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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-Q
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Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 27, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
File Number 0-20539
PRO-FAC COOPERATIVE, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
New York 16-6036816
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
90 Linden Oaks, PO Box 682, Rochester, NY 14603
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, Including Area Code (716) 383-1850
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 twelve months (or 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
- -- Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of May 1, 1999.
Common Stock - 1,995,740
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
PRO-FAC COOPERATIVE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND NET PROCEEDS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- ----------------------
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $361,235 $163,150 $920,517 $ 542,219
Cost of sales (250,847) (118,238) (641,292) (389,078)
-------- -------- -------- ---------
Gross profit 110,388 44,912 279,225 153,141
Selling, administrative, and general expense (88,005) (34,243) (215,006) (108,463)
Gains on sales of assets, net 532 0 64,734 0
Restructuring (5,000) 0 (5,000) 0
Income from Great Lakes Kraut LLC 728 512 2,417 1,472
-------- -------- -------- ---------
Operating income 18,643 11,181 126,370 46,150
Interest expense (20,048) (7,716) (46,997) (23,457)
Amortization of debt issue costs associated with the
Bridge Facility 0 0 (5,500) 0
-------- -------- -------- ---------
(Loss)/income before dividends, allocation of net proceeds,
and extraordinary item (1,405) 3,465 73,873 22,693
Tax provision (1,436) (1,291) (28,336) (6,794)
-------- -------- -------- ---------
(Loss)/income before dividends, allocation of net proceeds,
and extraordinary item (2,841) 2,174 45,537 15,899
Extraordinary item relating to the early extinguishment of debt
(net of income taxes) 0 0 (18,024) 0
-------- -------- -------- ---------
Net (loss)/income $(2,841) $ 2,174 $27,513 $ 15,899
======== ======== ======== =========
Allocation of net proceeds:
Net (loss)/income $(2,841) $ 2,174 $27,513 $ 15,899
Dividends on common and preferred stock (1,602) (1,521) (5,104) (4,774)
-------- -------- -------- ---------
Net (deficit)/proceeds (4,443) 653 22,409 11,125
Allocation from/(to) earned surplus 4,443 (409) (21,734) (4,570)
-------- -------- -------- ---------
Net proceeds available to members $ 0 $ 244 $ 675 $ 6,555
======== ======== ======== =========
Net proceeds available to members:
Estimated cash payment $ 0 $ 61 $ 169 $ 1,639
Qualified retains 0 183 506 4,916
-------- -------- -------- ---------
Net proceeds available to members $ 0 $ 244 $ 675 $ 6,555
======== ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
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PRO-FAC COOPERATIVE, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) March 27, June 27, March 28,
1999 1998 1998
---------- -------- --------
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 9,421 $ 5,049 $ 2,859
Accounts receivable trade, net 109,254 55,046 55,012
Accounts receivable, other 5,992 3,575 1,373
Current deferred tax assets 13,336 4,849 12,312
Inventories -
Finished goods 319,749 111,153 120,656
Raw materials and supplies 48,539 30,433 32,698
---------- -------- --------
Total inventories 368,288 141,586 153,354
---------- -------- --------
Current investment in CoBank 3,198 1,994 2,502
Prepaid manufacturing expense 7,607 8,404 3,674
Prepaid expenses and other current assets 28,427 12,989 12,002
---------- -------- --------
Total current assets 545,523 233,492 243,088
Investment in CoBank 19,699 22,377 22,534
Investment in Great Lakes Kraut LLC 9,001 6,584 8,056
Property, plant and equipment, net 353,418 194,615 207,278
Assets held for sale at net realizable value 920 2,662 2,582
Goodwill and other intangible assets, net 300,676 94,744 94,465
Other assets 26,415 12,234 13,741
---------- -------- --------
Total assets $1,255,652 $566,708 $591,744
========== ======== ========
LIABILITIES AND SHAREHOLDERS' AND MEMBERS' CAPITALIZATION
Current liabilities:
Notes payable $110,870 $ 0 $ 57,800
Current portion of obligations under capital leases 256 256 558
Current portion of long-term debt 8,731 8,071 8,070
Accounts payable 59,495 70,158 39,997
Income taxes payable 1,978 4,046 5,266
Accrued interest 10,935 8,559 3,867
Accrued employee compensation 13,399 8,598 10,041
Other accrued expenses 88,825 19,013 18,076
Dividends payable 31 52 37
Amount due members 14,805 20,636 15,207
---------- -------- --------
Total current liabilities 309,325 139,389 158,919
Obligations under capital leases 503 503 817
Long-term debt 709,574 229,937 227,488
Deferred income tax liabilities 34,644 32,457 39,591
Other non-current liabilities 29,696 23,053 22,869
Minority interest in AgriFrozen 8,000 0 0
---------- -------- --------
Total liabilities 1,091,742 425,339 449,684
---------- -------- --------
Commitments and contingencies
Class B cumulative redeemable preferred stock; liquidation
preference $10 per share, authorized - 500,000 shares; issued
and outstanding 28,634, 27,043, and 33,053 shares, respectively 286 270 331
Common stock, par value $5, authorized - 7,000,000 shares
</TABLE>
<TABLE>
<CAPTION>
March 27, June 27, March 28,
1999 1998 1998
----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares issued 1,913,892 1,825,863 1,786,425
Shares subscribed 212,794 160,629 54,822
--------- --------- ---------
Total subscribed and issued 2,126,686 1,986,492 1,841,247
Less subscription receivable in installments (212,794) (160,629) (54,822)
--------- --------- ---------
Total issued and outstanding 1,913,892 1,825,863 1,786,425 9,569 9,129 8,932
========= ========= =========
Shareholders' and members' capitalization:
Retained earnings allocated to members 26,078 29,765 30,076
Non-qualified allocation to members 2,050 2,660 2,660
Accumulated other comprehensive income:
Minimum pension liability adjustment (608) (608) 0
Non-cumulative preferred stock, par value $25; authorized -
5,000,000 shares; issued and outstanding - 41,471,
45,001, and 49,310, respectively 1,037 1,125 1,233
Class A cumulative preferred stock, liquidation preference
$25 per share; authorized - 10,000,000 shares; issued and
outstanding 3,692,659, 3,503,199, and 3,498,890 shares,
respectively 92,316 87,580 87,472
Earned surplus 33,182 11,448 11,356
---------- -------- --------
Total shareholders' and members' capitalization 154,055 131,970 132,797
---------- -------- --------
Total liabilities and capitalization $1,255,652 $566,708 $591,744
========== ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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PRO-FAC COOPERATIVE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
(DOLLARS IN THOUSANDS) March 27, March 28,
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 27,513 $ 15,899
Amounts payable to members (169) (1,639)
Adjustments to reconcile net income to net cash used in operating activities:
Extraordinary item relating to the early extinguishment of debt 18,024 0
Gains on sales of assets (64,734) 0
Loss on disposal of assets 353 0
Amortization of goodwill and other intangibles 6,739 2,802
Amortization of debt issue costs (including fees associated with the Bridge Facility) 6,969 600
Depreciation 20,211 13,673
Equity in undistributed earnings of Great Lakes Kraut LLC (2,417) (1,472)
Equity in undistributed earnings of CoBank (520) (715)
Change in assets and liabilities:
Accounts receivable (18,865) (4,929)
Inventories 5,830 (40,634)
Accounts payable and other accrued expenses (64,357) (13,457)
Amounts due to members (5,831) (584)
Income taxes payable 8,395 (406)
Other assets and liabilities (4,057) (12,738)
------- --------
Net cash used in operating activities (66,916) (43,600)
------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (13,411) (10,645)
Proceeds from disposals 94,913 511
Proceeds from investment in CoBank 1,994 946
Cash paid for acquisitions (523,409) (810)
-------- -------
Net cash used in investing activities (439,913) (9,998)
-------- -------
Cash flows from financing activities:
Net proceeds from notes payable 110,870 57,800
Proceeds from issuance of long-term debt 711,530 3,010
Proceeds from Great Lakes Kraut LLC 0 1,800
Payments on long-term debt (287,313) (4,146)
Cash paid for debt issuance costs (19,085) 0
Cash portion of non-qualified conversion (153) (75)
Issuances of common stock 456 4
Cash dividends paid (5,104) (4,774)
-------- -------
Net cash provided by financing activities 511,201 53,619
------- -------
Net change in cash and cash equivalents 4,372 21
Cash and cash equivalents at beginning of period 5,049 2,838
-------- -------
Cash and cash equivalents at end of period $ 9,421 $ 2,859
======== =======
</TABLE>
(Table continued on next page)
4
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PRO-FAC COOPERATIVE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(TABLE CONTINUED FROM PREVIOUS PAGE)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
March 27, March 28,
1999 1998
--------- ---------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Acquisition of Erin's Gourmet Popcorn
Inventories $ 33
Property, plant and equipment 26
Goodwill 554
--------
$ 613
========
Acquisition of Agripac, Inc.
Accounts receivable 12,563
Inventories 47,465
Property, plant and equipment 17,685
Prepaid expenses and other current assets 1,119
Goodwill and other intangible assets 9,134
Other accrued expenses (88)
Minority interest (8,000)
--------
$79,878
========
Acquisition of Dean Foods Vegetable Company
Accounts receivable 24,201
Inventories 195,674
Prepaid expenses and other current assets 1,939
Current deferred tax asset 6,300
Property, plant and equipment 158,310
Assets held for sale 49
Goodwill and other intangible assets 213,504
Accounts payable (40,865)
Accrued employee compensation (8,437)
Other accrued expenses (80,384)
Long-term debt (2,752)
Subordinated promissory note (30,000)
Other assets and liabilities, net 3,066
--------
$440,605
========
Acquisition of J.A. Hopay Distributing Co., Inc.
Accounts receivable $ 420
Inventories 153
Property, plant and equipment 51
Goodwill and other intangible assets 3,303
Other accrued expenses (251)
Obligation for covenant not to compete (1,363)
--------
$ 2,313
========
Acquisition of C&O Distributing Company
Property, plant and equipment $ 54
Goodwill 756
------
$ 810
======
Investment in Great Lakes Kraut LLC
Inventories $2,175
Prepaid expenses and other current assets 409
Property, plant and equipment 6,966
Other accrued expenses (62)
------
$9,488
======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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PRO-FAC COOPERATIVE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles and, in the opinion
of management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results of operations for
these periods. The following summarizes the significant accounting policies
applied in the preparation of the accompanying financial statements. These
financial statements should be read in conjunction with the financial statements
and accompanying notes contained in the Pro-Fac Cooperative, Inc. ("Pro-Fac" or
the "Cooperative") Form 10-K/A-1 for the fiscal year ended June 27, 1998.
CONSOLIDATION: The consolidated financial statements include the Cooperative and
its wholly-owned subsidiary, Agrilink Foods, Inc. ("Agrilink" or "the Company")
and PF Acquisition II, Inc. ("AgriFrozen") in which the Cooperative has a
controlling interest. The financial statements are after elimination of
intercompany transactions and balances. Investments in affiliates owned more
than 20 percent but not in excess of 50 percent are recorded under the equity
method of accounting.
RECLASSIFICATION: Certain items for fiscal 1998 have been reclassified to
conform with the current presentation.
ADOPTION OF SFAS NO. 130: Effective June 28, 1998, the Cooperative adopted
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." Comprehensive income is defined as the change in equity
of a business during a period from transactions and other events and
circumstances from non-owner sources. Under SFAS No. 130, the term
"comprehensive income" is used to describe the total of net earnings plus other
comprehensive income which for the Cooperative includes foreign currency
translation adjustments and minimum pension liability adjustments. The adoption
of SFAS No. 130 did not have a material effect on the Cooperative's results of
operations or financial position.
ADOPTION OF SFAS NO. 131: Effective June 28, 1998 the Cooperative adopted SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 supersedes SFAS No. 14, "Financial Reporting for Segments of a
Business Enterprise," replacing the "industry segment" approach with the
"management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments. SFAS
No. 131 also requires disclosures about products and services, geographic areas,
and major customers. This change in approach and the adoption of SFAS No. 131
did not affect the Cooperative's results of operations or financial position.
During the third quarter of fiscal 1999, the Cooperative announced a
restructuring of its nationwide operations to a one-company organization.
Accordingly, the approach used for making operating decisions and assessing
performance is now based upon product line.
DERIVATIVE FINANCIAL INSTRUMENTS: The Cooperative does not engage in interest
rate speculation. Derivative financial instruments are utilized to hedge
interest rate risks and are not held for trading purposes.
The Cooperative enters into interest rate swap agreements to limit exposure to
interest rate movements. Net payments or receipts are accrued into prepaid
expenses and other current assets and/or other accrued expenses and are recorded
as adjustments to interest expense. Interest rate instruments are entered into
for periods no greater than the life of the underlying transaction being hedged.
Management anticipates that all interest rate derivatives will be held to
maturity. Any gains or losses on prematurely terminated interest rate
derivatives will be recognized over the remaining life, if any, of the
underlying transaction as an adjustment to interest expense.
NOTE 2. ACQUISITIONS
AGRIPAC FROZEN VEGETABLE BUSINESS: On February 23, 1999, PF Acquisition II, Inc.
acquired the frozen vegetable business of Agripac, Inc. ("Agripac"), an Oregon
cooperative. PF Acquisition II, Inc. conducts business under the name AgriFrozen
Foods ("AgriFrozen") and was formed in January 1999 under the corporation laws
of New York State and is a subsidiary of Pro-Fac. AgriFrozen was formed to
acquire substantially all of the assets of Agripac related to its frozen
vegetable processing business. On January 4, 1999 Agripac filed a voluntary
petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court for the District of Oregon. On January 22, 1999 Agripac, as
debtor-in-possession, filed a motion with the Bankruptcy Court for authority to
sell substantially all of the assets comprising its frozen food processing
business. The bankruptcy court confirmed the sale of Agripac's frozen food
processing assets to AgriFrozen by an order entered on February 18, 1999.
6
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<PAGE>
The purchase price for the assets was $80.5 million. AgriFrozen paid an
additional $7.8 million in related expenses, including $6.4 million to prior
member-growers of Agripac to obtain crop delivery agreements with AgriFrozen,
and transaction expenses and miscellaneous costs totaling $1.4 million.
AgriFrozen expects to pay an additional $1.2 million in severance costs
associated with the acquisition and the implementation of AgriFrozen's business
plan. In connection with, and as a condition to the consummation of the
acquisition, AgriFrozen entered into a sufficient number of crop delivery
contracts with prior member growers of Agripac acceptable to AgriFrozen.
The acquisition was accounted for under the purchase method of accounting. Under
purchase accounting tangible and identifiable intangible assets acquired are
recorded at their respective fair values. The valuations and other studies which
will provide the basis for such an allocation have not progressed to a stage
where there is sufficient information to make a final allocation in the
accompanying financial statements. Accordingly, the purchase accounting
adjustments made in the accompanying financial statements are preliminary.
In order to consummate the acquisition, AgriFrozen (i) entered into a credit
facility with CoBank (the "CoBank Credit Facility") providing for $30 million of
term loan borrowings and up to $60 million of revolving credit borrowings (the
"CoBank Revolving Credit Facility") and (ii) issued a $12 million Subordinated
Promissory Note to CoBank. Neither Pro-Fac nor Agrilink guaranteed the debts of
AgriFrozen or otherwise pledged any of their respective properties as security
for the CoBank financing. In fact, all of AgriFrozen's indebtedness is expressly
without recourse to Pro-Fac and Agrilink.
Phase I environmental audits were performed on the facilities acquired from
Agripac, including lease properties. A number of environmental conditions
requiring remedial action have been identified, but none of them individually,
or in the aggregate, are expected to exceed the $4.0 million of debt reduction
for environmental remediation to be provided by CoBank.
As part of its business strategy, AgriFrozen has also entered into an
administrative services agreement with Agrilink to provide it with certain
management consulting and administrative services.
The effects of the Agripac acquisition are not material and accordingly, have
been excluded from the pro forma information presented below.
ERIN'S GOURMET POPCORN: On January 5, 1999, the Company announced that it
acquired the assets of Erin's Gourmet Popcorn ("Erin's"), a Seattle-based,
ready-to-eat popcorn manufacturer. The acquisition was accounted for as a
purchase. The purchase price was approximately $0.6 million. Intangibles of
approximately $0.6 million were recorded in conjunction with this transaction
and are being amortized over 3 to 30 years.
The effects of the Erin's acquisition are not material, and accordingly, have
been excluded from the pro forma information presented below.
DEAN FOODS VEGETABLE COMPANY: On September 24, 1998, Agrilink acquired the Dean
Foods Vegetable Company ("DFVC"), the frozen and canned vegetable business of
Dean Foods Company ("Dean Foods"), by acquiring all the outstanding capital
stock of Dean Foods Vegetable Company and Birds Eye de Mexico SA de CV (the
"Acquisition"). In connection with the Acquisition, Agrilink sold its aseptic
business to Dean Foods. Agrilink paid $360 million in cash, net of the sale of
the aseptic business, and issued to Dean Foods a $30 million unsecured
subordinated promissory note due November 22, 2008 (the "Dean Foods Subordinated
Promissory Note"), as consideration for the Acquisition. The Company has the
right, exercisable until July 15, 1999, to require Dean Foods, jointly with the
Company, to treat the Acquisition as an asset sale for tax purposes under
Section 338(h)(10) of the Internal Revenue Code. On April 15, 1999, the Company
paid $13.2 million to Dean Foods and exercised the election.
After the Acquisition, DFVC was merged into the Company. DFVC has been one of
the leading processors of vegetables in the United States, selling its products
under well-known brand names, such as Birds Eye, Freshlike and Veg-All, and
various private labels. The Company believes that the Acquisition strengthens
its competitive position by: (i) enhancing its brand recognition and market
position, (ii) providing opportunities for cost savings and operating
efficiencies and (iii) increasing its product and geographic diversification.
The Acquisition was accounted for under the purchase method of accounting. Under
purchase accounting, tangible and identifiable intangible assets acquired and
liabilities assumed were recorded at their respective fair values. Goodwill
associated with the Acquisition is being amortized over 30 years.
7
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The following unaudited pro forma financial information presents a summary of
consolidated results of operations of the Cooperative and the acquired Dean
Foods Vegetable Company as if the acquisition had occurred at the beginning of
the 1998 fiscal year.
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
March 27, 1999 March 28, 1998
-------------- --------------
<S> <C> <C>
Net sales $1,017.5 $914.3
Income before extraordinary items $ 35.3 $ (3.3)
Net income $ 17.3 $(3.3)
</TABLE>
These unaudited pro forma results have been prepared for comparative purposes
only and include adjustments for additional depreciation expense and
amortization and interest expense on acquisition debt. They do not purport to be
indicative of the results of operations which actually would have resulted had
the combination been in effect at the beginning of the 1998 fiscal year, or of
the future operations of the consolidated entities.
Concurrently with the Acquisition, Agrilink refinanced its existing indebtedness
(the "Refinancing"), including its 12 1/4 percent Senior Subordinated Notes due
2005 (the "Old Notes") and its then existing bank debt. On August 24, 1998,
Agrilink commenced a tender offer (the "Tender Offer") for all the Old Notes and
consent solicitation to certain amendments under the indenture governing the Old
Notes to eliminate substantially all the restrictive covenants and certain
events of default therein. Substantially all of the $160 million aggregate
principal amount of the Old Notes were tendered and purchased by Agrilink for
aggregate consideration of approximately $184 million, including accrued
interest of $2.9 million. Agrilink also terminated its then existing bank
facility (including seasonal borrowings) and repaid the $176.5 million,
excluding interest owed and breakage fees outstanding thereunder. The Company
recognized an extraordinary item of $18.0 million (net of income taxes) in the
first quarter of fiscal 1999 relating to this refinancing.
In order to consummate the Acquisition and the Refinancing and to pay the
related fees and expenses, Agrilink: (i) entered into a new credit facility (the
"New Credit Facility") providing for $455 million of term loan borrowings (the
"Term Loan Facility") and up to $200 million of revolving credit borrowings (the
"Revolving Credit Facility"), (ii) entered into and drew upon a $200 million
bridge loan facility (the "Bridge Facility") and (iii) issued the $30 million
Subordinated Promissory Note to Dean Foods. The Bridge Facility was repaid
during November of 1998 principally with the proceeds from a new Senior
Subordinated Note Offering (see NOTE 4 - "Debt - 11 7/8 Percent Senior
Subordinated Notes"). Debt issue costs of $5.5 million associated with the
Bridge Facility were expensed during the quarter ended December 26, 1998.
J.A. HOPAY DISTRIBUTING CO, INC.: Effective July 21, 1998, the Company acquired
J.A. Hopay Distributing Co., Inc. ("Hopay") of Pittsburgh, Pennsylvania. The
acquisition was accounted for as a purchase. The purchase price (net of
liabilities assumed) was approximately $2.3 million. Intangibles of
approximately $3.3 million were recorded in conjunction with this transaction
and are being amortized over 5 to 30 years.
The effects of the Hopay acquisition are not material and, accordingly, have
been excluded from the above pro forma presentation.
NOTE 3. AGREEMENTS WITH AGRILINK AND AGRIFROZEN
AGRILINK: The contractual relationship between Agrilink and Pro-Fac is defined
in the Marketing and Facilitation Agreement. Under the agreement, the Company
pays Pro-Fac the commercial market value ("CMV") for all crops supplied by
Pro-Fac. CMV is defined as the weighted average price paid by other commercial
processors for similar crops sold under preseason contracts and in the open
market in the same or competing market area. Although CMV is intended to be no
more than the fair market value of the crops purchased by Agrilink, it may be
more or less than the price Agrilink would pay in the open market in the absence
of the agreement.
Under the agreement, the Company is required to have on its board of directors
some persons who are neither members of nor affiliated with Pro-Fac
("Disinterested Directors"). The number of Disinterested Directors must at least
equal the number of directors who are members of Pro-Fac. The volume and type of
crops to be purchased by Agrilink under the agreement are determined pursuant to
its annual profit plan, which requires the approval of a majority of the
Disinterested Directors. In addition, under the agreement, in any year in which
the Company has earnings on products which were processed from crops supplied by
Pro-Fac ("Pro-Fac Products"), the Company pays to Pro-Fac, as additional
patronage income, up to 90 percent of such earnings, but in no case more than 50
percent of all pretax earnings (before dividing with Pro-Fac) of the Company. In
years in which the Company has losses on Pro-Fac Products, the
8
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Company reduces the CMV it would otherwise pay to Pro-Fac by up to 90 percent of
such losses, but in no case by more than 50 percent of all pretax losses (before
dividing with Pro-Fac) of the Company. Additional patronage income is paid to
Pro-Fac for services provided to Agrilink, including the provision of a long
term, stable crop supply, favorable payment terms for crops and the sharing of
risks of losses of certain operations of the business. Earnings and losses are
determined at the end of the fiscal year, but are accrued on an estimated basis
during the year. Under the agreement, Pro-Fac is required to reinvest at least
70 percent of the additional patronage income in Agrilink.
AGRIFROZEN: The contractual relationship between AgriFrozen and Pro-Fac is
defined in the Marketing and Facilitation Agreement between AgriFrozen and
Pro-Fac. Under the agreement, AgriFrozen will purchase raw products from Pro-Fac
and will process and market the finished products. AgriFrozen will pay Pro-Fac
CMV for the crops supplied by Pro-Fac. In addition, in any year in which
AgriFrozen has earnings on any products sold which were processed from crops
supplied by Pro-Fac, AgriFrozen will distribute such earnings to members of
Pro-Fac. However, in the event AgriFrozen experiences any losses on Pro-Fac
products, AgriFrozen will deduct the losses from the total CMV payable. The
agreement permits AgriFrozen to pay 20% in cash and retain 80% of its earnings
on Pro-Fac products as working capital.
Under the Marketing and Facilitation Agreement between AgriFrozen and Pro-Fac,
the board of directors of AgriFrozen is required to consist of: (i) at least
three and as many as five directors who are individuals who currently serve as
directors of Pro-Fac and who are chosen by Pro-Fac's board of directors; (ii)
one director who is nominated by the president of Agrilink from among Agrilink's
management employees; and (iii) any number of disinterested directors who are to
be elected from individuals suggested by the president of Agrilink.
Disinterested directors are persons who are neither employees, shareholders, nor
otherwise affiliated with Pro-Fac or AgriFrozen, but may include a disinterested
director of Agrilink.
NOTE 4. DEBT
SUMMARY OF LONG-TERM DEBT:
<TABLE>
<CAPTION>
March 27, 1999 June 27, March 28,
---------------------------------
Agrilink AgriFrozen Total 1998 1998
-------- ---------- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Bank Debt $446,800 $30,000 $476,800 $ 72,400 $ 69,900
Senior Subordinated Notes 200,015 0 200,015 160,000 160,000
Subordinated Promissory Note 30,407 12,000 42,407 0 0
Unamortized Discount on Subordinated
Promissory Note 0 (7.977) (7,977) 0 O
Other 7,060 0 7,060 5,608 5,658
-------- ------- -------- -------- --------
Total Debt 684,282 34,023 718,305 238,008 235,558
Less Current Portion (8,731) 0 (8,731) (8,071) (8,070)
-------- ------- -------- -------- --------
Total Long-Term Debt $675,551 $34,023 $709,574 $229,937 $227,488
======== ======= ======== ======== ========
</TABLE>
AGRILINK DEBT
NEW CREDIT FACILITY (BANK DEBT): In connection with the Acquisition, the Company
entered into the New Credit Facility with Harris Bank as Administrative Agent
and Bank of Montreal as Syndication Agent, and the lenders thereunder. The New
Credit Facility consists of the $200 million Revolving Credit Facility and the
$455 million Term Loan Facility. The Term Loan Facility is comprised of the Term
A Facility, which has a maturity of five years, the Term B Facility, which has a
maturity of six years, and the Term C Facility, which has a maturity of seven
years. The Revolving Credit Facility has a maturity of five years.
The New Credit Facility bears interest, at the Company's option, at the
Administrative Agent's alternate base rate or the London Interbank Offered Rate
("LIBOR") plus, in each case, applicable margins of: (i) in the case of
alternate base rate loans, (x) 1.00 percent for loans under the Revolving Credit
Facility and the Term A Facility, (y) 2.75 percent for loans under the Term B
Facility and (z) 3.00 percent for loans under the Term C Facility and (ii) in
the case of LIBOR loans, (x) 2.75 percent for loans under the Revolving Credit
Facility and the
9
<PAGE>
<PAGE>
Term A Facility, (y) 3.75 percent for loans under the Term B Facility and (z)
4.00 percent for loans under the Term C Facility. The Administrative Agent's
"alternate base rate" is defined as the greater of: (i) the prime commercial
rate as announced by the Adminis-trative Agent or (ii) the Federal Funds rate
plus 0.50 percent. In addition, the Company pays a commitment fee calculated at
a rate of 0.50 percent per annum on the daily average unused commitment under
the Revolving Credit Facility.
Upon consummation of the Acquisition, the Company drew $455 million under the
Term Loan Facility, consisting of $100 million, $175 million and $180 million of
loans under the Term A Facility, Term B Facility and Term C Facility,
respectively. Additionally, the Company drew $93 million under the Revolving
Credit Facility for seasonal working capital needs and $14.3 million under the
Revolving Credit Facility was issued for letters of credit. During December
1998, the Company's primary lender exercised its right under the New Credit
Facility to transfer $50 million from the Term A Facility to the Term B and Term
C Facilities in increments of $25 million.
The Term Loan Facility is subject to the following amortization schedule.
<TABLE>
<CAPTION>
Fiscal Year Term Loan A Term Loan B Term Loan C Total
- ----------- ----------- ----------- ----------- -----
(Dollars in millions)
<S> <C> <C> <C> <C>
1999 $ 0.0 $ 0.1 $ 0.1 $ 0.2
2000 7.5 0.4 0.4 8.3
2001 10.0 0.4 0.4 10.8
2002 10.0 0.4 0.4 10.8
2003 10.0 0.4 0.4 10.8
2004 10.3 0.4 0.4 11.1
2005 0.0 194.9 0.4 195.3
2006 0.0 0.0 199.5 199.5
----- ------ ------ ------
$47.8 $197.0 $202.0 $446.8
===== ====== ====== ======
</TABLE>
The Term Loan Facility is subject to mandatory prepayment under various
scenarios as defined in the New Credit Facility. During the third quarter of
fiscal 1999, the Company made mandatory prepayments of $8.0 million from
proceeds of the sale of the peanut butter operations. In addition, during the
third quarter principal payments of $0.1 million were made on each of the Term
Loan A and Term Loan B facilities.
The Company's obligations under the New Credit Facility are secured by a
first-priority lien on: (i) substantially all existing or after-acquired assets,
tangible or intangible, (ii) the capital stock of certain of Pro-Fac's
(excluding AgriFrozen) current and future subsidiaries, and (iii) all of the
Company's rights under the agreement to acquire DFVC (principally
indemnification rights) and the Marketing and Facilitation Agreement between
Agrilink and Pro-Fac. The Company's obligations under the New Credit Facility
are guaranteed by Pro-Fac (excluding AgriFrozen) and certain of the Company's
current and future, if any, subsidiaries.
The New Credit Facility contains customary covenants and restrictions on the
Company's ability to engage in certain activities, including, but not limited
to: (i) limitations on the incurrence of indebtedness and liens, (ii)
limitations on sale-leaseback transactions, consolidations, mergers, sale of
assets, transactions with affiliates and investments and (iii) limitations on
dividend and other distributions. The New Credit Facility also contains
financial covenants requiring Pro-Fac to maintain a minimum level of
consolidated EBITDA, a minimum consolidated interest coverage ratio, a minimum
consolidated fixed charge coverage ratio, a maximum consolidated leverage ratio
and a minimum level of consolidated net worth. According to the Credit
Agreement, the assets, liabilities, and results of operations of AgriFrozen
shall not be consolidated with Pro-Fac for purposes of determining compliance
with the covenants. Pro-Fac and the Company are in compliance with all
covenants, restrictions and requirements under the terms of the New Credit
Facility.
INTEREST RATE PROTECTION AGREEMENTS: The Company has entered into a three-year
interest rate swap agreement with the Bank of Montreal in the notional amount of
$150 million. The swap agreement provides for an interest rate of 4.96 percent
over the term of the swap payable by the Company in exchange for payments at the
published three-month LIBOR. In addition, the Company entered into a separate
interest rate swap agreement with the Bank of Montreal in the notional amount of
$100 million for an initial period of three years, which may be extended, at the
Company's option, for an additional two-year period. This swap agreement
provides for an interest rate of 5.32 percent over the term of the swap, payable
by the Company in exchange for payments at the published three-month LIBOR. The
Company entered into these agreements in order to manage its interest rate risk
by exchanging its floating rate interest payments for fixed rate interest
payments.
10
<PAGE>
<PAGE>
SENIOR SUBORDINATED NOTES - 11 7/8 PERCENT (DUE 2008): To extinguish the
Subordinated Bridge Facility, the Company issued Senior Subordinated Notes ("New
Notes") for $200 million aggregate principal amount due November 1, 2008.
Interest on the New Notes accrues at the rate of 11 7/8 percent per annum and is
payable semiannually in arrears on May 1 and November 1.
The New Notes represent general unsecured obligations of the Company,
subordinated in right of payment to certain other debt obligations of the
Company (including the Company's obligations under the New Credit Facility). The
New Notes are guaranteed by Pro-Fac and certain of the Company's current and
future, if any, subsidiaries.
The New Notes contain customary covenants and restrictions on the Company's
ability to engage in certain activities, including, but not limited to: (i)
limitations on the incurrence of indebtedness and liens; (ii) limitations on
consolidations, mergers, sales of assets, transactions with affiliates; and
(iii) limitations on dividends and other distributions. The Company is in
compliance with all covenants, restrictions, and requirements under the New
Notes.
SUBORDINATED BRIDGE FACILITY: To complete the Acquisition, the Company entered
into a Subordinated Bridge Facility (the "Bridge Facility"). During November
1998, the net proceeds from the sale of the New Notes, together with borrowings
under the Revolving Credit Facility, were used to repay all the indebtedness
outstanding ($200 million plus accrued interest) under the Bridge Facility. The
outstanding indebtedness under the Bridge Facility accrued interest at an
approximate rate per annum of 10 1/2 percent. Debt issuance costs associated
with the Bridge Facility of $5.5 million were fully amortized during the second
quarter.
DEAN FOODS SUBORDINATED PROMISSORY NOTE: As partial consideration for the
Acquisition, the Company issued to Dean Foods the Dean Foods Subordinated
Promissory Note for $30 million aggregate principal amount due November 22,
2008. Interest on the note is payable quarterly in arrears commencing December
31, 1998, at a rate per annum of 5 percent until November 22, 2003, and at a
rate of 10 percent thereafter. Interest accruing through November 22, 2003 is
required to be paid in kind through the issuance by the Company of additional
subordinated promissory notes identical to the note. The Company satisfied this
requirement through the issuance of two additional promissory notes each for
approximately $0.4 million on December 31, 1998 and March 31, 1999. Interest
accruing after November 22, 2003 is payable in cash. The notes may be prepaid at
the Company's option without premium or penalty.
The note is expressly subordinate to the New Notes and the New Credit Facility
and contains no financial covenants. The note is guaranteed by Pro-Fac.
SENIOR SUBORDINATED NOTES - 12 1/4 PERCENT (DUE 2005): In conjunction with the
Acquisition, the Company repurchased $159,985,000 principal amount of its Old
Notes, of which $160 million aggregate principal amount was previously
outstanding. The Company paid a total of approximately $184 million to
repurchase the Old Notes, including interest accrued thereon of $2.9 million.
Holders who tendered consented to certain amendments to the indenture relating
to the Old Notes, which eliminated or amended substantially all the restrictive
covenants and certain events of default contained in such indenture. The Company
may repurchase the remaining Old Notes in the future in open market
transactions, privately negotiated purchases or otherwise.
AGRIFROZEN DEBT
COBANK CREDIT FACILITY (BANK DEBT): In connection with the acquisition of
Agripac's frozen vegetable processing business, AgriFrozen entered into the
CoBank Credit Facility with CoBank as administrative agent for the lenders
thereunder. The CoBank Credit Facility consists of a $30 million term loan
facility and a revolving credit facility which mature June 29, 2002. The
revolving credit facility commitment is $60 million for fiscal 1999, $55 million
for fiscal 2000 and in each year thereafter it is $50 million.
The CoBank term loan facility bears interest, at the Company's option, at a
fixed or variable rate. The fixed rate is CoBank's cost of funds plus 4.19
percent. The variable rate is CoBank's "National Variable Rate," which is a
reference rate established by CoBank. In addition, Agrifrozen will pay a
commitment fee calculated at a rate of 0.50 percent per annum on the amount by
which the lesser of (i) the CoBank revolving credit facility commitment or (ii)
$50 million, exceeds the average daily aggregate of the revolving credit
facility advances. There is an interest cap, which includes the fees on the
CoBank Revolving Credit Facility, of $1,925,000 for the initial period ending
June 26, 1999 and $5.5 million for each subsequent fiscal year.
AgriFrozen's obligations under the CoBank Credit Facility are secured by a
first-priority lien on substantially all existing or after acquired assets,
tangible or intangible, of AgriFrozen.
AgriFrozen's obligations under the CoBank Credit Facility are not guaranteed by
Pro-Fac or Agrilink and are expressly nonrecourse as to Pro-Fac and Agrilink.
11
<PAGE>
<PAGE>
The CoBank Credit Facility contains customary covenants and restrictions on
AgriFrozen's ability to engage in certain activities, including, but not limited
to: (i) limitations on the incurrence of indebtedness and liens, (ii)
limitations on consolidations, mergers, sale of assets, acquisitions and
transactions with affiliates and third parties (iii) limitations on dividends
and other distributions and (iv) limitations on capital expenditures and
administrative expenses. The CoBank Credit Facility also contains financial
covenants that are effective beginning in fiscal 2000. The covenants require
AgriFrozen to maintain a minimum level of EBITDA and a maximum leverage ratio.
AgriFrozen is in compliance with the restrictions and requirements under the
terms of the CoBank Credit Facility.
COBANK SUBORDINATED PROMISSORY NOTE: As partial consideration for the
acquisition of Agripac's frozen vegetable processing business, AgriFrozen issued
to CoBank the CoBank Subordinated Promissory Note for $12 million aggregate
principal amount. Interest on the note is payable quarterly in arrears
commencing February 22, 2004 at a rate per annum of 5%, and at a rate of 7%
thereafter. As the stated rates on the note are below market value, AgriFrozen
has imputed the appropriate discount utilizing an effective interest rate of
13%. Interest accruing for the period from February 22, 2004 until February 22,
2009 is payable in kind through the issuance by AgriFrozen of additional
subordinated promissory notes identical to the note. Quarterly principal
payments are due commencing March 31, 2009 each equal to 1/40 of the principal
balance on March 31, 2009 with a final lump-sum payment due February 22, 2014.
The note may be prepaid at AgriFrozen's option without premium or penalty.
The note is expressly subordinate to the CoBank Credit Facility. The note is
secured by the assets of AgriFrozen, but it is not guaranteed by Pro-Fac or
Agrilink and is expressly nonrecourse as to Pro-Fac and Agrilink.
NOTE 5. OTHER MATTERS
RESTRUCTURING: During the third quarter of fiscal 1999, the Company began
implementation of a corporate-wide restructuring program. The overall objectives
of the plan are to reduce expenses, improve productivity, and streamline
operations. The total restructuring charge amounted to $5.0 million and was
primarily comprised of employee termination benefits (which will improve annual
earnings by approximately $8.0 million). Efforts will focus on the consolidation
of operating functions and the elimination of approximately five percent of the
work force. Reductions in personnel will include operational and administrative
positions. The majority of such termination benefits will be liquidated during
the next 12 months.
SALE OF CANNED VEGETABLE BUSINESS: In March, 1999 a letter of intent was signed
by Agrilink with Hoopeston Foods, Inc. ("Hoopeston") for Hoopeston to acquire
the assets of the private label canned vegetable business. Hoopeston would
acquire three processing facilities located in Arlington, Minnesota, Hortonville
and Cambria, Wisconsin, and the machinery and equipment used in the Fond du Lac,
leased Wisconsin facility.
The transaction is subject to certain conditions, including negotiation and
finalization of agreements, further due diligence, and board approval.
SALE OF ADAMS BRAND PEANUT BUTTER OPERATIONS: On January 29, 1999, the Company
sold the Adams brand peanut butter operations to the J.M. Smucker Company. The
Company received proceeds of approximately $13.5 million which were applied to
the New Credit Facility. A gain of approximately $3.5 million was recognized on
this transaction.
ARLINGTON CANNED VEGETABLE FACILITY FIRE: In January 1999, a plant operated by
the Company in Arlington, Minnesota, was damaged by fire. All material costs
associated with the repairs and business interruption are anticipated to be
covered under the Company's insurance policies.
ALTON WAREHOUSE: In January 1999, a warehouse owned by the Company in Alton, New
York, was damaged when excessive snowfall caused the roof to collapse. All
material costs associated with the repairs are anticipated to be covered under
the Company's insurance policies.
DIVIDENDS: Subsequent to quarter end, the Cooperative declared a cash dividend
of $.43 per share on the Class A Cumulative Preferred Stock. These dividends
approximate $1.6 million and were paid on April 30, 1999.
Agrilink declared and paid a dividend of $7.5 million to its parent, Pro-Fac, in
the third quarter of fiscal 1999.
12
<PAGE>
<PAGE>
NOTE 6. SUBSIDIARY GUARANTORS
Kennedy Endeavors, Incorporated and Linden Oaks Corporation ("Subsidiary
Guarantors"), wholly-owned subsidiaries of the Company, have jointly and
severally, fully and unconditionally guaranteed, on a senior subordinated basis,
the obligations of the Company with respect to the Company's 11 7/8 percent
Senior Subordinated Notes due 2008 and the New Credit Facility. The covenants in
the New Notes and the New Credit Facility do not restrict the ability of the
Subsidiary Guarantors to make cash distributions to the Company.
Separate financial statements and other disclosures concerning the Subsidiary
Guarantors are not presented because management has determined that such
financial statements and other disclosures are not material. Accordingly, set
forth below is certain summarized financial information derived from unaudited
historical financial information for the Subsidiary Guarantors, on a combined
basis.
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- ------------------------
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
SUMMARIZED STATEMENT OF OPERATIONS:
Net sales $ 8,237 $2,841 $ 14,565 $8,708
Gross profit 6,067 1,192 9,204 3,771
Income from continuing operations 5,515 369 6,569 1,270
Net income 3,576 225 4,219 775
SUMMARIZED BALANCE SHEET:
Current assets $ 1,985 $2,011 $ 1,985 $2,011
Noncurrent assets 219,508 7,227 219,508 7,227
Current liabilities 2,649 691 2,649 691
</TABLE>
On March 2, 1999, the Company transferred trademarks valued at $212.6 million to
Linden Oaks Corporation. By consolidating the trademarks into a separate
subsidiary, Agrilink will be able to monitor more closely and efficiently the
benefits associated with its trademarks. The royalty fees that are earned by
Linden Oaks Corporation in connection with the trademarks are insignificant with
respect to the Cooperative's Consolidated Statement of Operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this discussion is to outline the significant reasons for changes
in the Unaudited Consolidated Statement of Operations and Net Proceeds in the
third quarter and first nine months of fiscal 1999 versus such periods in fiscal
1998.
Pro-Fac Cooperative, Inc.'s ("Pro-Fac" or the "Cooperative") wholly-owned
subsidiary, Agrilink Foods, Inc. ("Agrilink" or the "Company") has four primary
product lines: Vegetables, Fruits, Snacks and Canned Meals. The Cooperative's
subsidiary, PF Acquisition II, Inc., has vegetables as its one primary product
line. The majority of each of the product lines' net sales are within the United
States. In addition, the Cooperative's operating facilities, except for one
facility in Mexico, are within the United States.
The vegetable product line consists of canned and frozen vegetables, chili
beans, pickles, and various other products. Branded products within the
vegetable product line include Birdseye, Veg-All, McKenzies and Brooks Chili
Beans. The fruit product line consists of canned and frozen fruits including
fruit fillings and toppings. Branded products within the fruit category include
Comstock and Wilderness. The snacks product line consists of potato chips,
popcorn and other corn-based snack items. Branded products within the snacks
category include Tim's Cascade Chips, Snyder of Berlin, La Restaurante, and
Mathews. The canned meal product line includes canned meat products such as
chilies, stews, soups, and various other ready-to-eat prepared meals. Branded
products within the canned meals category include Nalley's.
13
<PAGE>
<PAGE>
The following tables illustrate the results of operations by business unit for
the three- and nine-month periods ended March 27, 1999 and March 28, 1998, and
the Cooperative's total assets by product line as of March 27, 1999 and March
28, 1998.
NET SALES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- -----------------------------
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
-------------- --------------- -------------- -------------
% of % of % of % of
$ Total $ Total $ Total $ Total
------ ----- ------ ----- ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vegetables 282.0 78.1 66.3 40.6 637.7 69.3 205.0 37.8
Fruits 22.0 6.1 22.1 13.6 90.4 9.8 96.6 17.8
Snacks 23.2 6.4 19.6 12.0 67.6 7.3 62.1 11.5
Canned Meals 18.6 5.1 16.2 9.9 51.3 5.6 51.7 9.5
Other 12.5 3.5 13.2 8.1 37.8 4.1 43.5 8.0
------ ----- ------ ----- ------ ----- ----- -----
Continuing segments 358.3 99.2 137.4 84.2 884.8 96.1 458.9 84.6
Businesses sold 2.9 .8 25.8 15.8 35.7 3.9 83.3 15.4
------ ----- ------ ----- ------ ----- ----- -----
Total(1) $361.2 100.0% $163.2 100.0% $920.5 100.0% 542.2 100.0%
====== ===== ====== ===== ====== ===== ===== =====
</TABLE>
(1) Includes the net sales of operations sold. See NOTES 2 and 5 to the "Notes
to Consolidated Financial Statements."
OPERATING INCOME(1)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ------------------------------
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
-------------- --------------- -------------- --------------
% of % of % of % of
$ Total $ Total $ Total $ Total
----- ----- ----- ----- ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vegetables 18.4 79.6 4.2 37.5 43.1 64.7 12.3 26.6
Fruits 1.6 6.9 3.2 28.6 10.8 16.2 17.0 36.8
Snacks 1.1 4.8 1.3 11.6 4.9 7.4 5.8 12.6
Canned Meals 2.4 10.4 1.8 16.1 5.7 8.6 7.5 16.2
Other 0.5 2.2 (.3) (2.7) 1.6 2.4 .8 1.7
----- ----- ----- ----- ----- ------ ----- -----
Continuing segments 24.0 103.9 10.2 91.1 66.1 99.3 43.4 93.9
Corporate overhead (0.6) (2.6) (2.5) (22.3) (3.0) (4.5) (8.2) (17.7)
----- ----- ----- ----- ----- ------ ----- ------
Continuing operations 23.4 101.3 7.7 68.8 63.1 94.8 35.2 76.2
Businesses sold(2) (0.3) (1.3) 3.5 31.2 3.5 5.2 11.0 23.8
----- ----- ----- ----- ----- ------ ----- ------
Total3 $23.1 100.0% $11.2 100.0% $66.6 100.0% $46.2 100.0%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
(1) Excludes the gain on sales of assets and the restructuring charge. See NOTES
2 and 5 to the "Notes to Consolidated Financial Statements."
(2) Represents the operating results of the operations sold. See NOTES 2 and 5
to the "Notes to Consolidated Financial Statements."
(3) Operating income less interest expense and the amortization of debt issue
costs associated with the Bridge Facility of $20.0 million and $7.7 million
for the three months ended March 27, 1999 and March 28, 1998, respectively;
and $52.5 million and $23.5 million for the nine months ended March 27, 1999
and March 28, 1998, respectively; results in income before taxes, dividends,
allocation of net proceeds and extraordinary item. Management does not
allocate interest expense and corporate overhead to product lines when
evaluating product line performance.
14
<PAGE>
<PAGE>
EBITDA12
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ------------------------------
March 27, March 28, March 27, March 28,
1999 1998 1999 1998
-------------- --------------- -------------- --------------
% of % of % of % of
$ Total $ Total $ Total $ Total
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vegetables 24.4 77.4 7.4 44.8 62.7 67.0 20.7 33.1
Fruits 2.2 7.0 4.0 24.3 12.4 13.2 19.9 31.8
Snacks 1.7 5.4 1.9 11.5 6.7 7.2 7.4 11.9
Canned Meals 2.9 9.2 2.2 13.3 7.3 7.8 8.8 14.1
Other 0.9 2.9 (0.4) (2.4) 2.9 3.1 1.7 2.7
----- ----- ----- ----- ----- ------ ----- -----
Continuing segments 32.1 101.9 15.1 91.5 92.0 98.3 58.5 93.6
Corporate overhead (0.6) (1.9) (2.6) (15.7) (2.9) (3.1) (8.2) (13.1)
----- ----- ----- ----- ----- ------ ----- -----
Continuing operations 31.5 100.0 12.5 75.8 89.1 95.2 50.3 80.5
Businesses sold(3) 0.0 0.0 4.0 24.2 4.5 4.8 12.2 19.5
----- ----- ----- ----- ----- ----- ----- -----
Total $31.5 100.0% $16.5 100.0% $93.6 100.0% $62.5 100.0%
===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
(1) Earnings before interest, taxes, depreciation, and amortization ("EBITDA")
is defined as the sum of income before taxes, dividends, allocation of net
proceeds, extraordinary item, interest expense, amortization of debt issue
costs associated with the Bridge Facility, depreciation and amortization of
goodwill and other intangibles.
EBITDA should not be considered as an alternative to net income or cash
flows from operations or any other generally acaccounting principles
measure of performance or as a measure of liquidity.
EBITDA is included herein because the Cooperative believes EBITDA is a
financial indicator of a company's ability to service debt.
EBITDA as calculated by the Cooperative may not be comparable to
calculations as presented by other companies.
(2) Excludes the gains on the sales of assets and the restructuring charge. See
NOTES 2 and 5 to the "Notes to Consolidated Financial Statements."
(3) Represents the operating results of the operations sold. See NOTES 2 and 5
to the "Notes to Consolidated Financial Statements."
TOTAL ASSETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
March 27, 1999 March 28, 1998
---------------------- --------------------
% of % of
$ Total $ Total
-------- ----- ------ ------
<S> <C> <C> <C> <C>
Vegetables 980.9 78.1 274.5 46.4
Fruits 87.6 7.0 89.5 15.1
Snacks 37.4 3.0 38.6 6.5
Canned Meals 46.9 3.7 47.9 8.1
Other 42.7 3.4 46.4 7.8
-------- ----- ------ ------
Continuing segments 1,195.5 95.2 496.9 83.9
Corporate 59.3 4.7 47.1 8.0
Businesses sold(1) 0.0 0.0 43.2 7.3
Assets held for sale 0.9 0.1 4.5 .8
-------- ----- ------ -----
Total $1,255.7 100.0% $591.7 100.0%
======== ===== ====== =====
</TABLE>
(1) Includes the assets of the operations sold. See NOTES 2 and 5 to the
"Notes to Consolidated Statements."
