfer or other disposition by Quaker Oats
of any material part of the Aunt Jemima/Celeste Business, no material
liabilities were incurred by any Loan Party with respect to the Aunt
Jemima/Celeste Business (other than Borrower's obligations under the Aunt
Jemima/Celeste Acquisition Documents, the Senior Convertible Loan and under this
Agreement) and there has been no purchase or other acquisition of any business
or property (including any capital stock of any other Person) by any Loan Party
material in relation to the financial condition of the Aunt Jemima/Celeste
Business at May 31, 1996.
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58
(c) The pro forma balance sheet of the Borrower as at March 30, 1996,
certified by a Responsible Officer of the Borrower, copies of which have been
heretofore furnished to each Lender, adjusted to give effect to (as if such
events had occurred on such date) (i) the Aunt Jemima/Celeste Acquisition, (ii)
the receipt by the Borrower of a capital contribution of at least $60,000,000
from Holdings funded by a capital contribution of at least $40,000,000 from VDK
Foods and the $20,000,000 unsecured loan described in subsection 6.1(c)(iii)
which in turn were funded with the net proceeds of the issuance of at least
$60,000,000 of additional Limited Liability Interests, (iii) the making of the
Additional Term Loans to the Borrower hereunder and the Senior Convertible Loan,
and (iv) the fees, expenses and financing costs related to the foregoing,
together with the notes thereto, were prepared based on good faith assumptions
and on the best information available to the Borrower as of the date of delivery
thereof and fairly presents on a pro forma basis the financial position of the
Borrower as at March 30, 1996, as adjusted, as described above, assuming such
events had occurred at such date. Prior to the date hereof, none of VDK Foods,
Holdings or the Borrower engaged in any business, owned any assets or incurred
any liabilities except in connection with the Asset Purchase, the Acquisition or
the Aunt Jemima/Celeste Acquisition or the financing of the Asset Purchase, the
Acquisition or the Aunt Jemima/Celeste Acquisition, the operation of the
Businesses, the Mrs. Paul's Business and the Aunt Jemima/Celeste Business, or as
contemplated by this Agreement, the Asset Purchase Agreement, the Acquisition
Agreement or the Aunt Jemima/Celeste Acquisition Agreement.
5.2 No Change. (a) Since March 30, 1996, there has been no development,
event or circumstance which has had or could reasonably be expected to have a
Material Adverse Effect, and (b) during the period from March 30, 1996 to and
including the date of this Agreement no dividends or other distributions have
been declared, paid or made upon the Capital Stock of VDK Foods, Holdings or the
Borrower nor has any of the Capital Stock of VDK Foods, Holdings or the Borrower
been redeemed, retired, purchased or otherwise acquired for value by the
Borrower or any of its Subsidiaries.
5.3 Existence; Compliance with Law. Each Loan Party (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified or licensed
to do business as a foreign entity 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 except where the failure to be so
qualified and/or in good standing could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect 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, reasonably be expected to have a Material Adverse
Effect.
5.4 Power; Authorization; Enforceable Obligations. Each Loan Party has
the power and authority, and the legal right, to make, deliver and perform the
Loan Documents to which it is a party and, in the case of the Borrower, to
borrow hereunder. Each Loan Party has taken all necessary action to authorize
the Extensions of Credit on the terms and conditions of this Agreement and any
Notes and to authorize the execution, delivery and performance by it of the Loan
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority
(including, without limitation, the
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59
Federal Trade Commission and the Department of Justice) or any other Person is
required to be obtained or made by any Loan Party in connection with the Aunt
Jemima/Celeste Acquisition or the Aunt Jemima/Celeste Acquisition Agreement, the
Extensions of Credit hereunder, the execution, delivery or performance by each
applicable Loan Party or the validity or enforceability with respect to or
against any Loan Party of the Loan Documents to which it is a party or with the
continuing operations of the Borrower and its Subsidiaries other than (i)
consents, authorizations and filings in connection with the Aunt Jemima/Celeste
Acquisition or the Aunt Jemima/Celeste Acquisition Agreement (x) which are
required to be obtained or made and are in full force and effect (each of which
are listed on Schedule 5.4) or (y) which are not required to be obtained or made
prior to consummation of the Aunt Jemima/Celeste Acquisition and are listed on
Schedule 5.4 or (z) which, if not obtained or made, could not reasonably be
expected to have a Material Adverse Effect, (ii) the filing of Uniform
Commercial Code financing statements and filings with the United States Patent
and Trademark Office and the United States Copyright Office to perfect the
security interest that can be perfected by such filings, (iii) recordation of
the Chambersburg Mortgage Second Amendment, the Erie Mortgage Second Amendment,
and any Mortgage to be filed on the Effective Date, (iv) consents,
authorizations and filings in connection with enforcement of the Loan Documents
and (v) as contemplated by subsection 6.1. This Agreement has been, and each
other Loan Document will be, duly executed and delivered on behalf of each Loan
Party that is a party hereto or thereto. This Agreement constitutes, and each
other Loan Document when executed and delivered will constitute, a legal, valid
and binding obligation of each Loan Party that is a party hereto or thereto
enforceable against such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
5.5 No Legal Bar. The execution, delivery and performance of the Loan
Documents, the Extensions of Credit hereunder and the use of the proceeds
thereof by each applicable Loan Party will not violate any Requirement of Law or
Contractual Obligation of any Loan Party which could reasonably be expected to
have a Material Adverse Effect and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation other
than as contemplated in or permitted by the Loan Documents.
5.6 No Material Litigation. Except as set forth in Schedule 5.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower, Holdings
or VDK Foods, threatened by or against any Loan Party or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby or (b) which has a
reasonable possibility of an adverse determination, and if adversely determined,
could reasonably be expected to have a Material Adverse Effect.
5.7 No Default. No Loan Party is in default under or with respect to
any of its Contractual Obligations (including, without limitation, the Senior
Subordinated Notes and the Senior Subordinated Note Indenture) in any respect
which could reasonably be expected to have a Material Adverse Effect. No Default
or Event of Default has occurred and is continuing.
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5.8 Ownership of Property; Liens. To the best of each Loan Party's
knowledge, after giving effect to the Aunt Jemima/Celeste Acquisition, each Loan
Party has or will have good record and marketable title in fee simple to, or a
valid leasehold interest in, all its real property except for such matters as do
not materially adversely affect the use of the property in the conduct of the
business as currently conducted, and good title to, or a valid leasehold
interest in, all its other material property, and none of such property is
subject to any Lien except as permitted by subsection 8.3. Schedule 5.8 sets
forth a true and complete list of all real property owned or leased by the Loan
Parties.
5.9 Intellectual Property. (a) After giving effect to the Asset Purchase
each Loan Party has acquired, pursuant to the Asset Purchase Agreement, that
which the Sellers have represented is the ownership or the license to use all
material patents, trademarks (registered or unregistered), trade names, service
marks, assumed names and copyrights (such items, together with all applications
therefor and all other material intellectual property and proprietary rights,
whether or not subject to statutory registration or protection, of Pillsbury,
Pet or any of their respective Subsidiaries that are used in or necessary for
the conduct of either of the Businesses as conducted on the closing date of the
Asset Purchase Agreement, being collectively referred to herein as the
"Intellectual Property") owned, filed or licensed by Pillsbury, Pet or any of
their respective Subsidiaries or used in or necessary for the conduct of either
of the Businesses as conducted on the closing date of the Asset Purchase
Agreement (other than the Pet Intellectual Property), except where the failure
to so acquire any such Intellectual Property could not reasonably be expected to
have a Material Adverse Effect.
(b) After giving effect to the Acquisition the Borrower has acquired,
pursuant to the Acquisition Agreement, that which Campbell Soup has represented
is the ownership or the license to use all material patents, trademarks
(registered or unregistered), trade names, service marks, assumed names and
copyrights (such items, together with all applications therefor and all other
material intellectual property and proprietary rights, whether or not subject to
statutory registration or protection, of Campbell Soup, CSC or any of their
respective Subsidiaries that are used in or necessary for the conduct of the
Mrs. Paul's Business as conducted on the closing date of the Acquisition
Agreement, being collectively referred to herein as the "Mrs. Paul's
Intellectual Property") owned, filed or licensed by Campbell Soup, CSC or any of
their respective Subsidiaries or used in or necessary for the conduct of the
Mrs. Paul's Business as conducted on the closing date of the Acquisition
Agreement, except where the failure to so acquire any such Mrs. Paul's
Intellectual Property could not reasonably be expected to have a Material
Adverse Effect.
(c) As of the Effective Date, after giving effect to the Aunt
Jemima/Celeste Acquisition the Borrower has acquired, pursuant to the Aunt
Jemima/Celeste Acquisition Agreement, that which Quaker Oats has represented is
the ownership or the license to use all material patents, trademarks (registered
or unregistered), trade names, service marks, assumed names and copyrights (such
items, together with all applications therefor and all other material
intellectual property and proprietary rights, whether or not subject to
statutory registration or protection, of Quaker Oats or any of its Subsidiaries
that are used in or necessary for the conduct of the Aunt Jemima/Celeste
Business as conducted on the closing date of the Aunt Jemima/Celeste Acquisition
Agreement, being collectively referred to herein as the "Aunt
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61
Jemima/Celeste Intellectual Property") owned, filed or licensed by Quaker Oats
or any of its Subsidiaries or used in or necessary for the conduct of the Aunt
Jemima/Celeste Business as conducted on the closing date of the Aunt
Jemima/Celeste Acquisition Agreement, except where the failure to so acquire any
such Aunt Jemima/Celeste Intellectual Property could not reasonably be expected
to have a Material Adverse Effect.
(d) As of each subsequent Borrowing Date, (i) each Loan Party owns, or is
licensed to use, the Intellectual Property, the Mrs. Paul's Intellectual
Property and the Aunt Jemima/Celeste Intellectual Property necessary for the
conduct of its business then conducted except for those the failure to own or
license which could not reasonably be expected to have a Material Adverse Effect
and (ii) no claim of which VDK Foods, Holdings or the Borrower has been given
notice has been asserted and is pending by any Person challenging or questioning
the use by any Loan Party of any such Intellectual Property, Mrs. Paul's
Intellectual Property or Aunt Jemima/Celeste Intellectual Property or the
validity or effectiveness of any such Intellectual Property, Mrs. Paul's
Intellectual Property or Aunt Jemima/Celeste Intellectual Property, nor does VDK
Foods, Holdings or the Borrower know of any valid basis for any such claim,
except for such claims that, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
5.10 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation applicable to any Loan Party could reasonably be expected to have a
Material Adverse Effect.
5.11 Taxes. VDK Foods, Holdings and the Borrower and its Subsidiaries
have filed or caused to be filed all tax returns which, to the knowledge of VDK
Foods, Holdings or the Borrower and its Subsidiaries, are required to be filed
in respect of periods subsequent to the Closing Date and have paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its property in respect of such periods and all other material
taxes imposed on it or any of its property by any Governmental Authority (other
than any taxes the amount or validity of which are being contested in good faith
by appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the applicable Loan Party and other than
any taxes which in the aggregate would not have a Material Adverse Effect as the
case may be) in respect of such periods.
5.12 Federal Regulations. No part of the proceeds of any Loans will be
used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors as now and from time to time hereafter in effect. If
requested by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation G or
Regulation U, as the case may be.
5.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code, except where, in connection with any such event or
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62
noncompliance, the liability which would be likely to result could not be
reasonably expected to have a Material Adverse Effect. No termination of a
Single Employer Plan has occurred except where, in connection with any such
termination, the liability which would be likely to result could not be
reasonably expected to have a Material Adverse Effect, and no Lien which remains
unsatisfied in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by an amount in excess of $5,000,000. Neither the Borrower
nor any Commonly Controlled Entity has had a complete or partial withdrawal from
any Multiemployer Plan; neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer
Plans as of the valuation date most closely preceding the date on which this
representation is made or deemed made; and no such Multiemployer Plan is in
Reorganization or Insolvent, except where, in any such case, the liability which
would be likely to result could not be reasonably expected to have a Material
Adverse Effect.
5.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The Borrower is not subject to regulation under any Federal or State
statute or regulation (other than Regulation X of the Board of Governors) which
limits its ability to incur Indebtedness as contemplated herein.
5.15 Subsidiaries. As of the Effective Date, VDK Foods has no
Subsidiaries other than Holdings, Holdings has no Subsidiaries other than the
Borrower, and the Borrower has no Subsidiaries.
5.16 Purpose of Loans. The proceeds of the Existing Term Loans have been
and shall be used by the Borrower to pay a portion of the purchase price under
the Asset Purchase Agreement and the Acquisition Agreement, to pay related fees
and expenses and to provide for the working capital requirements of the
Businesses and the Mrs. Paul's Business after the Asset Purchase and the
Acquisition. The proceeds of the Revolving Credit Loans and/or Swing Line Loans
have been and shall be used to provide for the working capital requirements of
the Businesses and the Mrs. Paul's Business after the Asset Purchase and the
Acquisition and for general corporate purposes. The proceeds of the Additional
Term Loans shall be used by the Borrower to finance the Aunt Jemima/Celeste
Acquisition, to pay related fees and expenses and to provide for the working
capital requirements of the Aunt Jemima/Celeste Business, the Mrs. Paul's
Business and the Businesses.
5.17 Environmental Matters. Except to the extent that the inaccuracy of
any of the following (or the circumstances giving rise to such inaccuracy),
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect:
(a) The facilities and properties owned, leased or operated by the
Borrower or any of its Subsidiaries (the "Properties") do not contain any
Hazardous Materials in amounts or concentrations which (i) constitute a
violation of, or (ii) could give rise
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63
to any liability under, any Environmental Law or could interfere with the
continued operation of the Properties or could reasonably be expected to
impair the fair saleable value thereof.
(b) The Borrower and its Subsidiaries and the Properties are in
compliance with, and to the knowledge of the Borrower and its
Subsidiaries have in the last three years been in compliance with, all
applicable Environmental Laws and applicable Environmental Permits, and
the Borrower and its Subsidiaries reasonably believe that they will be
able to comply with all applicable Environmental Laws in the future and
renew or obtain all Environmental Permits necessary for their operations
in the future.
(c) Neither the Borrower nor any of its Subsidiaries has received any
written notice of violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the
Businesses, nor to the knowledge of the Borrower or any of its
Subsidiaries is such notice being threatened.
(d) Hazardous Materials have not been transported, disposed of,
emitted, discharged, or otherwise released or threatened to be released,
nor has their disposal been arranged for, (i) by the Borrower or any of
its Subsidiaries in violation of, or (ii) in a manner or to a location
which could reasonably be expected to give rise to liability under, any
applicable Environmental Law; nor have any Hazardous Materials been
generated, treated, stored, emitted, discharged or otherwise released or
threatened to be released or disposed of at, on or under any of the
Properties in violation of, or in a manner that could reasonably be
expected to give rise to liability under, any applicable Environmental
Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened, under any Environmental Law to which the Borrower or any
Subsidiary is or to the knowledge of the Borrower or any of its
Subsidiaries will be named as a party, nor are there any consent decrees
or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Borrower or any of its
Subsidiaries, or the Properties or the Businesses.
5.18 Regulation H. To the extent available, the Borrower has obtained for
all Mortgaged Properties which are located in a "flood hazard area", as
designated in any Flood Insurance Rate Map published by the Federal Emergency
Management Agency, flood insurance in such total amount as the Agent has from
time to time reasonably required.
5.19 Accuracy of Information. The factual statements and information
contained in the Confidential Information Memorandum dated June, 1996 relating
to VDK Foods and its Subsidiaries (as the same may be supplemented in writing
through the Effective Date, the "Information Memorandum"), when taken as a
whole, were, as of the date of such Information Memorandum or the dates
otherwise specified therein or written supplements thereto, accurate
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in all material respects and did not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading, provided that (a) with respect to trade data which relates to a
Person which is not a Loan Party or an Affiliate thereof, the Borrower
represents and warrants only that such information is believed by it in good
faith to be accurate in all material respects, (b) the statements therein
describing documents and agreements are summary only and as such are qualified
in their entirety by reference to such documents and agreements, (c) to the
extent any such information therein was based upon or constitutes a forecast or
projection or pro forma financial information, Holdings and the Borrower
represent only that such forecasts or projections or pro forma financial
information were based upon good faith estimates and assumptions believed by
management of the Borrower to be reasonable at the time made and (d) as to the
information which is specified as having been supplied by third parties,
Holdings and the Borrower represent only that they are not aware of any material
misstatement or omission therein.
5.20 Solvency. As of the Effective Date, after giving effect to the Aunt
Jemima/Celeste Acquisition, the making of the Additional Term Loans hereunder
and the other transactions contemplated to occur on the Effective Date each Loan
Party is Solvent.
5.21 Aunt Jemima/Celeste Acquisition Agreement. The Agent has received a
complete copy of each of the Aunt Jemima/Celeste Acquisition Agreement and each
of the other Aunt Jemima/Celeste Acquisition Documents (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto) and all amendments and waivers relating thereto and other side letters
or agreements affecting the terms thereof. As of the Effective Date, none of
such documents and agreements has been amended or supplemented, nor have any of
the provisions thereof been waived, in any material respect, except pursuant to
a written agreement or instrument which has heretofore been consented to by the
Agent. As of the Effective Date, to the knowledge of Holdings and the Borrower,
the representations and warranties contained in the Aunt Jemima/Celeste
Acquisition Agreement and each of the other Aunt Jemima/Celeste Acquisition
Documents are true and correct in all material respects on the Effective Date as
if made on and as of the Effective Date (except as contemplated by the Aunt
Jemima/Celeste Acquisition Agreement or the other Aunt Jemima/Celeste
Acquisition Documents).
5.22 Security Documents. (a) The Guarantee and Collateral Agreement is
effective to create in favor of the Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in all the Collateral
described therein and proceeds thereof and, upon completion of the filings and
other actions specified on Schedule 3 to the Guarantee and Collateral Agreement,
the Guarantee and Collateral Agreement shall constitute fully perfected, first
priority Liens on, and security interests in, all right, title and interest of
Holdings, the Borrower and its Subsidiaries in the Collateral described therein
and in proceeds thereof superior in right to any other Person other than Liens
permitted hereby.
(b) The Borrower Patent and Trademark Security Agreement is effective to
create in favor of the Agent, for the ratable benefit of the Lenders, a legal,
valid and enforceable security interest in all the Collateral described therein
and proceeds thereof and, upon completion of the filings and other actions
specified on Schedule 3 to the Borrower Patent and Trademark Security Agreement,
the Borrower Patent and Trademark Security Agreement shall constitute fully
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65
perfected, first priority Liens on, and security interests in, all right, title
and interest of the Borrower in the Collateral described therein and in proceeds
thereof superior in right to any other Person other than Liens permitted hereby.
(c) The Mrs. Paul's Patent and Trademark Security Agreement is effective
to create in favor of the Agent, for the ratable benefit of the Lenders, a
legal, valid and enforceable security interest in all the Collateral described
therein and proceeds thereof and, upon completion of the filings and other
actions specified on Schedule 3 to the Mrs. Paul's Patent and Trademark Security
Agreement, the Mrs. Paul's Patent and Trademark Security Agreement shall
constitute fully perfected, first priority Liens on, and security interests in,
all right, title and interest of the Borrower in the Collateral described
therein and in proceeds thereof superior in right to any other Person other than
Liens permitted hereby.
(d) The Aunt Jemima/Celeste Patent and Trademark Security Agreement is
effective to create in favor of the Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in all the Collateral
described therein and proceeds thereof and, upon completion of the filings and
other actions specified on Schedule 3 to the Aunt Jemima/Celeste Patent and
Trademark Security Agreement, the Aunt Jemima/Celeste Patent and Trademark
Security Agreement shall constitute fully perfected, first priority Liens on,
and security interests in, all right, title and interest of the Borrower in the
Collateral described therein and in proceeds thereof superior in right to any
other Person other than Liens permitted hereby.
(e) The properties listed on Schedule 5.8 constitute all material real
properties owned or leased by Holdings or any of its Subsidiaries. The Mortgages
are each effective to create in favor of the Agent, for the ratable benefit of
the Lenders, a legal, valid and enforceable Lien on the properties described
therein and proceeds thereof, and each Mortgage constitutes a fully perfected,
first priority Lien on, and security interest in, all right, title and interest
of the Loan Parties in the properties described therein and the proceeds
thereof, superior in right to any other Person other than Liens permitted
hereby.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Effectiveness of Amended and Restated Credit and
Guarantee Agreement and to Making of Additional Term Loans. The effectiveness
of this Agreement and the agreement of each Term Loan Lender to make the
Additional Term Loan requested to be made by it is subject to the satisfaction,
immediately prior to or concurrently with the making of such Extension of Credit
on the Effective Date, of the following conditions precedent:
(a) Loan Documents. The Agent shall have received (i) this Agreement,
executed and delivered by a duly authorized officer of Holdings, the
Borrower and the Required Transaction Lenders with a counterpart for each
Lender, (ii) for the account of each Tranche A Term Loan Lender which
requests a Tranche A Term Note on the Effective Date, a Tranche A Term
Note conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower, (iii) for the account of each Tranche
B Term Loan Lender which requests a Tranche B Term Note on the Effective
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66
Date, a Tranche B Term Note conforming to the requirements hereof and
executed by a duly authorized officer of the Borrower, (iv) for the
account of each Tranche C Term Loan Lender which requests a Tranche C
Term Note on the Effective Date, a Tranche C Term Note conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower, (v) the GCA Second Amendment, executed and delivered by a duly
authorized officer of each Loan Party party thereto, with a counterpart
for the Agent and a counterpart or a copy for each Lender, (vi) the Aunt
Jemima/Celeste Patent and Trademark Security Agreement, executed and
delivered by a duly authorized officer of the Borrower, with a
counterpart for the Agent and a counterpart or a copy for each Lender,
(vii) a Borrower Mortgage or Subsidiary Mortgage, as the case may be, for
each material real property owned or leased by Holdings or any of its
Subsidiaries acquired by Holdings or any of its Subsidiaries in
connection with the Aunt Jemima/Celeste Acquisition, each executed and
delivered by a duly authorized officer of each Loan Party party thereto,
with a counterpart for the Agent and a counterpart or a copy for each
Lender, (viii) the Chambersburg Mortgage Second Amendment and the Erie
Mortgage Second Amendment, each executed and delivered by a duly
authorized officer of each Loan Party party thereto, with a counterpart
for the Agent and a counterpart or a copy for each Lender and (ix) the
VDK Foods Acknowledgement and Consent, executed and delivered by a duly
authorized officer of VDK Foods, with a counterpart for the Agent and a
counterpart or a copy for each Lender.
(b) Senior Convertible Loan. As of the Effective Date, the Agent
shall have received evidence reasonably satisfactory to it that the
Borrower shall have received at least $20,000,000 in cash from loans
under the Senior Convertible Loan and that Holdings has guaranteed the
Borrower's obligations under the Senior Convertible Loan and cash
collateralized its guarantee.
(c) Issuance of Common Equity and Limited Liability Interests and
Intercompany Loans. As of the Effective Date, the Agent shall have
received evidence reasonably satisfactory to it that (i) VDK Foods shall
have issued additional Limited Liability Interests for at least
$60,060,000 in gross cash proceeds, of which approximately $275,000 will
be paid by certain employees of the Borrower, $34,801,000 will be paid by
Fenway, $12,492,000 will be paid by National Sun Industries and
$12,492,000 will be paid by UBS, (ii) VDK Foods shall have made a capital
contribution of at least $40,000,000 to Holdings in consideration for
Holding's issuance of its common stock to VDK Foods, (iii) VDK Foods
shall have made an unsecured loan of at least $20,000,000 to Holdings and
(iv) Holdings shall have made a cash capital contribution of at least
$40,000,000 to the Borrower in consideration for the Borrower's issuance
of its common stock to Holdings.
(d) Senior Indebtedness. As of the Effective Date, the Agent shall
have received evidence reasonably satisfactory to it that the Extensions
of Credit under this Agreement (including, without limitation, the
Revolving Credit Loans, the Existing Term Loans, the Additional Term
Loans and the Letters of Credit) shall constitute
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"Senior Indebtedness" (as such term is defined in the Senior Subordinated
Note Indenture) under the Senior Subordinated Note Indenture.
(e) Aunt Jemima/Celeste Acquisition. The Aunt Jemima/Celeste
Acquisition (including the acquisition of the sole perpetual license of
the "Aunt Jemima" trademark for use in the Aunt Jemima/Celeste Business)
shall be consummated concurrently with the making of the Additional Term
Loans by the Term Loan Lenders hereunder in accordance with the Aunt
Jemima/Celeste Acquisition Agreement for a purchase price not exceeding
$190,000,000 (excluding the cost of excess inventory), and the Agent
shall have received, with a copy for each Lender, (i) a conformed copy of
the Aunt Jemima/Celeste Acquisition Agreement (and any supplementary
information delivered to the Borrower pursuant to Section 9.18 thereof),
all of which shall be in form and substance satisfactory to the Agent and
the Required Transaction Lenders, (ii) a conformed copy of the Aunt
Jemima/Celeste Transition Services Agreement, which shall be in form and
substance satisfactory to the Agent and the Required Transaction Lenders,
(iii) a conformed copy of each of the Trademark License Agreement, the
Interim Trademark and Trade Name License Agreement, the Patent License
Agreement, the McDonald's Co-Pack Agreement and the Shared Technology
License Agreement (each as defined in the Aunt Jemima/Celeste Acquisition
Agreement), and the Canadian Agency Agreement dated July __, 1996 between
the Borrower and The Quaker Oats Company of Canada Limited, (iv) a
conformed copy of the Amended and Restated Management Services Agreement,
dated as of July ___, 1996, between the Borrower and Dartford, which
shall be in form and substance satisfactory to the Agent and the Required
Transaction Lenders, and (v) the legal opinion of counsel to Quaker Oats,
delivered pursuant to Section 1.8 of the Aunt Jemima/Celeste Acquisition
Agreement, which opinion shall contain a statement or be accompanied by a
letter addressed to each Lender and dated such date, to the effect that
each such Lender may rely upon such opinion to the same extent as if it
were originally addressed to them.
(f) Sources and Uses of Funds. The sources and uses of funds in
connection with the Aunt Jemima/Celeste Acquisition shall be as set forth
on Schedule 6.1(f).
(g) Borrowing Certificate. The Agent shall have received, with a copy
for each Lender, a certificate of the Borrower, dated the Effective Date,
substantially in the form of Exhibit M, with appropriate insertions and
attachments, satisfactory in form and substance to the Agent, executed by
the President or any Vice President and the Secretary or any Assistant
Secretary of the Borrower.
(h) Corporate Proceedings of the Borrower. The Agent shall have
received, with a copy for each Lender, a copy of the resolutions, in form
and substance satisfactory to the Agent, of the Board of Directors of the
Borrower authorizing (i) the execution, delivery and performance of this
Agreement, the other Loan Documents to which it is a party and the Aunt
Jemima/Celeste Acquisition Agreement, (ii) the Extensions of Credit
contemplated hereunder and (iii) the granting by it of the Liens created
pursuant to the Borrower Security Documents, certified by the Secretary
or an
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Assistant Secretary of the Borrower as of the Effective Date, which
certificate shall be in form and substance reasonably satisfactory to the
Agent and shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded.
(i) Borrower Incumbency Certificate. The Agent shall have received,
with a copy for each Lender, a Certificate of the Borrower, dated the
Effective Date, as to the incumbency and signature of the officers of the
Borrower executing any Loan Document or the Aunt Jemima/Celeste
Acquisition Agreement or any certificate or other document to be
delivered by the Borrower pursuant hereto or thereto reasonably
satisfactory in form and substance to the Agent, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of the Borrower.
(j) Corporate Proceedings of Holdings. The Agent shall have received,
with a copy for each Lender, a copy of the resolutions, in form and
substance reasonably satisfactory to the Agent, of the Board of Directors
of Holdings authorizing (i) the execution, delivery and performance of
this Agreement and the other Loan Documents to which Holdings is a party
and (ii) the granting by it of the Liens created pursuant to the Security
Documents to which it is a party, certified by the Secretary or an
Assistant Secretary of Holdings as of the Effective Date, which
certificate shall be in form and substance reasonably satisfactory to the
Agent and shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded.
(k) Holdings Incumbency Certificate. The Agent shall have received,
with a copy for each Lender, a certificate of Holdings, dated the
Effective Date, as to the incumbency and signature of the officers of
Holdings executing any Loan Document or any certificate or other document
to be delivered by Holdings pursuant hereto or thereto reasonably
satisfactory in form and substance to the Agent, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of Holdings.
(l) Proceedings of VDK Foods. The Agent shall have received, with a
copy for each Lender, a copy of the resolutions, in form and substance
reasonably satisfactory to the Agent, of the members of VDK Foods
authorizing the execution, delivery and performance of the VDK Foods
Agreement and the VDK Foods Acknowledgement and Consent, certified by the
Secretary or an Assistant Secretary of VDK Foods as of the Effective
Date, which certificate shall be in form and substance reasonably
satisfactory to the Agent and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(m) VDK Foods Incumbency Certificate. The Agent shall have received,
with a copy for each Lender, a certificate of VDK Foods, dated the
Effective Date, as to the incumbency and signature of the officers of VDK
Foods executing any Loan Document or any certificate or other document to
be delivered by VDK Foods pursuant hereto or thereto reasonably
satisfactory in form and substance to the Agent, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of VDK Foods.
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(n) Organizational Documents. The Agent shall have received, with a
copy for each Lender, true and complete copies of the certificate of
incorporation and by-laws of each Loan Party (or, in the case of VDK
Foods, the certificate of formation and Limited Liability Company
Agreement), certified as of the Effective Date as complete and correct
copies thereof by the Secretary or an Assistant Secretary of such Loan
Party.
(o) Consents, Licenses and Approvals. The Agent shall have received,
with a copy for each Lender, a certificate of a Responsible Officer of
the Borrower (i) attaching copies of all consents and authorizations of
and filings with any Governmental Authority (including, without
limitation, the Federal Trade Commission and the Department of Justice)
or any other Person that are required to be obtained or made by any Loan
Party in connection with the Aunt Jemima/Celeste Acquisition or the Aunt
Jemima/Celeste Acquisition Agreement, the Extensions of Credit hereunder
(including, without limitation, the Additional Term Loans), the
execution, delivery or performance by each applicable Loan Party or the
validity or enforceability with respect to or against any Loan Party of
the Loan Documents to which it is a party or with the continuing
operations of the Borrower and its Subsidiaries (other than those set
forth in clauses (i)(y), (i)(z), (ii), (iii) or (iv) of subsection 5.4)
as are reasonably requested by the Agent, and (ii) stating that such
consents, authorizations and filings are in full force and effect and
that all applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose material adverse conditions on the
Aunt Jemima/Celeste Acquisition or the financing thereof, and each such
consent, authorization and filing shall be in form and substance
reasonably satisfactory to the Agent.
(p) Fees and Expenses. The Agent and the Lenders shall have received
all fees and expenses to be received on or prior to the Effective Date
referred to in (i) this Agreement or (ii) the Fee Letter dated June 25,
1996 among Chemical Bank, CSI and the Borrower; and the Agent shall have
received for the account of the applicable Existing Lenders the amounts,
if any, payable pursuant to subsection 4.11.
(q) Legal Opinions. The Agent shall have received, with a counterpart
for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Richards & O'Neil, LLP,
special counsel to VDK Foods, Holdings and the Borrower, in form and
substance satisfactory to the Agent;
(ii) the executed legal opinion of Bass, Berry and Sims PLC,
Tennessee local counsel to Holdings and the Borrower, in form and
substance satisfactory to the Agent; and
<PAGE>
70
(iii) the executed legal opinion of Buchanan Ingersoll
Professional Corporation, Pennsylvania local counsel to Holdings and
the Borrower, in form and substance satisfactory to the Agent.
Such legal opinions shall include, without limitation, opinions to the
effect that (i) the consummation of the Aunt Jemima/Celeste Acquisition,
the incurrence by the Borrower of the Additional Term Loans and the
transactions contemplated by this Agreement shall not breach, or require
any consent under, the terms of the Senior Subordinated Notes or the
Senior Subordinated Note Indenture and (ii) the Revolving Credit Loans,
the Letters of Credit and the Term Loans shall constitute "Senior
Indebtedness" (as such term is defined in the Senior Subordinated Note
Indenture) under the Senior Subordinated Note Indenture.
(r) Actions to Perfect Liens; Lien Searches. The Agent shall have
received evidence in form and substance reasonably satisfactory to it
that all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on
form UCC-1, necessary or, in the opinion of the Agent, desirable to
perfect the Liens created by the Security Documents shall have been
completed (or, to the extent that any such filings, recordings,
registrations and other actions shall not have been completed,
arrangements satisfactory to the Agent for the completion thereof shall
have been made). The Agent shall have received, with a copy for each
Lender, the results of a recent lien search in each of the jurisdictions
and offices listed on Schedule 3 to the Guarantee and Collateral
Agreement (after giving effect to the GCA Second Amendment with respect
to UCC liens only) and each other jurisdiction and office in the United
States where assets of the Borrower and its Subsidiaries (including,
without limitation, assets being acquired in the Aunt Jemima/Celeste
Acquisition with respect to UCC liens only) are located or recorded, and
(i) such search shall reveal no Liens on any of such assets other than
those permitted pursuant to Section 8.3 or (ii) the Agent shall have
received evidence satisfactory to it that UCC-3 termination statements
and other Lien release documentation shall have been duly executed and
properly filed, and all other necessary actions shall have been duly
taken, to the extent necessary to effect the complete and irrevocable
release of all Liens other than those permitted pursuant to Section 8.3
on the assets of the Borrower and its Subsidiaries (including, without
limitation, assets being acquired in the Aunt Jemima/Celeste
Acquisition).
(s) Endorsement to Title Insurance Policy. The Agent shall have
received in respect of each parcel covered by each of the Chambersburg
Mortgage Second Amendment and the Erie Mortgage Second Amendment an
endorsement to each mortgagee's title policy (or policies) dated the
Effective Date in form and substance reasonably satisfactory to the Agent
which will insure such Mortgage as amended by the relevant Mortgage
Amendment. The Agent shall have received evidence satisfactory to it that
all premiums in respect of each such endorsement, and all charges for
mortgage recording tax, if any, have been paid.
<PAGE>
71
(t) Surveys. The Agent shall have received, and the title insurance
company issuing the policy referred to in subsection 6.1(u) (the "Title
Insurance Company") shall have received, maps or plats of an as-built
survey of the primary buildings, structures or other improvements located
on the sites of the Borrower's Jackson, Tennessee property certified to
the Agent and the Title Insurance Company in a manner satisfactory to
them, dated a date satisfactory to the Agent and the Title Insurance
Company by an independent professional licensed land surveyor
satisfactory to the Agent and the Title Insurance Company, which maps or
plats and the surveys on which they are based shall be made in accordance
with the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title Association
and the American Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be surveyed and
shown on such maps, plats or surveys the following: (i) the locations on
such sites of all the primary buildings, structures and other
improvements and the established building setback lines; (ii) the lines
of streets abutting the sites and width thereof adjacent to the primary
buildings, structures or other improvements located on the site; (iii)
all access and other easements appurtenant to primary buildings,
structures or other improvements located on the sites or necessary or
desirable to use primary buildings, structures or other improvements
located on the sites; (iv) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar encumbrances
affecting the primary buildings, structures or other improvements located
on the site, whether recorded, apparent from a physical inspection of the
sites or otherwise known to the surveyor; (v) any visible encroachments
on any adjoining property by the primary building structures and
improvements on the sites; and (vi) if the site is described as being on
a filed map, a legend relating the survey to said map.
(u) Title Insurance Policy. The Agent shall have received in respect
of the Borrower's Jackson, Tennessee property a mortgagee's title policy
(or policies) or marked up unconditional binder for such insurance dated
the Closing Date. Each such policy shall (i) be in an amount reasonably
satisfactory to the Agent; (ii) be issued at ordinary rates; (iii) insure
that the Mortgage insured thereby creates a valid first Lien on such
parcel free and clear of all defects and encumbrances, except such as may
be approved by the Agent or as otherwise permitted by this Agreement;
(iv) name the Agent for the benefit of the Lenders as the insured
thereunder; (v) be in the form of ALTA Loan Policy - 1970 if available
(provided, however, that any such policy may contain a creditor's rights
exception); (vi) contain such endorsements and affirmative coverage as
the Agent may reasonably request and are customary in transactions of
this nature and available without excessive premium and (vii) be issued
by title companies satisfactory to the Agent (including any such title
companies acting as co-insurers or reinsurers, at the option of the
Agent). The Agent shall have received evidence satisfactory to it that
all premiums in respect of each such policy, and all charges for mortgage
recording tax, if any, have been paid.
<PAGE>
72
(v) Flood Insurance. If requested by the Agent, the Agent shall have
received evidence reasonably satisfactory to it that flood insurance
complying with the requirements of subsection 5.18 is in effect.
(w) Insurance. The Agent shall have received evidence in form and
substance satisfactory to it that all of the requirements of subsection
7.5 and those Sections of the Security Documents requiring the
maintenance of insurance shall have been satisfied.
(x) Appraisals and Solvency. The Agent shall have received from
American Appraisal Associates, with a copy for each Lender, (i)
appraisals with respect to the property described on Schedule 6.1(x) and
(ii) a solvency opinion with respect to the solvency of the Borrower and
its Subsidiaries as of the Effective Date after giving effect to the Aunt
Jemima/Celeste Acquisition and the transactions contemplated hereby, in
each case reasonably satisfactory in form and substance to the Agent.
(y) Environmental Audit. The Lenders shall have received a
satisfactory environmental audit with respect to the Jackson, Tennessee
manufacturing facility acquired by the Borrower in connection with the
Aunt Jemima/Celeste Acquisition from a firm satisfactory to the Lenders.
(z) Financial Statements. The Agent shall have received, with a copy
for each Lender, (i) each of the financial statements referred to in
subsections 5.1(a) and 5.1(b), (ii) the pro forma balance sheet referred
to in subsection 5.1(c), and (iii) a certificate of the chief financial
officer of the Borrower indicating pro forma compliance by the Borrower
and its Subsidiaries with the covenants contained in Section 8, which
certificate shall be in form and substance reasonably satisfactory to the
Agent.
(aa) No Default. No default or event of default under the Senior
Subordinated Note Indenture or the Existing Credit Agreement shall have
occurred and be continuing or would occur as a consequence of the
financing contemplated hereby.
(ab) Aunt Jemima/Celeste Acquisition Fees and Expenses. The Agent
shall have received reasonably satisfactory evidence that the cash fees
and expenses to be incurred by VDK Foods, Holdings, the Borrower and its
Subsidiaries in connection with the Aunt Jemima/Celeste Acquisition and
the financing thereof will not exceed $7,500,000 in the aggregate.
6.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any Extension of Credit requested to be made by it on any date
(including, without limitation, its initial Extension of Credit), and the
agreement of the Issuing Bank to issue any Letter of Credit for which an
Application is presented, is subject to the satisfaction of the following
conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan
<PAGE>
73
Documents shall be true and correct in all material respects on and as of
such date (and, in the case of the representations and warranties made on
the Effective Date, after giving effect to the Aunt Jemima/Celeste
Acquisition) as if made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date in
which case such representations and warranties shall be true and correct
in all material respects as of such earlier date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Extension of
Credit requested to be made on such date.
(c) Borrowing Requests and Applications. The Agent shall have
received a request or Application for such Loan or Letter of Credit if
and as required by subsection 3.2, 3.8, 3.11 or 3.14, as applicable.
Each borrowing by and Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date thereof that the conditions contained in clauses (a) and (b) of this
subsection have been satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agent hereunder or under any
other Loan Document or any Letter of Credit remains outstanding, it shall and
(except in the case of delivery of financial information, reports and notices
and subsection 7.1 and 7.2 which shall be performed by the Borrower) shall cause
each of its Subsidiaries to, unless the Required Lenders shall otherwise consent
in writing:
7.1 Financial Statements. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited
consolidated and consolidating balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
audited consolidated and consolidating statements of income and changes
in stockholders' equity and of cash flows for such 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 a
qualification arising out of the scope of the audit, by Price Waterhouse
LLP or other independent certified public accountants of nationally
recognized standing;
(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 Borrower, the unaudited consolidated and consolidating
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such quarter and the related unaudited consolidated and
consolidating statements of income and changes in stockholders'
<PAGE>
74
equity and of cash flows of the Borrower and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer of
the Borrower as being fairly stated in all material respects (subject to
normal year-end audit adjustments);
(c) as soon as available, but in any event not later than (i) 45 days
after the end of July and August 1996 and (ii) 30 days after the end of
each month (other than September, December, March and June) of each
fiscal year of the Borrower thereafter, the unaudited consolidated and
consolidating statement of income (through the "Earnings Before Tax"
line) of the Borrower and its consolidated Subsidiaries for such month
and the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer of the Borrower as being fairly stated
in all material respects (subject to normal year-end audit adjustments);
and
(d) 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 Borrower, an operating report of the Borrower and its
consolidated Subsidiaries for such quarter and the portion of the fiscal
year through the end of such quarter, which discusses and provides
figures in comparative form to the previous year regarding the major
product lines in terms of sales and product profitability, certified by a
Responsible Officer of the Borrower as being fairly stated in all
material respects;
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and, other than the
operating report referred to in subsection (d) above, in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or Responsible Officer, as the
case may be, and disclosed therein).