15
<PAGE>
<PAGE>
CHANGES FROM THIRD QUARTER FISCAL 1999 TO THIRD QUARTER FISCAL 1998
The net loss for the third quarter of fiscal 1999 of $2.8 million represents a
$5.0 million decrease as compared to the third quarter of fiscal 1998 net income
of $2.2 million. The net loss for the third quarter of fiscal 1999 was
significantly impacted by the increase in interest expense associated with the
DFVC Acquisition and the $5.0 million restructuring charge recorded.
Accordingly, management believes an evaluation of EBITDA on a continuing
operations basis, as presented on page 15, is more appropriate as it allows the
operations of the business to be reviewed in a consistent manner. EBITDA from
continuing operations increased $19.0 million, or 152.0 percent, to $31.5
million in the third quarter of the current fiscal year from $12.5 million in
the third quarter of the prior fiscal year. This change is primarily
attributable to the increase within the vegetable product line as a result of
the DFVC Acquisition.
NET SALES: Total net sales for the quarter increased $198.0 million, or 121.3
percent, to $361.2 million in the third quarter of fiscal 1999 from $163.2
million in the third quarter of fiscal 1998. Excluding businesses sold, net
sales increased by $220.9 million to $358.3 million in the third quarter of
fiscal 1999 from $137.4 million in the third quarter of fiscal 1998. This change
is primarily attributable to an increase of $200.1 million and $9.0 million
within the vegetable product line as a result of the DFVC and Agripac
acquisitions, respectively, and a net increase of $6.6 million due to net
improvements in unit volume.
Net sales within snacks increased $3.6 million as a result of unit volume.
Canned meals increased $2.4 million primarily attributable to the introduction
of Nalley's Meals-for-Now. Meals-for-Now is a new line that offers a complete
ready-to-eat meal in a can.
GROSS PROFIT: Gross profit of $110.4 million in the quarter ended March 27, 1999
increased approximately $65.5 million, or 145.9 percent, from $44.9 million in
the quarter ended March 28, 1998. Excluding the impact of businesses sold, gross
profit increased $71.8 million or 187.3 percent. This change is primarily
attributable to an increase of $75.5 million within the vegetable product line
as a result of the DFVC Acquisition. This increase was offset by a reduction
within the preexisting vegetable operations due to sales mix and competitive
pricing resulting from higher industry stock levels.
SELLING, ADMINISTRATIVE, AND GENERAL EXPENSES: Selling, administrative, and
general expenses have increased $53.8 million as compared with the third quarter
of the prior fiscal year. The acquisitions of DFVC and Agripac accounted for
$54.4 million and $1.2 million of such increase, respectively. The offsetting
decrease is impacted by reductions in the Company's incentive programs.
GAINS ON SALES OF ASSETS: In conjunction with the Acquisition, the Company sold
its aseptic business to Dean Foods. The final purchase price of $80 million was
determined in the third quarter of fiscal 1999 based upon a final appraisal
performed by an independent appraiser. The gain on the sale was appropriately
adjusted to reflect the final purchase price.
On January 29, 1999, the Company sold the Adams brand peanut butter operation to
the J.M. Smucker Company. The Company received proceeds of approximately $13.5
million which were applied to the New Credit Facility. A gain of approximately
$3.5 million was recognized on this transaction.
RESTRUCTURING: Implementation of a corporate-wide restructuring program resulted
in a charge of $5.0 million in the third quarter of fiscal 1999. See NOTE 5 to
the "Notes to Consolidated Financial Statements."
INCOME FROM GREAT LAKES KRAUT LLC: This amount represents earnings received from
the investment in Great Lakes Kraut LLC, a joint venture formed between Agrilink
and Flanagan Brothers, Inc. on July 1, 1997. The increase of $0.2 million is
attributable to improvements in these operations.
INTEREST EXPENSE: Interest expense increased $12.3 million to $20.0 million in
the third quarter of fiscal 1999 from $7.7 million in the third quarter of
fiscal 1998. This increase is associated with debt to finance the DFVC
Acquisition and higher levels of seasonal borrowings to fund changes in
operating activities.
PROVISION FOR TAXES: The provision for taxes increased $0.1 million to $1.4
million in the third quarter of fiscal 1999 from $1.3 million in the third
quarter of fiscal 1998. The Cooperative's effective tax rate is impacted by the
net proceeds distributed to members and the non-deductibility of certain amounts
of goodwill. The provision was also impacted by the change in fiscal 1999
earnings.
16
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<PAGE>
CHANGES FROM FIRST NINE MONTHS FISCAL 1999 TO FIRST NINE MONTHS FISCAL 1998
Net income for the first nine months of fiscal 1999 of $27.5 million represented
a $11.6 million increase over the first nine months of fiscal 1998 net income of
$15.9 million. Comparability of these results is difficult as net income for
fiscal 1999 has been impacted by gains on the sales of assets, the restructuring
charge, the increase in interest expense associated with the DFVC Acquisition,
the amortization of debt issue costs associated with the Bridge Facility, and
the extraordinary item relating to the early extinguishment of debt.
Accordingly, management believes an evaluation of EBITDA on a continuing basis,
as presented on page 15, is more appropriate as it allows the operations of the
business to be reviewed in a more consistent manner. EBITDA from continuing
operations increased $38.8 million, or 77.1 percent, to $89.1 million in the
first nine months of the current fiscal year from $50.3 million in the first
nine months of the prior fiscal year. This change is primarily attributable to
the increase within the vegetable product line as a result of the DFVC
Acquisition offset by a decline in preexisting vegetable operations attributable
to a reduction due to sales mix and competitive pricing. In addition, the fruit
product line decreased as a result of changes in pricing and product mix.
NET SALES: Total net sales for the first nine months increased $378.3 million,
or 69.8 percent, to $920.5 million in the first nine months of fiscal 1999 from
$542.2 million in the first nine months of fiscal 1998. Excluding businesses
sold, net sales increased by $425.9 million, or 92.8 percent, to $884.8 million
in the first nine months of fiscal 1999 from $458.9 million in the first nine
months of fiscal 1998.
The increase in net sales is primarily attributable to the $398.3 million and
$9.0 million increase within the vegetable product line as a result of the DFVC
and Agripac acquisitions, respectively. In addition, preexisting vegetable
operations accounted for the remaining increase of $25.4 million. This increase
was attributable to net improvements in volume.
Net sales for the fruit product line decreased $6.2 million as a result of
changes in pricing and product mix, which included a reduction in branded volume
and an increase in private label volume.
Net sales for snacks increased by $5.5 million in the first nine months of
fiscal 1999 as a result of unit volume.
GROSS PROFIT: Gross profit of $279.2 million in the nine months ended March 27,
1999 increased approximately $126.1 million, or 82.4 percent, from $153.1
million in the first nine months ended March 28, 1998. Excluding the impact of
businesses sold, gross profit increased $137.2 million or 101.9 percent.
This change is primarily attributable to an increase of $143.2 million within
the vegetable product line as a result of the DFVC Acquisition. This increase
was offset by a decline of $6.9 million in the fruit product line due to changes
in pricing and product mix. See "Net Sales" section above. Increases in net
sales within snacks resulted in margin improvements of $1.3 million.
SELLING, ADMINISTRATIVE, AND GENERAL EXPENSES: Selling, administrative, and
general expenses have increased $106.5 million as compared with the first nine
months of the prior fiscal year. The acquisitions of DFVC and Agripac accounted
for $106.6 million and $1.2 million of such increase, respectively. The
offsetting decrease is impacted by reductions in the Company's incentive
programs.
GAINS ON SALES OF ASSETS: In conjunction with the Acquisition, the Company sold
its aseptic business to Dean Foods. The final purchase price of $80 million was
determined in the third quarter of fiscal 1999 based upon a final appraisal
performed by an independent appraiser. The gain on the sale was appropriately
adjusted to reflect the final purchase price.
On January 29, 1999, the Company sold the Adams brand peanut butter operation to
the J.M. Smucker Company. The Company received proceeds of approximately $13.5
million which were applied to the New Credit Facility. A gain of approximately
$3.5 million was recognized on this transaction.
RESTRUCTURING: Implementation of a corporate-wide restructuring program resulted
in a charge of $5.0 million in the third quarter of fiscal 1999. See NOTE 5 to
the "Notes to Consolidated Financial Statements."
INCOME FROM GREAT LAKES KRAUT LLC: This amount represents earnings received from
the investment in Great Lakes Kraut LLC, a joint venture formed between Agrilink
and Flanagan Brothers, Inc. on July 1, 1997. The increase of $1.0 million is
attributable to improvements in these operations.
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<PAGE>
INTEREST EXPENSE: Interest expense increased $23.5 million to $47.0 million in
the first nine months of fiscal 1999 from $23.5 million in the first nine months
of fiscal 1998. This increase is associated with debt to finance the DFVC
Acquisition and higher levels of seasonal borrowings to fund changes in
operating activities.
AMORTIZATION OF DEBT ISSUE COSTS ASSOCIATED WITH THE BRIDGE FACILITY: In order
to consummate the DFVC Acquisition, the Company entered into a $200 million
bridge loan facility (the "Bridge Facility"). The Bridge Facility was repaid
with the proceeds from the new senior subordinated note offering (see NOTE 4 -
"Debt - 11 7/8 Percent Senior Subordinated Notes due 2008"). Debt issuance costs
associated with the Bridge Facility were $5.5 million and were fully amortized
during the second quarter of fiscal 1999.
PROVISION FOR TAXES: The provision for taxes increased $21.5 million to $28.3
million in the first nine months of fiscal 1999 from $6.8 million in the first
nine months of fiscal 1998. Of this net increase, $25.2 million is attributable
to the provision associated with the gain on the sale of assets. The amount was
offset by a $2.1 million benefit associated with the amortization of debt issue
costs associated with the Bridge Facility. The remaining variance results from
the change in earnings before tax. The Cooperative's effective tax rate is
negatively impacted by the net proceeds distributed to members and the
non-deductibility of certain amounts of goodwill.
EXTRAORDINARY ITEM RELATING TO THE EARLY EXTINGUISHMENT OF Debt: Concurrently
with the Acquisition, the Company refinanced its existing indebtedness,
including its 12 1/4 percent Senior Subordinated Notes due 2005 and its then
existing bank debt. Premiums and breakage fees associated with early redemptions
and other fees incurred amounted to $18.0 million (net of applicable income
taxes of $10.4 million).
LIQUIDITY AND CAPITAL RESOURCES
The following discussion highlights the major variances in the "Unaudited
Consolidated Statement of Cash Flows" for the first nine months of fiscal 1999
compared to the first nine months of fiscal 1998.
Net cash used in operating activities increased $23.3 million over the prior
fiscal year. This increase primarily results from variances within accounts
receivable and accounts payable due to the timing of liquidation of outstanding
balances and an increase in estimated tax payments. The net change in operating
activities has also been impacted by the inclusion of operating activities from
the DFVC Acquisition.
Net cash used in investing activities increased significantly due to the DFVC
Acquisition offset by the subsequent sale of assets, including the disposal of
an idle facility held for sale. The purchase of property, plant and equipment
increased $2.8 million to $13.4 million for the nine months ended March 27, 1999
from $10.6 million for the nine months ended March 28, 1998 and was for general
operating purposes.
Net cash provided by financing activities increased significantly due to the
DFVC Acquisition and the activities completed concurrent with the Acquisition to
refinance existing indebtedness. The increase is also a result of financing the
Agripac acquisition. See further discussion at "Liquidity and Capital Resources"
below and at NOTE 4 - "Debt" to the "Notes to Consolidated Financial Statements"
included herein.
In addition, seasonal borrowings increased during the first nine months of
fiscal 1999 due to financing the Agripac acquisition and funding additional
working capital requirements associated with the DFVC Acquisition.
AGRILINK DEBT
NEW CREDIT FACILITY (BANK DEBT): In connection with the Acquisition, the Company
entered into the New Credit Facility with Harris Bank as Administrative Agent
and Bank of Montreal as Syndication Agent, and the lenders thereunder. The New
Credit Facility consists of the $200 million Revolving Credit Facility and the
$455 million Term Loan Facility. The Term Loan Facility is comprised of the Term
A Facility, which has a maturity of five years, the Term B Facility, which has a
maturity of six years, and the Term C Facility, which has a maturity of seven
years. The Revolving Credit Facility has a maturity of five years.
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<PAGE>
The New Credit Facility bears interest, at the Company's option, at the
Administrative Agent's alternate base rate or LIBOR plus, in each case,
applicable margins of: (i) in the case of alternate base rate loans, (x) 1.00
percent for loans under the Revolving Credit Facility and the Term A Facility,
(y) 2.75 percent for loans under the Term B Facility and (z) 3.00 percent for
loans under the Term C Facility and (ii) in the case of LIBOR loans, (x) 2.75
percent for loans under the Revolving Credit Facility and the Term A Facility,
(y) 3.75 percent for loans under the Term B Facility and (z) 4.00 percent for
loans under the Term C Facility. The Administrative Agent's "alternate base
rate" is defined as the greater of: (i) the prime commercial rate as announced
by the Administrative Agent or (ii) the Federal Funds rate plus 0.50 percent. In
addition, the Company pays a commitment fee calculated at a rate of 0.50 percent
per annum on the daily average unused commitment under the Revolving Credit
Facility.
Upon consummation of the Acquisition, the Company drew $455 million under the
Term Loan Facility, consisting of $100 million, $175 million and $180 million of
loans under the Term A Facility, Term B Facility and Term C Facility,
respectively. Additionally, the Company drew $93 million under the Revolving
Credit Facility for seasonal working capital needs and $14.3 million under the
Revolving Credit Facility was issued for letters of credit. During December
1998, the Company's primary lender exercised its right under the New Credit
Facility to transfer $50.0 million from the Term A Facility to the Term B and
Term C Facilities in increments of $25.0 million
The Term Loan Facility is subject to the following amortization schedule.
<TABLE>
<CAPTION>
Fiscal Year Term Loan A Term Loan B Term Loan C Total
- ----------- ----------- ----------- ----------- -----
(Dollars in millions)
<S> <C> <C> <C> <C>
1999 $0.0 $ 0.1 $ 0.1 $ 0.2
2000 7.5 0.4 0.4 8.3
2001 10.0 0.4 0.4 10.8
2002 10.0 0.4 0.4 10.8
2003 10.0 0.4 0.4 10.8
2004 10.3 0.4 0.4 11.1
2005 0.0 194.9 0.4 195.3
2006 0.0 0.0 199.5 199.5
----- ------ ------ ------
$47.8 $197.0 $202.0 $446.8
===== ====== ====== ======
</TABLE>
The Term Loan Facility is subject to mandatory prepayment under various
scenarios as defined in the New Credit Facility. During the third quarter of
fiscal 1999, the Company made mandatory prepayments of $8.0 million from
proceeds of the sale of the peanut butter operations. In addition, during the
third quarter principal payments of $0.1 million were made on each of the Term
Loan A and Term Loan B facilities.
The Company's obligations under the New Credit Facility are secured by a
first-priority lien on: (i) substantially all existing or after-acquired assets,
tangible or intangible, (ii) the capital stock of certain of Pro-Fac's
(excluding AgriFrozen) current and future subsidiaries, and (iii) all of the
Company's rights under the agreement to acquire DFVC (principally
indemnification rights) and the Marketing and Facilitation Agreement between
Agrilink and Pro-Fac. The Company's obligations under the New Credit Facility
are guaranteed by Pro-Fac (excluding AgriFrozen) and certain of the Company's
current and future, if any, subsidiaries.
The New Credit Facility contains customary covenants and restrictions on the
Company's ability to engage in certain activities, including, but not limited
to: (i) limitations on the incurrence of indebtedness and liens, (ii)
limitations on sale-leaseback transactions, consolidations, mergers, sale of
assets, transactions with affiliates and investments and (iii) limitations on
dividend and other distributions. The New Credit Facility also contains
financial covenants requiring Pro-Fac to maintain a minimum level of
consolidated EBITDA, a minimum consolidated interest coverage ratio, a minimum
consolidated fixed charge coverage ratio, a maximum consolidated leverage ratio
and a minimum level of consolidated net worth. According to the Credit
Agreement, the assets, liabilities, and results of operations of AgriFrozen
shall not be consolidated with Pro-Fac for purposes of determining compliance
with the covenants. Pro-Fac and the Company are in compliance with all
covenants, restrictions and requirements under the terms of the New Credit
Facility.
SENIOR SUBORDINATED NOTES - 11 7/8 PERCENT (DUE 2008): To extinguish the Bridge
Facility, the Company issued Senior Subordinated Notes ("New Notes") for $200
million aggregate principal amount due November 1, 2008. Interest on the New
Notes accrues at the rate of 11 7/8 percent per annum and is payable
semiannually in arrears on May 1 and November 1.
The New Notes represent general unsecured obligations of the Company,
subordinated in right of payment to certain other debt obligations of the
Company (including the Company's obligations under the New Credit Facility). The
New Notes are guaranteed by Pro-Fac and certain of the Company's current and
future, if any, subsidiaries.
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<PAGE>
The New Notes contain customary covenants and restrictions on the Company's
ability to engage in certain activities, including, but not limited to: (i)
limitations on the incurrence of indebtedness and liens; (ii) limitations on
consolidations, mergers, sales of assets, transactions with affiliates; and
(iii) limitations on dividends and other distributions. The Company is in
compliance with all covenants, restrictions, and requirements under the New
Notes.
SUBORDINATED BRIDGE FACILITY: To complete the Acquisition, the Company entered
into the Bridge Facility. During November 1998, the net proceeds from the sale
of the New Notes, together with borrowings under the Revolving Credit Facility,
were used to repay all the indebtedness outstanding ($200 million plus accrued
interest) under the Bridge Facility. The outstanding indebtedness under the
Bridge Facility accrued interest at an approximate rate per annum of 10 1/2%.
Debt issuance costs associated with the Bridge Facility of $5.5 million were
fully amortized during the quarter ended December 26, 1998.
DEAN FOODS SUBORDINATED PROMISSORY NOTE: As partial consideration for the
Acquisition, the Company issued to Dean Foods the Dean Foods Subordinated
Promissory Note for $30 million aggregate principal amount due November 22,
2008. Interest on the note is payable quarterly in arrears commencing December
31, 1998, at a rate per annum of 5 percent until November 22, 2003, and at a
rate of 10 percent thereafter. Interest accruing through November 22, 2003 is
required to be paid in kind through the issuance by the Company of additional
subordinated promissory notes identical to the note. The Company satisfied this
requirement through the issuance of two additional promissory notes each for
approximately $0.4 million on December 31, 1998 and March 31, 1999. Interest
accruing after November 22, 2003 is payable in cash. The notes may be prepaid at
the Company's option without premium or penalty.
The note is expressly subordinate to the New Notes and the New Credit Facility
and contains no financial covenants. The note is guaranteed by Pro-Fac.
SENIOR SUBORDINATED NOTES - 12 1/4 PERCENT (DUE 2005): In conjunction with the
Acquisition, the Company repurchased $159,985,000 principal amount of its Old
Notes, of which $160 million aggregate principal amount was previously
outstanding. The Company paid a total of approximately $184 million to
repurchase the Old Notes, including interest accrued thereon of $2.9 million.
Holders who tendered consented to certain amendments to the indenture relating
to the Old Notes, which eliminated or amended substantially all the restrictive
covenants and certain events of default contained in such indenture. The Company
may repurchase the remaining Old Notes in the future in open market
transactions, privately negotiated purchases or otherwise.
INTEREST RATE RISK MANAGEMENT: The Company is subject to market risk from
exposure to changes in interest rates based on its financing activities. The
Company has entered into certain financial instrument transactions to maintain
the desired level of exposure to the risk of interest rate fluctuations and to
minimize interest expense. More specifically, the Company has entered into two
interest rate swap agreements with the Bank of Montreal. The agreements provide
for fixed interest rate payments by the Company in exchange for payments
received at the three-month LIBOR rate. See further discussion at NOTE 4 "Debt -
Interest Rate Protection Agreements" to the "Notes to Consolidated Financial
Statements" included herein.
The following is a summary of the Company's interest rate swap agreements:
<TABLE>
<CAPTION>
March 27, 1999
--------------
<S> <C>
Interest Rate Swap:
Variable to Fixed - notional amount $250,000,000
Average pay rate 4.96-5.32%
Average receive rate 5.07%
Maturities through 2001
</TABLE>
The Company has the option of extending one of the interest rate swap
agreements, with a notional amount of $100,000,000 and expiration date of
October 5, 2001, for an additional two years through October 5, 2003.
While there is potential that interest rates will fall, and hence minimize the
benefits of the Company's hedge position, it is the Company's position that on a
long-term basis, the possibility of interest rates increasing exceeds the
likelihood of interest rates decreasing. The Company will, however, monitor
market conditions to adjust its position as it considers necessary.
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<PAGE>
AGRIFROZEN DEBT
COBANK CREDIT FACILITY (BANK DEBT): In connection with the acquisition of
Agripac's frozen vegetable processing business, AgriFrozen entered into the
CoBank Credit Facility with CoBank as administrative agent for the lenders
thereunder. The CoBank Credit Facility consists of a $30 million term loan
facility and a revolving credit facility which mature June 29, 2002. The
revolving credit facility commitment is $60 million for fiscal 1999, $55 million
for fiscal 2000 and in each year thereafter it is $50 million.
The CoBank term loan facility bears interest, at the Company's option, at a
fixed or variable rate. The fixed rate is CoBank's cost of funds plus 4.19
percent. The variable rate is CoBank's "National Variable Rate," which is a
reference rate established by CoBank. In addition, Agrifrozen will pay a
commitment fee calculated at a rate of 0.50 percent per annum on the amount by
which the lesser of (i) the CoBank revolving credit facility commitment or (ii)
$50 million, exceeds the average daily aggregate of the revolving credit
facility advances. There is an interest cap, which includes the fees on the
CoBank Revolving Credit Facility, of $1,925,000 for the initial period ending
June 26, 1999 and $5.5 million for each subsequent fiscal year.
AgriFrozen's obligations under the CoBank Credit Facility are secured by a
first-priority lien on substantially all existing or after acquired assets,
tangible or intangible, of AgriFrozen.
AgriFrozen's obligations under the CoBank Credit Facility are not guaranteed by
Pro-Fac or Agrilink and are expressly nonrecourse as to Pro-Fac and Agrilink.
The CoBank Credit Facility contains customary covenants and restrictions on
AgriFrozen's ability to engage in certain activities, including, but not limited
to: (i) limitations on the incurrence of indebtedness and liens, (ii)
limitations on consolidations, mergers, sale of assets, acquisitions and
transactions with affiliates and third parties (iii) limitations on dividends
and other distributions and (iv) limitations on capital expenditures and
administrative expenses. The CoBank Credit Facility also contains financial
covenants that are effective beginning in fiscal 2000. The covenants require
AgriFrozen to maintain a minimum level of EBITDA and a maximum leverage ratio.
AgriFrozen is in compliance with the restrictions and requirements under the
terms of the CoBank Credit Facility.
COBANK SUBORDINATED PROMISSORY NOTE: As partial consideration for the
acquisition of Agripac's frozen vegetable processing business, AgriFrozen issued
to CoBank the CoBank Subordinated Promissory Note for $12 million aggregate
principal amount. Interest on the note is payable quarterly in arrears
commencing February 22, 2004 at a rate per annum of 5%, and at a rate of 7%
thereafter. As the stated rates on the note are below market value, AgriFrozen
has imputed the appropriate discount utilizing an effective interest rate of
13%. Interest accruing for the period from February 22, 2004 until February 22,
2009 is payable in kind through the issuance by AgriFrozen of additional
subordinated promissory notes identical to the note. Quarterly principal
payments are due commencing March 31, 2009 each equal to 1/40 of the principal
balance on March 31, 2009 with a final lump-sum payment due February 22, 2014.
The note may be prepaid at AgriFrozen's option without premium or penalty.
The note is expressly subordinate to the CoBank Credit Facility. The note is
secured by the assets of AgriFrozen, but it is not guaranteed by Pro-Fac or
Agrilink and is expressly nonrecourse as to Pro-Fac and Agrilink.
OTHER MATTERS
RESTRUCTURING: During the third quarter of fiscal 1999, the Company began
implementation of a corporate-wide restructuring program. The overall objectives
of the plan are to reduce expenses, improve productivity, and streamline
operations. The total restructuring charge amounted to $5.0 million and was
primarily comprised of employee termination benefits (which will improve annual
earnings by approximately $8.0 million). Efforts will focus on the consolidation
of operating functions and the elimination of approximately five percent of the
work force. Reductions in personnel will include operational and administrative
positions. The majority of such termination benefits will be liquidated during
the next 12 months.
SNYDER OF BERLIN FACILITY STRIKE: In April 1999, approximately 160 workers
at the Company's Snyder of Berlin facility in Berlin, Pennsylvania went out on
strike. The Snyder facility employs a total of approximately 370 people,
approximately 160 are members of the union. The Company is currently producing
the snack products otherwise produced at that the Snyder facility at outside
locations. Sales of the Company's Snyder products represent less than 4% of the
Company's total business. The Company is negotiating with the union. To date the
strike has not had a material impact on the Company's financial condition or
operations.
SHORT- AND LONG-TERM TRENDS: The vegetable and fruit portions of the business
can be positively or negatively affected by weather conditions nationally and
the resulting impact on crop yields. Favorable weather conditions can produce
high crop yields and an oversupply situation. This results in depressed selling
prices and reduced profitability on the inventory produced from that year's
crops. Excessive rain or drought conditions can produce low crop yields and a
shortage situation. This typically results in higher selling prices and
increased profitability. While the national supply situation controls the
pricing, the supply can differ regionally because of variations in weather.
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The crop and yield resulting from the 1998 growing season has resulted in an
increased supply throughout the industry. Accordingly, pricing began to be
negatively impacted during the third quarter. Management believes this trend
will continue during the fourth quarter.
YEAR 2000 READINESS DISCLOSURE: A full inventory and analysis of business
applications and related software was performed and the Company determined that
it will be required to modify or replace certain portions of its software so
that its computer systems will be Year 2000 compliant. These modifications and
replacements are being and will continue to be made in conjunction with the
Company's overall information systems initiatives. No major delay in these
initiatives is anticipated.
In addition, the Company is contacting non-information technology vendors to
ensure that any of their products that are currently in use can adequately deal
with the change in century. Areas being addressed include full reviews of
manufacturing equipment, telephone and voice mail systems, security systems, and
other office/site support systems. Based upon preliminary information, the costs
of addressing potential problems are not expected to have a material adverse
impact on the Company's financial position, results of operations, or cash flows
in future periods. Accordingly, the cost of the project is being funded through
operating cash flows.
The Company has initiated formal communications with significant suppliers and
customers to determine the extent to which the Company is vulnerable to those
third parties' failure to remediate their own Year 2000 issues. However, there
can be no guarantee that the systems of other companies on which the Company's
systems rely will be timely converted, or that a failure to convert by another
company, or a conversion that is incompatible with the Company's systems, would
not have material adverse effect on the Company. Accordingly, the Company plans
to devote the necessary resources to resolve all significant Year 2000 issues in
a timely manner.
The Company expects to complete the Year 2000 project during the fall of 1999.
Based on the progress made to date (which includes compliant systems in place
and in production), the Company does not believe any material exposure to
significant business interruption exists. In the event some of the remaining
elements of the Company's Year 2000 compliance project are delayed, procedures
have been addressed to ensure alternative workaround initiatives are completed.
Prior to AgriFrozen's acquisition of Agripac's frozen vegetable processing
business, the Cooperative conducted an analysis of Agripac's associated computer
hardware and software systems. Based on this analysis, AgriFrozen is currently
in the process of replacing its computer hardware with year 2000 compliant
hardware and has entered into a sublease with Agrilink pursuant to which it will
license Agrilink's software systems. AgriFrozen expects that its computer
hardware replacement and software conversion will be completed on or before
November 1999. The software conversion is not expected to have a material
adverse impact on AgriFrozen's operations. Also before the acquisition, Agripac
conducted an assessment of its vendors, suppliers and customers to determine the
extent of their year 2000 readiness and Agripac's potential vulnerability.
However, there can be no guarantee that the systems of other companies on which
AgriFrozen's systems rely will be timely converted, or that a failure to convert
by another company, or a conversion that is incompatible with AgriFrozen's
systems, would not have a material adverse effect on AgriFrozen.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
From time to time, the Cooperative makes oral and written statements that may
constitute "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995 (the "Act") or by the Securities and Exchange
Commission ("SEC") in its rules, regulations, and releases. The Cooperative
desires to take advantage of the "safe harbor" provisions in the Act for
forward-looking statements made from time to time, including, but not limited
to, the forward-looking information contained in the Management's Discussion and
Analysis (pages 13 to 21) and other statements made in this Form 10-Q and in
other filings with the SEC.
The Cooperative cautions readers that any such forward-looking statements made
by or on behalf of the Cooperative are based on management's current
expectations and beliefs but are not guarantees of future performance. Actual
results could differ materially from those expressed or implied in the
forward-looking statements. Among the factors that could impact the
Cooperative's ability to achieve its goals are:
the impact of strong competition in the food industry;
the impact of weather on the volume and quality of raw product;
22
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<PAGE>
the inherent risks in the marketplace associated with new product
introductions, including uncertainties about trade and consumer acceptance;
the continuation of the Cooperative's success in integrating operations
(including whether the anticipated cost savings in connection with its
acquisitions will be realized and the timing of any such realization), and
the availability of acquisition and alliance opportunities;
the Cooperative's ability to achieve gains in productivity and improvements
in capacity utilization; and
the Cooperative's ability to service debt.
PART II - OTHER INFORMATION
ITEM 2 - CHANGES IN SECURITIES
During January 1999, the Cooperative issued shares of its Class A Cumulative
Preferred Stock in exchange for shares of its Noncumulative Preferred Stock, on
a share-for-share basis. Such exchange is exempt from registration under Section
3(a)(9) of the Securities Act of 1933. The date and amount of the exchange is
set forth below:
<TABLE>
<CAPTION>
Date Number of Shares Value of Shares
--------------- ---------------- ---------------
<S> <C> <C>
January 8, 1999 3,530 $88,250
</TABLE>
On February 15, 1999 the members of Pro-Fac approved the adoption of certain
amendments to Pro-Fac's restated certificate of incorporation and its bylaws.
Specifically, the restated certificate of incorporation was amended to create
two new classes of securities - Class B Common Stock and Special Membership
Interests. In the event of a dissolution or other termination of Pro-Fac or its
business, and after the payment of all debts and retains, all liquidation
amounts or preferences to holders of Pro-Fac's preferred stock and all
liquidation amounts to the holders of Pro-Fac's Class A Common Stock, the
holders of Pro-Fac's Special Membership Interests and the holders of Pro-Fac's
Class B Common Stock will be entitled to the payment of their respective
liquidation amounts. All remaining assets of Pro-Fac, if any, after payment of
the foregoing, is now distributable ratably among holders of Class A and Class B
common stock, to whom interests in funds retained by Pro-Fac have been allocated
during the preceding five fiscal years and the fiscal year of dissolution in
such proportion as the total of the amounts allocated to each Class A and Class
B member during such period bear to the total of the amounts allocated to each
holder of Class A and Class B common stock but retained by Pro-Fac during that
period.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 15, 1999, a special meeting of Pro-Fac's members was held to
consider proposed amendments to Pro-Fac's restated certificate of incorporation
and bylaws. A total of 305 members of record as of January 22, 1999 were present
or represented at the special meeting. A total of 294 votes were cast "for" and
11 were cast "against" the amendments to the restated certificate of
incorporation, and 295 votes were cast "for" and ten were cast "against" the
amendments to the bylaws.
23
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<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
3.1 Restated Certificate of Incorporation of Pro-Fac
Cooperative, Inc.
3.2 Pro-Fac Cooperative, Inc. Bylaws.
4.1(1) Indenture, dated as of November 18, 1998, between
Agrilink Foods, Inc., the Guarantors named therein and
IBJ Schroder Bank & Trust Company, Inc. as Trustee.
4.2(1) Form of 11 7/8 Senior Subordinated Notes Due 2008
(included as Exhibit B to Exhibit 4.1).
4.3(1) Registration Rights Agreement, dated as of November 18,
1998, among Agrilink Foods, Inc., Pro-Fac Cooperative,
Inc., Warburg Dillon Read LLC, and Nesbitt Burns
Securities Inc.
10.1(2) Credit Agreement Among Agrilink Foods, Inc., Pro-Fac
Cooperative, Inc., and Harris Trust and Savings Bank,
and Bank of Montreal, Chicago Branch, and the Lenders
From Time to Time Parties Hereto, dated September 23,
1998.
10.2(2) $200,000,000 Senior Subordinated Credit Agreement Among
Agrilink Foods, Inc., Pro-Fac Cooperative, Inc., and
Warburg Dillon Read LLC and UBS AG, Stamford Branch,
and the Lenders From Time to Time Party Hereto, dated
September 23, 1998.
10.3(2) Subordinated Promissory Note Among Agrilink Foods, Inc.
and Dean Foods Company, dated as of September 23, 1998.
10.4 Service Agreement among Agrilink Foods, Inc. and PF
Acquisition II, Inc., dated as of February 22, 1999.
10.5 Marketing and Facilitation Agreement, dated as of
February 22, 1999, between Pro-Fac and PF Acquisition
II, Inc.
10.6 Credit Agreement among PF Acquisition II, Inc. and
CoBank as administrative agent for the lenders
thereunder, dated February 22, 1999.
10.7 Subordinated Note Agreement among PF Acquisition II,
Inc. and CoBank, dated February 22, 1999.
10.8 Asset Purchase Agreement between PF Acquisition II,
Inc., Pro-Fac Cooperative, Inc. and Agripac, Inc.,
Debtor and Debtor-In-Possession dated February 12, 1999.
10.9 Amendment to Marketing and Facilitation Agreement
between Agrilink Foods, Inc. and Pro-Fac dated
September 23, 1998.
27 Financial Data Schedule
</TABLE>
(1) Incorporated by reference from Registrant's Form S-4 filed January 5, 1999.
(2) Incorporated by reference from Registrant's Fiscal 1999 First Quarter
Report on Form 10-Q filed November 6, 1998.
(b) The following reports on Form 8-K were filed during the period to
which this report relates:
<TABLE>
<CAPTION>
Date Item
---- ---------------------
<S> <C>
March 4, 1999 Item 5 - Other Events
</TABLE>
24
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<PAGE>
SIGNATURES
Pursuant to the requirements 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.
PRO-FAC COOPERATIVE, INC.
Date: May 10, 1999 BY: /s/ Stephen R. Wright
-------------------- -----------------------------------
STEPHEN R. WRIGHT
GENERAL MANAGER
Date: May 10, 1999 BY: /s/ Earl L. Powers
-------------------- -----------------------------------
EARL L. POWERS
VICE PRESIDENT FINANCE AND
ASSISTANT TREASURER
(PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER)
25
<PAGE>
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
PRO-FAC COOPERATIVE, INC.
Pursuant to Section 12 of the Cooperative Corporations Law
HARRIS BEACH & WILCOX, LLP
The Granite Building
130 East Main Street
Rochester, New York 14604
<PAGE>
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
PRO-FAC COOPERATIVE, INC.
Pursuant to Section 12 of the
Cooperative Corporations Law
The undersigned, the Assistant Secretary of Pro-Fac Cooperative, Inc. (the
"Corporation"), hereby certifies as follows:
1. The name of the Corporation is Pro-Fac Cooperative, Inc.
2. The Certificate of Incorporation of Pro-Fac Cooperative, Inc. was filed in
the office of the Secretary of State on October 17, 1960.
3. The Certificate of Incorporation is hereby amended:
(a) to increase the number of shares of capital stock which the
Corporation shall be authorized to issue as set forth in paragraph "6";
(b) to create special membership interests which the Corporation shall
be authorized to issue as permitted under the New York Cooperative Cooperations
Law and as set forth in paragraph "6";
(c) to insert the designations, relative rights, and limitations of
the classes of shares of capital stock of the Corporation as set forth in
paragraph "6"; and
(d) to renumber certain paragraphs as a result of the amendments
included herein.
4. The text of the Certificate of Incorporation, as so amended, is hereby
restated to read as herein set forth in full:
1. The name of the Corporation is Pro-Fac Cooperative, Inc.
2. The purposes for which the corporation is to be formed are:
(a) To engage in activities connected with the marketing, processing,
manufacture and sale of agricultural products, including, without
limitation, the purchase, financing, production, manufacture, warehousing,
cultivating, harvesting, preservation, drying, processing, cleansing,
canning, blending, packing, grading, storing, handling, utilization,
shipping, marketing, merchandising, and selling of agricultural and food
products of its members and the by-products thereof.
(b) To engage as a cooperative purchasing association in activities
relating to the purchase of supplies for producers of agricultural
products.
(c) To perform services connected with the acquisition for its members of
supplies and articles of common use, including livestock, equipment,
machinery, food, products and family and other household and personal
supplies to be used or consumed by members, their families and guests.
(d) To do all and everything incidental and necessary for the
accomplishment of any of the purposes or the attainment of any of the
objects or the furtherance of any of the powers hereinabove set forth or
permitted under Sections 13 and 14 of Article 2 as limited by Article 6 of
the Cooperative Corporation Law of the State of New York, individually or
as agent either alone or in association with other corporations, firms or
individuals.
3. Its duration shall be perpetual.
<PAGE>
<PAGE>
4. Its principal business office is to be located in the County of Monroe,
State of New York.
5. The number of directors of the Corporation shall not be less than 11 nor
more than 18, the exact number to be fixed from time to time in the
Corporation's Bylaws.
6. The Corporation shall have the authority to issue: (a) an aggregate of
62,000,000 shares of capital stock, consisting of 5,000,000 shares of Class A
Common Stock, par value $5.00 per share ("Class A Common Stock"), 2,000,000
shares of Class B Common Stock, par value $5.00 per share ("Class B Common
Stock" and, collectively, with Class A Common Stock, "Common Stock"), 5,000,000
shares Non-Cumulative Preferred Stock, par value of $25.00 per share (the
"Non-Cumulative Preferred Stock"), 10,000,000 shares of Class A Preferred Stock,
par value of $1.00 per share (the "Class A Preferred Stock"), 10,000,000 shares
of Class B Preferred Stock, par value of $1.00 per share (the "Class B Preferred
Stock"), 10,000,000 shares of Class C Preferred Stock, par value of $1.00 per
share (the "Class C Preferred Stock"), 10,000,000 shares of Class D Preferred
Stock, par value of $1.00 per share (the "Class D Preferred Stock") and
10,000,000 shares of Class E Preferred Stock, par value of $1.00 per share (the
"Class E Preferred Stock" and, collectively, with the Non-Cumulative Preferred
Stock, the Class A Preferred Stock, the Class B Preferred Stock, the Class C
Preferred Stock and the Class D Preferred Stock, "Preferred Stock"), and (b) up
to $15,000,000 of special membership interests, which shall have a stated value
equal to such interests' face amount ("Special Membership Interest(s)").
The following is a statement of the designations, powers, preferences and
rights in respect of the classes of the capital stock and Special Membership
Interests of the Corporation, and the qualifications, limitations or
restrictions thereof, and of the authority with respect thereto expressly vested
in the Board of Directors of the Corporation (the "Board of Directors"):
DESIGNATION, PREFERENCES AND RIGHTS OF NON-CUMULATIVE PREFERRED STOCK.
(a) The shares of the Non-Cumulative Preferred Stock may be issued in
one or more annual series, which the Board of Directors shall have the
authority to establish, the shares of each such series to be
designated by the year of issuance so as to distinguish them from
shares of all other series.
The holders of the Non-Cumulative Preferred Shares shall be entitled
to receive as and when declared by the Board of Directors out of funds
legally available therefor dividends at such rate as may, from time to
time, be determined by the Board of Directors, but not less than 6
percent per annum of the par value of such shares. Such dividends, if
any, shall be non-cumulative and shall be payable at such times as
shall be determined by the Board of Directors. After full
non-cumulative dividends at the rate determined by the Board of
Directors for the then current year shall have been declared and paid
or set apart for payment to the holders of Preferred Stock, dividends
may be declared and paid or set apart for payment to the holders of
Common Stock and Special Membership Interests as provided herein.
Subject to the foregoing provisions, the Non-Cumulative Preferred
Stock shall not be entitled to participate in any other or additional
surplus or net profits of the Corporation. The Corporation shall be
entitled from time to time to retire the whole or any portion or
series of its Non-Cumulative Preferred Stock upon payment of the par
value of such stock plus all accrued dividends unpaid at the date of
such retirement. Such retirement shall be effected by payment out of
funds legally available for such purpose, but no such stock shall be
redeemed for cash under circumstances which would produce any
impairment of the capital or capital stock of the Corporation. Such
retirement shall be on such other terms and conditions as may be
determined by the Board of Directors, provided that no shares of the
Non-Cumulative Preferred Stock shall be retired except upon 90 days'
written notice of such retirement given to the holders thereof.
2
<PAGE>
<PAGE>
Upon dissolution or other termination of the Corporation of its
business, or the distribution of its assets, prior to any payment to
the holders of the Common Stock and Special Membership Interests as
provided herein, the holders of the Non-Cumulative Preferred Stock
shall first receive the full par value of such stock, together with
the amount of such dividends as have been declared but are unpaid as
of such distribution of payment.
DESIGNATION, PREFERENCES AND RIGHTS OF CLASS A PREFERRED STOCK, THE CLASS B
PREFERRED STOCK, THE CLASS C PREFERRED STOCK, THE CLASS D PREFERRED STOCK AND
THE CLASS E PREFERRED STOCK; GENERAL.
(a) Each of the Class A Preferred Stock, the Class B Preferred Stock,
the Class C Preferred Stock, the Class D Preferred Stock and the Class
E Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more series of Class A Preferred Stock,
Class B Preferred Stock, the Class C Preferred Stock, Class D
Preferred Stock or Class E Preferred Stock, as the case may be, and
the Board of Directors is expressly authorized, prior to issuance, in
the resolution or resolutions providing for the issue of shares of
each particular series of any such class of such Preferred Stock, to
fix the following:
(i) The distinctive serial designation of such series which
shall distinguish it from other series;
(ii) The number of shares included in such series, which number
may be increased or decreased from time to time unless otherwise
provided by the Board of Directors in creating the series;
(iii) The annual dividend rate (or methods of determining such
rate) for shares of such series, the date or dates upon which, and the
form or method or payments in which, such dividends shall be payable
and, subject to paragraph (c) below, the relative priority of the
right to such dividends;
(iv) Whether dividends on the shares of such series shall be
cumulative or non-cumulative, and, in the case of shares of any series
having cumulative dividend rights, the date or dates or method of
determining the date or dates from which dividends on the shares of
such series shall be cumulative;
(v) The amount or amounts which shall be paid out of the
assets of the Corporation to the holders of the shares of such series
upon voluntary or involuntary liquidation, dissolution or winding up
of the Corporation and, subject to paragraph (c) below, the relative
priority of the right to such distribution;
(vi) The price or prices at which, the period or periods within
which and the terms and conditions upon which the shares of such
series may be redeemed, in whole or in part, at the option of the
Corporation;
(vii) The obligation, if any, of the Corporation to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise
and the price or prices at which, the period or periods within which
and the terms and conditions upon which the shares of such series
shall be redeemed, in whole or in part, pursuant to such obligations;
(viii) The period or periods within which and the terms and
conditions, if any, including the price or prices or the rate or rates
of conversion and the terms and conditions of any adjustments thereof,
upon which the shares of such series shall be convertible at the
option of the holder into shares of any class of stock or into shares
of any other series of such class of preferred stock, except into
share of a class having rights or preferences as dividends
3
<PAGE>
<PAGE>
or distribution of assets upon liquidation which are prior or superior
in rank to those of shares being converted;
(ix) The voting rights, if any, of the shares of such series in
addition to those required by law; and
(x) Any other relative designations, rights, preferences,
privileges, voting powers or limitations of the shares of the series
not inconsistent herewith or with applicable law.
(b) All shares of Class A Preferred Stock, Class B Preferred Stock, Class C
Preferred Stock, Class D Preferred Stock and Class E Preferred Stock, (i)
shall rank senior in priority to the Common Stock and the Special
Membership Interests and, as determined by the Board of Directors, on a
parity with or junior in priority to the Non-Cumulative Preferred Stock in
respect of the right to receive dividends and the right to receive payments
out of the assets of the Corporation upon voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, (ii) shall, with
respect to other shares of its class, be of equal rank with respect to all
other shares of such class, regardless of series, and (iii) shall be
identical in all respects except as provided in paragraph (a) above. The
shares of any one series of the Class A Preferred Stock, the Class B
Preferred Stock, the Class C Preferred Stock, the Class D Preferred Stock
or the Class E Preferred Stock shall be identical with each other in all
respects except as to the dates from and after which dividends thereon
shall be cumulative. In case the stated dividends or the amounts payable on
liquidation are not paid in full, the shares of any series of the Class A
Preferred Stock, the Class B Preferred Stock, the Class C Preferred Stock,
the Class D Preferred Stock or the Class E Preferred Stock shall share
ratably with the shares of all other series of Class A Preferred Stock,
Class B Preferred Stock, Class C Preferred Stock, Class D Preferred Stock
or Class E Preferred Stock, as the case may be, in the payment of
dividends, including accumulations, if any, in accordance with the sums
which would be payable on said shares if all dividends were declared and
paid in full, and in any distribution of assets other than by way of
dividends in accordance with the sums which would be payable on such
distribution if all sums payable were discharged in full. Shares of Class A
Preferred Stock, Class B Preferred Stock, Class C Preferred Stock, Class D
Preferred Stock and Class E Preferred Stock redeemed, purchased or
otherwise acquired by the Corporation (including shares surrendered for
conversion) shall, as determined by the Board of Directors and subject to
applicable law, be canceled and thereupon restored to the status of
authorized by unissued Class A Preferred Stock, Class B Preferred Stock,
Class C Preferred Stock, Class D Preferred Stock or Class E Preferred
Stock, as the case may be, undesignated as to series, or retained as
treasury shares.
(c) Except as otherwise provided by the Board of Directors in accordance
with paragraph (a) above in respect of any series of the Class A Preferred
Stock, the Class B Preferred Stock, the Class C Preferred Stock, the Class
D Preferred Stock or the Class E Preferred Stock or as otherwise expressly
required by law, the Class A Preferred Stock, the Class B Preferred Stock,
the Class C Preferred Stock, the Class D Preferred Stock and the Class E
Preferred Stock shall have no voting rights.
(d) Upon dissolution or other termination of the Corporation or its
business, or the distribution of its assets, the holders of each share of
Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock,
Class D Preferred Stock and Class E Preferred Stock shall be entitled to be
paid out of the assets of the Corporation available for distribution to its
shareholders, before any payment or declaration and setting apart for
payment of any amount shall be made in respect of the Common Stock and the
Special Membership Interests.
**************
DESIGNATION, PREFERENCES AND RIGHTS OF CLASS A CUMULATIVE PREFERRED STOCK.
4
<PAGE>
<PAGE>
1. CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when used in the
plural and vice versa), unless the context otherwise requires:
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day other than a Saturday, Sunday, national
holiday or other day on which commercial banks in New York City are authorized
or required to close under the laws of the State of New York.
"Capital Stock" means any and all shares, interests, participants,
rights or other equivalents (however designated) of corporate stock.
"Common Stock" means the Common Stock, par value $5.00 per share, of
the Corporation and any other class of common stock hereafter authorized by the
Corporation from time to time.
"Corporation" means Pro-Fac Cooperative, Inc.
"Cumulative Preferred Stock" means the Class A Cumulative Preferred
Stock, par value $1.00 per share, of the Corporation.
"Dividend Payment Date" means the April 30, July 31, October 31 and
January 31 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"Dividend Record Date" means, with respect to the dividend payable on
each Dividend Payment Date, the immediately preceding April 15, July 15, October
15 or January 15 or such other record date as may be designated by the Board of
Directors with respect to the dividend payable on such Dividend Payment Date;
provided, however, that such record date may not be more than fifty (50) days
prior to such Dividend Payment Date.
"Holder" means a registered holder of shares of Cumulative Preferred
Stock.
"Initial Dividend Period" means, with respect to each share of
Cumulative Preferred Stock, the dividend period commencing on the Issue Date of
such share of Cumulative Preferred Stock and ending on and including the
immediately succeeding Dividend Payment Date.
"Issue Date" means, with respect to each share of Cumulative Preferred
Stock, the date upon which such share was originally issued by the Corporation.
"Junior Dividend Securities" has the meaning specified in Section 3(a)
hereof and includes the Common Stock and Special Membership Interests.
"Junior Liquidation Securities" has the meaning specified in Section
3(a) hereof and includes the Common Stock and Special Membership Interests.
"Liquidation Preference" means, with respect to each share of
Cumulative Preferred Stock, the Original Liquidation Preference, plus an amount
in cash equal to all accrued and unpaid dividends (including an amount equal to
a prorated dividend from the last Dividend Payment Date to the date such
5
<PAGE>
<PAGE>
Liquidation Preference is being determined). The Liquidation Preference of a
share of Cumulative Preferred Stock will increase on a daily basis as dividends
accrue on such share and will decrease only to the extent such dividends are
actually paid.
"Non-Cumulative Amount" has the meaning specified in Section 4(a)
hereof.
"Non-Cumulative Preferred Stock" means the Non-Cumulative Preferred
Stock, par value $25.00 per share, of the Corporation.
"Original Liquidation Preference" means $25.00 per share of Cumulative
Preferred Stock.
"Other Class A Series" means any series of Class A Preferred Stock,
par value $1.00 per share, of the Corporation other than the Cumulative
Preferred Stock.
"Parity Dividend Securities" has the meaning specified in Section 3(b)
hereof and includes the Non-Cumulative Preferred Stock and any Other Class A
Series.
"Parity Liquidation Securities" has the meaning specified in Section
3(b) hereof and includes the Non-Cumulative Preferred Stock and any Other Class
A Series.
"Quarterly Dividend Period" means the quarterly period commencing on
and including the day after each Dividend Payment Date and ending on and
including the immediately subsequent Dividend Payment Date.
"Redemption" has the meaning specified in Section 6(a) hereof.
"Redemption Date" has the meaning specified in Section 6(b) hereof.
"Redemption Notice" has the meaning specified in Section 6(b) hereof.
"Redemption Price" means a price per share equal to the Liquidation
Preference as of the applicable Redemption Date.
"Replaced Securities" has the meaning specified in Section 7 hereof.
"Replacing Securities" has the meaning specified in Section 7 hereof.
"Senior Dividend Series" has the meaning specified in Section 3(c)
hereof.
"Senior Liquidation Securities" has the meaning specified in Section
3(c) hereof.
"Special Membership Interests" means the evidence of membership in the
Corporation having a stated value equal to its face amount.
2. DESIGNATION
The series of preferred stock authorized hereunder shall be designated
as the "Class A Cumulative Preferred Stock." The number of shares constituting
such series shall initially be 10,000,000, which number may from time to time be
changed (but not above 10,000,000 or below the number then outstanding) by the
Board of Directors. The par value of the Cumulative Preferred Stock shall be
$1.00 per share. All shares of Cumulative Preferred Stock shall be identical
with each other in all respects except as to the dates from and after which
dividends thereon shall be cumulative.
6
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<PAGE>
3. RANK
The Cumulative Preferred Stock shall rank, with respect to priority of
dividend rights or rights on liquidation, dissolution and winding-up of the
affairs of the Corporation or both:
(a) senior to all classes or series of Common Stock and Special
Membership Interests of the Corporation and to any other class or
series of Capital Stock (except the Non-Cumulative Preferred
Stock and any Other Class A Series) that does not expressly
provide that it ranks senior to or on a parity with the
Cumulative Preferred Stock as to dividends or upon liquidation,
dissolution and winding-up, as the case may be (with respect to
such junior dividend rights or junior rights upon liquidation,
dissolution and winding up, collectively referred to, as the
context may require, as "Junior Dividend Securities" or "Junior
Liquidation Securities");
(b) on a parity with the Non-Cumulative Preferred Stock and any Other
Class A Series and each class or series of Capital Stock that
expressly provides that it ranks on a parity with the Cumulative
Preferred Stock as to dividends or upon liquidation, dissolution
and winding-up, as the case may be (with respect to such parity
dividend rights or parity rights upon liquidation, dissolution
and winding-up, collectively referred to, as the context may
require, as "Parity Dividend Securities" or "Parity Liquidation
Securities"); and
(c) junior to each class or series of Capital Stock (except any Other
Class A Series) which expressly provides that it ranks senior to
the Cumulative Preferred Stock as to dividends or upon
liquidation, dissolution and winding-up, as the case may be (with
respect to such senior dividend rights or senior rights upon
liquidation, dissolution and winding-up collectively referred to,
as the context may require, as "Senior Dividends Securities" or
"Senior Liquidation Securities").
4. DIVIDENDS, ETC.
(a) Beginning on the applicable Issue Date, the Holders of
outstanding shares of Cumulative Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors, but only out of funds legally available for the
payment of dividends, dividends payable in cash at the rate per
share of $0.43 per quarter and no more; provided that the
dividend payable on October 31, 1995 on any shares of Cumulative
Preferred Stock to holders of record thereof on October 15, 1995
shall equal $0.43 per share. All dividends shall be fully
cumulative and shall accrue (whether or not earned or declared,
whether or not permitted under any agreement of the Corporation
and whether or not there are funds legally available therefor),
without interest, from the first day of the Quarterly Dividend
Period with respect to which such dividend may be payable as
herein provided, except that with respect to the first dividend
payable with respect to any share of Cumulative Preferred Stock,
such dividend shall accrue from the applicable Issue Date;
provided that with respect to the dividend payable on October 31,
1995 with respect to any share of Cumulative Preferred Stock,
such dividend shall equal $0.43. All dividends shall be
cumulative and shall be payable in arrears on each Dividend
Payment Date commencing on the Dividend Payment Date immediately
succeeding the applicable Issue Date, in preference to and with
priority over dividends on Junior Dividend Securities. No full
dividend and no distribution shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on
the Cumulative Preferred Stock for any period unless dividends
aggregating at least the Non-Cumulative Amount have been or
contemporaneously are declared on the Non-Cumulative Preferred
Stock (including any dividends previously declared for the same
stated dividend payment date pursuant to this sentence), payable
not later than the stated dividend payment
7
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<PAGE>
date for the Non-Cumulative Preferred Stock on or next following
the date of payment of such dividend or distribution on the
Cumulative Preferred Stock, and a sum has been or
contemporaneously is set apart sufficient for such payment. The
"Non-Cumulative Amount" means the pro rata portion of the
anticipated annual dividends (in any case, not less than six
percent per annum) on the Non-Cumulative Preferred Stock
calculated for the period from, but not including, its
immediately preceding stated dividend payment date (whether or
not any dividend was paid on such date) through, and including,
the date of payment of such dividend or distribution on the
Cumulative Preferred Stock.
(b) All dividends and distributions paid with respect to shares of
the Cumulative Preferred Stock pursuant to Section 4(a) hereof
shall be paid pro rata to the Holders entitled thereto. No full
dividend and no distribution shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on
Parity Dividend Securities for any period unless full cumulative
dividends have been or contemporaneously are declared and a sum
set apart sufficient for such payment on the Cumulative Preferred
Stock for all Dividend Periods terminating on or prior to the
date of payment of such full dividends on the Parity Dividend
Securities. If any dividends are not paid in full upon the shares
of the Cumulative Preferred Stock and the Parity Dividend
Securities, (i) all dividends declared for any period upon shares
of the Cumulative Preferred Stock and the Parity Dividend
Securities shall be declared pro rata so that the amount of
dividends declared on the Cumulative Preferred Stock and on each
class or series of the Parity Dividend Securities shall in all
cases bear to each other the same ratio that accrued dividends
(or, in the case of the Non-Cumulative Preferred Stock, that
portion of the Non-Cumulative Amount which has not previously
been declared and set apart) on the Cumulative Preferred Stock
and on each class or series of Parity Dividend Securities bear to
each other, and (ii) a sum shall be set apart sufficient to pay
any such declared dividends which are not being paid immediately.
Any dividend not paid on the Cumulative Preferred Stock pursuant
to this Section 4 shall be fully cumulative and shall accrue,
without interest, as set forth in Section 4(a) hereof and shall
be in arrears until paid.
(c) The Corporation shall not declare, pay or set apart for payment
any dividend on any of the Junior Dividend Securities or make any
distribution in respect thereof either directly or indirectly and
whether in cash, obligations or shares of the Corporation or
other property (other than dividends or distributions in Junior
Dividend Securities which are no higher in priority with respect
to the Cumulative Preferred Stock, as to rights on liquidation,
dissolution and winding-up, than the Junior Dividend Securities
upon which such dividend or distribution is issued), unless on or
prior to the date of declaration of such dividend or distribution
on the Junior Dividend Securities full cumulative dividends have
been or contemporaneously are declared in compliance with Section
4(a) hereof, and a sum set apart sufficient for such payment on
the Cumulative Preferred Stock for all Dividend Periods
terminating on or prior to the date of payment of such dividend
or distribution on the Junior Dividend Securities.
(d) Except as otherwise provided in Section 4(a) hereof with respect
to the dividend payable on October 31, 1995, the amount of
dividends payable on the Cumulative Preferred Stock for any
period less than a full Quarterly Dividend Period (including the
Initial Dividend Period) and the Non-Cumulative Amount shall be
computed on the basis of twelve 30-day months and a 360-day year.
Dividends shall accrue on a daily basis during each Dividend
Period as provided above, and the Liquidation Preference of each
outstanding share of Cumulative Preferred Stock shall be
correspondingly increased on a daily basis. Each such dividend
shall be payable to Holders of record
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as their names shall appear on the stock books of the Corporation
on the Dividend Record Date for such dividends, except that
dividends in arrears for any past Dividend Payment Date may be
declared and paid at any time without reference to such regular
Dividend Payment Date to Holders of record on such date not more
than fifty (50) days prior to the date of payment as shall be
determined by the Board of Directors.
(e) Dividends shall cease to accrue in respect of any particular
share of Cumulative Preferred Stock on the Redemption Date with
respect thereto unless the Corporation defaults in payment of the
Redemption Price with respect to such share of Cumulative
Preferred Stock.
5. PAYMENT ON LIQUIDATION
Upon any liquidation, dissolution or winding-up of the affairs of the
Corporation, whether voluntary or involuntary, the Holders of Cumulative
Preferred Stock will be entitled to receive out of the assets of the Corporation
available for distribution to the holders of its Capital Stock an amount in cash
per share equal to the Liquidation Preference determined as of the date of such
liquidation, dissolution or winding-up, before any payment or other distribution
is made on any Junior Liquidation Securities. Holders of Cumulative Preferred
Stock shall not be entitled to any other distribution in the event of
liquidation, dissolution or winding-up of the affairs of the Corporation. If
upon any liquidation, dissolution or winding-up of the affairs of the
Corporation, the assets of the Corporation are not sufficient to pay in full the
liquidation payments payable to the holders of outstanding shares of the
Cumulative Preferred Stock and all Parity Liquidation Securities, then the
holders of all such shares shall share equally and ratably in any distribution
of assets in proportion to the full liquidation payments determined as of the
date of such liquidation, dissolution or winding-up, to which each of them is
entitled. For the purposes of this Section 5, neither a consolidation or merger
of the Corporation with or into one or more corporations nor a sale, lease,
exchange or transfer of all or substantially all of the Corporation's assets
shall be deemed to be a liquidation, dissolution or winding-up of the
Corporation.
6. REDEMPTION
(a) Redemption. The Corporation may redeem at the option of the
Corporation in its sole discretion, at any time or from time to
time, in whole or in part, shares of Cumulative Preferred Stock
(a "Redemption") at the Redemption Price. With respect to any
Redemption of fewer than all the outstanding shares of Cumulative
Preferred Stock, the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be
redeemed shall be selected pro rata or by lot, except that the
Corporation may first redeem all shares held by any Holder of a
number of shares not to exceed 100 as may be specified by the
Corporation. The Board of Directors shall have full power and
authority, subject to the provisions herein contained, to
prescribe the terms and conditions upon which shares of the
Cumulative Preferred Stock shall be redeemed from time to time.
(b) Notice of Redemption. Notice of any Redemption of shares of
Cumulative Preferred Stock shall be given by publication at least
once in a newspaper printed in the English language and
customarily published on each Business Day and of general
circulation in the County of Monroe, State of New York and in
such other local, regional or national publications, if any, as
the Board of Directors may determine. Such publication shall be
not more than sixty (60) days nor less than thirty (30) days
prior to the date fixed for Redemption (the "Redemption Date").
Notice of any Redemption of shares of Cumulative Preferred Stock
specifying the time and place of Redemption and the Redemption
Price (a "Redemption Notice"), shall also be mailed not more than
sixty (60) nor less than thirty (30) days prior to the Redemption
Date in a postage prepaid envelope to each Holder of Cumulative
Preferred Stock to be redeemed at
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the address for such Holder shown on the Corporation's Records.
No failure to give such Redemption Notice nor any defect therein
shall affect the validity of the procedure for the Redemption of
any shares of Cumulative Preferred Stock to be redeemed. Each
such Redemption Notice shall state:
i) the Redemption Date;
ii) the Redemption Price;
iii) the number of shares of Cumulative Preferred Stock to be
redeemed and, if fewer than all the shares of Cumulative
Preferred Stock held by a Holder are to be redeemed, the
number of shares thereof to be redeemed from such Holder;
iv) the manner and place or places at which payment for the
shares of Cumulative Preferred Stock offered for Redemption
will be made upon presentation and surrender to the
Corporation of the certificates evidencing the shares being
redeemed;
v) that dividends on the shares of Cumulative Preferred Stock
being redeemed shall cease to accrue on the Redemption Date
unless the Corporation defaults in the payment of the
Redemption Price with respect to such shares; and
vi) that the rights of Holders of Cumulative Preferred Stock as
stockholders of the Corporation with respect to shares being
redeemed shall terminate as of the Redemption Date unless
the corporation defaults in the payment of the Redemption
Price with respect to such shares.
Upon mailing any such Redemption Notice, the Corporation shall
become obligated to redeem at the Redemption Price on the
applicable Redemption Date all shares of Cumulative Preferred
Stock therein specified.
(c) On any Redemption Date, the full Redemption Price shall become
payable in cash for the shares of Cumulative Preferred Stock
being redeemed on such Redemption Date. As a condition of payment
of the Redemption Price, each Holder of Cumulative Preferred
Stock must surrender the certificate or certificates representing
the shares of Cumulative Preferred Stock being redeemed to the
Corporation in the manner and at the place designated in the
Redemption Notice. Each surrendered certificate shall be canceled
and retired. All Redemption payments will be made to the Holders
of the shares being redeemed.
(d) On any Redemption Date, unless and to the extent that the
Corporation defaults in the payment of the Redemption Price for
any shares called for Redemption, dividends on the Cumulative
Preferred Stock called for Redemption shall cease to accumulate
and all rights of Holders of such shares shall terminate, except
for the right to receive the Redemption Price without interest.
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7. RESTRICTION ON REDEMPTIONS AND OTHER ACQUISITIONS OF CERTAIN STOCK
Except in the case of repurchases of Common Stock by the Corporation
pursuant to Article II, Section 7 of the Bylaws of the Corporation, the
Corporation shall not purchase, redeem or otherwise acquire for consideration,
directly or indirectly, any shares of Cumulative Preferred Stock, Parity
Dividend Securities, Parity Liquidation Securities, Junior Dividend Securities
or Junior Liquidation Securities unless on or prior to the date of such
purchase, redemption or acquisition full cumulative dividends have been or
contemporaneously are declared in compliance with Section 4(a) hereof, and a sum
set apart sufficient for such payment on the Cumulative Preferred Stock for all
Dividend Periods terminating on or prior to such date. Notwithstanding the
foregoing, the Corporation may acquire Cumulative Preferred Stock, Parity
Dividend Securities, Parity Liquidation Securities, Junior Dividend Securities
or Junior Liquidation Securities (the "Replaced Securities") as a result of a
reclassification, exchange or conversion of the Replaced Securities solely into
or for other Capital Stock of the Corporation (the "Replacing Securities") or
through the use solely of the proceeds of a substantially simultaneous sale of
Replacing Securities provided in any such case that the Replacing Securities are
no higher in priority with respect to the Cumulative Preferred Stock and the
Non-Cumulative Preferred Stock, as to either dividend rights or rights on
liquidation, dissolution and winding-up, than the Replaced Securities.
8. VOTING RIGHTS
The Cumulative Preferred Stock, except as otherwise required by law,
shall be non-voting.
9. MUTILATED OR MISSING CUMULATIVE PREFERRED STOCK CERTIFICATES
If any of the Cumulative Preferred Stock certificates shall be
mutilated, lost, stolen or destroyed, the Corporation shall issue, in exchange
and substitution for and upon cancellation of the mutilated Cumulative Preferred
Stock certificate, or in lieu of and substitution for the Cumulative Preferred
Stock certificate lost, stolen or destroyed, a new Cumulative Preferred Stock
certificate of like tenor and representing an equivalent number of shares of
Cumulative Preferred Stock, but only upon receipt of evidence satisfactory to
the Corporation of such loss, theft or destruction of such Cumulative Preferred
Stock certificate and indemnity and bond, if requested.
10. REISSUANCE OF CUMULATIVE PREFERRED STOCK
Shares of Cumulative Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of New York) have the status of authorized and unissued shares of Class A
Preferred Stock of the Corporation undesignated as to series and may be
redesignated and reissued as part of any series of Class A Preferred Stock of
the Corporation.
11. BUSINESS DAY
If any payment, redemption or exchange shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment, redemption
or exchange shall be made on the immediately succeeding Business Day.
12. HEADINGS OF SUBDIVISIONS
The headings of various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provision
hereof.
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13. SEVERABILITY OF PROVISIONS
If any right, preference or limitation of the Cumulative Preferred
Stock set forth herein is invalid, unlawful or incapable of being enforced by
reason of any rule or law or public policy, all other rights, preferences and
limitations set forth herein which can be given effect without the invalid
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
14. LIMITATIONS
Except as may otherwise be required by law, the shares of Cumulative
Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth herein or otherwise in the Certificate of Incorporation of the
Corporation.
*********************
DESIGNATION, PREFERENCES AND RIGHTS OF CLASS B, SERIES 1 10% CUMULATIVE
PREFERRED STOCK
1. CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings
(with terms defined in the singular having comparable meanings when used in the
plural and vice versa) unless the context otherwise requires:
"Annual Dividend Period" means the annual period commencing on and
including each Dividend Payment Date and ending on and including the day before
the immediately subsequent Dividend Payment Date.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day other than a Saturday, Sunday, national
holiday or other day on which commercial banks in New York City are authorized
or required to close under the laws of the State of New York.
"Capital Stock" means any and all shares, interest, participations,
rights or other equivalents (however designated) of corporate stock.
"Class A Series" means any series of Class A Preferred Stock, par
value $1.00 per share, of the Corporation.
"Common Stock" means the Common Voting Stock, par value $5.00 per
share, of the Corporation and any other class of common stock hereafter
authorized by the Corporation from time to time.
"Corporation" means Pro-Fac Cooperative, Inc.
"Dividend Payment Date" means the April 1 of each year.
"Dividend Period" means the Initial Dividend Period and thereafter
each Annual Dividend Period.
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"Dividend Record Date" means with respect to the dividend payable on
each Dividend Payment Date the immediately preceding March 15 or such other
record date as may be designated by the Board of Directors with respect to the
dividend payable on such Dividend Payment Date.
"Holder" means a registered holder of shares of Series 1 Preferred
Stock.
"Initial Dividend Period" means, with respect to each share of Series
1 Preferred Stock, the dividend period commencing on the Issue Date of such
share of Series 1 Preferred Stock and ending on and including the day before the
immediately succeeding Dividend Payment Date.
"Issue Date" means, with respect to each share of Series 1 Preferred
Stock, the April 1 or October 1 upon which or next succeeding the date upon
which such share was originally issued by the Corporation.
"Junior Dividend Securities" has the meaning specified in Section 3(a)
hereof and includes the Common Stock and the Special Membership Interests.
"Junior Liquidation Securities: has the meaning specified in Section
3(a) hereof and includes the Common Stock and the Special Membership Interests.
"Liquidation Preference" means, with respect to each share of Series 1
Preferred Stock, the Original Liquidation Preference, plus an amount in cash
equal to all accrued and unpaid dividends (including an amount equal to a
prorated dividend from the last Dividend Payment Date to the date such
Liquidation Preference is being determined). The Liquidation Preference of a
share of Series 1 Preferred Stock will increase on a daily basis as dividends
accrue on such share and will decrease only to the extent such dividends are
actually paid.
"Non-Cumulative Amount" has the meaning specified in Section 4(a)
hereof.
"Non-Cumulative Preferred Stock" means the Non-Cumulative Preferred
Stock, par value $25.00 per share, of the Corporation.
"Original Liquidation Preference" means $10.00 per share of Series 1
Preferred Stock.
"Other Class B Series" means any series of Class B Preferred Stock,
par value $1.00 per share, of the Corporation other than the Series 1 Preferred
Stock.
"Parity Dividend Securities" has the meaning specified in Section 3(b)
hereof and includes the Non-Cumulative Preferred Stock, any Class A Series and
any Other Class B Series.
"Parity Liquidation Securities" has the meaning specified in Section
3(b) hereof and includes the Non-Cumulative Preferred Stock, any Class A Series,
and any Other Class B Series.
"Redemption" has the meaning specified in Section 6(a) hereof.
"Redemption Date" has the meaning specified in Section 6(b) hereof.
"Redemption Notice" has the meaning specified in Section 6(b) hereof.
"Redemption Price" means a price per share equal to the Liquidation
Preference as of the applicable Redemption Date.
"Replaced Securities" has the meaning specified in
Section 7 hereof.
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"Replacing Securities" has the meaning specified in Section 7 hereof.
"Senior Dividend Securities" has the meaning specified in Section 3(c)
hereof.
"Senior Liquidation Securities" has the meaning specified in Section
3(c) hereof.
"Series 1 Preferred Stock" means the Class B, Series 1 10% Cumulative
Preferred Stock, par value $1.00 per share, of the Corporation.
"Special Membership Interests" means the evidence of membership in the
Corporation having a stated value equal to its face amount.
2. DESIGNATION
The series of preferred stock authorized hereunder shall be designated
as the "Class B, Series 1 10% Cumulative Preferred Stock." The number of shares
constituting such series shall initially be 500,000, which number may from time
to time be changed (but not above 500,000 or below the number then outstanding)
by the Board of Directors. The par value of the Series 1 Preferred Stock shall
be $1.00 per share. All shares of Series 1 Preferred Stock shall be identical
with each other in all respects except as to the dates from and after which
dividends thereon shall be cumulative.
3. RANK
The Series 1 Preferred Stock shall rank, with respect to priority of
dividend rights or rights on liquidation, dissolution and winding-up of the
affairs of the Corporation or both:
(a) senior to all classes or series of Common Stock and Special
Membership Interests of the Corporation and to any other class or
series of Capital Stock (except the Non-Cumulative Preferred
Stock, any Class A Series, and any Other Class B Series) that
does not expressly provide that it ranks senior to or on a parity
with the Series 1 Preferred Stock as to dividends or upon
liquidation, dissolution and winding-up, as the case may be (with
respect to such junior dividend rights or junior rights upon
liquidation, dissolution and winding-up, collectively referred
to, as the context may require, as "Junior Dividend Securities"
or "Junior Liquidation Securities");
(b) on a parity with the Non-Cumulative Preferred Stock, any Class A
Series, and any Other Class B Series and each class or series of
Capital Stock that expressly provides that it ranks on a parity
with the Series 1 Preferred Stock as to dividends or upon
liquidation, dissolution and winding-up, as the case may be (with
respect to such parity dividend rights or parity rights upon
liquidation, dissolution and winding-up, collectively referred
to, as the context may require, as "Parity Dividend Securities"
or "Parity Liquidation Securities"); and
(c) junior to each class or series of Capital Stock (except any Class
A Series or Other Class B Series) that expressly provides that it
ranks senior to the Series 1 Preferred Stock as to dividends or
upon liquidation, dissolution and winding-up, as the case may be
(with respect to such senior dividend rights or senior rights
upon liquidation, dissolution and winding-up, collectively
referred to, as the context may require, as "Senior Dividend
Securities" or "Senior Liquidation Securities").
4. DIVIDENDS; ETC.
(a) Beginning on the applicable Issue Date, the Holders of
outstanding shares of Series 1 Preferred Stock shall be entitled
to receive, when, as and if declared by the Board
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of Directors, but only out of funds legally available for the
payment of dividends, dividends payable in cash at the rate per
share of $1.00 per year and no more. All dividends shall be fully
cumulative and shall accrue (whether or not earned or declared,
whether or not permitted under any agreement of the Corporation
and whether or not there are funds legally available therefor),
without interest, from the first day of the Annual Dividend
Period with respect to which such dividend may be payable as
herein provided, except that with respect to the first dividend
payable with respect to any share of Series 1 Preferred Stock,
such dividend shall accrue from the applicable Issue Date. All
dividends shall be cumulative and shall be payable in arrears on
each Dividend Payment Date commencing on the Dividend Payment
Date that follows the Dividend Record Date immediately succeeding
the applicable Issue Date, in preference to and with priority
over dividends on Junior Dividend Securities. No full dividend
and no distribution shall be declared by the Board of Directors
or paid or set apart for payment by the Corporation on the Series
1 Preferred Stock for any period unless dividends aggregating at
least the Non-Cumulative Amount have been or contemporaneously
are declared on the Non-Cumulative Preferred Stock(including any
dividends previously declared for the same stated dividend
payment date pursuant to this sentence), payable not later than
the stated dividend payment date for the Non-Cumulative Preferred
Stock on or next following the date of payment of such dividend
or distribution on the Series 1 Preferred Stock, and a sum has
been or contemporaneously is set apart sufficient for such
payment. The "Non-Cumulative Amount" means the pro rata portion
of the anticipated annual dividends (in any case, not less than
six percent per annum) on the Non-Cumulative Preferred Stock
calculated for the period from, but not including, its
immediately preceding stated dividend payment date (whether or
not any dividend was paid on such date) through, and including,
the date of payment of such dividend of distribution on the
Series 1 Preferred Stock.
(b) All dividends and distributions paid with respect to shares of
the Series 1 Preferred Stock pursuant to Section 4(a) hereof
shall be paid pro rata to the Holders entitled thereto. No full
dividend and no distribution shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on
Parity Dividend Securities for any period unless full cumulative
dividends have been or contemporaneously are declared and a sum
set apart sufficient for such payment of the Series 1 Preferred
Stock for all Dividend Periods terminating on or prior to the
date of payment of such full dividends on the Parity Dividend
Securities. If any dividends are not paid in full upon the shares
of the Series 1 Preferred Stock and the Parity Dividend
Securities, (i) all dividends declared for any period upon shares
of the Series 1 Preferred Stock and the Parity Dividend
Securities shall be declared pro rata so that the amount of
dividends declared on the Series 1 Preferred Stock and on each
class or series of the Parity Dividend Securities shall in all
cases bear to each other the same ratio that accrued dividends
(or, in the case of the Non-Cumulative Preferred Stock, that
portion of the Non-Cumulative Amount which has not previously
been declared and set apart) on the Series 1 Preferred Stock and
on each class or series of Parity Dividend Securities bear to
each other, and (ii) a sum shall be set apart sufficient to pay
any such declared dividends that are not being paid immediately.
Any dividend not paid on the Series 1 Preferred Stock pursuant to
this Section 4 shall be fully cumulative and shall accrue,
without interest, as set forth in Section 4(a) hereof and shall
be in arrears until paid.
(c) The Corporation shall not declare, pay or set apart for payment
any dividend on any of the Junior Dividend Securities or make any
distribution in respect thereof either directly or indirectly and
whether in cash, obligations or shares of the Corporation or
other property (other than dividends or distributions in Junior
Dividend Securities that
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are no higher in priority with respect to the Series 1 Preferred
Stock, as to rights on liquidation, dissolution and winding-up,
than the Junior Dividend Securities upon which such dividend or
distribution is issued)unless on or prior to the date of
declaration of such dividend or distribution on the Junior
Dividend Securities full cumulative dividends have been or
contemporaneously are declared in compliance with Section 4(a)
hereof, and a sum set apart sufficient for such payment on the
Series 1 Preferred Stock for all Dividend Periods terminating on
or prior to the date of payment of such dividend or distribution
on the Junior Dividend Securities.
(d) The amount of dividends payable on the Series 1 Preferred Stock
for any period less than a full Annual Dividend Period
(including, in some cases, the Initial Dividend Period) and the
Non-Cumulative Amount shall be computed on the basis of twelve 30
day months and a 360-day year. Dividends shall accrue on a daily
basis during each Dividend Period as provided above, and the
Liquidation Preference of each outstanding share of Series 1
Preferred Stock shall be correspondingly increased on a daily
basis. Each such dividend shall be payable to Holders of record
as their names shall appear on the stock books of the Corporation
on the Dividend Record Date for such dividends, except that
dividends in arrears for any past Dividend Payment Date may be
declared and paid at any time without reference to such regular
Dividend Payment Date to Holders of record on such date not more
than fifty (50) days prior to the date of payment as shall be
determined by the Board of Directors.
(e) Dividends shall cease to accrue in respect of any particular
share of Series 1 Preferred Stock on the Redemption Date with
respect thereto unless the Corporation defaults in payment of the
Redemption Price with respect to such share of Series 1 Preferred
Stock.
5. PAYMENT ON LIQUIDATION
Upon any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, the Holders of Series 1 Preferred
Stock will be entitled to receive out of the assets of the Corporation available
for distribution to the holders of its Capital Stock an amount in cash per share
equal to the Liquidation Preference determined as of the date of such
liquidation, dissolution or winding-up, before any payment or other distribution
is made on any Junior Liquidation Securities. Holders of Series 1 Preferred
Stock shall not be entitled to any other distribution in the event of
liquidation, dissolution or winding-up of the affairs of the Corporation. If
upon any liquidation, dissolution or winding-up of the affairs of the
Corporation, the assets of the Corporation are not sufficient to pay in full the
liquidation payments payable to the holder of outstanding shares of the Series 1
Preferred Stock and all Party Liquidation Securities, then the holders of all
such shares shall share equally and ratably in any distribution of assets in
proportion to the full liquidation payments determined as of the date of such
liquidation, dissolution or winding-up to which each of them is entitled. For
the purposes of this Section 5, neither a consolidation or merger of the
Corporation with or into one or more corporations nor a sale, lease, exchange or
transfer of all or substantially all of the Corporation's assets shall be deemed
to be a liquidation, dissolution or winding-up of the Corporation.
6. REDEMPTION
(a) Redemption. The Corporation may redeem at the option of the
Corporation in its sole discretion, at any time or from time to
time, in whole or in part, shares of Series 1 Preferred Stock (a
"Redemption"), at the Redemption Price. With respect to any
Redemption of fewer than all the outstanding share of Series 1
Preferred Stock, the number of shares to be redeemed and the
manner of selecting the shares to be redeemed (which may be pro
rata, by lot by Issue Date, based on whether the Holder is or has
ceased to be an employee of the Corporation or a subsidiary
thereof, or such
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other method as the Board of Directors deems appropriate) shall
be determined by the Board of Directors. The Board of Directors
shall have full power and authority, subject to the provisions
herein contained, to prescribe the terms and conditions upon
which shares of the Series 1 Preferred Stock shall be redeemed
from time to time.
(b) Notice of Redemption. Notice of any Redemption of shares of
Series 1 Preferred Stock, specifying the time and place of
Redemption and the Redemption Price (a "Redemption Notice"),
shall be mailed, not more than sixty (60) nor less than thirty
(30) days prior to the date fixed for Redemption (the "Redemption
Date"), in a postage prepaid envelope to each Holder of Series 1
Preferred Stock to be redeemed at the address for such Holder
shown on the Corporation's records. No failure to give such
Redemption Notice nor any defect therein shall affect the
validity of the procedure for the Redemption of any shares of
Series 1 Preferred Stock to be redeemed. Each such Redemption
Notice shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the number of shares of Series 1 Preferred Stock to be
redeemed and, if fewer than all the shares of Series 1
Preferred Stock held by a Holder are to be redeemed, the
number of shares thereof to be redeemed from such Holder;
(iv) the manner and place or places at which payment for the
shares of Series 1 Preferred Stock offered for Redemption
will be made, upon presentation and surrender to the
Corporation of the certificates evidencing the shares being
redeemed (if such shares are certificated shares);
(v) that dividends on the shares of Series 1 Preferred Stock
being redeemed shall cease to accrue on the Redemption Date
unless the Corporation defaults in the payment of the
Redemption Price with respect to such shares; and
(vi) that the rights of the Holders of Series 1 Preferred Stock
as stockholders of the Corporation with respect to shares
being redeemed shall terminate as of the Redemption date
unless the Corporation defaults in the payment of the
Redemption Price with respect to such shares.
Upon mailing any such Redemption Notice, the Corporation shall
become obligated to redeem at the Redemption Price on the
applicable Redemption Date all shares of Series 1 Preferred Stock
therein specified.
(c) On any Redemption Date, the full Redemption Price shall become
payable in cash for the shares of Series 1 Preferred Stock being
redeemed on such Redemption Date. As a condition of payment of
the Redemption Price, if the shares of Series 1 Preferred Stock
being redeemed are certificated shares, each Holder of Series 1
Preferred Stock must surrender the certificate or certificates
representing the shares of Series 1 Preferred Stock being
redeemed to the Corporation in the manner and at the place
designated in the Redemption Notice. Each surrendered certificate
shall be canceled and retired. All Redemption payments will be
made to the Holder of the shares being redeemed.
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(d) On any Redemption Date, except to the extent that the Corporation
defaults in the payment of the Redemption Price of any shares
called for Redemption, dividends on the Series 1 Preferred Stock
called for Redemption shall cease to accumulate and all rights of
Holders of such shares shall terminate except for the right to
receive the Redemption Price, without interest.
7. RESTRICTION ON REDEMPTION AND OTHER ACQUISITIONS OF CERTAIN STOCK
Except in the case of repurchases of Common Stock by the Corporation
pursuant to Article II, Section 7 of the Bylaws of the Corporation, the
Corporation shall not purchase, redeem or otherwise acquire for consideration,
directly or indirectly, any shares of Series 1 Preferred Stock, Parity Dividend
Securities, Parity Liquidation Securities, Junior Dividend Securities or Junior
Liquidation Securities unless on or prior to the date of such purchase,
redemption or acquisition full cumulative dividends have been or
contemporaneously are declared in compliance with Section (4)(a) hereof, and a
sum set apart sufficient for such payment, on the Series 1 Preferred Stock for
all Dividend Periods terminating on or prior to such date. Notwithstanding the
foregoing, the Corporation may acquire Series 1 Preferred Stock, Parity Dividend
Securities, Parity Liquidation Securities, Junior Dividend Securities or Junior
Liquidation Securities (the "Replaced Securities") as a result of a
reclassification, exchange or conversion of the Replaced Securities solely into
or for other Capital Stock of the Corporation (the "Replacing Securities"), or
through the use solely of the proceeds of a substantially simultaneous sale of
Replacing Securities, provided in any such case that the Replacing Securities
are no higher in priority with respect to the Series 1 Preferred Stock and the
Non-Cumulative Preferred Stock, as to either dividend rights or rights on
liquidation, dissolution and winding-up, than the Replaced Securities.
8. VOTING RIGHTS
The Series 1 Preferred Stock, except as otherwise required by law,
shall be non-voting.
9. MUTILATED OR MISSING SERIES 1 PREFERRED STOCK CERTIFICATES
If any of the Series 1 Preferred Stock certificates shall be
mutilated, lost, or destroyed, the Corporation shall issue, in exchange and
substitution for and upon cancellation of the mutilated Series 1 Preferred Stock
certificate, or in lieu of and substitution for the Series 1 Preferred Stock
certificate lost, stolen or destroyed, a new Series 1 Preferred Stock
certificate of like tenor and representing an equivalent number of shares of
Series 1 Preferred Stock, but only upon receipt of evidence satisfactory to the
Corporation of such loss, theft or destruction of such Series 1 Preferred Stock
certificate and indemnity and bond, if requested.
10. REISSUANCE OF SERIES 1 PREFERRED STOCK
Shares of Series 1 Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of New York) have the status of authorized and unissued shares of Class B
Preferred Stock of the Corporation undesignated as to series and may be
redesignated and reissued as part of any series of Class B Preferred Stock of
the Corporation.
11. BUSINESS DAY
If any payment, redemption or exchange shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment, redemption
or exchange shall be made on the immediately succeeding Business Day.
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12. HEADINGS OF SUBDIVISIONS
The headings of various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
13. SEVERABILITY OF PROVISIONS
If any right, preference or limitations of the Series 1 Preferred
Stock set forth herein is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other rights, preferences and
limitations set forth herein that can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
14. LIMITATIONS
Except as may otherwise be required by law, the shares of Series 1
Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth herein or otherwise in the Certificate of Incorporation of the
Corporation.
*********************
DESIGNATION, PREFERENCES AND RIGHTS OF SPECIAL MEMBERSHIP INTERESTS
Special Membership Interests shall have no rights (including but not
limited to, no voting rights, no dividend rights, and no rights to any payment
of interest), powers, preferences or relative, participating, optional or
special rights other than those rights upon liquidation as set forth in the
Certificate of Incorporation under the heading "Designation, Preferences and
Rights of Common Stock, 2. Payment of Liquidation (b)" and as provided in the
Corporation's Bylaws.
DESIGNATION, PREFERENCES AND RIGHTS OF COMMON STOCK
Subject to the preferences, privileges and powers with respect to each
class of capital stock of the Corporation having any priority over the Common
Stock, the preferences of the Special Membership Interests having priority over
the Class B Common Stock, and the restrictions and qualifications thereof, the
holders of the Common Stock shall have and possess all rights pertaining to
capital stock of the Corporation. All shares of Class A Common Stock and Class B
Common Stock shall be identical with each other in every respect, except as set
forth below in Sections 1. and 2. below.
1. DIVIDENDS, ETC.
Subject to the dividend preferences of the holders of Non-Cumulative
Preferred Stock, Class A Preferred Stock, Class B Preferred Stock, Class C
Preferred Stock, Class D Preferred Stock and Class E Preferred Stock as herein
provided, the holders of Class A Common Stock and Class B Common Stock shall be
entitled to receive dividends as and when declared by the Board of Directors out
of funds legally available therefor in amounts per share as determined by the
Board of Directors, provided that (a) dividends may be declared by the Board of
Directors or paid or set apart for payment by the Corporation on the Class A
Common Stock and not on the Class B Common Stock and (b) if, the Board of
Directors declares dividends on both Class A Common Stock and Class B Common
Stock, (i) the dividend amount or rate declared by the Board of Directors or
paid or set apart for payment by the Corporation need not be the same on the
Class A Common Stock and the Class B Common Stock and (ii) such dividends shall
first be paid or funds set apart for payment by the Corporation on the Class A
Common Stock before any payment by the Corporation on the Class B Common Stock.
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2. PAYMENT ON LIQUIDATION
Subject to the preferences upon liquidation, dissolution or winding up
of the holders of Non-Cumulative Preferred Stock, Class A Preferred Stock, Class
B Preferred Stock, Class C Preferred Stock, Class D Preferred Stock and Class E
Preferred Stock as herein provided, in the event of any liquidation, dissolution
or winding up of this Corporation whether voluntary or involuntary,
(a) holders of each share of Class A Common Stock shall be entitled to
be paid, before any sums shall be paid or any assets distributed to holders of
Special Membership Interests or holders of shares of Class B Common Stock out of
assets of the Corporation available for distribution to holders of the
Corporation's capital stock, the sum of $5.00 (plus declared but unpaid
dividends) per share of Class A Common Stock. If the assets of the Corporation
are insufficient to permit payment in full to the holders of Class A Common
Stock as provided in this subsection 2(a) and payment in full to the holders of
Special Membership Interests and holders of shares of Class B Common Stock as
provided in subsections 2(b) and (c) below, then the entire assets of the
Corporation available for distribution shall be distributed ratably among the
holders of shares of Class A Common Stock according to the respective amounts
which would be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to said shares were paid
in full. After payment shall have been made in full to the holders of Class A
Common Stock, all remaining assets available for distribution to shareholders
shall be distributed to the holders of Special Membership Interests and holders
of shares of Class B Common Stock as provided in subsections 2(b) and (c) below.
(b) holders of Special Membership Interests shall next be entitled to
be paid in full the stated value of such Special Membership Interests, before
any sums shall be paid or any assets distributed to holders of shares of Class B
Common Stock out of assets of the Corporation available for distribution to
holders of the Corporation's capital stock. If the assets of the Corporation are
insufficient to permit payment in full to the holders of Special Membership
Interests as provided in this subsection 2(b) and payment in full to the holders
of Special Membership Interests and holders of shares of Class B Common Stock as
provided in subsections 2(c) below, then the entire assets of the Corporation
available for distribution shall be distributed ratably among the holders of
Special Membership Interests according to the respective amounts which would be
payable in respect of the Special Membership Interests held by them upon such
distribution if all amounts payable on or with respect to said Special
Membership Interests were paid in full. After payment shall have been made in
full to the holders of Special Membership Interests, all remaining assets
available for distribution to shareholders shall be distributed ratably to the
holders of shares of Class B Common Stock as provided in subsections 2(c) below.
(c) holders of each share of Class B Common Stock shall be entitled to
be paid, before any sums shall be paid or any assets distributed in accordance
with subsection 2(d) below out of assets of the Corporation available for
distribution to holders of the Corporation's capital stock, the sum of $5.00
(plus declared but unpaid dividends) per share of Class B Common Stock. If the
assets of the Corporation are insufficient to permit payment in full to the
holders of Class B Common Stock as provided in this subsection 2(c) and
distribution of all remaining assets of the Corporation as provided in
subsection 2(d) below, then the entire assets of the Corporation available for
distribution shall be distributed ratably among the holders of shares of Class B
Common Stock according to the respective amounts which would be payable in
respect of the shares held by them upon such distribution if all amounts payable
on or with respect to said shares were paid in full. After payment shall have
been made in full to the holders of Class B Common Stock, all remaining assets
available for distribution shall be distributed as provided in subsection 2(d)
below.
(d) After payment to the holder of all classes of stock as herein
provided, the funds remaining shall be distributed as provided in the Bylaws of
the Corporation.
3. VOTING RIGHTS. All voting rights of the Corporation shall be vested
exclusively in the holders of the Common Stock. Each holder of Common Stock
shall have one vote regardless of the number of such shares held by such
shareholder. When two or more holders of Common Stock join in an agricultural
venture which markets crops through the Corporation, the Board of Directors
shall in its discretion determine whether
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such venture is a single agricultural enterprise for which the holders of the
Common Stock who participate in the enterprise shall have one vote among them or
whether the venture is a multiple enterprise entitling the holders of Common
Stock who participate in the enterprise to more than one vote.
4. MANDATORY DISPOSITION. Any holder of Common Stock who ceases to be a
producer of agricultural products which he sells to the Corporation shall be
obligated to dispose of his Common Stock as provided in the Bylaws of the
Corporation.
*********************
7. The following provisions are adopted for the regulations of the business
and conduct of the affairs of the Corporation.
(a) No transaction, right or liability entered into, enjoyed or incurred by
or in respect of the Corporation, shall be affected by the fact that any
director or directors of the Corporation are or may have been personally
interested in or concerning the same, and each director of the Corporation is
hereby relieved of any and all liability which otherwise might prevent him from
contracting with the Corporation for the benefit of himself or any firm,
association or corporation, in which in any way he may be interested.
(b) The Board of Directors may, from time to time, sell any or all of the
unissued capital stock of the Corporation, whether the same be any of the
original authorized capital or of any increase thereof, without first offering
the same to the stockholders then existing, and all such sales may be made upon
such terms and conditions as the Board of Directors may be deemed advisable, and
may restrict a purchase, sale, distribution, transfer, owning and holding of
stock as fully and to the extent as authorized by the New York Cooperative
Corporations Law.
(c) The earnings and savings of the Corporation, after payment of dividends
as aforesaid and after deduction of reserve and other funds in amounts required
or permitted by law to be established, shall be distributed, whether in the form
of stock, cash, or evidence of indebtedness, or notices of equity or
participation or in services, proportionately and equitably among the persons
for whom it does business, on the basis of the amount of sales, purchases or
other services, rendered to or by such persons, and within the limits of law, in
accordance of the Bylaws of the Corporation.
(d) No director of the Corporation shall be personally liable to the
Corporation or to any member or shareholder for damages for any breach of duty
in such capacity except where a judgment or other final adjudication adverse to
such director establishes: (i) that the director's acts or omissions were in bad
faith or involved intentional misconduct or a knowing violation of law; or (ii)
that the director personally gained in fact a financial profit or other
advantage to which the director was not legally entitled; or (iii) that the
director's acts violated Section 719 of the New York Business Corporation Law.
If the New York Business Corporation Law or Cooperative Corporation Law is
hereafter amended to authorize corporate action further eliminating or limiting
the personal liability of directors, then the liability of the directors of the
Corporation shall be eliminated or limited to the fullest extent permitted by
the New York Business Corporation Law and Cooperative Corporation Law, as so
amended.
8. The Secretary of State of the State of New York is designated as the
agent of the Corporation upon whom process against it may be served, and the
post office address to which the Secretary of State shall mail a copy of such
process served upon him is P.O. Box 682, Rochester, New York 14603.
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5. The amendment and restatement of the certificate of incorporation was
authorized by vote of a majority of the Board of Directors at a meeting duly
convened and held on February 10, 1999, and was ratified and authorized by the
members of the Corporation at a meeting duly convened and held on February 15,
1999.
IN WITNESS WHEREOF, I have made and subscribed this certificate this 3rd day of
March, 1999.
/s/ David M. Mehalick
--------------------------------------------
David M. Mehalick, Assistant Secretary
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PRO-FAC COOPERATIVE, INC.
BYLAWS
(As amended February 15, 1999)
ARTICLE I: OFFICES
SECTION 1. PRINCIPAL OFFICE
The principal office of Pro-Fac Cooperative, Inc. (the "Cooperative")
shall be located in Rochester, New York, or such other place as the Board of
Directors may from time to time designate.
ARTICLE II: MEMBER
SECTION 1. ELIGIBILITY
All persons, partnerships, firms, corporations, institutions and
business organizations of any kind which engage in the production of
agricultural products which can be marketed through the Cooperative shall be
eligible for membership in the Cooperative as shall cooperative corporations of
such producers.
SECTION 2. MEMBERSHIP
(a) The Cooperative shall have two classes of Members (as that term is
herein defined). Members owning shares of Class A Common Stock of the
Cooperative shall be "Class A Members" and Members owning shares of Class B
Common Stock of the Cooperative shall be "Class B Members" and, collectively,
with the Class A Members, the "Members." A "Class A Member" shall be a producer
and supplier of raw products to the Cooperative for processing at facilities of
Agrilink Foods, Inc. ("Agrilink Foods"). A "Class B Member" shall be a producer
and supplier of raw products to the Cooperative for processing at facilities of
PF Acquisition II, Inc. ("PF Acquisition" now, and as such entity may later be
re-named by resolution). The Class A Common Stock and the Class B Common Stock
of the Cooperative shall be referred to herein collectively as, the "Common
Stock." Class B Members shall also own "Special Membership Interests," as
defined below. The actual value of each Special Membership Interest shall be
determined by the Board of Directors.
(b) An applicant for membership in the Cooperative shall file with the
Cooperative an application for membership in such form and containing such terms
as shall be from time to time determined by the Board of Directors. Included in
the application shall be a statement that the applicant agrees to (i) comply
with and be bound by the terms and conditions contained in the Cooperative's
Restated Certificate of Incorporation dated February 15, 1999, as further
amended and restated from time to time (the "Certificate of Incorporation") and
in these Bylaws, as further amended from time to time ("Bylaws"); (ii) purchase
the required number and class of shares of Common Stock, i.e., Class A Common
Stock or Class B Common Stock, of the Cooperative as established from time to
time by the Board of Directors based upon whether the applicant is a Class A
Member or a Class B Member and the quantity and type of agricultural products to
be marketed through the Cooperative by the applicant; and (iii) take into
account, pursuant to Section 1385 and 1388 of the Internal Revenue Code of 1986
as amended, the stated dollar amount of any and all written notices of
allocation received from the Cooperative and include such stated dollar amount
in his gross income for the year in which such written notices of allocation are
received.
(c) As more particular described in Article X of these Bylaws, the
Board of Directors may, by resolution, segregate the Cooperative's business with
its Members into two distinct pools: (i) the "Class A Member Pool," which shall
be limited to Class A Members and (ii) the "Class B Member Pool," which shall be
limited to Class B Members.
(d) "Special Membership Interests" represent a Class B Member's
historical delivery commitments and obligations to their predecessor
cooperative, Agripac, Inc. The actual value of each Special Membership Interest
shall be determined by the Board of Directors.
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SECTION 3. APPROVAL OF APPLICATION
An application for membership may be approved by the Board of Directors
as herein provided if it is determined that the approval of the application will
be for the mutual benefit of the Members of the Cooperative and consistent with
the accomplishment of its corporate purposes.
SECTION 4. MEMBERSHIP COMMITTEE
The Board of Directors, by resolution adopted by a majority of the
entire Board of Directors, may appoint a Membership Committee, a majority of
which shall be members of the Board of Directors, each of whom shall hold office
until such appointment is rescinded and a successor appointed and qualified. The
Membership Committee shall have such functions and responsibilities as may be
delegated by the Board of Directors, including, but not limited to, approving or
rejecting applications for membership and for transfer of Common Stock by a
Member. In any case where factual information concerning the qualifications of
an applicant is insufficient to determine eligibility, the matter may be
referred by the Membership Committee to the Commodity Committee of the
Cooperative (as described in Article VII of these Bylaws) in or near the
community in which the applicant resides for report and recommendation to the
Membership Committee.
SECTION 5. OWNERSHIP AND TRANSFER OF COMMON STOCK
(a) The Common Stock of the Cooperative shall be issued to and owned
only by persons, partnerships, firms, corporations, institutions, or other
business organizations of any kind engaged in the production of agricultural
products (and cooperative corporations of such producers) whose application for
membership has been approved and who market such agricultural products annually
through the Cooperative. Until termination of the Put Period (as that term is
defined in Section 7), Class B Members shall only be entitled to purchase and
own shares of Class B Common Stock.