7.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a), a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default having occurred as of the
end of the fiscal year covered by such financial statements in respect of
subsection 8.1, 8.2, 8.3, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.11(i), 8.12 or
8.13, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) and (b), a certificate of a Responsible
Officer (i) stating that, to the best of such Responsible Officer's
knowledge, the Borrower during such period has observed or performed all
of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to be observed,
performed or satisfied by it during such period, and that such
Responsible Officer has
<PAGE>
75
obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) setting forth in reasonable detail
the calculations required to determine compliance with subsections 8.1
and 8.8;
(c) not later than sixty days after the end of each fiscal year of
the Borrower, commencing with the fiscal year ending in June 1996, a copy
of the projections by the Borrower of the operating budget and cash flow
budget of the Borrower and its Subsidiaries for the succeeding fiscal
year, such projections to be accompanied by a certificate of a
Responsible Officer of the Borrower to the effect that such projections
have been prepared using assumptions believed in good faith by management
of the Borrower to be reasonable at the time made and that such
Responsible Officer has no reason to believe that such projections are
incorrect or misleading in any material respect;
(d) within five Business Days after the same are sent, copies of all
financial statements and reports which any Loan Party sends to the
holders of the Senior Subordinated Notes or to the holders of any
securities of the Loan Parties registered with the SEC, and within five
Business Days after the same are filed, copies of all financial
statements and reports which any Loan Party may make to, or file with,
the SEC or any successor or analogous Governmental Authority;
(e) promptly upon receipt thereof, copies of all reports submitted to
the Borrower by independent certified public accountants in connection
with each annual, interim or special audit of the books of the Borrower
or any of its Subsidiaries made by such accountants, including, without
limitation, any management letter commenting on the Borrower's internal
controls submitted by such accountants to management in connection with
their annual audit; and
(f) promptly, such additional financial and other information within
the possession of the Borrower or any of its Subsidiaries as any Lender
may from time to time reasonably request through the Agent.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except as contemplated by this
Agreement or where the amount or validity thereof is then 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 Borrower or any of its
Subsidiaries, as the case may be.
7.4 Conduct of Business; Maintenance of Existence; Compliance with Laws.
Continue to engage in business of the same general type as now conducted by the
Businesses, the Mrs. Paul's Business and the Aunt Jemima/Celeste Business and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business except as otherwise
permitted pursuant to subsection 8.5; comply in all material respects with all
Contractual Obligations and Requirements of Law (excluding, for purposes of this
subsection 7.4,
<PAGE>
76
Requirements of Law and Contractual Obligations specifically addressed elsewhere
in this Section 7) except where (a) any such Contractual Obligation is being
contested in good faith, a bona fide dispute exists with respect to any such
Contractual Obligation or failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (b) the
failure to comply with any such Requirement of Law could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all property material to
the conduct of its business (including, without limitation, the Mortgaged
Property) in good working order and condition; maintain insurance with
financially sound and reputable insurance companies (or, to the extent
consistent with prudent business practice, a program of self-insurance) on such
of its property and 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 (including, without limitation, the insurance
required pursuant to the Security Documents); and furnish to each Lender, upon
written request, full information as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions. Keep proper
financial records in conformity with GAAP and, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect, all
Requirements of Law; and permit (a) representatives of the Agent (and, after the
occurrence and during the continuance of an Event of Default, any Lender) to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time during normal business hours,
upon reasonable notice, and as often as may reasonably be desired, and (b) upon
reasonable notice during normal business hours, representatives of the Agent or
any Lender to discuss the business, operations, properties and financial and
other condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified public
accountants.
7.7 Notices. Promptly give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default by the Borrower or any of its
Subsidiaries under any Contractual Obligation of the Borrower or any of
its Subsidiaries of which any Loan Party has (or should have) knowledge
or notice or (ii) litigation, investigation or proceeding which may exist
at any time between the Borrower or any of its Subsidiaries and any
Governmental Authority of which any Loan Party has (or should have)
knowledge or notice, which in either case, if not cured or resolved or if
adversely determined, as the case may be, could reasonably be expected to
have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries, of which any Loan Party has (or should have) knowledge or
notice, in which the amount involved is not covered by insurance or in
which injunctive or similar relief is sought which, if adversely
determined, could reasonably be expected to have a Material Adverse
Effect;
<PAGE>
77
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any
Plan, in each of cases (i) and (ii), where such event could reasonably be
expected to have a Material Adverse Effect; and
(e) any development or event of which any Loan Party has (or should
have) knowledge or notice which could reasonably be expected to have a
Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
7.8 Environmental Laws. (a) Comply with, and use reasonable efforts to
ensure compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and use reasonable
efforts to ensure that all tenants and subtenants obtain and comply with and
maintain, any and all Environmental Permits required by applicable Environmental
Laws, except where the failure to so comply or obtain such permits could not
reasonably be expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws, except to the extent
that the pendency of such proceedings could not reasonably be expected to have a
Material Adverse Effect.
7.9 Maintenance of Liens of the Security Documents. Promptly, upon the
reasonable request of the Agent, at the Borrower's expense, execute, acknowledge
and deliver, or cause the execution, acknowledgement and delivery of, and
thereafter register, file or record, or cause to be registered, filed or
recorded, in an appropriate governmental office, any document or instrument
supplemental to or confirmatory of the Security Documents or otherwise
reasonably deemed by the Agent necessary or desirable for the continued
validity, perfection and priority of the Liens on the Collateral covered
thereby.
7.10 Pledge of After Acquired Property; Additional Guarantors. (a) If
at any time following the Closing Date the Borrower or any of its Subsidiaries
shall acquire property of any nature whatsoever having a value in excess of
$100,000 which is intended by the terms of the applicable Security Document to
be, but is not, subject to the Liens created by the Security Documents, the
Borrower shall, or shall cause the relevant Subsidiaries to, as soon as possible
and in no event later than 30 days after the relevant acquisition date and, to
the extent permitted
<PAGE>
78
by applicable law, grant to the Agent for the ratable benefit of the Lenders a
first priority (subject to Liens permitted under subsection 8.3) Lien (to the
extent the applicable Loan Party is then permitted to grant such a Lien) on such
property as collateral security for the Obligations pursuant to documentation
reasonably satisfactory in form and substance to the Agent. The Borrower, at its
own expense, shall execute, acknowledge and deliver, or cause the execution,
acknowledgement and delivery of, and thereafter register, file or record in an
appropriate governmental office, any document or instrument (including legal
opinions, title insurance, consents and corporate documents) and take all such
actions reasonably deemed by the Agent to be necessary or desirable to ensure
the creation, priority and perfection of such Lien.
(b) (i) The Borrower shall cause each new Subsidiary (other than a
Foreign Subsidiary) of the Borrower created or acquired after the Closing Date,
promptly upon such creation or acquisition, to execute an instrument in form and
substance reasonably satisfactory to the Agent (it being acknowledged and agreed
that an instrument in the form attached to the Guarantee and Collateral
Agreement as Exhibit A thereto shall satisfy this requirement) pursuant to which
such new Subsidiary shall become a party to the Guarantee and Collateral
Agreement as a grantor and a guarantor thereunder, and (ii) the Borrower shall,
or shall cause the Subsidiary of the Borrower which holds the Capital Stock of
such new Subsidiary to, execute and deliver an instrument in form and substance
reasonably satisfactory to the Agent (it being acknowledged and agreed that an
instrument in the form attached to the Guarantee and Collateral Agreement as
Exhibit B thereto shall satisfy this requirement) providing for the pledge of
100% of the issued and outstanding Capital Stock of each new Subsidiary
(including a Foreign Subsidiary) of the Borrower created or acquired after the
Closing Date (provided, that in no event shall Capital Stock representing more
than 65% of the voting power of the Capital Stock of any such new Subsidiary
which is a Foreign Subsidiary be so pledged) to the Agent for the benefit of the
Lenders, and the Borrower shall deliver to the Agent the stock certificates
evidencing such Capital Stock together with undated stock powers for each such
certificate, duly executed in blank.
7.11 Interest Rate Protection. Within 90 days following the Effective
Date, enter into Interest Rate Protection Agreements in form and substance
satisfactory to the Agent which, considered together with the terms of the
Borrower's outstanding Funded Indebtedness bearing a fixed rate of interest,
provide to the Borrower fixed interest rates with respect to not less than one-
half of the aggregate outstanding principal amount of the Borrower's outstanding
Funded Indebtedness as of the Effective Date for a period of at least three
years after the Effective Date, and the Borrower agrees and confirms that the
Guarantee and Collateral Agreement grants to the Agent, for the benefit of the
Lenders, a first priority (subject to any Liens permitted pursuant to subsection
8.3) perfected security interest in its rights under any such Interest Rate
Protection Agreements. The Borrower covenants and agrees that it will not (and
it will not permit its Subsidiaries to) enter into Rate Protection Agreements
for the purpose of (i) reducing the amount of Indebtedness bearing a fixed rate
of interest or swapped or capped into a fixed rate of interest as required by
this subsection 7.11 or (ii) speculating on interest rates or currency
movements. It is understood and agreed that the foregoing prohibition is not
intended to restrict the use of Rate Protection Agreements in the ordinary
course of business to match assets and liabilities of the Borrower and its
Subsidiaries.
<PAGE>
79
SECTION 8. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments remain in
effect or any amount is owing to any Lender or the Agent hereunder or under any
other Loan Document or any Letter of Credit remains outstanding, the Borrower
shall not, nor (except with respect to subsection 8.1) shall the Borrower permit
any of its Subsidiaries to, directly or indirectly, unless the Required Lenders
shall otherwise agree in writing:
8.1 Financial Condition Covenants.
(a) Leverage Ratio. Permit the ratio of (i) Consolidated Total Debt
at the last day of any fiscal quarter ending during any "Test Period" set
forth below to (ii) Consolidated EBITDA for the period of four
consecutive fiscal quarters ending on such date to be greater than the
amount set forth opposite such period below:
<TABLE>
<CAPTION>
Test Period Leverage Ratio
----------- --------------
<S> <C>
9/30/96 - 12/31/96 6.00 to 1.00
3/31/97 - 6/30/97 5.85 to 1.00
9/30/97 - 12/31/97 5.60 to 1.00
3/31/98 - 6/30/98 5.40 to 1.00
9/30/98 - 12/31/98 5.00 to 1.00
3/31/99 - 6/30/99 4.75 to 1.00
9/30/99 - 12/31/99 4.50 to 1.00
3/31/00 - 12/31/00 4.00 to 1.00
3/31/01 and thereafter 3.75 to 1.00
</TABLE>
provided, that, for purposes of this subsection 8.1(a), the Borrower
shall be deemed to have Consolidated EBITDA of $21,800,000 for the three-
month period ended December 31, 1995, $24,600,000 for the three-month
period ended March 31, 1996 and $10,080,000 for the three-month period
ended June 30, 1996.
(b) Fixed Charge Coverage Ratio. Permit for any period of four
consecutive fiscal quarters ending during any "Test Period" set forth
below the ratio of (i) the sum of Consolidated EBITDA for such period to
(ii) Consolidated Fixed Charges for such period to be less than the ratio
set forth opposite such period below:
<TABLE>
<CAPTION>
Test Period Fixed Charge Coverage Ratio
----------- ---------------------------
<S> <C>
12/31/95 - 6/30/97 1.00 to 1.00
9/30/97 - 6/30/98 1.05 to 1.00
9/30/98 - 6/30/99 1.10 to 1.00
9/30/99 - 6/30/00 1.15 to 1.00
9/30/00 - 6/30/01 1.20 to 1.00
9/30/01 and thereafter 1.25 to 1.00
</TABLE>
<PAGE>
80
provided, that, for the purposes of this subsection 8.1(b), for the 1997
fiscal year, the Borrower shall be deemed to have Capital Expenditures of
$1,500,000 for each three-month period and provided further, that, for
the three-month periods ending on June 30, 1996, September 30, 1996 and
December 31, 1996, the ratio of the sum of Consolidated EBITDA to
Consolidated Fixed Charges shall be calculated with respect to the three-
month, six-month and nine-month periods ended on such dates,
respectively.
(c) Consolidated Cash Interest Expense Ratio. Permit for any period
of four consecutive fiscal quarters ending during any "Test Period" set
forth below the Consolidated Cash Interest Expense Ratio for such period
to be less than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Consolidated Cash
Test Period Interest Expense
----------- ------------------
<S> <C>
12/31/95 - 6/30/96 1.25 to 1.00
9/30/96 - 12/31/96 1.30 to 1.00
3/31/97 - 6/30/97 1.40 to 1.00
9/30/97 - 12/31/97 1.50 to 1.00
3/31/98 - 6/30/98 1.60 to 1.00
9/30/98 - 12/31/98 1.75 to 1.00
3/31/99 - 6/30/99 1.90 to 1.00
9/30/99 - 6/30/00 2.25 to 1.00
9/30/00 - 6/30/01 2.50 to 1.00
9/30/01 and thereafter 3.00 to 1.00
</TABLE>
provided, that, for the three-month periods ending on June 30, 1996,
September 30, 1996 and December 31, 1996, the ratio of Consolidated
EBITDA to Consolidated Cash Interest Expense shall be calculated with
respect to the three-month, six-month and nine-month periods ended on
such dates, respectively.
8.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness or issue or sell any preferred stock, except:
(a) Indebtedness in respect of the Loans, any Notes, the Guarantees,
the Letters of Credit and the other obligations of the Loan Parties under
this Agreement and the other Loan Documents;
(b) Indebtedness of the Borrower to any Subsidiary and of any
Subsidiary to the Borrower or any other Subsidiary;
(c) Indebtedness of the Borrower and any of its Subsidiaries incurred
to finance the acquisition, construction or improvement of fixed or
capital assets (whether pursuant to a loan, a Financing Lease or
otherwise) in an aggregate principal amount, together with outstanding
Indebtedness permitted under subsection 8.2(d), not
<PAGE>
81
exceeding as to the Borrower and its Subsidiaries $10,000,000 at any time
outstanding;
(d) Indebtedness in respect of Sale/Leaseback Transactions permitted
under subsection 8.12 in an aggregate principal amount incurred
subsequent to the Closing Date, together with outstanding Indebtedness
permitted under subsection 8.2(c), not to exceed $10,000,000 at any time
outstanding;
(e) Indebtedness of the Borrower in an aggregate principal amount not
exceeding $100,000,000 in respect of the Senior Subordinated Notes and
any senior subordinated notes of the Borrower issued in exchange therefor
and having substantially identical terms as contemplated by the Senior
Subordinated Note Indenture;
(f) Indebtedness not exceeding $5,000,000 in aggregate principal
amount at any one time outstanding, provided that such Indebtedness is
not secured by a Lien on any assets of the Loan Parties;
(g) Indebtedness consisting of Guarantee Obligations expressly
permitted pursuant to subsection 8.4;
(h) Indebtedness of the Borrower or any of its Subsidiaries which
represents the assumption of Indebtedness otherwise permitted hereunder
of a wholly-owned Subsidiary of the Borrower in connection with the
merger of such wholly-owned Subsidiary with or into the assuming Person
or the purchase of all or substantially all the assets of such wholly-
owned Subsidiary, in each case pursuant to a transaction permitted under
subsection 8.5(a) or 8.5(b), as the case may be; provided that the
principal amount of such Indebtedness is not increased and the maturity
of such Indebtedness is not shortened pursuant to any such assumption;
(i) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business, provided that such
Indebtedness is extinguished within five Business Days of notice to the
Borrower of its incurrence;
(j) Indebtedness of the Borrower or any of its Subsidiaries to
Holdings, provided that (i) such Indebtedness is subordinated to the
Obligations on terms and conditions satisfactory to the Agent, (ii) such
Indebtedness is funded by Holdings with proceeds of Indebtedness and/or
capital contributions of Holdings to VDK Foods (and such Indebtedness is
funded by VDK Foods with the proceeds of Indebtedness and/or capital
contributions of VDK Foods to any of the Investors or any of their
respective Affiliates), and (iii) such Indebtedness is not secured by a
Lien on any assets of the Loan Parties;
(k) Indebtedness in respect of Rate Protection Agreements permitted
under subsection 7.11;
<PAGE>
82
(l) Indebtedness of the Borrower in an aggregate principal amount not
exceeding $20,000,000 in respect of the Senior Convertible Loan; and
(m) any renewals, extensions, refundings or refinancings of such
Indebtedness (other than the Indebtedness described in subsections 8.2(a)
and 8.2(e) above), provided that the principal amount of such
Indebtedness is not increased pursuant to any such renewal, extension,
refunding or refinancing.
8.3 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) statutory landlords' liens and carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business for sums which are not overdue for a period
of more than 90 days or which are being contested in good faith by
appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-
insurance arrangements;
(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) all easements, zoning restrictions, flowage rights, rights-of-
way, covenants, conditions, restrictions, reservations, licenses,
agreements and other similar matters, including the unrecorded easements
and similar agreements set forth in Schedule 8.3(e), which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the use of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary;
(f) Liens securing Indebtedness of the Borrower and its Subsidiaries
permitted by subsection 8.2(c) incurred to finance the acquisition,
construction or improvement of fixed or capital assets, provided that (i)
such Liens shall be created within 180 days after the acquisition,
construction or improvement of such fixed or capital assets, (ii) such
Liens do not at any time encumber any property other than the property
acquired, constructed or improved with the proceeds of such Indebtedness,
(iii) the amount of Indebtedness secured thereby shall not subsequently
be increased and (iv) the principal amount of Indebtedness secured by any
such Lien shall at no time exceed 100% of
<PAGE>
83
the original purchase price of such asset or the amount expended to
construct or improve such asset, as the case may be;
(g) Liens in existence on the Closing Date listed on Schedule 8.3(g),
provided that no such Lien is spread to cover any additional property
after the Closing Date and that the amount of Indebtedness secured
thereby shall not subsequently be increased;
(h) all building codes and zoning ordinances and other laws,
ordinances, regulations, rules, orders or determinations of any Federal,
state, county, municipal or other governmental authority now or hereafter
enacted;
(i) Liens created pursuant to the Security Documents;
(j) any Lien on any asset securing Indebtedness permitted to be
incurred under subsection 8.2(d) in connection with Sale/Leaseback
Transactions expressly permitted by subsection 8.12; provided that (i)
the proceeds of such Indebtedness shall be at least equal to 80% of the
fair market value (as determined in good faith by the Board of Directors,
or any duly authorized committee thereof, of the Borrower) of such asset
and (ii) at the time of incurrence of such Indebtedness, no Event of
Default shall have occurred and be continuing or would result as a result
thereof; and
(k) judgment Liens created by or resulting from any litigation or
legal proceeding if released or bonded within 60 days of the date of
creation thereof, unless such litigation or legal proceeding could
reasonably be expected to have a Material Adverse Effect.
8.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) the Guarantees and Letters of Credit; and
(b) guarantees made in the ordinary course of its business by the
Borrower of obligations of any Subsidiary, which obligations are
otherwise permitted under this Agreement.
8.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing
or surviving corporation) or with or into any one or more wholly-owned
Subsidiaries of the Borrower (provided that the wholly-owned Subsidiary
or Subsidiaries shall be the continuing or surviving corporation);
<PAGE>
84
(b) any wholly-owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to the Borrower or any other wholly-owned Subsidiary of the
Borrower; and
(c) pursuant to any sale of assets expressly permitted by subsection
8.6.
8.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares
of such Subsidiary's Capital Stock to any Person other than the Borrower or any
wholly-owned Subsidiary, except:
(a) the conveyance, sale, lease, assignment, transfer or other
disposition of Obsolete Property or surplus property in the ordinary
course of business;
(b) Asset Sales (other than of inventory or Obsolete Property or
pursuant to any Sale/Leaseback Transaction in each case in the ordinary
course of business), provided that (i) the Net Proceeds of any such Asset
Sale are applied to the extent required by subsection 4.1(c) and (ii)
either (A) a line of business is disposed of for a multiple of at least
five times the portion of Consolidated EBITDA attributable to such line
of business for the preceding four consecutive fiscal quarters (or such
fewer number of fiscal quarters as shall have ended since the Closing
Date) and such line of business accounted for not more than 10% of
Consolidated EBITDA for the preceding four consecutive fiscal quarters
(or such fewer number of fiscal quarters as shall have ended since the
Closing Date) or (B) an asset other than a line of business disposed of
pursuant to (A) above is disposed of for not less than its fair market
value and, after giving effect to such disposition, the aggregate amount
of Net Proceeds of all Asset Sales pursuant to this clause (B) subsequent
to the Closing Date shall not exceed $5,000,000;
(c) any Asset Sale pursuant to any Sale/Leaseback Transaction
permitted pursuant to subsection 8.12;
(d) the sale of inventory in the ordinary course of business;
(e) the sale or discount for fair value without recourse of accounts
receivable arising in the ordinary course of business in connection with
the compromise or collection thereof;
(f) as permitted by subsection 8.5(b);
(g) the license of Intellectual Property, Mrs. Paul's Intellectual
Property and the Aunt Jemima/Celeste Intellectual Property in the
ordinary course of business;
(h) leases or subleases not materially interfering with the ordinary
course of conduct of the business of the Borrower and its Subsidiaries;
and
<PAGE>
85
(i) the sale of the Celeste Business (a "Celeste Sale"), so long as
no Default or Event of Default has occurred or would result therefrom,
provided that (x) the Borrower's pro forma financial ratios after giving
effect to the Celeste Sale are no worse than the Borrower's pro forma
financial ratios described in subsections 8.1(a), (b) and (c) prior to
giving effect to the Celeste Sale and (y) after such Celeste Sale and
application of the Net Proceeds from the Celeste Sale and any use of any
portion of the Cash Collateral in connection with such Celeste Sale in a
manner that would increase the paid-in capital account, the paid-in
capital account must be greater than 30% of the sum of the Borrower's (i)
paid-in capital plus (ii) Funded Indebtedness.
8.7 Limitation on Restricted Payments. Declare or pay any dividend
(other than dividends payable solely in common stock of the Borrower) on, or
make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Borrower or any
warrants or options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Borrower or
any Subsidiary (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called "Restricted Payments"), except that,
(a) the Borrower may pay cash dividends to Holdings (i) to pay any
taxes required to be paid by Holdings in the ordinary course of business
or (ii) to the extent necessary to enable Holdings to pay cash dividends
to VDK Foods to pay any taxes required to be paid by VDK Foods in the
ordinary course of business, provided that, in each case, any such taxes
are paid no later than fifteen Business Days after the date on which the
relevant dividend is made;
(b) the Borrower may pay cash dividends to Holdings to the extent
necessary (i) to enable Holdings to pay fees, expenses and other
obligations incurred or required in connection with the Asset Purchase,
the Acquisition or the Aunt Jemima/Celeste Acquisition or in connection
with the matters described in subsection 9.1(iii)(D) or subsection
9.1(vi) or (ii) to enable Holdings to pay cash dividends to VDK Foods to
the extent necessary to enable VDK Foods to pay fees, expenses and other
obligations incurred or required in connection with the Asset Purchase,
the Acquisition or the Aunt Jemima/Celeste Acquisition or in connection
with the matters described in subsection 2(a)(iii)(D) or subsection
2(a)(vi) of the VDK Foods Agreement, provided that Holdings or VDK Foods,
as appropriate, shall pay each obligation in respect of which such
dividend is made no later than fifteen Business Days after the date on
which the relevant dividend is made; and
(c) the Borrower may pay cash dividends to Holdings to the extent
necessary to enable Holdings to pay to any participant under the VDK
Holdings, Inc. Incentive Compensation Plan an amount in cash as may be
negotiated in return for such participant's relinquishment and waiver of
all rights under such plan; provided that (i) the aggregate amount of
such dividends paid shall not exceed $2,000,000 in any twelve-month
period or $4,000,000 while this Agreement is in effect; and (ii) no
<PAGE>
86
Event of Default shall have then occurred and be continuing or would
result therefrom, provided, that this clause (ii) shall not prohibit any
transaction under this subsection 8.7(c) within 60 days of the date of
declaration or the making of any binding commitment in respect of any
such transaction if at said date of declaration or commitment no Event of
Default shall have then occurred and be continuing or would result
therefrom.
8.8 Limitation on Capital Expenditures. Make or commit to make Capital
Expenditures in excess of $5,000,000 in the aggregate for the Borrower and its
Subsidiaries during any fiscal year of the Borrower; provided, that (i) Capital
Expenditures with respect to the 1996 fiscal year (and for (F) below with
respect to the 1996 and 1997 fiscal year) (A) shall be limited to $3,000,000 in
the aggregate for the Borrower and its Subsidiaries, (B) shall be calculated
with respect to the period beginning on the Closing Date and ending on June 30,
1996, (C) shall not include expenditures up to an aggregate amount equal to
$500,000 made in connection with the relocation of the Pet-Ritz cobbler
production line from the Pillsbury-owned facility in Lithonia, Georgia to the
Borrower's Chambersburg, Pennsylvania facility, (D) shall not include
expenditures up to an aggregate amount equal to $500,000 made in connection with
the relocation and establishment of the executive offices of the Borrower within
St. Louis, Missouri, (E) shall not include expenditures up to an aggregate
amount equal to the portion of the purchase price for the Mrs. Paul's
Acquisition that is treated as a Capital Expenditure, and (F) shall not include
expenditures up to an aggregate amount equal to $4,000,000 made in connection
with the relocation of the Mrs. Paul's Business from the Campbell Soup-owned
facility in Omaha, Nebraska to the Borrower's Erie, Pennsylvania facility or the
Borrower's Chambersburg, Pennsylvania facility, (ii) Capital Expenditures with
respect to the 1997 fiscal year shall not include expenditures up to an
aggregate amount equal to $2,500,000 made in connection with the Jackson,
Tennessee pizza sheeting line and the Aunt Jemima packaging automation line,
(iii) Capital Expenditures not in excess of $1,500,000 permitted to be made
during any fiscal year (and not carried over from a prior fiscal year) and not
made during such fiscal year may be carried over and expended during the next
succeeding fiscal year and (iv) Capital Expenditures made during any fiscal year
shall be first deemed made in respect of amounts carried over from the prior
fiscal year and then deemed made in respects of amounts permitted for such
fiscal year.
8.9 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or any assets constituting a
business unit of, or make any other investment in, any Person (an "Investment"),
except:
(a) extensions of trade credit and endorsements of negotiable
instruments and other negotiable documents in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) loans and advances to employees and directors of Holdings, the
Borrower or any of its Subsidiaries for travel, entertainment and
relocation expenses in the ordinary course of business in an aggregate
amount for Holdings, the Borrower and its Subsidiaries not to exceed
$400,000 at any time outstanding;
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87
(d) Investments by the Borrower in its Subsidiaries and Investments
by such Subsidiaries in the Borrower and in other Subsidiaries, provided
that the aggregate amount of all such Investments (including Investments
in the nature of sales and transfers of assets (including, pursuant to a
transaction permitted under subsection 8.5(b)) for less than fair market
value) after the Closing Date in Foreign Subsidiaries shall not exceed
$1,000,000;
(e) securities held by the Borrower or any of its Subsidiaries prior
to the Closing Date and listed on Schedule 8.9(e);
(f) advances by the Borrower to Holdings, in lieu of the payment of
cash dividends, to enable Holdings to make the payments contemplated by
subsection 8.7, provided that, if such advances are made with respect to
the payments contemplated by subsection 8.7(a) or 8.7(b), such advances
are used to make such payments within fifteen Business Days after such
advances are made;
(g) loans and advances to employees and directors of Holdings or the
Borrower to purchase Limited Liability Interests, provided that such
loans shall not exceed in the aggregate $500,000;
(h) promissory notes issued to the Borrower or any of its
Subsidiaries by the purchasers of assets sold in accordance with
subsection 8.6(a), 8.6(b) or 8.6(c), provided that (i) the principal
amount of all such promissory notes in connection with any sale of assets
shall not exceed 15% of the total sales price for such assets and (ii)
the aggregate principal amount of all such promissory notes at any time
outstanding shall not exceed $2,000,000;
(i) Permitted Acquisitions in an aggregate amount not to exceed the
Permitted Acquisition Amount; and
(j) the Aunt Jemima/Celeste Acquisition.
8.10 Limitation on Optional Payments and Modifications of Debt
Instruments and other Obligations. (a) Make any optional payment or prepayment
on or redemption, defeasance or purchase of any Senior Subordinated Notes or
other Indebtedness permitted under subsection 8.2(e) (other than a prepayment of
the Senior Convertible Loan with the Net Proceeds in excess of $45,000,000 from
a Celeste Sale), (b) amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of the Senior Subordinated
Note Indenture or any other agreement or indenture governing the terms and
conditions of any other Indebtedness permitted under subsection 8.2(e) (other
than any such amendment, modification or change which (i) would extend the
maturity or reduce the amount of any payment of principal thereof or would
reduce the rate or extend the date for payment of interest thereon or (ii) does
not in any way adversely affect the interests of the Agent or the Lenders
hereunder or under the other Loan Documents or (iii) is of a technical or
clarifying nature) or (c) amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms of the Transition Services
Agreement, the Mrs. Paul's Transition Services Agreement, the Mrs. Paul's
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88
Co-Pack Agreement, the Aunt Jemima/Celeste Transition Services Agreement, the
Trademark License Agreement, the Interim Trademark and Trade Name License
Agreement, the Patent License Agreement, the McDonald's Co-Pack Agreement and
Shared Technology License Agreement (other than any such amendment, modification
or change which (i) does not in any way adversely affect the interests of the
Agent or the Lenders hereunder or under the other Loan Documents or (ii) is of a
technical or clarifying nature).
8.11 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Borrower's or such Subsidiary's business and (c) upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary,
as the case may be, than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate, provided, that the
foregoing restriction shall not prohibit (i) payment of reasonable fees and
expenses to directors of Holdings, the Borrower and its Subsidiaries not in
excess of $250,000 per fiscal year of the Borrower, (ii) the transactions
contemplated by the Aunt Jemima/Celeste Acquisition Agreement, (iii) any payment
or other transaction pursuant to any tax sharing agreement, (iv) payments
permitted under subsection 8.7 or subsection 8.9, (v) the Indebtedness permitted
pursuant to subsection 8.2(b) or 8.2(j), (vi) any employment agreement entered
into by the Borrower or any of its Subsidiaries in the ordinary course of
business, (vii) any issuance of securities in connection with employment
arrangements, stock options and stock ownership plans of the Borrower entered
into in the ordinary course of business, (viii) transactions between the
Borrower and its Subsidiaries and (ix) the transactions contemplated by the
agreements listed on Schedule 8.11(ix).
8.12 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary (a "Sale/Leaseback
Transaction"), except for Sale/Leaseback Transactions subsequent to the Closing
Date the aggregate sales price of which does not exceed $2,500,000 in any year.
8.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Borrower to end on a day other than the last Saturday in June.
8.14 Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those food businesses which are
reasonably related to those businesses in which the Borrower and its
Subsidiaries are engaged on the Effective Date.
SECTION 9. NEGATIVE COVENANTS OF HOLDINGS
Holdings agrees that, so long as the Commitments remain in effect or any
amount is owing to any Lender or the Agent hereunder or under any other Loan
Document or any Letter
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89
of Credit remains outstanding, Holdings shall not, unless the Required Lenders
shall otherwise agree in writing:
9.1 Limitation on Holdings' Activities. Incur any Indebtedness (other
than as contemplated by subsections 6.1(c)(iii) and 8.2(j)) or create any
Guarantee Obligations (other than the guarantee of the Borrower's obligations
under the Senior Convertible Loan), or make any investments, loans or advances
to any Person, or purchase any material assets, or conduct, transact or
otherwise engage, or commit to transact, conduct or otherwise engage, in any
business or operations other than (i) transactions contemplated in connection
with the consummation of the Aunt Jemima/Celeste Acquisition, (ii) the ownership
of the Capital Stock of the Borrower, and the exercise of rights and performance
of obligations in connection therewith, (iii) the entry into, and exercise of
rights and performance of obligations in respect of, (A) this Agreement and the
Guarantee and Collateral Agreement, (B) contracts and agreements with or for the
benefit of officers, directors and employees of Holdings or any Subsidiary
thereof relating to their employment or directorships, (C) insurance policies
and related contracts and agreements, (D) equity subscription agreements,
registration rights agreements, warrant agreements, voting and other stockholder
agreements, engagement letters, underwriting agreements and other agreements in
respect of its equity securities or any offering, issuance or sale thereof and
(E) the VDK Holdings, Inc. Incentive Compensation Plan, (iv) the offering,
issuance and sale of its equity securities to the extent such offering, issuance
or sale does not constitute a Default or Event of Default under Section 11(k),
(v) the filing of registration statements, and compliance with applicable
reporting and other obligations, under and compliance with its Federal, state or
other securities laws, (vi) the performance of obligations under and compliance
with its certificate of incorporation and by-laws, or any applicable law,
ordinance, regulation, rule, order, judgment, decree or permit, including,
without limitation, as a result of or in connection with the activities of its
Subsidiaries, (vii) the performance of contractual obligations in existence on
the Closing Date or otherwise permitted hereunder, (viii) the incurrence and
payment of its business expenses and any taxes for which it may be liable, (ix)
the incurrence of a Lien in favor of the lenders under the Senior Convertible
Loan Agreement on cash and cash equivalents of Holdings (the "Cash Collateral")
with a value equivalent to the Senior Convertible Loan and an amount calculated
to be sufficient, together with the earnings on such cash and cash equivalents,
to pay interest on the Senior Convertible Loan for the term thereof and (x)
other activities reasonably incidental or related to the foregoing.
9.2 Restricted Payments. Use any amount received by it pursuant to
subsection 8.7 from the Borrower or any of its Subsidiaries for any purpose
other than as set forth in such subsection.
9.3 Net Proceeds. Fail to contribute the Net Proceeds of any issuance
of Capital Stock by VDK Foods or Holdings on or after the Closing Date to the
Borrower within two Business Days after Holdings receives such Net Proceeds,
other than as contemplated by subsection 6.1(c).
9.4 Dividends. Except as contemplated by subsection 8.7(a) and (b),
declare or pay any dividend (other than dividends payable solely in Capital
Stock of Holdings) on, or, except as set forth in subsection 9.3, make any
payment on account of, or set apart assets for a sinking
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90
or other analogous fund for the purchase, redemption, defeasance, retirement or
other acquisition of Capital Stock of Holdings, or any warrants or options to
purchase any such Capital Stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Holdings or any of its
Subsidiaries.
SECTION 10. GUARANTEE
10.1 Guarantee. (a) To induce the Agent and the Lenders to execute and
deliver this Agreement and to make the Extensions of Credit provided for herein
to the Borrower, Holdings hereby unconditionally and irrevocably guarantees to
the Agent and the Lenders and their respective successors, permitted transferees
and permitted assigns, the prompt and complete payment and performance by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Obligations (including, without limitation, the Existing Term Loans, the
Additional Term Loans, the Revolving Credit Loans and the Swing Line Loans).
Holdings further agrees to pay any and all reasonable expenses (including,
without limitation, all reasonable fees and disbursements of counsel) which may
be paid or incurred by the Agent or any Lender in enforcing, or obtaining advice
of counsel in respect of, any rights with respect to, or collecting, any or all
of the Obligations and/or enforcing any rights with respect to, or collecting
against, Holdings under this Section 10. This Guarantee shall remain in full
force and effect until the Obligations are paid in full, no Letter of Credit
remains outstanding and the Commitments are terminated, notwithstanding that
from time to time prior thereto the Borrower may be free from any Obligations.
(b) No payment or payments made by the Borrower or any other Person or
received or collected by the Agent or any Lender from the Borrower or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of Holdings under this Section 10 which shall, notwithstanding any
such payment or payments (other than payments made by Holdings in respect of the
Obligations or payments received or collected from Holdings in respect of the
Obligations), remain in full force and effect until the Obligations are paid in
full, no Letter of Credit remains outstanding and the Commitments are
terminated. Holdings agrees that whenever, at any time, or from time to time, it
shall make any payment to the Agent or any Lender on account of its liability
under this Section 10, it will notify the Agent and such Lender in writing that
such payment is made under this Section 10 for such purpose.
10.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Section 10, Holdings shall not
be entitled to be subrogated to any of the rights of the Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Agent or any Lender for the payment of
the Obligations, nor shall Holdings seek or be entitled to seek any contribution
or reimbursement from the Borrower or any other Guarantor in respect of payments
made by Holdings hereunder, until all amounts owing to the Agent and the Lenders
by the Borrower on account of the Obligations are paid in full, the Commitments
are terminated and no Letter of
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Credit remains outstanding. If any amount shall be paid to Holdings on account
of such subrogation rights at any time when all of the Obligations shall not
have been paid in full, the Commitments shall not have been terminated or a
Letter of Credit remains outstanding, such amount shall be held by Holdings in
trust for the Agent and the Lenders, segregated from other funds of Holdings,
and shall, forthwith upon receipt by Holdings, be turned over to the Agent in
the exact form received by Holdings (duly indorsed by Holdings to the Agent, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as the Agent may determine. The provisions of this paragraph shall
survive the termination of the guarantee contained in this Section 10 and the
payment in full of the Obligations, the termination of the Commitments and the
cancellation, revocation or termination of all outstanding Letters of Credit.
10.3 Amendments, etc. with respect to the Obligations; Waiver of Rights.
Holdings shall remain obligated hereunder notwithstanding that, without any
reservation of rights against Holdings, and without notice to or further assent
by Holdings, any demand for payment of any of the Obligations made by the Agent
or any Lender may be rescinded by the Agent or such Lender, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Agent or any Lender, and this Agreement, the
other Loan Documents, any Interest Rate Protection Agreement entered into by the
Borrower with any Lender or any Affiliate of any Lender and any other documents
executed and delivered in connection herewith or therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Agent (or the
Required Lenders, as the case may be) or such Lender or Affiliate may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Agent nor any Lender or its Affiliates shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for the guarantee contained in this Section 10 or any property
subject thereto. When making any demand hereunder against Holdings, the Agent or
any Lender may, but shall be under no obligation to, make a similar demand on
the Borrower or any other guarantor, and any failure by the Agent or any Lender
to make any such demand or to collect any payments from the Borrower or any such
other guarantor or any release of the Borrower or such other guarantor shall not
relieve Holdings of its obligations or liabilities under this Section 10, and
shall not impair or affect the rights and remedies, express or implied, or as a
matter of law, of the Agent or any Lender against Holdings. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
10.4 Guarantee Absolute and Unconditional. Holdings waives, to the
fullest extent permitted by applicable law, any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice of or proof
of reliance by the Agent or any Lender upon the guarantee contained in this
Section 10 or acceptance of the guarantee contained in this Section 10; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon the guarantee contained in this Section 10; and all dealings between the
Borrower or Holdings, on the one hand, and the Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have
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been had or consummated in reliance upon the guarantee contained in this Section
10. Holdings waives, to the fullest extent permitted by applicable law,
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or Holdings with respect to the Obligations.
This Guarantee shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of this Agreement, any Note, any other Loan Document or any
Interest Rate Protection Agreement entered into by the Borrower with any Lender
or any Affiliate of any Lender, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by the Agent or any Lender, (b) any defense, set-
off or counterclaim (other than a defense of payment or performance) which may
at any time be available to or be asserted by the Borrower against the Agent or
any Lender or (c) any other circumstance whatsoever (with or without notice to
or knowledge of the Borrower or Holdings) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Obligations, or of Holdings under the guarantee contained in this Section 10, in
bankruptcy or in any other instance. When pursuing its rights and remedies
hereunder against Holdings, the Agent and any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Borrower or any other Person or against any collateral security or guarantee for
the Obligations or any right of offset with respect thereto, and any failure by
the Agent or any Lender to pursue such other rights or remedies or to collect
any payments from the Borrower or any such other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve Holdings of
any liability hereunder, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Agent or any
Lender against Holdings. For the purposes hereof, "demand" shall include the
commencement and continuance of any legal proceedings. The guarantee contained
in this Section 10 shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon Holdings and its successors,
and shall inure to the benefit of the Agent and the Lenders, and their
respective successors, permitted transferees and permitted assigns, until all
the Obligations and the obligations of Holdings under this Guarantee shall have
been satisfied by payment in full, no Letter of Credit remains outstanding and
the Commitments shall be terminated, notwithstanding that from time to time
during the term of this Agreement the Borrower may be free from any Obligations.
10.5 Reinstatement. The guarantee contained in this Section 10 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
10.6 Payments. Holdings hereby agrees that the Obligations will be paid
to the Agent without set-off or counterclaim in Dollars at the office of the
Agent located at 270 Park Avenue, New York, New York 10017.