(b) No Common Stock shall be transferred without the prior written
consent of the Cooperative.
(c) Upon the death of an individual Member, the estate of the deceased
shall continue as a Member of the Cooperative solely for the purpose of winding
up the affairs of the deceased until all obligations of the deceased to the
Cooperative, including those under any current commodity agreement, have been
performed, after which the estate shall dispose of its Common Stock in the
manner specified in Section 7.
(d) Upon determination by the Board of Directors that a Member is no
longer a producer of agricultural products which he sells to the Cooperative,
then such Member shall dispose of his Common Stock in the Cooperative in the
manner specified in Section 7.
(e) Should the Cooperative discontinue a crop, then it shall notify all
Members whose ownership of Common Stock is based upon their marketing such crop
through the Cooperative and direct such Members within a time specified by the
Board of Directors in its discretion to sell their Common Stock to the
Cooperative for cash at the par value thereof, plus any declared but unpaid
dividends as of the date of such sale. With respect to Class B Members, the time
period within which the Board of Directors will require that their shares of
Common Stock be sold back to the Cooperative shall in no event be earlier than
the termination of the Put Period (as that term is defined in Section 7).
(f) Should a Member desire or be required by the Cooperative
permanently to reduce the quantity of a crop which he sells to the Cooperative,
then such Member shall in the manner specified in Section 7 of this Article,
dispose of such number of shares of his Common Stock as is necessary to bring
his ownership of shares of Common Stock into the proper relationship to the
quantity and type of agricultural products which he markets through the
Cooperative as determined by the Board of Directors. With respect to Class B
Members, the manner in which such members will be entitled to dispose of their
shares of Common Stock prior to the
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termination of the Put Period (as that term is defined in Section 7) shall be
limited to transfers to other Class B Members, subject to the requirements of
subsection (b) above.
SECTION 6. EXPULSION
(a) The Board of Directors, acting through its Membership Committee if
it elects to do so, may expel any Member of the Cooperative if it determines
that such Member (i) has become in default in payment of his subscription for
Common Stock, or (ii) willfully fails to comply with these Bylaws or otherwise
obstructs the purposes or proper activities of Cooperative, or (iii) has
defaulted in his obligation under the general marketing agreement, crop
agreement, commodity agreement or any other agreement with the Cooperative.
(b) A Member may be expelled from the Cooperative only after a hearing
before the Membership Committee. The Member shall be given by mail or in person
at least five days' written notice of such hearing, which indicates the
intention to consider such expulsion and specifies the proposed reasons
therefore. The Member shall be given an opportunity to appear and be heard at
such hearing. If after such hearing the Committee determines that the Member
should be expelled, he shall have the right to appeal the decision to the full
Board of Directors. The decision of the Board of Directors in such a case shall
be final.
(c) If a Member is expelled as provided herein, the Cooperative shall
cause written notice of such action to be mailed to the Member.
(d) A Member expelled from the Cooperative under this Section shall
dispose of his Common Stock as specified in Section 7.
SECTION 7. PROCEDURE ON TRANSFER
A Member who is obligated to dispose of his Common Stock in the
Cooperative shall do so as follows:
(a) A Member shall make a reasonable effort to find another grower in
such grower's pool, i.e., a Class A Member shall seek to find another grower in
the Class A Member Pool and a Class B Member shall seek to find another grower
in the Class B Member Pool, who is willing to purchase the Common Stock of such
Member and assume all his obligations to the Cooperative and who meets all
requirements for membership in the Cooperative. The Cooperative may assist the
Member in finding such a grower and shall give the Member a reasonable time
within which to try to find such a grower.
(b) The Cooperative shall notify the Member when such reasonable time
has expired, at which time the Member must then promptly sell his Common Stock
to the Cooperative for cash at the par value thereof plus any dividends thereon
which have been declared but remain unpaid. With respect to Class B Members, the
expiration of a "reasonable time" will in no event be earlier than the
termination of the Put Period (as that term is defined below in subsection (c)).
(c) The "Put Period" shall mean the period from the date that the
Cooperative issues shares of its Class B Common Stock to a Member until and
inclusive of June 29, 2002, or such later date, in the event the Cooperative's
Board of Directors shall extend such date beyond June 29, 2002, which the Board
of Directors may do in its sole and absolute discretion without notice.
SECTION 8. RIGHTS OF TRANSFEREES
No one shall become a Member of the Cooperative unless an application
for membership is filed in accordance with Section 2 of this Article and is
approved as provided in Section 3 of this Article.
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ARTICLE III: MEETINGS OF MEMBERS
SECTION 1. MEETINGS OF MEMBERS
(a) Annual, special and regional meetings of Members of the Cooperative
shall be held at such time and place and upon such terms and conditions as shall
be determined by the Board of Directors. Written notice of the time, place and
any particular known business to be transacted at such meeting shall be given by
mailing, not less that ten (10) nor more than fifty (50) days prior to the
meeting, postage prepaid, a copy of such notice directed to each eligible voter
at his address as it appears on the books of the Cooperative.
(b) The Board of Directors may direct that, in lieu of or in addition
to a single annual or special meeting of Members, one or more regional
membership meetings be held in the regions, or in combinations of the regions,
designated by the Board of Directors. Such regional meetings shall be conducted
as provided in this Article and as otherwise determined by the Board of
Directors.
(c) Should the Board of Directors direct the holding of regional
meetings of Members as herein provided, then notice of such meetings shall be
given to all Members in each region in the manner provided in Section 1(a) of
this Article. If so requested by the Board of Directors, at a regional meeting,
the Members shall from their number elect a delegate and alternate delegate (who
shall act if the delegate is unable to serve) to represent the Members at any
meeting of delegates. Delegates and alternate delegates shall be selected and
authorized to act as follows:
(i) Delegates and alternate delegates shall be nominated and
elected in the same manner as provided herein for the
nomination and election of regional directors.
(ii) Delegates and alternate delegates shall be elected for a
term of one year, or until their successors have been duly
elected and qualified. At all meetings of delegates a
majority of the delegates present (or any alternate
delegates if they are serving instead of the delegates)
shall constitute a quorum.
(iii) Any action required to be taken by the entire membership of
the Cooperative may, if requested by the Board of Directors,
be taken in their behalf by the delegates at a meeting of
delegates.
(iv) To the maximum extent possible, the Members shall at
regional meetings instruct their delegates as how to vote at
any meeting of delegates. At any meeting of delegates each
delegate shall, as to all matters voted upon by Members at a
regional meeting, have a number of votes equal to the total
votes cast by the Members in his region at such regional
meeting, and he shall cast those votes in the same manner as
those votes were cast at the regional meeting.
(v) As to any matter properly submitted to a meeting of
delegates which has not been voted upon by Members at a
regional meeting, each delegate shall cast in a manner which
he believes to be in the best interest of the Cooperative
all votes available to be cast by the Members in the region
represented by such delegate.
SECTION 2. SPECIAL MEETINGS
A special meeting of Members or delegates may be called by a majority
of the Board of Directors or of the Members. Notice of such special meeting,
specifying the time, place and purpose for which it is called, shall be given to
each Member (or if a delegate meeting is called, to each delegate) in the manner
provided in Section 1(a) of this Article.
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SECTION 3. QUORUM AND VOTING
(a) At all meetings of the Members, the Members present shall
constitute a quorum. At any annual, special or regional meeting of Members, duly
called in accordance with these Bylaws and applicable law, the written vote of
an absent Member signed by him shall be received and counted, provided he shall
have been previously notified in writing of the substance of the motion or
resolution upon which such vote is taken. At all annual and special meetings of
Members and all regional meetings of Members with respect to the election of
directors, delegates and alternate delegates, all decisions (except decisions on
matters otherwise regulated by statute or otherwise governed by these Bylaws)
shall be determined by the majority vote of the Members present in person or
voting by mail as herein provided. At all regional meetings of Members other
than those as they relate to the election of directors, delegates or alternate
delegates, all decisions (except decisions on matters otherwise regulated by
statue or otherwise governed by these bylaws) shall be determined by the
majority vote of the aggregate number of Members present in person or voting by
mail as herein provided at all such regional meetings, taken in the aggregate.
(b) All voting by Members and delegates shall be as described in these
Bylaws, and voting by proxy shall not be permitted.
(c) The delegates may take action without a meeting upon the unanimous
written consent of all of the delegates.
SECTION 4. INSPECTORS OF ELECTION
Two inspectors of election shall be appointed by the chairman of the
meeting at each annual meeting or regional meeting of Members to serve for that
meeting. If any inspector shall not be present or shall decline to serve, the
chairman shall appoint an inspector to fill his place.
ARTICLE IV: DIRECTORS
SECTION 1. NUMBER OF DIRECTORS
There shall be no fewer than eleven (11) nor more than eighteen (18)
directors of the Cooperative, with the exact number to be determined from time
to time by resolution of the Board.
SECTION 2. TERM OF OFFICE
Except as provided in Section 5(b) and (c) of this Article, directors
shall serve for the term of three (3) years or until their successors shall have
been duly elected and qualified.
SECTION 3. ELECTION OF DIRECTORS
(a) Directors shall be chosen by a plurality of the votes cast at any
meeting called for that purpose, and substantially one-third (1/3) of their
number shall be elected each year.
(b) The Board of Directors shall divide the territorial area in which
the Cooperative operates into regions and shall designate the number of
directors to be elected from each region so as to attain reasonably balanced
regional representation on the Board of Directors based upon the value of raw
product delivered by the Members in each region. The Board of Directors may in
its discretion further divide any region into districts within the region.
(c) The Board of Directors shall appoint a number of directors no
greater than one-fifth (1/5) of the entire number of directors to represent
primarily the interest of the general public in the Cooperative. Such directors
need not be Members of the Cooperative.
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(d) The Members in each region shall elect the director or directors
for that region. In any region which is divided into districts, the Members in
each district shall elect the directors from that district.
SECTION 4. NOMINATION OF DIRECTORS
(a) The Members of each region of the Cooperative shall elect a
nominating committee for their region. In any region which is divided into
districts there shall be a nominating committee for each district elected by the
Members of the district. Each committee member shall serve for a two-year term
with substantially one-half of the membership of the committee elected each
year. Rules for the election of committee members and for selection of nominees
for directorships shall be established annually by the Board of Directors.
(b) Directors representing each region or district shall be nominated
by the regional or district nominating committees formed pursuant to these
Bylaws. Additional nominations of directors may otherwise be made only by
Members from the floor of the meeting at which directors are to be elected.
(c) All nominees for director, to be validly nominated, must meet such
qualifications for office as are established under these Bylaws or by law.
SECTION 5. REVISION OF REGIONAL REPRESENTATION
(a) Should there be major shifts in the geographical distribution of
Members of the production of raw products delivered to the Cooperative, the
Board of Directors shall redistribute the number of directors representing one
or more regions or shall revise the boundaries of one or more regions so as to
maintain reasonably balanced regional representation on the Board of Directors
based upon the value of raw product delivered in each region.
(b) In case the number of directors representing a region is to be
reduced by a redistribution as provided in Section 5(a), then in order to
facilitate that reduction the Board of Directors may request (but not compel)
the resignation as a director of all of the directors from the region (or from a
district within a region) affected whose terms will not have expired as of the
time such reduction is to become effective.
(c) In acting pursuant to this Section 5, the Board of Directors may
request the nominating committees for the affected regions or districts to
nominate Members for election to those vacant directorships which the region or
district may be entitled to elect after the redistribution of director
representation as provided in this Section 5. At a meeting of the Members of the
affected region or district called upon such terms as may be determined by the
Board of Directors, directors may be elected to fill such vacant directorships
as the Members of the affected regions or districts may be entitled to elect
after the redistribution of director representation as provided in this Section
5. Such directors shall be nominated for and elected to such directorships for
terms of one to three years so that the terms of substantially one-third of all
directors shall expire each year.
SECTION 6. BOARD VACANCIES
Vacancies in the Board of Directors occurring during the year caused by
death, resignation or otherwise, may, until the next meeting of Members called
for the election of a successor director, be filled by a majority vote of the
remaining directors at any meeting of the Board of Directors. Vacancies shall be
filled by Members from the region or district in which the vacancy occurs.
SECTION 7. COMPENSATION
Directors, as such, shall not receive any stated salary, but as fixed
by resolution of the Board of Director, a stated sum and expenses of attendance
may be allowed for such meetings as they necessarily attend in behalf of the
Cooperative.
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SECTION 8. POWER OF DIRECTORS
Subject to the provisions of the Certificate of Incorporation and of
these Bylaws, the business of the Cooperative shall be managed and conducted by
the Board of Directors. The Board may adopt rules and regulations for the
conduct of its meetings and for the management of the affairs of the Cooperative
and may adopt additional bylaws consistent with the laws of the State of New
York and with these Bylaws, provided such additional bylaws are submitted for
the approval of Members at the next annual meeting, or at the next regional
meeting of Members held in lieu of an annual meeting, or at a special meeting
called for such purpose.
SECTION 9. COMMITTEES OF THE BOARD
The Board of Directors, by resolution adopted by a majority of the
entire board, may designate from among its members an executive committee and
other committees, each consisting of three or more directors, and each of which,
to the extent provided in such resolution, shall have all the authority of the
Board of Directors, except as to the following matters:
(a) The submission to Members of any action that by law requires
authorization of Members;
(b) The filling of vacancies in the Board of Directors or in any
committee;
(c) The fixing of compensation of any director for serving on the
Board of Directors or on any committee;
(d) The amendment or repeal of the Bylaws, or the adoption of new
bylaws; and
(e) The amendment of repeal of any resolution of the Board of
Directors which by its terms shall not be so amendable or
repealable.
The Board of Directors may designate one or more directors as alternate
members of any such committee, who may replace any absent member or
members at any meeting of such committee. Each such committee (and each
member of such committee) shall serve at the pleasure of the Board of
Directors.
ARTICLE V: MEETINGS OF DIRECTORS
SECTION 1. PLACE OF MEETINGS
All meetings of the Board of Directors shall be held at the principal
office of the Cooperative or at such other places as the Board of Directors,
from time to time, may determine.
SECTION 2. REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held immediately
after any annual meeting of Members, or delegates, and thereafter at such time
as may be fixed by the directors for regular meetings.
SECTION 3. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by the general
manager or the president and shall be called by the general manager at any time
at the request of any three directors.
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SECTION 4. NOTICE
Written notice of each regular meeting of the Board of Directors shall
be mailed to each director not less than five days before each regular meeting.
Notice of special meetings shall be given not less five days before the meeting,
if given by mail, or three days before the meeting, if given by telephone or
telegram, and such notice shall state the purpose of the meeting. No other
business shall be transacted at a special meeting except with the unanimous
consent of all directors. Notice of meeting need not be given to any director
who submits a signed waiver of notice whether before or after the meeting, or
who attends the meeting without protesting, prior to the meeting or at its
commencement, the lack of notice to him.
SECTION 5. QUORUM
A majority of all the directors shall constitute a quorum for the
transaction of business at any meeting.
SECTION 6. OFFICIAL ACTS OF THE BOARD
Each of the official acts of the Board of Directors shall be by a
majority vote of the directors present at any duly convened meeting. The board
may take action without a meeting upon the unanimous written consent of all the
directors.
ARTICLE VI: OFFICERS
SECTION 1. OFFICERS AND AGENTS
(a) The officers of the Cooperative shall be a president, a vice
president, a secretary, a treasurer, and a general manager, who shall be elected
by the Board of Directors immediately after each annual meeting of Members or
delegates. Any two of the aforesaid offices, except those of president and
secretary, may be held by the same person.
(b) The Board may elect such other officers as it shall deem necessary,
who shall have such authority and shall perform such duties as from time to time
shall be prescribed by the Board.
SECTION 2. TERM OF OFFICE
The officers of the Cooperative shall hold office for one year and
until their successors are chosen and qualify in their stead. Any officer may be
removed at any time by the affirmative vote of a majority of the directors. If
any office becomes vacant for any reason, the vacancy shall be filled by the
Board of Directors.
SECTION 3. PRESIDENT
The president shall be a Member and director of the Cooperative and
shall preside at all meetings of Members, delegates and directors.
SECTION 4. VICE PRESIDENT
The vice president shall be a Member and director of the Cooperative,
in the absence or disability of the president, he shall perform the duties and
exercise the power of the president. He shall also perform such other duties as
the Board of Directors shall prescribe.
SECTION 5. SECRETARY
The secretary shall attend all meetings of the Board of Directors and
of the Members or delegates and shall
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(a) give or cause to be given a notice of all meetings of Members,
shareholders, delegates and the Board of Directors,
(b) record or cause to be recorded all votes and minutes of the
proceedings of such meetings,
(c) have custody of the seal of the Cooperative and affix it to any
instrument when authorized by the Board of Directors,
(d) perform or cause to be performed such other duties as may be
prescribed by the Board of Directors.
SECTION 6. TREASURER
The treasurer shall
(a) have custody of the funds of the Cooperative,
(b) keep or cause to be kept full and accurate accounting of receipts
and disbursements in books belonging to the Cooperative,
(c) deposit or cause to be deposited, all money and other valuable
effects in the name and to the credit of the Cooperative in such depositories as
may be designated by the Board of Directors,
(d) disburse or cause to be disbursed, the funds of the Cooperative as
may be ordered by the Board of Directors, taking proper vouchers for such
disbursements,
(e) render or cause to be rendered to the president, directors and
Members an accounting of all his transactions as treasurer and of the financial
condition of the Cooperative,
(f) give, or cause to be given to the Cooperative, if required by the
Board of Directors, a bond in such sum or sums with such surety or sureties as
shall be satisfactory to the Board, conditioned upon the faithful performance of
his duties and for restoration to the Cooperative in case of his death,
resignation, retirement, or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Cooperative.
SECTION 7. GENERAL MANAGER
The general manager shall be the chief executive officer of the
Cooperative and shall see that all orders and resolutions of the Board of
Directors are carried into effect.
ARTICLE VII: COMMODITY COMMITTEES
SECTION 1. FORMATION
There shall be a Commodity Committee representing the Members for each
of the major crops produced for the Cooperative as determined by the Board of
Directors.
SECTION 2. COMMITTEE MEMBERS
The number, distribution, and method of election of committee members,
each of whom shall be a Member of the Cooperative, shall be determined by the
Board of Directors.
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SECTION 3. PURPOSE
Commodity Committees are charged with the responsibility of counseling
and advising the Board of Directors and officers and management of the
Cooperative on matters generally associated with the specific crop, the growers
of which they represent. The committees shall also act in matters referred to
them by the Membership Committee under Article II, Section 4 hereof, and shall
have such other functions as may be delegated by the Board of Directors.
ARTICLE VIII: INVESTMENT SUMMARIES AND SHARES OF STOCK
SECTION 1. INVESTMENT SUMMARIES
To the extent a determination to issue certificates is not made
pursuant to Section 2 of this Article, the Cooperative shall issue, not less
frequently than annually, investment summaries to each Member or shareholder of
the Cooperative, which shall set forth the entire interest of the Member or
shareholder in the Cooperative as of the date it is issued.
SECTION 2. CERTIFICATES OF STOCK
The Board of Directors may determine to issue certificates for some or
all of its capital stock. The certificates of stock of the Cooperative shall be
numbered and entered in the books of the Cooperative as they are issued. They
shall exhibit the holder's name and the number of shares and shall be signed by
the president or a vice president and the treasurer or an assistant treasurer or
the secretary or an assistant secretary.
SECTION 3. LOST CERTIFICATES
Should it appear that a stock certificate issued by the Cooperative has
been lost, the Board of Directors may direct that a new certificate or
certificates be issued in place of any certificates theretofore issued by the
Cooperative, alleged to have been lost or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate of stock to be lost
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the Cooperative a bond in such sum and with such
surety or sureties as may direct as indemnity against any claim that may be made
against the Cooperative with respect to the certificate alleged to have been
lost or destroyed.
SECTION 4. STOCK OWNERSHIP
The Cooperative shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof, and accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person whether or not it shall have express or
other notice thereof, except as expressly provided by the laws of New York.
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE
The Board of Directors may prescribe a period not exceeding fifty days
prior to the date of meetings of the Members and shareholders or prior to the
last day on which the consent or dissent of Members and shareholders may be
effectively expressed for any purpose without a meeting, during which no
transfer of stock on the books of the Cooperative may be made; or in lieu or
prohibiting the transfer of stock, may fix a time not more than fifty days prior
to the date of any meeting of Members and shareholders or prior to the last day
on which the consent or dissent of Members and shareholders may be effectively
expressed for any purpose without a meeting, as the time of which Members and
shareholders entitled to notice of and to vote at such a meeting or whose
consent or dissent is required or may be expressed for any purpose, as the case
may be, shall to be determined; and all persons who were holders of record of
voting stock at such time and no others
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shall be entitled to notice of and to vote at such meeting or to express their
consent or dissent, as the case may be. The Board of Directors may also fix a
time not exceeding fifty days preceding the date fixed for the payment of any
dividend or the making of any distribution, or for the delivery of evidence of
rights, or evidence of interests arising out of any change, conversion or
exchange of capital stock, as a record time for the determination of the Members
and shareholders entitled to receive any such dividend, distribution, rights or
interests, or at its option, in lieu of so fixing a record time, may prescribe a
period not exceeding fifty days prior to the date for such payment, distribution
or delivery during which no transfer of stock on the books of the Cooperative
may be made.
ARTICLE IX: PROCESSING AND MARKETING
SECTION 1. AGENT GROWERS
A Member of the Cooperative may on a temporary basis contract with
another grower, who may, but need not be, a Member of the Cooperative, to
fulfill all or a part of the Member's obligation to deliver crops to the
Cooperative, provided such agreement is approved by the Membership Committee of
the Board of Directors, and further provided that, in the event a Class B Member
shall contract with another Member to fulfill such Class B Member's obligation,
such other Member shall be a Class B Member and, in the event a Class A Member
shall contract with another Member to fulfill such Class A Member's obligations,
such other Member shall be a Class A Member. Such grower shall be referred to as
an "agent grower."
SECTION 2. DELIVERY OF MEMBERS' PRODUCTS
It shall be the duty of every Member and agent grower to deliver his
crops to the Cooperative for marketing in accordance with the terms and
conditions of, and in the amounts specified in, the general marketing agreement,
the annual crop agreements, or any agreement between him and the Cooperative. It
shall be the duty of the Cooperative to receive and market such crops in
accordance with the terms and conditions of all such agreements.
SECTION 3. COOPERATIVE'S CONTROL
All handling of the products of Members and agent growers produced
under agreement with the Cooperative shall upon delivery to the Cooperative be
under the full and exclusive control of the Cooperative and its agents and
representatives, and the Cooperative shall have the full and unqualified right
to take title to such products and process, sell, mortgage, pledge or otherwise
encumber, dispose of or transfer them and to sue on, enforce and compromise any
rights or claims arising out of any transaction involving such products. No
Member or agent grower shall have any rights or shall exercise any control over
any products delivered by virtue of having furnished such products, other than
as may be expressly provided in these Bylaws or in any agreement with the
Cooperative.
SECTION 4. LIENS
The Cooperative shall have a lien upon all of the products of any
Member or agent grower to be marketed through the Cooperative, whether harvested
or growing, and upon all sums payable to the Member or agent grower, as security
for the payment to the Cooperative of all sums owing from such Member or agent
at any time, including the sums due as damages pursuant to any crop purchase or
other agreement.
SECTION 5. NON-MEMBER DEALINGS
The Cooperative shall have the right to handle the products of or
otherwise deal with non-Members upon such terms and conditions as the Board of
Directors may from time to time determine, but the total value of all such
products shall not exceed the total value of all products handled for its
Members.
SECTION 6. OTHER ACTIVITIES
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The Cooperative shall have the right to engage in such other
activities, including but not limited to, the furnishing of equipment and
supplies to Members and agent growers, research and advertising, as may be
conducive to the attainment of it purposes.
ARTICLE X: PROCEEDS AND DISPOSITION OF PROCEEDS
SECTION 1. COMMERCIAL MARKET VALUE
The Board of Directors shall each year determine the commercial market
value of each crop marketed through the Cooperative. Such commercial market
value is to be a weighted average of the prices paid by commercial processors
for similar crops sold for similar or related uses in the same or competing
marketing areas, as determined by the Board of Directors in agreement with the
Board of Directors of Agrilink Foods with respect to the commercial market value
of Class A Member crops, and as determined by the Board of Directors in
agreement with the Board of Directors of PF Acquisition with respect to the
commercial market value of Class B Member crops.
SECTION 2. POOLS
The Cooperative shall operate within two distinct pools, unless the
Board of Directors determines that additional pools are advisable. The
Cooperative's pools shall be as follows: (a) the "Class A Member Pool," which
shall be limited to Class A Members and (b) the "Class B Member Pool," which
shall be limited to Class B Members.
SECTION 3. PATRONAGE PROCEEDS
The patronage proceeds of the Cooperative, generally, shall be its
gross receipts derived from sources which under law qualify as patronage income,
including income from the sale of raw products and all income from other
patronage sources, less its operating expenses properly attributable to the
production of such patronage income, including overhead, interest, dividends on
capital stock, maintenance, depreciation, obsolescence, depletion, bad debts,
taxes and other proper costs, all as determined by the Board of Directors in
accordance with regular business practices and sound accounting principles.
Patronage proceeds shall be separately computed for the Class A Member Pool and
the Class B Member Pool. Capital gains and capital losses shall be distributed
as determined by the Board of Directors in its discretion after considering the
current federal income tax law and regulations, but in any event such capital
gains and capital losses will be distributed to the Members of the particular
pool affected.
SECTION 4. MEMBERS' SHARE OF PATRONAGE PROCEEDS
For each fiscal year of the Cooperative, a Member's share of patronage
proceeds shall be determined within the particular pool the Member is assigned.
Within each pool, each Member's and each agent grower's pro rata share of the
patronage proceeds shall be determined annually by dividing the patronage
proceeds of the pool by the total raw product value (commercial market value
times total quantity delivered) of the pool; this gives the percent of
commercial market value earned by the particular pool. The multiplication of
that percentage by the raw product value delivered by each Member and agent
grower in the pool determines the pro rata share of patronage proceeds of each
Member and agent grower in the pool. In any year in which patronage proceeds of
a particular pool as determined pursuant to Sections 3, 4 and 8 are less than
commercial market value of the pool there shall be paid or allocated to each
Member and agent grower as the purchase price for his crops as provided in
Section 5 not only his share of patronage proceeds of the pool for the year but
also his share of funds available for such payment pursuant to any commercial
market value stabilization program adopted by the Board of Directors with
respect to such pool, up to a total payment or allocation of full commercial
market value or the maximum amount available under the program, whichever is
less. The determination of patronage proceeds within the Class A Member Pool and
the Class B Member Pool shall be separately computed and need not be the same
for any fiscal year of the Cooperative.
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SECTION 5. PAYMENT OF PATRONAGE PROCEEDS
Without any further action on the part of any officer of the Board of
Directors of the Cooperative, the Cooperative shall be absolutely liable for the
payment or allocation as herein provided to each Member and agent grower of the
pro rata share of patronage proceeds of each Member and agent grower within each
pool as determined pursuant to Section 4. Such payment allocation shall be
accomplished annually within eight and one-half months of the close of the
fiscal year of the Cooperative.
SECTION 6. RETENTION OF PATRONAGE PROCEEDS
Upon such terms and conditions and in such amounts as are deemed
advisable in the discretion of the Board of Directors, a portion of the
patronage proceeds of each pool may be retained in the Cooperative for use as
working capital or for such other purposes as may be determined by the Board of
Directors. Such portion of the patronage proceeds of a particular pool so
retained shall be allocated among the Members and agent growers in the pool
entitled thereto, and the Cooperative shall cause written notice of such
allocation to be sent to each such Member and agent grower in the pool. Subject
to any limitations or restrictions that may be imposed by financing documents,
the balance of the patronage proceeds not so retained shall be paid in cash to
the Members and agent growers in the particular pool. The amount of patronage
proceeds retained or paid in cash from the Class A Member Pool and the Class B
Member Pool may differ for each fiscal year of the Cooperative.
SECTION 7. TAXABLE INCOME OF MEMBERS
Each Member of the Cooperative, and, as applicable, each agent grower
as described in Article IX, Section 1, shall take into account, pursuant to
Section 1385 and 1388 of the Internal Revenue Code of 1986 as amended, the
stated dollar amount of any and all written notices of allocation received from
the Cooperative and shall include such stated dollar amount in his gross income
for tax purposes for the year in which such written notice of allocation is
received.
SECTION 8. NON-PATRONAGE PROCEEDS
The non-patronage proceeds of the Cooperative shall be its gross
receipts derived from all sources which under law do not qualify as patronage
income, less all expenses properly attributable to the production of such
non-patronage income. Non-patronage proceeds shall be used in behalf of the
Cooperative and its Members in accordance with such lawful purposes as may be
determined by the Board of Directors. Except as provided below, in any year in
which non-patronage expenses exceed non-patronage income so that there is a loss
from the non-patronage activities of the Cooperative, such non-patronage loss
shall be deducted from patronage proceeds determined in accordance with Sections
3 and 4 of this Article before payment and allocation of patronage proceeds is
made pursuant to Sections 5 and 6 of this Article. Notwithstanding the
foregoing, any such non-patronage loss which is directly attributable to the
processing facilities at Agrilink Foods shall be deducted from patronage
proceeds of the Class A Member Pool and any such non-patronage loss which is
directly attributable to the processing facilities of PF Acquisition shall be
deducted from patronage proceeds of the Class B Member Pool.
SECTION 9. DISSOLUTION
(a) Upon dissolution or other termination of the Cooperative or its
business, after the payment of all debts, amounts allocated to Members but
retained by the Cooperative shall be paid in full, or on a pro rata basis
without priority, before any liquidating dividends are declared on or with
respect to capital stock of the Cooperative.
(b) After the payments provided for above in subsection (a), the
holders of the Cooperative's preferred stock (the "Preferred Stock") shall be
entitled to be paid, before any sums shall be paid or any assets distributed to
holders of Common Stock or Special Membership Interests out of assets of the
Cooperative
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available for distribution to holders of the Cooperative's capital stock, their
liquidation amounts or preferences as provided in the Cooperative's Certificate
of Incorporation.
(c) After payment to the holders of Preferred Stock, and subject to the
preferences upon liquidation, dissolution or winding up of the holders of
Preferred Stock, holders of each share of Class A Common Stock shall be entitled
to be paid, before any sums shall be paid or any assets distributed to holders
of Special Membership Interests or holders of shares of Class B Common Stock,
out of assets of the Cooperative available for distribution to holders of the
Cooperative's capital stock, the sum of $5.00 (plus declared but unpaid
dividends) per share of Class A Common Stock. If the assets of the Cooperative
are insufficient to permit payment in full to the holders of Class A Common
Stock as provided in this subsection 9(c) and payment in full to the holders of
Special Membership Interests and holders of shares of Class B Common Stock as
provided in subsections 9(d) and (e) below, then the entire assets of the
Cooperative available for distribution shall be distributed ratably among the
holders of shares of Class A Common Stock according to the respective amounts
which would be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to said shares were paid
in full.
(d) After payment shall have been made in full to the holders of Class
A Common Stock, holders of Special Membership Interests shall next be entitled
to be paid, before any sums shall be paid or any assets distributed to holders
of shares of Class B Common Stock, out of assets of the Cooperative available
for distribution to holders of the Cooperative's capital stock. If the assets of
the Cooperative are insufficient to permit payment in full to the holders of
Special Membership Interests as provided in this subsection 9(d) and payment in
full to the holders of shares of Class B Common Stock as provided in subsections
9(e) below, then the entire assets of the Cooperative available for distribution
shall be distributed ratably among the holders of Special Membership Interests
according to the respective amounts which would be payable in respect of the
Special Membership Interests held by them upon such distribution if all amounts
payable on or with respect to said Special Membership Interests were paid in
full.
(e) After payment shall have been made in full to the holders of
Special Membership Interests, holders of each share of Class B Common Stock
shall be entitled to be paid, before any sums shall be paid or any assets
distributed in accordance with subsection 9(f) below, out of assets of the
Cooperative available for distribution to holders of the Cooperative's capital
stock, the sum of $5.00 (plus declared but unpaid dividends) per share of Class
B Common Stock. If the assets of the Cooperative are insufficient to permit
payment in full to the holders of Class B Common Stock as provided in this
subsection 9(e) and distribution of all remaining assets of the Cooperative as
provided in subsection 9(f) below, then the entire assets of the Cooperative
available for distribution shall be distributed ratably among the holders of
shares of Class B Common Stock according to the respective amounts which would
be payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to said shares were paid in full.
(f) After payment shall have been made in full to the holders of Class
B Common Stock, all remaining assets available for distribution shall be
distributed among the Members to whom interests in funds retained by the
Cooperative have been allocated during the preceding five fiscal years and the
fiscal year of dissolution in such proportion as the total of the amounts
allocated to each Member during such period shall bear to the total of the
amounts allocated to all Members but retained by the Cooperative during such
period.
SECTION 10. GUARANTEE
The Cooperative may, by resolution of the Board of Directors, guarantee
and endorse the notes, checks, drafts or borrowings of any other corporation,
and any bank or trust company shall be fully protected under any such guarantee
or endorsement upon receipt of a copy of any such resolution duly certified by
the secretary of the Cooperative.
SECTION 11. FISCAL YEAR
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The fiscal year of the Cooperative shall be as determined from time to
time by the Board of Directors of the Cooperative.
ARTICLE XI: DIVIDENDS
SECTION 1. DECLARATION
Dividends upon the capital stock of the Cooperative may be declared by
the Board of Directors at any regular or special meeting, subject to the
provisions of law and the Certificate of the Incorporation relating thereto.
ARTICLE XII: MISCELLANEOUS PROVISIONS
SECTION 1. SEAL
The seal of the Cooperative shall be circular in form and contain the
name of the Cooperative, the year of its organization and the words, "Corporate
Seal, New York". The seal may be used by causing it to be impressed directly on
the instrument or writing to be sealed, or upon an adhesive substance affixed
thereto. to seal on any corporate instrument may be a facsimile, engraved or
printed.
SECTION 2. ROBERTS RULES OF ORDER
To the extent that issues concerning the operation of the Cooperative
are not resolved by law, the Certificate of Incorporation, or these Bylaws, are
to be determined in accordance with the most recent editions of Roberts Rules of
Order published at the time such issue arises.
SECTION 3. AMENDMENTS
These Bylaws may be amended by the Board of Directors as set forth in
Article IV, Section 8, hereof, and may also be amended or repealed, or new
bylaws adopted, at any meeting of Members or delegates by the affirmative vote
of two-thirds of the votes cast by the Members voting, either in person or by
mail, providing the substance of the proposed amendment has been inserted in the
notice of such meeting.
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SERVICE AGREEMENT
THIS AGREEMENT is made as of this 22 day of February, 1999 by and between
PF ACQUISITION II, INC., a New York corporation with offices at Salem,
Oregon (the "Company") and AGRILINK FOODS, INC., a New York corporation, with
offices at 90 Linden Place, Rochester New York ("AFI").
WITNESSETH:
WHEREAS, the Company has been formed by Pro-Fac Cooperative, Inc. (the sole
shareholder of AFI) to acquire substantially all of the frozen food business
assets of Agripac, Inc., an Oregon cooperative corporation and debtor and
debtor-in-possession, and to engage in processing, production, distribution and
sale of frozen vegetables; and
WHEREAS, the Company has requested and AFI has agreed to provide certain
administrative and executive consulting services to the Company, on the terms
and conditions set forth below; and
WHEREAS, the Company and AFI have negotiated and entered into this
Agreement on an arms-length basis and with the consent of their respective third
party institutional lenders;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. SERVICES TO THE COMPANY. AFI hereby agrees during the
term of this agreement to provide to the Company (collectively,
the "Services"):
(a) general selling and administrative services, including by way of
example and not limitation, financial, accounting, purchasing, human resources,
research and development, agricultural, employee benefits, quality assurance,
computer and information systems, order entry, and customer and engineering
services, as more fully described in Exhibit 1(a); and
(b) executive management consulting services and advice as requested from
time to time by the Company (provided that the Company shall at all times retain
responsibility for and the absolute right to make all policy, business and other
decisions); and
(c) such other services as the parties may, during the term of this
Agreement, determine, which shall be set forth in Exhibit 1(a) as amended from
time to time by mutual agreement of the parties hereto;
(d) AFI shall indemnify, defend and hold the Company harmless from and
against any claims, liabilities, loss, costs or expense, including reasonable
attorney's fees and expenses resulting from AFI's gross negligence or wilful
misconduct in its performance pursuant to this Agreement.
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2. COMPENSATION.
(a) In consideration for AFI providing such Services, the Company agrees to
pay to AFI at the rate of One Million Dollars ($1,000,000) per annum, such
amount to be payable monthly in arrears in the amounts set forth in the Table
below on the second day of each fiscal month of the Company commencing on March
1, 1999 through and including June 3, 2002, unless this Agreement is earlier
terminated as set forth herein.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Fiscal Monthly Payments Due During Each Fiscal Quarter of the Company
- -----------------------------------------------------------------------------
Due for Fiscal Month 1 Due For Fiscal Month 2 Due for Fiscal Month 3
- -----------------------------------------------------------------------------
<S> <C> <C>
$96,153.84 $76,923.08 $76,923.08
- -----------------------------------------------------------------------------
</TABLE>
(b) In addition, for each fiscal year (as herein defined) of the Company,
the Company shall pay to AFI an amount equal to 40% of the amount by which the
Company's EBITDA (as herein defined) for such fiscal year exceeds $12,000,000
(the "Supplemental Payment"). For purposes of this Agreement, the Company's
"fiscal" year shall be the twelve (12) month period ending on the last Saturday
of June. The first fiscal year of the Company for purposes of the supplemental
payment shall be the fiscal year ending June 24, 2000. In the event of a
termination of this Agreement prior to the end of June 2002, other than as a
result of a breach by AFI of its obligations hereunder, the Supplemental Payment
shall be determined using a ratable portion of $12,000,000 based upon that
portion of the current fiscal year that has expired as of the effective date of
termination. For purposes of this Agreement "EBITDA" shall mean, for each fiscal
year (or portion thereof, as applicable) of the Company, the sum of the amounts
for such period of (i) the net income of the Company (calculated in accordance
with GAAP), plus (ii) in each case to the extent deducted in determining the
Company's net income for such period (and without duplication), (A) the
provision for income taxes of the Company based on income and profits of the
Company, (B) the amortization expense of the Company, (C) the depreciation
expense of the Company, (D) the total interest expense of the Company (including
without limitation imputed interest, commissions and similar fees owed with
respect to letters of credit and bankers' acceptances, net costs associated with
hedging obligations, amortization of financing fees and expenses, the interest
portion of deferred payment obligations, amortization of any debt discount or
premium, all other non-cash expense, and capitalized interest) and (E) all other
non-cash items reducing net income, plus (iii) without duplication, any amounts
payable to AFI under subsections (a) and (b) of Section 2 of this Agreement for
such fiscal year period (regardless of whether actual cash payment of such
amounts is made in such fiscal year period), minus (iv) all non-cash items for
such period to the extent such items increased net income for such period. Any
amount payable by the Company to AFI under this Section 2(b) shall be paid
within 90 days of the end of each such fiscal year.
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(c) To the extent that any payment to AFI is not made in full on or before
the date due, interest shall accrue on the unpaid amount until the date of
payment in full at a rate equal to the average rate of interest then being paid
by the Company to its institutional lenders.
3. TERM. This Agreement shall remain in effect until the end of the fiscal
year of the Company in June 2002, unless extended by further agreement of the
Company and AFI; provided, however, that:
(a) Termination in Event of Company Change in Control. AFI may terminate
this Agreement immediately upon a minimum of one hundred eighty (180) days
written notice to the Company in the event that any of the common stock of the
Company is owned by a person or entity other than Pro-Fac Cooperative, Inc.
(b) Partial Termination. The Services provided under this
Agreement may be terminated in part by mutual agreement of the
Company and AFI which shall specify the Services which are being
terminated.
4. ACCESS TO RECORDS. AFI, through its officers, board of directors and
independent accountants, shall have free access during normal business hours to
all books and records of the Company that AFI may deem necessary or appropriate
for the performance of the Services hereunder or for the determination of
EBITDA.
5. NOTICES. Any notice required to be given under this Agreement shall be
deemed to have been duly given and effective, when delivered by facsimile, hand
or mailed, certified or registered with postage prepaid:
If to the Company to: PF Acquisition II, Inc.
325 Patterson Street, N.W.
Salem, Oregon 97304
Attn: President
Facsimile: (503) 371-5666
If to AFI to: Agrilink Foods, Inc.
90 Linden Place
Rochester, NY 14625
Attn: Dennis M. Mullen, President
Facsimile: (716) 383-1606
or to such other person or address as a party shall submit to the other party in
writing.
6. ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other.
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7. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
permitted assigns.
8. ENTIRE AGREEMENT. This Agreement represents the entire agreement between
the parties with respect to the subject matter hereof and may not be amended or
modified without the prior written consent of each party.
9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one and the same instrument.
10. RENEGOTIATION. In the event that any statute, law, regulation, rule,
order or interpretation renders any provision of this Agreement illegal, the
parties hereto agree to use their best efforts to remedy the situation by
renegotiating the terms of this Agreement within thirty (30) days after notice
to the other party.
11. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflict of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PF ACQUISITION II, INC.
By: /s/ Earl L. Powers
________________________
Earl L. Powers, Vice President
AGRILINK FOODS, INC.
By: /s/ Earl L. Powers
------------------------
Earl L. Powers, Chief Financial Officer
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Exhibit 1(a)
Detailed Description of Services
Additional Services
None as of February 22, 1999.
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MARKETING AND FACILITATION AGREEMENT
(Pro-Fac Cooperative, Inc. and PF Acquisition II, Inc.)
This is an agreement dated as of February 22, 1999 between
Pro-Fac Cooperative, Inc. ("Pro-Fac") and PF Acquisition II, Inc. ("PFA").
The members and patrons of Pro-Fac are active growers who have
joined together in their cooperative to market their crops at a fair price and
to try to achieve as much stability and continuity as is possible in
agriculture. While Pro-Fac and its members and patrons have considerable
expertise in the growing of crops, they do not have such expertise in the
processing and sale of those crops in the form of commercially viable processed
food products.
PFA is engaged in the processing, distribution and sale of frozen
vegetables, but it lacks expertise in the farming and growing of the crops on
which it depends for a reliable and long term source of supply for its products.
Agripac, Inc. announced that it was disposing of its frozen
vegetable business. The members of Pro-Fac and the Board of Directors of Pro-Fac
each voted in favor of pursuing a bid by PFA to acquire the assets of the frozen
vegetable business of Agripac, Inc. through PFA, a wholly-owned subsidiary of
Pro-Fac (the "Transaction"), after which PFA is to continue its operations as a
wholly-owned subsidiary of Pro-Fac.
Following the Transaction, Pro-Fac and PFA desire that the
relationship between them be governed by the terms of this agreement in order to
insure that such relationship is at arm's length in order to satisfy the
independent financial arrangements of PFA, which are non-recourse as to Pro-Fac,
and the financial arrangements of Agrilink Foods, Inc., which Pro-Fac
guarantees.
It is therefore agreed as follows:
DEFINITIONS
1. Definitions. When used in this agreement, the following terms
shall have the meanings indicated below:
a. "Commercial Market Value" of crops sold by Pro-Fac to PFA
shall mean the weighted average of the prices paid by the other commercial
processors for similar crops used for similar or related purposes sold under
pre-season contracts and in the open market in the same or similar marketing
areas. Where such price cannot be readily determined, then Commercial Market
Value shall be determined by some other method acceptable to each party.
Commercial Market Value shall be determined as provided in paragraph 7 hereof.
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b. "Pro-Fac Products" shall mean all products sold by PFA
which were processed from crops supplied by Pro-Fac. The determination of what
is a Pro-Fac Product shall be made in an annual examination of products made
from crops supplied by Pro-Fac. If made from crops supplied by Pro-Fac and from
similar crops purchased directly by PFA to supplement and facilitate the
marketing of crops by Pro-Fac, then such product shall be considered to be a
Pro-Fac Product, provided that the value of such crops purchased by PFA for use
in the product is not greater than the value of crops supplied by Pro-Fac for
the product. If Pro-Fac supplies less than half the value of crops necessary to
make the product, then only that portion of the product actually made from crops
supplied by Pro-Fac shall be considered a Pro-Fac Product.
c. "Earnings (Losses) on Pro-Fac Products" shall mean the
entire proceeds received by PFA from the sale of Pro-Fac Products less the costs
incurred by PFA in its own behalf or in behalf of Pro-Fac in processing and
selling such products. Such costs shall be determined in accordance with
generally accepted accounting practices in the food industry as modified by past
practices and accounting methods used by the parties and shall include all
variable product costs, a pro rata share of plant and warehousing overhead costs
based upon the estimated usage of facilities and a pro rata share of selling,
general and administrative, overhead and financial expenses. Such costs shall
include Commercial Market Value to be paid pursuant to paragraph 8 but shall not
include any additional payment pursuant to paragraph 9. "Earnings on Pro-Fac
Products" shall mean the amount by which such proceeds exceed such costs;
"Losses on Pro-Fac Products" shall mean the amount by which such proceeds are
less than such costs.
d. "Pro-Fac Facilitation Accommodations" shall include (but
not be necessarily limited to): (i) making available by Pro-Fac to PFA access to
the Federal Farm Credit System for borrowing of funds; (ii) the long term
commitment of Pro-Fac hereunder to provide to PFA a stable and reliable source
of high quality crops that provide the essential basis for the operation and
utilization of facilities of PFA in which Pro-Fac products are processed; (iii)
favorable extended payment terms provided by Pro-Fac for the payment of
Commercial Market Value for crops of its members; and (iv) the acceptance by
Pro-Fac of the risk of losses by PFA on the sale of Pro-Fac Products as set
forth in this Agreement.
e. "Joint Committee" shall mean a joint committee of the
boards of directors of Pro-Fac and Agrilink Foods, Inc which shall be comprised
of the chief executive officer of Agrilink Foods, Inc. and an equal number of
Pro-Fac Directors and Disinterested Directors, as such term is defined in the
Marketing and Facilitation Agreement between Pro-Fac and Agrilink Foods, Inc.,
dated November 3, 1994, as amended.
STRUCTURE
2. Directors of PFA. The board of directors of PFA shall consist
of such number of directors as may from time to time be elected by Pro-Fac as
the sole shareholder of PFA, initially as follows:
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a. At least three and as many as five directors shall be
known as "Pro- Fac Directors" and shall consist of the persons chosen by the
Pro-Fac board of directors from among those serving as Pro-Fac directors.
b. One director shall be known as the "Management Director"
and shall be nominated by the president of Agrilink Foods, Inc., from among
management employees of Agrilink Foods, Inc.
c. There may be such number of directors, to be known as
"Disinterested Directors", who shall be selected from among persons suggested by
the president of Agrilink Foods, Inc. Disinterested Directors shall be chosen
from among persons who are not employees, shareholders (at the time of becoming
directors) or otherwise Affiliates (other than by reason of being a director of
PFA) of either Pro-Fac or PFA. "Affiliate" of any specified person means any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person; provided, however,
Affiliate shall not include a "disinterested director" of Agrilink Foods, Inc.
For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such person, whether through the ownership of voting securities,
by agreement or otherwise; provided, however, that beneficial ownership of 10%
or more of the voting securities of a person shall be deemed to be control.
d. Notwithstanding the foregoing, Pro-Fac may vary the
number of directors, to include such number of Directors or ex officio Directors
to represent the Pro-Fac members who own Class B common stock of Pro-Fac who
supply crops to Pro-Fac for delivery to PFA and processing by PFA.
3. Retention of Earnings by PFA. Pro-Fac will allow PFA to retain
as working capital 80% of the Earnings on Pro-Fac Products as determined in
paragraph 10. Such retention shall be accounted for as an additional capital
contribution to PFA to the extent required by any third-party debt instrument by
which PFA or Pro-Fac is bound.
MARKETING
4. Delivery of Crops. Pro-Fac agrees to sell and deliver to PFA
all crops of the type and in the amounts set forth by acreage or tonnage in the
raw product section of the profit plan applicable to PFA. The profit plan shall
be determined by the boards of directors of Pro-Fac and PFA. Subject only to its
inability to do so because of the vagaries of weather or other causes validly
preventing growing such crops as set forth in the agreement between Pro-Fac and
its members, Pro-Fac shall deliver to PFA the crops described in the profit plan
applicable to PFA, and PFA agrees to process and market such crops as herein
provided.
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5. Marketing Discretion. PFA shall in its discretion determine in
what form the finished processed products shall appear for marketing and what
label or labels shall appear on such finished processed products. PFA shall
establish the price at which it shall sell products originating in whole or in
part from Pro-Fac crops. To facilitate the marketing of the finished products by
PFA, title to the Pro-Fac crops shall pass to PFA at the time such crops are
graded and accepted by PFA.
6. Agency. PFA is authorized to act as agent for Pro-Fac to the
extent necessary to enable Pro-Fac to receive crops from its members and deliver
such crops to PFA pursuant to the terms and conditions of this agreement.
PAYMENT FOR CROPS AND FACILITATION ACCOMMODATIONS
7. Commercial Market Value. Commercial Market Value shall be
determined in accordance with Section 1(a) by the boards of directors of Pro-Fac
and of PFA acting upon the good faith recommendation of the Joint Committee.
8. Calculation of Earnings and Losses. The determination of
Earnings and Losses on Pro-Fac Products of PFA shall be made on the basis of all
Pro-Fac Products of PFA considered in the aggregate each year as of the end of
the fiscal year for each party.
9. Payment for Crops. Subject to the provisions of paragraph 11,
PFA shall pay to Pro-Fac as the purchase price for the crops purchased from
Pro-Fac each year the Commercial Market Value of those crops, together with any
additional payment which may be due Pro-Fac pursuant to paragraph 10 hereof. The
due date for payment of the Commercial Market Value by PFA shall coincide with
the time of payment for crops by Pro-Fac to its members.
10. Additional Payment for Crops and for Pro-Fac Facilitation
Accommodations. In any year in which PFA has Earnings on Pro-Fac Products, as an
additional payment for crops beyond Commercial Market Value and for the Pro-Fac
Facilitation Accommodations, PFA shall as of the end of such fiscal year remit
to Pro-Fac 20% of such earnings, retaining the remaining 80% of such earnings in
accordance with paragraph 3.
11. Sharing of Losses. In any year in which PFA has Losses on
Pro-Fac Products, PFA shall deduct such losses from the Commercial Market Value
it would otherwise be required to pay to Pro-Fac for crops as provided in
paragraph 9.
12. Payments to Members of Pro-Fac. Pro-Fac shall not be
obligated to pay out to its members and others who sold crops to Pro-Fac the
entire amount of any additional payment received from PFA for crops and for the
Pro-Fac Facilitation Accommodations pursuant to Section 10. It is the intent of
the parties hereto that Pro-Fac will pay or allocate to its grower-members and
others entitled thereto the payments received by Pro-Fac from PFA pursuant to
this
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agreement only to the extent deemed advisable by the board of directors of
Pro-Fac after retaining such funds as may be necessary for the operations of
Pro-Fac and PFA and for the creation of such reserve funds as may be deemed fair
and reasonable.
MANAGEMENT
13. Management Services. PFA will employ Agrilink Foods, Inc. to
provide management and administrative services to PFA through a service
agreement. PFA shall pay Agrilink Foods, Inc. fees for such services as are set
forth in such agreement.
14. Books of Account. All accounting records and books of account
necessary for PFA to perform its obligations hereunder shall be kept at such
office of PFA as it deems appropriate.
15. Policy Established by Pro-Fac Board of Directors. The
management of the business of PFA shall be in accordance with the policies
formulated and approved by the boards of directors of Pro-Fac and PFA. PFA
delegates to Agrilink Foods, Inc. (through the service agreement referenced in
paragraph 13) the authority to administer, manage and operate various aspects of
the business of PFA in its normal course, limited by the provisions of law as to
the delegation of authority by a corporate board of directors. Agrilink Foods,
Inc. shall consult PFA and its board of directors on any matter which, by reason
of its size or its nature, is not in the ordinary course of business.
GENERAL
16. Term. This Agreement shall remain in effect until the end of
the fiscal year of Pro-Fac in June 2002, unless Pro-Fac shall earlier cease to
be the sole owner of PFA, whereupon Pro-Fac may terminate this Agreement on 90
days notice to PFA.
17. Assignment. This Agreement may not be assigned by either
party without the written consent of the other. Any assignment during the period
any third party debt instrument is in effect shall require the approval, if any,
of the holders of such debt in accordance with the terms of the debt instrument.
18. Amendment. This Agreement may be amended or modified only by
a written statement of such amendment or modification duly signed by each of the
parties. Any amendment during the period any third party debt instrument is in
effect shall require the approval, if any, of the holders of such debt in
accordance with the terms of the debt instrument.
19. Headings. The headings preceding the text of paragraphs of
this Agreement are for convenience only and shall not be deemed part of this
Agreement.
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20. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF the parties have each caused this Agreement to
be entered into and executed as of the date first above written.
PRO-FAC COOPERATIVE, INC. PF ACQUISITION II, INC.
By: /s/ Earl L. Powers By: /s/ Earl L. Powers
___________________________ _________________________________
Earl L. Powers Earl L. Powers
___________________________ _________________________________
Vice President Vice President
___________________________ _________________________________
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CREDIT AGREEMENT
dated as of February 22, 1999
among
PF ACQUISITION II, INC.
The BANKS Party Hereto
and
COBANK, ACB, as Administrative Agent
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS..............................................................1
SECTION 1.1 Definitions...................................................1
SECTION 1.2 Accounting Terms.............................................12
SECTION 1.3 Computation of Time Periods..................................12
SECTION 1.4 Rules of Construction........................................12
ARTICLE II LOANS AND ADVANCES.....................................................13
SECTION 2.1 Revolving Credit Facility Loans..............................13
SECTION 2.2 Term Credit Facility Loan....................................13
SECTION 2.3 All Loans and Advances.......................................14
SECTION 2.4 Manner of Borrowing..........................................14
SECTION 2.5 Interest.....................................................14
SECTION 2.6 Fees.........................................................16
SECTION 2.7 Notes........................................................16
SECTION 2.8 Mandatory Prepayments........................................16
SECTION 2.9 Optional Prepayments.........................................17
SECTION 2.10 Mandatory Reduction of Revolving Credit Facility
Commitment....................................................17
SECTION 2.11 Optional Reduction of Revolving Credit Facility
Commitment....................................................17
SECTION 2.12 Manner of Payment...........................................18
SECTION 2.13 Conversions or Continuations................................18
SECTION 2.14 Netting Advances............................................19
SECTION 2.15 Environmental Term Loan Credit..............................19
ARTICLE III SECURITY..............................................................19
SECTION 3.1 Security.....................................................19
ARTICLE IV LIMITATIONS ON OUTSTANDINGS............................................20
SECTION 4.1 Limitation on Revolving Credit Facility Outstandings.........20
SECTION 4.2 Borrowing Base...............................................20
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SECTION 4.3 Borrowing Base Certificate...................................21
SECTION 4.4 Mandatory Repayment..........................................21
ARTICLE V CONDITIONS PRECEDENT....................................................21
SECTION 5.1 Conditions Precedent to Initial Extension of Credit..........21
SECTION 5.2 Conditions Precedent to All Advances.........................23
SECTION 5.3 Condition Precedent to Certain Revolving Advances............23
ARTICLE VI REPRESENTATIONS AND WARRANTIES.........................................24
SECTION 6.1 Incorporation, Good Standing, Etc............................24
SECTION 6.2 Power and Authority..........................................24
SECTION 6.3 Legally Enforceable Agreement................................24
SECTION 6.4 Court Approval...............................................24
SECTION 6.5 Financial Statements.........................................24
SECTION 6.6 Litigation...................................................24
SECTION 6.7 Ownership and Liens..........................................25
SECTION 6.8 Investments..................................................25
SECTION 6.9 ERISA........................................................25
SECTION 6.10 Operation of Business.......................................25
SECTION 6.11 Taxes.......................................................25
SECTION 6.12 Environment.................................................25
SECTION 6.13 No Default..................................................25
SECTION 6.14 Security Interests..........................................25
ARTICLE VII AFFIRMATIVE COVENANTS.................................................26
SECTION 7.1 Cooperative Status...........................................26
SECTION 7.2 Corporate Existence, Etc.....................................26
SECTION 7.3 Maintenance of Property......................................26
SECTION 7.4 Compliance with Laws.........................................26
SECTION 7.5 Taxes........................................................26
SECTION 7.6 Insurance....................................................27
SECTION 7.7 Inspection...................................................27
SECTION 7.8 Maintenance of Records.......................................27
SECTION 7.9 Reports and Notices..........................................27
SECTION 7.10 ERISA.......................................................29
SECTION 7.11 Use of Proceeds.............................................29
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SECTION 7.12 Change In Business..........................................29
SECTION 7.13 Investments In CoBank.......................................29
SECTION 7.14 Transfer Pricing and Allocations............................29
ARTICLE VIII NEGATIVE COVENANTS...................................................30
SECTION 8.1 Borrowings...................................................30
SECTION 8.2 Liens........................................................30
SECTION 8.3 Transfer Of Assets...........................................30
SECTION 8.4 Mergers, Acquisitions, Etc...................................31
SECTION 8.5 Loans........................................................31
SECTION 8.6 Contingent Liabilities.......................................31
SECTION 8.7 Change in Business...........................................31
SECTION 8.8 Dividends, Etc...............................................31
SECTION 8.9 Retirement of Indebtedness...................................31
SECTION 8.10 Change in Fiscal Year.......................................32
SECTION 8.11 Other Borrowings Covenants..................................32
SECTION 8.12 Capital Expenditures........................................32
SECTION 8.13 Administrative Expenditures.................................32
SECTION 8.14 Payments to Agrilink or Pro-Fac.............................33
SECTION 8.15 Amendments..................................................33
ARTICLE IX FINANCIAL COVENANTS....................................................33
SECTION 9.1 Leverage Ratio...............................................33
SECTION 9.2 Minimum EBITDA...............................................34
ARTICLE X DEFAULT.................................................................34
SECTION 10.1 Events of Default...........................................34
SECTION 10.2 Remedies Upon Default.......................................36
ARTICLE XI FIXED RATE LOAN AND CAPITAL ADEQUACY
MATTERS...................................................................37
SECTION 11.1 Broken Funding Surcharge....................................37
SECTION 11.2 Limitation on Types of Advances.............................38
SECTION 11.3 Illegality..................................................38
SECTION 11.4 Treatment of Affected Loans.................................39
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SECTION 11.5 Capital Adequacy............................................39
SECTION 11.6 Right of Substitution.......................................40
ARTICLE XII AGENCY PROVISIONS.....................................................40
SECTION 12.1 Appointment, Powers and Immunities of
Administrative Agent..........................................40
SECTION 12.2 Reliance by Administrative Agent............................41
SECTION 12.3 Defaults....................................................41
SECTION 12.4 Rights of the Administrative Agent as a Bank................42
SECTION 12.5 Indemnification of Administrative Agent.....................42
SECTION 12.6 Non-Reliance on Administrative Agent and Other
Banks.........................................................42
SECTION 12.7 Failure of Administrative Agents to Act.....................43
SECTION 12.8 Resignation or Removal of Administrative Agent..............43
SECTION 12.9 Amendments Concerning Agency Function.......................44
SECTION 12.10 Liability of Administrative Agent..........................44
SECTION 12.11 Transfer of Agency Function................................44
SECTION 12.12 Withholding Taxes..........................................44
SECTION 12.13 Non-Receipt of Funds by Administrative Agent...............44
ARTICLE XIII MISCELLANEOUS........................................................46
SECTION 13.1 Amendments, Etc.............................................46
SECTION 13.2 Usury.......................................................46
SECTION 13.3 Notices.....................................................46
SECTION 13.4 No Waiver...................................................46
SECTION 13.5 Assignments and Participations..............................47
SECTION 13.6 Expenses; Indemnification...................................48
SECTION 13.7 Integration.................................................49
SECTION 13.8 Jurisdiction; Immunities....................................49
SECTION 13.9 Governing Law...............................................50
SECTION 13.10 Effectiveness and Severability of Provisions...............50
SECTION 13.11 Counterparts...............................................50
SECTION 13.12 Exhibits and Schedules.....................................50
SECTION 13.13 Table of Contents; Headings................................50
SECTION 13.14 Severability...............................................51
SECTION 13.15 Consents...................................................51
SECTION 13.16 Confidentiality............................................51
SECTION 13.17 Transfer of Ownership of Borrower Under Certain
Circumstances.................................................51
SECTION 13.18 Obligations Non-Recourse to Agrilink and Pro-Fac...........52
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SECTION 13.19 Jury Trial Waiver..........................................52
SECTION 13.20 Agreement in Writing.......................................53
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EXHIBITS
A - Assignment and Assumption Agreement
B - Borrowing Base Certificate
C - Mortgage
D - Revolving Credit Facility Note
E - Security Agreement
F - Term Credit Facility Note
SCHEDULES
6.12 Environmental Matters
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is entered into this 22nd
day of February, 1999, among PF ACQUISITION II, INC. ("Borrower"), CoBANK, ACB
("CoBank"), and each other lender which may hereafter execute and deliver an
Assignment and Assumption Agreement pursuant to Section 12.5 of this Agreement
(each a "Bank" and collectively, the "Banks"), and CoBank, as administrative
agent for the Banks ("Administrative Agent").
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For purposes of this Agreement, the following
capitalized terms shall have the following meanings:
(1) "Acquisition" means the acquisition by Borrower on the
Closing Date of substantially all of the assets comprising the frozen vegetables
business of Seller pursuant to the Acquisition Agreement.
(2) "Acquisition Agreement" means the Asset Purchase Agreement
dated as of February 12 , 1999 between Seller, Pro-Fac and Borrower.
(3) "Administrative Agent's Office" means Administrative
Agent's address as set forth on the signature page of this Agreement, or such
other address as Administrative Agent may designate from time to time by written
notice to Borrower, and each Bank.
(4) "Administrative Expenditures" means "selling, general and
administrative" expense as such term is defined pursuant to GAAP; provided that
none of (a) payments by Borrower to Agrilink pursuant to the Service Agreement,
(b) Specified Expenses and (c) management information system expenses in any
Fiscal Quarter during the Fiscal Year ending June 24, 2000 up to a maximum
$500,000 in any such Fiscal Quarter shall be an Administrative Expenditure.
(5) "Advance" means a Revolving Credit Facility Advance and a
Term Credit Facility Advance.
(6) "Affected Loan" has the meaning specified in Section 10.4.
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(7) "Affiliate" means, as to any Person, any other Person
which directly or indirectly controls, or is controlled by, or is under common
control with such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
(8) "Agreement" means this Credit Agreement.
(9) "Agrilink" means Agrilink Foods, Inc., a New York
corporation, and a subsidiary of Pro-Fac.
(10) "Amortization" means the total amortization of the
Borrower as measured in accordance with GAAP.
(11) "Applicable Finance Charges" means (a) interest payable
under the Notes, including interest at the Default Rate and (b) the Revolving
Credit Facility Unused Commitment Fee.
(12) "Applicable Lending Office" means, for each Bank and for
each type of Advance, the lending office of such Bank designated as such for
such type of Advance on its signature page hereof or in the applicable
Assignment and Assumption Agreement or such other office of such Bank as such
Bank may from time to time specify to Administrative Agent and Borrower as the
office by which its Advances of such type are to be made and maintained.
(13) "Application of Payments Effective Date" has the meaning
specified in Section 10.2(C).
(14) "Asset Sale" means the sale or other transfer by Borrower
of (a) any fixed or capital asset, (b) any patent, trademark, copyright or other
similar intangible asset or (c) any capital stock or other equity interest of
any Person whose principal assets are fixed or capital assets, or intangible
assets, acquired from Borrower.
(15) "Assignment and Assumption Agreement" means an Assignment
and Assumption Agreement, substantially in the form of Exhibit A, pursuant to
which a Bank assigns and an Assignee assumes rights and obligations in
accordance with Section 13.5.
(16) "Assignee" has the meaning specified in Section 13.5.
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(17) "Authorized Officer" means the Treasurer of Borrower or
other similar financial officer authorized by Borrower and acceptable to the
Administrative Agent.
(18) "Bank's Office" means, in the case of each Bank, the
office of such Bank designated on the signature page hereof, or as designated in
the applicable Assignment and Assumption Agreement, or such other office as such
Bank may from time to time specify by notice to Borrower and the Administrative
Agent.
(19) "Banking Day" means any day on which commercial banks are
not authorized or required to close in the States of Oregon, Colorado or New
York.
(20) "Bankruptcy Case" means In re Agripac, Inc., Case
No. 699-60001-fra11 pending before the United States Bankruptcy Court for the
District of Oregon.
(21) "Borrower's Funding Account" means the following deposit
account of Borrower at: Key Bank of Oregon, ABA Number 123002011, account number
____________ or such other account as may be designated by Borrower in a written
notice to each of the Banks.
(22) "Borrowing Base" has the meaning specified in
Section 4.2.
(23) "Borrowing Base Certificate" means a Borrowing Base
Certificate in the form of Exhibit B.
(24) "Borrowing Notice" has the meaning specified in
Section 2.4.
(25) "Capital Expenditures" means "capital expenditures"
(including obligations under capitalized leases) as such term is defined
pursuant to GAAP.
(26) "Closing Date" means the date upon which the conditions
precedent set forth in Section 5.1 are satisfied or waived by all of the Banks.
(27) "CoBank Quoted Rate" means, as of any date, the interest
rate quoted by the Administrative Agent on that date as representing its cost of
funds for a Loan in an amount approximately equal to the Fixed Rate Loan and for
the Interest Period selected by Borrower pursuant to Section 2.4. The Co-Bank
Quoted Rate is established by the Administrative Agent in its sole discretion to
approximate its costs of funding such a Fixed Rate Loan for such an Interest
Period and may be based on actual or estimated costs of funding and/or any other
factors deemed appropriate by the Administrative Agent.
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(28) "Collateral" means, collectively, the Security Agreement
Collateral and the Mortgage Collateral.
(29) "Court Order" means the order of the United States
Bankruptcy Court for the District of Oregon approving the consummation of the
Acquisition in accordance with the Acquisition Agreement and covering such other
related matters as are acceptable to the Administrative Agent.
(30) "Credit Facilities" means the Revolving Credit Facility
and the Term Credit Facility.
(31) "Default Rate" means, with respect to each Advance
comprising the Outstanding Obligations, when Administrative Agent declares an
Event of Default hereunder (whether or not the due date therefor has been
accelerated as a result of such Event of Default), a rate per annum equal to:
(1) if such Advance is a Variable Rate Advance, a variable rate four percent
(4%) above the rate of interest then in effect thereon; and (2) if such Advance
is a Fixed Rate Advance, a fixed rate four percent (4%) above the applicable
Fixed Rate in effect thereon at the time of default until the end of the then
current Interest Period therefor and, thereafter, a variable rate four percent
(4%) above the rate of interest for a Variable Rate Advance.
(32) "Depreciation" means total depreciation of Borrower as
measured in accordance with GAAP.
(33) "Dollar" means the basic unit of currency of the United
States of America.
(34) "EBITDA" shall mean, for any period, (i) the net income
of Borrower for such period determined in accordance with GAAP, plus (ii)
amounts included in determination of net income for such period that have been
deducted for (A) Interest Expense for such period, (B) total Federal, state,
local and foreign income, and similar taxes of Borrower for such period, (C)
Depreciation for such period, (D) Amortization for such period, (E) any
write-down of goodwill created as a result of the Acquisition, (F) any Specified
Expenses for such period and (G) if such period is a Fiscal Quarter during the
Fiscal Year ending June 24, 2000, management information system expense up to a
maximum $500,000 in any such Fiscal Quarter. One-time gains (losses) and
extraordinary income (losses) will be subtracted (added) in the calculation of
EBITDA.
(35) "Environmental Term Loan Credit" means one or more
credits which may in accordance with Section 2.15 be applied as a credit against
principal due
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under the Term Loan; provided that (a) the aggregate amount of the Environmental
Term Loan Credit shall not exceed $4,000,000 and (b) any amount thereof that has
not been so applied on or before the third anniversary of the Closing Date shall
expire and no longer be available.
(36) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder.
(37) "Event of Default" shall mean an event specified in
Section 9.1.
(38) "Fiscal Quarter" means the fiscal quarter of Borrower
comprised of a 13 or 14 week period ending on the last Saturday in March, June,
September and December.
(39) "Fiscal Year" means the fiscal year of Borrower comprised
of a 52 or 53 week period ending on the last Saturday in June.
(40) "Fixed Rate Advance" means any Advance when and to the
extent the interest rate therefor is determined by reference to the Fixed Rate.
(41) "Fixed Rate" means a rate equal to the CoBank Quoted Rate
plus 419 basis points (4.19%).
(42) "Fixed Rate Loan" means a Loan when and to the extent the
interest rate for the Advances made as part of such Loan are determined in
relation to the Fixed Rate.
(43) "Funded Debt" means all indebtedness for borrowed money
of Borrower (including all indebtedness under the Notes), and shall include debt
created, assigned, or guaranteed by Borrower either directly or indirectly,
including obligations secured by Liens upon property of Borrower and upon which
such entity customarily pays the interest, and all obligations under capitalized
leases.
(44) "GAAP" means generally accepted accounting principles in
effect from time to time.
(45) "Good Faith Contest" means the contest of an item if: (1)
the item is diligently contested in good faith by appropriate proceedings timely
instituted; (2) either the item is (a) bonded or (b) adequate reserves are
established with respect to the contested item if and to the extent required in
accordance with GAAP; (3) during the period of such contest, the enforcement of
any contested item is effectively stayed;
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and (4) the failure to pay or comply with the contested item could not
reasonably be expected to result in a Material Adverse Affect.
(46) "Incremental Retained Earnings" means (a) with respect to
the period from the Closing Date to June 26, 1999, the amount by which Retained
Earnings at the end of such period exceeds Retained Earnings at the beginning of
such period and (b) with respect to each Fiscal Year beginning on or after June
27, 1999, the amount by which Retained Earnings at the end of such Fiscal Year
exceeds Retained Earnings at the beginning of such Fiscal Year.
(47) "Individual Facility Commitments" means, with respect to
a Bank, its Individual Revolving Credit Facility Commitment and its Individual
Term Credit Facility Commitment.
(48) "Individual Revolving Credit Facility Commitment" means,
with respect to each Bank, an amount set forth below, or as designated in the
applicable Assignment and Assumption Agreement, provided, however, that the
aggregate of all the Individual Revolving Credit Facility Commitments shall at
no time exceed the Total Revolving Credit Facility Commitment:
Name of Bank Individual Revolving Credit Facility
Commitment
CoBank $60,000,000
The Individual Revolving Credit Facility Commitment of each Bank shall reduce,
upon each reduction in the Total Revolving Credit Facility Commitment, in the
same proportion as the Individual Revolving Credit Facility Commitment of that
Bank bears to the aggregate of the Individual Revolving Credit Facility
Commitments.
(49) "Individual Term Credit Facility Commitment" means, with
respect to each Bank, an amount set forth below, or as designated in the
applicable Assignment and Assumption Agreement, provided, however, that the
aggregate of all the Individual Term Credit Facility Commitments shall at no
time exceed the Total Term Credit Facility Commitment:
Name of Bank Individual Term Credit Facility
Commitment
CoBank $30,000,000
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(50) "Interest Expense" means interest expense as measured in
accordance with GAAP.
(51) "Interest Period" means (a) with respect to any Fixed
Rate Advance, the period commencing on the date such Advance is made, converted
from a Variable Rate Advance, or renewed, as the case may be, and ending on such
date as Borrower may select pursuant to Section 2.4 provided that such ending
date is not earlier than the fifth (5th) Banking Day after the date of the
Advance and not later than the Maturity Date; and provided further that if an
Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day.
(52) "Law" means all federal, state and local statutes,
treaties, rules, regulations, ordinances, codes and binding judicial precedents.
(53) "Lien" means a mortgage, deed of trust, pledge, security
interest or other encumbrance of any kind, including, without limitation,
attachment, judgment and execution liens.
(54) "Loan" means the aggregate of the Revolving Credit
Facility Advances and the Term Facility Advances made by the Banks on a
particular date.
(55) "Loan Documents" means this Agreement and all instruments
and documents contemplated hereby, including, without limitation, the Notes, the
Security Agreement and the Mortgages, and any supplement thereto.
(56) "Material Adverse Effect" means any set of circumstances
or events that (a) is or could reasonably be expected to be material and adverse
to the condition (financial or otherwise), business or prospects of Borrower or
(b) materially impairs or could reasonably be expected to impair the ability of
Borrower to perform, in all material respects, all of its obligations under the
Loan Documents.
(57) "Maturity Date" means June 29, 2002.
(58) "Minimum Assignment" means, with respect to each Bank
that is making an assignment in accordance with the terms of Section 13.5, an
assignment of a portion of its Individual Facility Commitments and Credit
Facilities with an aggregate principal or face amount of at least Ten Million
Dollars ($10,000,000) where such amount is determined by aggregating each of the
following assigned by such Bank: (1) Unused Revolving Credit Facility
Commitment, and (2) the aggregate principal amount of its outstanding Advances.
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(59) "Minimum Hold" means, of a Bank's Individual Facility
Commitments, an amount equal to Ten Million Dollars ($10,000,000), but in no
event less than fifty percent (50%) of the Bank's Individual Facility
Commitments as of the Closing Date or, if the Bank is an assignee under an
Assignment and Assumption Agreement (other than CoBank or St. Paul Bank),as of
the date of consummation of the assignment made pursuant to such Assignment and
Assumption Agreement.
(60) "Monthly Date" means the first (1st) calendar day of each
month occurring on or after the Closing Date.
(61) "Mortgages" means mortgages covering Borrower's owned and
leased real property interests to be executed by Borrower in the form attached
hereto as Exhibit C.
(62) "Mortgage Collateral" means the "mortgaged premises"
described as such in the Mortgages.
(63) "Net Cash Sale Proceeds" means, with respect to any Asset
Sale, the sum of (a) the cash proceeds received by or for the account of
Borrower from such Asset Sale plus (b) the amount of cash received by or for the
account of Borrower upon the sale, collection or other liquidation of any
proceeds that are not cash from such Asset Sale, in each case net of (i) any
amount required to be paid to any Person owning an interest in the assets
disposed of, (ii) any amount applied to the repayment of Indebtedness secured by
a Lien permitted under Section 8.2 on the asset disposed of, (iii) any transfer,
income or other taxes payable as a result of such Asset Sale, (iv) professional
fees and expenses, fees due to any governmental agency, broker's commission and
other out-of-pocket costs of sale actually paid to any Person that is not an
Affiliate of Borrower attributable to such Asset Sale and (v) any reserves
established in accordance with GAAP in connection with such Asset Sale.
(64) "Notes" means the Revolving Credit Facility Notes and the
Term Credit Facility Notes.
(65) "Outstanding Obligations" means, as of any date of
determination, the sum of the aggregate principal amount of all Advances then
outstanding.
(66) "Participant" has the meaning specified in Section 13.5.
(67) "Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority, limited liability company or other entity of
whatever nature.
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(68) "PBGC" means the Pension Benefit Guaranty Corporation.
(69) "Plan" means an employee benefit plan covering any
officers or employees of Borrower or any of its Subsidiaries, any benefits of
which are, or are required to be, guaranteed by the PBGC.
(70) "Potential Default" means the occurrence of any event
which with the passage of time or the giving of notice or both could ripen into
an Event of Default.
(71) "Pro-Fac" means Pro-Fac Cooperative, Inc., a New York
corporation and the holders of 100% of the voting common stock of Borrower.
(72) "Pro Rata Share" means as to each Bank, a fraction, the
numerator of which is such Bank's Individual Credit Facility Commitments and the
denominator of which is the Total Facility Commitments.
(73) "Qualified Environmental Expenditure" means an
expenditure made by Borrower during the period from the Closing Date through the
third anniversary of the Closing Date that (a) is for the purpose of remediation
of non-compliance with applicable state and federal environmental laws or
regulations existing on the Closing Date on real property acquired by Borrower
pursuant to the Acquisition, (b) is appropriate, in the written opinion of an
independent environmental consultant acceptable to the Administrative Agent, for
the purpose of such remediation (assuming the work contemplated by such
expenditure is performed in accordance with professional standards), (c) does
not improve such real property beyond the point necessary to bring such real
property into adequate compliance with such laws and regulations and (d) has
been approved in writing by the Administrative Agent prior to the making of such
expenditure (provided, that such approval will not be withheld unless the
Administrative Agent reasonably determines that the requirements of clause (a)
or (c) have not been met).
(74) "Retained Earnings" means, as of any date, the retained
earnings of Borrower as of that date determined in accordance with GAAP.
(75) "Required Banks" means, except as otherwise provided in
Section 10.2(A) and (B) hereof, Banks holding at least 67% of the Total Facility
Commitments, regardless of whether any commitments are in effect.
(76) "Revolving Credit Facility" means the Revolving Credit
Facility established pursuant to Section 2.1.
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(77) "Revolving Credit Facility Availability Period" means the
period commencing on the Closing Date to, but not including, the Maturity Date.
(78) "Revolving Credit Facility Advance" has the meaning
specified in Section 2.1.
(79) "Revolving Credit Facility Commitment Fee" has the
meaning specified in Section 2.6.
(80) "Revolving Credit Facility Loan" has the meaning
specified in Section 2.1.
(81) "Revolving Credit Facility Note" means a promissory note
in the form of Exhibit D to be executed by Borrower.
(82) "Security Agreement" means a security agreement in the
form attached hereto as Exhibit E to be executed by Borrower.
(83) "Security Agreement Collateral" means the Collateral
described as such in the Security Agreement.
(84) "Seller" means Agripac, Inc., an Oregon non-profit
cooperative association that is as of the Closing Date the Debtor-in-Possession
in the Bankruptcy Case.
(85) "Service Agreement" means the Service Agreement dated
February __, 1999 between Borrower and Agrilink.
(86) "Specified Expenses" means (a) cash bonuses payable to
former members of Seller who become members of Pro-Fac not in excess of
$6,400,000 and (b) (i) cash payments to former members of Seller who are now
retired, (ii) severance payments to employees of Borrower who are former
employees of Seller and (iii) transactional costs related to the Acquisition
Agreement and this Agreement not in excess of $2,600,000 for all of the payments
described in this clause (b).
(87) "Subordinated Notes" means the Subordinated Promissory
Notes aggregating $12,000,000 of Borrower to be issued on the Closing Date
pursuant to the Subordinated Note Purchase Agreement.
(88) "Subordinated Note Purchase Agreement" means the Note
Purchase Agreement dated as of the Closing Date among Borrower, Co-Bank and St.
Paul Bank for the issuance, sale and purchase of the Subordinated Notes.
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(89) "Term Credit Facility" means the Term Credit Facility
established pursuant to Section 2.2.
(90) "Term Credit Facility Advance" has the meaning specified
in Section 2.2.
(91) "Term Credit Facility Loan" has the meaning specified in
Section 2.2.
(92) "Term Credit Facility Note" means a promissory note in
the form of Exhibit F to be executed by Borrower.
(93) "Total Facility Commitments" means the sum of all Banks'
Individual Facility Commitments.
(94) "Total Revolving Credit Facility Commitment" means,
subject to Sections 2.10 and 2.11, (a) during the period from the Closing Date
through June 26, 1999, $60,000,000, (b) during the period from June 27, 1999
through June 24, 2000, $55,000,000 and (c) during the period from June 25, 2000
and thereafter, $50,000,000.
(95) "Total Term Credit Facility Commitment" means Thirty
Million Dollars ($30,000,000).
(96) "Unused Revolving Credit Facility Commitment" means, with
respect to a Bank, the amount (if any) by which its Individual Revolving Credit
Facility Commitment exceeds its outstanding Revolving Credit Facility Advances.
(97) "Variable Rate" means the rate of interest established by
CoBank from time to time as its "National Variable Rate," which rate is subject
to change from time to time by CoBank effective as of such date as may be
specified by CoBank. The "National Variable Rate" is a reference rate
established by CoBank and does not necessarily represent the lowest available
variable interest rate for credit extended by CoBank.
(98) "Variable Rate Advance" means any Advance when and to the
extent the interest rate for such Advance is determined in relation to the
Variable Rate.
(99) "Variable Rate Loan" means any Loan when and to the
extent the interest rate for the Advances made as part of such Loan are
determined in relation to the Variable Rate.
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(100) "Variable Rate all-in Rate" means the Variable Rate plus
150 basis points (1.50%).
SECTION 1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All financial data
required to be delivered hereunder shall be prepared in accordance with GAAP
(except as otherwise provided in this Agreement).
SECTION 1.3 Computation of Time Periods. Except as otherwise provided
herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
SECTION 1.4 Rules of Construction. When used in this Agreement:
(1) a reference to a Law includes any amendment or modification to
such Law; (2) a reference to a Person includes its permitted successors and
permitted assigns and a reference to a Person in a particular capacity excludes
such Person in any other capacity; (3) a reference to an agreement, instrument
or document shall include such agreement, instrument or document as the same may
be amended, modified or supplemented from time to time and, if applicable, as
permitted by the Loan Documents, and reference to any Note includes any note
issued pursuant hereto in extension or renewal thereof and in substitution or
replacement therefor; (4) reference to any gender includes the other gender; (5)
the words "herein," "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision; (6) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof or
such Schedule or Exhibit hereto; and (7) the words "including" (and with
correlative meaning "include") means including, without limiting the generality
of any description preceding such term. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof. Any reference to Pacific Time shall mean such time as in
effect in the United States of America.
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ARTICLE II
LOANS AND ADVANCES
SECTION 2.1 Revolving Credit Facility Loans. Subject to the terms and
conditions of this Agreement, each of the Banks severally agrees to make
Advances (each Advance made by an individual Bank pursuant to this Section 2.1,
a "Revolving Credit Facility Advance" and the total of all such Advances made by
all the Banks at the same time, the "Revolving Credit Facility Loans") to
Borrower from time to time during the period from the Closing Date to the
Maturity Date, provided that:
(1) with respect to all Banks, the aggregate principal amount
of all Revolving Credit Facility Loans outstanding at any time does not exceed
the lesser of (a) the Total Revolving Credit Facility Commitment or (b) the
Borrowing Base; and
(2) with respect to each Bank, the aggregate principal amount
of such Bank's Revolving Credit Facility Advances outstanding at any time does
not exceed such Bank's Individual Revolving Credit Facility Commitment.
Each Revolving Credit Facility Advance will be made by the
Banks in accordance with each Bank's Pro Rata Share. The Revolving Credit
Facility Loans which do not utilize the Total Revolving Credit Facility
Commitment in full shall, with respect to Variable Rate Advances be in the
minimum amount of Five Hundred Thousand Dollars ($500,000) and in integral
multiples of One Hundred Thousand Dollars ($100,000) or with respect to Fixed
Rate Advances, be in the minimum amount of One Million Dollars ($1,000,000) and
in integral multiples of One Hundred Thousand Dollars ($100,000). Within the
limits of the Total Revolving Credit Facility Commitment and during the
Revolving Credit Facility Availability Period, Borrower may borrow, make an
optional prepayment pursuant to Section 2.9, and reborrow under this Section.
SECTION 2.2 Term Credit Facility Loan. Subject to the terms and
conditions of this Agreement, each of the Banks severally agrees to make an
Advance (each Advance made by an individual Bank pursuant to this Section 2.2 a
"Term Credit Facility Advance" and the total of all such advances made by all
the Banks at the same time, the "Term Credit Facility Loan") to Borrower on the
Closing Date, provided that:
(1) with respect to all Banks, the aggregate principal amount
of all Term Credit Facility Loans outstanding at any time does not exceed the
Total Term Credit Facility Commitment; and
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(2) with respect to each Bank, the aggregate principal amount
of such Bank's Term Credit Facility Advances outstanding at any time does not
exceed the total of such Bank's Individual Term Credit Facility Commitment.
Each Term Credit Facility Advance will be made by the Banks in
accordance with each Bank's Pro Rata Share. The Term Credit Facility Loan shall,
with respect to Variable Rate Advances be in the minimum amount of Five Hundred
Thousand Dollars ($500,000) and in integral multiples of One Hundred Thousand
Dollars ($100,000) or with respect to Fixed Rate Advances, be in the minimum
amount of One Million Dollars ($1,000,000) and in integral multiples of One
Hundred Thousand Dollars ($100,000). This is not a revolving credit facility and
Borrower may not reborrow any amounts prepaid pursuant to Section 2.9 under this
Section.
SECTION 2.3 All Loans and Advances. The failure of any Bank to make any
requested pro rata Advance to be made by it on the date specified for such
Advance shall not relieve any Bank of its obligation (if any) to make any
Advance on such date, but no Bank shall be responsible for the failure of any
other Bank to make any such Advance to be made by such Bank.
SECTION 2.4 Manner of Borrowing. Borrower shall give Administrative
Agent prior written or telegraphic or facsimile notice (effective upon receipt)
of each Advance (1) in the case of a Variable Rate Loan, on or before 11:00 A.M.
(Pacific time) on the day of making such Variable Rate Loan, and (2) in the case
of a Fixed Rate Loan, on or before 11:00 A.M. (Pacific time) at least three (3)
Banking Days prior to the date of making such Fixed Rate Loan.
Each of the foregoing notices ("Borrowing Notice") must
specify (1) the amount of such Loan, (2) the date of such Loan, (3) whether the
Loan will bear interest at (a) the Variable Rate or (b) the Fixed Rate and (4)
in the case of a Fixed Rate Loan, the initial Interest Period applicable
thereto. Administrative Agent shall promptly notify each Bank of each such
Borrowing Notice. Not later than 1:00 P.M. (Pacific time) on the date any such
Loan is to be funded, each Bank will make available to Administrative Agent at
Administrative Agent's Office, in immediately available funds, such Bank's Pro
Rata Share of such Loan. After Administrative Agent's receipt of such funds, but
not later than 2:00 P.M. (Pacific time), and upon fulfillment of the applicable
conditions set forth in Article V, Administrative Agent will make such Loan
available to Borrower at its counters, in immediately available funds, and will
transmit such funds by wire transfer to Borrower's Funding Account.
SECTION 2.5 Interest. In the case of each Fixed Rate Loan, Borrower
shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.1, subject to the following
limitations, (1) the Interest Period may
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not extend beyond the Maturity Date and (2) no Interest Period shall have a
duration of less than five (5) Banking Days and if any such proposed Interest
Period would otherwise be for a shorter period, such Interest Period shall not
be available. Fixed Rate Advances having different Interest Periods at the same
time hereunder shall be deemed separate Advances for purposes of the foregoing,
one for each Interest Period.
Borrower shall pay interest to Administrative Agent for the
benefit of each Bank on the outstanding and unpaid principal amount of such
Bank's Advances, at a rate per annum as follows (1) for a Variable Rate Advance
at a rate equal to the Variable Rate all-in Rate and (2) for a Fixed Rate
Advance at a rate equal to the Fixed Rate. Any principal amount not paid when
due (at maturity, by acceleration or otherwise) shall bear interest thereafter,
payable on demand, at the applicable Default Rate.
The interest rate on each Variable Rate Advance shall change
when the Variable Rate changes. Interest on each Advance shall not exceed the
maximum amount permitted under applicable Law and shall be calculated on the
basis of a year of three hundred sixty (360) days for the actual number of days
elapsed.
Accrued interest shall be due and payable in arrears (1) on
each Monthly Date, commencing with the first such date after making such Loan
and (2) interest accruing at the Default Rate shall be due and payable on
demand. Notwithstanding anything to the contrary contained in this Agreement,
accrued interest on Loans shall be due and payable on the Maturity Date.
Notwithstanding the foregoing, the aggregate Applicable
Finance Charges payable under this Agreement shall not exceed (a) $1,925,000 for
the period from the Closing Date through June 26, 1999 or (b) $5,500,000 for
each Fiscal Year thereafter. If in any such period or Fiscal Year the Applicable
Finance Charges limitation is reached, then thereafter for the remainder of such
period or Fiscal Year, Applicable Finance Charges otherwise payable under this
Agreement shall not accrue or be payable in any event. The limitation contained
in this paragraph shall cease to be effective upon (a) the occurrence of the
Event Default described in Section 10.1(M) or (b) the acceleration of the
amounts due under the Notes pursuant to Sections 10.2(A) or 10.2(B) and, in
either instance, any Applicable Finance Charges otherwise accruable or payable
during the then Fiscal Year that did not accrue or become payable by reason of
this paragraph shall automatically and retroactively accrue and become payable
to the same extent as any other interest under this Agreement.
Administrative Agent shall provide to Borrower written notice
of the amount of interest to be due and payable. Failure of Administrative Agent
to provide
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such prior written notice, however, shall not affect Borrower's obligation to
make such interest payments when due.
SECTION 2.6 Fees.
The Borrower agrees to pay to Administrative Agent for the
benefit of Banks a commitment fee ("Revolving Credit Facility Unused Commitment
Fee") in an amount equal to fifty basis points (.50 of 1%) per annum times the
amount, if any, by which (a) the lesser of (i) the Total Revolving Credit
Facility Commitment or (ii) $50,000,000 exceeds (b) the average daily aggregate
of Revolving Credit Facility Advances, payable on each Monthly Date in arrears.
SECTION 2.7 Notes. All Revolving Credit Facility Advances made by each
Bank shall be evidenced by, and repaid with interest in accordance with, a
single Revolving Credit Facility Note in the stated maximum principal amount
equal to such Bank's Individual Revolving Credit Facility Commitment, dated the
date such Bank becomes a Bank, payable to such Bank for the account of its
Applicable Lending Office, and maturing as to principal on the Maturity Date.
All Term Credit Facility Advances made by each Bank shall be
evidenced by, and repaid with interest in accordance with, a single Term Credit
Facility Note in the stated maximum principal amount equal to such Bank's
Individual Term Credit Facility Commitment, dated the date such Bank becomes a
Bank, payable to such Bank for the account of its Applicable Lending Office, and
maturing as to principal on the Maturity Date.
Each Bank shall record on its books and records or on the
schedule to its applicable Note the amount of each Advance made by it hereunder,
the rate or rate option and interest period applicable thereto, all payments of
principal and interest, and the principal balance from time to time outstanding.
The Bank's record thereof, whether shown on such books and records or on the
schedule to the applicable Note, shall be prima facie evidence as to all such
amounts and shall be binding on Borrower absent manifest error.
SECTION 2.8 Mandatory Prepayments. Borrower shall prepay the Loans
within two (2) Banking Days after the consummation of any Asset Sale by an
amount equal to the Net Cash Proceeds thereof. Concurrently with such Asset
Sale, Borrower shall notify the Administrative Agent in writing whether or not
it intends to acquire replacement assets of the kind or type which were the
subject of such Asset Sale within the ninety (90) day period following the Asset
Sale. If Borrower does not so notify the Administrative Agent that it intends to
acquire such replacement assets within such time period, then (a) the Net Cash
Proceeds shall be applied to prepay
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either the Revolving Credit Facility or the Term Credit Facility, as may be
designated by the Administrative Agent and (b) if applied to the Revolving
Credit Facility, the Total Revolving Facility Credit Commitment shall also be
permanently reduced by such amount as may be designated by the Administrative
Agent up to the amount of such Net Cash Sales Proceeds. If Borrower does so
notify the Administrative Agent that it intends to acquire such replacement
assets within such time period, then (a) the Net Cash Proceeds shall be applied
to prepay the Revolving Credit Facility and (b) if Borrower fails to provide the
Administrative Agent on or before the 90th day following the Asset Sale with
evidence satisfactory to the Administrative Agent that it has in fact acquired
the replacement assets referred to in its earlier notice, then as of such 90th
day following the Asset Sale (a) the prepayment shall, if the Administrative
Agent so designates, be re-allocated to apply to the Term Credit Facility or (b)
the Total Revolving Credit Facility Commitment shall be permanently reduced by
such amount as may be designated by the Administrative Agent up to the amount of
such Net Cash Sales Proceeds.
SECTION 2.9 Optional Prepayments. Borrower may prepay any Loans upon
giving Administrative Agent prior written or facsimile notice (effective upon
receipt) no later than 11:00 A.M. (Pacific Time) three Banking Days prior to the
date of such prepayment.
Each prepayment of Loans made under this Section 2.9 may be
made in whole or in part and will be made with accrued interest to the date of
such prepayment on the amount prepaid, provided that (1) each partial prepayment
shall be in a principal amount of not less than One Million Dollars ($1,000,000)
and integral multiples of One Hundred Thousand Dollars ($100,000) and (2)
Borrower pays compensation in accordance with Section 11.1. Each such prepayment
shall be paid to the Banks in accordance with their Pro Rata Share.
SECTION 2.10 Mandatory Reduction of Revolving Credit Facility
Commitment. The Total Revolving Credit Facility Commitment shall be permanently
reduced (a) pursuant to Section 2.8 to the extent implemented by the
Administrative Agent in accordance therewith and (b) as of the 90th day after
the end of each Fiscal Year (including the Fiscal Year ending June 26, 1999), by
an amount equal to 75% of the Incremental Retained Earnings for that Fiscal
Year.
SECTION 2.11 Optional Reduction of Revolving Credit Facility
Commitment. Borrower may at any time, and from time to time, voluntarily and
permanently reduce the Total Revolving Credit Facility Commitment upon prior
written or facsimile notice (effective upon receipt) no later than 11:00 a.m.
(Pacific Time) three Banking Days prior to such reduction. Such voluntary
reduction under this Section 2.11 shall be in
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an amount not less than One Million Dollars ($1,000,000) and integral multiples
of One Hundred Thousand Dollars ($100,000).
SECTION 2.12 Manner of Payment. Borrower shall make each payment under
this Agreement and under each Note not later than 12:00 noon (Pacific Time) on
the date when due in Dollars to the Administrative Agent for the benefit of each
Bank in immediately available funds.
Borrower hereby authorizes each Bank, if and to the extent
payment of the Loans or interest thereon or any fee is not made when due under
this Agreement or under the Notes, to charge from time to time against any
account it maintains with such Bank any such amount so due to such Bank and/or
any or all of the other Banks. Each Bank that maintains any such account agrees
that it holds such account as trustee for the Banks hereunder.
Except to the extent provided in this Agreement, whenever any
payment to be made under this Agreement or under the Notes shall be stated to be
due on any day other than a Banking Day, such payment shall be made on the next
succeeding Banking Day, and such extension of time shall in such case be
included in the computation of the payment of interest and the fees.
Any payment of an Advance shall be made to the Banks in
accordance with their Pro Rata Share.
SECTION 2.13 Conversions or Continuations. Provided that no Potential
Default or Event of Default has occurred and is continuing, Borrower shall have
the right to convert all or a part of one type of Loan into another type of Loan
or to continue all or any part of a Fixed Rate Loan, at any time or from time to
time, provided that (1) Borrower shall give Administrative Agent (a) written or
facsimile notice of each such conversion into a Variable Rate Loan by no later
than 11:00 A.M. (Pacific Time) on the date of such conversion and (b) written or
facsimile notice of each conversion into and continuation of a Fixed Rate Loan
by no later than 11:00 A.M. (Pacific Time) three Banking Days prior to such
conversion or continuation, (2) Fixed Rate Loans may be converted or continued
only on the last day of an Interest Period for such Loans and (3) after giving
effect to such continuation or conversion the minimum principal amount of the
outstanding Fixed Rate Loans with the same Interest Period will be One Million
Dollars ($1,000,000) and integral multiples of One Hundred Thousand Dollars
($100,000). All notices given under this Section shall be irrevocable.
Each such notice of conversion or continuation shall specify
the Advance to be converted or continued and the amount thereof and the date of
conversion or
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continuation (which shall be a Banking Day) and, in respect of a Fixed Rate
Loan, the duration of an Interest Period. Each such notice of the duration of an
Interest Period shall specify the Fixed Rate Loan to which such Interest Period
is to relate. In the event that Borrower fails to select the type of Loan, or
the duration of any Interest Period for any Fixed Rate Loan, within the time
period and otherwise as provided in this Section, such Loan (if outstanding as a
Fixed Rate Loan) will be automatically converted into a Variable Rate Loan on
the last day of the then current Interest Period for such Fixed Rate Loan.
SECTION 2.14 Netting Advances. Borrower and each Bank agree that on any
Banking Day that Borrower is obligated to repay such Bank's Advance and such
Bank is obligated to make an Advance to Borrower, then to the extent the Advance
to be made on such Banking Day exceeds the principal amount of the Advance to be
prepaid or repaid on that Banking Day, the Bank, at Bank's option, will only
remit to Borrower the difference between such Advances and to the extent the
principal amount of the Advance to be prepaid or repaid on such Day exceeds the
Advance to be made on that Banking Day, Borrower will only remit to the Bank the
difference between such Advances, and in each case such Bank's or Borrower's
obligation to make payment or prepayment or repayment, as the case may be, of an
amount equal to the smaller Advance shall be automatically satisfied or
discharged. Nothing contained herein shall affect the obligation to make an
interest payment (if any) on such date.
SECTION 2.15 Environmental Term Loan Credit. From time to time during
the period from the Closing Date through the third anniversary of the Closing
Date, Borrower may seek an Environmental Term Loan Credit in accordance with
this Section 2.15 in an amount equal to Qualified Environmental Expenditures
made by Borrower during that period. Following payment of a Qualified
Environmental Expenditure, Borrower shall submit to the Administrative Agent a
written report acceptable to the Administrative Agent setting forth detailed
information respecting the Qualified Environmental Expenditure. The
Administrative Agent shall, within thirty (30) days after receipt of such
report, deliver to Borrower a written notice setting forth the amount of the
Environmental Term Loan Credit, to be effective as of the date of such notice.