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SECTION 11. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Loan, or any
other amount payable hereunder, within five Business Days after any such
interest or other amount becomes due in accordance with the terms thereof
or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the observance
or performance of any agreement contained in Section 8 or Section 9 (other
than subsection 9.2), Section 6 or 7 of each of the Mortgages, or Section
5.6 or 5.9(b) of the Guarantee and Collateral Agreement; or
(d) The Borrower or any other Loan Party shall default in the observance
or performance of any other agreement contained in this Agreement or any
other Loan Document (other than as provided in paragraphs (a) through (c)
of this Section), and such default shall continue unremedied for a period
of 30 days; or
(e) The Borrower or any other Loan Party shall (i) default in any
payment of principal of or interest on any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation in respect of
Indebtedness or in any payments required under any Rate Protection
Agreement, beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created or under such Rate Protection Agreement,
as the case may be, if the aggregate amount of the Indebtedness and/or
Guarantee Obligations and/or payments under Rate Protection Agreements in
respect of which such default or defaults shall have occurred is at least
$500,000; or (ii) default in the observance or performance of any other
agreement or condition to be observed or performed by such Loan Party
relating to any such Indebtedness or Guarantee 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 Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
the full amount of such Guarantee Obligation to become payable, provided,
however, that a default, event or condition described in this Section
11(e)(ii) shall not constitute an Event of Default under this Section 11(e)
unless, at the time of such default, event or condition, defaults, events
or conditions of the type
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described in this Section 11(e)(ii) shall have occurred and are continuing
with respect to Indebtedness and Guarantee Obligations in respect to
Indebtedness the aggregate amount of which exceeds $500,000; or
(f) (i) The Borrower or any other Loan Party 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, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any other Loan Party shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any other Loan Party 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) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the Borrower
or any other Loan Party 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, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Borrower or any other Loan Party 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) the Borrower or any other Loan Party shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) Any Person 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), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) 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 commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan, or (vi) any other similar event or condition shall occur or exist
with respect to a Plan that could result in a liability (other than in the
ordinary course), and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if
any, could reasonably be expected to have a Material Adverse Effect; or
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(h) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving individually a liability of
$1,000,000 (not paid or fully covered by insurance or indemnity (A) of the
Sellers under the Asset Purchase Agreement, (B) of Campbell Soup under the
Acquisition Agreement or (C) of Quaker Oats under the Aunt Jemima/Celeste
Acquisition Agreement) or in the aggregate a liability (not paid or fully
covered by insurance or indemnity (A) of the Sellers under the Asset
Purchase Agreement, (B) of Campbell Soup under the Acquisition Agreement or
(C) of Quaker Oats under the Aunt Jemima/Celeste Acquisition Agreement) of
$2,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or the Borrower or any other Loan Party which is
a party to any of the Security Documents shall so assert in writing or (ii)
any Lien created by any of the Security Documents shall, by reason of any
breach by any Loan Party party thereto of any of its covenants or other
obligations contained in such Security Documents, cease to be enforceable
and of the same effect and priority, subject to Section 11(d), purported to
be created thereby (other than Liens with respect to property not
constituting a material portion of the Collateral); or
(j) Any Guarantee shall cease, for any reason, to be in full force and
effect or any Guarantor shall so assert; or
(k) (i) The Investors and their respective wholly-owned Subsidiaries
shall cease (A) to beneficially own, directly or indirectly, at least 60%
of the Capital Stock of Holdings and (B) to have the right to cast a
majority of the votes of the common shareholders of Holdings, (ii)
Dartford, Fenway and their respective wholly-owned Subsidiaries shall cease
(A) to beneficially own, directly or indirectly, at least 36% of the
Capital Stock of Holdings and (B) to have the right to cast a majority of
the votes of the common shareholders of Holdings, (iii) Holdings shall
cease to own all the Capital Stock of the Borrower or (iv) a Change of
Control (as defined in the Senior Subordinated Note Indenture) shall occur
under the Senior Subordinated Note Indenture; or
(l) The subordination provisions contained in Article X of the Senior
Subordinated Note Indenture shall cease to be enforceable in accordance
with their terms;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (ii) or (iii) of paragraph (f) of this Section with respect to
the Borrower, automatically the Commitments (including the Swing Line
Commitment) shall immediately terminate and the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the Agent
may, or upon the request of the Required Lenders, the Agent shall, by notice to
the Borrower declare the Commitments (including the Swing Line Commitment) to be
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terminated forthwith, whereupon the Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Agent may, or upon the
request of the Required Lenders, the Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts (including, without limitation, all amounts of L/C Obligations, whether
or not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) owing under this Agreement to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant to the
preceding paragraph, the Borrower shall at such time deposit in a cash
collateral account opened by the Agent an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. The Borrower hereby
grants to the Agent, for the benefit of the Issuing Bank and the L/C
Participants, a security interest in such cash collateral account to secure all
obligations of the Borrower under this Agreement and the other Loan Documents.
Amounts held in such cash collateral account shall be applied by the Agent to
the payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other Obligations. After all such
Letters of Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other Obligations shall have been
paid in full, the balance, if any, in such cash collateral account shall be
returned to the Borrower. The Borrower shall execute and deliver to the Agent,
for the account of the Issuing Bank and the L/C Participants, such further
documents and instruments as the Agent may request to evidence the creation and
perfection of the security interest in such cash collateral account.
SECTION 12. THE AGENT
12.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
12.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall
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not be responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by it with reasonable care.
12.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement or any other Loan Document (except
for its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by the Borrower or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of the Borrower to perform its obligations hereunder or thereunder. The Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower.
12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
12.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received notice from a Lender or the Borrower or Holdings
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
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12.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their Commitment Percentages immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Loans and all
other amounts payable hereunder.
12.8 Agent in Its Individual Capacity. The Agent and its Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the Borrower as though the Agent were not the Agent hereunder and under the
other Loan Documents. With respect to the Loans made by it and with respect to
any Letter of Credit issued or participated in by it, the Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Agent, and the terms
"Lender" and "Lenders" shall include the Agent in its individual capacity.
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12.9 Successor Agent. (a) The Agent may resign as Agent upon 10 days'
notice to the Lenders and the Borrower. If the Agent shall resign as Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be subject to the approval of the Borrower (which approval
shall not be unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon such appointment and approval,
and the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Loans. After any retiring
Agent's resignation as Agent, the provisions of this Section 12 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement and the other Loan Documents.
(b) By this provision, each of the parties hereto consents to the
resignation of Chemical Bank as Agent hereunder and to the appointment of Chase
as the Agent hereunder as successor to Chemical Bank.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Agent may, from time to time, (a) enter into with the Borrower and each Loan
Party which is a party to the relevant Loan Documents written amendments,
supplements or modifications hereto and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders or of the Borrower hereunder
or thereunder, (b) release Collateral (except that no consent of any Lender or
the Required Lenders is required to permit the release of a Lien in connection
with any Asset Sale permitted under Section 8 of this Agreement or any other
transaction permitted under such Section) or (c) waive, on such terms and
conditions as the Required Lenders or the Agent, as the case may be, may specify
in such instrument, any of the requirements of this Agreement or the other Loan
Documents or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (i) reduce the amount or extend the scheduled date of maturity of any Loan
made by any Lender or of any installment thereof, or reduce the stated rate of
any interest thereon or reduce the fee payable hereunder to any Lender or extend
the scheduled date of any payment thereof or increase the aggregate amount or
extend the expiration date of any Lender's Commitments (including the conversion
of any Loan into equity of the Borrower), in each case without the written
consent of such Lender directly affected thereby, (ii) amend, modify or waive
any provision of this subsection or the definition of Required Transaction
Lenders or reduce the percentage specified in the definition of Required Lenders
or consent to the assignment or transfer by the Borrower of any of its rights
and obligations under this Agreement and the other Loan Documents or release a
material portion of the Collateral or release any Guarantee, in each case
without the written consent of all the Lenders, (iii) amend, modify or waive any
provision of subsections 3.6 through 3.9 without the
<PAGE>
100
written consent of the Swing Line Lender, (iv) amend, modify or waive any
provision of subsections 3.10 through 3.18 without the written consent of the
Issuing Bank, (v) amend, modify or waive any provision of Section 12 without the
written consent of the then Agent, (vi) change the allocation among the Tranche
A Term Loans, Tranche B Term Loans and Tranche C Term Loans of prepayments to be
made pursuant to subsection 4.1 or waive or amend any provision of subsection
4.1(b) without the prior written consent of (1) Lenders holding more than 50% of
the aggregate outstanding principal amount of the Tranche A Term Loans, (2)
Lenders holding more than 50% of the aggregate outstanding principal amount of
the Tranche B Term Loans and (3) Lenders holding more than 50% of the aggregate
outstanding principal amount of the Tranche C Term Loans, (vii) change the
application of prepayments of Tranche A Term Loans pursuant to subsection 4.1
without the prior written consent of Lenders holding more than 50% of the
aggregate outstanding principal amount of the Tranche A Term Loans, (viii)
change the application of prepayments of Tranche B Term Loans pursuant to
subsection 4.1 without the prior written consent of Lenders holding more than
50% of the aggregate outstanding principal amount of the Tranche B Term Loans,
(ix) change the application of prepayments of Tranche C Term Loans pursuant to
subsection 4.1 without the prior written consent of Lenders holding more than
50% of the aggregate outstanding principal amount of the Tranche C Term Loans or
(x) amend, modify or waive any of the conditions to the making of any Extension
of Credit or the issuance of any Letter of Credit after the Effective Date
contained in subsection 6.2 without the prior written consent of Revolving
Credit Lenders, the aggregate Revolving Credit Commitment Percentages of which
is more than 50%. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Agent and all future holders of the Loans.
In the case of any waiver, the Borrower, the Lenders and the Agent shall be
restored to their former positions and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived (to the extent provided in
such waiver) shall be deemed to be cured and not continuing; no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon. Notwithstanding anything to the contrary in this
subsection 13.1, no consent of any Lender or of the Required Lenders shall be
required to permit the release of a Lien in connection with any Asset Sale or
other transaction permitted by Section 8 of this Agreement; the Agent shall
execute such release and termination as may be required by this Agreement.
13.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Borrower and the
Agent, and as set forth in Schedule 1.1 in the case of the other parties hereto,
or to such other address as may be hereafter notified by the respective parties
hereto:
Holdings: VDK Holdings, Inc.
801 Montgomery Street, Suite 400
San Francisco, California 94133
Attention: M. Laurie Cummings
Telecopy: (415) 982-3023
<PAGE>
101
The Borrower: Van de Kamp's, Inc.
1000 St. Louis Union Station
St. Louis, Missouri 63103
Attention: Timothy B. Andersen
Telecopy: (314) 632-5633
with copies to: Richards & O'Neil, LLP
885 Third Avenue, 7th Floor
New York, New York 10022
Attention: Craigh Leonard
Telecopy: (212) 750-9022
The Agent: The Chase Manhattan Bank, N.A.
10 South La Salle Street, 23rd Floor
Chicago, Illinois 60603
Attention: Steven J. Faliski
Telecopy: (312) 443-1964
with a copy to: Chemical Bank Agent Bank Services
140 East 45th Street, 29th Floor
New York, New York 10017
Attention: Janet M. Belden
Telecopy: (212) 622-0122
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 3.2, 3.4, 3.8, 3.11, 4.1, 4.2 or 4.7(b) shall not be
effective until received.
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Agent or any Lender, any right, remedy, power
or privilege hereunder or under the other Loan Documents 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 rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
13.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the syndication of the Loans and the Commitments
under, and the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
<PAGE>
102
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent, (b) to pay or reimburse each Lender and the Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents prepared in connection herewith or therewith,
including, without limitation, the fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel in lieu of the fees and
expenses of outside counsel) to each Lender and of counsel to the Agent, (c) to
pay, indemnify, and hold each Lender and the Agent harmless 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 similar taxes, if
any, which are payable or determined to be payable in connection with the
execution and delivery of, or administration 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, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Agent (and their respective directors, officers, trustees, employees and
agents) harmless from and against any and all other liabilities (excluding
income taxes), obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, the other Loan Documents, the Asset Purchase Agreement, the
Asset Purchase, the Acquisition Agreement, the Acquisition, the Aunt
Jemima/Celeste Acquisition Agreement, the Aunt Jemima/Celeste Acquisition or the
use of the proceeds of the Loans in connection with the Asset Purchase, the
Acquisition or the Aunt Jemima/Celeste Acquisition, and any such other
documents, including, without limitation, any of the foregoing relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries or any of
the Properties (all the foregoing in this clause (d), collectively, the
"indemnified liabilities"), provided, that the Borrower shall have no obligation
hereunder to the Agent or any Lender with respect to indemnified liabilities
arising from (i) the gross negligence or willful misconduct of the Agent or any
such Lender or (ii) legal proceedings commenced against the Agent or any such
Lender by any security holder or creditor thereof arising out of and based upon
rights afforded any such security holder or creditor solely in its capacity as
such. The agreements in this subsection shall survive repayment and/or
assignment of the Loans and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower,
Holdings, the Lenders, the Agent and their respective successors and assigns,
except that neither the Borrower nor Holdings may assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of
each Lender and any assignment or transfer by any Lender of its rights or
obligations under this Agreement or any Loan Document must be made in compliance
with this subsection 13.6 (and any purported assignment in violation of this
subsection shall be null and void).
(b) Any Lender may, in the ordinary course of its lending or investment
business and in accordance with applicable law, at any time sell to one or more
financial institutions or other entities ("Loan Participants") participating
interests in any Loan owing to such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder and under the other
<PAGE>
103
Loan Documents. In the event of any such sale by a Lender of a participating
interest to a Loan Participant, (i) such Lender's obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible for the performance thereof, (iii)
such Lender shall remain the holder of any such Loan for all purposes under this
Agreement and the other Loan Documents, (iv) the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (v) no Loan Participant under any participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any Loan Party therefrom, except with respect
to the matters described in clauses (i) and (ii) of the proviso to the second
sentence of subsection 13.1. The Borrower agrees that, while an Event of Default
shall have occurred and be continuing if amounts outstanding under this
Agreement are due or unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Loan
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 13.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Loan Participant shall be
entitled to the benefits of subsections 4.9, 4.10 and 4.11 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of subsection 4.10 such Loan
Participant shall have complied with the requirements of said subsection, and
provided, further, that no Loan Participant shall be entitled to receive any
greater amount pursuant to any such subsection than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Loan Participant had no such
transfer occurred.
(c) Any Lender may, in the ordinary course of its lending or investment
business and in accordance with applicable law, at any time and from time to
time assign, with the consent of the Borrower and the Agent in the case of an
assignment other than to another Lender or an affiliate thereof (which in each
case shall not be unreasonably withheld), to any other Lender or any affiliate
thereof or to an additional bank or financial institution or other entity (an
"Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit N, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender or
an affiliate thereof, by the Borrower and the Agent (which consent shall not be
unreasonably withheld)) and delivered to the Agent for its acceptance and
recording in the Register, provided that, (i) in the case of any such assignment
to an Assignee that is an affiliate of the assigning Lender, the consent of the
Borrower shall only be required if, at the time of such assignment, such
Assignee would be entitled to require the Borrower to pay, or the Borrower would
be required to pay, greater amounts under subsection 4.9 or 4.10 than if no such
assignment had occurred and (ii) in the case of any such assignment to an
additional bank or financial institution or other entity, if such assignment is
of less than all of the rights and obligations of the assigning Lender, the sum
of the aggregate principal amount of the Loans, the aggregate amount of the L/C
Obligations and the aggregate amount of the unused Commitments (A) being
assigned to such
<PAGE>
104
additional bank or financial institution or other entity and (B) remaining with
the assigning Lender are not, in each case, less than $5,000,000 (or such lesser
amount as may be agreed to by the Borrower and the Agent). Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
subsection, the consent of the Borrower shall not be required, and, unless
requested by the Assignee and/or the assigning Lender, new Notes shall not be
required to be executed and delivered by the Borrower, for any assignment which
occurs when any of the events described in Section 11(f) shall have occurred and
be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at the address
of the Agent referred to in subsection 13.2 a copy of each Assignment and
Acceptance delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Lenders and the Commitments of, and principal
amounts of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of a Loan or other obligation hereunder as
the owner thereof for all purposes of this Agreement and the other Loan
Documents, notwithstanding any notice to the contrary. Any assignment of any
Loan or other obligation hereunder (whether or not evidenced by a Note) shall be
effective only upon appropriate entries with respect thereto being made in the
Register. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Agent) together
with, except in the case of an assignment pursuant to subsection 4.13, payment
to the Agent of a registration and processing fee of $3,500, the Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Loan
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been delivered to
such Lender by or on behalf of the Borrower in connection with such Lender's
credit evaluation of the Borrower and its Affiliates prior to becoming a party
to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute
<PAGE>
105
assignments and that such provisions do not prohibit assignments creating
security interests, including, without limitation, any pledge or assignment by a
Lender of any Loan or Note to any Federal Reserve Bank in accordance with
applicable law, provided that no such assignment, whether to a Federal Reserve
Bank or other entity, shall release a Lender from any of its obligations
hereunder or substitute any such Federal Reserve Bank or other entity for such
Lender as a party hereto or permit an absolute assignment to occur other than in
accordance with such provisions of this subsection.
13.7 Adjustments; Set-off; Proceeds of Collateral. (a) If any Lender
(a "Benefitted Lender") shall at any time receive any payment of all or part of
its Loans or the Reimbursement Obligations owing to it, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
Section 11(f), or otherwise), in a greater proportion than any such payment to
or collateral received by any other Lender, if any, in respect of such other
Lender's Loans or the Reimbursement Obligations owing to it, or interest
thereon, such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan or the
Reimbursement Obligations owing to it, or shall provide such other Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set-
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Agent after any such set-off and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
(c) If the Agent shall at any time receive any proceeds on any
Collateral pursuant to the terms of any Security Document, the Agent shall hold
such proceeds for the benefit of the Lenders as collateral security for the
Obligations and, in accordance with the terms of this Agreement, the Agent shall
apply such proceeds against the Obligations in the following order of priority:
FIRST, to the payment of all reasonable costs and expenses incurred by
the Agent in connection with this Agreement, any Security Document, any
other Loan Document or any of the Obligations, including, without
limitation, all court costs and the reasonable
<PAGE>
106
fees and expenses of its agents and legal counsel, and any other reasonable
costs or expenses incurred in connection with the exercise by the Agent of
any right or remedy under this Agreement, any Security Document, or any
other Loan Document;
SECOND, to the ratable satisfaction of all other Obligations; and
THIRD, to the Borrower or its successors or assigns, or to whomsoever may
be lawfully entitled to receive the same.
13.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Agent.
13.9 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without, to
the extent permitted by law, invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not, to the
extent permitted by law, invalidate or render unenforceable such provision in
any other jurisdiction.
13.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
13.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
13.12 Submission To Jurisdiction; Waivers. Each of the Borrower and
Holdings hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such
<PAGE>
107
action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Borrower or Holdings at its address set forth in subsection 13.2 or at
such other address of which the Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential
damages.
13.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
with or duty to the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship
between the Agent and Lenders, on one hand, and the Borrower, on the
other hand, in connection herewith or therewith is solely that of
creditor and debtor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among the Borrower and the Lenders.
13.14 WAIVERS OF JURY TRIAL. THE BORROWER, HOLDINGS, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
13.15 Consent to Amendment of VDK Foods Agreement. By this provision,
the Agent and each of the Lenders consents to the amendment by VDK Foods of
subsection 2(a)(i) of the VDK Foods Agreement to read as follows: "(i)
transactions contemplated in connection with the consummation of the Asset
Purchase, the Acquisition and the Aunt Jemima/Celeste Acquisition (including,
without limitation, the unsecured loan of at least $20,000,000 from VDK Foods to
Holdings".
<PAGE>
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.
VDK HOLDINGS, INC.
By: /s/ Jamie B. Ardrey
-------------------------------
Title: Executive Vice President
VAN DE KAMP'S, INC.
By: /s/ Jamie B. Ardrey
-------------------------------
Title: Executive Vice President
<PAGE>
CHEMICAL BANK, as Agent
By: /s/ Marian N. Schulman
------------------------------
Title: Attorney-in-Fact
THE CHASE MANHATTAN BANK, N.A., as
Agent and as a Lender
By: /s/ Marian N. Schulman
------------------------------
Title: Attorney-in-Fact
<PAGE>
BANQUE PARIBAS
By: /s/ Lee S. Buckner
------------------------------
Title: Group Vice President
<PAGE>
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ David Bouhl, F.V.P.
---------------------------------
Title: Head of Corporate Banking
<PAGE>
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By: /s/ Brian J. Klatt
----------------------------------
Title: Vice President
By: /s/ Dennis J. Ziengs
----------------------------------
Title: General Manager North America
<PAGE>
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By: /s/ Nicholas Kalogeropoulos
------------------------------
Title: Assistant Treasurer
By: /s/ Craig D. Meisner
------------------------------
Title: Vice President
<PAGE>
FLEET NATIONAL BANK (successor in interest to
Fleet Bank of Massachusetts, N.A.)
By: /s/ Kevin P. Cronin
-------------------------------
Title: Senior Vice President
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By: /s/ Glen Clark
----------------------------
Title: Vice President
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ C. Andrew Piculell
--------------------------------
Title: Vice President
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By: /s/ Anthony R. Clemente
---------------------------------
Title: Authorized Signatory
<PAGE>
PRIME INCOME TRUST
By: /s/ Rajesh K. Gupta
------------------------------
Title: Senior Vice President
<PAGE>
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME
TRUST
By: /s/ Kathleen A. Zarn
-------------------------------
Title: Vice President
<PAGE>
BANQUE NATIONALE DE PARIS
By: /s/ Mark Whitson
------------------------------
Title: Vice President
By: /s/ Pamela Lucash
------------------------------
Title: Assistant Treasurer
<PAGE>
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: /s/ Henry R. Biedrzycki
------------------------------
Title: Vice President
<PAGE>
FIRST BANK NATIONAL ASSOCIATION
By: /S/ Elliot J. Jaffe
------------------------------
Title: Vice President
<PAGE>
MIDLAND BANK PLC
By: /s/ Michelene Spencer
-------------------------------
Title: Executive Vice President
<PAGE>
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Adam G. Clemens
------------------------------
Title: Investment Vice President
<PAGE>
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Michael Bacevich
------------------------------
Title: Vice President
<PAGE>
SENIOR HIGH INCOME PORTFOLIO, INC.
By: /s/ Anthony R. Clemente
------------------------------
Title: Authorized Signatory
<PAGE>
FEDERAL STREET PARTNERS
By: /s/ Tim Barnes
------------------------------
Title: Division Executive
<PAGE>
ANNEX A TO
CREDIT AND GUARANTEE AGREEMENT
------------------------------
<TABLE>
<CAPTION>
PRICING GRID FOR REVOLVING CREDIT LOANS AND TRANCHE A TERM LOANS
===============================================================================================
Ratio of Consolidated
Consolidated Cash Total Debt to Applicable Margin
Interest Expense Consolidated for Eurodollar Applicable Margin
Ratio EBITDA Loans For ABR Loans
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less-than Greater-than
2.25 to 1.00 3.75 to 1.00 2.50% (Tranche A 1.50% (Tranche A
and Revolving and Revolving
Credit) Credit)
3.00% (Tranche B) 2.00% (Tranche B)
3.25% (Tranche C) 2.25% (Tranche C)
- -----------------------------------------------------------------------------------------------
Greater-than or equal Less-than or equal
2.25 to 1.00 3.75 to 1.00 2.25% (Tranche A 1.25% (Tranche A
and Revolving and Revolving
Credit) Credit)
3.00% (Tranche B) 2.00% (Tranche B)
3.25% (Tranche C) 2.25% (Tranche C)
- -----------------------------------------------------------------------------------------------
Greater-than or equal Less-than or equal
2.75 to 1.00 3.00 to 1.00 2.00% (Tranche A 1.00% (Tranche A
and Revolving and Revolving
Credit) Credit)
3.00% (Tranche B) 2.00% (Tranche B)
3.25% (Tranche C) 2.25% (Tranche C)
===============================================================================================
</TABLE>
<PAGE>
SCHEDULE 1.1 TO
SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
COMMITMENTS, ADDRESSES AND LENDING OFFICES
------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
THE CHASE MANHATTAN BANK, N.A.
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$10,065,789.45 $3,639,653.10 $31,384,615.39 $11,769,230.77 $19,615,384.61 $2,684,210.55
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
270 Park Avenue 270 Park Avenue 10 South La Salle Street
New York, New York 10017 New York, New York 10017 23rd Floor
Chicago, Illinois 60603
Attn: Steven J. Faliski
Telephone: (312) 807-4073
Telecopier: (312) 443-1964
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
BANQUE NATIONALE DE PARIS
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$4,736,842.11 $4,736,842.11 $0.00 $0.00 $0.00 $1,263,157.89
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
499 Park Avenue 499 Park Avenue 499 Park Avenue
New York, New York 10022 New York, New York 10022 New York, New York 10022
Attn: Mark Whitson
Telephone: (212) 415-9884
Telecopier: (212) 418-8269
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
BANQUE PARIBAS
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ---------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$8,684,210.53 $2,922,846.89 $0.00 $0.00 $0.00 $2,315,789.47
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
2029 Century Park East 2029 Century Park East 101 California Street
Suite 3900 Suite 3900 Suite 3150
Los Angeles, California 90067 Los Angeles, California 90067 San Francisco, CA 94111
Attn: Robert N. Pinkerton
Telephone : (415) 398-6811
Telecopier: (415) 398-4240
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CAISSE NATIONALE DE CREDIT AGRICOLE
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ---------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$9,473,684.21 $3,313,456.94 $0.00 $0.00 $0.00 $2,526,315.79
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- ---------------
55 East Monroe 55 East Monroe 55 East Monroe
Chicago, Illinois 60603-5702 Chicago, Illinois 60603-5702 Suite 4700
Chicago, Illinois 60603
Attn: Ted Tice
Telephone: (312) 917-7463
Telecopier: (312) 372-3455
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
3
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COOPERATIEVE CENTRALE RAIFFEISEN - BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ---------------- -------------------- --------------- -------------------------- --------------- ---------------------------
<S> <C> <C> <C> <C> <C>
$9,473,684.21 $3,313,456.94 $0.00 $0.00 $0.00 $2,526,315.79
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
Rabobank Nederland Rabobank Nederland Rabobank Nederland
245 Park Avenue 245 Park Avenue 300 South Wacker Drive
New York, New York 10167 New York, New York 10167 Suite 3500
Chicago, Illinois 60606
Attn: Larry Sidwell
Telephone: (312) 408-8203
Telecopier: (312) 408-8240
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ------------------ -------------------- --------------- -------------------------- --------------- ----------------
$9,473,684.21 $3,313,456.94 $0.00 $0.00 $0.00 $2,526,315.79
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
---------------------- ------------------------- -------------------
Dresdner Bank AG, New York Branch Dresdner Bank AG, New York Branch 75 Wall Street
75 Wall Street 75 Wall Street 29th Floor
New York, New York 10005-2889 New York, New York 10005-2889 New York, NY 10005-2889
Attn: Richard Conroy
Telephone: (212) 574-0206
Telecopier: (212) 574-0129
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
R&O-221337.1
<PAGE>
<TABLE>
<CAPTION>
4
- ------------------------------------------------------------------------------------------------------------------
FEDERAL STREET PARTNERS
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
$0.00 $0.00 $2,461,538.46 $2,461,538.46 $1,538,461.54 $0.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
100 Federal Street 100 Federal Street 100 Federal Street
Boston, MA 02110 Boston, MA 02110 Boston, MA 02110
Attn: Tim Barns
Telephone: (617) 434-7976
Telecopier: (617) 434-4929
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
FIRST BANK NATIONAL ASSOCIATION
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
$4,736,842.11 $4,736,842.11 $0.00 $0.00 $0.00 $1,263,157.89
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
First Bank Place First Bank Place First Bank Place
601 Second Ave., South 601 Second Ave., South 601 Second Ave., South
Minneapolis, MN 55402 Minneapolis, MN 55402 Minneapolis, MN 55402
Attn: Elliott Jaffee
Telephone: (612) 973-0543
Telecopier: (612) 973-0825
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
<TABLE>
<CAPTION>
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$8,684,210.53 $2,922,846.89 $0.00 $0.00 $0.00 $2,315,789.47
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
------------------------ -------------------------- --------------------
100 Federal Street 100 Federal Street Diversified Finance
Boston, Massachusetts 02110 Boston, Massachusetts 02110 MS 01-09-01
100 Federal Street
Boston, Massachusetts 02110
Attn: Timothy Barns
Telephone: (617) 434-7976
Telecopier: (617) 434-4929
- --------------------------------------------------------------------------------------------------------------------------
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
$4,736,842.11 $4,736,842.11 $0.00 $0.00 $0.00 $1,263,157.89
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
------------------------ -------------------------- --------------------
1 First Union Center 1 First Union Center 1 First Union Center
301 S. College St. 301 S. College St. 301 S. College St.
Charlotte, NC 28288 Charlotte, NC 28288 Charlotte, NC 28288
Attn: Ed Ross
Telephone: (704) 383-9839
Telecopier: (704) 374-3300
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FLEET NATIONAL BANK
<TABLE>
<CAPTION>
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$9,473,684.21 $3,313,456.94 $0.00 $0.00 $0.00 $2,526,315.79
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
------------------------ -------------------------- --------------------
75 State Street, MAB0F04P 75 State Street, MAB0F04P 75 State Street, MAB0F04P
Boston, Massachusetts 02109 Boston, Massachusetts 02109 Boston, Massachusetts 02109
Attn: Linda Copoulos
Telephone: (617) 346-1811
Telecopier: (617) 346-1569
- ---------------------------------------------------------------------------------------------------------------------------
HARRIS TRUST AND SAVINGS BANK
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
$9,473,684.21 $3,313,456.94 $0.00 $0.00 $0.00 $2,526,315.79
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
------------------------ -------------------------- --------------------
111 West Monroe Street 111 West Monroe Street 111 West Monroe Street
Chicago, Illinois 60603 Chicago, Illinois 60603 18th Floor West
Chicago, Illinois 60603
Attn: Ylanda T. Wilhite
Telephone: (312) 461-3776
Telecopier: (312) 765-8095
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
7
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
<TABLE>
<CAPTION>
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$0.00 $0.00 $7,384,615.38 $0.00 $4,615,384.62 $0.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
------------------------ -------------------------- --------------------
800 Scudders Mill Road 800 Scudders Mill Road 800 Scudders Mill Road
Plainsboro, New Jersey 08536 Plainsboro, New Jersey 08536 Plainsboro, New Jersey 08536
Attn: Anthony Clemente
Telephone: (609) 282-2059
Telecopier: (609) 282-2756
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
MIDLAND BANK PLC
<TABLE>
<CAPTION>
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$4,736,842.11 $4,736,842.11 $0.00 $0.00 $0.00 $1,263,157.89
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
------------------------ -------------------------- --------------------
140 Broadway 140 Broadway 140 Broadway
New York, NY 10015 New York, NY 10015 New York, NY 10015
Attn: Michelene Spencer
Telephone: (212) 658-2751
Telecopier: (212) 658-2580
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
8
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NEW YORK LIFE INSURANCE COMPANY
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$0.00 $0.00 $7,384,615.38 $7,384,615.38 $4,615,384.62 $0.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
51 Madison Avenue 51 Madison Avenue 51 Madison Avenue
New York, NY 10010 New York, NY 10010 New York, NY 10010
Attn: Donnamarie Christina
Telephone: (212) 576-3857
Telecopier: (212) 576-8340
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
PILGRIM AMERICA PRIME RATE TRUST
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$0.00 $0.00 $7,384,615.39 $7,384,615.39 $4,615,384.61 $0.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
Two Renaissance Sq. Two Renaissance Sq. Two Renaissance Sq.
40 N. Central Avenue 40 N. Central Avenue 40 N. Central Avenue
Phoenix, AZ 85004-4424 Phoenix, AZ 85004-4424 Phoenix, AZ 85004-4424
Attn: Howard Tiffen
Telephone: (602) 417-8255
Telecopier: (602) 417-8327
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
9
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PRIME INCOME TRUST
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ----------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$0.00 $0.00 $8,000,000.00 $1,000,000 $5,000,000 $0.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
Two World Trade Center Two World Trade Center Two World Trade Center
New York, New York 10048 New York, New York 10048 New York, New York 10048
Attn: Rafael Scolari
Telephone: (212) 392-5886
Telecopier: (212) 392-5345
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
SENIOR HIGH INCOME PORTFOLIO, INC.
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- --------------- -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$0.00 $0.00 $3,076,923.08 $3,076,923.08 $1,923,076.92 $0.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
800 Scudders Mill Road 800 Scudders Mill Road 800 Scudders Mill Road
Plainsboro, NJ 08536 Plainsboro, NJ 08536 Plainsboro, NJ 08536
Attn: Anthony Clemente
Telephone: (609) 282-2059
Telecopier: (609) 282-2756
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
10
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST
Total Tranche A Additional Tranche A Total Tranche B Additional Tranche B
Term Loan Term Loan Term Loan Term Loan Tranche C Term Revolving Credit
Commitment Commitment Commitment Commitment Loan Commitment Commitment
- ------------------ -------------------- --------------- -------------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
$0.00 $0.00 $12,923,076.92 $6,923,076.92 $8,076,923.08 $0.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
One Parkview Plaza One Parkview Plaza One Parkview Plaza
Oakbrook Terrace, Illinois 60181 Oakbrook Terrace, Illinois 60181 Oakbrook Terrace, IL 60181
Attn: Jeffrey W. Maillet
Telephone: (708) 684-6438
Telecopier: (708) 684-6741
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 5.1(a)
FINANCIAL CONDITION - MATERIAL CHANGES IN BORROWER SINCE
--------------------------------------------------------
DECEMBER 31, 1995
-----------------
Since March 30, 1996 and up to and including the date hereof, the Loan Parties
have or will have, consummated the Mrs. Paul's Acquisition and the Aunt
Jemima/Celeste Acquisition and increased material liabilities in connection
therewith.
<PAGE>
SCHEDULE 5.1(b)
FINANCIAL CONDITION - MATERIAL CHANGES IN THE AUNT JEMIMA AND
--------------------------------------------------------------
CELESTE BUSINESSES SINCE MAY 31, 1996
-------------------------------------
None
<PAGE>
SCHEDULE 5.4
CONSENTS
--------
The following consents are required in connection with the Aunt Jemima/Celeste
Acquisition or the Aunt Jemima/Celeste Acquisition Agreement.
Third Party Consents
- --------------------
. Packaging Machinery Lease between Gulf States Paper Corporation and The
Quaker Oats Company, dated February 16, 1985, as amended (HS11198-442, GSPC
lease #234 - Kliklok Captain "H" Loader)
. Packaging Machinery Lease between Gulf States Paper Corporation and The
Quaker Oats Company, dated August 23, 1985, as amended (HS10198-457, GSPC
lease #249 - Kliklok Captain "H" Loader)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS10198-313, GSPC
lease #41775 - Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-344 -
Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-355, Lease
#5577 - Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-398, Lease
#62679-B - Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-400, Lease
#62679-A - Kliklok Captain "S" Packaging Machine)
. Power Supply Contract, dated as of March 1, 1992, among The City of
Jackson, Tennessee, The Quaker Oats Company and Tennessee Valley Authority
<PAGE>
Required Governmental Approval and Notices
- ------------------------------------------
A. TO BE OBTAINED PRIOR TO THE EFFECTIVE DATE
------------------------------------------
1. Any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have
expired or been terminated.
B. TO BE OBTAINED POST-EFFECTIVE DATE
----------------------------------
1. New applications for environmental permits with new company name
have been filed with the following authorities, and new license
is awaited:
. Tennessee Division of Air Pollution Control
. Tennessee Division of Water Pollution Control
. Jackson, Tennessee Utility Division
. Tennessee Division of Solid Waste Management
2. New license from USDA will be required to utilize frozen fruits
and vegetables at the Jackson facility
<PAGE>
SCHEDULE 5.6
LITIGATION
----------
None
<PAGE>
SCHEDULE 5.8
REAL PROPERTY
-------------
I. Owned Real Property
-------------------
A. That property commonly known and numbered 2200 East 38th Street, Erie,
Pennsylvania, not including the contiguous 7.2 undeveloped acres.
B. That property commonly known and numbered 225 West Vine Street,
Chambersburg, Pennsylvania.
C. That property commonly known and numbered 96 Quaker Drive, Jackson,
Tennessee.
II. Leased Real Property
--------------------
A. Headquarters of the Borrower, leased at 1000 St. Louis Union Station,
St. Louis, Missouri 63103
<PAGE>
Schedule 6.1(f)
Sources and Uses of Funds for Aunt Jemima/Celeste Acquisition
-------------------------------------------------------------
================================================================================
Sources Uses
-------
- --------------------------------------------------------------------------------
Additional Term $135,000,000 Excess Inventory ($2,200,000)
Loans
- --------------------------------------------------------------------------------
Senior Convertible $20,000,000 Purchase Price $188,000,000
Loan
- --------------------------------------------------------------------------------
Capital Contribution $40,000,000 Transaction Fees and Expenses $7,500,000
by Holdings
- --------------------------------------------------------------------------------
Cash on Hand $ 8,000,000 Transition Costs $2,500,000
- --------------------------------------------------------------------------------
Total $195,800,000 Total $195,800,000
============ ============
================================================================================
<PAGE>
SCHEDULE 6.1(x)
PROPERTIES FOR APPRAISAL
------------------------
Tangible Assets - Personal Property
- Real Estate
Intangible Assets:
Celeste(R) Trademarks and Trade Names
Aunt Jemima(R) License
Broker Network
Product Recipes and Formulations
Packaging and Promotional Materials
Manufacturing Trade Secrets
Manufacturing Systems Software
Total Intangible Assets
<PAGE>
SCHEDULE 8.3(e)
EASEMENTS, LICENSES, ETC.
-------------------------
See Title Policy #39005310700000037, as marked and redated September
19, 1995, issued by Chicago Title Insurance Company to Mortgagee with
respect to the property located in Erie, Pennsylvania and the
endorsement thereto delivered pursuant to Section 6.1(s) hereto, as
well as Title Policy #9581-00241, dated September 19, 1995, issued by
the Chicago Title Insurance Company to Mortgagee with respect to the
property located in Chambersburg, Pennsylvania and the endorsement
thereto delivered pursuant to Section 6.1(s) hereto.
See Title Commitment #00279395 dated April 29, 1996 and see any
matters shown on that certain Survey for that property commonly known
and numbered 96 Quaker Drive, Jackson, Tennessee prepared by Barge
Waggoner Sumner and Canon dated June 20, 1996 and last revised on July
1, 1996.
<PAGE>
SCHEDULE 8.3(g)
EXISTING LIENS
--------------
1. See Title Policy #39005310700000037, as marked and redated
September 19, 1995, issued by Chicago Title Insurance Company to
Mortgagee with respect to the property located in Erie,
Pennsylvania and the endorsement thereto delivered pursuant to
Section 6.1(r) hereto, as well as Title Policy #9581-00241, dated
September 19, 1995, issued by the Chicago Title Insurance Company
to Mortgagee with respect to the property located in
Chambersburg, Pennsylvania and the endorsement thereto delivered
pursuant to Section 6.1(r) hereto.
2. See Title Commitment #00279395 dated April 29, 1996 and see any
matters shown on that certain Survey for that property commonly
known and numbered 96 Quaker Drive, Jackson, Tennessee prepared
by Barge Waggoner Sumner and Canon dated June 20, 1996 and last
revised on July 1, 1996.
<PAGE>
SCHEDULE 8.9(e)
SECURITIES HELD BY BORROWER OF ANY SUBSIDIARY
---------------------------------------------
Notes issued by employees and directors of Holdings or the Borrower as
contemplated by Section 8.9(g)
<PAGE>
SCHEDULE 8.11(ix)
AFFILIATE TRANSACTIONS
----------------------
1. Amended and Restated Management Services Agreement, dated as of the
Effective Date, between Borrower and Dartford.
2. Computer Services Agreement, dated September 5, 1995, between the Borrower
and Windy Hill Pet Food Company LLC.
3. Payment to Dartford, Fenway, UBS and National Sun Industries of fees and
expenses incurred prior to the Effective Date which are included in the
$7,500,000 referenced in Section 6.1(ab) of this Agreement.
4. Loans from Borrower to employees of Borrower to purchase Limited Liability
Interests as contemplated by subsection 6.1(c) hereof.
<PAGE>
EXHIBIT A
TO AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
2
SECOND AMENDMENT TO OPEN-END MORTGAGE AND SECURITY AGREEMENT
------------------------------------------------------------
THIS SECOND AMENDMENT, dated as of July __, 1996 is made by VAN DE
KAMP'S, INC., a Delaware corporation (formerly known as Dartford Frozen Foods,
Inc.) ("Mortgagor"), whose address is 1000 St. Louis Union Station, St. Louis,
Missouri, to THE CHASE MANHATTAN BANK, N.A., a national banking association,
whose address is 270 Park Avenue, New York, New York 10017, as Agent (in such
capacity, "Mortgagee") for itself and for the several banks and financial
institutions from time to time parties to that certain Second Amended and
Restated Credit and Guarantee Agreement dated as of the date hereof among VDK
Holdings, Inc., a Delaware corporation ("Holdings"), the several banks and other
financial institutions from time to time parties thereto (collectively, the
"Lenders"; individually, a "Lender") and Mortgagee (as the same may be further
amended, restated, supplemented, modified or replaced from time to time, the
"Credit Agreement"). References to this "Mortgage" shall mean this instrument
and any and all renewals, modifications, amendments, supplements, extensions,
consolidations, substitutions, spreaders and replacements of this instrument.