ARTICLE III
SECURITY
SECTION 3.1 Security. The Credit Facilities, the Loans, the Advances,
the Notes, interest, fees and all other obligations of Borrower hereunder shall
be secured by a first priority security interest in the Mortgage Collateral and
the Security
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Agreement Collateral. All such security shall be held in the name of the
Administrative Agent for the benefit of the Banks. All obligations of Borrower
to CoBank hereunder shall also be secured by an exclusive statutory lien for the
benefit of CoBank on all equities of CoBank owned by Borrower.
ARTICLE IV
LIMITATIONS ON OUTSTANDINGS
SECTION 4.1 Limitation on Revolving Credit Facility Outstandings.
Notwithstanding anything to the contrary contained in this Agreement, at no time
subsequent to April 2, 1999 may the aggregate principal amount of all Revolving
Credit Facility Loans exceed the lesser of the Total Revolving Credit Facility
Commitment or the "Borrowing Base" (as defined below).
SECTION 4.2 Borrowing Base. For purposes hereof the term "Borrowing
Base" shall mean an amount, as determined on the basis of the most recent
Borrowing Base Certificate furnished pursuant to Section 4.3 hereof, as follows:
(A) Trade Receivables. 85% of the trade accounts
receivable of Borrower which: (1) arise from the sale and delivery of inventory
on ordinary trade terms; (2) are evidenced by an invoice; (3) are net of any
credit, trade or other allowance given to the account debtor; (4) are not owing
by an account debtor who has become insolvent or is the subject of any
bankruptcy, reorganization, liquidation or like proceeding; (5) are not subject
to any offset or deduction; (6) are not owing by an Affiliate of Borrower; (7)
are subject to a first priority perfected security interest in favor of the
Administrative Agent for the benefit of the Banks and are not subject to a Lien
in favor of any other Person, except as permitted by Section 8.2 hereof; (8) are
payable in Dollars; (9) are not owing by an obligor located outside of the
United States of America unless the receivable is supported by a letter of
credit issued by a bank acceptable to the Administrative Agent; (10) are not
government receivables; and (11) have not been determined by the Required Banks
to be unacceptable for any other reason. The above provisions notwithstanding,
trade accounts receivables shall also exclude (i) that portion of any account
that is past due more than 60 days from the date the account was due, (ii) that
portion of any account that is the subject of any dispute, counterclaim or
defense irrespective of the aging of such account, (iii) any contra account no
matter when created, and (iv) an entire account if 25% or more of the account is
past due more than 60 days from the date the account was due; plus
(B) Inventory. 65% of the value, as determined on the
basis of the lower of cost or market valuation, of inventory (processed and
unprocessed) of
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agricultural products of Borrower that: (1) substantially conform to Borrower's
advertised or represented specifications; (2) are able to be sold in the
ordinary course of business; (3) have not been determined by the Required Banks
to be unacceptable due to age, type, variety, quality, quantity, value,
marketability, or location; (4) are subject to a first priority perfected
security interest in favor of the Administrative Agent for the benefit of the
Banks and are not subject to a Lien in favor of any other Person, except as
permitted by Section 8.2 hereof; and (5) meet all applicable governmental
standards.
SECTION 4.3 Borrowing Base Certificate. Within 5 Banking Days after
March 27, 1999 and the last business day in each subsequent fiscal month,
Borrower shall furnish the Administrative Agent with: (1) a Borrowing Base
Certificate setting forth a computation of the Borrowing Base as of the month
ending date, certified as correct by an Authorized Officer, and (2) such
documentation supporting the amounts and values reflected in the Borrowing Base
Certificate as may be required by the Administrative Agent. Notwithstanding the
above, Borrower will submit a Borrowing Base Certificate, certified as correct
by an Authorized Officer, as of such other times or intervals as the
Administrative Agent shall reasonably request.
SECTION 4.4 Mandatory Repayment. If at any time the aggregate principal
amount of all Revolving Credit Facility Loans exceeds the Borrowing Base set
forth in the most recent Borrowing Base Certificate, then Borrower shall
immediately notify each Bank and repay so much of the outstanding Revolving
Credit Facility Loans as is necessary to reduce the amount of those outstandings
to the limits of the Borrowing Base. In the event any Fixed Rate Loan is
required to be prepaid, then in addition to the mandatory prepayment required
hereby, Borrower shall pay compensation provided for in Section 11.1 hereof.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 Conditions Precedent to Initial Extension of Credit. The
obligation of each Bank to extend credit hereunder is subject to the conditions
precedent that the Administrative Agent shall have received in sufficient copies
for each Bank:
(A) Revolving Credit Facility. The Revolving Credit
Facility Note of each Bank duly executed by Borrower.
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(B) Term Credit Facility Notes. The Term Credit
Facility Note of each Bank duly executed by Borrower.
(C) Security Agreement. The Security Agreement, duly
executed by Borrower, together with duly executed copies of such financing
statements, instruments or documents, as is necessary, in the opinion of the
Administrative Agent, to perfect the security interest of the Banks in the
Security Agreement Collateral.
(D) Mortgages. The Mortgages duly executed and
acknowledged by Borrower.
(E) Title Insurance. An ALTA lender's form of title
insurance with a revolving credit endorsement (i) with respect to the real
property interests located in the County of Marion, State of Oregon in a face
amount acceptable to the Administrative Agent, (ii) with respect to the real
property interests located in the County of Walla Walla, State of Washington in
a face amount acceptable to the Administrative Agent and (iii) with respect to
the real property leasehold interests located in the Counties of Walla Walla and
Yakima, State of Washington in a face amount acceptable to the Administrative
Agent insuring the Mortgages as a first lien on the Mortgage Collateral, subject
only to those exceptions approved in writing by the Administrative Agent.
(F) Corporate Documentation. Certified copies of
Borrower's articles of incorporation and bylaws, together with documentation
evidencing its qualification to transact business in Oregon.
(G) Evidence of Corporate Action. Resolutions, in
form and content satisfactory to the Administrative Agent and each Bank and
certified as of the Closing Date by the Secretary or Assistant Secretary of
Borrower, authorizing Borrower to enter into the Loan Documents and the
instruments and documents contemplated hereby.
(H) Incumbency Certificate. A certificate (dated as
of the Closing Date) of the Secretary or Assistant Secretary of Borrower
certifying the names and true signatures of the officers of Borrower authorized
to sign the Loan Documents and the instruments and documents contemplated
hereby.
(I) Legal Opinion. The written legal opinion of
Borrower's counsel, in form and substance acceptable to the Administrative
Agent, with respect to the matters described in Sections 6.1, 6.2, 6.3 and 6.6.
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(J) Court Order. A copy of the Court Order (which
shall be in form and substance acceptable to the Administrative Agent).
(K) Acquisition Agreement. A copy of the Acquisition
Agreement (which shall be in form and substance satisfactory to the
Administrative Agent) certified to be in full force and effect by the Secretary
or Assistant Secretary of Borrower.
(L) Service Agreement. A copy of the Service
Agreement (which shall be in form and substance satisfactory to the
Administrative Agent) certified to be in full force and effect by the Secretary
or Assistant Secretary of Borrower.
(M) Additional Documentation. Such other approvals,
opinions or documents as any Bank may reasonably request.
SECTION 5.2 Conditions Precedent to All Advances. The obligation of
each Bank to make each Advance shall be subject to the further conditions
precedent that on the date of providing such Advance:
(A) Representations and Warranties. Each of the
representations and warranties set forth in Article VI hereof shall be and
remain true and correct as of said date as if made at said date;
(B) No Material Adverse Effect. No event or
circumstances constituting a Material Adverse Effect has occurred since (i) the
Closing Date or (ii) the date of the most recent financial statements furnished
to the Banks pursuant to Section 7.9 hereof; and
(C) Default. No Event of Default or Potential Default
shall have occurred and be continuing or would result from providing such
Advance;
and each request for an Advance shall be and shall constitute a representation
and warranty to the foregoing effects.
SECTION 5.3 Condition Precedent to Certain Revolving Advances. The
obligation of each Bank to make Revolving Advances at a time when the limitation
on interest set forth in the penultimate paragraph of Section 2.5 is applicable
shall be subject to the further condition precedent that Borrower sets forth in
the Borrowing Notice therefor a statement to the effect that the proceeds
thereof will be used to discharge an existing bona fide obligation of Borrower
and not for investing the same in investment securities.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to each Bank that:
SECTION 6.1 Incorporation, Good Standing, Etc. Borrower is a
corporation duly organized and existing under the laws of the State of New York
and is a subsidiary of Pro-Fac. Borrower has the power and authority to own its
assets and to transact the business in which it is now engaged and is duly
qualified as a foreign corporation and is in good standing under the laws of the
State of Oregon and each other jurisdiction in which such qualification is
required.
SECTION 6.2 Power and Authority. The execution, delivery, and
performance by Borrower of the Loan Documents have been duly authorized by all
necessary corporate action and do not and will not: (1) contravene any provision
of its charter or bylaws; (2) result in a breach of or constitute a default
under any loan, credit agreement or other agreement to which it is a party or by
which it or its properties may be bound or affected; (3) result in, or require,
the creation or imposition of any unpermitted Lien upon any of its property; or
(4) violate any provision of any law, rule, regulation, judgment, order or
decree to which it is bound.
SECTION 6.3 Legally Enforceable Agreement. This Agreement and each of
the other Loan Documents constitute legal, valid and binding obligations of
Borrower, enforceable in accordance with their terms, except to the extent that
such enforcement may be limited by applicable bankruptcy, insolvency, and other
laws affecting creditors' rights generally.
SECTION 6.4 Court Approval. The Acquisition has been approved by the
Court Order.
SECTION 6.5 Financial Statements. Borrower has delivered to the Banks a
copy of an unaudited pro forma opening balance sheet of Borrower, giving effect
to the Acquisition, this Agreement, the Subordinated Notes, and all other
transactions contemplated to occur on the Closing Date. Such balance sheet was
prepared pursuant to the procedures described in the notes thereto and fairly
reflects the pro forma unaudited financial condition of Borrower on the Closing
Date. Borrower has no significant known contingent liabilities other than as
indicated on said balance sheet.
SECTION 6.6 Litigation. There are no pending or, to the knowledge of
Borrower, threatened actions or proceedings against or affecting Borrower or any
of its Subsidiaries before any court, arbitrator, governmental agency or
instrumentality, or
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other body which may, in any one case or in the aggregate, constitute a Material
Adverse Effect.
SECTION 6.7 Ownership and Liens. Except as may be permitted pursuant to
Section 8.2 hereof, none of the assets of Borrower (including its leasehold
interests) are subject to a Lien.
SECTION 6.8 Investments. As of the date hereof, Borrower does not own
any capital stock in any corporation or any equity interest in any business
entity other than: (i) equity in CoBank or (ii) equity in the St. Paul Bank.
SECTION 6.9 ERISA. Borrower is in compliance in all material respects
with ERISA, to the extent applicable to it, and have received no notice to the
contrary from the PBGC or any other governmental entity or agency.
SECTION 6.10 Operation of Business. Borrower possess all licenses,
permits, franchises, trademarks, and trade names (or rights thereto) to conduct
its business substantially as is contemplated to be conducted, and Borrower is
not in violation of any rights of others with respect to any of the foregoing.
SECTION 6.11 Taxes. Borrower has timely filed all tax returns (federal,
state and local) required to be filed and has paid all taxes, assessments and
governmental charges required to be paid as shown thereby. There are no pending
or, to the knowledge of Borrower, threatened investigations, objections or
controversies involving any return filed by Borrower for any Fiscal Year.
SECTION 6.12 Environment. Except as disclosed in Schedule 6.12 hereto,
Borrower is in compliance, in all material respects, with all applicable
environmental laws, rules and regulations, and Borrower has not received any
notice to the contrary or to the effect that any of its properties are the
subject of any investigation to determine whether compliance exists with all
such laws, rules and regulations.
SECTION 6.13 No Default. Borrower is in full compliance with the terms
and conditions of this Agreement, and no Event of Default or Potential Default
is existing hereunder.
SECTION 6.14 Security Interests. Upon the execution and delivery of the
Security Agreement, the Security Agreement will create a valid security interest
in the Security Agreement Collateral described therein securing the Outstanding
Obligations (subject only to Liens permitted by clauses (ii) through (vii) and
clause (ix) of Section 8.2 and to such qualifications and exceptions as are
contained in the Uniform Commercial Code with respect to the priority of
security interests perfected by means
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other than the filing of a financing statement or with respect to the creation
of security interests in property to which Article 9 of the Uniform Commercial
Code does not apply) and upon the proper filing of the UCC-1 financing
statements delivered to the Administrative Agent pursuant to Section 5.1 with
the appropriate governmental agency all action necessary to perfect the security
interest so created (to the extent that such security interest may be perfected
by filing) will have been taken and completed. Upon the execution and delivery
of the Mortgages, the Mortgages will create a valid Lien in the Mortgage
Collateral described therein securing the Outstanding Obligations (subject only
to Liens permitted by clauses (ii) through (vii) and clause (ix) of Section
8.2), and upon recordation thereof with the appropriate governmental agency, all
action necessary to perfect the Lien so created will have been taken and
completed.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Bank
shall have any Individual Credit Facility Commitment hereunder or any other
amount is owing by Borrower to any Bank hereunder or under any other Loan
Document, Borrower shall:
SECTION 7.1 Cooperative Status. Subject to Section 13.17, maintain its
status as a subsidiary of Pro-Fac eligible to borrow from CoBank.
SECTION 7.2 Corporate Existence, Etc. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation
or formation, and qualify and remain qualified as a foreign corporation or
entity in each jurisdiction in which such qualification is required except where
the failure to so qualify has not and could not reasonably be expected to result
in a Material Adverse Effect.
SECTION 7.3 Maintenance of Property. Keep and maintain all of its
properties that are necessary or useful in the proper conduct of its business in
good condition, and make all necessary renewals, replacements, additions,
betterments, and improvements thereto.
SECTION 7.4 Compliance with Laws. Comply in all material respects with
all applicable Laws. Without limiting the foregoing, Borrower agrees to comply
in all material respects with all Laws relating to environmental protection.
SECTION 7.5 Taxes. Duly pay and discharge, all taxes, rates,
assessments, fees and governmental charges upon or against Borrower or against
its properties
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before the same becomes delinquent and before penalties accrue thereon unless
and to the extent that the same is the subject of a Good Faith Contest.
SECTION 7.6 Insurance. Maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or similar
business and similarly situated, and make such increases in the type or amount
of coverage as the Administrative Agent may reasonably request. All such
policies insuring any Collateral shall provide for loss payable clauses or
endorsements in form and content acceptable to Administrative Agent. At the
request of the Administrative Agent or any Bank, all policies (or such other
proof of compliance with this Section as may be satisfactory to the
Administrative Agent or such Bank) shall be delivered to the Administrative
Agent.
SECTION 7.7 Inspection. Permit any Bank or its representatives, agents
or independent contractors, during normal business hours or at such other times
as the parties may agree to: (a) inspect or examine its properties, books and
records; (b) to make copies of its books and records; and (c) discuss its
affairs, finances and accounts with its officers, employees and independent
certified public accountants. Without limiting the foregoing, Collateral
evaluations will be conducted by the Administrative Agent (including agents
retained by the Administrative Agent) on a quarterly basis. All costs and
expenses related to such quarterly Collateral evaluations shall be paid by the
Borrower to the Administrative Agent upon demand.
SECTION 7.8 Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of Borrower.
SECTION 7.9 Reports and Notices. Furnish to the Administrative Agent:
(A) Monthly Financial Statements. As soon as
available but in no event more than 25 days after the close of each fiscal
month, a balance sheet of Borrower as of the end of such month, a statement of
income of Borrower for such period and for the Fiscal Year to date, and such
other monthly financial statements as Administrative Agent may specifically
request, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous Fiscal Year and
prepared by Borrower in accordance with GAAP consistently applied.
(B) Annual Financial Statements. As soon as
available, but in no event later than 90 days after the end of each Fiscal Year
of Borrower financial statements of Borrower for such Fiscal Year prepared in
accordance with GAAP
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consistently applied. Such financial statements shall: (i) be audited in
accordance with generally accepted auditing standards by independent certified
public accountants of nationally recognized standing; (ii) be accompanied by a
report of such accountants containing an unqualified opinion; (iii) be prepared
in reasonable detail and in comparative form to the prior Fiscal Year; and (iv)
include a balance sheet, a statement of income, a statement of retained
earnings, a statement of cash flows, and all notes and schedules relating
thereto.
(C) Statement by Authorized Officer. Together with
the monthly financial statements received as of the end of each month, furnished
to the Administrative Agent pursuant to paragraph (A) and the annual statement
furnished to Administrative Agent under paragraph (B) above, a written statement
of Borrower signed by an Authorized Officer (i) to the effect that the
Authorized Officer has re-examined the terms and provisions of the Loan
Documents and that to the best of his or her knowledge and belief no Potential
Default or Event of Default has occurred during the period covered by such
statements or, if any such Potential Default or Event of Default has occurred
during such period, setting forth a description of such Potential Default or
Event of Default and specifying the action, if any, taken by Borrower to remedy
the same; and (ii) setting forth the information and computations (in sufficient
detail) required to establish whether Borrower was in compliance with the
requirements of Sections 9.1 and 9.2 as of the end of the most recent Fiscal
Quarter.
(D) Annual Budget. As soon as available but in no
event later than thirty (30) days after the commencement of any Fiscal Year of
the Borrower occurring during the term hereof, copies of Borrower's annual
budgets and forecasts of operations and capital expenditures.
(E) Notice of Non-Environmental Litigation. Promptly
after the commencement thereof, notice of the commencement of all actions,
suits, or proceedings before any court, arbitrator, governmental agency or
instrumentality, or other body affecting Borrower which, if determined adversely
to Borrower could result in a Material Adverse Effect.
(F) Notice of Environmental Litigation, Etc. Promptly
after receipt thereof, notice of the receipt of all pleadings, orders,
complaints, indictments, or any other communication alleging a condition that
may require Borrower to undertake or to contribute to a cleanup or other
response under environmental Laws, or which seek penalties, damages, injunctive
relief, or criminal sanctions related to alleged violations of such Laws, or
which claim personal injury or property damage to any person as a result of
environmental factors or conditions.
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(G) Notice of Default or Material Adverse Affect.
Promptly after becoming aware thereof, notice of the occurrence of a Potential
Default or of an Event of Default or of the occurrence of any event or
circumstance that constitutes a Material Adverse Effect (including, without
limitation, any material loss or depreciation in the value of the Collateral).
(H) ERISA. At least 30 days prior to the effective
date thereof notice of Borrower's intent to withdraw from or terminate any Plan.
(I) Other Information. Such other information
regarding the condition or operations, financial or otherwise, of Borrower as
Administrative Agent may, from time to time, reasonably request, including, but
not limited to, copies of all pleadings, notices, and communications referred to
in Subsections (E) and (F) above.
SECTION 7.10 ERISA. Promptly pay and discharge all obligations and
liabilities under ERISA of a character which if unpaid or unperformed might
result in the imposition of a Lien against any of its property and not terminate
any Plan or withdraw therefrom unless it shall be in compliance with all of the
terms and conditions of this Agreement after giving effect to any liability to
the PBGC resulting from such termination or withdrawal.
SECTION 7.11 Use of Proceeds. Use the Credit Facilities provided for
herein solely to finance the Acquisition, to pay the Specified Expenses and to
finance subsequent short-term working capital requirements of Borrower.
SECTION 7.12 Change In Business. Continue to engage in business of the
same general type as now conducted by it and not engage in any business
activities unrelated to its present business activities or operations.
SECTION 7.13 Investments In CoBank. Purchase such equity in CoBank as
CoBank may from time to time require in accordance with its bylaws and capital
plan. In connection therewith, Borrower hereby acknowledges receipt of a written
description of the terms and conditions under which such equity is issued.
SECTION 7.14 Transfer Pricing and Allocations. Maintain transfer
pricing and sales allocation policies and practices between Borrower, on the one
hand, and Pro-Fac and Agrilink, on the other hand, that are designed to be fair
and equitable to Borrower and its creditors (including the Banks). It is
understood and agreed that the inspection rights of the Administrative Agent and
the Banks under Section 7.7 shall extend to inspection of such records as may be
appropriate to verify the foregoing.
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ARTICLE VIII
NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid or any Bank
shall have any Individual Credit Facility Commitment hereunder or any other
amount is owing by Borrower to any Bank hereunder or under any other Loan
Document, Borrower shall not:
SECTION 8.1 Borrowings. Create, incur, assume, or allow to exist,
directly or indirectly, any indebtedness or liability for borrowed money
(including trade or bankers' acceptances), letters of credit, or the deferred
purchase price of property or services (including capitalized leases), except
for: (i) debt to Banks; (ii) accounts payable to trade creditors incurred in the
ordinary course of business; (iii) current operating liabilities (other than for
borrowed money) incurred in the ordinary course of business; (iv) the
Subordinated Notes; and (v) purchase money indebtedness arising under equipment
leases or similar agreements assumed by Borrower pursuant to the Acquisition
Agreement.
SECTION 8.2 Liens. Create, incur, assume, or allow to exist any
mortgage, deed of trust, pledge, lien (including the lien of an attachment,
judgment, or execution), security interest, or other encumbrance of any kind
upon any of its property, real or personal (collectively, "Liens"). The
foregoing restrictions shall not apply to: (i) Liens in favor of Administrative
Agent on behalf of the Banks; (ii) Liens for taxes, assessments, or governmental
charges that are not past due; (iii) Liens and deposits under workers'
compensation, unemployment insurance, and social security Laws; (iv) Liens and
deposits to secure the performance of bids, tenders, contracts (other than
contracts for the payment of money), and like obligations arising in the
ordinary course of business as conducted on the date hereof; (v) Liens imposed
by Law in favor of mechanics, materialmen, warehousemen, and like persons that
secure obligations that are not past due; (vi) easements, rights-of-way,
restrictions, and other similar encumbrances which, in the aggregate, do not
materially interfere with the occupation, use, and enjoyment of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto; (vii) liens retained by
software vendors in conjunction with software license agreements; (viii) Liens
securing the Subordinated Notes subordinate in all respects to the Liens under
the Security Agreement and Mortgages and (ix) Liens securing indebtedness
permitted by clause (v) of Section 8.1.
SECTION 8.3 Transfer Of Assets. Sell, transfer, lease, or otherwise
dispose of any of its assets, except in the ordinary course of Borrower's
business.
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SECTION 8.4 Mergers, Acquisitions, Etc. Merge or consolidate with any
other entity or acquire all or a material part of the assets of any Person, or
form or create any new subsidiary or affiliate, or commence operations under any
other name, organization, or entity, including any joint venture, without the
prior written consent of the Required Banks (which shall not be unreasonably
withheld or delayed).
SECTION 8.5 Loans. Lend or advance money, credit, or property to any
Person, except for loans and other financial services extended in the ordinary
course of Borrower's business.
SECTION 8.6 Contingent Liabilities. Assume, guarantee, become liable as
a surety, endorse, contingently agree to purchase, or otherwise be or become
liable, directly or indirectly (including, but not limited to, by means of a
maintenance agreement, an asset or stock purchase agreement, or any other
agreement designed to ensure any creditor against loss), for or on account of
the obligation of any person or entity, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of the Borrower's business, except for leasehold indemnification
agreements required by lessors in the ordinary course of business.
SECTION 8.7 Change in Business. Engage in any business activities or
operations substantially different from or unrelated to Borrower's contemplated
business activities or operations.
SECTION 8.8 Dividends, Etc. Declare or pay any dividends or retire
capital equities, or make any other distribution of its earnings, surplus or
assets to any holder of its capital stock, except that Borrower may (a) declare
and pay cash dividends in each Fiscal Year in an amount not in excess of 20% (or
such higher minimum percentage as may be required under Subchapter T of the
Internal Revenue Code if then applicable to Borrower) of the net income of
Borrower for the immediately preceding Fiscal Year as set forth in the audited
financial statements of Borrower for such Fiscal Year, and (b) make qualified
and non-qualified retain allocations; provided in any case described in clause
(a) or (b) that no Potential Default or Event of Default then exists or would
result therefrom. Borrower shall retain the balance of such net income after any
such dividend as retained earnings of Borrower.
SECTION 8.9 Retirement of Indebtedness. Prepay or retire, directly or
indirectly, any loans or other indebtedness permitted hereunder owing to any
Person, or modify the terms of any such indebtedness permitted hereunder, which
is subordinated in right of payment to Borrower's obligations hereunder.
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SECTION 8.10 Change in Fiscal Year. Change its Fiscal Year to a period
other than the Fiscal Year in effect on the date of this Agreement without
providing prompt prior written notice to the Administrative Agent.
SECTION 8.11 Other Borrowings Covenants. Enter into any covenants or
provisions through other borrowings when permitted hereunder which are more
restrictive than those contained herein.
SECTION 8.12 Capital Expenditures. Expend or incur obligations to
expend in any Fiscal Year (or portion thereof) Capital Expenditures more than
the amount set forth below opposite such Fiscal Year (or portion thereof):
<TABLE>
<CAPTION>
Period Amount
- ------ -------
<S> <C>
Closing Date through $1,200,000
June 26, 1999
Fiscal Year ending $3,500,000
June 24, 2000
Fiscal Year ending $3,605,000
June 30, 2001
Fiscal Year ending $3,710,000
June 29, 2002
</TABLE>
SECTION 8.13 Administrative Expenditures. Expend or incur obligations
to expend in any Fiscal Year (or portion thereof) Administrative Expenditures
more than the amount set forth below opposite such Fiscal Year (or portion
thereof):
<TABLE>
<CAPTION>
Period Amount
- ------ -------
<S> <C>
Closing Date through $3,000,000
June 26, 1999
Fiscal Year ending $2,000,000
June 24, 2000
Fiscal Year ending $2,060,000
June 30, 2001
</TABLE>
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<PAGE>
<PAGE>
<TABLE>
<S> <C>
Fiscal Year ending $2,120,000
June 29, 2002
</TABLE>
SECTION 8.14 Payments to Agrilink or Pro-Fac. Make any payment for any
purpose to Agrilink or Pro-Fac except (a) dividends permitted pursuant to
Section 8.8 and (b) payments to Agrilink pursuant to the Service Agreement;
provided that if a Potential Default or Event of Default then exists, any
payment otherwise payable to Agrilink based on EBITDA for the most
recently-ended Fiscal Year shall be reduced by 50% and the balance of such
payment cancelled (except, if such reduction occurs by reason of a Potential
Default that is subsequently cured by Borrower before it matures into an Event
of Default without a waiver from the Banks, then such reduction shall be
cancelled and Agrilink may be paid 100% of such payment).
SECTION 8.15 Amendments. Make any amendment to the Service Agreement or
Subordinated Notes without the prior written consent of the Required Banks
(which shall not be unreasonably withheld or delayed).
ARTICLE IX
FINANCIAL COVENANTS
So long as any of the Notes shall remain unpaid or any Bank
shall have any Individual Credit Facility Commitment or any other amount is
owing by Borrower to any Bank hereunder or under any other Loan Document:
SECTION 9.1 Leverage Ratio. Borrower shall have, as of the end of each
Fiscal Quarter described below, a ratio of Funded Debt to EBITDA for the four
(4) Fiscal Quarters then ended of not greater than the ratio set forth opposite
such Fiscal Quarter:
<TABLE>
<CAPTION>
Fiscal Quarter
Ending Ratio
- ------ -----
<S> <C>
June 24, 2000 6.5 to 1.00
September 30, 2000 8.0 to 1.00
December 30, 2000 8.0 to 1.00
March 31, 2001 8.0 to 1.00
</TABLE>
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<PAGE>
<PAGE>
<TABLE>
<S> <C>
June 30, 2001 6.0 to 1.00
Each Fiscal Quarter
thereafter 7.5 to 1.00
</TABLE>
SECTION 9.2 Minimum EBITDA. Borrower shall have, as of the end of each
Fiscal Quarter described below, EBITDA of not less than the amount set forth
opposite such Fiscal Quarter:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Amount
- --------------------- -------
<S> <C>
September 25, 1999 $1,500,000 for the Fiscal
Quarter then ended
December 25, 1999 $4,000,000 for the
two (2) Fiscal Quarters
then ended
March 25, 2000 $7,500,000 for the three (3)
Fiscal Quarters then ended
June 24, 2000 and each $12,000,000 for the
Fiscal Quarter thereafter four (4) Fiscal Quarters
then ended
</TABLE>
ARTICLE X
DEFAULT
SECTION 10.1 Events of Default. Each of the following shall constitute
an "Event of Default" hereunder:
(A) Principal Payment Default. Failure by Borrower to
make any principal payment required to be made hereunder within 5 days after the
date when due; or
(B) Other Payment Default. Failure by Borower to make
any interest or other payment (other than a principal payment) required to be
made hereunder or under any other Loan Document within 20 days of the date when
due; or
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(C) Representations and Warranties. Any
representation or warranty made by Borrower herein or in any agreement,
certificate or document related hereto or furnished in connection herewith,
shall prove to have been false or misleading in any material respect on or as of
the date made; or
(D) Certain Affirmative Covenants. Failure by
Borrower to perform or comply with any covenant set forth in Sections 7.3
through 7.9 hereof (other than 7.9(E) through (H)) and such failure continues
for 15 days after written notice thereof shall have been delivered to Borrower
by any Bank; or
(E) Other Covenants and Agreements. Borrower shall
fail to perform or comply with any other covenant or agreement contained herein,
including any covenant excluded in (D) above and such failure continues for 5
days after written notice thereof shall have been delivered to Borrower by any
Bank; or
(F) Cross-Default. Borrower shall, after any
applicable grace period, breach or be in default under the terms of any other
Loan Document or of any other agreement between Borrower and any Bank; or
(G) Other Indebtedness. Borrower shall fail to pay
when due any indebtedness for borrowed money to any other Person or any other
event occurs which, under any agreement or instrument relating to such
indebtedness, has the effect of accelerating or permitting the acceleration of
such indebtedness or obligations, whether or not such indebtedness or
obligations are actually accelerated or the right to accelerate is conditioned
on the giving of notice, the passage of time or otherwise; or
(H) Material Adverse Effect. The Required Banks shall
have determined that an event or circumstance constituting a Material Adverse
Effect has occurred; or
(I) Judgments. A judgment, decree, or order for the
payment of money in excess of $50,000 shall be rendered against the Borrower and
either: (i) enforcement proceedings shall have been commenced; (ii) a Lien
prohibited under Section 8.2 hereof shall have been obtained; or (iii) such
judgment, decree, or order shall continue unsatisfied and in effect for a period
of 20 consecutive days without being vacated, discharged, satisfied, or stayed
pending appeal; or
(J) ERISA. Any reportable event (as defined in ERISA)
which constitutes grounds for the termination of any Plan, or for the
appointment of a trustee to administer or liquidate any such Plan, shall have
occurred and be continuing 30 days after written notice to such effect shall
have been given to Borrower by Administrative
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Agent; or any such Plan shall be terminated; or a trustee shall be appointed; or
the PBGC shall institute proceedings to terminate any such Plan; or
(K) Bankruptcy, Etc. Borrower shall (1) have entered
involuntarily against it an order for relief under the Bankruptcy Code of 1978,
as amended; (2) admit in writing its inability to pay, or not pay, its debts
generally as they become due or suspend payment of its obligations; (3) make an
assignment for the benefit of creditors; (4) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee, conservator,
liquidator or similar official for it or any substantial part of its property;
(5) file a petition seeking relief or institute any proceeding seeking to have
entered against it an order for relief under the Bankruptcy Code of 1978, as
amended, to adjudicate it insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, marshalling of assets, adjustment or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors or fail to file an answer or other
pleading denying the material allegations of any such proceeding filed against
it; (6) fail to contest in good faith any appointment or proceeding described in
Section 10.1(L) hereof; or (7) take any corporate action in furtherance of any
of the foregoing; or
(L) Involuntary Trustees, Etc. A custodian, receiver,
trustee, conservator, liquidator or similar official shall be appointed for
Borrower or any substantial part of its property, or a proceeding described in
Section 10.1(K)(5) shall be instituted against Borrower and such appointment
continues undischarged or any such proceeding continues undismissed or unstayed
for a period of 60 days; or
(M) Sale of Borrower. Borrower shall cease to be a
subsidiary of Pro-Fac, or Borrower shall sell or transfer all or substantially
all of its assets to a Person that is not a subsidiary of Pro-Fac.
SECTION 10.2 Remedies Upon Default.
(A) Non-Bankruptcy Defaults. Upon the occurrence of
and during the continuance of any Event of Default (other than an Event of
Default described in Subsections 10.1(K) or (L)), the Banks may, upon vote of
the Required Banks and upon notice to Borrower: (1) declare the Banks'
obligations to extend credit hereunder to be terminated, whereupon the same
shall terminate; (2) declare the outstanding Notes, all interest thereon, and
all other amounts payable under this Agreement and the other Loan Documents to
be due and payable, whereupon the Notes, all such interest, and all such other
amounts shall become and be due and payable, without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by Borrower; and (3) proceed to foreclose against any security, take any action
or exercise any remedy under any of the Loan
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Documents, or exercise any other action, right, power or remedy permitted by
Law. Without limiting the foregoing, any Bank may exercise its right of set off
with regard to any deposit accounts or other accounts maintained by Borrower
with any of the Banks for the pro rata benefit of the Banks. Notwithstanding the
foregoing or Section 1.1(74) hereof, if following the occurrence of an Event of
Default (other than an Event of Default described in Subsection 10.1 (K) or
(L)), the Required Banks do not, for a period of more than 90 days, agree to
either exercise the rights provided for in this Subsection or (to the extent the
Required Banks have the authority to do so under Section 13.1 hereof) waive the
Event of Default (or amend this Agreement to eliminate the Event of Default),
then the term "Required Banks" shall, after such 90th day and only for the
purpose of electing affirmatively to exercise the Banks' rights under this
Section, mean a majority in number of the Banks.
(B) Remedies For Bankruptcy Defaults. Upon the
occurrence of an Event of Default described in Subsections 10.1(K) or (L): (1)
the obligation of the Banks to extend further credit pursuant to any of the
terms hereof shall immediately terminate; (2) the Notes and all other
obligations of Borrower hereunder and under the other Loan Documents shall
immediately become due and payable without presentment, demand, protest or
notice of any kind; and (3) the Banks may, upon vote of the Required Banks,
exercise such rights and remedies as may be permitted by law. Notwithstanding
the foregoing or Section 1.1(74) hereof, in the event the Required Banks do not,
for a period of more than 60 days, agree on how to exercise such rights and
remedies, then the term "Required Banks" shall, after such 60th day and only for
the purpose of determining the method of exercising those rights, mean a
majority in number of the Banks.
(C) Application of Payments. If the vote of the
Required Banks referred to in Section 10.2(A) is obtained and notice ("Section
10.2(A) Notice") is given to Borrower as required therein or if there is an
Event of Default as described in Section 10.2(B) ("Section 10.2 (B) Default"),
then, effective on the date of the Section 10.2(A) Notice or Section 10.2 (B)
Default ("Application of Payments Effective Date"), all amounts payable by
Borrower with respect to the Outstanding Obligations, and all amounts received
by the Banks with respect to the Outstanding Obligations, shall, as to each
Bank, be in the proportion of its Pro Rata Share.
ARTICLE XI
FIXED RATE LOAN AND CAPITAL ADEQUACY MATTERS
SECTION 11.1 Broken Funding Surcharge. Notwithstanding any provision
in this Agreement giving Borrower the right to repay any Loan prior to the date
it would
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otherwise be due and payable, Borrower agrees that in the event it repays any
Fixed Rate Loan prior to its scheduled due date or prior to the last day of the
Interest Period applicable thereto (whether such payment is made voluntarily, as
a result of an acceleration, or otherwise), Borrower will pay to the
Administrative Agent a surcharge in an amount which would result in the Banks
being made whole (on a present value basis) for the actual or imputed funding
loss incurred by the Banks as a result thereof. Such surcharges will be
calculated in accordance with methodology established by the Administrative
Agent (a copy of which will be made available to Borrower upon request).
SECTION 11.2 Limitation on Types of Advances. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of the Fixed Rate
for any Interest Period:
(1) Administrative Agent determines (which determination shall
be conclusive) that funding sources are not being provided for the relevant
maturities for purposes of determining rates of interest for Fixed Rate Loans as
provided in this Agreement; or
(2) any Bank determines (which determination shall be
conclusive) that the "CoBank Quoted Rate" does not adequately cover the cost to
that Bank of making or maintaining such Fixed Rate Loan for such Interest
Period;
then Administrative Agent shall give Borrower prompt notice thereof, and so long
as such condition remains in effect, in the case of subsection (1) above, the
Banks, and in the case of subsection (2) above, the Bank that makes the
determination, shall be under no obligation to make Fixed Rate Loans, convert
Variable Rate Loans into Fixed Rate Loans, or continue Fixed Rate Loans, and
Borrower shall, on the last day(s) of the then current applicable Interest
Period(s) for the outstanding Fixed Rate Loans, either repay such Fixed Rate
Loans or convert such Fixed Rate Loans into a Variable Rate Loan in accordance
with Section 2.13.
SECTION 11.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Fixed Rate Loans
hereunder or convert Variable Rate Loans to Fixed Rate Loans, then such Bank
shall promptly notify Administrative Agent and Borrower thereof and such Bank's
obligation to make or continue, or to convert Variable Rate Loans into, Fixed
Rate Loans shall be suspended until such time as such Bank may again make and
maintain Fixed Rate Loans (in which case the provisions of Section 11.2 hereof
shall be applicable).
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<PAGE>
SECTION 11.4 Treatment of Affected Loans. If the obligations of any
Bank to make or continue Fixed Rate Loans, or to convert Variable Rate Loans
into Fixed Rate Loans, are suspended pursuant to Section 11.2 or 11.3 hereof
(all Fixed Rate Loans so affected being herein called "Affected Loans"), such
Bank's Affected Loans shall be automatically converted into Variable Rate Loans
on the last day(s) of the then current Interest Period(s) for the Affected Loans
(or, in the case of a conversion required by Section 11.2 or 11.3, on such
earlier date as such Bank may specify to Borrower).
To the extent that such Bank's Affected Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Bank's Affected Loans shall be applied instead to its Variable
Rate Loans. All Loans which would otherwise be made or continued by such Bank as
Fixed Rate Loans shall be made or continued instead as Variable Rate Loans, and
all Variable Rate Loans of such Bank which would otherwise be converted into
Fixed Rate Loans shall remain as Variable Rate Loans.
SECTION 11.5 Capital Adequacy. If any Bank shall have determined that,
after the date hereof, the adoption of any applicable Law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its parent corporation) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
parent corporation) could have achieved but for such adoption, change, request
or directive (taking into consideration its policies with respect to capital
adequacy existing on the date of this Agreement) by an amount deemed by such
Bank to be material, then from time to time, within fifteen (15) days after
demand by such Bank (with a copy to Administrative Agent), Borrower shall pay to
such Bank such additional amount or amounts as will compensate such Bank (or its
parent corporation) for such reduction. A certificate of any Bank claiming
compensation under this Section, setting forth in reasonable detail the basis
therefor, shall be conclusive in the absence of manifest error.
However, to the extent capital costs relate to a Bank's loans
in general and not specifically to a Loan hereunder, such Bank shall use
reasonable averaging and attribution methods. In addition, each Bank agrees
that, as promptly as practical after it becomes aware of the occurrence of an
event or the existence of a condition that would entitle it to exercise its
rights under this Section, it will use commercially reasonable efforts to make,
fund or maintain the affected Advances through another lending office of such
Bank if (1) as a result thereof the additional money that would
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otherwise be required to be paid in respect of such Advances would be reduced,
and (2) the making, funding or maintaining of such Advances through such other
lending office would not adversely affect such Advances or such Bank. Finally,
if a Bank is to require Borrower to make payments under this Section then Bank
must make a demand on Borrower to make such payment within ninety (90) days of
the later of (1) the date on which such capital costs are actually incurred by
such Bank, or (2) the date on which such Bank knows, or should have known, that
such capital costs have been incurred by such Bank.
SECTION 11.6 Right of Substitution. Borrower and the Banks agree that
if (1) a Bank requests compensation pursuant to Section 11.1 or Section 11.5 or
(2) Section 11.3 applies, Borrower shall have the right to substitute a bank to
replace the Bank in question, provided, that, (1) all the terms and requirements
of Section 13.5 are complied with, (2) Borrower compensates the Bank being
removed for the losses, costs and expenses incurred by such Bank as a result of
such substitution, and payment to the replaced Bank of compensation in
accordance with Section 11.5 as if all Loans transferred to the new bank by the
replaced Bank were prepaid on the date of such assignment and the payment of the
principal and interest owed to such replaced Bank.
ARTICLE XII
AGENCY PROVISIONS
SECTION 12.1 Appointment, Powers and Immunities of Administrative
Agent. Each Bank hereby irrevocably appoints and authorizes the Administrative
Agent to act as its agent hereunder and under any other Loan Document with such
powers as are specifically delegated to such Administrative Agent by the terms
of this Agreement and any other Loan Document, together with such other powers
as are reasonably incidental thereto. The Administrative Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and any other Loan Document, and shall not by reason of this Agreement be a
trustee or fiduciary for any Bank. The Administrative Agent shall not be
responsible to any Bank for any recitals, statements, representations or
warranties made by Borrower or any officer or official of Borrower or any other
Person contained in this Agreement or any other Loan Document, or in any
certificate or other document or instrument referred to or provided for in, or
received by any of them under, this Agreement or any other Loan Document, or for
the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or any other document
or instrument referred to or provided for herein or therein, or for any failure
by Borrower to perform any of its obligations hereunder or thereunder. The
Administrative Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities
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received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Neither
the Administrative Agent nor any of its respective directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith, except for its or their own gross
negligence or willful misconduct. Borrower shall pay any fee agreed to by
Borrower and the Administrative Agent with respect to the Administrative Agent's
services hereunder.
SECTION 12.2 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, facsimile, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat each Bank as
the holder of the Advances made by it for all purposes hereof unless and until a
notice of the assignment or transfer thereof satisfactory to the Administrative
Agent signed by such Bank shall have been furnished to the Administrative Agent,
but the Administrative Agent shall not be required to deal with any Person who
has acquired a participation in any Loan from a Bank. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Required Banks, and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks and the Administrative Agent and any other holder of
all or any portion of any Loan.
SECTION 12.3 Defaults. The Administrative Agent shall not be deemed to
have knowledge of the occurrence of a Potential Default or Event of Default
unless the Administrative Agent has received notice from a Bank or Borrower
specifying such Potential Default or Event of Default and stating that such
notice is a "Notice of Default." In the event that the Administrative Agent
receives such a Notice of Default, the Administrative Agent shall give prompt
notice thereof to the Banks. The Administrative Agent shall take such action
with respect to such Potential Default or Event of Default which is continuing
as shall be directed by the Required Banks; provided that, unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may take such action, or refrain from taking such action, with respect to
such Potential Default or Event of Default as it shall deem advisable in the
best interest of the Banks; and provided further that the Administrative Agent
shall not be required to take any such action which it determines to be contrary
to Law.
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SECTION 12.4 Rights of the Administrative Agent as a Bank. With respect
to its Individual Revolving Credit Facility Commitment or Individual Term Credit
Facility Commitment and the Advances provided by it, the Administrative Agent in
its capacity as a Bank hereunder shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not acting as the
Administrative Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include the Administrative Agent in its capacity as a Bank.
The Administrative Agent and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to (on a secured or
unsecured basis), and generally engage in any kind of banking, trust or other
business with Borrower or any of its Affiliates as if it were not acting as the
Administrative Agent, and the Administrative Agent may accept fees and other
consideration from Borrower for services in connection with this Agreement or
otherwise without having to account for the same to any Bank.
SECTION 12.5 Indemnification of Administrative Agent. Each Bank agrees
to indemnify the Administrative Agent (to the extent not reimbursed under
Section 13.6 or under the applicable provisions of any other Loan Document, but
without limiting the obligations of Borrower under Section 13.6 or such
provisions), for its Pro Rata Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of this Agreement or any other Loan Document, or any other
documents contemplated by or referred to herein or therein, or the transactions
contemplated hereby or thereby (including, without limitation, the costs and
expenses which Borrower is obligated to pay under Section 13.6) or under the
applicable provisions of any other Loan Document or the enforcement of any of
the terms hereof or thereof or of any such other documents or instruments;
provided that no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Administrative
Agent or its directors, officers, employees or agents.
SECTION 12.6 Non-Reliance on Administrative Agent and Other Banks. Each
Bank agrees that it has, independently and without reliance on the
Administrative Agent, or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrower and the decision to enter into this Agreement and the other Loan
Documents and that it will, independently and without reliance upon the
Administrative Agent, or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any other Loan Document. The Administrative Agent shall not be required to keep
itself informed as to the performance or observance by Borrower of
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this Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or to inspect the properties or books of
Borrower. The Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of Borrower which may come into the possession
of the Administrative Agent, or any of its Affiliates. The Administrative Agent
shall not be required to file this Agreement or any other Loan Document or any
document or instrument referred to herein or therein, for record or give notice
of this Agreement or any other Loan Document or any document or instrument
referred to herein or therein, to anyone. Each of the Banks acknowledges and
agrees that the Administrative Agent only has the duties and responsibilities
explicitly set forth in the Loan Documents.
SECTION 12.7 Failure of Administrative Agents to Act. Except for action
expressly required of the Administrative Agent hereunder, the Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Banks under Section
12.5 in respect of any and all liability and expense which may be incurred by it
by reason of taking or continuing to take any such action.
SECTION 12.8 Resignation or Removal of Administrative Agent. Subject to
the appointment and acceptance of a successor Administrative Agent, as provided
below, the Administrative Agent may resign at any time by giving written notice
thereof to the Banks and Borrower, and the Administrative Agent may be removed
at any time with or without cause by the Required Banks; provided that Borrower
and each other Bank shall be promptly notified thereof. Upon any such
resignation or removal, the Required Banks shall have the right, subject to
prior consultation with Borrower, to appoint a successor Administrative Agent
which must be located in the United States of America. If no successor
Administrative Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation or the Required Banks'
removal of such retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent
which must be located in the United States of America. The Required Banks or the
retiring Administrative Agent, as the case may be, shall upon the appointment of
a successor Administrative Agent promptly so notify Borrower and each other
Bank. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent the provisions of this
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Article XII shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.
SECTION 12.9 Amendments Concerning Agency Function. The Administrative
Agent shall not be bound by any waiver, amendment, supplement or modification of
this Agreement or any other Loan Document which affects its duties hereunder or
thereunder unless it shall have given its prior consent thereto.
SECTION 12.10 Liability of Administrative Agent. The Administrative
Agent shall not have any liabilities or responsibilities to Borrower on account
of the failure of any Bank to perform its obligations hereunder or to any Bank
on account of the failure of Borrower to perform their respective obligations
hereunder or under any other Loan Document.
SECTION 12.11 Transfer of Agency Function. Without the consent of
Borrower or any Bank, the Administrative Agent may at any time or from time to
time transfer its functions as Administrative Agent hereunder to any of its
offices located in the United States of America, provided that the
Administrative Agent shall promptly notify Borrower and each Bank.
SECTION 12.12 Withholding Taxes. Each Bank represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Administrative Agent and to
Borrower such forms, certifications, statements and other documents as the
Administrative Agent or Borrower may request from time to time to evidence such
Bank's exemption from the withholding of any tax imposed by any jurisdiction or
to enable the Administrative Agent or Borrower, as the case may be, to comply
with any applicable Laws or regulations relating thereto. Without limiting the
effect of the foregoing, if any Bank is not created or organized under the Laws
of the United States of America or any state thereof, such Bank will furnish to
the Administrative Agent and Borrower Form 4224 or Form 1001 of the Internal
Revenue Service, or such other forms, certifications, statements or documents,
duly executed and completed by such Bank, as evidence of such Bank's exemption
from the withholding of United States tax with respect thereto. Notwithstanding
anything herein to the contrary, Borrower shall not be obligated to make any
payments hereunder to such Bank in respect of any Advance until such Bank shall
have furnished to the Administrative Agent and Borrower the requested form,
certification, statement or document.
SECTION 12.13 Non-Receipt of Funds by Administrative Agent.
(A) Unless Administrative Agent shall have received
notice from a Bank prior to the date on which such Bank is to provide funds to
Administrative
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Agent for an Advance to be made by such Bank that such Bank will not make
available to Administrative Agent such funds, Administrative Agent may assume
that such Bank has made such funds available to Administrative Agent on the date
of such Advance in accordance with the terms of this Agreement and
Administrative Agent in its sole discretion may, but shall not be obligated to,
in reliance upon such assumption, make available to Borrower on such date a
corresponding amount. If and to the extent such Bank shall not have made such
funds available to Administrative Agent, such Bank agrees to repay
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
Borrower until the date such amount is repaid to Administrative Agent, at the
customary rate set by Administrative Agent for the correction of errors among
banks for three (3) Banking Days and thereafter at the Variable Rate. If such
Bank shall repay to Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Bank's Advance for purposes of this Agreement.
If such Bank does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Borrower, and Borrower shall immediately pay such corresponding amount to
Administrative Agent with the interest thereon, for each day from the date such
amount is made available to Borrower until the date such amount is repaid to
Administrative Agent, at the rate of interest applicable at the time to such
proposed Advance.