Unless otherwise defined herein, capitalized terms shall have the meanings
ascribed to them in the Credit Agreement.
Background
----------
WHEREAS, Holdings, Grantor, Beneficiary (as defined below) and certain
banks and other financial institutions (the "Existing Lenders") are parties to
the Amended and Restated Credit and Guarantee Agreement, dated as of May 6, 1996
(as amended and waived to the date hereof, the "Existing Credit Agreement"),
pursuant to which the Existing Lenders made loans to, and acquired
participations in letters of credit for the account of, Grantor to enable
Grantor to consummate the transactions contemplated by the Asset Purchase
Agreement (as defined in the Credit Agreement) and the Acquisition Agreement (as
defined in the Credit Agreement);
WHEREAS, Grantor has entered into an Asset Purchase Agreement, dated
as of May 15, 1996 (the "Aunt Jemima/Celeste Acquisition Agreement"), The Quaker
Oats Company, a New Jersey corporation ("Quaker Oats") pursuant to which Grantor
has agreed to purchase, and Quaker Oats has agreed to sell, substantially all of
the assets comprising the Aunt Jemima/Celeste Business (as defined below), upon
the terms and subject to the conditions set forth therein (the "Aunt
Jemima/Celeste Acquisition");
WHEREAS, Grantor has requested that Beneficiary and the Lenders enter
into the Credit Agreement to provide a portion of
<PAGE>
3
the funds required to consummate the Aunt Jemima/Celeste Acquisition and to
provide for the working capital requirements of the Businesses after the Aunt
Jemima/Celeste Acquisition and for general corporate purposes;
WHEREAS, a certain Open-End Mortgage and Security Agreement dated as
of September 19, 1995 and recorded on September 22, 1995 in Volume 1024, Page 11
of the Recorder's Office of Franklin County, Pennsylvania, as amended by that
certain First Amendment to Mortgage and Security Agreement dated as of May 6,
1996 and recorded on May 10, 1996 in Volume 1295, page 594 of the Recorder's
Office of Franklin County, Pennsylvania (as amended, the "Mortgage") given by
Mortgagor to Mortgagee encumbers real property together with the improvements
located thereon (the "Improvements") described on Schedule A attached hereto
(the "Real Estate");
WHEREAS, the Mortgage has been assigned by Chemical Bank, as Agent to
The Chase Manhattan Bank, N.A., as Agent by that certain Assignment dated as of
even date herewith and to be recorded in the Recorder's Office of Franklin
County, Pennsylvania;
WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders
have agreed, among other things, to increase the Tranche A Term Loans and the
Tranche B Term Loans, and to add a new Tranche C Term Loan facility on the
condition (among others) that Mortgagor execute this Second Amendment;
NOW THEREFORE, in consideration of the premises and for the sum of Ten
Dollars ($10.00), the receipt and sufficiency of which is hereby acknowledged,
Mortgagor hereby agrees as follows:
1. All references in the Mortgage to the "Credit Agreement" shall be
deemed to mean the Credit and Guarantee Agreement dated as of September 19, 1996
among Mortgagor, Holdings, the Existing Lenders and Mortgagee, as amended and
restated by the Amended and Restated Credit and Guarantee Agreement dated as of
May 6, 1996 and as further amended and restated by the Second Amended and
Restated Credit and Guarantee Agreement dated as of the date hereof among
Mortgagor, Holdings, the Existing Lenders, the New Lenders and Mortgagee, and as
it may be further amended, supplemented or otherwise modified from time to time.
2. All references in the Mortgage to the "Lenders" shall be deemed to
mean the Lenders under the Credit Agreement.
3. All references in the Mortgage to the "Loans" shall be deemed to
mean the Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Swing
Line Loans and Revolving Credit Loans, as each such term is defined in the
Credit Agreement.
<PAGE>
4
4. All references in the Mortgage to the "Notes" shall be deemed to
mean the Tranche A Term Notes, the Tranche B Term Notes, the Tranche C Term
Notes, the Swing Line Note and the Revolving Credit Notes, as each such term is
defined in the Credit Agreement.
5. Section 36 of the Mortgage is hereby deleted and amended by
substituting the following therewith:
"36. Open-End Mortgage; Maximum Amount Secured. This Mortgage is
an "Open-End Mortgage" as set forth in 42 Pa. C.S.A. (S) 8143 and secures
obligations up to the maximum amount of indebtedness outstanding at any one
time equal to $250,000,000, plus accrued and unpaid interest, and any
advances or other extensions of credit made pursuant to the Mortgage
including, but not limited to, advances for the payment of taxes and
municipal assessments, maintenance charges, insurance premiums, costs
incurred for the protection of the Mortgaged Property or the lien of this
Mortgage, expenses incurred by Mortgagee by reason of default by Mortgagor
under this Mortgage, the Credit Agreement, the Notes, the Loans, the
Letters of Credit or any other Loan Documents and advances for
construction, alteration or renovation on the Mortgaged Property or for any
other purposes, together with all other sums due hereunder or secured
hereby."
6. The Mortgage, as amended hereby, is hereby ratified and confirmed
and is and shall remain in full force and effect.
<PAGE>
5
This Second Amendment has been duly executed by Mortgagor and
Mortgagee on the date first above written.
ATTEST VAN DE KAMP'S, INC.
[corporate seal]
By:_________________ By:________________
Name: Name:
Title: Title:
ATTEST THE CHASE MANHATTAN BANK, N.A.,
[corporate seal] as Agent
By:_________________ By:________________
Name: Name:
Title: Title:
I hereby certify that the address of the Mortgagee is: The Chase
Manhattan Bank, N.A., 270 Park Avenue, New York, New York 10017.
___________________
Agent for Mortgagee
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this, the ____ day of , 1996, before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared ___________________________, who acknowledged [her] [him]self to be the
[_________________] President of VAN DE KAMP'S, INC., a Delaware corporation and
that [s]he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by [her][him]self as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------
Notary Public
[Notarial Seal]
My Commission Expires: Title:
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this, the ____ day of , 1996, before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared ___________________________, who acknowledged [her] [him]self to be the
[_________________] President of THE CHASE MANHATTAN BANK, N.A., a national
banking association and that [s]he, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by [her][him]self as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------
Notary Public
[Notarial Seal]
My Commission Expires: Title:
<PAGE>
EXHIBIT B
TO AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
2
SECOND AMENDMENT TO OPEN-END MORTGAGE AND SECURITY AGREEMENT
------------------------------------------------------------
THIS SECOND AMENDMENT, dated as of July __, 1996 is made by VAN DE
KAMP'S, INC., a Delaware corporation (formerly known as Dartford Frozen Foods,
Inc.) ("Mortgagor"), whose address is 1000 St. Louis Union Station, St. Louis,
Missouri, to THE CHASE MANHATTAN BANK, N.A., a national banking association,
whose address is 270 Park Avenue, New York, New York 10017, as Agent (in such
capacity, "Mortgagee") for itself and for the several banks and financial
institutions from time to time parties to that certain Second Amended and
Restated Credit and Guarantee Agreement dated as of the date hereof among VDK
Holdings, Inc., a Delaware corporation ("Holdings"), the several banks and other
financial institutions from time to time parties thereto (collectively, the
"Lenders"; individually, a "Lender") and Mortgagee (as the same may be further
amended, restated, supplemented, modified or replaced from time to time, the
"Credit Agreement"). References to this "Mortgage" shall mean this instrument
and any and all renewals, modifications, amendments, supplements, extensions,
consolidations, substitutions, spreaders and replacements of this instrument.
Unless otherwise defined herein, capitalized terms shall have the meanings
ascribed to them in the Credit Agreement.
Background
----------
WHEREAS, Holdings, Grantor, Beneficiary (as defined below) and certain
banks and other financial institutions (the "Existing Lenders") are parties to
the Amended and Restated Credit and Guarantee Agreement, dated as of May 6, 1996
(as amended and waived to the date hereof, the "Existing Credit Agreement"),
pursuant to which the Existing Lenders made loans to, and acquired
participations in letters of credit for the account of, Grantor to enable
Grantor to consummate the transactions contemplated by the Asset Purchase
Agreement (as defined in the Credit Agreement) and the Acquisition Agreement (as
defined in the Credit Agreement);
WHEREAS, Grantor has entered into an Asset Purchase Agreement, dated
as of May 15, 1996 (the "Aunt Jemima/Celeste Acquisition Agreement"), The Quaker
Oats Company, a New Jersey corporation ("Quaker Oats") pursuant to which Grantor
has agreed to purchase, and Quaker Oats has agreed to sell, substantially all of
the assets comprising the Aunt Jemima/Celeste Business (as defined below), upon
the terms and subject to the conditions set forth therein (the "Aunt
Jemima/Celeste Acquisition");
<PAGE>
3
WHEREAS, Grantor has requested that Beneficiary and the Lenders enter
into the Credit Agreement to provide a portion of the funds required to
consummate the Aunt Jemima/Celeste Acquisition and to provide for the working
capital requirements of the Businesses after the Aunt Jemima/Celeste Acquisition
and for general corporate purposes;
WHEREAS, a certain Open-End Mortgage and Security Agreement dated as
of September 19, 1995 and recorded on September 20, 1995 in Record Book 404,
Page 65 of the Recorder's Office of Erie County, Pennsylvania, as amended by
that certain First Amendment to Mortgage and Security Agreement dated as of May
6, 1996 and recorded on May 8, 1996 in Volume 438, page 1568 of the Recorder's
Office of Erie County, Pennsylvania (as amended, the "Mortgage") given by
Mortgagor to Mortgagee encumbers real property together with the improvements
located thereon (the "Improvements") described on Schedule A attached hereto
(the "Real Estate");
WHEREAS, the Mortgage has been assigned by Chemical Bank, as Agent to
The Chase Manhattan Bank, N.A., as Agent by that certain Assignment dated as of
even date herewith and to be recorded in the Recorder's Office of Erie County,
Pennsylvania;
WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders
have agreed, among other things, to increase the Tranche A Term Loans and the
Tranche B Term Loans and to add a new Tranche C Term Loan facility on the
condition (among others) that Mortgagor execute this Second Amendment;
NOW THEREFORE, in consideration of the premises and for the sum of Ten
Dollars ($10.00), the receipt and sufficiency of which is hereby acknowledged,
Mortgagor hereby agrees as follows:
1. All references in the Mortgage to the "Credit Agreement" shall be
deemed to mean the Credit and Guarantee Agreement dated as of September 19, 1996
among Mortgagor, Holdings, the Existing Lenders and Mortgagee, as amended and
restated by the Amended and Restated Credit and Guarantee Agreement dated as of
May 6, 1996 and as further amended and restated by the Second Amended and
Restated Credit and Guarantee Agreement dated as of the date hereof among
Mortgagor, Holdings, the Existing Lenders, the New Lenders and Mortgagee, and as
it may be further amended, supplemented or otherwise modified from time to time.
2. All references in the Mortgage to the "Lenders" shall be deemed to
mean the Lenders under the Credit Agreement.
3. All references in the Mortgage to the "Loans" shall be deemed to
mean the Tranche A Term Loans, Tranche B Term Loans, Tranche C Term Loans, Swing
Line Loans and Revolving Credit Loans, as each such term is defined in the
Credit Agreement.
<PAGE>
4
4. All references in the Mortgage to the "Notes" shall be deemed to
mean the Tranche A Term Notes, the Tranche B Term Notes, the C Term Notes, the
Swing Line Note and the Revolving Credit Notes, as each such term is defined in
the Credit Agreement.
5. Section 36 of the Mortgage is hereby deleted and amended by
substituting the following therewith:
"36. Open-End Mortgage; Maximum Amount Secured. This Mortgage
is an "Open-End Mortgage" as set forth in 42 Pa. C.S.A. (S) 8143 and
secures obligations up to the maximum amount of indebtedness outstanding at
any one time equal to $250,000,000, plus accrued and unpaid interest, and
any advances or other extensions of credit made pursuant to the Mortgage
including, but not limited to, advances for the payment of taxes and
municipal assessments, maintenance charges, insurance premiums, costs
incurred for the protection of the Mortgaged Property or the lien of this
Mortgage, expenses incurred by Mortgagee by reason of default by Mortgagor
under this Mortgage, the Credit Agreement, the Notes, the Loans, the
Letters of Credit or any other Loan Documents and advances for
construction, alteration or renovation on the Mortgaged Property or for any
other purposes, together with all other sums due hereunder or secured
hereby."
6. The Mortgage, as amended hereby, is hereby ratified and confirmed
and is and shall remain in full force and effect.
<PAGE>
This Second Amendment has been duly executed by Mortgagor and
Mortgagee on the date first above written.
ATTEST VAN DE KAMP'S, INC.
[corporate seal]
By:_________________ By:________________
Name: Name:
Title: Title:
ATTEST THE CHASE MANHATTAN BANK, N.A.,
[corporate seal] as Agent
By:_________________ By:________________
Name: Name:
Title: Title:
I hereby certify that the address of the Mortgagee is: The Chase
Manhattan Bank, N.A., 270 Park Avenue, New York, New York 10017.
___________________
Agent for Mortgagee
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this, the ____ day of , 1996, before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared ___________________________, who acknowledged [her] [him]self to be the
[_________________] President of VAN DE KAMP'S, INC., a Delaware corporation and
that [s]he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by [her][him]self as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------
Notary Public
[Notarial Seal]
My Commission Expires: Title:
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
On this, the ____ day of , 1996, before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared ___________________________, who acknowledged [her] [him]self to be the
[_________________] President of THE CHASE MANHATTAN BANK, N.A., a national
banking association and that [s]he, as such officer, being authorized to do so,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by [her][him]self as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------
Notary Public
[Notarial Seal]
My Commission Expires: Title:
<PAGE>
EXHIBIT C
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
SECOND AMENDMENT
TO
GUARANTEE AND COLLATERAL AGREEMENT
SECOND AMENDMENT, dated as of July __, 1996 (this "Amendment"), to the
Guarantee and Collateral Agreement, dated as of September 19, 1995, as amended
by the First Amendment to the Guarantee and Collateral Agreement, dated as of
May 6, 1996, (as the same may be amended, supplemented or otherwise modified
from time to time, the "Guarantee and Collateral Agreement"), made by each of
the signatories hereto (the "Grantors"), in favor of The Chase Manhattan Bank,
N.A., as agent (in such capacity, the "Agent") for the several banks and other
financial institutions (the "Lenders") from time to time parties to the Second
Amended and Restated Credit and Guarantee Agreement, dated as of July __, 1996
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware corporation
("Holdings"), Van de Kamp's, Inc., a Delaware corporation (the "Borrower"), the
Lenders and the Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, effective as of the date hereof the parties thereto have
agreed to amend and restate the Existing Credit Agreement;
WHEREAS, contemporaneously with the amendment and restatement of the
Existing Credit Agreement, the Borrower is acquiring the assets of the Aunt
Jemima/Celeste Business with, inter alia, the proceeds of loans made to the
Borrower by the Lenders under the Credit Agreement;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, each such Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
and
WHEREAS, it is a condition precedent to the effectiveness of the
amendment and restatement of the Existing Credit Agreement and of the Lenders'
agreement to make their additional loans to the Borrower that the Borrower and
the other Grantors shall have entered into this Amendment;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
Grantors and the Agent hereby agree as follows:
<PAGE>
2
SECTION 1. Definitions. As used in this Amendment, terms defined in
the preamble hereof and the recitals hereto are used herein as so defined and
terms defined in the Credit Agreement are used herein as therein defined.
SECTION 2. Amendment of Schedules.
(a) Schedule 3 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Filings and Other Actions Required to Perfect
Security Interests (with respect to Collateral located in the United States)
listed on Schedule 3 hereto.
(b) Schedule 5 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Locations of Inventory and Equipment listed on
Schedule 5 hereto.
(c) Schedule 6 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Patent and Patent Licenses and Trademarks and
Trademark Licenses listed on Schedule 6 hereto.
(d) Schedule 7 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Contracts listed on Schedule 7 hereto.
(e) Schedule 8 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Vehicles listed on Schedule 8 hereto.
SECTION 3. Pledge; Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, each Grantor
hereby delivers to the Agent, for the ratable benefit of the Lenders, the
Pledged Stock listed on Schedule 2 hereto and all Proceeds and products thereof,
and grants to the Agent for the ratable benefit of the Lenders a security
interest in all of the Collateral acquired by such Grantor in connection with,
or in which such Grantor has any right, title or interest as a result of, the
Acquisition. Such grant shall be governed by the terms and conditions of the
Guarantee and Collateral Agreement.
SECTION 4. Representations and Warranties. To induce the Agent and
the Lenders to enter into the amendment and restatement of the Credit Agreement
and to agree to the amendments therein, each Grantor hereby represents and
warrants to the Agent and each Lender that after giving effect to the
Acquisition:
(a) Representations and Warranties. Each of the representations and
warranties contained in Section 4 of the Guarantee and Collateral Agreement,
with respect to Collateral located in the United States, as amended hereby, are
true and correct on and as of the Effective Date and as of each other date
hereafter contemplated by such Section 4 as if made on and as of such date.
(b) Real Property. Such Grantor does not, on the Effective Date, own
any material real property which is not subject to the Lien of the Mortgages.
<PAGE>
3
SECTION 5. Continuing Effect of Guarantee and Collateral Agreement.
This Amendment shall not constitute an amendment or waiver of any provision of
the Guarantee and Collateral Agreement not expressly referred to herein and
shall not be construed as an amendment, waiver or consent to any action on the
part of any Grantor that would require an amendment, waiver or consent of the
Agent or the Lenders except as expressly stated herein. Except as expressly
amended hereby, the provisions of the Guarantee and Collateral Agreement are and
shall remain in full force and effect.
SECTION 6. Counterparts. This Amendment may be executed by the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
<PAGE>
4
IN WITNESS WHEREOF, each of the undersigned has caused this Amendment
to be duly executed and delivered as of the date first above written.
VDK HOLDINGS, INC.
By:
--------------------------------------
Title:
VAN DE KAMP'S, INC.
By:
--------------------------------------
Title:
<PAGE>
Schedule 3
----------
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
[List each office where a financing statement is to be filed]*
Patent and Trademark Filings
----------------------------
[List all filings]
Actions with respect to Pledged Stock**
---------------------------------------
Other Actions
-------------
[Describe other actions to be taken]
____________________
* Note that perfection of security interests in patents and trademarks
requires filings under the UCC in the jurisdictions where filings would be
made for general intangibles, as well as filings in the U.S Copyright
Office and the U.S. Patent & Trademark Office.
** If the interest of a Grantor in Pledged Stock appears on the books of a
financial intermediary, the procedures for creation of the pledge specified
in 8-313(h) of the Code will have to be followed. These procedures involve
notification to the financial intermediary.
<PAGE>
Schedule 5
----------
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
------- ---------
<PAGE>
Schedule 6
----------
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
<PAGE>
Schedule 7
----------
CONTRACTS
<PAGE>
Schedule 8
----------
VEHICLES
<PAGE>
EXHIBIT D
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
AUNT JEMIMA/CELESTE PATENT AND TRADEMARK SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July __, 1996, made by VAN DE KAMP'S,
INC., a Delaware corporation (the "Borrower"), in favor of THE CHASE MANHATTAN
BANK, N.A., as agent (in such capacity, the "Agent") for the several banks and
other financial institutions (the "Lenders") from time to time parties to the
Second Amended and Restated Credit and Guarantee Agreement, dated as of July __,
1996 (as the same may be further amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware
corporation ("Holdings"), the Borrower, the Lenders and the Agent.
W I T N E S S E T H :
-------------------
WHEREAS, effective as of the date hereof the parties thereto have
agreed to amend and restate the Existing Credit Agreement;
WHEREAS, contemporaneously with the amendment and restatement of the
Credit Agreement, the Borrower is acquiring the assets of the Aunt
Jemima/Celeste Business with inter alia, the proceeds of the loans made to the
Borrower by the Lenders under the Credit Agreement;
WHEREAS, the Borrower is a party to the Guarantee and Collateral
Agreement, dated as of September 19, 1995, as amended by the First Amendment to
the Guarantee and Collateral Agreement, dated as of May 6, 1996, entered into in
connection with the Credit Agreement in favor of the Agent for the benefit of
the Lenders (as the same may be amended, supplemented or otherwise modified from
time to time, the "Guarantee and Collateral Agreement");
WHEREAS, the Borrower owns each of the Trademarks and Trademark
Licenses and each of the Patents and Patent Licenses listed on Schedule 6 to the
Second Amendment, dated as of the date hereof, to the Guarantee and Collateral
Agreement (the "GCA Second Amendment");
WHEREAS, pursuant to the terms of the Guarantee and Collateral
Agreement (as amended by the GCA Amendments), the Borrower has mortgaged,
pledged and granted to the Agent, for the ratable benefit of the Lenders, a
security interest in all right, title and interest of the Borrower in, to and
under the Collateral (as defined herein), including the property listed on the
attached Schedules 1 and 2, whether presently existing or hereafter arising or
acquired, and all proceeds thereof, including, without limitation, any and all
causes
<PAGE>
2
of action which may exist by reason of infringement thereof for the full term of
any Trademark or Patent, to secure the payment of the Obligations (as defined
herein);
WHEREAS, for convenience of reference and recordation, but with no
intention to supersede the terms of the Guarantee and Collateral Agreement (as
amended by the GCA Amendments), the parties hereto have entered into this
Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the
Agent and the Lenders to amend and restate the Existing Credit Agreement and to
induce the Lenders to maintain and make their respective Loans to, and to issue
or participate in Letters of Credit for the account of, the Borrower under the
Credit Agreement, the Borrower hereby agrees with the Agent, for the ratable
benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein are so used as so defined; the
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as so defined:
Accounts, Chattel Paper, Documents, General Intangibles, Instruments and
Proceeds; and the following terms shall have the following meanings:
"Agreement": this Aunt Jemima/Celeste Patent and Trademark Security
Agreement, as amended, supplemented or otherwise modified from time to
time.
"Code": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"Collateral": as defined in Section 2.
"Collateral Account": any account established to hold money proceeds,
maintained under the sole dominion and control of the Agent, subject to
withdrawal by the Agent for the account of the Lenders as provided in
Section 7.
"Concentration Account": the collateral account established at the
office of The Chase Manhattan Bank, N.A. located at 270 Park Avenue, New
York, New York 10017, in the name of the Agent, entitled "[The Chase
Manhattan Bank Collateral Proceeds Account for Van de Kamp's, Inc.",
Account No. 323-210-236].
"Patents": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 1 hereto, and (b) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 1
hereto.
<PAGE>
3
"Patent License": any agreement, whether written or oral, providing
for the grant by or to the Borrower of any right to manufacture, use or
sell any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 1 hereto.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade dress,
trade styles, service marks, designs, logos and other source or business
identifiers, and the goodwill of the business associated therewith,
including customer lists, license rights, advertising materials and all
other business assets which uniquely reflect the goodwill of the business,
now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether
in the United States Patent and Trademark Office or in any similar office
or agency of the United States, or any State thereof, or any other country
or political subdivision thereof, or otherwise, including, without
limitation, any thereof referred to in Schedule 2 hereto, and (b) all
renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to the Borrower of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 2 hereto.
2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations, the Borrower hereby grants to
the Agent for the ratable benefit of the Lenders a security interest in all of
the following property now owned or at any time hereafter acquired by the
Borrower or in which the Borrower now has or at any time in the future may
acquire any right, title or interest (collectively, the "Collateral"):
(i) all Accounts arising out of the use of or related to the
Patents and/or Trademarks;
(ii) all General Intangibles connected with the use of or
related to the Patents and/or Trademarks;
(iii) all Patents;
(iv) all Patent Licenses;
(v) all Trademarks;
(vi) all Trademark Licenses; and
(vii) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.
<PAGE>
4
3. Representations and Warranties. The Borrower hereby represents
and warrants that:
(a) Title; No Other Liens. Except for the Lien granted to the Agent
for the ratable benefit of the Lenders pursuant to this Agreement and the
other Liens permitted to exist on the Collateral pursuant to the Credit
Agreement, the Borrower owns each item of the Collateral free and clear of
any and all Liens or claims of others. No security agreement, financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as may
have been filed in favor of the Agent, for the ratable benefit of the
Lenders, pursuant to this Agreement or as may be permitted pursuant to the
Credit Agreement.
(b) Perfected First Priority Liens. Upon the completion of filing of
the financing statements set forth on Schedule 3 hereto, the security
interests granted pursuant to this Agreement, will constitute valid
perfected security interests in the United States only in the Collateral in
favor of the Agent, for the ratable benefit of the Lenders, which are prior
to all other Liens on such Collateral in existence on the date hereof
(except such other Liens as are not prohibited under the Credit Agreement)
and which are enforceable as such against all creditors of and purchasers
from the Borrower, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
(c) Chief Executive Office. On the date hereof, the location of the
Borrower's chief executive office or sole place of business is 1000 St.
Louis Union Station, St. Louis, Missouri 63103.
(d) Patents and Trademarks. Schedule 1 hereto includes all U.S.
Patents and U.S. Patent Licenses acquired by the Borrower in its own name
in connection with the Acquisition as of the date hereof. Schedule 2 hereto
includes all U.S. Trademarks and U.S. Trademark Licenses acquired by the
Borrower in its own name in connection with the Acquisition as of the date
hereof. To the best of the Borrower's knowledge, each U.S. Patent and U.S.
Trademark is valid, subsisting, unexpired, enforceable and has not been
abandoned. Except as set forth in either such Schedule, none of such U.S.
Patents or U.S. Trademarks is the subject of any licensing or franchise
agreement. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity
of any U.S. Patent or U.S. Trademark in any respect that could reasonably
be expected to have a Material Adverse Effect. No action or proceeding is
pending (i) seeking to limit, cancel or question the validity of any U.S.
Patent or U.S. Trademark, or (ii) which, if adversely determined, would
have a material adverse effect on the value of any U.S. Patent or U.S.
Trademark.
<PAGE>
5
4. Covenants. The Borrower covenants and agrees with the Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have expired or otherwise been terminated:
(a) The Borrower (either itself or through licensees) will (i)
subject to the reasonable business judgment of the Borrower, continue to
use each material Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force
free from any claim of abandonment for non-use, (ii) maintain as in the
past the quality of products and services offered under such Trademark,
(iii) employ such Trademark with the appropriate notice of registration,
(iv) not adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Agent, for the ratable benefit of
the Lenders, shall obtain a perfected security interest in such mark
pursuant to this Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act whereby
such Trademark may become invalidated.
(b) The Borrower will not do any act, or omit to do any act, whereby
any material Patent may become abandoned or dedicated.
(c) The Borrower will notify the Agent and the Lenders promptly if it
knows, or has reason to know, that any application or registration relating
to any material Patent or Trademark may become abandoned or dedicated, or
of any adverse determination or development with respect to any Patent or
Trademark (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent
and Trademark Office or any court or tribunal in any country) regarding the
Borrower's ownership of any material Patent or Trademark or its right to
register the same or to keep and maintain the same.
(d) Whenever the Borrower, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or
any political subdivision thereof, the Borrower shall report such filing to
the Agent and the Lenders within five Business Days after the last day of
the fiscal quarter in which the Borrower receives notice of such filing.
Upon request of the Agent, the Borrower shall execute and deliver any and
all agreements, instruments, documents, and papers as the Agent may request
to evidence the Agent's and the Lenders' security interest in any Patent or
Trademark and the goodwill and general intangibles of the Borrower relating
thereto or represented thereby, and the Borrower hereby constitutes the
Agent as its attorney-in-fact to execute, file and deliver all such
writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power being coupled with an interest is
irrevocable until the Obligations are paid in full and the Commitments are
terminated and no Letter of Credit remains outstanding.
<PAGE>
6
(e) The Borrower will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits or declarations
of use and affidavits or declarations of incontestability.
(f) In the event that any Patent or Trademark is infringed,
misappropriated or diluted by a third party, the Borrower shall (i) take
such actions as the Borrower shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark and (ii) if such Patent
or Trademark is of material economic value, promptly notify the Agent and
the Lenders after it learns thereof and promptly sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate
and to recover any and all damages for such infringement, misappropriation
or dilution, or take such other actions as the Borrower shall reasonably
deem appropriate under the circumstances to protect such Patent or
Trademark.
5. Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Borrower hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, the Borrower hereby gives the Agent the power
and right, on behalf of the Borrower, without notice to or assent by the
Borrower, to do the following:
(i) at any time when an Event of Default shall have occurred and be
continuing, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Agreement and to pay all or any part of the
premiums therefor and the costs thereof; and
(ii) at any time when an Event of Default shall have occurred and be
continuing, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and indorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or
<PAGE>
7
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right
in respect of any Collateral; (E) to defend any suit, action or proceeding
brought against the Borrower with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or releases as
the Agent may deem appropriate; (G) to assign, or grant licenses with
respect to, any Patent or Trademark (along with all the goodwill of the
business to which any such Trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as the Agent
shall in its sole discretion determine; (H) in the exercise of its rights
under this Section 5, to use any and all Trademarks and Trademark Licenses,
if practicable and only to the extent permitted by agreements relating
thereto and applicable laws, to the extent of the rights of the Borrower
therein, and the Borrower hereby grants a license to the Agent for such
purpose and (I) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Agent were the absolute owner thereof for all
purposes, and to do, at the Agent's option and the Borrower's expense, at
any time, or from time to time, all acts and things which the Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Agent's and the Lenders' Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until this Agreement is terminated and the
security interests created hereby are released.
(b) Other Powers. The Borrower also authorizes the Agent and the
Lenders, at any time and from time to time, to execute, in connection with the
sale provided for in Section 7 hereof, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) No Duty on Agent or Lenders' Part. The powers conferred on the
Agent and the Lenders hereunder are solely to protect the Agent's and the
Lenders' interests in the Collateral and shall not impose any duty upon the
Agent or any Lender to exercise any such powers. The Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to the Borrower for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
6. Performance by Agent of Company's Obligations. If the Borrower
fails to perform or comply with any of its agreements contained herein and the
Agent, as provided for by the terms of this Agreement, at its option, but
without any obligation so to do, shall itself perform or comply, or otherwise
cause performance or compliance, with any agreement, the expenses of the Agent
incurred in connection with such performance or compliance, together
<PAGE>
8
with interest thereon at the rate per annum set forth in subsection 4.4(c) of
the Credit Agreement, from the date of payment by the Agent to the date
reimbursed by the Borrower, shall be payable by the Borrower to the Agent on
demand and shall constitute Obligations secured hereby.
7. Remedies. (a) At any time after the occurrence and during the
continuance of an Event of Default, the Agent may in its own name or in the name
of others communicate with obligors under the Accounts to verify with them to
the Agent's satisfaction the existence, amount and terms of any Accounts.
(b) Notice to Account Debtors. Upon the request of the Agent at any
time after the occurrence and during the continuance of an Event of Default, the
Borrower shall notify account debtors on the Accounts that the Accounts have
been assigned to the Agent for the ratable benefit of the Lenders and that
payments in respect thereof shall be made directly to the Agent.
(c) (i) The Borrower has established, in the name of the Agent, and
subject to the control of the Agent, for the benefit of the Agent and the
Lenders, a system of lockboxes and related deposit accounts (the "Lockbox
System") into which the Proceeds of all Accounts shall be deposited and
forwarded to the Agent in accordance with this Agreement. The Borrower has
instructed, and shall continue to instruct, all obligors on the Accounts to make
all payments in respect of the Accounts to one or more of such lockboxes. The
Borrower may and will, and the Agent hereby authorizes the Borrower to, enforce,
compromise and collect amounts owing on the Accounts, for the benefit and on
behalf of the Agent and the Lenders, at the expense of the Borrower, in
accordance with subsection 7.4 of the Credit Agreement; provided, however, that
such privilege shall automatically be suspended upon the occurrence of an Event
of Default specified in Section 11(f) of the Credit Agreement, and may at the
option of the Agent be terminated upon the occurrence and during the continuance
of any Event of Default.
(ii) Without prejudice to subsection 7(c)(i) hereof, whether or
not an Event of Default has occurred, any Proceeds that are not deposited
directly into the Lockbox System, when collected by the Borrower, whether
consisting of checks, notes, drafts, bills of exchange, money orders, commercial
paper of any kind whatsoever, or other documents, received in payment of any
Account or otherwise shall be promptly, and in any event within two Business
Days, (A) until an Event of Default has occurred and is continuing and the
Borrower has received notice from the Agent thereof or, if earlier, the
occurrence of an Event of Default under Section 11(f) of the Credit Agreement
with respect to the Borrower, deposited into the Lockbox System, and until so
deposited, shall be deemed to be held in trust by the Borrower for and as the
Agent's property, and (B) after an Event of Default has occurred and is
continuing and the Borrower has received notice from the Agent thereof or, if
earlier, the occurrence of an Event of Default under Section 11(f) of the Credit
Agreement with respect to the Borrower, turned over by the Borrower to the
Agent, in precisely the form received, except for its endorsement when required,
and until so turned over, shall be deemed to be held in trust by the Borrower
for and as the Agent's property, and shall be held separately from the
Borrower's other funds. Such Proceeds shall continue to be collateral security
for
<PAGE>
9
all of the Obligations and shall be applied in accordance with Section 6.5
hereof. Each such deposit of Proceeds shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.
(iii) The Agent shall credit the Proceeds of the Accounts which have
been received through the Lockbox System, and the Proceeds received by the Agent
pursuant to subsection 7(f), into the Concentration Account. After an Event of
Default has occurred and is continuing under the Credit Agreement and the
Borrower has received notice from the Agent thereof or, if earlier, the
occurrence of an Event of Default under Section 11(f) of the Credit Agreement,
the Concentration Account shall be, and shall remain, under the sole dominion
and control of the Agent. The Borrower acknowledges and agrees that, after an
Event of Default has occurred and is continuing under the Credit Agreement and
the Borrower has received notice from the Agent thereof or, if earlier, the
occurrence of an Event of Default under Section 11(f) of the Credit Agreement,
(A) the Borrower shall have no right of withdrawal from the Concentration
Account, (B) the funds on deposit in the Concentration Account shall continue to
be collateral security for all of the Obligations and (C) the funds on deposit
in the Concentration Account shall be applied in accordance with Section 7(f)
hereof. Any portion of the funds on deposit in the Concentration Account which
the Agent elects not to so apply may be held in the Concentration Account to the
extent necessary to cash collateralize the Obligations which are not then due
and payable.
(d) Anything herein to the contrary notwithstanding, the Borrower
shall remain liable under each of the Accounts to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Agent nor any Lender shall have any obligation or liability under any Account
(or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Agent or any Lender of any payment relating
thereto, nor shall the Agent or any Lender be obligated in any manner to perform
any of the obligations of the Borrower under or pursuant to any Account (or any
agreement giving rise thereto), to make any payment, to make any inquiry as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
(e) Proceeds to be Turned Over To Agent. In addition to the rights
of the Agent and the Lenders specified in this Section 7 with respect to
payments of Accounts, if an Event of Default shall occur and be continuing, all
Proceeds received by the Borrower consisting of cash, checks and other near-cash
items be held by the Borrower in trust for the Agent and the Lenders, segregated
from other funds of the Borrower, and forthwith upon receipt by the Borrower, be
turned over to the Agent in the exact form received by the Borrower (duly
indorsed by the Borrower to the Agent, if required) and held by the Agent in a
Collateral Account maintained under the sole dominion and control of the Agent.
All Proceeds while held by the Agent in a Collateral Account (or by the Borrower
in trust for the Agent and the Lenders) shall continue to be held as collateral
security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 7(f).
<PAGE>
10
(f) Application of Proceeds. At such intervals as may be agreed upon
by the Borrower and the Agent, or, if an Event of Default shall have occurred
and be continuing, at any time at the Agent's election, the Agent may apply all
or any part of Proceeds held in any Collateral Account in payment of the
Obligations in such order as the Agent may elect and any part of such funds
which the Agent elects not so to apply and deems not required as collateral
security for the Obligations shall be paid over from time to time by the Agent
to the Borrower or to whomsoever may be lawfully entitled to receive the same.
Any balance of such Proceeds remaining after the Obligations shall have been
paid in full, the Commitments shall have been terminated and no Letter of Credit
remains outstanding shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive the same.
(g) Code Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders may exercise, in addition to all
other rights and remedies granted to them in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code and under all other
applicable laws. Without limiting the generality of the foregoing, the Agent,
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Borrower or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived to the fullest
extent permitted by applicable law), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the Agent or
any Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Agent or any Lender shall
have the right upon any such public sale or sales, and, to the fullest extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in
the Borrower, which right or equity of redemption is hereby waived or released
to the fullest extent permitted by applicable law. The Borrower further agrees,
at the Agent's request, to assemble the Collateral and make it available to the
Agent at places which the Agent shall reasonably select, whether at the
Borrower's premises or elsewhere. The Agent shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as the Agent
may elect, and only after such application and after the payment by the Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent account for the
surplus, if any, to the Borrower. To the fullest extent permitted by applicable
law, the Borrower waives all claims, damages and demands it may acquire against
the Agent or any Lender arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other
<PAGE>
11
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition.
(h) Deficiency. The Borrower shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Agent or any Lender to collect such deficiency.
8. Limitation on Duties Regarding Preservation of Collateral. The
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Agent
deals with similar property for its own account. Neither the Agent, any Lender,
nor any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or any
other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
9. Powers Coupled with an Interest. All powers, authorizations and
agencies herein contained are irrevocable and powers coupled with an interest
until this Agreement is terminated and the security interests created hereby are
released.
10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without, to
the extent permitted by law, invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not, to the
extent permitted by law, invalidate or render unenforceable such provision in
any other jurisdiction.
11. Paragraph Headings. The paragraph headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
12. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, 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 rights, remedies, powers and privileges
herein provided are cumulative, may be exercised singly or concurrently and not
exclusive of any rights, remedies, powers or privileges provided by law.
13. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Borrower and
the Agent, provided that any provision of this Agreement imposing obligations on
the Borrower may be waived by the Agent in a written instrument executed by the
Agent. This Agreement shall be binding upon
<PAGE>
12
the successors and assigns of the Borrower and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns, provided that the
Borrower may not assign, transfer or delegate any of its rights or obligations
under this Agreement without the prior written consent of the Agent and any
purported assignment without such consent shall be null and void.
14. Notices. All notices, requests and demands given hereunder shall
be given in accordance with subsection 13.2 of the Credit Agreement.
15. Authority of Agent. The Borrower acknowledges that the rights
and responsibilities of the Agent under this Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the Agent
and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and the Borrower, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and the Borrower shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
16. Integration. This Agreement represents the agreement of the
Borrower and the Agent with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
VAN DE KAMP'S, INC.
By:
------------------------------------------
Title:
<PAGE>
13
Schedules:
- ---------
Schedule 1 Patents and Patent Licenses
Schedule 2 Trademarks and Trademark Licenses
Schedule 3 Filings Required to Perfect Security Interests
<PAGE>
EXHIBIT E
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
SUBSIDIARY LOCKBOX AGREEMENT
LOCKBOX AGREEMENT, dated as of ____________, among [NAME OF BANK], a
________ (the "Depositary Bank"), THE CHASE MANHATTAN BANK, N.A. a national
banking association, as agent for the Lenders referred to below (in such
capacity, the "Agent"), and ____________, a ________ corporation (the
"Company").
W I T N E S S E T H :
-------------------
WHEREAS, pursuant to the Second Amended and Restated Credit and
Guarantee Agreement, dated as of July __, 1996 (as the same may be further
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among VDK Holdings, Inc., a Delaware corporation ("Holdings"), Van
de Kamp's, Inc., a Delaware corporation (the "Borrower"), the several banks and
other financial institutions from time to time parties thereto (the "Lenders")
and the Agent, the Borrower has agreed to establish a lockbox and depositary
account system relating to the accounts receivable of the Borrower and its
subsidiaries (including the Company);
WHEREAS, the Company has granted a security interest in its accounts
receivable to the Agent for the Lenders pursuant to the Guarantee and Collateral
Agreement dated as of September 19, 1995, as amended by the First Amendment to
the Guarantee and Collateral Agreement, dated as of May 6, 1996, (as the same
has been and may be further amended, supplemented or otherwise modified from
time to time, the "Guarantee and Collateral Agreement") made by Holdings, the
Borrower, the Company and the other grantors parties thereto in favor of the
Agent and agreed pursuant to such Guarantee and Collateral Agreement to cause
the proceeds thereof, at the request of the Agent (which request has now been
made by the Agent), to be deposited into the Lockbox Account (as hereinafter
defined) pursuant to this Agreement;
WHEREAS, the Company has agreed to establish a bank account with the
Depositary Bank to be established and maintained in the name of the Agent,
designated as the "_______________" Account No. _______________ (the "Lockbox
Account"); and
WHEREAS, the Depositary Bank has agreed to perform certain services
for the Lockbox Account pursuant to this Lockbox Agreement among the Depositary
Bank, the Agent and the Company;
NOW, THEREFORE, the parties hereto hereby agree as follows:
<PAGE>
2
1. Definitions. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
2. Depositary Bank. The Depositary Bank shall be the Agent's agent
for the purpose of holding and collecting all of the items from time to time on
deposit in the Lockbox Account and their proceeds. The Lockbox Account shall be
under the sole dominion and control of the Agent. Neither the Company nor any
person or entity claiming by, through or under the Company (except the Agent),
shall have any right, title or interest in, any control over the use of, or any
right to withdraw any amount from, the Lockbox Account. The Depositary Bank
shall be entitled to rely on, and shall act in accordance with, all instructions
given to it by the Agent with respect to the Lockbox Account.
3. Duties of the Depositary Bank. The Depositary Bank shall:
(a) Rent one or more post office boxes in the name of the Agent
relating to the Lockbox Account. The Depositary Bank shall have exclusive
and unrestricted access, and shall collect the mail delivered to, such post
office box or boxes (even though addressed to the Company or the Agent) on
each business day on which the Depositary Bank is open in accordance with
the Depositary Bank's regular collection schedule. The Depositary Bank
shall give the Agent and the Company notice of the address or addresses of
the post office box or boxes and shall instruct the Agent and the Company
how mail intended for the Lockbox Account should be addressed.
(b) Open all mail (even though addressed to the Company or the Agent)
and promptly endorse all items and remittances received in such post office
box or boxes and credit such items and remittances to the Lockbox Account.
All such items and remittances shall be endorsed in substantially the
following form:
"Credited without prejudice to Account No. ___________. Absence of
Endorsement Guaranteed - '[Name of Bank]'."
(c) Prepare two photocopies of the front of each check, draft, note,
bill of exchange, money order, commercial paper or other security
instrument or document (collectively, the "checks"; individually, a
"check"), with the date of deposit to be shown on the photocopy. One set of
such photocopies shall be forwarded to the Company at the end of each
business day. Attachments received with payments, such as detachable stubs,
together with any correspondence and the individual envelope, are to be
affixed to the photocopy of the check retained by the Depositary Bank.
(d) Deposit checks which are postdated by no more than three days in
the Lockbox Account and return all other postdated checks to the Company
or, at any time after an Event of Default has occurred and is continuing
and receipt of written notice from the Agent thereof or, if earlier, the
occurrence of an Event of Default under Section 11(f) of the Credit
Agreement with respect to the Company, to the Agent. Checks returned unpaid
because of uncollected or insufficient funds shall be redeposited without
advice; checks returned a second time shall be charged to the
<PAGE>
3
Lockbox Account and mailed under appropriate advice to the Company or, at
any time after an Event of Default has occurred and is continuing and
receipt of written notice from the Agent thereof or, if earlier, the
occurrence of an Event of Default under Section 11(f) of the Credit
Agreement with respect to the Company, to the Agent. Undated checks may be
dated by the Depositary Bank to agree with the postmark date and included
in the regular deposit. Checks incorrectly made out, where the amount
specified in figures and the written amount differ, are to be deposited for
the written amount only, except where the figure amount agrees with the
total of the remittance notice. Checks bearing no signature are to be
deposited with notification to the drawer bank requesting that the
signature be obtained. Third-party checks may be deposited into the Lockbox
Account if properly endorsed. Checks bearing the legend "Payment in Full"
or words of similar import, either typed or handwritten, shall be withheld
from the clearing system and sent to the Company or, at any time after an
Event of Default has occurred and is continuing and receipt of written
notice from the Agent thereof or, if earlier, the occurrence of an Event of
Default under Section 11(f) of the Credit Agreement with respect to the
Company, to the Agent. Should such an item be cleared, the Agent and the
Depositary Bank hereby agree that no liability shall accrue to the
Depositary Bank as a result of such action.
(e) Apply and credit to the Lockbox Account all wire transfers
directed to such Lockbox Account even though such wire transfers may
identify the Lockbox Account as an account of the Company.
(f) Maintain a microfilm record of the front and back of each check
included in the Lockbox Account. This film shall be available for
inspection by the Agent and the Company.
(g) Not commingle funds deposited in the Lockbox Account pursuant to
this Agreement with other funds not deposited pursuant to this Agreement.
(h) Hold all funds at any time on deposit in the Lockbox Account for
application in accordance with the terms of this Agreement.
(i) Give the Agent and the Borrower prompt notice if the Lockbox
Account shall become subject to any writ, judgment, warrant of attachment,
execution or similar process.
4. Transfer of Funds. On each day on which both the branch office of
the Depositary Bank at which the Lockbox Account is being maintained and the
office of The Chase Manhattan Bank, N.A., at 270 Park Avenue, New York, New York
10017 are open, the Depositary Bank shall transfer all funds on deposit in such
Lockbox Account (after such funds become available to the Depositary Bank) to
the Concentration Account referred to in the Concentration Account Agreement
dated as of September 19, 1995, between Chemical Bank, as Agent and the Company,
maintained at said office of The Chase Manhattan Bank,
<PAGE>
4
N.A. Unless otherwise directed by the Agent, such funds shall be transferred by
the Depositary Bank through the Automated Clearing House and shall be identified
as follows:
The Chase Manhattan Bank, N.A. For the account of
ABA #02100012-8 The Chase Manhattan Bank
270 Park Avenue Collateral Proceeds Account
New York, NY 10017 for Van de Kamp's, Inc.
323-210-236
5. Liability. The Depositary Bank shall not be liable to the Agent
or the Borrower for any action taken or omitted to be taken by it in good faith,
nor shall the Depositary Bank be responsible to the Agent or the Borrower for
the consequences of any oversight or error of judgment or be answerable to the
Agent or the Borrower for the same unless such consequences shall occur through
the gross negligence or wilful misconduct of the Depositary Bank or any of its
directors, officers, agents or employees.
6. Fees and Expenses. The Company hereby agrees as follows:
(a) Fees and charges associated with the Lockbox Account as shall
from time to time be mutually agreed upon by the Company and the Depositary
Bank shall be included on a monthly consolidated account analysis statement
which the Depositary Bank shall submit to the Company. This statement shall
set forth the fees and charges payable for such month and be accompanied by
such supporting documentation as the Depositary Bank shall deem reasonable.
(b) Depositary Bank expenses in connection with the establishment and
maintenance of the post office box or boxes rented pursuant to this Lockbox
Agreement shall also be included on the analysis statement.
(c) The Depositary Bank shall be entitled to charge the Lockbox
Account for such fees and expenses as indicated by the analysis statement.
7. Limitations on Liability of the Depositary Bank. The Depositary
Bank undertakes to perform such duties as are expressly set forth herein.
Notwithstanding any other provision of this Lockbox Agreement, it is agreed by
the parties hereto that the Depositary Bank shall not be liable for any action
taken by it or any of its directors, officers, agents or employees in accordance
with this Lockbox Agreement except for its or his or her own gross negligence or
willful misconduct. In no event shall the Depositary Bank be liable for losses
or delays resulting from force majeure, interruption of communication
facilities, labor difficulties or other causes beyond the Depositary Bank's
reasonable control or for indirect, special or consequential damages.
8. Irrevocable Instructions. The Company acknowledges that the
agreements made by it and the authorizations granted in Section 3 are powers
coupled with an interest
<PAGE>
5
until the Guarantee and Collateral Agreement is terminated and the Liens created
thereby are released.
9. Account Information. The Depositary Bank shall provide monthly
statements summarizing the activity of the Lockbox Account to the Agent and the
Company. In addition, the Depositary Bank will provide to the Agent and the
Company copies of all information reasonably requested by either of them. The
details representing deposited items, adding machine tapes, etc., together with
all other materials rejected for various reasons, and so marked, and one advice
of credit, shall be sent by the Depositary Bank to the Company or, at any time
after written notice by the Agent, to the Agent.
10. Representations and Warranties. The Depositary Bank represents
and warrants that:
(a) Only employees of the Depositary Bank or its affiliates have
access to the post office box or boxes provided for herein.
(b) The Lockbox Account is the only account that has been maintained
by the Depositary Bank with respect to receivables of the Company.
(c) It is a banking corporation duly organized, validly existing and
in good standing under the laws of ____________ and has full corporate
power and authority under such laws to execute, deliver and perform its
obligations under this Agreement.
(d) The execution, delivery and performance of this Agreement by the
Depositary Bank have been duly and effectively authorized by all necessary
corporate action and this Agreement has been duly executed and delivered by
the Depositary Bank and constitutes a valid and binding obligation of the
Depositary Bank enforceable in accordance with its terms.
11. Effectiveness; Integration; Amendments. This Lockbox Agreement
shall be effective as of the date first above written, and the Depositary Bank
shall be in a position to process remittances as of that date. To the extent
that other agreements are inconsistent with this Lockbox Agreement, this Lockbox
Agreement shall supersede any other agreement relating to the matters referred
to herein, including any other agreement between the Company and the Depositary
Bank relating to the collection of receivables of the Company or its
predecessors. Neither this Lockbox Agreement nor any provisions hereof may be
changed, amended, modified or waived except by an instrument in writing executed
by the parties hereto; provided that such instrument need be executed only by
the Depositary Bank and the Agent if it does not change any rights or
obligations of, or authorizations granted by, the Company hereunder in a manner
adverse to the Company. Any provision of this Lockbox Agreement which may prove
unenforceable under any law or regulation shall not affect the validity of any
other provisions hereof.
12. Termination. (a) This Lockbox Agreement shall automatically
terminate on the date on which all Obligations under the Credit Agreement have
been paid in full, all
<PAGE>
6
Commitments of the Lenders thereunder have been terminated and no Letter of
Credit remains outstanding. The Depositary Bank shall be entitled to rely on a
certificate of the Agent to such effect.
(b) This Lockbox Agreement may be terminated by the Company (with the
prior written consent of the Agent) or any other party hereto upon sixty days
prior written notice to the other parties hereto.
13. Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile), and shall be deemed to have been duly given or made when delivered,
or, three days after being deposited in the mail, postage prepaid, or one
Business Day after being sent by priority overnight mail with a nationally
recognized overnight delivery carrier, or in the case of facsimile notice, when
received, addressed as follows, or to such other address as may be hereafter
notified by the respective parties hereto:
<TABLE>
<CAPTION>
<S> <C>
The Agent: The Chase Manhattan Bank, N.A.
10 South La Salle Street, 23rd Floor
Chicago, Illinois 60603
Attention: Steven J. Faliski
Facsimile: (312) 443-1964
The Depositary Bank: [Name of Bank]
------------------------------
------------------------------
------------------------------
Attention: [ ]
Facsimile: [(___) ]
The Company: [Name of Company]
------------------------------
------------------------------
------------------------------
Attention: [ ]
Facsimile: [ (___) ]
</TABLE>
14. Bankruptcy of Company. In the event that a bankruptcy case or
receivership proceeding is commenced by or against the Company, the Agent may
pay the fees and charges of the Depositary Bank payable by the Company under
this Lockbox Agreement from the date of commencement of such case or proceeding
until the earlier of the date of termination of this Agreement or the date of
dismissal or termination of such case or proceeding to the extent that such fees
and charges are not being paid by the Company.
15. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE LAWS OF THE STATE
IN WHICH THE DEPOSITARY BANK IS LOCATED
<PAGE>
7
GOVERN THE LOCKBOX ACCOUNT, THIS LOCKBOX AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
16. Severability. Any provision of this Lockbox Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without, to
the extent permitted by law, invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not, to the
extent permitted by law, invalidate or render unenforceable such provision in
any other jurisdiction.
<PAGE>
8
17. Counterparts. This Lockbox Agreement may be executed in any
number of counterparts which together shall constitute one and the same
instrument.
18. Assignment. The Depositary Bank will not assign or transfer any
of its rights or obligations hereunder (other than to the Agent) without the
prior written consent of the other parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has caused this Lockbox
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
[NAME OF BANK]
By:
--------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.,
as Agent
By:
--------------------------------------
Name:
Title:
[NAME OF COMPANY]
By:
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT F
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
SWING LINE LOAN PARTICIPATION CERTIFICATE
[Name of Lender]
- ----------------------------------
- ----------------------------------
- ----------------------------------
Dear Sirs:
Pursuant to subsection 3.9 of the Second Amended and Restated Credit
and Guarantee Agreement, dated as of July __, 1996 (as further amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
unless otherwise defined herein, terms defined in the Credit Agreement and used
herein are so used as therein defined), among VDK Holdings, Inc., a Delaware
corporation, Van de Kamp's, Inc., a Delaware corporation, the several banks and
other financial institutions from time to time parties thereto (the "Lenders"),
and The Chase Manhattan Bank, N.A., as agent for the Lenders, the undersigned,
as Swing Line Lender
<PAGE>
2
under the Credit Agreement, hereby acknowledges receipt from you on the date
hereof of ______________ DOLLARS ($_______________) as payment for the purchase
of a participating interest in the following Swing Line Loan:
Date of Swing Line Loan:
--------------------------------------
Principal Amount of Swing Line Loan
Participating Interest: $
--------------------------------
Very truly yours,
THE CHASE MANHATTAN BANK, N.A.
By:
------------------------------------
Title:
<PAGE>
EXHIBIT G
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
ACKNOWLEDGEMENT AND CONSENT
The undersigned limited liability company hereby:
(a) acknowledges and consents to the execution, delivery and performance
of (i) the Second Amended and Restated Credit and Guarantee Agreement dated as
of July __, 1996, (as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among VDK Holdings, Inc., a
Delaware corporation, Van de Kamp's, Inc., a Delaware corporation, the several
banks and other financial institutions from time to time parties thereto (the
"Lenders"), and The Chase Manhattan Bank, N.A., a national banking association,
as agent for the Lenders thereunder, and (ii) all of the documents and
transactions contemplated thereby; and
(b) agrees that such execution, delivery and performance shall not in any
way affect such limited liability company's obligations under any Loan Document
(as defined in the Credit Agreement) to which such limited liability company is
a party, which obligations on the date hereof remain absolute and unconditional
and are not subject to any defense, set-off or counterclaim;
Dated: July __, 1996
VDK FOODS LLC
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT H
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT REFERRED
TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY
THE AGENT PURSUANT TO THE TERMS OF SUCH AMENDED AND RESTATED CREDIT AND
GUARANTEE AGREEMENT.
[FORM OF]
TRANCHE A TERM NOTE
$________ New York, New York
September 19, 1995
FOR VALUE RECEIVED, the undersigned, VAN DE KAMP'S, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _____________________ (the "Lender") at the office of The Chase
Manhattan Bank, N.A., located at 270 Park Avenue, New York, New York 10017, in
lawful money of the United States of America and in immediately available funds,
the principal amount of _______________________ DOLLARS ($_________), or, if
less, the unpaid principal amount of the Tranche A Term Loans made by the Lender
pursuant to subsection 2.1 of the Credit Agreement (as defined below). The
principal amount of the Tranche A Term Loans made by the Lender shall be repaid
in the amounts and on the dates specified in subsection 2.3 of the Credit
Agreement. The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount of the Tranche A Term Loans made by the
Lender from time to time outstanding at the rates and on the dates specified in
the Credit Agreement.
The holder of this Note is authorized to record on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Tranche A Term Loan made by the Lender and the date and amount of each payment
or prepayment of principal with respect thereto, each conversion of all or a
portion thereof to another Type, each continuation of all or a portion thereof
as the same Type and, in the case of Eurodollar Loans, the length of each
Interest Period and the Eurodollar Rate with respect thereto. Each such
recordation shall, to the extent permitted by applicable law, constitute prima
facie evidence of the accuracy of the information so recorded, provided that the
failure to make any such recordation (or any error therein) shall not affect the
obligation of the Borrower to repay (with applicable interest) the Tranche A
Term Loans made by the Lender in accordance with the terms of the Credit
Agreement.
<PAGE>
2
This Note (a) is one of the Tranche A Term Notes referred to in the
Second Amended and Restated Credit and Guarantee Agreement, dated as of July __,
1996 (as the same may be further amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware
corporation, Van de Kamp's, Inc., a Delaware corporation, the Lender, the other
banks and financial institutions from time to time parties thereto and The Chase
Manhattan Bank, N.A., as agent, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is secured and guaranteed as
provided in the Loan Documents. Reference is hereby made to the Loan Documents
for a description of the properties and assets in which a security interest has
been granted, the nature and extent of the security and the guarantees, the
terms and conditions upon which the security interests and each guarantee were
granted and the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
VAN DE KAMP'S, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
<PAGE>
Schedule A
to Tranche A Term Note
----------------------
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
Amount of
Amount of ABR Loans Unpaid
Amount Principal of Converted to Principal
Amount of Converted to ABR Loans Eurodollar Balance of Notation
Date ABR Loans ABR Loans Repaid Loans ABR Loans Made By
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule B
to Tranche A Term Note
----------------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Interest
Amount Period and Amount of Unpaid
Converted to Eurodollar Amount of Eurodollar Principal
Amount of or Continued Rate with Principal of Loans Balance of
Eurodollar as Eurodollar Respect Eurodollar Converted to Eurodollar Notation
Date Loans Loans Thereto Loans Repaid ABR Loans Loans Made By
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
=========================================================================================================
</TABLE>
<PAGE>
EXHIBIT I
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT REFERRED
TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY
THE AGENT PURSUANT TO THE TERMS OF SUCH AMENDED AND RESTATED CREDIT AND
GUARANTEE AGREEMENT.
[FORM OF]
TRANCHE B TERM NOTE
$______________ New York, New York
May __, 1996
FOR VALUE RECEIVED, the undersigned, VAN DE KAMP'S, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _____________________ (the "Lender") at the office of The Chase
Manhattan Bank, N.A., located at 270 Park Avenue, New York, New York 10017, in
lawful money of the United States of America and in immediately available funds,
the principal amount of _______________________ DOLLARS ($_________), or, if
less, the unpaid principal amount of the Tranche B Term Loan made by the Lender
pursuant to subsection 2.1 of the Credit Agreement (as defined below). The
principal amount of the Tranche B Term Loan made by the Lender shall be repaid
in the amounts and on the dates specified in subsection 2.3 of the Credit
Agreement. The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount of the Tranche B Term Loan made by the
Lender from time to time outstanding at the rates and on the dates specified in
the Credit Agreement.
The holder of this Note is authorized to record on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of the
Tranche B Term Loan made by the Lender and the date and amount of each payment
or prepayment of principal with respect thereto, each conversion of all or a
portion thereof to another Type, each continuation of all or a portion thereof
as the same Type and, in the case of Eurodollar Loans, the length of each
Interest Period and the Eurodollar Rate with respect thereto. Each such
recordation shall, to the extent permitted by applicable law, constitute prima
facie evidence of the accuracy of the information so recorded, provided that the
failure to make any such recordation (or any error therein) shall not affect the
obligation of the Borrower to repay (with applicable interest) the Tranche B
Term Loan made by the Lender in accordance with the terms of the Credit
Agreement.
This Note (a) is one of the Tranche B Term Notes referred to in the
Second Amended and Restated Credit and Guarantee Agreement, dated as of July __,
1996 (as the same
<PAGE>
2
may be further amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among VDK Holdings, Inc., a Delaware corporation, Van
de Kamp's, Inc., a Delaware corporation, the Lender, the other banks and
financial institutions from time to time parties thereto and The Chase Manhattan
Bank, N.A., as agent, (b) is subject to the provisions of the Credit Agreement
and (c) is subject to optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement. This Note is secured and guaranteed as
provided in the Loan Documents. Reference is hereby made to the Loan Documents
for a description of the properties and assets in which a security interest has
been granted, the nature and extent of the security and the guarantees, the
terms and conditions upon which the security interests and each guarantee were
granted and the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
VAN DE KAMP'S, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
Schedule A
to Tranche B Term Note
----------------------
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
Amount of
Amount of ABR Loans Unpaid
Amount Principal of Converted to Principal
Amount of Converted to ABR Loans Eurodollar Balance of Notation
Date ABR Loans ABR Loans Repaid Loans ABR Loans Made By
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule B
to Tranche B Term Note
----------------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
Interest
Amount Period and Amount of Unpaid
Converted to Eurodollar Amount of Eurodollar Principal
Amount of or Continued Rate with Principal of Loans Balance of
Eurodollar As Eurodollar Respect Eurodollar Converted to Eurodollar Notation
Date Loans Loans Thereto Loans Repaid ABR Loans Loans Made By
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT J
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT REFERRED
TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY
THE AGENT PURSUANT TO THE TERMS OF SUCH AMENDED AND RESTATED CREDIT AND
GUARANTEE AGREEMENT.
[FORM OF]
TRANCHE C TERM NOTE
$__________ New York, New York
July __, 1996
FOR VALUE RECEIVED, the undersigned, VAN DE KAMP'S, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _____________________ (the "Lender") at the office of The Chase
Manhattan Bank, N.A., located at 270 Park Avenue, New York, New York 10017, in
lawful money of the United States of America and in immediately available funds,
the principal amount of _______________________ DOLLARS ($_________), or, if
less, the unpaid principal amount of the Tranche C Term Loan made by the Lender
pursuant to subsection 2.1 of the Credit Agreement (as defined below). The
principal amount of the Tranche C Term Loan made by the Lender shall be repaid
in the amounts and on the dates specified in subsection 2.3 of the Credit
Agreement. The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount of the Tranche C Term Loan made by the
Lender from time to time outstanding at the rates and on the dates specified in
the Credit Agreement.
The holder of this Note is authorized to record on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of the
Tranche C Term Loan made by the Lender and the date and amount of each payment
or prepayment of principal with respect thereto, each conversion of all or a
portion thereof to another Type, each continuation of all or a portion thereof
as the same Type and, in the case of Eurodollar Loans, the length of each
Interest Period and the Eurodollar Rate with respect thereto. Each such
recordation shall, to the extent permitted by applicable law, constitute prima
facie evidence of the accuracy of the information so recorded, provided that the
failure to make any such recordation (or any error therein) shall not affect the
obligation of the Borrower to repay (with applicable interest) the Tranche C
Term Loan made by the Lender in accordance with the terms of the Credit
Agreement.
<PAGE>
2
This Note (a) is one of the Tranche C Term Notes referred to in the
Second Amended and Restated Credit and Guarantee Agreement, dated as of July __,
1996 (as the same may be further amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware
corporation, Van de Kamp's, Inc., a Delaware corporation, the Lender, the other
banks and financial institutions from time to time parties thereto and The Chase
Manhattan Bank, N.A., as agent, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is secured and guaranteed as
provided in the Loan Documents. Reference is hereby made to the Loan Documents
for a description of the properties and assets in which a security interest has
been granted, the nature and extent of the security and the guarantees, the
terms and conditions upon which the security interests and each guarantee were
granted and the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
VAN DE KAMP'S, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE>
Schedule A
to Tranche C Term Note
----------------------
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Amount of
Amount of ABR Loans Unpaid
Amount Principal of Converted to Principal
Amount of Converted to ABR Loans Eurodollar Balance of Notation
Date ABR Loans ABR Loans Repaid Loans ABR Loans Made By
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule B
to Tranche C Term Note
----------------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Interest
Amount Period and Amount of Unpaid
Amount of Converted to Eurodollar Amount of Eurodollar Principal
Amount of or Continued Rate with Principal of Loans Balance of
Eurodollar as Eurodollar Respect Eurodollar Converted to Eurodollar Notation
Date Loans Loans Thereto Loans Repaid ABR Loans Loans Made By
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT K
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT REFERRED
TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY
THE AGENT PURSUANT TO THE TERMS OF SUCH AMENDED AND RESTATED CREDIT AND
GUARANTEE AGREEMENT.
[FORM OF]
REVOLVING CREDIT NOTE
$__________________ New York, New York
September 19, 1995
FOR VALUE RECEIVED, the undersigned, VAN DE KAMP'S, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of ________________ (the "Lender") at the office of The Chase Manhattan
Bank, N.A., located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, on the
Termination Date the principal amount of ________________ DOLLARS
($___________), or, if less, the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Lender to the Borrower pursuant to subsection
3.1 of the Credit Agreement (as defined below). The Borrower further agrees to
pay interest in like money at such office on the unpaid principal amount of
Revolving Credit Loans made by the Lender from time to time outstanding at the
rates and on the dates specified in the Credit Agreement.
The holder of this Note is authorized to record on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made by the Lender and the date and amount of each payment
or prepayment of principal thereof, each conversion of all or a portion thereof
to another Type, each continuation of all or a portion thereof as the same Type
and, in the case of Eurodollar Loans, the length of each Interest Period and the
Eurodollar Rate with respect thereto. Each such recordation shall, to the
extent permitted by applicable law, constitute prima facie evidence of the
accuracy of the information so recorded, provided that the failure to make any
such recordation shall not affect the obligation of the Borrower to repay (with
applicable interest) Revolving Credit Loans made by the Lender pursuant to the
Credit Agreement.
<PAGE>
2
This Note (a) is one of the Revolving Credit Notes referred to in the
Second Amended and Restated Credit and Guarantee Agreement, dated as of July __,
1996 (as the same may be further amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware
corporation, Van de Kamp's, Inc., a Delaware corporation, the Lender, the other
banks and financial institutions from time to time parties thereto and The Chase
Manhattan Bank, N.A., as agent, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is secured and guaranteed
as provided in the Loan Documents. Reference is hereby made to the Loan
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and each
guarantee were granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
VAN DE KAMP'S, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE>
Schedule A
to Revolving Credit Note
------------------------
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Amount of ABR
Amount Amount of Loans Converted Unpaid Principal
Amount of ABR Converted Principal of ABR to Balance of ABR Notation
Date Loans ABR Loans Loans Repaid Eurodollar Loans Loans Made By
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
=============================================================================================================
</TABLE>
<PAGE>
Schedule B
to Revolving Credit Note
------------------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Amount Amount of Unpaid
Converted to Interest Period Amount of Eurodollar Principal
Amount of or Continued and Eurodollar Principal of Loans Balance of
Eurodollar as Eurodollar Rate with Eurodollar Converted to Eurodollar Notation
Date Loans Loan Respect Thereto Loans Repaid ABR Loans Loans Made By
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
====================================================================================================================
</TABLE>
<PAGE>
EXHIBIT L
TO AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT REFERRED
TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER MAINTAINED BY
THE AGENT PURSUANT TO THE TERMS OF SUCH AMENDED AND RESTATED CREDIT AND
GUARANTEE AGREEMENT.
[FORM OF]
SWING LINE NOTE
New York, New York
$___________________ September 19, 1995
FOR VALUE RECEIVED, the undersigned, VAN DE KAMP'S, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _____________ (the "Swing Line Lender"), at its offices located at 270
Park Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds on the Termination Date, the
principal amount of _______________ DOLLARS ($____________) or, if less, the
aggregate unpaid principal amount of the Swing Line Loans made by the Swing Line
Lender to the Borrower pursuant to subsection 3.6 of the Credit Agreement (as
defined below). The Borrower further agrees to pay interest in like money at
said office on the unpaid principal amount of Swing Line Loans from time to time
outstanding at the rates and on the dates specified in the Credit Agreement.
The Swing Line Lender is authorized to record the date and the amount
of each Swing Line Loan made by the Swing Line Lender to the Borrower pursuant
to subsection 3.6 of the Credit Agreement and the date and amount of each
payment or prepayment of principal thereof on Schedule A annexed hereto and made
a part hereof and any such recordation shall, to the extent permitted by
applicable law, constitute prima facie evidence of the accuracy of the
information so recorded, provided, that any failure by the Swing Line Lender to
make such recordation shall not affect the obligation of the Borrower to repay
(with applicable interest) the Swing Line Loans made by the Swing Line Lender
pursuant to the Credit Agreement.
This Note (a) is the Swing Line Note referred to in the Second Amended
and Restated Credit and Guarantee Agreement, dated as of July __, 1996 (as the
same may be further amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware corporation,
Van de Kamp's, Inc., a Delaware corporation, the several other banks and other
financial institutions from time to time parties thereto (the "Lenders"), and
The Chase Manhattan Bank, N.A., as agent for the Lenders, (b) is subject to the
provisions of the Credit Agreement and (c) is subject to optional and mandatory
prepayment in
<PAGE>
2
whole or in part as provided in the Credit Agreement. This Note is secured and
guaranteed as provided in the Loan Documents. Reference is hereby made to the
Loan Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
VAN DE KAMP'S, INC.
By:
--------------------------------------
Title:
<PAGE>
Schedule A to
Swing Line Note
---------------
LOANS AND REPAYMENTS
--------------------
<TABLE>
<CAPTION>
===========================================================
Unpaid
Amount of Amount of Principal
Swing Line Swing Line Balance of Notation
Loans Loans Swing Line Made
Date Made Repaid Loans By
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=============================================================
<S> <C>
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
- -------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT M
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
BORROWING CERTIFICATE
Pursuant to subsections 6.1(g), 6.1(h), 6.1(i) and 6.1(n) of the
Second Amended and Restated Credit and Guarantee Agreement, dated as of July __,
1996 (as the same may be amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware
corporation, Van de Kamp's, Inc., a Delaware corporation (the "Borrower"), the
several banks and other financial institutions from time to time parties thereto
(the "Lenders") and The Chase Manhattan Bank, N.A., as agent for the Lenders,
the undersigned, ____________________ of the Borrower, hereby certifies as
follows:
1. The representations and warranties of the Borrower set forth in
the Credit Agreement and each of the other Loan Documents to which it is
a party or which are contained in any certificate, document or financial
or other statement furnished pursuant to or in connection with the Credit
Agreement or any Loan Document are true and correct in all material
respects on and as of the date hereof with the same effect as if made on
the date hereof, except for representations and warranties expressly
stated to relate to a specific earlier date, in which case such
representations and warranties are true and correct in all material
respects as of such earlier date;
2. No Default or Event of Default has occurred and is continuing as
of the date hereof or will occur after giving effect to the making of the
Loans and the issuance of the Letters of Credit requested to be made
and/or issued on the date hereof or the consummation of each of the
transactions contemplated by the Loan Documents; and
3. _________________ is and at all times since _____________ __,
199_, has been the duly elected and qualified [Assistant] Secretary of
the Borrower and the signature set forth on the signature line for such
officer below is such officer's true and genuine signature;
and the undersigned [Assistant] Secretary of the Borrower hereby certifies as
follows:
4. There are no liquidation or dissolution proceedings pending or
to my knowledge threatened against the Borrower or any of its
Subsidiaries, nor has any other event occurred affecting or threatening
the corporate existence of the Borrower or any of its Subsidiaries;
5. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware;
<PAGE>
2
6. (a) Attached hereto as Exhibit A is a true and complete copy
of resolutions duly adopted by the Board of Directors of the Borrower on
__________ __, 1996; such resolutions have not in any way been amended,
modified, revoked or rescinded and have been in full force and effect
since their adoption to and including the date hereof and are now in full
force and effect; such resolutions are the only corporate proceedings of
the Borrower now in force relating to or affecting the matters referred
to therein;
(b) attached hereto as Exhibit B is a true and complete copy
of the By-laws of the Borrower as in effect at all times since __________
__, 199_, to and including the date hereof; and
(c) attached hereto as Exhibit C is a true and complete copy
of the Certificate of Incorporation of the Borrower as in effect at all
times since __________ __, ____, to and including the date hereof; and
7. The following persons are now duly elected and qualified
officers of the Borrower, holding the offices indicated next to their
respective names below, and such officers have held such offices with the
Borrower at all times since __________ __, 199_, to and including the
date hereof, and the signatures appearing opposite their respective names
below are the true and genuine signatures of such officers, and each of
such officers is duly authorized to execute and deliver on behalf of the
Borrower, the Credit Agreement and the other Loan Documents to which it
is a party and any certificate or other document to be delivered by the
Borrower pursuant to the Credit Agreement or any such Loan Document:
<TABLE>
<CAPTION>
Name Office Signature
---- ------ ---------
<S> <C> <C>
[ ] [ ] ________
[ ] [ ] ________
</TABLE>
Unless otherwise defined herein, capitalized terms which are defined
in the Credit Agreement and used herein are so used as so defined.
<PAGE>
3
IN WITNESS WHEREOF, the undersigned have hereunto set our names and
affixed the corporate seal.
VAN DE KAMP'S, INC. VAN DE KAMP'S, INC.
By: By:
------------------------------ --------------------------------------
Name: Name:
Title: [Vice] President Title: [Assistant] Secretary
Date: July __, 1996 (CORPORATE SEAL)
<PAGE>
EXHIBIT N
TO SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Second Amended and Restated Credit and
Guarantee Agreement, dated as of July __, 1996 (as further amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among VDK
Holdings, Inc., a Delaware corporation ("Holdings"), Van de Kamp's, Inc., a
Delaware corporation (the "Borrower"), the several banks and other financial
institutions from time to time parties thereto (the "Lenders") and The Chase
Manhattan Bank, N.A., as agent for the Lenders (in such capacity, the "Agent").
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
______________ (the "Assignor") and _____________ (the "Assignee")
agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below) (but not prior to the registration of the
information contained herein in the Register pursuant to subsection 13.6(e) of
the Credit Agreement), a ___% interest (the "Assigned Interest") in and to the
Assignor's rights and obligations under the Credit Agreement with respect to
those credit facilities contained in the Credit Agreement as are set forth on
Schedule 1 (individually, an "Assigned Facility"; collectively, the "Assigned
Facilities"), in a principal amount for each Assigned Facility as set forth on
Schedule 1.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) (i) requests that the
Agent, upon request by the Assignee, (A) exchange any attached Notes for a new
Note or Notes payable to the Assignee or, (B) if the Assignor does not hold any
Notes, issue a new Note or Notes payable to the Assignee and (ii) if (A) the
Assignor has retained any interest in the Assigned Facility and (B) the Assignor
holds any Notes, requests that the Agent exchange the attached Notes for a new
Note or Notes payable to the Assignor, in each case in amounts which reflect
<PAGE>
2
the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to subsections 5.1 and 7.1 thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Acceptance;
(c) agrees that it will, independently and without reliance upon the Assignor,
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under the Credit Agreement, the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be a party to and
bound by the provisions of the Credit Agreement and will perform in accordance
with its terms all the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender including, if it is organized
under the laws of a jurisdiction outside the United States, its obligations
pursuant to subsection 4.10(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
____________ __, 19__ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to the Credit Agreement, effective as of
the Effective Date (which shall not, unless otherwise agreed to by the Agent, be
earlier than five Business Days after the date of such acceptance and recording
by the Agent and which shall not, in any case, be prior to the date of recording
by the Agent) and which shall not, in any case, be prior to the date of
recording by the Agent.
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
<PAGE>
3
7. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
8. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
<PAGE>
Schedule 1
to Assignment and Acceptance
----------------------------
Re: Assignment and Acceptance relating to the Second Amended and Restated Credit
and Guarantee Agreement, dated as of July __, 1996 (as further amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among VDK Holdings, Inc., a Delaware corporation ("Holdings"), Van de Kamp's,
Inc., a Delaware corporation (the "Borrower"), the several banks and other
financial institutions from time to time parties thereto (the "Lenders") and The
Chase Manhattan Bank, N.A., as agent for the Lenders (in such capacity, the
"Agent").
- --------------------------------------------------------------------------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
<TABLE>
<CAPTION>
Credit Principal
Facility Assigned Amount Assigned Commitment Percentage Assigned/1/
- ----------------- --------------- ---------------------------------
<S> <C> <C>
$________ __._________%
</TABLE>
The terms set forth above are hereby agreed to by:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By: By:
------------------------ -------------------------
Name: Name:
Title: Title:
- ------------------------------
/1/ Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all Lenders.
<PAGE>
2
<TABLE>
<CAPTION>
<S> <C>
[Accepted: Consented To:
THE CHASE MANHATTAN BANK, N.A., VAN DE KAMP'S, INC.
as Agent
By:
--------------------
By: Name:
-------------------- Title:]
Name:
Title:
</TABLE>
<PAGE>
EXHIBIT 10.22
================================================================================
FIRST AMENDMENT
Dated as of August 28, 1996
to the
SECOND AMENDED AND RESTATED
CREDIT AND GUARANTEE AGREEMENT
among
VDK HOLDINGS, INC.,
VAN DE KAMP'S, INC.,
THE LENDERS PARTIES THERETO,
and
THE CHASE MANHATTAN BANK,
as Agent
================================================================================
<PAGE>
FIRST AMENDMENT, dated as of August 28, 1996 (this "First Amendment"),
among: (i) VDK HOLDINGS, INC., a Delaware corporation ("Holdings"); (ii) VAN DE
KAMP'S, INC., a Delaware corporation (the "Borrower"); (iii) the several lenders
and other financial institutions listed on the signature pages of this First
Amendment (individually, a "Lender", and collectively, the "Lender") and (iv)
THE CHASE MANHATTAN BANK, a New York banking corporation (as successor to The
Chase Manhattan Bank, N.A.), as Agent, amending the Second Amended and Restated
Credit and Guarantee Agreement, dated as of July 9, 1996 (as amended,
supplemented or otherwise modified prior to the date hereof, the "Credit
Agreement"), among the Borrower, Holdings, the Lenders and the Agent.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower has requested the Lenders to agree to amend the
Credit Agreement to, among other things, correct certain calculation periods for
financial covenants of the Borrower, and change certain provisions thereof as
set forth in this First Amendment;
WHEREAS, the Lenders are willing to agree to the amendments requested
by the Borrower;
NOW THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS.
1.1 Defined Terms. Unless otherwise defined herein and except as set
forth in this First Amendment, terms defined in the Credit Agreement are used
herein as therein defined.
SECTION 2. AMENDMENT OF CREDIT AGREEMENT.
2.1 Amendments to Subsection 8.1. (a) Paragraph (b) of subsection 8.1
of the Credit Agreement is hereby amended by deleting the second proviso
therefrom and substituting therefor the following:
provided further, that, for the three-month period ending on June 30,
1996, the ratio of the sum of Consolidated EBITDA to Consolidated
Fixed Charges shall be calculated with respect to the nine-month
period ended on such date and for the three-month periods ending on
September 30, 1996, December 31, 1996 and March 31, 1997, the ratio of
the sum of Consolidated EBITDA to Consolidated Fixed Charges shall be
calculated with respect to the three-month, six-month and nine-month
periods ended on such dates, respectively.
<PAGE>
2
(b) Paragraph (c) of subsection 8.1 of the Credit Agreement is hereby
amended by deleting the proviso therefrom and substituting therefor the
following:
provided, that, for the three-month period ending on June 30, 1996,
the ratio of Consolidated EBITDA to Consolidated Cash Interest Expense
shall be calculated with respect to the nine-month period ended on
such date and for the three-month periods ending on September 30,
1996, December 31, 1996 and March 31, 1997, the ratio of Consolidated
EBITDA to Consolidated Cash Interest Expense shall be calculated with
respect to the three-month, six-month and nine-month periods ended on
such dates, respectively.
SECTION 3. MISCELLANEOUS.
3.1 Effectiveness. The amendments provided for herein shall become
effective as of August 28, 1996 (the "Effective Date") upon the satisfaction of
the following condition precedent:
(a) the Administrative Agent shall have received counterparts of this
First Amendment, duly executed and delivered by the Borrower, Holdings and
the Required Lenders.
3.2 Representations and Warranties. After giving effect to the
amendments contained herein, on the Effective Date, the Borrower hereby
confirms, reaffirms and restates the representations and warranties set forth in
Section 5 of the Credit Agreement; provided that each reference in such Section
5 to "this Agreement" shall be deemed to be a reference both to this First
Amendment and to the Credit Agreement as amended by this First Amendment.
3.3 Continuing Effect; No Other Amendments. Except as expressly
amended or waived hereby, all of the terms and provisions of the Credit
Agreement are and shall remain in full force and effect. The amendments
contained herein shall not constitute an amendment or waiver of any other
provision of the Credit Agreement or for any purpose except as expressly set
forth herein.
3.4 No Default. No Default or Event of Default shall have occurred
and be continuing as of the Effective Date.
3.5 Counterparts. This First Amendment may be executed in any number
of counterparts by the parties hereto, each of which counterparts when so
executed shall be an original, but all the counterparts shall together
constitute one and the same instrument.
3.6 GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed and delivered by their respective duly authorized
officers as of the date first above written.
VDK HOLDINGS, INC.
By: /s/ Jamie B. Ardrey
-------------------------------------
Title: Executive Vice President
VAN DE KAMP'S, INC.
By: /s/ Jamie B. Ardrey
-------------------------------------
Title: Executive Vice President
THE CHASE MANHATTAN BANK, as Agent
and as a Lender
By: /s/ Marian N. Schulman
-------------------------------------
Title: Attorney-in-Fact
BANQUE PARIBAS
By: /s/ Lee S. Buckner
-------------------------------------
Title: Group Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ W. Leroy Startz
-------------------------------------
Title: First Vice President
<PAGE>
4
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By: /s/ Ian Reece
-------------------------------------
Title: Vice President and Manager
By: /s/ Dana W. Hemenway
-------------------------------------
Title: Vice President
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN
BRANCHES
By: /s/ Nicholas Kalogeropoulos
-------------------------------------
Title: Assistant Treasurer
By: /s/ Andrew K. Mittag
-------------------------------------
Title: Vice President
FLEET NATIONAL BANK (successor in interest to
Fleet Bank of Massachusetts, N.A.)
By: /s/ Kevin P. Cronin
-------------------------------------
Title: Senior Vice President
HARRIS TRUST AND SAVINGS BANK
By: /s/ Glen Clark
-------------------------------------
Title: Vice President
<PAGE>
5
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ C. Andrew Piculell
-------------------------------------
Title: Vice President
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By: /s/ Anthony R. Clemente
-------------------------------------
Title: Authorized Signatory
PRIME INCOME TRUST
By: /s/ Rafael Scolari
-------------------------------------
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
-------------------------------------
Title: Sr. Vice Pres.--
Portfolio Manager
RESTRUCTURED OBLIGATIONS BACKED
BY SENIOR ASSETS, B.V.