(B) Unless Administrative Agent shall have received notice
from Borrower prior to the date on which any payment is due to any Bank
hereunder that Borrower will not make such payment in full, Administrative Agent
may assume that Borrower has made such payment in full to Administrative Agent
on such date and Administrative Agent in its sole discretion may, but shall not
be obligated to, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent Borrower shall not have so made such payment in full to
Administrative Agent, each Bank shall repay to Administrative Agent forthwith on
demand such amount distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such Bank until the date
such Bank repays such amount to Administrative Agent at the customary rate set
by Administrative Agent for the correction of errors among banks for three (3)
Banking Days and thereafter at the Variable Rate.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Amendments, Etc. No amendment, modification, termination,
or waiver of any provision of this Agreement or of any Loan Document to which
Borrower is a party, nor consent to any departure by Borrower herefrom or
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Banks, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, do any of the following: (a) waive any of
the conditions precedent specified in Section 6.1; (b) increase the Individual
Revolving Credit Facility Commitment or Individual Term Credit Facility
Commitment of any Bank or subject any Bank to any additional obligations; (c)
reduce the principal of, or interest on, the Notes or any fees hereunder; (d)
postpone any date fixed for any payment of principal of, or interest on, the
Notes, or the payment of any other obligation of Borrower hereunder, including
any fees hereunder; (e) change the definition of Required Banks; (f) release any
collateral; (g) amend, modify any Bank's rights to receive its Pro Rata Share of
any payment or proceeds of Collateral; or (h) amend, modify or waive any
provision of this Section 13.1, and provided further than no amendment, waiver,
or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Banks required above to take such action, affect the rights or
duties of the Administrative Agent under any of the Loan Documents.
SECTION 13.2 Usury. Anything herein to the contrary notwithstanding,
the obligations of Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of Law applicable to a Bank
limiting rates of interest which may be charged or collected by such Bank.
SECTION 13.3 Notices. Unless the party to be notified otherwise
notifies each other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to the
Administrative Agent by telephone, confirmed by telex, facsimile, or other
writing, and to the Banks and to Borrower by ordinary mail, facsimile or telex
addressed to such party at its address on the signature page of this Agreement.
Notices shall be effective: (1) if given by mail, upon receipt; and (2) if given
by telex or facsimile, when the telex or facsimile is transmitted to the telex
or facsimile number as aforesaid.
SECTION 13.4 No Waiver. No failure or delay on the part of any Bank or
the Administrative Agent in exercising any right, power, or remedy hereunder
shall
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operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power, or remedy preclude any other or further exercise thereof or
the exercise of any other right, power, or remedy hereunder. The rights and
remedies provided herein are cumulative, and are not exclusive of any other
rights, powers, privileges, or remedies, now or hereafter existing, at law or in
equity or otherwise.
SECTION 13.5 Assignments and Participations. This Agreement shall be
binding upon, and shall inure to the benefit of, Borrower, Administrative Agent
and Banks and their respective successors and permitted assigns. Borrower may
not assign or transfer its rights or obligations hereunder.
Any Bank may at any time assign to one or more banks or other
financial institutions (each an "Assignee") a part of its rights and obligations
under this Agreement and its Notes, and such Assignee shall assume rights and
obligations, pursuant to an Assignment and Assumption Agreement executed by such
Assignee and such Bank, with and subject to the consent of each of
Administrative Agent and Borrower (which consent shall not be unreasonably
withheld or delayed); provided that, in each case, (1) the portion of the
Individual Revolving Credit Facility Commitment and Individual Term Credit
Facility Commitment assigned is equal to or greater than the Minimum Assignment,
(2) the portion of the Individual Revolving Credit Facility Commitment and
Individual Term Credit Facility Commitment retained by the assigning Bank is
equal to or greater than its Minimum Hold, and (3) the assigning Bank and
Assignee shall pay Administrative Agent a processing and recordation fee of Two
Thousand Five Hundred Dollars ($2,500). Upon execution and delivery of such
instrument and payment by such Assignee to the Bank of an amount equal to the
purchase price agreed between the Bank and such Assignee, such Assignee shall be
a Bank to this Agreement and shall have all the rights and obligations of a Bank
with the Individual Facility Commitment as set forth in such Assignment and
Assumption Agreement, and the assigning Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this paragraph, new Notes as required shall be issued by Borrower.
If the Assignee is not incorporated under the laws of the United States of
America or a state thereof, it shall, prior to the first date on which interest
or fees are payable hereunder for its account, deliver to Borrower and the
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 12.12.
Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
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With the consent of Borrower (which consent shall not be
unreasonably withheld or delayed), any Bank may at any time grant to one or more
banks or other financial institutions (each a "Participant") participating
interests in its portion of the Loans. In no event shall a Participant
constitute a Bank for purposes hereof. In the event of any such grant by a Bank
of a participating interest to a Participant, whether or not upon notice to
Borrower and the Administrative Agent, such Bank shall remain responsible for
the performance of its obligations hereunder, and Borrower and the
Administrative Agent shall continue to deal solely and directly with such Bank
in connection with such Bank's rights and obligations hereunder. Any agreement
pursuant to which any Bank may grant such a participating interest shall provide
that such Bank shall retain the sole right and responsibility to enforce the
obligations of Borrower hereunder and under any other Loan Document including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement or any other Loan Document, provided that
such participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in the proviso in
Section 13.1 without the consent of the Participant.
Borrower agrees to provide all assistance reasonably requested
by a Bank (at the sole cost and expense of such Bank) to enable such Bank either
to sell participations in or make assignments of its portion of the Loans as
permitted by this Section.
CoBank agrees that all Loans that are made by CoBank and that
are retained for its own account and are not included in any sales of
participation interest shall be entitled to patronage distributions in
accordance with the bylaws of CoBank and its practices and procedures related to
patronage distribution. Accordingly, all Loans that are included in a sale of
participation interest shall not be entitled to patronage distributions.
SECTION 13.6 Expenses; Indemnification. Borrower agrees to reimburse
the Administrative Agent, on demand for all costs, expenses, and charges plus
expenses incurred by such Administrative Agent, in connection with the
preparation of the Loan Documents. Borrower agrees to reimburse Administrative
Agent and each of the Banks on demand for all costs, expenses, and charges
(including, without limitation, all fees and charges of external legal counsel
for Administrative Agent, and each Bank) incurred by Administrative Agent, or
any Bank in connection with compliance with any of the Loan Documents, or
enforcement of this Agreement, the Notes, or any other Loan Document. In
addition to the foregoing, Borrower agrees to reimburse the Administrative Agent
on demand for all fees and charges of external legal counsel for Administrative
Agent incurred in connection with the administration of this Agreement
(including, without limitation, the preparation of any amendments hereto or to
the
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other Loan Documents or any consents furnished hereunder or under the other Loan
Documents, but excluding any costs incurred in connection with any participation
or assignment by a Bank). Borrower agrees to and hereby does indemnify each Bank
and their respective directors, officers, employees and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims, damages
or expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to this Agreement or
any of the Loan Documents or to any actual or proposed use by Borrower of the
proceeds of the Loans or to any violation or alleged violation of any
Environmental Law by Borrower or any of its Subsidiaries, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified or its directors, officers, employees or agents).
Borrower, each of the Banks and Administrative Agent agree
that the cost of each wire transfer to be made by each such Person pursuant to
the terms of this Agreement will be borne by the Person making such transfer.
The obligations of Borrower under this Section shall survive
the repayment of the Loans and payment of all amounts due under or in connection
with any of the Loan Documents and the termination of the Commitments.
SECTION 13.7 Integration. The Loan Documents set forth the entire
agreement among the parties hereto relating to the transactions contemplated
thereby supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 13.8 Jurisdiction; Immunities. Borrower hereby irrevocably
submits to the jurisdiction of any Colorado State or United States Federal court
sitting in Denver over any action or proceeding arising out of or relating to
this Agreement, the Notes, or any other Loan Document, and Borrower hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Colorado State or Federal court. Borrower
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to Borrower at its then
current address as described in Section 13.3. Borrower agrees, to the extent
permitted by Law, that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by Law. Borrower further waives any objection to
venue in such State and any objection to an action or proceeding in such State
on the basis of forum non conveniens. Borrower agrees that any action or
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proceeding brought against any Bank shall be brought only in Colorado State or
United States Federal court sitting in Denver.
Nothing in this Section shall affect the right of any Bank to
serve legal process in any other manner permitted by Law or affect the right of
any Bank to bring any action or proceeding against Borrower or its property in
the courts of any other jurisdiction.
To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, Borrower hereby
irrevocably waives, to the extent permitted by law, such immunity in respect of
its obligations under this Agreement, the Notes, the Letters or Credit, and any
other Loan Document.
SECTION 13.9 Governing Law. Except to the extent governed by applicable
Federal law, this Agreement, the Loan Documents and the Notes shall be governed
by, and construed in accordance with, the Laws of the State of Colorado.
SECTION 13.10 Effectiveness and Severability of Provisions. This
Agreement and the other Loan Documents to which Borrower is a party shall
continue in effect until all indebtedness and obligations of Borrower hereunder
and under all other Loan Documents to which it is a party shall have been
repaid. Any provision of this Agreement or Loan Document 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 of this Agreement or such Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 13.11 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
SECTION 13.12 Exhibits and Schedules. The Exhibits and Schedules are a
part of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.
SECTION 13.13 Table of Contents; Headings. The headings in the Table of
Contents and in this Agreement are for reference only, and shall not affect the
interpretation or construction of this Agreement.
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SECTION 13.14 Severability. If any word, phrase, sentence, paragraph,
provision or section of this Agreement shall be held, declared, pronounced or
rendered invalid, void, unenforceable or inoperative for any reason by any court
of competent jurisdiction, governmental authority, statute or otherwise, such
holding, declaration, pronouncement or rendering shall not adversely affect any
other word, phrase, sentence, paragraph, provision or section of this Agreement,
which shall otherwise remain in full force and effect and be enforced in
accordance with its terms.
SECTION 13.15 Consents. Each Bank that is a party to this Agreement
hereby consents, to the extent required under any agreement between the Bank and
Borrower, to Borrower entering into this Agreement and obtaining the Credit
Facilities provided under this Agreement.
SECTION 13.16 Confidentiality. Each Bank shall maintain the
confidential nature of, and shall not use or disclose, any of Borrower's
financial information, confidential information or trade secrets without first
obtaining Borrower's written consent. Nothing in this Section shall require any
Bank to obtain the consent of Borrower before exercising any of its respective
rights under the Loan Documents upon the occurrence of an Event of Default. The
obligations of the Bank shall in no event apply to: (1) providing information
about Borrower to any financial institution contemplated in Section 13.5
pursuant to a confidentiality agreement conforming to this Section 13.16 in all
material respects or to such Bank's parent holding company; (2) any situation in
which any Bank is required by Law or required by any governmental authority to
disclose information; (3) providing information to counsel to any Bank in
connection with the transactions contemplated by the Loan Documents; (4)
providing information to independent auditors retained by the Banks; (5) any
information that is in or becomes part of the public domain otherwise than
through a wrongful act of such Bank or any of its employees or agents thereof;
(6) any information that is in the possession of any Bank prior to receipt
thereof from Borrower or any other Person known to such Bank to be acting on
behalf of Borrower; (7) any information that is independently developed by any
Bank; and (8) any information that is disclosed to any Bank by a third party
that has no obligation of confidentiality with respect to the information
disclosed. A Bank's confidentiality requirements continue after it is no longer
a Bank under this Agreement.
SECTION 13.17 Transfer of Ownership of Borrower Under Certain
Circumstances. The Administrative Agent and each Bank expressly acknowledge that
Pro-Fac may transfer or abandon all, but not less than all, of the common stock
or other ownership interests of Borrower held by Pro-Fac: (a) on June 15, 2002,
provided that the Administrative Agent has been provided with not less than
eleven months prior written notice of Pro-Fac's intention to do so, or (b) at
any time prior to the Maturity
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Date (and whether or not any Event of Default or Potential Default has occurred
or is continuing) if (i) Borrower is insolvent or otherwise unable to meet its
obligations as they come due (as determined by Pro-Fac in its sole discretion
reasonably exercised), or (ii) (A) any liability or liabilities of Seller that
arose prior to the Closing Date (including liabilities, e.g., environmental or
pension fund liabilities, for which Borrower may have independent liability) is
imposed or asserted against Borrower or any Affiliate of Borrower, and (B)
either (1) any Bank is unwilling to make any Advance in respect of such
liability or any cost or expense incurred or expected to be incurred by Borrower
in connection with such liability; or (2) despite the willingness of all of the
Banks to make Advances with respect to such liability or any related costs,
Pro-Fac makes a determination in its reasonable business judgment that, in view
of such liability or costs, continuing to own common stock or to have any other
ownership interest in Borrower is not in the best interests of Pro-Fac. Nothing
in this Section 13.17 shall affect the existence of an Event of Default under
Section 10.1(M) by reason of the foregoing, or the exercise by the Banks of
their remedies provided for in the Loan Documents as a result thereof. Pro-Fac
is an expressly intended third party beneficiary of this Section 13.17 and may
enforce the terms hereof as though a party to this Agreement.
SECTION 13.18 Obligations Non-Recourse to Agrilink and Pro-Fac.
Anything in this Agreement or any of the Loan Documents to the contrary
notwithstanding, the Administrative Agent and each of the Banks agrees that
Borrower's obligations arising under or in any way relating to this Agreement or
any of the Loan Documents are WITHOUT RECOURSE to Agrilink and Pro-Fac and any
of their Affiliates other than Borrower, and whether or not any transfer or
abandonment described in Section 13.17 has occurred. The Administrative Agent
and each Bank hereby irrevocably waives, releases and holds harmless each of
Agrilink and Pro-Fac and their respective Affiliates (including after-acquired
Affiliates) of and from any claim of any kind or nature whatsoever regarding or
relating to the Borrower, including without limitation any claim arising under
or in connection with this Agreement or any Loan Document. Each of Agrilink and
Pro-Fac and their respective Affiliates, successors and assigns are expressly
intended third party beneficiaries of this Section 13.18 and may enforce the
terms hereof as though a party of this Agreement.
SECTION 13.19 Jury Trial Waiver.
THE BORROWER AND EACH BANK HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW
OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE LOAN
DOCUMENTS.
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SECTION 13.20 Agreement in Writing.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT BOTH BORROWER AND THE BANKS FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED COVERING SUCH MATTERS
ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF
THE AGREEMENT BETWEEN BORROWER AND THE BANKS, EXCEPT AS MAY LATER BE AGREED IN
WRITING TO MODIFY IT.
THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS BETWEEN
BORROWER AND THE BANKS LISTED BELOW, IS THE FINAL EXPRESSION OF THE AGREEMENT
BETWEEN SUCH PARTIES. THE LOAN DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR OR CONTEMPORANEOUS ORAL CREDIT AGREEMENTS OR PRIOR WRITTEN CREDIT
AGREEMENTS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written.
<TABLE>
<S> <C>
PF ACQUISITION II, INC. Attn: President
90 Linden Place
By /s/ Earl L. Powers Rochester, New York 14625
----------------------------- Fax: (716) 383-1606
Earl L. Powers, Vice President Telephone: (716) 383-1850
-----------------------------
[Printed Name & Title]
</TABLE>
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<TABLE>
<S> <C>
CoBANK, ACB 3636 American River Drive
Sacramento, CA 95864
By /s/ Robert D. Bergsten P.O. Box 13010-A
----------------------------------- Sacramento, CA 95813
Robert D. Bergesten, Vice President Attn: Credit Department
----------------------------------- Fax: (916) 973-3001
[Printed Name & Title] Telephone: (916) 973-3033
</TABLE>
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EXHIBIT A
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of _____________, 199_, among
[insert name of assigning Bank] ("Assignor"), [insert name of Assignee]
("Assignee"), PF ACQUISITION II, INC. ("Borrower"), and CoBANK ACB ("CoBank"),
in its capacity as "Administrative Agent".
PRELIMINARY STATEMENTS
1. This Assignment and Assumption Agreement (this "Agreement") relates to
the Credit Agreement (as amended from time to time, the "Credit Agreement")
dated as of February __, 1999, and the Subordinated Note Agreement (as amended
from time to time, the "Subordinated Note Agreement") dated as of February __,
1999, each originally among Borrower, CoBank, and St. Paul Bank for Cooperatives
and each other lender which may hereafter execute and deliver an Assignment and
Assumption Agreement pursuant to the Credit Agreement and the Subordinated Note
Agreement (each a "Bank" and, collectively, the "Banks"), and CoBank, as
administrative agent for the Banks (in such capacity, together with its
successors in such capacity, "Administrative Agent"). All capitalized terms used
herein and not defined herein shall have the meanings given to them in the
Credit Agreement or to the extent not covered in the Credit Agreement, the
Subordinated Note Agreement.
2. Subject to the terms and conditions set forth in the Credit Agreement,
Assignor is required to make Revolving Credit Facility Advances from time to
time to Borrower in an aggregate principal amount outstanding at any time not to
exceed _____________ Dollars ($____________) ("Individual Revolving Credit
Facility Commitment").
3. Advances made to Borrower by Assignor under the Credit Agreement with
reference to Individual Revolving Credit Facility Advances in the aggregate
principal amount of ________________ Dollars ($________) are outstanding at
commencement of business on the date hereof. This Agreement shall become
effective prior to any Advance made on the date hereof.
4. Subject to the terms and conditions set forth in the Credit Agreement,
Assignor is required to make Term Credit Facility Advances from time to time to
Borrower in an aggregate principal amount outstanding at any time not to exceed
_____________ Dollars ($____________) ("Individual Revolving Credit Facility
Commitment").
<PAGE>
<PAGE>
5. Advances made to Borrower by Assignor under the Credit Agreement with
reference to Individual Term Credit Facility Advances in the aggregate principal
amount of ________________ Dollars ($________) are outstanding at commencement
of business on the date hereof. This Agreement shall become effective prior to
any Advance made on the date hereof.
6. Subject to the terms and conditions set forth in the Subordinate Note
Agreement, Assignor is required to make loans from time to time to Borrower in
an aggregate principal amount outstanding at any time not to exceed
_____________ Dollars ($____________) ("Individual Subordinated Debt Facility
Commitment").
7. Advances made to Borrower by Assignor under the Subordinate Note
Agreement with reference to Individual Subordinated Debt Credit Facility
Advances in the aggregate principal amount of ________________ Dollars
($________) are outstanding at commencement of business on the date hereof. This
Agreement shall become effective prior to any Advance made on the date hereof.
8. Assignor desires to assign to Assignee all of the rights of Assignor
under the Credit Agreement in respect of a portion of (i) its Individual
Revolving Credit Facility Commitment thereunder in an amount equal to
________________ ($________) (the "Assigned Revolving Credit Facility
Commitment"), (ii) together with a portion of its outstanding Revolving Credit
Facility Advances in an amount equal to ________________ Dollars ($________)
(the "Assigned Revolving Credit Facility Advances") (iii) its Individual Term
Credit Facility Commitment thereunder in an amount equal to ________________
($________) (the "Assigned Term Credit Facility Commitment"), (iv) together with
a portion of its outstanding Term Credit Facility Advances in an amount equal to
________________ Dollars ($________) (the "Assigned Term Credit Facility
Advances"), (v) its Individual Subordinated Debt Facility Commitment thereunder
in an amount equal to ________________ ($________) (the "Assigned Subordinated
Debt Facility Commitment"), (vi) together with a portion of its outstanding
Subordinated Debt Facility Advances in an amount equal to ________________
Dollars ($________) (the "Assigned Subordinated Debt Facility Advances"), and
Assignee desires to accept assignment of such rights and assume the
corresponding obligations from Assignor on such terms. The Assigned Revolving
Credit Facility Commitment, Assigned Term Credit Facility Commitment and the
Assigned Subordinated Debt Facility Commitment are hereinafter collectively
referred to as the "Assigned Commitments," and the Assigned Revolving Credit
Facility Advances, Assigned Term Credit Facility Advances, and Assigned
Subordinated Debt Facility Advances are hereinafter collectively referred to as
the "Assigned Advances."
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. ASSIGNMENT. Assignor hereby assigns to Assignee all of the
rights of Assignor under the Credit Agreement and the Subordinated Note
Agreement in and to the Assigned
<PAGE>
<PAGE>
Assignment and Assumption Agreement -3-
Commitments, and the Assigned Advances (together with interest on the Assigned
Advances accrued thereon to the date of this Agreement), and Assignee hereby
accepts such assignment from Assignor and assumes all of the obligations of
Assignor under the Credit Agreement and the Subordinated Note Agreement in and
to the Assigned Commitments and the Assigned Advances. Upon the execution and
delivery hereof by Assignor, Assignee, Borrower, and the Administrative Agent
and the payment of the amount specified in Section 2 below required to be paid
on the date hereof (a) Assignee shall, as of the commencement of business on the
date hereof, succeed to the rights and be obligated to perform the obligations
of a Bank under the Credit Agreement (i) with an Individual Revolving Credit
Facility Commitment in an amount equal to the Assigned Revolving Credit Facility
Commitment, (ii) with Advances in a principal amount equal to the Assigned
Revolving Credit Facility Advances, (iii) with an Individual Term Credit
Facility Commitment in an amount equal to the Assigned Term Credit Facility
Commitment, (iv) with Advances in a principal amount equal to the Assigned Term
Credit Facility Advances, (v) with an Individual Revolving Credit Facility
Commitment in an amount equal to the Assigned Revolving Credit Facility
Commitment, (vi) with Advances in a principal amount equal to the Assigned
Revolving Credit Facility Advances, and (b) Assignee shall, as of the
commencement of business on the date hereof, succeed to the rights and be
obligated to perform the obligations of a Bank under the Subordinated Note
Agreement (i) with an Individual Subordinated Note Facility Commitment in an
amount equal to the Assigned Subordinated Note Facility Commitment, (ii) with
Advances in a principal amount equal to the Assigned Subordinated Note Facility
Advances, and (c) the Individual Revolving Credit Facility Commitment,
Individual Term Credit Facility Commitment and the Individual Subordinated Note
Facility Commitment and the Advances of Assignor shall, as of the commencement
of business on the date hereof, be reduced correspondingly and Assignor released
from its obligations under the Credit Agreement and Subordinated Note Agreement
to the extent such obligations have been assumed by Assignee. The assignment
provided for herein shall be without recourse to Assignor, except that Assignor
warrants that it owns the Assigned Facility Advances free and clear of any Liens
and that it has the right to make the assignments contemplated by this
Agreement.
SECTION 2. PAYMENTS. As consideration for the assignment and sale
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the date
hereof in immediately available funds an amount equal to ________________
($________) [insert the amount of the Assigned Facility Advances and accrued
interest thereon and such other amount as is agreed to between Assignor and
Assignee]. It is understood that interest and commitment fees and other fees
payable to Assignor under the Credit Agreement accrued to the date hereof are
for the account of Assignor and such fees accruing from and including the date
hereof are for the account of Assignee. Each of Assignor and Assignee hereby
agrees that if it receives any amount under the Credit Agreement which is for
the account of the other party hereto, it shall receive the same for the account
of such other party to the extent of such other party's interest therein and
shall promptly pay the same to such other party.
SECTION 3. CONSENT OF BORROWER. This Agreement is conditioned upon the
consent of
<PAGE>
<PAGE>
Assignment and Assumption Agreement -4-
Borrower pursuant to Section 13.5 of the Credit Agreement and 9.4 of the
Subordinated Note Agreement. The execution of this Agreement by Borrower is
evidence of such consent. Pursuant to Section 13.5 of the Credit Agreement and
9.4 of the Subordinated Note Agreement, Borrower has agreed to execute and
deliver (1) to Assignee a Revolving Credit Facility Note, payable to the order
of Assignee to evidence the assignment and assumption provided for herein and
(2) to Assignor, in substitution for its existing Note a Revolving Credit
Facility Note payable to the order of Assignor to evidence the assignment and
assumption provided for herein, (3) to Assignee a Term Credit Facility Note,
payable to the order of Assignee to evidence the assignment and assumption
provided for herein, (4) to Assignor, in substitution for its existing Note a
Term Credit Facility Note payable to the order of Assignor to evidence the
assignment and assumption provided for herein, (5) to Assignee a Subordinated
Note Facility Note, payable to the order of Assignee to evidence the assignment
and assumption provided for herein and (6) to Assignor, in substitution for its
existing Note a Subordinated Note Facility Note payable to the order of Assignor
to evidence the assignment and assumption provided for herein.
SECTION 4. NON-RELIANCE ON ASSIGNOR. Assignor makes no representation or
warranty in connection with, and shall have no responsibility with respect to,
the solvency, financial condition, or statements of Borrower or any other party
to any Loan Document, or the validity and enforceability of the obligations of
Borrower or any other party to a Loan Document in respect of the Credit
Agreement, Subordinated Note Agreement, any Note, or any other Loan Document.
Assignee acknowledges that it has, independently and without reliance on
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of Borrower and any
other party to the Loan Documents.
SECTION 5. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado.
SECTION 6. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
<PAGE>
<PAGE>
Assignment and Assumption Agreement -5-
By: _______________________ By: _______________________
Name: Name:
Title: Title:
<PAGE>
<PAGE>
Assignment and Assumption Agreement -6-
Applicable Lending Office:
Address for Notices:
[Assignee]
[address]
Attention: _______________
Telephone: (___) ________
Facsimile: (___) ________
COBANK, ACB, PF ACQUISITION, INC.,
as Administrative Agent as Borrower
By: _______________________ By: _______________________
Name: Name:
Title: Title:
<PAGE>
<PAGE>
EXHIBIT B
BORROWING BASE REPORT
COBANK, ACB, AS ADMINISTRATIVE AGENT
<TABLE>
<S> <C> <C>
- -------------------------------------------- -------------------------------------------- -----------------------
NAME OF BORROWER CITY, STATE FOR PERIOD ENDING (DATE)
PF ACQUISITION II, INC. ROCHESTER, NEW YORK
- -------------------------------------------- -------------------------------------------- -----------------------
</TABLE>
PART A--ELIGIBLE INVENTORY
<TABLE>
<CAPTION>
TYPES OF ELIGIBLE INVENTORY VALUE ADVANCE MAXIMUM ADVANCE
RATE ALLOWABLE
<S> <C> <C> <C> <C>
Eligible Inventory as defined under the
Credit Agreement $ 65% = $
------------------------------- -----------------------
TOTAL PART A: $
------------------------
</TABLE>
PART B--ELIGIBLE RECEIVABLES
AS DEFINED IN THE CREDIT AGREEMENT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Account Receivable Aging
- ---------------------------------------------------------------------------------------------------------------------------------
0 - 30 Days 31 - 60 Days 61 - 90 Days Over 90 Days Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $ $ $
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AMOUNT ADVANCE MAXIMUM ADVANCE
RATE ALLOWABLE
<S> <C> <C> <C>
Total Receivables $
--------------------------------------------
Less: Intercompany $( )
--------------------------------------------
Legal Offsets $( )
--------------------------------------------
Contra Accounts $( )
--------------------------------------------
Foreign $( )
--------------------------------------------
Aged Accounts $( )
--------------------------------------------
Government $( )
--------------------------------------------
Other Liens $( )
--------------------------------------------
Eligible Receivables $ 85% = $
-------------------------------------------- ------------------------
TOTAL PART B:
$
------------------------
SUBTOTAL FOR PARTS A & B $
------------------------
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
PART C--BORROWING BASE CALCULATION
1. SUBTOTAL (Add Totals from Parts A and B). $
-----------------------
2. Subtract all crop payments owing to persons or entities
who are not members of the borrower and who have not waived
their right to a lien or are producers in the State of Washington. $( )
-------------------
3. Subtract amounts secured by other involuntary liens. $( )
-------------------
4. Subtotal of Lines 2 & 3 $( )
---------------------------
5. BORROWING BASE (Line 1 minus Line 4). $
---------------------------
6. Outstanding Revolving Balance under Credit Agreement on period end date.
$
7. Excess Or Deficit On Period End Date (Line 5 - Line 6). ---------------------------
$
---------------------------
</TABLE>
NOTE: IF LINE 7 IS A DEFICIT, REMIT THE DEFICIT TO COBANK, AS ADMINISTRATIVE
AGENT. I HEREBY CERTIFY THAT TO THE BEST OF MY KNOWLEDGE THIS INFORMATION IS
CORRECT.
<TABLE>
- ---------------------------------------------- ----------------------------------- --------------------------------------------
<S> <C> <C>
AUTHORIZED SIGNATURE TITLE DATE
- ---------------------------------------------- ----------------------------------- --------------------------------------------
</TABLE>
<PAGE>
<PAGE>
EXHIBIT C - CREDIT AGREEMENT
Return Address:
CoBANK, ACB
P.O. Box 5110
Denver, CO 80217
SENIOR LINE OF CREDIT, TERM LOAN MORTGAGE AND FIXTURE FILING
THIS MORTGAGE, made and entered into this 22nd day of February, 1999, by PF
ACQUISITION II, INC., whose address is 90 Linden Place, Rochester, New York
14625 (hereinafter referred to as "Mortgagor"), and COBANK, ACB, a corporation
organized and existing under the laws of the United States of America, located
at 5500 South Quebec Street, Englewood, Colorado 80111, P.O. Box 5110 Denver,
Colorado 80217, as Administrative Agent for the Banks party to the Loan
Agreement referred to below (hereinafter referred to as "Mortgagee"),
W I T N E S S E T H:
This document is intended as a mortgage to secure performance of the covenants
and agreements herein contained and contained in the Loan Documents (as defined
in that certain Credit Agreement dated as of February 22, 1999 among Mortgagor,
the Banks party hereto, and CoBank, ACB, as Administrative Agent for such Banks
(as the same may be amended, modified or supplemented from time to time, the
"Loan Agreement")), and to secure payment of the loans made by the Banks
pursuant to the Loan Agreement in the aggregate sum of NINETY MILLION AND NO/100
DOLLARS ($90,000,000.00) evidenced by a Revolving Credit Facility Note (as
defined in the Loan Agreement) in the amount of $60,000,000.00 in favor of
CoBank, ACB dated February 22, 1999 maturing on June 29, 2002 and a Term Credit
Facility Note (as defined in the Loan Agreement) in the amount of $30,000,000.00
in favor of CoBank, ACB dated February 22, 1999 maturing on June 29, 2002,
together with interest payable on the unpaid balance thereof at the rate(s)
specified in the foregoing promissory notes, and any and all renewals or
extensions thereof.
In consideration therefor and for value received by Mortgagor from Mortgagee,
Mortgagor does hereby mortgage, grant, bargain, sell and convey unto Mortgagee,
its successors and assigns, the following-described real property, situate in
the COUNTY OF MARION, STATE OF OREGON:
MARION COUNTY, OREGON
SITE 4, PARCEL 1:
Parcel 2 of PARTITION PLAT 96-98, filed for record on November 8, 1996 in Reel
1353, Page 36, Microfilm records, Marion County, Oregon.
<PAGE>
<PAGE>
SENOR LINE OF CREDIT, TERM LOAN MORTGAGE AND FIXTURE FILING Page 2
PF ACQUISITION II, INC.
Rochester, New York
SITE 6, PARCEL 1
Beginning at the Northwest corner of that certain tract of land deeded to David
Clark by George Taylor and wife, which deed was recorded July 19, 1910 on Page
583, Book 114 of Deed Records of Marion County, Oregon; thence South 32[d] 15'
West 22 feet; thence South 59[d] 47' East 338.76 feet, more or less, to the East
boundary of Lot 3 of the North 1/2 of the Donation Land Claim of B. S. Bonney
and wife; thence North 32[d] 15' East along said line 22 feet to the South
boundary line of the Woodburn-Natron Branch of the Southern Pacific Railroad;
thence North 60[d] 45' West 339 feet to the place of beginning, and being a part
of Lot 3, of the North 1/2 of the Donation Land Claim of B. S. Bonney and wife
in Township 5 South, Range 1 West of the Willamette Meridian in Marion County,
Oregon.
SAVE AND EXCEPT, the land conveyed to the State of Oregon by Ray-Brown Company,
Inc., by deed recorded in Volume 216, Page 177, Deed Records of Marion County,
Oregon.
SAVE AND EXCEPT, that parcel of land situate in the B. S. Bonney Donation Land
Claim in Section 17, Township 5 South, Range 1 West of the Willamette Meridian,
Marion County, Oregon, which is more particularly described as follows:
Beginning at an iron pipe on the Southwesterly right-of-way line of the Southern
Pacific Railroad, from whence the Southwest corner of Lot 4, of the Subdivision
of the North 1/2 of the B. S. Bonney Donation Land Claim, bears South 32[d] 30'
West 221.90 feet and South 60[d] 45' East 96.90 feet and South 32[d] 28' West
308.50 feet and South 59[d] 26' East 35.76 feet and South 32[d] 15' West 434.1
feet and running thence North 60[d] 45' West 168.00 feet along the Southwesterly
right-of-way line of the Southern Pacific Railroad to a 3/4" iron pipe; thence
South 32[d] 30' West 22.00 feet to a 3/4" iron pipe on the Southwesterly
right-of-way line of Pacific Highway U.S. 99E; thence South 60[d] 45' East
168.00 feet, parallel to said railroad right-of-way; thence North 32[d] 30' East
22 feet to the point of beginning.
SITE 6, PARCEL 2
Beginning at an iron pin in the South line of the Southern Pacific Railroad
right-of-way 13.22 chains South 86[d] 45' West and 14.12 chains South 32[d] 6'
West from the most Easterly Northeast corner of the B. S. Bonney Donation Land
Claim in Township 5 South, Range 1 West of the Willamette Meridian in Marion
County, Oregon; thence South 32[d] 6" West, 6.74 chains to a stone in the
Southeast corner of Lot 4 of the B. S. Bonney Subdivision; thence South 89[d]
47' West along the line dividing said claim in North and South halves, 14.44
chains to an iron bolt; thence North 31[d] 57' East, 13.82 chains to an iron
bolt in the South line of said right-of-way of the Southern Pacific Railroad
Company; thence South 60 58' East along said right-of-way, 12.26 chains to the
point of beginning, and situated in the North 1/2 of the B. S. Bonney Donation
Land Claim in Township 5 South, Range 1 West of the Willamette Meridian in
Marion County, Oregon.
<PAGE>
<PAGE>
SENOR LINE OF CREDIT, TERM LOAN MORTGAGE AND FIXTURE FILING Page 3
PF ACQUISITION II, INC.
Rochester, New York
SITE 6, PARCEL 3
Beginning on the division line, dividing the B. S. Bonney Donation Land Claim
into North and South halves, at a point which is 13.20 chains South 86[d] 45'
West and 20.92 chains South 32[d] 15' West of the most Easterly Northeast corner
of the said B. S. Bonney Donation Land Claim and running thence North 32[d] 15'
East 435 feet to the South line of the Woodburn-Silverton Branch of the Southern
Pacific Railroad right-of-way; thence South 60[d] 45' East along the South line
of said right-of-way 735.5 feet to its intersection with said division line;
thence West along said division line 920 feet to the place of beginning, and
being a part of Lot 5 of the North 1/2 of said Donation Land Claim, in Township
5 South, Range 1 West of Willamette Meridian in Marion County, Oregon.
SITE 6, PARCEL 4
Beginning at a point on the South boundary line of the Southern Pacific Railroad
right-of-way which is 531.2 feet North 32[d] 15' East of the Southeast corner of
a 4.103 acre tract of land formerly owned by N. F. Strain, said tract being a
part of Lot 3 of the North 1/2 of the Donation Land Claim of B. S. Bonney and
wife in Township 5 South, Range 1 West of the Willamette Meridian in Marion
County, Oregon; thence South 32[d] 15' West 22 feet; thence South 60[d] 58' East
parallel with said right-of-way 1.424 chains; thence North 32[d] 15' East 22
feet to the South boundary line of said right-of-way; thence North 60[d] 58'
West along said South boundary line 1.424 chains to the place of beginning, and
being situated in Donation Land Claim of B. S. Bonney and wife in Township 5
South, Range 1 West of the Willamette Meridian in Marion County, Oregon.
SITE 6, PARCEL 5
Beginning at a point which is North 19[d] 45' East 13.645 chains and South 87[d]
22' East 32.284 chains and North 19[d] 23' East 44.62 chains from the Southwest
corner of the Thomas Fitzgerald Donation Land Claim in Township 5 South, Range 1
West of the Willamette Meridian, and running thence South 59[d] 55' East along
the South boundary line of the Southern Pacific Railroad right-of-way 1.28
chains; thence South 19[d] 23' West 3.54 chains; thence North 59[d] 55' West
1.28 chains; thence North 19[d] 23' East 3.54 chains to the place of beginning,
being situated in Marion County, Oregon.
SITE 6, PARCEL 6
Beginning at a point which is reached by beginning at the Southwest corner of
the Thomas Fitzgerald Donation Land Claim in Township 5 South, Range 1 West of
the Willamette Meridian, in Marion County, Oregon, and running thence North
19[d] 45' East 13.645 chains; thence South 87 22' East 22.40 chains; thence
North 19[d] 45' East 45.80 chains to the Northwest corner of that certain tract
deeded to Rudolph Zak, Edward Zak and Anna Zak, his wife, by deed recorded at
Page 526, Book 162, Records of Deeds for Marion County, Oregon; running thence
along the West line of additional
<PAGE>
<PAGE>
SENOR LINE OF CREDIT, TERM LOAN MORTGAGE AND FIXTURE FILING Page 4
PF ACQUISITION II, INC.
Rochester, New York
land of said Zak Brothers, said land being described in deed recorded at Page
527, Book 162, Records of Deeds for Marion County, Oregon, Northeasterly 184.7
feet to a point on the South line of the Southern Pacific Railroad right-of-way
and being the beginning point of the herein described tract; running thence
along said railroad right-of-way boundary South 60[d] 26' East 551.2 feet, more
or less, to the Northeast corner of the above described Zak land; thence along
the East line of said Zak land South 19[d] 23' West 130.0 feet; thence parallel
with the said railroad North 60[d] 26' West 130.0 feet; thence North 19[d] 23'
East 119.9 feet; thence on a line parallel to and 10 feet from said railroad
right-of-way boundary North 60[d] 26' West 421.2 feet, more or less, to a point
in the West line of said additional land of Zak Brothers, 10 feet Southwest of
point of beginning; thence Northeast along said West line of Zak Brothers
additional property, 10 feet to point of beginning. SAVE AND EXCEPT, the
Westerly 25 feet for a roadway.
SITE 6, PARCEL 7
Beginning at an iron pipe which marks the point of beginning of a tract of land
conveyed to Irene McMahan, by deed recorded in Volume 490, Page 3, Deed Records
of Marion County, Oregon, which point is 434.1 feet North 32[d] 15' East from
the Southwest corner of Lot 4 of the subdivision of the North 1/2 of the B. S.
Bonney Donation Land Claim in Township 5 South, Range 1 West of the Willamette
Meridian in Marion County, Oregon; and running thence North 59[d] 26' West a
distance of 35.76 feet along the South line of said McMahan tract to an iron
pipe at the Southwest corner thereof; thence North 32[d] 28' East a distance of
308.50 feet along the West line of said tract and extended to an iron pipe;
thence North 60[d] 45' West a distance of 74.90 feet to an iron pipe at an angle
point on the West line of said tract; thence North 32[d] 30' East a distance of
199.90 feet along the said West line to the iron pipe at the Northwest corner of
said tract; thence South 60[d] 45' East a distance of 202.98 feet along the
North line of said tract to the Northeast corner thereof; thence South 32[d] 15'
West a distance of 508.60 feet along the West line of said tract to an iron
pipe; thence North 60[d] 58' West a distance of 94.3 feet, more or less, to the
point of beginning.
SITE 6, PARCEL 8
Beginning on the East boundary of the B. S. Bonney Donation Land Claim in
Township 5 South, Range 1 West of the Willamette Meridian in Marion County,
Oregon, at a point which is 25.95 chains North 19[d] 40' East from the Southeast
corner thereof; thence West 2,641.16 feet to the Easterly line of the Pacific
Highway as same is located in the said Township and Range; thence North 32[d]
31' East along the Easterly line of the said Pacific Highway, 186.78 feet to the
line dividing the said Bonney Donation Land Claim into North and South halves;
thence North 89 52' East along the line dividing the said claim into North and
South halves a distance of 2,598.02 feet to the Easterly line of said Bonney
Donation Land Claim; thence South 19[d] 20' West along the Easterly line of the
said claim 172.42 feet to the place of beginning.
<PAGE>
<PAGE>
SENOR LINE OF CREDIT, TERM LOAN MORTGAGE AND FIXTURE FILING Page 5
PF ACQUISITION II, INC.
Rochester, New York
SAVE AND EXCEPT, a strip of land 60.00 feet wide conveyed to Oregonian Railroad
Company Limited by deed recorded in Volume 26, Page 81, of Deed Records, Marion
County, Oregon.
SAVE AND EXCEPT, that parcel of land situate in Section 17, Township 5 South,
Range 1 West of the Willamette Meridian, Marion county, Oregon, which is more
particularly described as follows: Beginning at the Southeast corner of that
tract of land conveyed to Terminal Ice and Cold Storage Company by deed recorded
in Volume 593, Page 395, Marion County Record of Deeds, said Southeast corner
being recorded as bearing South 19[d] 22' West 1,283.53 feet from the most
Easterly Northeast corner of the Bradford S. Bonney Donation Land Claim No. 47,
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon; and running thence from the true point of beginning; South 19[d] 22'
West 70 feet, more or less, along the Southwesterly extension of the
Southeasterly boundary line of said Terminal Ice and Cold Storage Company tract
to the Northwesterly right-of-way line of the Southern Pacific Railroad; thence
North 60[d] 57' West 139 feet, more or less, along said Northwesterly railroad
right-of-way line to the most Easterly Southwest corner of said Terminal Ice and
Cold Storage Company tract; thence South 89[d] 45' East 144.54 feet along the
Southerly boundary line of said Terminal Ice and Cold Storage Company tract to
the point of beginning.
SITE 6, PARCEL 9
Beginning at a stone in the East line of the B. S. Bonney Donation Land Claim in
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon, said stone being 646.61 feet North 19[d] 38' East from the Southeast
corner of said claim; and running thence South 87[d] 52' West 1,087.62 feet to a
stone; thence North 19[d] 39' East 1,091.81 feet to an iron pipe; thence North
89[d] 48' West 1,574.67 feet to a point in the Easterly right-of-way line of the
Pacific Highway; thence North 32[d] 30' East 18.93 feet along said Easterly
line, to an iron pipe; thence South 89[d] 48' East 2,640.76 feet to a stone in
the East line of said B. S. Bonney Donation Land Claim; thence South 19[d] 38'
West 1,061.66 feet along said East line to the point of beginning.
SITE 6, PARCEL 10
Beginning at an iron pipe which is 2,092.52 feet South 87[d] 49' West and 625.00
feet North 04[d] 46' East and 1,028.01 feet North 10[d] 05' East from the
Southeast corner of the B. S. Bonney Donation Land Claim in Township 5 South,
Range 1 West of the Willamette Meridian, Marion County, Oregon; and running
thence North 89[d] 48' West 247.23 feet to an iron pipe in the Easterly
right-of-way line of the Pacific Highway; thence South 32[d] 30' West 206.88
feet along said Easterly line to an iron pipe; thence South 82[d] 26'
East 322.67 feet to an iron pipe; thence North 10[d] 05' East 219.51 feet to
the point of beginning.
SITE 6, PARCEL 11
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Beginning at a stone at the Southeast corner of the B. S. Bonney Donation Land
Claim in Township 5 South, Range 1 West of the Willamette Meridian, Marion
County, Oregon; and running thence South 87[d] 49' West along the South line of
said claim 2,092.52 feet to a stone; thence North 04[d] 46' East 625.00 feet
along the East line of that certain tract of land described in Volume 449, Page
282, Marion County Deed Records to a stone at the Northeast corner thereof;
thence North 10[d] 05' East 1,028.01 feet to an iron pipe; thence North 89[d]
48' West 247.23 feet to an iron pipe set in the Easterly right-of-way line of
the Pacific Highway; thence North 32[d] 30' East 54.42 feet along said Easterly
line to a point; thence South 89[d] 48' East 1,574.67 feet to an iron pipe;
thence South 19[d] 39' West 1,091.81 feet to a stone; thence North 87[d] 52'
East 1,087.62 feet to a stone in the East line of said B. S. Bonney Donation
Land Claim; thence South 19[d] 38' West 646.61 feet along said East line to the
point of beginning.
SAVE AND EXCEPT, a portion of that tract of land conveyed to Agripac, Inc., an
Oregon Cooperative Corporation by Warranty Deed, recorded in Reel 918, Page 429,
Microfilm Records, Marion County, Oregon; said beginning point of the following
described parcel, being an iron rod with plastic cap marked LS 1362 and lying
3,589.65 feet North 16[d] 59'26" West of the Southeast corner of Neil Johnson
Donation Land Claim No. 69 in Township 5 South, Range 1 West of the Willamette
Meridian, Marion County, Oregon; thence along the Westerly boundary of said
Agripac tract the following courses: South 86[d] 53'16" West 730.83 feet to the
East right-of-way of Pacific Highway 99E; thence North 31[d] 35'00" East along
said right-of-way 72.98 feet; thence North 86 53'16" East 702.36 feet to an iron
pipe; thence North 9[d] 10'24" East 195.00 feet; thence leaving said Westerly
boundary North 30[d] 12'00" East 409.00 feet; thence North 0[d] 34'00" West
391.00 feet; thence South 86[d] 37'53" East 494.69 feet; thence South 61[d]
37'04" East 591.66 feet; thence South 28[d] 22'56" West 1,030.50 feet; thence
North 61[d] 37'04" West 396.67 feet; thence North 85[d] 47'24" West 419.43 feet
to the point of beginning.
SITE 6, PARCEL 12
That parcel of land situate in the B. S. Bonney Donation Land Claim, Section 17,
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon, described in Volume 579, Page 486 of the Deed Records of Marion County,
Oregon, which is more particularly described as follows: Beginning at a 3/4"
iron pipe from whence the Southwest corner of Lot 4 of the subdivision of the
North 1/2 of B. S. Bonney Donation Land Claim bears South 60[d] 45' East 74.90
feet and South 32[d] 28' West 308.50 feet and South 59[d] 26' East 35.76 feet
and South 32[d] 15' West 434.1 feet and running thence North 60[d] 45' West 22
feet to an iron pipe; thence North 32[d] 30' East 199.90 feet; thence South
60[d] 45' East 22.00 feet; thence South 32[d] 03' West 199.90 feet to the point
of beginning.
SITE 6, PARCEL 13
That tract of land situate in Sections 19 and 20, Township 5 South, Range 1 West
of the Willamette
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Meridian in Marion County, Oregon, which is more particularly described as
follows: Beginning at an iron bar on the Southerly boundary line of that tract
of land conveyed to General Foods Corporation by deed recorded in Volume 547,
Page 833, Marion County Record of Deeds, said iron bar being also the
Northeasterly corner of that tract of land conveyed to F and D Geschwill by deed
recorded in Volume 404, Page 152, Deed Records for Marion County, Oregon, in
Sections 19 and 20, Township 5 South, Range 1 West of the Willamette Meridian,
Marion County, Oregon, which bears South 89[d] 45' East 309.21 feet and North
31[d] 59' East 3,330.55 feet and North 86[d] 53' East 1,070.32 feet from the
most Southerly Southwest corner of the Neil Johnson Donation Land Claim No. 69,
and running thence from the true point of beginning; South 18[d] 50' West
2,665.47 feet along the Easterly boundary line of said Geschwill tract to a 3/4"
iron pipe; thence South 89[d] 39'30" West 1,753.47 feet to a 3/4" iron pipe on
the Westerly boundary of that tract of land conveyed to F and D Geschwill by
deed recorded in Volume 465, Page 177, Deed Records for Marion County, Oregon;
thence North 31[d] 59' East 2,917.55 feet along said Westerly boundary and the
Northeasterly extension thereof to a 3/4" iron pipe on the Northerly boundary
line of said Geschwill tract recorded in Volume 404, Page 152, Deed Records for
Marion County, Oregon; thence North 86[d] 53' East 1,070.32 feet to the point of
beginning.
SAVE AND EXCEPT, beginning at a point on the West line of that tract of land
conveyed to Fred Geschwill by deed recorded in Volume 288, Page 341, Deed
Records for Marion County, Oregon, which is South 18[d] 50'49" West 1,654.33
feet and South 89[d] 39'30" West 1,053.19 feet from the Northeast corner of the
Neil Johnson Donation Land Claim No. 69 in Township 5 South, Range 1 West of the
Willamette Meridian in Marion County, Oregon; thence South 18[d] 49'55" West
1,064.46 feet; thence South 89[d] 39'30" West 1,753.46 feet to an iron pipe in
the Southwest corner of that tract of land conveyed to General Foods Corporation
by deed recorded in Volume 625, Page 152, Deed Records for Marion County,
Oregon; thence North 31[d] 59' East 1,189.80 feet along the West line of said
General Foods tract to a 5/8 iron rod; thence North 89[d] 39'30" East 1,466.84
feet to the place of beginning.