By: Chancellor Senior Secured Management, Inc.
as Portfolio Adviser
By: /s/ Christopher A. Bondy
-------------------------------------
Title: Vice President
<PAGE>
6
STRATA FUNDING LTD.
By: /s/ Elizabeth Kearns
-------------------------------------
Title: Director
MERRILL LYNCH PRIME RATE PORTFOLIO
By: MERRILL LYNCH ASSET MANAGEMENT L.P.,
as Investment Adviser
By: /s/ Anthony R. Clemente
-------------------------------------
Title: Authorized Signatory
BANQUE NATIONALE DE PARIS
By: /s/ Mark Whitson
-------------------------------------
Title: Vice President
By: /s/ Pamela Lucash
-------------------------------------
Title: Assistant Treasurer
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By: /s/ Henry R. Biedrzycki
-------------------------------------
Title: Vice President
<PAGE>
7
FIRST BANK NATIONAL ASSOCIATION
By: /s/ Elliot J. Jaffe
-------------------------------------
Title: Vice President
MIDLAND BANK PLC
By: /s/ Martin Brown
-------------------------------------
Title: Director
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Steven M. Benevento
-------------------------------------
Title: Assistant Vice President
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Michael J. Bacevich
-------------------------------------
Title: Vice President
SENIOR HIGH INCOME PORTFOLIO, INC.
By: /s/ Anthony R. Clemente
-------------------------------------
Title: Authorized Signatory
<PAGE>
8
FEDERAL STREET PARTNERS
By: /s/ C. Andrew Piculell
-------------------------------------
Title: Vice President
SENIOR DEBT PORTFOLIO
By: BOSTON MANAGEMENT AND RESEARCH, as
Investment Advisor
By: /s/ Barbara Campbell
-------------------------------------
Title: Assistant Treasurer
<PAGE>
EXHIBIT 10.23
SECOND AMENDMENT
TO
GUARANTEE AND COLLATERAL AGREEMENT
SECOND AMENDMENT, dated as of July 9, 1996 (this "Amendment"), to the
Guarantee and Collateral Agreement, dated as of September 19, 1995, as amended
by the First Amendment to the Guarantee and Collateral Agreement, dated as of
May 6, 1996, (as the same may be amended, supplemented or otherwise modified
from time to time, the "Guarantee and Collateral Agreement"), made by each of
the signatories hereto (the "Grantors"), in favor of The Chase Manhattan Bank,
N.A., as agent (in such capacity, the "Agent") for the several banks and other
financial institutions (the "Lenders") from time to time parties to the Second
Amended and Restated Credit and Guarantee Agreement, dated as of July 9, 1996
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware corporation
("Holdings"), Van de Kamp's, Inc., a Delaware corporation (the "Borrower"), the
Lenders and the Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, effective as of the date hereof the parties thereto have
agreed to amend and restate the Existing Credit Agreement;
WHEREAS, contemporaneously with the amendment and restatement of the
Existing Credit Agreement, the Borrower is acquiring the assets of the Aunt
Jemima/Celeste Business with, inter alia, the proceeds of loans made to the
Borrower by the Lenders under the Credit Agreement;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, each such Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
and
WHEREAS, it is a condition precedent to the effectiveness of the
amendment and restatement of the Existing Credit Agreement and of the Lenders'
agreement to make their additional loans to the Borrower that the Borrower and
the other Grantors shall have entered into this Amendment;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
Grantors and the Agent hereby agree as follows:
<PAGE>
2
SECTION 1. Definitions. As used in this Amendment, terms defined in
the preamble hereof and the recitals hereto are used herein as so defined and
terms defined in the Credit Agreement are used herein as therein defined.
SECTION 2. Amendment of Schedules.
----------------------
(a) Schedule 3 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Filings and Other Actions Required to Perfect
Security Interests (with respect to Collateral located in the United States)
listed on Schedule 3 hereto.
(b) Schedule 5 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Locations of Inventory and Equipment listed on
Schedule 5 hereto.
(c) Schedule 6 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Patent and Patent Licenses and Trademarks and
Trademark Licenses listed on Schedule 6 hereto.
(d) Schedule 7 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Contracts listed on Schedule 7 hereto.
(e) Schedule 8 to the Guarantee and Collateral Agreement is hereby
amended by adding thereto the Vehicles listed on Schedule 8 hereto.
SECTION 3. Pledge; Grant of Security Interest. As collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations, each
Grantor hereby delivers to the Agent, for the ratable benefit of the Lenders,
the Pledged Stock listed on Schedule 2 hereto and all Proceeds and products
thereof, and grants to the Agent for the ratable benefit of the Lenders a
security interest in all of the Collateral acquired by such Grantor in
connection with, or in which such Grantor has any right, title or interest as a
result of, the Acquisition. Such grant shall be governed by the terms and
conditions of the Guarantee and Collateral Agreement.
SECTION 4. Representations and Warranties. To induce the Agent and
the Lenders to enter into the amendment and restatement of the Credit Agreement
and to agree to the amendments therein, each Grantor hereby represents and
warrants to the Agent and each Lender that after giving effect to the
Acquisition:
(a) Representations and Warranties. Each of the representations and
warranties contained in Section 4 of the Guarantee and Collateral Agreement,
with respect to Collateral located in the United States, as amended hereby, are
true and correct on and as of the Effective Date and as of each other date
hereafter contemplated by such Section 4 as if made on and as of such date.
(b) Real Property. Such Grantor does not, on the Effective Date, own
any material real property which is not subject to the Lien of the Mortgages.
<PAGE>
3
SECTION 5. Continuing Effect of Guarantee and Collateral Agreement.
This Amendment shall not constitute an amendment or waiver of any provision of
the Guarantee and Collateral Agreement not expressly referred to herein and
shall not be construed as an amendment, waiver or consent to any action on the
part of any Grantor that would require an amendment, waiver or consent of the
Agent or the Lenders except as expressly stated herein. Except as expressly
amended hereby, the provisions of the Guarantee and Collateral Agreement are and
shall remain in full force and effect.
SECTION 6. Counterparts. This Amendment may be executed by the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
<PAGE>
4
IN WITNESS WHEREOF, each of the undersigned has caused this Amendment
to be duly executed and delivered as of the date first above written.
VDK HOLDINGS, INC.
By: /s/ Jamie B. Ardrey
------------------------
Title: Executive Vice President
VAN DE KAMP'S, INC.
By: /s/ Jamie B. Ardrey
------------------------
Title: Executive Vice President
<PAGE>
Schedule 2
----------
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Class of Stock No. of
Grantor Issuer Stock Certificate No. Shares
- -------- ------ -------- --------------- ------
<S> <C> <C> <C> <C>
N/A
</TABLE>
<PAGE>
Schedule 3
----------
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
UCC Filings - The Borrower
--------------------------
Pennsylvania
------------
Secretary of the Commonwealth (previously filed)
Montgomery Prothonotary
California
----------
Secretary of State (previously filed)
Los Angeles County
Tennessee
---------
Secretary of State
Madison County Register of Deeds
Georgia
-------
Dekalb County Clerk of the Superior Court (previously filed)
Illinois
--------
Secretary of State (previously filed)
Cook County (previously filed)
Minnesota
---------
Secretary of State
Hennepin County
Texas
-----
Secretary of State
Dallas County
Iowa
----
Secretary of State
Clinton County
Ohio
----
Secretary of State
Hamilton County
<PAGE>
Patents and Trademark Filings
-----------------------------
Aunt Jemima/Celeste Patent and Trademark Security Agreement to
be filed in the United States Patent and Trademark Office
Actions with respect to Pledged Stock
-------------------------------------
None
Other Actions
-------------
None
<PAGE>
Schedule 5
----------
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
- ------- ---------
Equipment
- ---------
Borrower Quaker Oats Company
96 Quaker Drive
Jackson, TN
Leased Warehouse
53A E.L. Morgan Drive
Jackson, TN 38305
Barrington research and development center
Quaker Oats Company
617 West Main Street
Barrington, IL
<PAGE>
Grantor Locations
- ------- ---------
Inventory (Raw materials, ingredients,
work-in-process, finished goods and Arctic Cold Storage
packaging materials) 12033 Arctic Circle
Borrower Santa Fe Springs, CA 90670
American Cold Storage - Beare Division
P.O. Box 667
Jackson, TN 38301
Continental Freezer Warehouse
4220 S. Kildare Boulevard
Chicago, IL 60632
Rosenberger Cold Storage
2525 Bergey Road
Hatfield, PA 19440-0009
U.S. Cold Storage
5150 Pulaski
Dallas, TX 75233
Commercial Cold Storage
4330 Pleasantdale
Doraville, GA 30340
Trenton Cold Storage
19 Albert Street
Trenton, Ontario, Canada K8V 5R1
Peterborough Plant and Headquarters
Quaker Park
Hunter East Street
Peterborough, Ontario, Canada
Associated Freezers
Dartmouth, Nova Scotia, Canada
<PAGE>
Grantor Locations
- ------- ---------
Trenton Frozen Foods Plant
The Quaker Oats Company of Canada
Limited
19 Albert Street
Trenton, Ontario
Canada K8V 5R1
Trenton Rice Cakes Plant and Distribution
Centre
The Quaker Oats Company of Canada
Limited
106 Dufferin Street
Trenton, Ontario
Canada K8V 5R2
Quinte Warehousing
43 Carrying Place Road
Trenton, Ontario
Canada K8V 3E6
Les Industries Ling Inc.
Case Postale 850
Warwick, Quebec
Canada J0A 1M0
Anacon Foods Co.
3055 Old Highway 8
Suite 107
Minneapolis, MN 55418
Certain packaging inventories of the
Business owned by Quaker Oats are
located at International Paper
facilities in Clinton, Iowa and
Cincinnati, Ohio.
<PAGE>
Schedule 6
----------
PATENT AND PATENT LICENSES
<TABLE>
<CAPTION>
Patent No. Date of Issuance Title
- ---------- ---------------- -----
<S> <C> <C>
US 4,271,200 June 2, 1981 Method of Preparing a Frozen Pizza
Can. 1156508 November 8, 1983 Method of Preparing a Frozen Pizza
Can. 1158919 December 20, 1983 Method of Preparing a Frozen Pizza
US 4,283,424 August 11, 1981 Frozen Pizza Crust and Pizza Suitable
for Microwave Cooking
Can. 1136481 November 30, 1982 Frozen Pizza Crust and Pizza Suitable
for Microwave Cooking
US 4,303,677 December 1, 1981 Frozen Pizza Process
Can. 1156876 November 15, 1983 Frozen Pizza Process
US 4,416,904 November 22, 1983 Shelf Stable Pizza and Method for
Preparing Same
US 4,645,673 February 24, 1987 Frozen Pizza with Low Fat Pastry Crust
Can. 1286534 July 23, 1991 Frozen Pizza with Low Fat Pastry Crust
United States
Patent Application
Serial Number Date of Filing Title
- ------------------ -------------- -----
081577,832 December 26, 1995 Waffle Having Improved Strength and
Release Characteristics
</TABLE>
License for Technology claimed in United States Patent Application No.
08/579,058, filed December 26, 1995, granted pursuant to the Asset Purchase and
Sale Agreement dated May 15, 1996.
<PAGE>
TRADEMARK AND TRADEMARK LICENSES
AUNT JEMIMA/CELESTE TRADEMARK REGISTRATIONS
-------------------------------------------
Trademark: CELESTE
Country: United States
Status: Registered
Application Date: 08 July 1970
Application Date: 72-364617
Registration Date: 15 December 1970
Registration No.: 904414
Renewal Date: 15 December 2000
Class: 30
Registrant: The Quaker Oats Company
Trademark: ABBONDANZA
Country: United States
Status: Registered
Application Date: 27 July 1981
Application No.: 73-321012
Registration Date: 08 March 1983
Registration No.: 1230161
Renewal Date: 08 March 2003
Class: 30
Registrant: The Quaker Oats Company
Trademark: MISCELLANEOUS DESIGN (CELESTE CAMEO)
Country: United States
Status: Registered
Application Date: 27 November 1981
Application No.: 73-838967
Registration Date: 17 July 1990
Registration No.: 1606597
Renewal Date: 17 July 2000
Class: 30
Registrant: The Quaker Oats Company
For purposes of clarification, "Pizza-For-One" is not a registered trademark.
<PAGE>
AUNT JEMIMA/CELESTE TRADEMARK LICENSES
--------------------------------------
Trademark License Agreement, dated as of July ___, 1996, among The Quaker Oats
Company, The Quaker Oats Company of Canada Limited and Van de Kamp's, Inc.,
relating to the following trademarks:
UNITED STATES
<TABLE>
<CAPTION>
Mark Reg. No. Reg. Date Owner
---- -------- --------- -----
<S> <C> <C> <C>
AUNT JEMIMA 1575365 January 2, 1990 The Quaker Oats Company
AUNT JEMIMA 1590084 April 3, 1990 The Quaker Oats Company
AUNT JEMIMA 797560 October 12, 1965 The Quaker Oats Company
AUNT JEMIMA & 1697862 June 30, 1992 The Quaker Oats Company
Design
MISCELLANEOUS 1699260 July 7, 1992 The Quaker Oats Company
DESIGN (Aunt
Jemima Head)
MISCELLANEOUS 1614072 September 18, 1990 The Quaker Oats Company
DESIGN (Aunt
Jemima Head)
</TABLE>
CANADA
<TABLE>
<CAPTION>
Mark Reg. No. Reg. Date Owner
---- -------- --------- -----
<S> <C> <C> <C>
AUNT JEMIMA TMA 164,781 August 15, 1969 The Quaker Oats Company of
Canada Limited
AUNT JEMIMA TMA 384,601 May 17, 1991 The Quaker Oats Company of
& DESIGN Canada Limited
</TABLE>
<PAGE>
SCHEDULE 7
----------
CONTRACTS
1. Asset Purchase and Sale Agreement, dated as of May 15, 1996, by and between
Van de Kamp's, Inc. (the "Borrower") and The Quaker Oats Company ("Quaker
Oats"), as supplemented on July 9, 1996.
2. Transition Services Agreement, dated as of July 9, 1996, by and between
Quaker Oats and the Borrower.
3. Trademark License Agreement, dated as of July 9, 1996, among Quaker Oats,
The Quaker Oats Company of Canada Limited and the Borrower.
4. Interim Trademark and Tradename License Agreement dated as of July 9, 1996
between Quaker Oats and the Borrower.
5. Patent License Agreement dated as of July 9, 1996 between the Borrower and
Quaker Oats.
6. McDonald's Co-Pack Agreement dated as of July 9, 1996 between Quaker Oats
and the Borrower.
7. Shared Technology License Agreement dated as of July 9, 1996 between the
Borrower and Quaker Oats.
8. Canada Agency Agreement dated as of July 9, 1996 between the Borrower and
The Quaker Oats Company of Canada Limited.
<PAGE>
Schedule 8
----------
VEHICLES
Vehicle Identification Number: 1P4FH4431KX526626
Title Number: 38717076
Description: 1989 Plymouth Voyager Van
<PAGE>
EXHIBIT 10.28
EXECUTION COPY
VDK HOLDINGS, INC.
VAN DE KAMP'S, INC.
----------------------------------------
$20,000,000
SENIOR CONVERTIBLE LOAN
CREDIT AND GUARANTEE AGREEMENT
dated as of July 9, 1996
----------------------------------------
THE CHASE MANHATTAN BANK, N.A.,
as Agent
<PAGE>
TABLE OF CONTENTS
Page
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. DEFINITIONS................................................. 1
1.1 Defined Terms................................................. 1
1.2 Other Definitional Provisions; Financial Calculations......... 12
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS............................. 13
2.1 Loans......................................................... 13
2.2 Procedure for Borrowing....................................... 13
2.3 Repayment of Loans............................................ 13
2.4 Evidence of Debt.............................................. 13
SECTION 3. GENERAL PROVISIONS APPLICABLE TO EXTENSIONS OF
CREDIT............................................................. 14
3.1 Optional and Mandatory Prepayments............................ 14
3.2 Conversion and Continuation Options........................... 15
3.3 Minimum Amounts and Maximum Number of Tranches................ 16
3.4 Interest Rates and Payment Dates.............................. 16
3.5 Computation of Interest and Fees.............................. 17
3.6 Inability to Determine Interest Rate.......................... 17
3.7 Pro Rata Treatment and Payments............................... 18
3.8 Illegality.................................................... 18
3.9 Requirements of Law........................................... 19
3.10 Taxes........................................................ 20
3.11 Indemnity.................................................... 23
3.12 Change of Lending Office; Filing of Certificates or Documents 23
3.13 Replacement Lenders.......................................... 24
SECTION 4. REPRESENTATIONS AND WARRANTIES.............................. 24
4.1 Existence; Compliance with Law................................ 24
4.2 Power; Authorization; Enforceable Obligations................. 24
4.3 No Legal Bar.................................................. 25
4.4 No Material Litigation........................................ 25
4.5 No Default.................................................... 25
4.6 No Burdensome Restrictions.................................... 25
4.7 Federal Regulations........................................... 25
4.8 Investment Company Act; Other Regulations..................... 26
4.9 Subsidiaries.................................................. 26
4.10 Purpose of Loans............................................. 26
4.11 Accuracy of Information...................................... 26
4.12 Solvency..................................................... 26
4.13 Cash Collateral Agreement.................................... 26
4.14 Incorporation of Representations and Warranties.............. 27
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 5. CONDITIONS PRECEDENT......................................... 27
SECTION 6. COVENANTS.................................................... 31
SECTION 7. GUARANTEE.................................................... 31
7.1 Guarantee.................................................... 31
7.2 No Subrogation, Contribution, Reimbursement or Indemnity..... 31
7.3 Amendments, etc. with respect to the Obligations; Waiver of
Rights....................................................... 32
7.4 Guarantee Absolute and Unconditional......................... 32
7.5 Reinstatement................................................ 33
7.6 Payments..................................................... 34
7.7 Demand for Payment; Effect of Payment by Holdings............ 34
SECTION 8. EVENTS OF DEFAULT............................................ 34
SECTION 9. THE AGENT.................................................... 36
9.1 Appointment.................................................. 36
9.2 Delegation of Duties......................................... 37
9.3 Exculpatory Provisions....................................... 37
9.4 Reliance by Agent............................................ 37
9.5 Notice of Default............................................ 38
9.6 Non-Reliance on Agent and Other Lenders...................... 38
9.7 Indemnification.............................................. 38
9.8 Agent in Its Individual Capacity............................. 39
9.9 Successor Agent.............................................. 39
SECTION 10. MISCELLANEOUS................................................ 39
10.1 Amendments and Waivers....................................... 39
10.2 Notices...................................................... 40
10.3 No Waiver; Cumulative Remedies............................... 41
10.4 Survival of Representations and Warranties................... 41
10.5 Payment of Expenses and Taxes................................ 41
10.6 Successors and Assigns; Participations and Assignments....... 42
10.7 Adjustments; Set-off......................................... 44
10.8 Counterparts................................................. 45
10.9 Severability................................................. 45
10.10 Integration.................................................. 45
10.11 GOVERNING LAW................................................ 45
10.12 Submission To Jurisdiction; Waivers.......................... 45
10.13 Acknowledgements............................................. 46
10.14 WAIVERS OF JURY TRIAL........................................ 46
</TABLE>
-ii-
<PAGE>
Page
SCHEDULES:
1.1 Commitments, Addresses and Lending Offices
4.2 Consents
4.4 Litigation
5(f) Sources and Uses of Funds
EXHIBITS:
A Form of Cash Collateral Agreement
B Form of Note
C Form of Borrowing Certificate
D Form of Assignment and Acceptance
-iii-
<PAGE>
SENIOR CONVERTIBLE LOAN CREDIT AND GUARANTEE AGREEMENT, dated as of
July 9, 1996, among VDK HOLDINGS, INC., a Delaware corporation ("Holdings"), VAN
DE KAMP'S, INC., a Delaware corporation (the "Borrower"), the several banks and
other financial institutions from time to time parties to this Agreement
(collectively, the "Lenders"; individually, a "Lender") and THE CHASE MANHATTAN
BANK, N.A., a national banking association, as agent for the Lenders hereunder
(the "Agent").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in
effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
For purposes hereof: "Prime Rate" shall mean the rate of interest per annum
publicly announced from time to time by the Agent as its prime rate in
effect at its principal office in New York City (the Prime Rate not being
intended to be the lowest rate of interest charged by the Agent in
connection with extensions of credit to debtors); "Base CD Rate" shall mean
the sum of (a) the product of (i) the Three-Month Secondary CD Rate and
(ii) a fraction, the numerator of which is one and the denominator of which
is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board of Governors through the public
information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following
such day), or, if such rate shall not be so reported on such day or such
next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; "C/D Assessment
Rate" shall mean, for any day, the annual assessment rate in effect on such
day which is payable by a member of the Bank Insurance Fund maintained by
the FDIC classified as well-capitalized and within supervisory subgroup "B"
(or a comparable successor assessment risk classification) within the
meaning of 12 C.F.R. (S) 327.4 (or any successor provision) to the FDIC for
the FDIC's insuring time deposits at offices of such institution in the
United States; "C/D Reserve Percentage" shall mean, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of the
Board of Governors) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more; and "Federal Funds
<PAGE>
2
Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the
average of the quotations for the day of such transactions received by the
Agent from three federal funds brokers of recognized standing selected by
it. Any change in the ABR due to a change in the Prime Rate, the Three-
Month Secondary CD Rate, the C/D Assessment Rate, the C/D Reserve
Percentage or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate,
the Three-Month Secondary CD Rate, the C/D Assessment Rate, the C/D Reserve
Percentage or the Federal Funds Effective Rate, respectively.
"ABR Loans": Loans the rate of interest applicable to which is based
upon the ABR.
"Acquisition Agreement": as defined in the Second Amended and
Restated Credit and Guarantee Agreement.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Agent": The Chase Manhattan Bank, N.A., together with its affiliates,
as the arranger of the Commitments and as the agent for the Lenders under
this Agreement and the other Loan Documents, and any successor thereto
pursuant to subsection 9.9.
"Agreement": this Senior Convertible Loan Credit and Guarantee
Agreement, as the same may amended, supplemented or otherwise modified from
time to time.
"Applicable Margin": 0%, in the case of ABR Loans and .25%, in the
case of Eurodollar Loans.
"Asset Purchase Agreement": as defined in the Second Amended and
Restated Credit and Guarantee Agreement.
"Asset Sale": as to any Person, any sale or other disposition
(including any sale/leaseback transaction and any mortgage or lease of real
property other than any mortgage made by such Person in order to finance
the acquisition of additional real property) subsequent to the Effective
Date of any property of such Person.
"Assignee": as defined in subsection 10.6(c).
<PAGE>
3
"Aunt Jemima Business": the Aunt Jemima/Celeste Business, other than
the Celeste Business.
"Aunt Jemima/Celeste Acquisition": the purchase of substantially all
of the assets comprising the Aunt Jemima/Celeste Business, upon the terms and
subject to the conditions set forth in the Aunt Jemima/Celeste Acquisition
Agreement.
"Aunt Jemima/Celeste Acquisition Agreement": the Asset Purchase and
Sale Agreement, dated as of May 15, 1996, between the Borrower and Quaker Oats.
"Aunt Jemima/Celeste Business": the Business (as defined in the Aunt
Jemima/Celeste Acquisition Agreement).
"Benefitted Lender": as defined in subsection 10.7(a).
"Board of Governors": the Board of Governors of the Federal Reserve
System and any Governmental Authority which succeeds to the powers and
functions thereof.
"Borrower": as defined in the Preamble to this Agreement.
"Borrowing Date": any Business Day specified in a notice pursuant to
subsection 2.2 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"Cash Collateral": as defined in the Cash Collateral Agreement.
"Cash Collateral Agreement": the Cash Collateral Agreement, dated as
of the Effective Date, made by Holdings in favor of the Agent, which agreement
shall be substantially in the form of Exhibit A.
"Cash Equivalents": (a) securities issued or directly and fully
guaranteed or insured by the United States Government, or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (b) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.; (c) certificates of deposit, time deposits, eurodollar
time deposits, overnight bank deposits or bankers' acceptances having maturities
of not more than one
<PAGE>
4
year from the date of acquisition thereof of any Lender, or of any domestic
commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least A or the equivalent thereof by Standard &
Poor's Ratings Group, or A or the equivalent thereof by Moody's Investors
Service, Inc., and having capital and surplus in excess of $500,000,000;
(d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (a), (b) and (c)
entered into with any bank meeting the qualifications specified in clause
(c) above; (e) commercial paper rated at the time of acquisition thereof at
least A-2 or the equivalent thereof by Standard & Poor's Ratings Group or
P-2 or the equivalent thereof by Moody's Investors Service, Inc., or
carrying an equivalent rating by a nationally recognized rating agency, if
both of the two named rating agencies cease publishing ratings of
investments, and in either case maturing within 270 days after the date of
acquisition thereof; (f) interests in any investment company which invests
solely in instruments of the type specified in clauses (a) through (e)
above; and (g) other investment instruments approved in writing by the
Required Lenders and offered by any Lender or by any financial institution
which has a combined capital and surplus of not less than $100,000,000.
"Celeste Business": the frozen pizza business that the Borrower
purchased from Quaker Oats pursuant to the Aunt Jemima/Celeste Acquisition
Agreement.
"Celeste Sale": any sale or series of sales by the Borrower of all or
substantially all of the Celeste Business.
"Chase": The Chase Manhattan Bank, N.A., a national banking
association.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment": as to any Lender, its obligation to make a Loan to the
Borrower in an amount equal to the amount set forth opposite such Lender's
name in Schedule 1.1 under the heading "Commitment"; collectively, as to
all such Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, the percentage
of the aggregate Commitments then constituted by such Lender's Commitments
(or, after the Loans are made, the percentage of the aggregate Loans then
constituted by such Lender's Loans).
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CSI": Chase Securities Inc., a Delaware corporation.
"Currency Rate Protection Agreements": as to any Person, all foreign
exchange contracts, currency swap agreements or other similar agreements or
arrangements entered into in the ordinary course of business by such Person
designed to protect such Person against fluctuations in currency values.
<PAGE>
5
"Dartford": Dartford Partnership L.L.C., a Delaware limited liability
company.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United States of
America.
"Effective Date": the date (on or before July 31, 1996) on which the
conditions precedent set forth in Section 5 shall be satisfied or waived.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning the protection of the environment or the
protection of human health as it relates to the protection of the
environment, as now or may at any time hereafter be in effect.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board of
Governors) maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
rate at which Chase is offered Dollar deposits at or about 10:00 A.M., New
York City time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar and foreign
currency and exchange operations in respect of its Eurodollar Loans are
then being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of its Eurodollar Loan to be outstanding during such Interest
Period.
"Eurodollar Loans": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
-----------------------------------
1.00 - Eurocurrency Reserve Requirements
<PAGE>
6
"Event of Default": any of the events specified in Section 8, provided
that all requirements for the giving of notice, the lapse of time, or both,
and any other conditions, have been satisfied.
"Extension of Credit": with respect to any Lender, the making of a
Loan by such Lender; with respect to all the Lenders, the "Extensions of
Credit".
"FDIC": the Federal Deposit Insurance Corporation and any
Governmental Authority which succeeds to the powers and functions thereof.
"Federal Funds Effective Rate": as defined in the definition of ABR.
"Fenway": Fenway Partners Capital Fund, L.P., a Delaware limited
partnership.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"Governmental Authority": 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.
"Guarantee Obligation": as to any Person (the "Guaranteeing Person"),
any obligation of (a) the Guaranteeing Person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the Guaranteeing Person has issued a
reimbursement, counter indemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation (the "Primary Obligations") of any other third Person (the
"Primary Obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the Guaranteeing Person,
whether or not contingent, (i) to purchase any such Primary Obligation or
any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such Primary
Obligation or (2) to maintain working capital or equity capital of the
Primary Obligor or otherwise to maintain the net worth or solvency of the
Primary Obligor, (iii) 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 (iv) otherwise to assure or hold harmless the owner
of any such Primary Obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any Guaranteeing Person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the Primary Obligation in respect of which such
Guarantee Obligation is made and (b) the maximum amount for which such
Guaranteeing Person
<PAGE>
7
may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such Primary Obligation and the maximum amount
for which such Guaranteeing Person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation shall
be such Guaranteeing Person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Holdings": as defined in the Preamble to this Agreement.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business, payable in
accordance with customary practices and not more than 90 days past due,
unless being contested in good faith by appropriate proceedings), (b) any
other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person under
Financing Leases, (d) all obligations of such Person under Rate Protection
Agreements, (e) all obligations of such Person in respect of letters of
credit (whether or not drawn), acceptances and similar obligations issued
or created for the account of such Person, and (f) all indebtedness of
others of the types described in (a) through (e) above secured by any Lien
on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof (the amount of
such indebtedness with respect to such Person being deemed to be the lesser
of the value of such property or the amount of indebtedness of others so
secured).
"Information Memorandum": as defined in subsection 4.11.
"Interest Payment Date": (a) as to ABR Loans, the last day of each
March, June, September and December, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such Interest
Period and (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter, as selected
by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice
<PAGE>
8
to the Agent not less than three Business Days prior to the last
day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business
Day;
(2) no Interest Period that would otherwise extend beyond
the Maturity Date shall be selected by the Borrower;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Eurodollar Loan.
"Interest Rate Protection Agreements": as to any Person, all
interest rate swaps, caps or collar agreements or similar arrangements
entered into by such Person providing for protection against
fluctuations in interest rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"Investors": collectively, Dartford, Fenway, National Sun
Industries, UBS, Thomas O. Ellinwood, Thomas J. Youngerman, C. Renee
Sloan and Olafur Gudmundsson and any Permitted Transferee of Dartford,
Fenway, National Sun Industries or UBS.
"Lenders": as defined in the Preamble to this Agreement.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Limited Liability Interest": a limited liability company
interest of VDK Foods.
"Loan": as defined in subsection 2.1; collectively, the "Loans".
<PAGE>
9
"Loan Documents": this Agreement, any Notes and the Cash Collateral
Agreement.
"Loan Participants": as defined in subsection 10.6(b).
"Loan Parties": the Borrower, Holdings and VDK Foods.
"Material Adverse Effect": a material adverse effect on (a) the Aunt
Jemima/Celeste Acquisition, (b) the business, assets, operations, property
or condition (financial or otherwise) of the Borrower and its Subsidiaries
taken as a whole or (c) the validity or enforceability of this Agreement or
any of the other Loan Documents or the rights or remedies of the Agent or
the Lenders hereunder or thereunder.
"Maturity Date": July 9, 1997.
"National Sun Industries": National Sun Industries, Inc., a North
Dakota corporation.
"Net Proceeds": with respect to any Person, (a) with respect to any
Asset Sale by such Person, the cash proceeds (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or
otherwise, but only as and when received) of such Asset Sale net of (i)
attorneys' fees, accountants' fees, investment banking fees, survey costs,
title insurance premiums, and related search and recording charges,
transfer taxes, deed or mortgage recording taxes, required debt payments
(other than pursuant hereto), other customary expenses, amounts required to
be applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset which is the subject of such Asset Sale
(other than any Lien in favor of the Agent for the benefit of the Lenders)
and brokerage, consultant and other customary fees actually incurred in
connection therewith and (ii) taxes paid or payable as a result thereof and
(b) with respect to any issuance of equity securities or the incurrence of
any Indebtedness by such Person subsequent to the Effective Date, the cash
proceeds received from such issuance or incurrence net of investment
banking fees, legal fees, accountants fees, underwriting discounts and
commissions and other customary fees and expenses and other reasonable
costs and expenses actually incurred in connection therewith.
"New Lending Office": as defined in subsection 3.10(b).
"Non-Excluded Taxes": as defined in subsection 3.10(a).
"Note": as defined in subsection 2.4(d); collectively, the "Notes".
"Obligations": the unpaid principal of and interest on the Loans and
all other obligations and liabilities of the Borrower to the Agent and the
Lenders (including, without limitation, interest accruing at the then
applicable rate provided in this Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided
<PAGE>
10
in this Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, the other Loan Documents, any Rate Protection Agreement entered
into by the Borrower with any Lender or any Affiliate of any Lender
permitted pursuant to the Second Amended and Restated Credit and Guarantee
Agreement, any cash management services agreement entered into by the
Borrower with any Lender or any Affiliate of any Lender or any other
document made, delivered or given in connection herewith or therewith, in
each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the Agent or
to the Lenders that are required to be paid by the Borrower pursuant to the
terms of this Agreement, any other Loan Document or any such Rate
Protection Agreement or cash management services agreement entered into by
the Borrower with any Lender or any Affiliate of any Lender).
"Permitted Transferee": with respect to Dartford, Fenway, National Sun
Industries, or UBS, any Person which directly or indirectly, is in control
of, is controlled by, or is under common control with, Dartford, Fenway,
National Sun Industries, or UBS, respectively.
"Person": an individual, partnership, corporation, business trust,
joint stock company, limited liability company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Prepayment Account": as defined in subsection 3.1(c).
"Primary Obligations": as defined in the definition of "Guarantee
Obligation" contained in this subsection 1.1.
"Primary Obligor": as defined in the definition of "Guarantee
Obligation" contained in this subsection 1.1.
"Quaker Oats": The Quaker Oats Company, a New Jersey corporation.
"Rate Protection Agreements": collectively, any Currency Rate
Protection Agreements and Interest Rate Protection Agreements.
"Register": as defined in subsection 10.6(d).
"Regulation D": Regulation D of the Board of Governors as in effect
from time to time.
"Regulation G": Regulation G of the Board of Governors as in effect
from time to time.
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11
"Regulation H": Regulation H of the Board of Governors as in effect
from time to time.
"Regulation U": Regulation U of the Board of Governors as in effect
from time to time.
"Regulation X": Regulation X of the Board of Governors as in effect
from time to time.
"Required Lenders": at any time, Lenders the Commitment Percentages of
which aggregate more than 50%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and 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 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.
"Responsible Officer": as to any Person, the chief executive officer
and the president of such Person or, with respect to financial matters, the
chief financial officer of such Person or, in either case, such other
executive officers as may be designated from time to time by such Person in
writing to the Agent.
"Second Amended and Restated Credit and Guarantee Agreement": the
Amended and Restated Credit and Guarantee Agreement, dated as of July 9,
1996, among Holdings, the Borrower, the several banks and other financial
institutions from time to time parties thereto and The Chase Manhattan
Bank, N.A., as agent.
"Senior Subordinated Note Indenture": the Indenture, dated as of
September 15, 1995, between the Borrower and Harris Trust and Savings Bank,
as trustee, as the same may be amended, supplemented or otherwise modified
from time to time.
"Senior Subordinated Notes": $100,000,000 of the Borrower's 12% Senior
Subordinated Notes due 2005.
"Solvent": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount that
will be required to pay all "liabilities of such Person, contingent or
otherwise", as of such date (as such quoted terms are determined in
accordance with applicable Federal and state laws governing determinations
of the insolvency of debtors) as such debts become absolute and matured,
(b) such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (c) such Person
will be able to pay its debts as they mature, taking into account the
timing of and amounts of cash to be received by such Person and the timing
of and amounts of cash to be payable on or in respect of indebtedness of
such Person; in each case after giving effect to (A) as of the Effective
Date the making of the
<PAGE>
12
extensions of credit to be made on the Effective Date and the application
of the proceeds of such extensions of credit and (B) on any date after the
Effective Date, the making of any extension of credit to be made on such
date and the application of the proceeds of such extension of credit. For
purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or
(y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"Tranche": collectively, Eurodollar Loans the then current Interest
Periods with respect to all of which begin on the same date and end on the
same later date (whether or not such Loans shall originally have been made
on the same day); Tranches may be identified as "Eurodollar Tranches".
"Transferee": as defined in subsection 10.6(f).
"Type": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"UBS": UBS Capital LLC, a New York limited liability company.
"VDK Foods": VDK Foods, LLC, a Delaware limited liability
company.
1.2 Other Definitional Provisions; Financial Calculations. (a) Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Loan Documents or any certificate or
other document made or delivered pursuant hereto or thereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) 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
<PAGE>
13
provision of this Agreement, and Section, subsection, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) The parties hereto acknowledge that the Borrower has no
Subsidiaries as of the date hereof. However, references in this Agreement to
Subsidiaries of the Borrower and to consolidated and consolidating financial
statements have been included in case the Borrower has any Subsidiaries in the
future.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Loans. Subject to the terms and conditions hereof, each Lender
severally agrees to make a loan (a "Loan"; collectively, the "Loans") to the
Borrower on the Effective Date in an amount not to exceed the amount of the
Commitment of such Lender then in effect. The Loans may from time to time be
(a) Eurodollar Loans, (b) ABR Loans or (c) a combination thereof, as determined
by the Borrower and notified to the Agent in accordance with subsections 2.2 and
3.2; provided that the Loans made on the Effective Date shall be made as ABR
Loans.
2.2 Procedure for Borrowing. The Borrower hereby requests a
borrowing on the Effective Date in an amount equal to the aggregate amount of
the Commitments of the Lenders. The Loans made on the Effective Date shall
initially be ABR Loans. Each Lender will make the amount of its pro rata share
of the Loans available to the Agent for the account of the Borrower at the
office of the Agent specified in subsection 10.2 prior to 10:00 A.M., New York
City time, on the Effective Date in Dollars and in funds immediately available
to the Agent. The Agent shall credit the account of the Borrower by 11:00 A.M.,
New York City time, on the Effective Date, on the books of such office of the
Agent or such other account as specified by the Borrower with the aggregate of
the amounts made available to the Agent by the Lenders and in like funds as
received by the Agent.
2.3 Repayment of Loans. The Borrower hereby unconditionally promises
to pay to the Agent for the account of each Lender the principal amount of the
Loans made by such Lender on the earlier of the Maturity Date or the date of a
Celeste Sale. The Borrower hereby further agrees to pay to the Agent for the
account of each Lender interest on the unpaid principal amount of the Loans from
time to time outstanding from the Effective Date until payment in full thereof
at the rates per annum, and on the dates, set forth in subsection 3.4.
2.4 Evidence of Debt. (a) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Borrower to such Lender resulting from the Loan made by such Lender, including
the amounts of principal and interest payable and paid to such Lender from time
to time under this Agreement.
(b) The Agent shall record in the Register, with separate subaccounts
therein for each Lender, (i) the amount of each Loan made hereunder, the Type
thereof and, in the case of
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14
Eurodollar Loans, each Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Agent hereunder from the Borrower and each Lender's, as the case may be,
share thereof, if any.
(c) The entries made in the Register pursuant to subsection 2.4(b)
shall, to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any Lender to maintain any account
pursuant to subsection 2.4(a) or the Agent to make recordings in the Register
pursuant to subsection 2.4(b), or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Loan made to the Borrower by such Lender in accordance with the terms of this
Agreement.
(d) The Borrower agrees that, upon the request to the Agent by any
Lender, which request is communicated to the Borrower, the Borrower will execute
and deliver to such Lender a promissory note of the Borrower dated the Effective
Date evidencing the Loans made by such Lender, substantially in the form of
Exhibit B (a "Note"), payable to the order of such Lender and in a principal
amount equal to the unpaid principal amount of the Loans made by such Lender.
Each Lender is hereby authorized to record the date, Type and amount of each
Loan made by such Lender, the date and amount of each payment or prepayment of
principal thereof, each continuation thereof, each conversion of all or a
portion thereof to another Type and, in the case of Eurodollar Loans, the length
of each Interest Period and Eurodollar Rate with respect thereto, on the
schedule (or any continuation of the schedule) annexed to and constituting a
part of its Note, and any such recordation shall, to the extent permitted by
applicable law, constitute prima facie evidence of the accuracy of the
information so recorded, provided that the failure to make any such recordation
(or any error therein) shall not affect the obligation of the Borrower to repay
(with applicable interest) the Loans made to the Borrower in accordance with the
terms of this Agreement.
SECTION 3. GENERAL PROVISIONS APPLICABLE TO EXTENSIONS OF CREDIT
3.1 Optional and Mandatory Prepayments. (a) Holdings, on behalf of
the Borrower (but not the Borrower itself, except as provided below), may at any
time and from time to time prepay the Loans, in whole or in part, without
premium or penalty. The Agent and the Lenders hereby agree to release Cash
Collateral in an amount equal to any prepayment of Loans made by Holdings
pursuant to this sentence. The Borrower may at any time and from time to time
prepay the Loans, in whole or in part, without premium or penalty, with the
consent of the Required Lenders under the Second Amended and Restated Credit and
Guarantee Agreement and the consent of the Lenders hereunder, or without such
consents only with the proceeds of cash equity investments made by Holdings in
the Borrower which equity investments may be funded by releases of Cash
Collateral with the consent of the Lenders (which consent may be withheld at the
sole discretion of the Lenders); provided that, so long as no Default or Event
of Default has occurred and is continuing, the Agent and the Lenders hereby
agree to release Cash Collateral in amounts equal to cash equity investments
made by Holdings in the Borrower solely for the purpose of funding interest
payments on the Loans. Prepayments shall be made by giving
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15
irrevocable notice thereof to the Agent prior to 11:00 A.M., New York City time,
one Business Day prior to such prepayment, specifying the date and amount of
prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a
combination thereof, and, if of a combination thereof, the amount allocable to
each. Upon receipt of any notice of prepayment, the Agent shall notify each
Lender thereof on the date of receipt of such notice. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with any amounts payable pursuant to subsection 3.11
and accrued interest to such date on the amount prepaid. Amounts prepaid on
account of the Loans may not be reborrowed. Partial prepayments shall be in an
aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof.
(b) The Loans shall be payable in full by the Borrower on the date of
a Celeste Sale and (without limiting the foregoing) the Borrower shall use any
Net Proceeds from such Celeste Sale in excess of $45,000,000 to pay the Loans.
(c) Amounts to be applied pursuant to this subsection to the
prepayment of Loans shall be applied, as applicable, first to reduce outstanding
Loans which are ABR Loans. Any amounts remaining after each such application
shall, at the option of the Borrower, be applied to prepay Loans which are
Eurodollar Loans immediately and/or shall be deposited in the Prepayment Account
(as defined below). The Agent shall apply any cash deposited in the Prepayment
Account to prepay Loans which are Eurodollar Loans on the last day of the
respective Interest Periods therefor (or, at the direction of the Borrower, on
any earlier date) until all outstanding Loans which are Eurodollar Loans have
been prepaid or until all cash on deposit in the Prepayment Account (including,
without limitation, interest earned thereon) with respect to such Loans has been
exhausted. For purposes of this Agreement, the term "Prepayment Account" shall
mean an account established by the Borrower with the Agent and over which the
Agent shall have exclusive dominion and control, including the right of
withdrawal for application in accordance with this subsection 3.1(c). The Agent
will, at the request of the Borrower, invest amounts on deposit in the
Prepayment Account in Cash Equivalents that mature prior to the last day of the
applicable Interest Periods of the Eurodollar Loans to be prepaid, provided that
(i) the Agent shall not be required to make any investment that, in its sole
judgment, would require or cause the Agent to be in, or would result in any,
violation of any Requirement of Law and (ii) the Agent shall have no obligation
to invest amounts on deposit in the Prepayment Account if a Default or Event of
Default shall have occurred and be continuing. The Borrower shall indemnify the
Agent for any losses relating to the investments so that the amount available to
prepay Eurodollar Loans on the last day of the applicable Interest Periods
therefor is not less than the amount that would have been available had no
investments been made. Other than any interest earned on such investments, the
Prepayment Account shall not bear interest. Interest or profits, if any, on
such investments shall be deposited and reinvested and disbursed as described
above. If the maturity of the Loans has been accelerated pursuant to Section 8,
the Agent shall apply all amounts on deposit in the Prepayment Account to prepay
the outstanding Loans. The Borrower hereby grants to the Agent, for its benefit
and the benefit of the Lenders, a security interest in the Prepayment Account to
secure the Obligations.
3.2 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to ABR Loans by giving the Agent
at least one
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16
Business Day's prior irrevocable notice of such election, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto (or on any other day if on the date of such
conversion the Borrower pays to the Agent for the account of the applicable
Lenders accrued interest on such Eurodollar Loans to the date of such conversion
together with all amounts payable under subsection 3.11). The Borrower may
elect from time to time to convert ABR Loans to Eurodollar Loans by giving the
Agent at least three Business Days' prior irrevocable notice of such election.
Any such notice of conversion to Eurodollar Loans shall specify the length of
the initial Interest Period or Interest Periods therefor. Upon receipt of any
such notice the Agent shall promptly notify each affected Lender thereof. All
or any part of outstanding Eurodollar Loans and ABR Loans may be converted as
provided herein, provided that (i) no Loan may be converted into a Eurodollar
Loan when any Event of Default has occurred and is continuing and the Agent has
or the Required Lenders have determined that such a conversion is not
appropriate and (ii) no Loan may be converted into a Eurodollar Loan after the
date that is one month prior to the Maturity Date.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
notice to the Agent, in accordance with the applicable provisions of the term
"Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no Eurodollar Loan
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Agent has or the Required Lenders have determined that such a
continuation is not appropriate or (ii) after the date that is one month prior
to the Maturity Date and provided, further, that if the Borrower shall fail to
give such notice or if such continuation is not permitted such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period.
3.3 Minimum Amounts and Maximum Number of Tranches. All conversions
and continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $500,000 in excess thereof. In no event shall there be more than
three Eurodollar Tranches outstanding at any time.
3.4 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to the
ABR plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any other amount payable hereunder shall
not be paid when due (whether at the stated maturity, by acceleration or
otherwise, but taking into account any applicable grace period under Section
8(a)), such overdue amount shall bear interest at a rate per annum which is (x)
in the case of overdue principal, the rate that would otherwise be applicable
thereto pursuant to the foregoing provisions of this subsection plus 2% or (y)
in the case of overdue
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17
interest or other amounts due and payable hereunder, the rate described in
subsection 3.4(b) plus 2%, in each case from the date of such non-payment until
such amount is paid in full (after as well as before judgment).
(d) Interest shall be payable in Dollars and in arrears on each
Interest Payment Date and the Maturity Date, provided that interest accruing
pursuant to subsection 3.4(c) shall be payable from time to time on demand.
3.5 Computation of Interest and Fees. (a) All per annum rates shall
be calculated on the basis of a 360-day year for the actual days elapsed, except
that whenever interest is calculated on the basis of the Prime Rate, interest
shall be calculated on the basis of a 365- (or 366-, as the case may be) day
year for the actual days elapsed. The Agent shall as soon as practicable, notify
the Borrower and the affected Lenders of each determination of a Eurodollar
Rate. Any change in the interest rate on a Loan resulting from a change in the
ABR or the Eurocurrency Reserve Requirement shall become effective as of the
opening of business on the day on which such change becomes effective. The Agent
shall, as soon as practicable, notify the Borrower and the affected Lenders of
the effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error. The Agent shall, at the
request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
subsection 3.4(a).
3.6 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Agent shall have received notice from the Required Lenders
that the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the affected Lenders as soon as practicable thereafter. If such notice is given
(x) any Eurodollar Loans requested to be made on the first day of such Interest
Period shall be made as ABR Loans, (y) any Loans that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
converted to or continued as ABR Loans and (z) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to ABR Loans.
Until such notice has been withdrawn by the Agent, no further Eurodollar Loans
shall be made
<PAGE>
18
or continued as such, nor shall the Borrower have the right to convert ABR Loans
to Eurodollar Loans.
3.7 Pro Rata Treatment and Payments. (a) All payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without set off or
counterclaim and shall be made prior to 12:00 P.M., New York City time, on the
due date thereof to the Agent, for the account of the Lenders at the Agent's
office specified in subsection 10.2, in Dollars and in immediately available
funds. Payments received by the Agent after such time shall be deemed to have
been received on the next Business Day. The Agent shall distribute such payments
to the Lenders entitled to receive the same promptly upon receipt in like funds
as received. If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and, with respect to payments of
principal, interest shall be payable thereon at the then applicable rate during
such extension) unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made
on the immediately preceding Business Day. If, and to the extent that, on any
Business Day the Agent receives any payment hereunder or under the other Loan
Documents (including any such payment representing a realization upon the Cash
Collateral), and such payment is not sufficient to pay in full all principal,
interest and fees then due and payable hereunder, the Agent shall apply such
payment ratably to all such amounts then due and payable.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make the amount that would
constitute its portion of such borrowing available to the Agent, the Agent may
assume that such Lender is making such amount available to the Agent, and the
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Agent, on demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes such
amount immediately available to the Agent. A certificate of the Agent submitted
to any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's portion of such
borrowing is not made available to the Agent by such Lender within three
Business Days of such Borrowing Date, the Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans hereunder, on demand, from the Borrower, without prejudice to any
right or claim the Borrower may have against such Lender.
3.8 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, then such Lender shall give
notice of such illegality to the Agent and the Borrower. Upon such adoption or
change, (a) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such and convert ABR Loans to Eurodollar Loans
shall
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19
forthwith be suspended until such time as it shall no longer be unlawful for
such Lender to make or maintain Eurodollar Loans as contemplated by this
Agreement and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to ABR Loans on the respective last days
of the then current Interest Periods with respect to such Loans or within such
earlier period as required by law. If any such conversion of a Eurodollar Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to subsection 3.11. Any Lender giving notice
pursuant to the first sentence of this subsection shall notify the Agent and the
Borrower at such time as the circumstances giving rise to the initial notice
shall cease to exist.
3.9 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each case made
subsequent to the Effective Date:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made
by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes, changes in the rate of
tax on the overall net income of such Lender and taxes imposed as a
result of any future, present or former connection between the Lender
and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from the Lender having
executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any Note));
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall, within
10 Business Days after receipt by the Borrower of such Lender's written demand
(with a copy to the Agent), pay such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduced amount
receivable. If any Lender has demanded compensation under this subsection 3.9(a)
with respect to any Eurodollar Loan, the Borrower shall have the option to
convert immediately such Eurodollar Loan into an ABR Loan until the
circumstances giving rise to such demand for compensation no longer apply;
provided, that (i) no such conversion shall affect the Borrower's obligation to
pay compensation as provided herein which is due with respect to the period
prior to such conversion
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20
and (ii) on the date of such conversion the Borrower shall pay to the Agent for
the benefit of the relevant Lender accrued interest on such Eurodollar Loan to
the date of conversion, together with any amounts payable pursuant to subsection
3.11.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, in each case made subsequent to the Effective Date, shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, within 10 Business Days
after receipt by the Borrower of such Lender's written demand (with a copy to
the Agent), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to subsection 3.9(a) or (b), it shall promptly notify the Borrower
(with a copy to the Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
subsection submitted by such Lender to the Borrower (with a copy to the Agent)
shall be conclusive in the absence of manifest error. The Borrower shall not be
obligated to compensate any Lender pursuant to this subsection 3.9 for amounts
accruing prior to the date which is 180 days before such Lender notifies the
Borrower of such event, provided that such notice need not include a computation
of amounts in respect thereof. The agreements in this subsection shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.10 Taxes. (a) All payments made by the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes, franchise taxes (imposed in
lieu of net income taxes) and capital taxes imposed on the Agent or any Lender
(or Transferee) as a result of any future, present or former connection between
the Agent or such Lender (or Transferee) and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Agent or such Lender (or Transferee) having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or any
Note or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to the Agent or any
Lender (or Transferee) hereunder or under any Note, the amounts so payable to
the Agent or such Lender (or Transferee) shall be increased ("increased
amounts") by the amounts necessary so that after making all required deductions
and withholdings (including, without limitation, the payment of all Non-Excluded
Taxes) the Agent or such Lender
<PAGE>
21
(or Transferee) receives the amounts equal to the interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement. Whenever any Non-Excluded Taxes are payable by the Borrower, the
Borrower shall promptly send to the Agent for its own account or for the account
of such Lender (or Transferee), as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment thereof or
other evidence of remittance of Non-Excluded Taxes reasonably acceptable to the
Agent. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Agent the required
receipts or other reasonably acceptable evidence, the Borrower shall indemnify
the Agent and the Lenders for any incremental taxes, interest or penalties that
may become payable by the Agent or any Lender as a result of any such failure.
The Borrower will indemnify each Lender (or Transferee) and the Agent for the
amount of Non-Excluded Taxes paid by such Lender (or Transferee) or the Agent,
as the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. The agreements in this
subsection 3.10 shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.
(b) Each Lender (and each Transferee) that is not incorporated or
organized under the laws of the United States of America or a state thereof
shall:
(i) in the case of a Lender or a Transferee that is a "bank"
under Section 881(c)(3)(A) of the Code:
(A) on or before the date it becomes a party to this Agreement
(or, in the case of a Loan Participant, on or before the date such
Loan Participant becomes a Loan Participant hereunder) and on or
before the date, if any, such Lender (or Transferee) changes its
applicable lending office by designating a different lending office (a
"New Lending Office"), deliver to the Borrower and the Agent (y) two
properly completed and duly executed copies of United States Internal
Revenue Service Form 1001 or 4224, or successor applicable form, as
the case may be, and (z) an Internal Revenue Service Form W-8 or W-9,
or successor applicable form, as the case may be;
(B) deliver to the Borrower and the Agent two further properly
completed and duly executed copies of any such form or certification
on or before the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Borrower or upon the request of the Borrower or the Agent; and
(C) obtain such extensions of time for filing and completing
such forms or certifications as may reasonably be requested by the
Borrower;
(ii) in the case of a Lender or a Transferee that is not a
"bank" under Section 881(c)(3)(A) of the Code:
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22
(A) on or before the date it becomes a party to this Agreement
(or, in the case of a Loan Participant, on or before the date such
Loan Participant becomes a Loan Participant hereunder) deliver to the
Borrower and the Agent (I) a statement under penalties of perjury that
such Lender (x) is not a "bank" under Section 881(c)(3)(A) of the
Code, is not subject to regulatory or other legal requirements as a
bank in any jurisdiction, and has not been treated as a bank for
purposes of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a rating agency
or qualification for any exemption from tax, securities law or other
legal requirements, (y) is not a 10-percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code and
(z) is not a controlled foreign corporation receiving interest from a
related person within the meaning of Section 881(c)(3)(C) of the Code
and (II) a properly completed and duly executed Internal Revenue
Service Form W-8 or applicable successor form;
(B) deliver to the Borrower and the Agent two further properly
completed and duly executed copies of said Form W-8, or any successor
applicable form on or before the date that any such Form W-8 expires
or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Borrower or upon the request of the Borrower; and
(C) obtain such extensions of time for filing and completing
such forms or certifications as may be reasonably requested by the
Borrower or the Agent;
unless in any such case any change in law or regulation has occurred subsequent
to the date such Lender (or Transferee) became a party to this Agreement (or in
the case of a Loan Participant, the date such Loan Participant became a Loan
Participant hereunder) which renders all such forms inapplicable or which would
prevent such Lender from properly completing and executing any such form with
respect to it and such Lender so advises the Borrower and the Agent in writing
no later than 15 calendar days before any payment hereunder or under any Note is
due. Each such Lender (and each Transferee) shall certify (i) in the case of a
Form 1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes and
(ii) in the case of a Form W-8 or W-9 delivered pursuant to subsection
3.10(b)(i), that it is entitled to an exemption from United States backup
withholding tax.
(c) The Borrower shall not be required to indemnify any Lender (or
Transferee), or to pay any increased amounts to any Lender (or Transferee) in
respect of any Non-Excluded Tax, pursuant to this subsection 3.10 to the extent
that (i) any obligation to withhold or deduct amounts with respect to tax
existed on the date such Lender (or Transferee) became a party to this Agreement
(or, in the case of a Transferee that is a Loan Participant, on the date such
Loan Participant became a Loan Participant hereunder) or, with respect to
payments to a New Lending Office, the date such Lender (or Transferee)
designated such New Lending Office with respect to a Loan; provided, however,
that this clause (i) shall not apply to any Transferee or New Lending Office
that becomes a Transferee or New Lending Office as a result of an assignment,
<PAGE>
23
participation, transfer or designation made at the written request of the
Borrower, or (ii) any Lender (or Transferee) fails to comply in full with the
provisions of subsection 3.10(b) hereof.
(d) If a Lender (or Transferee) or the Agent shall become aware that
it is entitled to claim a refund from a Governmental Authority in respect of
Non-Excluded Taxes as to which it has been indemnified by the Borrower, or with
respect to which the Borrower has paid increased amounts, pursuant to this
subsection 3.10, it shall promptly notify the Borrower of the availability of
such refund claim and shall make the appropriate claim to such Governmental
Authority for such refund. If a Lender (or Transferee) or the Agent receives a
refund (including pursuant to a claim for refund made pursuant to the preceding
sentence) in respect of any Non-Excluded Tax as to which it has been indemnified
by the Borrower, or with respect to which the Borrower has paid increased
amounts, pursuant to this subsection 3.10, it shall within 30 days from the date
of such receipt pay over such refund to the Borrower, net of all out-of-pocket
third-party expenses of such Lender (or Transferee) or the Agent.
3.11 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans or converting
any Eurodollar Loans to ABR Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
3.12 Change of Lending Office; Filing of Certificates or Documents.
Each Lender agrees that if it makes any demand for payment, or becomes entitled
to any increased amounts, under subsection 3.8, 3.10 or 3.11(a) or if any
adoption or change of the type described in subsection 3.9 shall occur with
respect to it, it will use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions and so long as such efforts would
not be disadvantageous to it, as determined in its sole discretion) to designate
a different lending office or file any certificate or document reasonably
requested in writing by the Borrower if such action would reduce or obviate the
need for the Borrower to make payments under subsection 3.8, 3.10 or 3.11(a) or
would eliminate or reduce the effect of any adoption or change described in
subsection 3.9.
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24
3.13 Replacement Lenders. In the event that the Borrower becomes
obligated to pay additional amounts or increased amounts to, or receives notice
from, any Lender pursuant to subsection 3.8, 3.9 or 3.10 then, unless such
Lender has theretofore removed or cured the conditions which result in the
obligation to pay such additional amounts or increased amounts, the Borrower
may, on ten Business Days' prior written notice to the Agent and such Lender,
cause such Lender to (and such Lender shall) assign pursuant to subsection
10.6(c) all of its rights and obligations under this Agreement to another bank
or financial institution which is willing to become a Lender and is acceptable
(which acceptance shall not be unreasonably withheld) to the Agent, for a
purchase price equal to the outstanding principal amount of the Loans payable to
such Lender plus any accrued but unpaid interest on such Loans and any other
amounts payable to such Lender under this Agreement (including, without
limitation, amounts payable under subsection 3.11).
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
make their respective Loans, Holdings and the Borrower hereby represent and
warrant to the Agent and each Lender that:
4.1 Existence; Compliance with Law. Each Loan Party (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority to own and
operate its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, (c) is duly qualified or licensed
to do business as a foreign entity 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 except where the failure to be so
qualified and/or in good standing could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect 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, reasonably be expected to have a Material Adverse
Effect.
4.2 Power; Authorization; Enforceable Obligations. Each Loan Party
has the power and authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and, in the case of the Borrower, to
borrow hereunder. Each Loan Party has taken all necessary action to authorize
the Extensions of Credit on the terms and conditions of this Agreement and any
Notes and to authorize the execution, delivery and performance by it of the Loan
Documents to which it is a party. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority
(including, without limitation, the Federal Trade Commission and the Department
of Justice) or any other Person is required to be obtained or made by any Loan
Party in connection with the Aunt Jemima/Celeste Acquisition or the Aunt
Jemima/Celeste Acquisition Agreement, the Extensions of Credit hereunder, the
execution, delivery or performance by each applicable Loan Party or the validity
or enforceability with respect to or against any Loan Party of the Loan
Documents to which it is a party or with the continuing operations of the
Borrower and its Subsidiaries other than (i) consents, authorizations and
filings in connection with the Aunt Jemima/Celeste Acquisition or the Aunt
Jemima/Celeste Acquisition Agreement (x) which are required to be obtained or
made and are
<PAGE>
25
in full force and effect (each of which are listed on Schedule 4.2) or (y) which
are not required to be obtained or made prior to consummation of the Aunt
Jemima/Celeste Acquisition and are listed on Schedule 4.2 or (z) which, if not
obtained or made, could not reasonably be expected to have a Material Adverse
Effect, (ii) the filing of Uniform Commercial Code financing statements to
perfect the security interest that can be perfected by such filings, (iii)
consents, authorizations and filings in connection with enforcement of the Loan
Documents and (iv) as contemplated by Section 5. This Agreement has been, and
each other Loan Document will be, duly executed and delivered on behalf of each
Loan Party that is a party hereto or thereto. This Agreement constitutes, and
each other Loan Document when executed and delivered will constitute, a legal,
valid and binding obligation of each Loan Party that is a party hereto or
thereto enforceable against such Loan Party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.3 No Legal Bar. The execution, delivery and performance of the
Loan Documents, the Extensions of Credit hereunder and the use of the proceeds
thereof by each applicable Loan Party will not violate any Requirement of Law or
Contractual Obligation of any Loan Party which could reasonably be expected to
have a Material Adverse Effect and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation other
than as contemplated in or permitted by the Loan Documents.
4.4 No Material Litigation. Except as set forth in Schedule 4.4, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower, Holdings
or VDK Foods, threatened by or against any Loan Party or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby or (b) which has a
reasonable possibility of an adverse determination, and if adversely determined,
could reasonably be expected to have a Material Adverse Effect.
4.5 No Default. No Loan Party is in default under or with respect to
any of its Contractual Obligations (including, without limitation, the Senior
Subordinated Notes and the Senior Subordinated Note Indenture) in any respect
which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.6 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation applicable to any Loan Party could reasonably be expected to have a
Material Adverse Effect.
4.7 Federal Regulations. No part of the proceeds of any Loans will be
used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U of the
Board of Governors as now and from time to time hereafter in effect. If
requested by any Lender or the Agent, the Borrower will furnish to the Agent and
each Lender a statement to the foregoing effect in conformity with the
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26
requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation G or
Regulation U, as the case may be.
4.8 Investment Company Act; Other Regulations. No Loan Party is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The Borrower is not subject to regulation under any Federal or State
statute or regulation (other than Regulation X of the Board of Governors) which
limits its ability to incur Indebtedness as contemplated herein.
4.9 Subsidiaries. As of the Effective Date, VDK Foods has no
Subsidiaries other than Holdings, Holdings has no Subsidiaries other than the
Borrower, and the Borrower has no Subsidiaries.
4.10 Purpose of Loans. The proceeds of the Loans shall be used to
bridge either a sale of the Celeste Business or an equity investment in the
Borrower to support a long-term ownership of the Celeste Business.
4.11 Accuracy of Information. The factual statements and information
contained in the Confidential Information Memorandum dated June, 1996 relating
to VDK Foods and its Subsidiaries (as the same may be supplemented in writing
through the Effective Date, the "Information Memorandum"), when taken as a
whole, were, as of the date of such Information Memorandum or the dates
otherwise specified therein or written supplements thereto, accurate in all
material respects and did not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading, provided that (a) with respect to trade data which relates to a
Person which is not a Loan Party or an Affiliate thereof, the Borrower
represents and warrants only that such information is believed by it in good
faith to be accurate in all material respects, (b) the statements therein
describing documents and agreements are summary only and as such are qualified
in their entirety by reference to such documents and agreements, (c) to the
extent any such information therein was based upon or constitutes a forecast or
projection or pro forma financial information, Holdings and the Borrower
represent only that such forecasts or projections or pro forma financial
information were based upon good faith estimates and assumptions believed by
management of the Borrower to be reasonable at the time made and (d) as to the
information which is specified as having been supplied by third parties,
Holdings and the Borrower represent only that they are not aware of any material
misstatement or omission therein.
4.12 Solvency. As of the Effective Date, after giving effect to the
Aunt Jemima/Celeste Acquisition, the making of the Loans hereunder and the other
transactions contemplated to occur on the Effective Date each Loan Party is
Solvent.
4.13 Cash Collateral Agreement. The Cash Collateral Agreement is
effective to create in favor of the Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in all the Cash
Collateral described therein and proceeds thereof and, upon completion of the
filings and other actions specified in the Cash Collateral Agreement, the Cash
Collateral Agreement shall constitute fully perfected, first priority Liens on,
and security interests
<PAGE>
27
in, all right, title and interest of Holdings in the Cash Collateral described
therein and in proceeds thereof superior in right to any other Person.
4.14 Incorporation of Representations and Warranties. Each of the
representations and warranties of Holdings and the Borrower contained in the
Second Amended and Restated Credit and Guarantee Agreement is incorporated
herein by reference as if such representations and warranties were set forth
herein in their entirety.
SECTION 5. CONDITIONS PRECEDENT
The effectiveness of this Agreement and the agreement of each Lender
to make the Loan requested to be made by it is subject to the satisfaction,
immediately prior to or concurrently with the making of such Extension of Credit
on the Effective Date, of the following conditions precedent:
(a) Loan Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of
Holdings, the Borrower and the Lenders with a counterpart for each
Lender, (ii) for the account of each Lender which requests a Note on
the Effective Date, a Note conforming to the requirements hereof and
executed by a duly authorized officer of the Borrower and (iii) the
Cash Collateral Agreement, executed and delivered by a duly authorized
officer of each Loan Party party thereto, with a counterpart for the
Agent and a counterpart or a copy for each Lender and the Cash
Collateral shall have been deposited in the Cash Collateral Account
(as defined in the Cash Collateral Agreement).
(b) Second Amended and Restated Credit and Guarantee Agreement.
As of the Effective Date, the Agent shall have received evidence
reasonably satisfactory to it that each of the conditions precedent to
effectiveness of the Second Amended and Restated Credit and Guarantee
Agreement and to the availability of the Additional Term Loans (as
defined in the Second Amended and Restated Credit and Guarantee
Agreement) shall have been satisfied.
(c) Issuance of Common Equity and Limited Liability Interests
and Intercompany Loans. As of the Effective Date, the Agent shall
have received evidence reasonably satisfactory to it that (i) VDK
Foods shall have issued additional Limited Liability Interests for at
least $60,060,000 in gross cash proceeds, of which approximately
$275,000 will be paid by certain employees of the Borrower,
$34,801,000 will be paid by Fenway, $12,492,000 will be paid by
National Sun Industries and $12,492,000 will be paid by UBS, (ii) VDK
Foods shall have made a capital contribution of at least $40,000,000
to Holdings in consideration for Holding's issuance of its common
stock to VDK Foods, (iii) VDK Foods shall have made an unsecured loan
of at least $20,000,000 to Holdings and (iv) Holdings shall have made
a cash capital contribution of at least
<PAGE>
28
$40,000,000 to the Borrower in consideration for the Borrower's
issuance of its common stock to Holdings.
(d) Senior Indebtedness. As of the Effective Date, the Agent
shall have received evidence reasonably satisfactory to it that the
Extensions of Credit under this Agreement shall constitute "Senior
Indebtedness" (as such term is defined in the Senior Subordinated Note
Indenture) under the Senior Subordinated Note Indenture.
(e) Aunt Jemima/Celeste Acquisition. The Aunt Jemima/Celeste
Acquisition (including the acquisition of the sole perpetual license
of the "Aunt Jemima" trademark for use in the Aunt Jemima/Celeste
Business) shall be consummated concurrently with the making of the
Loans by the Lenders hereunder in accordance with the Aunt
Jemima/Celeste Acquisition Agreement for a purchase price not
exceeding $190,000,000 (excluding the cost of excess inventory).
(f) Sources and Uses of Funds. The sources and uses of funds in
connection with the Aunt Jemima/Celeste Acquisition shall be as set
forth on Schedule 5(f).
(g) Borrowing Certificate. The Agent shall have received, with a
copy for each Lender, a certificate of the Borrower, dated the
Effective Date, substantially in the form of Exhibit C, with
appropriate insertions and attachments, satisfactory in form and
substance to the Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of the
Borrower.
(h) Corporate Proceedings of the Borrower. The Agent shall have
received, with a copy for each Lender, a copy of the resolutions, in
form and substance satisfactory to the Agent, of the Board of
Directors of the Borrower authorizing (i) the execution, delivery and
performance of this Agreement, the other Loan Documents to which it is
a party and the Aunt Jemima/Celeste Acquisition Agreement, (ii) the
Extensions of Credit contemplated hereunder and (iii) the granting by
it of the Liens created pursuant to the Cash Collateral Agreement,
certified by the Secretary or an Assistant Secretary of the Borrower
as of the Effective Date, which certificate shall be in form and
substance reasonably satisfactory to the Agent and shall state that
the resolutions thereby certified have not been amended, modified,
revoked or rescinded.
(i) Borrower Incumbency Certificate. The Agent shall have
received, with a copy for each Lender, a Certificate of the Borrower,
dated the Effective Date, as to the incumbency and signature of the
officers of the Borrower executing any Loan Document or the Aunt
Jemima/Celeste Acquisition Agreement or any certificate or other
document to be delivered by the Borrower pursuant hereto or thereto
reasonably satisfactory in form and substance to the Agent, executed
by the President or any Vice President and the Secretary or any
Assistant Secretary of the Borrower.
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29
(j) Corporate Proceedings of Holdings. The Agent shall have
received, with a copy for each Lender, a copy of the resolutions, in
form and substance reasonably satisfactory to the Agent, of the Board
of Directors of Holdings authorizing (i) the execution, delivery and
performance of this Agreement and the other Loan Documents to which
Holdings is a party and (ii) the granting by it of the Liens created
pursuant to the Cash Collateral Agreement, certified by the Secretary
or an Assistant Secretary of Holdings as of the Effective Date, which
certificate shall be in form and substance reasonably satisfactory to
the Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded.
(k) Holdings Incumbency Certificate. The Agent shall have
received, with a copy for each Lender, a certificate of Holdings,
dated the Effective Date, as to the incumbency and signature of the
officers of Holdings executing any Loan Document or any certificate or
other document to be delivered by Holdings pursuant hereto or thereto
reasonably satisfactory in form and substance to the Agent, executed
by the President or any Vice President and the Secretary or any
Assistant Secretary of Holdings.
(l) Organizational Documents. The Agent shall have received, with
a copy for each Lender, true and complete copies of the certificate of
incorporation and by-laws of each Loan Party (or, in the case of VDK
Foods, the certificate of formation and Limited Liability Company
Agreement), certified as of the Effective Date as complete and correct
copies thereof by the Secretary or an Assistant Secretary of such Loan
Party.
(m) Consents, Licenses and Approvals. The Agent shall have
received, with a copy for each Lender, a certificate of a Responsible
Officer of the Borrower (i) attaching copies of all consents and
authorizations of and filings with any Governmental Authority
(including, without limitation, the Federal Trade Commission and the
Department of Justice) or any other Person that are required to be
obtained or made by any Loan Party in connection with the Aunt
Jemima/Celeste Acquisition or the Aunt Jemima/Celeste Acquisition
Agreement, the Extensions of Credit hereunder, the execution, delivery
or performance by each applicable Loan Party or the validity or
enforceability with respect to or against any Loan Party of the Loan
Documents to which it is a party or with the continuing operations of
the Borrower and its Subsidiaries (other than those set forth in
clauses (i)(y), (i)(z), (ii) or (iii) of subsection 4.2) as are
reasonably requested by the Agent, and (ii) stating that such
consents, authorizations and filings are in full force and effect and
that all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority which
would restrain, prevent or otherwise impose material adverse
conditions on the Aunt Jemima/Celeste Acquisition or the financing
thereof, and each such consent, authorization and filing shall be in
form and substance reasonably satisfactory to the Agent.
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30
(n) Fees and Expenses. The Agent and the Lenders shall have
received all fees and expenses to be received on or prior to the
Effective Date referred to in (i) this Agreement or (ii) the Fee
Letter dated June 25, 1996 among Chemical Bank, CSI and the Borrower.
(o) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, the executed legal opinion of Richards &
O'Neil, LLP, special counsel to VDK Foods, Holdings and the Borrower,
in form and substance satisfactory to the Agent. Such legal opinion
shall include, without limitation, opinions to the effect that (i) the
consummation of the Aunt Jemima/Celeste Acquisition, the incurrence by
the Borrower of the Loans and the transactions contemplated by this
Agreement shall not breach, or require any consent under, the terms of
the Senior Subordinated Notes or the Senior Subordinated Note
Indenture and (ii) the Loans shall constitute "Senior Indebtedness"
(as such term is defined in the Senior Subordinated Note Indenture)
under the Senior Subordinated Note Indenture.
(p) Actions to Perfect Liens. The Agent shall have received
evidence in form and substance reasonably satisfactory to it that all
filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements
on form UCC-1, necessary or, in the opinion of the Agent, desirable to
perfect the Liens created by the Cash Collateral Agreement shall have
been completed (or, to the extent that any such filings, recordings,
registrations and other actions shall not have been completed,
arrangements satisfactory to the Agent for the completion thereof
shall have been made).
(q) Solvency. The Agent shall have received from American
Appraisal Associates, with a copy for each Lender a solvency opinion
with respect to the solvency of the Borrower and its Subsidiaries as
of the Effective Date after giving effect to the Aunt Jemima/Celeste
Acquisition and the transactions contemplated hereby, reasonably
satisfactory in form and substance to the Agent.
(r) No Default. No default or event of default under the Senior
Subordinated Note Indenture or the Amended and Restated Credit and
Guarantee Agreement, dated as of May 6, 1996, among Holdings, the
Borrower, the lenders parties thereto and Chemical Bank, as agent,
shall have occurred and be continuing or would occur as a consequence
of the financing contemplated hereby.
(s) Representations and Warranties. Each of the representations
and warranties made by the Borrower and the other Loan Parties in or
pursuant to the Loan Documents shall be true and correct in all
material respects on and as of the Effective Date, after giving effect
to the Aunt Jemima/Celeste Acquisition, as if made on and as of such
date, except to the extent such representations and warranties
expressly relate to an earlier date in which case such representations
and warranties shall be true and correct in all material respects as
of such earlier date.
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31
(t) No Default. No Default or Event of Default shall have
occurred and be continuing on the Effective Date or after giving
effect to the Extension of Credit requested to be made on such date.
SECTION 6. COVENANTS
Each of the affirmative covenants and negative covenants of Holdings
and the Borrower contained in the Second Amended and Restated Credit and
Guarantee Agreement is incorporated herein by reference as if such affirmative
covenants and negative covenants were set forth herein in their entirety.
SECTION 7. GUARANTEE
7.1 Guarantee. (a) To induce the Agent and the Lenders to execute and
deliver this Agreement and to make the Extensions of Credit provided for herein
to the Borrower, Holdings hereby unconditionally and irrevocably guarantees to
the Agent and the Lenders and their respective successors, permitted transferees
and permitted assigns, the prompt and complete payment and performance by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Obligations. Holdings further agrees to pay any and all reasonable
expenses (including, without limitation, all reasonable fees and disbursements
of counsel) which may be paid or incurred by the Agent or any Lender in
enforcing, or obtaining advice of counsel in respect of, any rights with respect
to, or collecting, any or all of the Obligations and/or enforcing any rights
with respect to, or collecting against, Holdings under this Section 7. The
guarantee contained in this Section 7 shall remain in full force and effect
until the Obligations are paid in full.
(b) No payment or payments made by the Borrower or any other Person or
received or collected by the Agent or any Lender from the Borrower or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of Holdings under this Section 7 which shall, notwithstanding any
such payment or payments (other than payments made by Holdings in respect of the
Obligations or payments received or collected from Holdings in respect of the
Obligations), remain in full force and effect until the Obligations are paid in
full. Holdings agrees that whenever, at any time, or from time to time, it shall
make any payment to the Agent or any Lender on account of its liability under
this Section 7, it will notify the Agent and such Lender in writing that such
payment is made under this Section 7 for such purpose.
7.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Section 7, Holdings hereby
irrevocably waives all rights which may have arisen in connection with the
guarantee contained in this Section 7 to be subrogated to any of the rights
(whether contractual, under the Bankruptcy Code, including Section 509 thereof,
under common law or otherwise) of the Agent or any Lender against the Borrower
or against any collateral security or guarantee or right of offset held by the
Agent or any Lender for the payment of the Obligations. Holdings hereby further
irrevocably waives all contractual,
<PAGE>
32
common law, statutory or other rights of reimbursement, contribution,
exoneration or indemnity (or any similar right) from or against the Borrower or
any other Person which may have arisen in connection with the guarantee
contained in this Section 7. So long as the Obligations remain outstanding, if
any amount shall be paid by or on behalf of the Borrower to Holdings on account
of any of the rights waived in this paragraph, such amount shall be held by
Holdings in trust, segregated from other funds of Holdings, and shall, forthwith
upon receipt by Holdings, be turned over to the Agent in the exact form received
by Holdings (duly indorsed by Holdings to the Agent, if required), to be applied
against the Obligations, whether matured or unmatured, in such order as the
Agent may determine. The provisions of this paragraph shall survive the
termination of the guarantee contained in this Section 7 and the payment in full
of the Obligations.
7.3 Amendments, etc. with respect to the Obligations; Waiver of
Rights. Holdings shall remain obligated hereunder notwithstanding that, without
any reservation of rights against Holdings, and without notice to or further
assent by Holdings, any demand for payment of any of the Obligations made by the
Agent or any Lender may be rescinded by the Agent or such Lender, and any of the
Obligations continued, and the Obligations, or the liability of any other party
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Agent or any Lender, and this Agreement, the
other Loan Documents, any Interest Rate Protection Agreement entered into by the
Borrower with any Lender or any Affiliate of any Lender and any other documents
executed and delivered in connection herewith or therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Agent (or the
Required Lenders, as the case may be) or such Lender or Affiliate may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Agent or any Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Agent nor any Lender or its Affiliates shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Obligations or for the guarantee contained in this Section 7 or any property
subject thereto. When making any demand hereunder against Holdings, the Agent or
any Lender may, but shall be under no obligation to, make a similar demand on
the Borrower or any other guarantor, and any failure by the Agent or any Lender
to make any such demand or to collect any payments from the Borrower or any such
other guarantor or any release of the Borrower or such other guarantor shall not
relieve Holdings of its obligations or liabilities under this Section 7, and
shall not impair or affect the rights and remedies, express or implied, or as a
matter of law, of the Agent or any Lender against Holdings. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
7.4 Guarantee Absolute and Unconditional. Holdings waives, to the
fullest extent permitted by applicable law, any and all notice of the creation,
renewal, extension or accrual of any of the Obligations and notice of or proof
of reliance by the Agent or any Lender upon the guarantee contained in this
Section 7 or acceptance of the guarantee contained in this Section 7; the
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon the guarantee contained in this Section 7; and all dealings between the
Borrower or Holdings, on the one hand, and the Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have been had
<PAGE>
33
or consummated in reliance upon the guarantee contained in this Section 7.
Holdings waives, to the fullest extent permitted by applicable law, diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or Holdings with respect to the Obligations. The guarantee
contained in this Section 7 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity,
regularity or enforceability of this Agreement, any Note, any other Loan
Document or any Interest Rate Protection Agreement entered into by the Borrower
with any Lender or any Affiliate of any Lender, any of the Obligations or any
other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Agent or any Lender, (b)
any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Borrower against the Agent or any Lender or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Borrower or Holdings)
which constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Obligations, or of Holdings under the
guarantee contained in this Section 7, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against Holdings, the Agent and
any Lender may, but shall be under no obligation to, pursue such rights and
remedies as it may have against the Borrower or any other Person or against any
collateral security or guarantee for the Obligations or any right of offset with
respect thereto, and any failure by the Agent or any Lender to pursue such other
rights or remedies or to collect any payments from the Borrower or any such
other Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower or any such
other Person or of any such collateral security, guarantee or right of offset,
shall not relieve Holdings of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Agent or any Lender against Holdings. For the purposes
hereof, "demand" shall include the commencement and continuance of any legal
proceedings. The guarantee contained in this Section 7 shall remain in full
force and effect and be binding in accordance with and to the extent of its
terms upon Holdings and its successors, and shall inure to the benefit of the
Agent and the Lenders, and their respective successors, permitted transferees
and permitted assigns, until all the Obligations and the obligations of Holdings
under the guarantee contained in this Section 7 shall have been satisfied by
payment in full.
7.5 Reinstatement. The guarantee contained in this Section 7 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
7.6 Payments. Holdings hereby agrees that the Obligations will be paid
to the Agent without set-off or counterclaim in Dollars at the office of the
Agent located at 270 Park Avenue, New York, New York 10017.
7.7 Demand for Payment; Effect of Payment by Holdings. Notwithstanding
anything else to the contrary contained herein, Holdings hereby acknowledges
that the Agent and
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34
the Lenders shall have the right to first make a demand upon, and proceed
against, Holdings and the Cash Collateral in seeking repayment of the Loans
before making a demand upon and proceeding against the Borrower, except with
respect to the Net Proceeds of a Celeste Sale in excess of $45,000,000, to the
extent necessary. Holdings and the Borrower each hereby agrees with the other
and with the Lenders and the lenders under the Second Amended and Restated
Credit and Guarantee Agreement that any payment by Holdings of any of the
Obligations shall be deemed to be, and shall constitute, a common equity
investment by Holdings in the Borrower in the same amount, and Holdings shall
have no right of subrogation owing out of any such repayment.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms thereof or hereof; or the Borrower shall fail
to pay any interest on any Loan, or any other amount payable hereunder,
within five Business Days after any such interest or other amount becomes
due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by the Borrower
or any other Loan Party herein or in any other Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or
any such other Loan Document shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 6; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) The Borrower or any other Loan Party shall (i) default in any
payment of principal of or interest on any Indebtedness (other than the
Loans) or in the payment of any Guarantee Obligation in respect of
Indebtedness or in any payments required under any Rate Protection
Agreement, beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created or under such Rate Protection Agreement,
as the case may be, if the aggregate amount of the Indebtedness and/or
Guarantee Obligations and/or payments under Rate Protection Agreements in
respect of which such default or defaults shall have occurred is at least
$500,000; or (ii) default in the observance or performance of any other
agreement or condition to be observed or performed by such Loan Party
relating to any such Indebtedness or Guarantee Obligation or contained in
any instrument or agreement
<PAGE>
35
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 Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries)
to cause, with the giving of notice if required, such Indebtedness to
become due prior to its stated maturity or the full amount of such
Guarantee Obligation to become payable, provided, however, that a default,
event or condition described in this Section 8(e)(ii) shall not constitute
an Event of Default under this Section 8(e) unless, at the time of such
default, event or condition, defaults, events or conditions of the type
described in this Section 8(e)(ii) shall have occurred and are continuing
with respect to Indebtedness and Guarantee Obligations in respect to
Indebtedness the aggregate amount of which exceeds $500,000; or
(f) (i) The Borrower or any other Loan Party 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, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or the Borrower or any other Loan Party shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any other Loan Party 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) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the Borrower
or any other Loan Party 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, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Borrower or any other Loan Party 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) the Borrower or any other Loan Party shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving individually a liability of
$1,000,000 (not paid or fully covered by insurance or indemnity (A) of the
Sellers under the Asset Purchase Agreement, (B) of Campbell Soup under the
Acquisition Agreement or (C) of Quaker Oats under the Aunt Jemima/Celeste
Acquisition Agreement) or in the aggregate a liability (not paid or fully
covered by insurance or indemnity (A) of the Sellers under the Asset
Purchase Agreement, (B) of Campbell Soup under the Acquisition Agreement or
(C) of Quaker Oats under the Aunt Jemima/Celeste Acquisition Agreement) of
$2,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
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36
(h) (i) the Cash Collateral Agreement shall cease, for any reason, to
be in full force and effect, or Holdings shall so assert in writing or (ii)
any Lien created by the Cash Collateral Agreement shall, by reason of any
breach by Holdings of any of its covenants or other obligations contained
therein, cease to be enforceable and of the same effect and priority,
subject to Section 8(d), purported to be created thereby; or
(i) the guarantee contained in Section 7 shall cease, for any reason,
to be in full force and effect or Holdings shall so assert; or
(j) (i) The Investors and their respective wholly-owned Subsidiaries
shall cease (A) to beneficially own, directly or indirectly at least 60% of
the Capital Stock of Holdings and (B) to have the right to cast a majority
of the votes of the common shareholders of Holdings, (ii) Dartford, Fenway
and their respective wholly-owned Subsidiaries shall cease (A) to
beneficially own, directly or indirectly, at least 36% of the Capital Stock
of Holdings and (B) to have the right to cast a majority of the votes of
the common shareholders of Holdings (iii) Holdings shall cease to own all
the Capital Stock of the Borrower or (iv) a Change of Control (as defined
in the Senior Subordinated Note Indenture) shall occur under the Senior
Subordinated Note Indenture; or
(k) The subordination provisions contained in Article X of the Senior
Subordinated Note Indenture shall cease to be enforceable in accordance
with their terms;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (ii) or (iii) of paragraph (f) of this Section with respect to
the Borrower, automatically the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement shall immediately become due
and payable, and (B) if such event is any other Event of Default with the
consent of the Required Lenders, the Agent may, or upon the request of the
Required Lenders, the Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement to be due and payable forthwith, whereupon the same shall immediately
become due and payable. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
SECTION 9. THE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes the Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities,
<PAGE>
37
duties, obligations or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against the Agent.
9.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of the Borrower to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
9.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan Documents
in accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
9.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower or
Holdings referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give notice thereof to the
<PAGE>
38
Lenders. The Agent shall take such action with respect to such Default or Event
of Default as shall be reasonably directed by the Required Lenders; provided
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Commitment Percentages in effect on the date on which indemnification
is sought (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with their Commitment Percentages immediately prior to
such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Loans and all
other amounts payable hereunder.
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39
9.8 Agent in Its Individual Capacity. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though the Agent were not the Agent hereunder and
under the other Loan Documents. With respect to the Loans made by it, the Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the
Agent, and the terms "Lender" and "Lenders" shall include the Agent in its
individual capacity.
9.9 Successor Agent. The Agent may resign as Agent upon 10 days'
notice to the Lenders and the Borrower. If the Agent shall resign as Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be subject to the approval of the Borrower (which approval
shall not be unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon such appointment and approval,
and the former Agent's rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Loans. After any
retiring Agent's resignation as Agent, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Agent may, from time to time, (a) enter into with the Borrower and each Loan
Party which is a party to the relevant Loan Documents written amendments,
supplements or modifications hereto and to the other Loan Documents for the
purpose of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders or of the Borrower hereunder
or thereunder or (b) waive, on such terms and conditions as the Required Lenders
or the Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan made by any Lender, or reduce
the stated rate of any interest thereon or reduce the fee payable hereunder to
any Lender or extend the scheduled date of any payment thereof or increase the
aggregate amount or extend the expiration date of any Lender's Commitments
(including the conversion of any Loan into equity of the Borrower), in each case
without the written consent of such Lender directly affected thereby, (ii)
amend, modify or waive any provision of this subsection or reduce the percentage
specified in the definition of Required Lenders or consent to the assignment or
transfer by the Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents or release any Cash Collateral (other
than releases of Cash Collateral to fund cash equity investments by Holdings in
the Borrower to fund payments of interest due hereunder by the Borrower as
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40
provided in subsection 3.1) or release the guarantee contained in Section 7, in
each case without the written consent of all the Lenders or (iii) amend, modify
or waive any provision of Section 9 without the written consent of the then
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders, the Agent and all future holders of the Loans. In the case of any
waiver, the Borrower, the Lenders and the Agent shall be restored to their
former positions and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived (to the extent provided in such waiver)
shall be deemed to be cured and not continuing; no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when delivered, or three days after
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Borrower and the
Agent, and as set forth in Schedule 1.1 in the case of the other parties hereto,
or to such other address as may be hereafter notified by the respective parties
hereto:
Holdings: VDK Holdings, Inc.
801 Montgomery Street, Suite 400
San Francisco, California 94133
Attention: M. Laurie Cummings
Telecopy: (415) 982-3023
The Borrower: Van de Kamp's, Inc.
1000 St. Louis Union Station
St. Louis, Missouri 63103
Attention: Timothy B. Andersen
Telecopy: (314) 632-5633
with copies to: Richards & O'Neil, LLP
885 Third Avenue, 7th Floor
New York, New York 10022
Attention: Craigh Leonard
Telecopy: (212) 750-9022
The Agent: The Chase Manhattan Bank, N.A.
10 South La Salle Street, 23rd Floor
Chicago, Illinois 60603
Attention: Steven J. Faliski
Telecopy: (312) 443-1964
with a copy to: Chemical Bank Agent Bank Services
140 East 45th Street, 29th Floor
New York, New York 10017
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41
Attention: Janet M. Belden
Telecopy: (212) 622-0122
provided that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.2, 3.1, 3.2 or 3.7(b) shall not be effective until
received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents 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 rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the syndication of the Loans and the Commitments
under, and the development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent, (b) to pay or reimburse each Lender and the Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents prepared in connection herewith or therewith,
including, without limitation, the fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel in lieu of the fees and
expenses of outside counsel) to each Lender and of counsel to the Agent, (c) to
pay, indemnify, and hold each Lender and the Agent harmless 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 similar taxes, if
any, which are payable or determined to be payable in connection with the
execution and delivery of, or administration 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, the other Loan
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Agent (and their respective directors, officers, trustees,
employees and agents) harmless from and against any and all other liabilities
(excluding income taxes), obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement or the other Loan Documents, or the use of the
proceeds of the Loans in connection with the Aunt Jemima/Celeste Acquisition,
and any such other documents, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Borrower, any of its
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42
Subsidiaries or any of the facilities and properties owned, leased or operated
by the Borrower or any of its Subsidiaries (all the foregoing in this clause
(d), collectively, the "indemnified liabilities"), provided, that the Borrower
shall have no obligation hereunder to the Agent or any Lender with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Agent or any such Lender or (ii) legal proceedings commenced
against the Agent or any such Lender by any security holder or creditor thereof
arising out of and based upon rights afforded any such security holder or
creditor solely in its capacity as such. The agreements in this subsection shall
survive repayment and/or assignment of the Loans and all other amounts payable
hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower,
Holdings, the Lenders, the Agent and their respective successors and assigns,
except that neither the Borrower nor Holdings may assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of
each Lender and any assignment or transfer by any Lender of its rights or
obligations under this Agreement or any Loan Document must be made in compliance
with this subsection 10.6 (and any purported assignment in violation of this
subsection shall be null and void).
(b) Any Lender may, in the ordinary course of its lending or
investment business and in accordance with applicable law, at any time sell to
one or more financial institutions or other entities ("Loan Participants")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating interest
to a Loan Participant, (i) such Lender's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible for the performance thereof, (iii) such Lender shall
remain the holder of any such Loan for all purposes under this Agreement and the
other Loan Documents, (iv) the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents, and (v) no Loan
Participant under any participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except with respect to the matters
described in clauses (i) and (ii) of the proviso to the second sentence of
subsection 10.1. The Borrower agrees that, while an Event of Default shall have
occurred and be continuing if amounts outstanding under this Agreement are due
or unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Loan Participant shall, to the
maximum extent permitted by applicable law, be deemed to have the right of
setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to have
agreed to share with the Lenders the proceeds thereof as provided in subsection
10.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that
each Loan Participant shall be entitled to the benefits of subsections 3.9, 3.10
and 3.11 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
of subsection 3.10 such Loan Participant shall have complied with the
requirements of said subsection, and provided, further, that no Loan
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43
Participant shall be entitled to receive any greater amount pursuant to any such
subsection than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Loan Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its lending or
investment business and in accordance with applicable law, at any time and from
time to time assign, with the consent of the Borrower and the Agent in the case
of an assignment other than to another Lender or an affiliate thereof (which in
each case shall not be unreasonably withheld), to any other Lender or any
affiliate thereof or to an additional bank or financial institution or other
entity (an "Assignee") all or any part of its rights and obligations under this
Agreement and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit D, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender or
an affiliate thereof, by the Borrower and the Agent (which consent shall not be
unreasonably withheld)) and delivered to the Agent for its acceptance and
recording in the Register, provided that, (i) in the case of any such assignment
to an Assignee that is an affiliate of the assigning Lender, the consent of the
Borrower shall only be required if, at the time of such assignment, such
Assignee would be entitled to require the Borrower to pay, or the Borrower would
be required to pay, greater amounts under subsection 3.9 or 3.10 than if no such
assignment had occurred and (ii) in the case of any such assignment to an
additional bank or financial institution or other entity, if such assignment is
of less than all of the rights and obligations of the assigning Lender, the
aggregate principal amount of the Loans (A) being assigned to such additional
bank or financial institution or other entity and (B) remaining with the
assigning Lender are not, in each case, less than $5,000,000 (or such lesser
amount as may be agreed to by the Borrower and the Agent). Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment as set
forth therein, and (y) the assigning Lender thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
subsection, the consent of the Borrower shall not be required, and, unless
requested by the Assignee and/or the assigning Lender, new Notes shall not be
required to be executed and delivered by the Borrower, for any assignment which
occurs when any of the events described in Section 8(f) shall have occurred and
be continuing.
(d) The Agent, on behalf of the Borrower, shall maintain at the
address of the Agent referred to in subsection 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amounts of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders shall treat each Person whose name
is recorded in the Register as the owner of a Loan or other obligation hereunder
as the owner thereof for all purposes of this Agreement and the other Loan
Documents, notwithstanding any notice to the
<PAGE>
44
contrary. Any assignment of any Loan or other obligation hereunder (whether or
not evidenced by a Note) shall be effective only upon appropriate entries with
respect thereto being made in the Register. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Agent) together
with, except in the case of an assignment pursuant to subsection 3.13, payment
to the Agent of a registration and processing fee of $3,500, the Agent shall (i)
promptly accept such Assignment and Acceptance and (ii) on the effective date
determined pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Lenders and
the Borrower.
(f) The Borrower authorizes each Lender to disclose to any Loan
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been delivered to
such Lender by or on behalf of the Borrower in connection with such Lender's
credit evaluation of the Borrower and its Affiliates prior to becoming a party
to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this subsection concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law, provided that no such assignment, whether to
a Federal Reserve Bank or other entity, shall release a Lender from any of its
obligations hereunder or substitute any such Federal Reserve Bank or other
entity for such Lender as a party hereto or permit an absolute assignment to
occur other than in accordance with such provisions of this subsection.
10.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted
Lender") shall at any time receive any payment of all or part of its Loans, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in Section 8(f), or otherwise), in a greater proportion
than any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly
<PAGE>
45
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify the Borrower and the Agent after
any such set-off and application made by such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.
10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without, to
the extent permitted by law, invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not, to the
extent permitted by law, invalidate or render unenforceable such provision in
any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
10.12 Submission To Jurisdiction; Waivers. Each of the Borrower and
Holdings hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgement in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the
United States of America for the Southern District of New York, and
appellate courts from any thereof;
<PAGE>
46
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court
and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower or Holdings at its address set forth in
subsection 10.2 or at such other address of which the Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
10.13 Acknowledgements. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between the Agent and Lenders, on one hand, and the
Borrower, on the other hand, in connection herewith or therewith is
solely that of creditor and debtor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.
10.14 WAIVERS OF JURY TRIAL. THE BORROWER, HOLDINGS, THE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
47
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.
VDK HOLDINGS, INC.
By: /s/ Jamie B. Ardrey
--------------------------------
Title: Executive Vice President
VAN DE KAMP'S, INC.
By: /s/ Jamie B. Ardrey
--------------------------------
Title: Executive Vice President
THE CHASE MANHATTAN BANK, N.A., as
Agent and as a Lender
By: /s/ Marian N. Schulman
--------------------------------
Title: Attorney-in-Fact
<PAGE>
SCHEDULE 1.1 TO
SENIOR CONVERTIBLE LOAN
CREDIT AND GUARANTEE AGREEMENT
COMMITMENT, ADDRESS AND LENDING OFFICES
---------------------------------------
<TABLE>
<CAPTION>
THE CHASE MANHATTAN BANK, N.A.
Commitment
-----------------
<S> <C> <C>
$20,000,000.00
Domestic Lending Office: Eurodollar Lending Office: Address for Notices:
----------------------- ------------------------- -------------------
270 Park Avenue 270 Park Avenue 10 South La Salle Street
New York, New York 10017 New York, New York 10017 23rd Floor
Chicago, Illinois 60603
Attn: Steven J. Faliski
Telephone: (312) 807-4073
Telecopier: (312) 443-1964
</TABLE>
<PAGE>
SCHEDULE 4.2
CONSENTS
--------
The following consents are required in connection with the Aunt Jemima/Celeste
Acquisition or the Aunt Jemima/Celeste Acquisition Agreement.
Third Party Consents
- --------------------
. Packaging Machinery Lease between Gulf States Paper Corporation and The
Quaker Oats Company, dated February 16, 1985, as amended (HS11198-442, GSPC
lease #234 - Kliklok Captain "H" Loader)
. Packaging Machinery Lease between Gulf States Paper Corporation and The
Quaker Oats Company, dated August 23, 1985, as amended (HS10198-457, GSPC
lease #249 - Kliklok Captain "H" Loader)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS10198-313, GSPC
lease #41775 - Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-344 -
Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-355, Lease
#5577 - Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-398, Lease
#62679-B - Kliklok Captain "S" Packaging Machine)
. Packaging Machinery Lease between Universal Packaging Corporation and The
Quaker Oats Company, dated March 10, 1982, as amended (HS11198-400, Lease
#62679-A - Kliklok Captain "S" Packaging Machine)
. Power Supply Contract, dated as of March 1, 1992, among The City of
Jackson, Tennessee, The Quaker Oats Company and Tennessee Valley Authority
<PAGE>
Required Governmental Approval and Notices
- ------------------------------------------
A. TO BE OBTAINED PRIOR TO THE EFFECTIVE DATE
------------------------------------------
1. Any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have
expired or been terminated.
B. TO BE OBTAINED POST-EFFECTIVE DATE
----------------------------------
1. New applications for environmental permits with new company name
have been filed with the following authorities, and new license
is awaited:
. Tennessee Division of Air Pollution Control
. Tennessee Division of Water Pollution Control
. Jackson, Tennessee Utility Division
. Tennessee Division of Solid Waste Management
2. New license from USDA will be required to utilize frozen fruits
and vegetables at the Jackson facility
<PAGE>
SCHEDULE 4.4
LITIGATION
----------
None
<PAGE>
Schedule 5.2
Sources and Uses of Funds for Aunt Jemima/Celeste Acquisition
-------------------------------------------------------------
<TABLE>
<CAPTION>
===============================================================================
Sources Uses
------- ----
===============================================================================
<S> <C> <C> <C>
Additional Term Loans $135,000,000 Excess Inventory ($2,200,000)
- -------------------------------------------------------------------------------
Senior Convertible Loan $ 20,000,000 Purchase Price $188,000,000
- -------------------------------------------------------------------------------
Capital Contribution by $ 40,000,000 Transaction Fees $ 7,500,000
Holdings and Expenses
- -------------------------------------------------------------------------------
Cash on Hand $ 800,000 Transition Costs $ 2,500,000
- -------------------------------------------------------------------------------
TOTAL $195,800,000 TOTAL $195,800,000
============ ============
===============================================================================
</TABLE>
<PAGE>
EXHIBIT A
TO SENIOR CONVERTIBLE LOAN
CREDIT AND GUARANTEE AGREEMENT
This exhibit to the Senior Convertible Loan Credit and Guarantee Agreement is a
form of the Cash Collateral Agreement, an executed version which has been filed
as Exhibit 10.29 to the 10-K.
<PAGE>
EXHIBIT B
TO SENIOR CONVERTIBLE LOAN
CREDIT AND GUARANTEE AGREEMENT
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND
PROVISIONS OF THE SENIOR CONVERTIBLE LOAN CREDIT AND GUARANTEE AGREEMENT
REFERRED TO BELOW. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE AGENT PURSUANT TO THE TERMS OF SUCH SENIOR CONVERTIBLE LOAN
CREDIT AND GUARANTEE AGREEMENT.
[FORM OF]
NOTE
$_____________ New York, New York
July __, 1996
FOR VALUE RECEIVED, the undersigned, VAN DE KAMP'S, INC., a Delaware
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of _____________________ (the "Lender") at the office of The Chase
Manhattan Bank, N.A., located at 270 Park Avenue, New York, New York 10017, in
lawful money of the United States of America and in immediately available funds,
the principal amount of _______________________ DOLLARS ($_________), or, if
less, the unpaid principal amount of the Loan made by the Lender pursuant to
subsection 2.1 of the Credit Agreement (as defined below). The principal amount
of the Loan made by the Lender shall be repaid in the amounts and on the dates
specified in subsection 2.3 of the Credit Agreement. The Borrower further agrees
to pay interest in like money at such office on the unpaid principal amount of
the Loan made by the Lender from time to time outstanding at the rates and on
the dates specified in the Credit Agreement.
The holder of this Note is authorized to record on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of the Loan
made by the Lender and the date and amount of each payment or prepayment of
principal with respect thereto, each conversion of all or a portion thereof to
another Type, each continuation of all or a portion thereof as the same Type
and, in the case of Eurodollar Loans, the length of each Interest Period and the
Eurodollar Rate with respect thereto. Each such recordation shall, to the extent
permitted by applicable law, constitute prima facie evidence of the accuracy of
the information so recorded, provided that the failure to make any such
recordation (or any error therein) shall not affect the obligation of the
Borrower to repay (with applicable interest) the Loan made by the Lender in
accordance with the terms of the Credit Agreement.
This Note (a) is one of the Notes referred to in the Senior
Convertible Loan Credit and Guarantee Agreement, dated as of July __, 1996 (as
the same may be further amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among VDK Holdings, Inc., a Delaware corporation,
the Borrower, the Lender, the other banks and financial
<PAGE>
2
institutions from time to time parties thereto and The Chase Manhattan Bank,
N.A., as agent, (b) is subject to the provisions of the Credit Agreement and (c)
is subject to optional and mandatory prepayment in whole or in part as provided
in the Credit Agreement. This Note is guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the nature and extent of the guarantee, the terms and conditions upon which the
guarantee was granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
VAN DE KAMP'S, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
Schedule A
to Term Note
------------
LOANS, CONVERSIONS AND REPAYMENTS OF ABR LOANS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Amount of
Amount of ABR Loans Unpaid
Amount Principal of Converted to Principal
Amount of Converted to ABR Loans Eurodollar Balance of Notation
Date ABR Loans ABR Loans Repaid Loans ABR Loans Made By
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule B
to Term Note
------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Interest
Amount Period and Amount of Unpaid
Converted to Eurodollar Amount of Eurodollar Principal
Amount of or Continued Rate with Principal of Loans Balance of
Eurodollar as Eurodollar Respect Eurodollar Converted to Eurodollar Notation
Date Loans Loans Thereto Loans Repaid ABR Loans Loans Made By
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
TO SENIOR CONVERTIBLE LOAN
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
BORROWING CERTIFICATE
Pursuant to subsections 5(f), 5(g) and 5(h) of the Senior Convertible
Loan Credit and Guarantee Agreement, dated as of July __, 1996 (as the same may
be amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among VDK Holdings, Inc., a Delaware corporation, Van de Kamp's,
Inc., a Delaware corporation (the "Borrower"), the several banks and other
financial institutions from time to time parties thereto (the "Lenders") and The
Chase Manhattan Bank, N.A., as agent for the Lenders, the undersigned,
____________________ of the Borrower, hereby certifies as follows:
1. The representations and warranties of the Borrower set forth in
the Credit Agreement and each of the other Loan Documents to which it is
a party or which are contained in any certificate, document or financial
or other statement furnished pursuant to or in connection with the Credit
Agreement or any Loan Document are true and correct in all material
respects on and as of the date hereof with the same effect as if made on
the date hereof, except for representations and warranties expressly
stated to relate to a specific earlier date, in which case such
representations and warranties are true and correct in all material
respects as of such earlier date;
2. No Default or Event of Default has occurred and is continuing as
of the date hereof or will occur after giving effect to the making of the
Loans requested to be made and/or issued on the date hereof or the
consummation of each of the transactions contemplated by the Loan
Documents; and
3. _________________ is and at all times since _____________ __,
199_, has been the duly elected and qualified [Assistant] Secretary of
the Borrower and the signature set forth on the signature line for such
officer below is such officer's true and genuine signature;
and the undersigned [Assistant] Secretary of the Borrower hereby certifies as
follows:
4. There are no liquidation or dissolution proceedings pending or
to my knowledge threatened against the Borrower or any of its
Subsidiaries, nor has any other event occurred affecting or threatening
the corporate existence of the Borrower or any of its Subsidiaries;
5. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware;
6. (a) Attached hereto as Exhibit A is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Borrower on
<PAGE>
2
__________ __, 1996; such resolutions have not in any way been amended,
modified, revoked or rescinded and have been in full force and effect
since their adoption to and including the date hereof and are now in full
force and effect; such resolutions are the only corporate proceedings of
the Borrower now in force relating to or affecting the matters referred
to therein;
(b) attached hereto as Exhibit B is a true and complete copy
of the By-laws of the Borrower as in effect at all times since __________
__, 199_, to and including the date hereof; and
(c) attached hereto as Exhibit C is a true and complete copy
of the Certificate of Incorporation of the Borrower as in effect at all
times since __________ __, ____, to and including the date hereof; and
7. The following persons are now duly elected and qualified
officers of the Borrower, holding the offices indicated next to their
respective names below, and such officers have held such offices with the
Borrower at all times since __________ __, 199_, to and including the
date hereof, and the signatures appearing opposite their respective names
below are the true and genuine signatures of such officers, and each of
such officers is duly authorized to execute and deliver on behalf of the
Borrower, the Credit Agreement and the other Loan Documents to which it
is a party and any certificate or other document to be delivered by the
Borrower pursuant to the Credit Agreement or any such Loan Document:
<TABLE>
<CAPTION>
Name Office Signature
---- ------ ---------
<S> <C> <C>
[ ] [ ] ____________
[ ] [ ] ____________
</TABLE>
Unless otherwise defined herein, capitalized terms which are defined
in the Credit Agreement and used herein are so used as so defined.
<PAGE>
3
IN WITNESS WHEREOF, the undersigned have hereunto set our names and
affixed the corporate seal.
VAN DE KAMP'S, INC. VAN DE KAMP'S, INC.
By: By:
----------------------- ----------------------------
Name: Name:
Title: [Vice] President Title: [Assistant] Secretary
Date: July , 1996 (CORPORATE SEAL)
--
<PAGE>
EXHIBIT D
TO SENIOR CONVERTIBLE LOAN
CREDIT AND GUARANTEE AGREEMENT
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Senior Convertible Loan Credit and
Guarantee Agreement, dated as of July __, 1996 (as further amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among VDK
Holdings, Inc., a Delaware corporation ("Holdings"), Van de Kamp's, Inc., a
Delaware corporation (the "Borrower"), the several banks and other financial
institutions from time to time parties thereto (the "Lenders") and The Chase
Manhattan Bank, N.A., as agent for the Lenders (in such capacity, the "Agent").
Unless otherwise defined herein, terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
____________________ (the "Assignor") and____________________ (the
"Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below) (but not prior to the registration of the
information contained herein in the Register pursuant to subsection 10.6(e) of
the Credit Agreement), a ___% interest (the "Assigned Interest") in and to the
Assignor's rights and obligations under the Credit Agreement with respect to
those credit facilities contained in the Credit Agreement as are set forth on
Schedule 1 (individually, an "Assigned Facility"; collectively, the "Assigned
Facilities"), in a principal amount for each Assigned Facility as set forth on
Schedule 1.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) (i) requests that the
Agent, upon request by the Assignee, (A) exchange any attached Notes for a new
Note or Notes payable to the Assignee or, (B) if the Assignor does not hold any
Notes, issue a new Note or Notes payable to the Assignee and (ii) if (A) the
Assignor has retained any interest in the Assigned Facility and (B) the Assignor
holds any Notes, requests that the Agent exchange the attached Notes for a new
Note or Notes payable to the Assignor, in each case in amounts which reflect
<PAGE>
2
the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant thereto and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto as are
delegated to the Agent by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be a party to and bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligations pursuant to subsection
3.10(b) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
____________ ___, 19__ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to the Credit Agreement, effective as of
the Effective Date (which shall not, unless otherwise agreed to by the Agent, be
earlier than five Business Days after the date of such acceptance and recording
by the Agent and which shall not, in any case, be prior to the date of recording
by the Agent) and which shall not, in any case, be prior to the date of
recording by the Agent.
5. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to the Effective Date or accrue
subsequent to the Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly between
themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
<PAGE>
3
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
8. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule 1 hereto.
<PAGE>
Schedule 1
to Assignment and Acceptance
Re: Assignment and Acceptance relating to the Senior Convertible Loan Credit and
Guarantee Agreement, dated as of July __, 1996 (as further amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among VDK
Holdings, Inc., a Delaware corporation ("Holdings"), Van de Kamp's, Inc., a
Delaware corporation (the "Borrower"), the several banks and other financial
institutions from time to time parties thereto (the "Lenders") and The Chase
Manhattan Bank, N.A., as agent for the Lenders (in such capacity, the "Agent").
- -------------------------------------------------------------------------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
<TABLE>
<CAPTION>
Principal
Amount Assigned Commitment Percentage Assigned/1/
--------------- ---------------------------------
<S> <C>
$_______ __.___________%
The terms set forth above are hereby agreed to by:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By: By:
-------------------------- ---------------------------
Name: Name:
Title: Title:
</TABLE>
- --------------------
/1/ Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all
Lenders.
<PAGE>
2
[Accepted: Consented To:
THE CHASE MANHATTAN BANK, N.A., VAN DE KAMP'S, INC.
as Agent
By:
By: ---------------------------
---------------------------- Name:
Name: Title:]
Title:
<PAGE>
EXHIBIT 10.29
CASH COLLATERAL AGREEMENT
CASH COLLATERAL AGREEMENT, dated as of July 9, 1996, between VDK HOLDINGS,
INC., a Delaware corporation ("Holdings"), and The Chase Manhattan Bank, N.A.,
as agent (in such capacity, the "Agent") for the Lenders parties to the Senior
Convertible Loan Credit and Guarantee Agreement, dated as of July 9, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Senior
Convertible Credit Agreement"), among Holdings, Van de Kamp's, Inc., a Delaware
corporation (the "Borrower"), the Agent and such Lenders.
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Senior Convertible Credit Agreement, the Lenders
severally have agreed to make Loans to the Borrower upon the terms and subject
to the conditions set forth in the Senior Convertible Credit Agreement;
WHEREAS, Holdings has guaranteed all of the obligations of the Borrower
under the Senior Convertible Credit Agreement; and
WHEREAS, it is a condition precedent to the obligations of the Lenders to
make their respective Loans to the Borrower that Holdings shall have executed
and delivered to the Agent this Agreement.
NOW, THEREFORE, in consideration of the premises and to induce the Agent
and the Lenders to enter into the Senior Convertible Credit Agreement and to
induce the Lenders to make their respective Loans to the Borrower, Holdings
hereby agrees with the Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
the Senior Convertible Credit Agreement and used herein shall have the meanings
given to them in the Senior Convertible Credit Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Cash Collateral Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
"Cash Collateral": the collective reference to:
(i) all cash, instruments, securities and funds deposited from time
to time in the Cash Collateral Account;
(ii) all investments of funds in the Cash Collateral Account and all
instruments and securities evidencing such investments; and
<PAGE>
2
(iii) all interest, dividends, cash, instruments, securities and
other property received in respect of, or as proceeds of, or in
substitution or exchange for, any of the foregoing.
"Cash Collateral Account": account no. _________________ established at
the office of The Chase Manhattan Bank, N.A., at ____________________,
designated "Chase - VDK Holdings, Inc. Cash Collateral Account."
"Code": the Uniform Commercial Code from time to time in effect in the
State of New York.
"Collateral": the collective reference to the Cash Collateral and the Cash
Collateral Account.
"Obligations": the collective reference to all obligations and liabilities
of Holdings to the Agent and the Lenders (including, without limitation,
interest accruing at the then applicable rate provided in the Senior Convertible
Credit Agreement after the maturity of the Loans and interest accruing at the
then applicable rate provided in the Senior Convertible Credit Agreement after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, the Senior Convertible Credit Agreement, the Notes, this Agreement or any
other document made, delivered or given in connection therewith or herewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Agent or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of the Senior
Convertible Credit Agreement or this Agreement or any other Loan Document).
(c) 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 and paragraph
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, Holdings hereby grants to the
Agent, for the ratable benefit of the Lenders, a security interest in the
Collateral.
<PAGE>
3
3. Maintenance of Cash Collateral Account. (a) The Cash Collateral
Account shall be maintained until the Obligations have been paid and performed
in full.
(b) The Collateral shall be subject to the exclusive dominion and control
of the Agent, which shall hold the Cash Collateral and administer the Cash
Collateral Account subject to the terms and conditions of this Agreement.
Holdings shall have no right of withdrawal from the Cash Collateral Account nor
any other right or power with respect to the Collateral, except as expressly
provided herein.
4. Deposit of Funds. Concurrent with the execution and delivery of this
Agreement, Holdings shall deposit in the Cash Collateral Account cash or Cash
Equivalents having a value equal to the principal of the Loans and the
anticipated differential between the interest rate on the Loans and the earnings
on the Cash Collateral for one year.
5. Representation and Warranty. Holdings represents and warrants to the
Agent that this Agreement creates in favor of the Agent a perfected, first
priority security interest in the Collateral, enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
6. Covenants. Holdings covenants and agrees with the Agent that:
(a) Holdings will not (i) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral, or (ii) create,
incur or permit to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Collateral, or any interest therein, except
for the security interest created by this Agreement.
(b) Holdings will maintain the security interest created by this Agreement
as a first, perfected security interest and defend the right, title and interest
of the Agent and the Lenders in and to the Collateral against the claims and
demands of all Persons whomsoever. At any time and from time to time, upon the
written request of the Agent, and at the sole expense of Holdings, Holdings will
promptly and duly execute and deliver such further instruments and documents and
take such further actions as the Agent reasonably may request for the purposes
of obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, of financing
statements under the Uniform Commercial Code.
7. Investment of Cash Collateral. (a) Subject to the provisions of
paragraph 7(b), the Agent will, at the request of Holdings, invest amounts on
deposit in the Cash Collateral Account in Cash Equivalents, provided that (i)
the Agent shall not be required to make any investment that, in its sole
judgment, would require or cause the Agent to be in, or would result in any,
violation of any Requirement of Law and (ii) the Agent shall have no obligation
to invest amounts on deposit in the Cash Collateral Account if a Default or
Event of Default
<PAGE>
4
shall have occurred and be continuing. All investments shall be made in the
name of the Agent or a nominee of the Agent and in a manner, determined by the
Agent in its sole discretion, that preserves the Agent's perfected, first
priority security interest in such investments.
(b) The Agent shall have no obligation to invest collected funds during
the first night after their collection.
(c) The Agent shall have no responsibility to Holdings for any loss or
liability arising in respect of such investments of the Cash Collateral
(including, without limitation, as a result of the liquidation of any thereof
before maturity), except to the extent that such loss or liability arises from
the Agent's gross negligence or willful misconduct.
(d) Holdings shall make additional deposits of cash in the Cash Collateral
Account in amounts equal to any losses as a result of the liquidation of any
investments before the maturity thereof so that the amount of Cash Collateral is
not less than the amount that would have been on deposit had such investments
not been liquidated.
(e) Holdings will pay or reimburse the Agent for any and all costs,
expenses and liabilities of the Agent incurred in connection with this
Agreement, the maintenance and operation of the Cash Collateral Account and the
investment of the Cash Collateral, including, without limitation, any
investment, brokerage or placement commissions and fees incurred by the Agent in
connection with the investment or reinvestment of Cash Collateral, and any
investment charges or other fees of the Agent in connection with maintenance of
the Cash Collateral Account.
8. Release of Cash Collateral. The Agent shall promptly release Cash
Collateral to Holdings upon the occurrence of the following events and in
amounts determined as follows:
(i) upon any prepayment of the Loans by Holdings, in an amount equal
to such prepayment;
(ii) upon any cash equity investment made by Holdings in the Borrower
solely for the purpose of funding an interest payment by Borrower under the
Senior Convertible Credit Agreement as permitted pursuant to subsection
3.1(a) of the Senior Convertible Credit Agreement, in an amount equal to
such interest payment;
(iii) upon any cash equity investment made by Holdings in the
Borrower solely for the purpose of funding a prepayment of the Loans by the
Borrower as permitted pursuant to subsection 3.1(a) of the Senior
Convertible Credit Agreement, in an amount equal to such prepayment; and
<PAGE>
5
(iv) so long as no event described in Section 8(f) of the Senior
Convertible Credit Agreement has occurred and is continuing with respect to
the Borrower, 91 days after repayment in full by the Borrower of all of its
obligations under the Senior Convertible Credit Agreement, all amounts
remaining in the Cash Collateral Account at such time.
9. Remedies. (a) Upon the occurrence of a Default or an Event of
Default, the Agent may, without notice of any kind, except for notices required
by law which may not be waived, apply the Collateral, after deducting all
reasonable costs and expenses of every kind incurred in respect thereof or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and disbursements of
counsel to the Agent, to the payment in whole or in part of the Obligations, in
such order as the Agent in its sole discretion may elect, and only after such
application and after the payment by the Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Agent account for the surplus, if any, to Holdings. In addition
to the rights, powers and remedies granted to it under this Agreement and in any
other agreement securing, evidencing or relating to the Obligations, the Agent
shall have all the rights, powers and remedies available at law, including,
without limitation, the rights and remedies of a secured party under the Code.
To the extent permitted by law, Holdings waives presentment, demand, protest and
all notices of any kind and all claims, damages and demands it may acquire
against the Agent or any Lender arising out of the exercise by them of any
rights hereunder.
(b) Holdings shall remain liable for any deficiency if the proceeds of any
sale or other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Agent or any Lender to collect such deficiency.
10. Agent's Appointment as Attorney-in-Fact. (a) Holdings hereby
irrevocably constitutes and appoints the Agent and any officer or agent of the
Agent, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of Holdings and
in the name of Holdings or in the Agent's own name, from time to time in the
Agent's discretion, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) Holdings hereby ratifies all that said attorneys shall lawfully do or
cause to be done pursuant to the power of attorney granted in paragraph 10(a).
All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
<PAGE>
6
11. Duty of Agent. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to comply with the specific
duties and responsibilities set forth herein. The powers conferred on the Agent
in this Agreement are solely for the protection of the Agent's and the Lenders'
interests in the Collateral and shall not impose any duty upon the Agent or any
Lender to exercise any such powers. Neither the Agent nor any Lender nor its or
their directors, officers, employees or agents shall be liable for any action
lawfully taken or omitted to be taken by any of them under or in connection with
the Collateral or this Agreement, except for its or their gross negligence or
willful misconduct.
12. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, Holdings authorizes the Agent to file financing statements with respect to
the Collateral without the signature of Holdings in such form and in such filing
offices as the Agent reasonably determines appropriate to perfect the security
interests of the Agent under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
13. Authority of Agent. Holdings acknowledges that the rights and
responsibilities of the Agent under this Agreement with respect to any action
taken by the Agent or the exercise or non-exercise by the Agent of any option,
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Agent and the
Lenders, be governed by the Senior Convertible Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Agent and Holdings, the Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and Holdings shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
14. Notices. All notices, requests and demands to or upon the Agent or
Holdings to be effective shall be made as provided in the Senior Convertible
Credit Agreement.
15. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
16. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by Holdings and
the Agent, provided that any provision of this Agreement may be waived by the
Agent and the Lenders in a letter or agreement executed by the Agent or by
facsimile transmission from the Agent.
(b) Neither the Agent nor any Lender shall by any act (except by a written
instrument pursuant to paragraph 16(a)), delay, indulgence, omission or
otherwise be deemed to have
<PAGE>
7
waived any right or remedy hereunder or to have acquiesced in any Default or
Event of Default or in any breach of any of the terms and conditions hereof. No
failure to exercise, nor any delay in exercising, on the part of the Agent or
any Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Agent or such Lender would otherwise have
on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
17. Section Headings. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
18. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of Holdings and shall inure to the benefit of the Agent
and the Lenders and their successors and assigns.
19. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
20. Demand for Payment. Notwithstanding anything else to the contrary
contained herein, Holdings hereby acknowledges that the Agent and the Lenders
shall have the right to first make a demand upon, and proceed against, Holdings
and the Collateral in seeking repayment of the Loans before making a demand upon
and proceeding against the Borrower.
<PAGE>
8
IN WITNESS WHEREOF, Holdings and the Agent have caused this Cash Collateral
Agreement to be duly executed and delivered as of the date first above written.
VDK HOLDINGS, INC.
By: /s/ Jamie B. Ardrey
--------------------------------
Title: Executive Vice President
THE CHASE MANHATTAN BANK, N.A.,
as Agent
By: /s/ Marian N. Schulman
--------------------------------
Title: Attorney-in-Fact
<PAGE>
Exhibit 12.1
Van de Kamp's, Inc.
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Period
September 19, 1995
through
June 29, 1996
-------------------
<S> <C>
Loss before income taxes $ (672)
Fixed charges: interest expense 12,469
Amortization of deferred financing expense 607
Interest portion of rentals 58
-------------------
Earnings available for fixed charges $12,462
===================
Fixed charges:
Interest expense $12,469
Amortization of deferred financing expense 607
Interest portion of rentals 58
-------------------
$13,134
===================
Ratio of earnings to fixed charges (A)
===================
</TABLE>
For the purpose of determining the ratio of earnings to fixed charges, earnings
consist of loss before income taxes and fixed charges. Fixed charges consist of
interest expense, whether expensed or capitalized, including amortization of
deferred financing expense and the portion (one-third) of rental expense that
management believes is representative of the interest component of rent expense.
The Sellers did not allocate interest expense to the Predecessor's combined
statements of income. Therefore no meaningful ratio of earnings to fixed charges
for the Predecessor periods can be computed.
(A) As a result of the loss before income taxes incurred during the nine and
one-half months ended June 29, 1996, the Company was unable to fully cover
the indicated fixed charges.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER <F1>
<FISCAL-YEAR-END> JUN-29-1996
<PERIOD-START> SEP-19-1995
<PERIOD-END> JUN-29-1996
<CASH> 4,040
<SECURITIES> 0
<RECEIVABLES> 16,946
<ALLOWANCES> 190
<INVENTORY> 30,202
<CURRENT-ASSETS> 55,095
<PP&E> 38,567
<DEPRECIATION> 2,624
<TOTAL-ASSETS> 305,499
<CURRENT-LIABILITIES> 35,076
<BONDS> 100,000
<COMMON> 84,115
0
0
<OTHER-SE> (439)
<TOTAL-LIABILITY-AND-EQUITY> 305,499
<SALES> 143,296
<TOTAL-REVENUES> 143,296
<CGS> 60,367
<TOTAL-COSTS> 120,121
<OTHER-EXPENSES> 11,188
<LOSS-PROVISION> 190
<INTEREST-EXPENSE> 12,469
<INCOME-PRETAX> (672)
<INCOME-TAX> (233)
<INCOME-CONTINUING> (439)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (439)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> OPERATING PERIOD SEPTEMBER 19, 1995 THROUGH JUNE 29, 1996
</FN>
</TABLE>