SITE 6, PARCEL 14
Beginning at the Northeast corner of the Neil Johnson Land Claim No. 69 in
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon; thence South 18[d] 50'49" West 1,654.33 feet along the East line of said
claim to 1 5/8" iron rod; thence South 89[d] 39'30" West 1,053.19 feet to a
point in the West line of the Fred Geschwill tract as described in Volume 288,
Page 341, Deed Records for Marion County, Oregon; thence North 18[d] 49'55" East
1,599.87 feet to an iron bar in the North line of said claim; thence North 86[d]
55'04" East 1,072.71 feet to the place of beginning.
SITE 6, PARCEL 15
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Beginning at an iron pipe in the West line of the Thomas Fitzgerald Donation
Land Claim 13.645 chains from the Southwest corner of the same in Township 5
South, Range 1 West of the Willamette Meridian, in Marion County, Oregon; thence
North 19[d] 45' East along the West line of said claim 45.40 chains to a stone;
thence South 88[d] 17' East 11.26 chains to the iron bar; thence South 19[d] 45'
West 45.60 chains to an iron bar; thence North 87[d] 23' West 11.20 chains to
the point of beginning, being situated in the Thomas Fitzgerald Donation Land
Claim in Township 5 South, Range 1 West of the Willamette Meridian in Marion
County, Oregon.
SITE 6, PARCEL 16
Beginning at a point 13.645 chains North 19[d] 45' East and 11.20 chains South
87[d] 22' East from the Southwest corner of the Thomas Fitzgerald Donation Land
Claim in Township 5 South, Range 1 West of the Willamette Meridian in Marion
County, Oregon; thence North 19[d] 45' East 9.32 chains to an iron pipe; thence
South 87[d] 22' East 5.615 chains to the Southwest corner of a tract of land
conveyed to Harvey E. Mikkelson, et al, by deed recorded in Volume 455, Page
502, Deed Records for Marion County, Oregon; thence North 19[d] 45' East 30.439
chains; thence South 70[d] 15' East 5.346 chains; thence North 19[d] 45' East
7.672 chains to an iron bar at the Northwest corner of the fourth tract of land
described in deed to Harvey E. Mikkelson, et al, recorded in Volume 444, Page
672, Deed Records for Marion County, Oregon; thence South 88 17' East 1.09
chains to a stone at most Westerly Southwest corner of a tract of land deeded to
Martin Aicher by Sebastian Aicher, et ux, by deed recorded in Volume 73, Page
450, Deed Records for Marion County, Oregon; thence North 18[d] 44' East 2.80
chains to an iron pipe in the South line of the Southern Pacific Railroad
right-of-way; thence South 60[d] 26' East 5.74 chains along said right-of-way to
the Northerly boundary of the first tract of land described in said deed to
Harvey E. Mikkelson, et al, recorded in Volume 444, Page 672, Deed Records;
thence South 60[d] 26' East along said Northerly boundary a distance of 2.62
chains to the Northeasterly corner of said parcel; thence South 19[d] 23' West
44.62 chains; thence North 87[d] 22' West 21.084 chains to the place of
beginning.
SAVE AND EXCEPT, beginning at a point which is reached by beginning at the
Southwest corner of the Thomas Fitzgerald Donation Land Claim in Township 5
South, Range 1 West of the Willamette Meridian, in Marion County, Oregon, and
running thence North 19[d] 45' East 13.645 chains; thence South 87[d] 22' East
22.40 chains; thence North 19[d] 45' East 45.80 chains to the Northwest corner
of that certain tract deeded to Rudolph Zak, Edward Zak and Anna Zak, his wife,
by deed recorded at Page 426, Book 162, Records of Deeds for Marion County,
Oregon; running thence along the West line of additional land of said Zak
Brothers, said land being described in deed recorded at Page 527, Book 162,
Records of Deeds for Marion County, Oregon, Northeasterly 184.7 feet to a point
on the South line of the Southern Pacific Railroad right-of-way and being the
beginning point of the herein described tract; running thence along said
railroad right-of-way boundary South 60[d] 26' East 551.2 feet, more or less, to
the Northeast corner of the above described Zak land; thence along the East line
of said Zak land South 19[d] 23' West 130.0 feet; thence parallel with the said
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railroad North 60[d] 26' West 130.0 feet; thence North 19[d] 23' East 119.9
feet; thence on a line parallel to and 10 feet from said railroad right-of-way
boundary North 60[d] 26' West 421.2 feet, more or less, to a point in the West
line of said additional land of Zak Brothers, 10 feet Southwest of point of
beginning; thence Northeast along said West line of Zak Brothers additional
property, 10 feet to point of beginning. SAVE AND EXCEPT, the Westerly 25 feet
for a roadway.
SITE 6, PARCEL 17
Beginning at an iron pipe on the North line of the Southern Pacific Railroad
right-of-way at a point 93 links North 18[d] 44' East from the North corner of
the last above mentioned tract; thence North 18[d] 44' East 2.96 chains to the
centerline of the county road; thence South 27[d] 29' East along the center of
said road 5.37 chains to an iron pipe in the North line of the said railroad
right-of-way; thence North 60[d] 26' West 3.95 chains to the point of beginning.
SITE 6, PARCEL 18
Beginning at a car spring on the Northerly boundary line of that tract of land
described in contract to A. L. Steffen and E. I. Steffen, recorded in Volume
460, Page 90, Deed Records for Marion County, Oregon, said car spring marking
the Southeast corner of that tract of land conveyed to H. E. Mikkelson and M.
Mikkelson, by deed recorded in Volume 444, Page 672, Deed Records for Marion
County, Oregon, said car spring is recorded as bearing North 19[d] 45' East
900.57 feet and South 87[d] 22' East 2,130.7 feet from the Southwest corner of
the Thomas Fitzgerald Donation Land Claim No. 54 in Township 5 South, Range 1
West of the Willamette Meridian in Marion County, Oregon; and running thence
from the true point of beginning; South 88[d] 04'10" East 2,865.86 feet along
said Northerly boundary line of said Steffen tract to a 1/2" iron pipe marking
the Northeasterly corner of said tract; thence South 12 West 874.70 feet to a
two inch iron pipe marking the Southeasterly corner of that tract of land
described in contract to A. L. Steffen and E. I. Steffen, recorded in Volume
520, Page 84, Deed Records for Marion County, Oregon; thence North 88[d] 02'
West 1,042.05 feet along the Southerly boundary line of said Steffen tract to
a 1/2" iron pipe; thence North 01[d] 55'50" East 840.83 feet to a 1/2" iron
pipe on a line parallel with and a perpendicular distance of 20.00 feet,
measured Southerly from said Northerly boundary line of said Steffen tract
described in Volume 460, Page 90, Deed Records for Marion County, Oregon;
thence North 88[d] 04'10" West 1,697.06 feet along said line parallel with
said Northerly boundary line to a 1/2" iron pipe; thence North 08[d] 03'24"
East 20.31 feet to a 1/2" iron pipe on the said Northerly boundary line;
thence South 88[d] 04'10" East 22.66 feet along said Northerly boundary line
to the point of beginning.
SITE 6, PARCEL 19
Beginning on the Westerly line and 6.78 chains North 19 45' East from the
Southwest corner of the Thomas Fitzgerald Donation Land Claim No. 54 in Township
5 South, Range 1 West of the
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Willamette Meridian in Marion County, Oregon; thence North 19[d] 45' East 6.865
chains along the Westerly line of said Fitzgerald Claim; thence South 87[d] 22'
East 2,108.08 feet to the Northwesterly corner of a tract of land conveyed to
General Foods Corporation, by deed recorded in Volume 640, Page 501, Deed
Records for Marion County, Oregon; thence South 08[d] 03'24" West 20.31 feet to
1/2 inch iron pipe; thence South 88[d] 04'10" East 1,697.06 feet to a 1/2 inch
iron pipe; thence South 1[d] 55'50" West to a point on the Southerly line of a
tract described in Agreement recorded in Volume 460, Page 90, Deed Records of
Marion County, Oregon; thence North 87[d] 14' West 3,918.00 feet, more or less,
to a point which is 10.00 feet from the Westerly line of said Fitzgerald Claim,
as measured perpendicular thereto; thence South 19[d] 45' West 6.70 chains to a
point on the Southerly line of said Fitzgerald Claim, which is South 87[d] 14'
East 10.00 feet from the Southwest corner thereof; thence North 87[d] 14' West
10.00 feet from the Southwest corner of said Fitzgerald Claim; thence North
19[d] 45' East 6.78 chains to the place of beginning.
SITE 6, PARCEL 20
Beginning at the Southwest corner of the Donation Land Claim of Thomas
Fitzgerald and wife, in Township 5 South, Range 1 West of the Willamette
Meridian, in said County and State; thence North 19[d] 45' East 6.78 chains
along the West line of the Thomas Fitzgerald claim; thence South 87[d] 14'
East 76.47 chains to the East line of said claim; thence South 11[d] 54' West
6.586 chains to the Southeast corner of the Thomas Fitzgerald claim; thence
North 87[d] 14' West 77.41 chains along the South line of the said claim to
the place of beginning.
SAVE AND EXCEPT, that portion thereof included in deed to General Foods
Corporation recorded December 14, 1967 in Book 640, Page 501, Deed Records,
Marion County, Oregon.
SITE 6 PARCEL 21: (PLANT 8)
All of Mortgagor's right, title and interest in and to that certain real
property facility lease between PF Acquisition II, Inc., (as Assignee to
Agripac, Inc.) as Lessee, and Greenfield Partners, Ltd., an Oregon limited
partnership as Lessor, pursuant to an undated Lease related to the real property
more particularly described below:
IMPROVEMENTS ONLY on the following described parcel:
A portion of that tract of land conveyed to Agripac, Inc., an Oregon Cooperative
Corporation by Warranty Deed, recorded in Reel 918, Page 429, Microfilm Records,
Marion County, Oregon; said beginning point of the following described parcel,
being an iron rod with plastic cap marked LS 1362 and lying 3,589.65 feet North
16[d] 59'26" West of the Southeast corner of Neil Johnson Donation Land Claim
No. 69, in Township 5 South, Range 1 West of the Willamette Meridian, Marion
County, Oregon; thence along the westerly boundary of said Agripac tract the
following courses: 86[d] 53'16" West, 730.83 feet to the east right of way of
Pacific Hwy 99E; thence North 31[d] 35'00" East along
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said right of way, 72.98 feet; thence North 86[d] 53'16" East, 702.36 feet to an
iron pipe; thence North 9[d] 10'24" East, 195.00 feet; thence leaving said
westerly boundary, North 30[d] 12'00" West 391.00 feet; thence South 86[d]
37'53" East, 494.69 feet; thence South 61[d] 37'04" East, 591.66 feet; thence
South 28[d] 22'56" West, 1,030.50 feet; thence North 61[d] 37'04" West 396.67
feet; thence North 85[d] 47'24" West, 419.43 feet to the point of beginning.
SITE 6 PARCEL 22: All of Mortgagor's right, title and interest in and to that
certain real property lease dated February 1, 1999, between Agripac, Inc. and
assumed by PF Acquisition II, Inc., as Lessee, and Albert J. Kowash, Trust as
Lessor, pursuant to an Lease related to the real property more particularly
described below and including all rights and benefits under that certain
Amendment to Permission to Utilize and Maintain Underground Water Lines dated
February 19, 1999, between Albert J. Kowash, Trust and Agripac, Inc. and assumed
by PF Acquisition II, Inc.:
Tract One:
Beginning 22.965 chains North 19[d] 45' East and 11.20 chains South 87[d] 22'
East from the Southwest corner of the Thomas Fitzgerald D.L.C. in Township 5
South Range 1 West of the Willamette Meridian in Marion County, Oregon; thence
North 19[d] 45' East 36.28 chains to an iron bar; thence South 88[d] 17' East
5.655 chains to a stone; thence South 19[d] 45' West 36.38 chains to an iron
pipe; thence North 87[d] 22' West 5.615 chains to the point of beginning in the
Thomas Fitzgerald D.L.C. in Township 5 South, Range 1 West, Marion County,
Oregon.
Tract Two:
All that portion of the following described property lying South of the Southern
Pacific Railroad right of way as follows: Beginning at a stone in the Northwest
corner of the Donation Land Claim of Thomas Fitzgerald and wife in Township 5
South, Range 1 West of the Willamette Meridian, Marion County, Oregon; thence
South 26[d] 44' East 31.24 chains to an iron pipe in the center line of the
County Road; thence South 19[d] 45' West 6.41 chains to the line between that
part of the wife's half of said Donation Land Claim set apart to Thomas, Henry
and Catherine I. Fitzgerald, and that part set apart to Honora and Mary
Fitzgerald; running thence North 88[d] West 23.61 chains; thence North 19 3/4[d]
East 35.48 chains to the place of beginning.
Save and except that portion conveyed to the State Highway Commission by deed
recorded April 18, 1952 in Volume 288, Page 341, Deed Records of Marion County,
Oregon.
Together with the tenements, hereditaments and appurtenances now or hereafter
thereunto belonging or in anywise appertaining, and all the rents, issues and
profits arising or to arise therefrom, inclusive of all the estate, right,
title, interest and claim whatsoever, at law or in equity, which Mortgagor now
has or may hereafter acquire in or to the described real property and each and
every part and parcel
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thereof, inclusive of all structures, improvements, appurtenances, fixtures,
easements, rights and privileges now owned or hereafter acquired, erected on, or
used in connection with the above-described real property, all of which are
hereby declared to be appurtenant to the land; all waters and water rights of
every kind and description and however evidenced, and all ditches or other
conduits, rights therein and rights of way therefor, which now are or hereafter
may be appurtenant to said premises or any part thereof, or used in connection
therewith; all structures, improvements and fixtures now or hereafter acquired
and placed, located, installed in, or used on or about any premises owned,
leased or operated by Mortgagor, including without limitation the described
premises, and after-acquired title to any of the described real property
resulting from purchase or the exercise of an option to purchase, and to any
streets or other public roadways abutting the described real property resulting
from any vacation by operation of law or conveyance, all of which shall be
deemed and construed as part of the realty. All property subject to this
Mortgage is hereinafter referred to as "the mortgaged premises."
TO HAVE AND TO HOLD the mortgaged premises unto Mortgagee, its successors and
assigns.
IT IS HEREBY AGREED that all covenants and stipulations in these presents
contained shall bind the successors and assigns of Mortgagor and shall inure to
the benefit of the successors and assigns of Mortgagee.
Mortgagor covenants and agrees:
1. At the time of the execution and delivery of this Mortgage, Mortgagor is well
seized of the mortgaged premises in fee simple (except as to the leasehold
interests referenced in Site 6, Parcel 21 and Site 6 Parcel 22), has good right
and authority to mortgage the same as herein provided, and the mortgaged
premises are free and clear of liens and encumbrances other than liens permitted
pursuant to the Loan Agreement.
2. Mortgagor will pay, when due, the indebtedness hereby secured in accordance
with the terms thereof.
3. Mortgagor will pay all taxes, assessments, water and other charges for
utility services that may be levied, assessed or charged upon or against the
mortgaged premises, or any part thereof, before the same become past due
according to law, and will promptly pay and satisfy any mechanic's lien or other
encumbrances that might by operation of law or otherwise become a lien upon the
mortgaged premises whether or not superior to the lien of this Mortgage, all
premiums upon insurance policies on the mortgaged property, all licenses or fees
legally owing by it, all rentals or other charges for the use of any leased
ground or premises upon which any of the mortgaged premises may be located, all
taxes or assessments which now are or which may hereafter be levied or assessed
and which are or are to become a lien upon the mortgaged premises and property,
or any
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part thereof, or upon this Mortgage or the debt secured thereby, or upon the
interest payable thereon, and amounts for investment in bank stock as may be
required. In case of default in payment of any of the foregoing, Mortgagee, its
successors or assigns, may at its option pay said insurance premiums, or
reinsure the mortgaged premises and pay all premiums therefor, and pay licenses,
fees, rentals, charges, taxes and/or assessments due or claimed to be due under
any legislative power or authority or under any valid contract; and any amounts
so paid by Mortgagee, and any amount required for investment in bank stock as
aforesaid shall become part of the principle debt; and amounts so paid by
Mortgagee shall bear interest from the date of payment.
4. Mortgagor (i) will keep all improvements erected on the mortgaged premises in
good order and repair, (ii) will not permit waste of the mortgaged premises to
do or suffer anything to be done to depreciate or impair the value of the
mortgaged premises during the life of this Mortgage, (iii) will not make any
changes in or alterations to the improvements on the mortgaged premises which
will materially decrease the value of the same, and (iv) will not remove or
permit to be removed any improvements from the mortgaged premises, without the
prior written consent of Mortgagee.
5. Mortgagor will keep the building improvements now erected, or which may
hereafter be erected, on the mortgaged premises insured against loss or damage
by fire with extended coverage endorsement, written by a responsible insurance
company or insurance companies satisfactory to Mortgagee in an amount
satisfactory to Mortgagee, naming Mortgagor and Mortgagee insured parties as
their interests may appear, and will cause to be executed and attached to all
policies of insurance issued thereon a clause in form satisfactory to Mortgagee,
making loss payable to Mortgagee as its interests may appear, said policy or
policies of insurance to be delivered to Mortgagee. Any insurance funds paid to
Mortgagee as a result of damage or loss to the mortgaged premises covered may at
the option of Mortgagee be released to Mortgagor to be expended in the repair,
restoration, or replacement of the mortgaged premises so damaged or lost, or be
retained by Mortgagee and be applied toward the payment of all or such of the
items of indebtedness secured hereby as Mortgagee may elect. Mortgagor hereby
appoints Mortgagee agent to collect all amounts payable under said policies to
Mortgagor, and such amounts received after the costs of collection shall be
applied to the payment of the principal sum and interest thereon, and other sums
secured hereby.
6. Mortgagor further makes the following representations, warranties, and
covenants, all of which are subject to any exceptions that Mortgagor may have
previously disclosed in writing to Mortgagee, and which, to the extent that they
deal with representations of fact, are based on Mortgagor's present knowledge,
arrived at after reasonable inquiry.
USE OF PROPERTY AND FACILITIES.
(1) Mortgagor will (a) use, handle, transport or store Hazardous
Material as
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defined under any Environmental Law or (b) store or treat nonhazardous wastes
(i) in a good and prudent manner in the ordinary course of business, and (ii) in
compliance with all applicable Environmental Laws.
(2) Mortgagor will not conduct or allow to be conducted, in
violation of any Environmental Law, any business, operations or activity on the
property, or employ or use the property to generate, use, handle, manufacture,
treat, store, process, transport or dispose of any Hazardous Materials, or any
other substance which is prohibited, controlled or regulated under applicable
law, or which poses a threat or nuisance to public safety, health or the
environment or cause, or allow to be caused, a known or suspected release of
Hazardous Materials, on, under or from the property.
(3) Mortgagor will not do or permit any act or thing, business or
operation, that poses an unreasonable risk of harm, or impairs, or may impair,
the value of the property, or any part thereof.
(B) CONDITION OF PROPERTY.
(1) Mortgagor shall take all appropriate response action,
including any removal and remedial action, in the event of a release, emission,
discharge or disposal of Hazardous Materials in, on, under or about the
property, so as to remain in compliance with Environmental Law as hereinafter
defined.
(2) Underground tanks, wells (except domestic water wells),
septic tanks, ponds, pits, or any other storage tanks (whether currently in use
or abandoned) on the property, if any, are maintained in compliance with
applicable Environmental Law.
(C) NOTICE OF ENVIRONMENTAL PROBLEM OR LITIGATION. Neither Mortgagor nor any of
its tenants have given, nor were they required to give, nor have they received,
any notice, letter, citation, order, warning, complaint, inquiry, claim or
demand that: (1) Mortgagor and/or any tenants have violated, or are about to
violate, any Environmental Law, judgment or order; (2) there has been a release,
or there is a threat of release, of Hazardous Materials from the property; (3)
Mortgagor and/or tenants may be or are liable, in whole or in part, for the
costs of cleaning up, remediating, removing or responding to a release or
threatened release of Hazardous Materials; (4) the property is subject to a lien
in favor of any governmental entity or any liability, costs or damages, under
any Environmental Law arising from or costs incurred by such governmental entity
in response to a release or a threatened release of a Hazardous Material.
Mortgagor further represents and warrants that no conditions currently exist or
are currently reasonably foreseeable, that would subject Mortgagor to any such
investigation, litigation, administrative enforcement or any damages, penalties,
injunctive relief, or cleanup costs under any Environmental Law. In the event of
such notice,
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Mortgagor and any tenants shall immediately provide a copy to the Mortgagee.
(D) RIGHT OF INSPECTION. Mortgagor hereby grants, and will cause any
tenants to grant, to Mortgagee, its agents, attorneys, employees, consultants,
contractors, successors and assigns, an irrevocable license and authorization,
upon reasonable notice, to enter upon and inspect the property and facilities
thereon, and perform such tests, including without limitation, subsurface
testing, soils and groundwater testing, and other tests which may physically
invade the property thereon, as the Mortgagee, in its sole discretion,
determines are necessary to protect its security interest, provided however,
that under no circumstances shall the Mortgagee be obligated to perform such
inspections or tests.
(E) INDEMNITY. Mortgagor agrees to indemnify and hold Mortgagee, and
each lender under the Loan Agreement, their directors, employees, agents, and
their successors and assigns, harmless from and against any and all claims,
losses, damages, liabilities, fines, penalties, charges, judgments,
administrative orders, remedial action requirements, enforcement actions of any
kind, and all costs and expenses incurred in connection therewith (including,
but not limited to, attorney's fees and expenses) arising directly or
indirectly, in whole or in part, out of any failure of Mortgagor to comply with
the environmental representations, warranties and covenants contained herein.
(F) CONTINUATION OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
INDEMNITIES. Mortgagor's representations, warranties, covenants and indemnities
contained herein shall survive the occurrence of any event whatsoever, including
without limitation, the satisfaction of the promissory note(s) secured hereby,
the reconveyance or foreclosure of this mortgage, the acceptance by Mortgagee of
a deed in lieu of foreclosure, or any transfer or abandonment of the property.
(G) CORRECTIVE ACTION. In the event the Mortgagor is in breach of any of
its representations, warranties or agreements as set forth above, Mortgagor at
its sole expense, shall take all action required, including environmental
cleanup of the property, to comply with the representations, warranties, and
covenants herein or applicable legal requirements and, in any event, shall take
all action deemed necessary under all applicable Environmental Laws.
(H) HAZARDOUS MATERIALS DEFINED. The term "Hazardous Materials" shall
mean dangerous, toxic, or hazardous pollutants, contaminants, chemicals, wastes,
materials or substances, as defined in or governed by the provisions of any
Environmental Law.
(I) ENVIRONMENTAL LAW DEFINED. The term "Environmental Law" shall mean
any federal, state or local law, statute, ordinance, rule, regulation,
administrative order and permit now in effect or hereinafter enacted, pertaining
to the public health, safety, industrial hygiene, or the environmental
conditions on, under or about the property.
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7. Should Mortgagor fail to pay any taxes, assessments, fire insurance premiums
or other charges payable by Mortgagor hereunder, before the same shall be past
due, Mortgagee may, at its option, make payment thereof, and the amounts so paid
with interest thereon at the rate then payable on indebtedness secured hereby
shall be added to and become a part of the debt secured by this Mortgage and
shall be repaid to Mortgagee forthwith, without waiver of any right arising from
breach of any of the covenants, and for such payments with interest the
mortgaged premises as well as Mortgagor shall be bound to the same extent as
bound for the payment of the indebtedness herein specifically described. Should
Mortgagee make such payment or payments at it option as set forth in the
foregoing sentence, such act shall not constitute a waiver by Mortgagee of any
other rights it may have arising from Mortgagor's failure as aforesaid,
including but not limited to Mortgagee's rights under paragraph 8 of this
Mortgage.
8. Mortgagor hereby assigns and transfers unto Mortgagee the issues and profits,
together with full power and authority to demand, sue for and collect the same
in the name of Mortgagor, or in its own name, and to take possession of and
manage the mortgaged premises or to cause a receiver to be appointed for such
purpose and apply the income therefrom, after the costs of collection and
management, to the reduction of the indebtedness secured hereby; provided,
however, that the right to collection and management shall not apply as long as
this Mortgage is in good standing.
9. Each of the following shall constitute a default under this Mortgage, and if
any of the following shall occur, the entire unpaid balance of principal and
accrued interest secured by this Mortgage shall become immediately due and
payable at the option of Mortgagee and foreclosure proceedings may be commenced
forthwith:
The occurrence of any Event of Default under the Loan Agreement;
Failure of Mortgagor to perform or observe all the provisions of this
Mortgage;
(C) Loss or destruction of or substantial damage to a material portion
of the mortgaged premises; or
(D) Sale or other transfer of the mortgaged premises or any part thereof
without the prior written consent of Mortgagee.
The failure of Mortgagee to exercise the option given hereunder shall not be
taken or deemed a waiver of its right to exercise such option as to any such
past or subsequent violation of any of said covenants or stipulations.
10. In the event suit or action is begun to foreclose this Mortgage, Mortgagor
will pay in addition to the costs and disbursements allowed by law such sum as
the court may adjudge reasonable attorney
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fees in such suit or action, or any appeal therefrom, and such sum as the court
may adjudge reasonable for the necessary examination and search of the public
records respecting the title to the mortgaged premises, and the plaintiff in
such suit or action may take judgment therein for such sums. Mortgagor will pay
to Mortgagee all sums, including costs, expenses and reasonable agent and
attorney fees, which Mortgagee or the lenders under the Loan Agreement may
expend or become obligated for in any proceedings, legal or otherwise, involving
the title to the mortgaged premises, or to establish, protect or sustain the
lien of this Mortgage, or its priority, or in defending against liens, claims,
rights, estates, easements, or restrictions, or for evidences of title to the
mortgaged premises, or for expenses and attorney fees incurred; together,
always, with interest on all sums at the rate then payable on the indebtedness
secured hereby; and for payment of said sums and interest this Mortgage shall
stand as security in like manner and effect as for payment of said debt.
11. If the mortgaged premises, or any part thereof, be condemned under any power
of eminent domain or acquired for public use, the damages, proceeds, and the
consideration for such acquisition, to the extent of the full amount of the
indebtedness secured by this Mortgage, including any expenses and attorney fees
incurred by Mortgagee or the lenders under the Loan Agreement on account of such
condemnation, are hereby assigned by Mortgagor to Mortgagee and shall be paid
forthwith to Mortgagee to be applied by it to the payment of such expenses and
attorney fees and any balance on account of the last maturing portion of the
indebtedness secured hereby.
As further security for the payment of all indebtedness herein
mentioned, all Mortgagor's rents and profits from the mortgaged premises and the
right, title and interest of Mortgagor in and under all leases now or hereafter
affecting the mortgaged premises, are hereby assigned and transferred to
Mortgagee. So long as no default shall have occurred under this Mortgage,
Mortgagor may collect assigned rents and profits as the same fall due, but upon
the occurrence of any default hereunder, or at such later time as Mortgagee in
its sole discretion may fix by written notice, all right of Mortgagor to collect
or receive rents or profits shall wholly terminate. No lease of the whole or any
part of the mortgaged premises involving an initial term of more than three
years shall be modified or terminated without the written consent of Mortgagee,
nor shall the surrender of any such lease be accepted nor any rental thereunder
be collected for more than two months in advance without like written consent.
In the event of any default hereunder and the exercise by Mortgagee of its
rights hereby granted, Mortgagor agrees that payments made by tenants or
occupants to Mortgagee shall, as to such tenants, be considered as though made
to Mortgagor and in discharge of tenants' obligations as such to Mortgagor.
Nothing herein contained shall be construed as obliging Mortgagee to perform any
of Mortgagor's covenants under any lease or rental agreement. Mortgagor shall
execute and deliver to Mortgagee upon demand any further or supplemental
assignments necessary to effectuate the intentions of this paragraph and upon
failure of Mortgagor so to comply, Mortgagee may, in addition to any other right
or remedy it has, declare the entire unpaid balance of principal and interest
secured by this Mortgage immediately due and payable.
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The word "Mortgagor" and the language of this instrument shall, where
there is more than one mortgagor, be construed as plural and be binding jointly
and severally upon all mortgagors and the word "Mortgagee" shall apply to any
holder of this Mortgage. All of the covenants of Mortgagor shall be binding upon
its successors and assigns and inure to the benefit of the successors and
assigns of Mortgagee. In the event of the transfer of the mortgaged premises or
any part thereof or any interest therein, whether voluntary or involuntary or by
operation of law, Mortgagee may, without notice to Mortgagor or any one else,
once or often, extend the time of payment or grant renewals of indebtedness
hereby secured for any term, execute releases or partial releases from the lien
of this Mortgage or in any other respect modify the terms hereof without thereby
affecting the personal primary liability of Mortgagor for the payment of the
indebtedness hereby secured. No condition of this Mortgage shall be deemed
waived unless the same be expressly waived in writing by Mortgagee. Whenever any
notice, demand, or request is required by the terms hereof or by any law now in
existence or hereafter enacted, such notice, demand or request shall be
sufficient if enclosed in a postpaid envelope addressed to Mortgagor at the last
address actually furnished to Mortgagee or at the mortgaged premises and
deposited in any post office, station or letter box.
Mortgagor will, at all times during the existence of any part of the
lien herein provided for, maintain its corporate existence and operate its
business as a cooperative association qualified under the Farm Credit Act of
1971 and any amendment thereto, and under applicable statutes of the state.
This Mortgage, without affecting its validity as a real estate mortgage,
is also executed and shall be construed as a "Security Agreement" under the
Uniform Commercial Code granting to Mortgagee a security interest in all
personal property mentioned herein, and in addition to the rights and remedies
provided herein, Mortgagee shall have all the rights and remedies granted by
such Uniform Commercial Code; and reasonable notice, when notice is required,
shall be ten (10) days.
16. This Mortgage shall also be construed as a fixture filing under ORS 79.4020
as to all fixtures included in the mortgaged premises.
As used in this Mortgage, the word "transfer" means every mode, direct or
indirect, absolute or conditional, voluntary or involuntary, of disposing of or
parting with property or with an interest in property, including, but not
limited to, as sale, lease, gift, granting an encumbrance or security interest,
allowing a lien to attach, and foreclosure and the transfer of control or
ownership of an entity that owns or controls property.
After a default by Mortgagor in the payment of the indebtedness hereby secured
(the "secured debt") or in the payment of taxes, assessments, or insurance
premiums and if required in writing by Mortgagee, Mortgagor thereafter will
deposit with Mortgagee a monthly reserve for the annual payment of taxes,
assessments, and insurance premiums. The reserve payment will be made at the
same time as the monthly payment of interest and principal and each monthly
payment will be in an
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amount that will be sufficient to accumulate a reserve that is sufficient to pay
taxes, assessments, and insurance premiums when such payments are due. The
failure to make reserve payments when due will be an event of default under this
Mortgage.
Unless Mortgagor provides Mortgagee with evidence of the insurance coverage that
is required by this Mortgage, Mortgagee may purchase such insurance to protect
Mortgagee's interest. Such insurance may, but need not, also protect Mortgagor's
interest. If the mortgaged premises become damaged, the insurance purchased by
the Mortgagee may not pay any claim Mortgagor may make or any claim made against
Mortgagor. Mortgagor will be solely responsible for the cost of the insurance
purchased by Mortgagee and Mortgagee may add such cost to the secured debt
without any prior request for reimbursement of such amount. When added to the
secured debt, interest will accrue and be payable thereon. The effective date of
coverage may be the date when Mortgagor's coverage lapsed or Mortgagor fails to
provide proof of coverage. The cost of the insurance purchased by Mortgagee may
be considerably more expensive than the insurance coverage that Mortgagor can
obtain and such insurance coverage may not satisfy any need for property damage
coverage or any mandatory liability insurance requirements imposed by applicable
law. Mortgagor may require Mortgagee to cancel Mortgagee's insurance by
providing evidence that Mortgagor has obtained the required insurance coverage
elsewhere. Mortgagee has no duty to Mortgagor, a guarantor, or anyone else to
obtain insurance coverage if Mortgagor fails to do so. It is agreed that the
risk of an uninsured loss is allocated to Mortgagor and such loss will not
reduce or otherwise affect Mortgagor's liability for payment of the entire
secured debt.
Under Oregon law, most agreements, promises and commitments made by a financial
institution concerning loans and other credit extensions which are not for
personal, family or household purposes or secured solely by the Debtor's
principal residence must be in writing, for express consideration and be signed
by the financial institution to be enforceable.
IN WITNESS WHEREOF, this Mortgage is executed by Mortgagor as of the day and
year shown below but shall be effective as of the day and year first above
written.
PF ACQUISITION II, INC.
By:.................................
Its:................................
Date:...............................
STATE OF _________________ )
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:ss.
COUNTY OF ______________ )
I DO HEREBY CERTIFY, That on this ___ day of ____________, 19____, before me,
the undersigned, a Notary Public in and for said county and state, duly
commissioned and sworn, personally appeared ____________ _, to me known to be
the ________________of the corporation that executed the within and foregoing
instrument and acknowledged the said instrument to be the free and voluntary act
and deed of said corporation for the uses and purposes therein mentioned and
that said person is authorized to execute the said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year first above written.
(SEAL)..........................................................................
...........................................Notary Public in and for the State of
.....................................................................Residing at
.........................................................My Appointment expires:
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Exhibit D
REVOLVING CREDIT FACILITY NOTE
$60,000,000.00 February 22, 1999
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of COBANK, ACB (the "Bank"), the principal amount of SIXTY MILLION DOLLARS
($60,000,000.00) or such lesser aggregate amounts as may be made as Revolving
Credit Facility Advances under the Bank's Individual Revolving Credit Facility
Commitment pursuant to the Credit Agreement referred to below, payable as
hereinafter set forth. The undersigned promises to pay interest on the principal
amount hereof remaining unpaid from time to time from the date hereon until the
date of payment in full, payable as hereinafter set forth.
Reference is made to the Credit Agreement dated as of February
22, 1999, by and among PF Acquisition II, Inc. ("Borrower"), the Banks which are
parties thereto, and CoBank, ACB, as Administrative Agent (as the same may be
amended, renewed, extended or otherwise modified from time to time, the "Loan
Agreement"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein with the meanings given those terms in the Loan
Agreement. This is one of the Revolving Credit Facility Notes referred to in the
Loan Agreement, and any holder hereof is entitled to all of the rights,
remedies, benefits and privileges provided for in the Loan Agreement as
originally executed or as it may from time to time be supplemented, modified or
amended. The Loan Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
upon the terms and conditions therein specified.
The principal indebtedness evidenced by this Revolving Credit
Facility Note shall be payable as provided in the Loan Agreement and in any
event on the Maturity Date.
Interest shall be payable on the outstanding daily unpaid
principal amount of each Revolving Credit Facility Advance hereunder from the
date thereof until payment in full and shall accrue and be payable at the rates
and on the dates set forth in the Loan Agreement, both before and after default
and before and after maturity and judgment, with interest on overdue principal
to bear interest at the Default Rate as set forth in the Loan Agreement, to the
fullest extent permitted by applicable Law.
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The amount of each payment hereunder shall be made to the
Administrative Agent at the Administrative Agent's Office for the account of the
Bank not later than 12:00 noon (Pacific Time) on the date when due in Dollars in
immediately available funds.
The Bank shall record on its books and records or on the
schedule to this Revolving Credit Facility Note the amount of each Revolving
Credit Facility Advance made by it under the Loan Agreement, the rate or rate
option and interest period applicable thereto, all payments of principal and
interest, and the principal balance from time to time outstanding. The Bank's
record thereof, whether shown on such books and records or on the schedule to
this Revolving Credit Facility Note, shall be prima facie evidence as to all
such amounts and shall be binding on the undersigned absent manifest error.
The undersigned hereby promises to pay all costs and expenses
of any rightful holder hereof incurred in collecting the undersigned's
obligations hereunder or in enforcing or attempting to enforce any of such
holder's rights hereunder, including reasonable attorneys' fees and
disbursements (including allocated costs of legal counsel employed by the
Administrative Agent or the holder), whether or not an action is filed in
connection therewith.
The undersigned hereby waives presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
THIS REVOLVING CREDIT FACILITY NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO.
PF ACQUISITION II, INC.
By ______________________________
------------------------------
[Printed name and title]
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EXHIBIT E
CoBANK, ACB
SENIOR SECURITY AGREEMENT
THIS SECURITY AGREEMENT IS EXECUTED AND DELIVERED BY PF ACQUISITION II,
INC., A NEW YORK CORPORATION, (THE "DEBTOR"), HAVING ITS PLACE OF BUSINESS (OR
CHIEF EXECUTIVE OFFICE IF MORE THAN ONE PLACE OF BUSINESS) LOCATED AT 90 LINDEN
PLACE, ROCHESTER, NEW YORK 14625, AND WHOSE TAXPAYER IDENTIFICATION NUMBER IS
161562258, TO COBANK, ACB, IN ITS CAPACITY AS ADMINISTRATIVE AGENT PURSUANT TO
THE PROVISIONS OF THAT CERTAIN CREDIT AGREEMENT DATED FEBRUARY 22, 1999 (THE
"SECURED PARTY"), WHOSE MAILING ADDRESS IS 5500 SOUTH QUEBEC STREET, ENGLEWOOD,
CO 80111.
SECTION 1. GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE DEBTOR HEREBY
GRANTS TO THE SECURED PARTY A SECURITY INTEREST IN ALL OF THE FOLLOWING
PROPERTY, WHEREVER LOCATED AND WHETHER NOW EXISTING OR HEREAFTER ACQUIRED,
TOGETHER WITH ALL ACCESSIONS AND ADDITIONS THERETO, AND ALL PRODUCTS AND
PROCEEDS THEREOF:
ACCOUNTS; INVENTORY (INCLUDING, WITHOUT LIMITATION, RETURNED OR
REPOSSESSED GOODS); CHATTEL PAPER; INSTRUMENTS, INVESTMENT PROPERTY
(INCLUDING, WITHOUT LIMITATION, CERTIFICATED AND UNCERTIFICATED
SECURITIES, SECURITY ENTITLEMENTS, SECURITIES ACCOUNTS, COMMODITY
CONTRACTS, MARGIN ACCOUNTS, AND COMMODITY ACCOUNTS), DOCUMENTS;
EQUIPMENT; FIXTURES; GENERAL INTANGIBLES (INCLUDING, WITHOUT LIMITATION,
CHOSES OR THINGS IN ACTION, LITIGATION RIGHTS AND RESULTING JUDGMENTS,
GOODWILL, PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY, TAX
REFUNDS, MISCELLANEOUS RIGHTS TO PAYMENT, ENTITLEMENTS AND INVESTMENTS,
EQUITIES AND PATRONAGE RIGHTS IN ALL COOPERATIVES, MARGIN ACCOUNTS,
COMPUTER PROGRAMS, INVOICES, BOOKS, RECORDS, AND OTHER INFORMATION
RELATING TO OR ARISING OUT OF THE DEBTOR'S BUSINESS); AND, TO THE EXTENT
NOT COVERED BY THE ABOVE, ALL OTHER PERSONAL PROPERTY OF THE DEBTOR OF
EVERY TYPE AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION, INTERESTS OR
CLAIMS IN OR UNDER ANY POLICY OF INSURANCE, TORT CLAIMS, DEPOSIT
ACCOUNTS, MONEY, AND JUDGMENTS (THE "COLLATERAL").
WHERE APPLICABLE, ALL TERMS USED HEREIN SHALL HAVE THE SAME MEANING AS SET FORTH
IN THE UNIFORM COMMERCIAL CODE (THE "UCC").
SECTION 2. THE OBLIGATIONS. THE SECURITY INTEREST GRANTED HEREUNDER
SHALL SECURE THE PAYMENT OF ALL PRESENT AND FUTURE OBLIGATIONS OF EVERY KIND OR
NATURE OF DEBTOR AT ANY TIME AND FROM TIME TO TIME OWED TO SECURED PARTY, UNDER
ANY ONE OR MORE OF THE LOAN DOCUMENTS (AS DEFINED BELOW), WHETHER DUE OR TO
BECOME DUE, MATURED OR UNMATURED, LIQUIDATED OR UNLIQUIDATED, OR CONTINGENT OR
NONCONTINGENT, INCLUDING OBLIGATIONS OF PERFORMANCE AS WELL AS OBLIGATIONS OF
PAYMENT, AND INCLUDING INTEREST THAT ACCRUED AFTER THE COMMENCEMENT OF ANY
PROCEEDING UNDER ANY DEBTOR RELIEF LAW BY OR AGAINST DEBTOR (THE "OBLIGATIONS").
FOR PURPOSES OF THIS SECURITY AGREEMENT, "LOAN DOCUMENTS" SHALL MEAN (I)
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SENIOR SECURITY AGREEMENT -2-
THAT CERTAIN CREDIT AGREEMENT DATED AS OF FEBRUARY 22, 1999 AMONG DEBTOR, THE
BANKS THEREIN NAMED AND COBANK, ACB, AS ADMINISTRATIVE AGENT (AS THE SAME MAY BE
AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME, THE "LOAN AGREEMENT"), AND
(II) ALL INSTRUMENTS AND DOCUMENTS CONTEMPLATED BY THE LOAN AGREEMENT,
INCLUDING, WITHOUT LIMITATION, THE NOTES (AS DEFINED IN THE LOAN AGREEMENT),
THIS SECURITY AGREEMENT AND THE MORTGAGES (AS DEFINED IN THE LOAN AGREEMENT),
AND ANY SUPPLEMENT THERETO. FOR PURPOSES OF THIS SECURITY AGREEMENT, "SECURED
PARTY" SHALL MEAN COBANK, ACB, AS ADMINISTRATIVE AGENT UNDER THE LOAN AGREEMENT,
(THE "ADMINISTRATIVE AGENT"), AND THE BANKS UNDER THE LOAN AGREEMENT, AND EACH
OF THEM, AND ANY ONE OR MORE OF THEM.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS. THE DEBTOR
REPRESENTS, WARRANTS AND COVENANTS AS FOLLOWS:
A. TITLE TO COLLATERAL. EXCEPT AS PERMITTED BY ANY OTHER WRITTEN
AGREEMENT BETWEEN THE PARTIES, AND EXCEPT FOR ANY SECURITY INTEREST IN FAVOR OF
THE SECURED PARTY, OR OTHERWISE PERMITTED PURSUANT TO THE LOAN AGREEMENT, THE
DEBTOR HAS CLEAR TITLE TO ALL COLLATERAL FREE OF ALL ADVERSE CLAIMS, INTERESTS,
LIENS, OR ENCUMBRANCES. WITHOUT THE PRIOR WRITTEN CONSENT OF THE SECURED PARTY,
THE DEBTOR SHALL NOT CREATE OR PERMIT THE EXISTENCE OF ANY ADVERSE CLAIMS,
INTERESTS, LIENS, OR OTHER ENCUMBRANCES AGAINST ANY OF THE COLLATERAL. THE
DEBTOR SHALL PROVIDE PROMPT WRITTEN NOTICE TO THE SECURED PARTY OF ANY FUTURE
ADVERSE CLAIMS, INTERESTS, LIENS, OR ENCUMBRANCES AGAINST ALL COLLATERAL, AND
SHALL DEFEND DILIGENTLY THE DEBTOR'S AND THE SECURED PARTY'S INTERESTS IN ALL
COLLATERAL.
B. VALIDITY OF SECURITY AGREEMENT; CORPORATE AUTHORITY. THIS
SECURITY AGREEMENT IS THE VALID AND BINDING OBLIGATION OF THE DEBTOR,
ENFORCEABLE IN ACCORDANCE WITH ITS TERMS. THE DEBTOR HAS THE CORPORATE POWER TO
EXECUTE, DELIVER AND CARRY OUT THE TERMS AND PROVISIONS OF THIS SECURITY
AGREEMENT AND ALL RELATED DOCUMENTS, AND HAS TAKEN ALL NECESSARY CORPORATE
ACTION TO AUTHORIZE THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS SECURITY
AGREEMENT AND ALL RELATED DOCUMENTS.
C. LOCATION OF THE DEBTOR. THE DEBTOR'S PLACE OF BUSINESS (OR
CHIEF EXECUTIVE OFFICE IF MORE THAN ONE PLACE OF BUSINESS) IS LOCATED AT THE
ADDRESS SHOWN ABOVE.
D. LOCATION OF COLLATERAL. ALL EQUIPMENT ARE NOW AT THE LOCATION
OR LOCATIONS SPECIFIED ON SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF. ALL
FARM PRODUCTS AND FIXTURES ARE NOW AT THE LOCATION OR LOCATIONS SPECIFIED ON
SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF.
E. NAME, IDENTITY, AND CORPORATE STRUCTURE. EXCEPT AS OTHERWISE
DISCLOSED TO THE SECURED PARTY IN WRITING, THE DEBTOR HAS NOT WITHIN THE PAST
TEN YEARS CHANGED ITS NAME, IDENTITY OR CORPORATE STRUCTURE THROUGH
INCORPORATION, MERGER, CONSOLIDATION, JOINT VENTURE OR
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SENIOR SECURITY AGREEMENT -3-
OTHERWISE.
F. CHANGE IN NAME, LOCATION OF COLLATERAL, ETC. WITHOUT GIVING AT
LEAST THIRTY DAYS' PRIOR WRITTEN NOTICE TO THE SECURED PARTY, THE DEBTOR SHALL
NOT CHANGE ITS NAME, IDENTITY OR CORPORATE STRUCTURE, THE LOCATION OF ITS PLACE
OF BUSINESS (OR CHIEF EXECUTIVE OFFICE IF MORE THAN ONE PLACE OF BUSINESS), OR
THE LOCATION OF THE COLLATERAL.
G. FURTHER ASSURANCES. UPON THE REQUEST OF THE SECURED PARTY, THE
DEBTOR SHALL DO ALL ACTS AND THINGS AS THE SECURED PARTY MAY FROM TIME TO TIME
DEEM NECESSARY OR ADVISABLE TO ENABLE IT TO PERFECT, MAINTAIN, AND CONTINUE THE
PERFECTION AND PRIORITY OF THE SECURITY INTEREST OF THE SECURED PARTY IN THE
COLLATERAL, OR TO FACILITATE THE EXERCISE BY THE SECURED PARTY OF ANY RIGHTS OR
REMEDIES GRANTED TO THE SECURED PARTY HEREUNDER OR PROVIDED BY LAW. WITHOUT
LIMITING THE FOREGOING, THE DEBTOR AGREES TO EXECUTE, IN FORM AND SUBSTANCE
SATISFACTORY TO THE SECURED PARTY, SUCH FINANCING STATEMENTS, AMENDMENTS
THERETO, SUPPLEMENTAL AGREEMENTS, ASSIGNMENTS, NOTICES OF ASSIGNMENTS, AND OTHER
INSTRUMENTS AND DOCUMENTS AS THE SECURED PARTY MAY FROM TIME TO TIME REQUEST. IN
ADDITION, IN THE EVENT THE COLLATERAL OR ANY PART THEREOF CONSISTS OF
INSTRUMENTS, DOCUMENTS, CHATTEL PAPER, OR MONEY (WHETHER OR NOT PROCEEDS OF THE
COLLATERAL), THE DEBTOR SHALL, UPON THE REQUEST OF THE SECURED PARTY, DELIVER
POSSESSION THEREOF TO THE SECURED PARTY (OR TO AN AGENT OF THE SECURED PARTY
RETAINED FOR THAT PURPOSE), TOGETHER WITH ANY APPROPRIATE ENDORSEMENTS AND/OR
ASSIGNMENTS. THE SECURED PARTY SHALL USE REASONABLE CARE IN THE CUSTODY AND
PRESERVATION OF SUCH COLLATERAL IN ITS POSSESSION, BUT SHALL NOT BE REQUIRED TO
TAKE ANY STEPS NECESSARY TO PRESERVE RIGHTS AGAINST PRIOR PARTIES. ALL COSTS AND
EXPENSES INCURRED BY THE SECURED PARTY TO ESTABLISH, PERFECT, MAINTAIN,
DETERMINE THE PRIORITY OF, OR RELEASE THE SECURITY INTEREST GRANTED HEREUNDER
(INCLUDING THE COST OF ALL FILINGS, RECORDINGS, AND TAXES THEREON AND THE FEES
AND EXPENSES OF ANY AGENT RETAINED BY SECURED PARTY) SHALL BECOME PART OF THE
OBLIGATIONS SECURED HEREBY AND BE PAID BY THE DEBTOR ON DEMAND.
H. INSURANCE. THE DEBTOR SHALL MAINTAIN SUCH PROPERTY AND
CASUALTY INSURANCE WITH SUCH INSURANCE COMPANIES, IN SUCH AMOUNTS, AND COVERING
SUCH RISKS, AS ARE AT ALL TIMES SATISFACTORY TO THE SECURED PARTY. ALL SUCH
POLICIES SHALL PROVIDE FOR LOSS PAYABLE CLAUSES OR ENDORSEMENTS IN FORM AND
CONTENT ACCEPTABLE TO THE SECURED PARTY. UPON THE REQUEST OF THE SECURED PARTY,
ALL POLICIES (OR SUCH OTHER PROOF OF COMPLIANCE WITH THIS SECTION AS MAY BE
SATISFACTORY TO THE SECURED PARTY) SHALL BE DELIVERED TO THE SECURED PARTY. THE
DEBTOR SHALL PAY ALL INSURANCE PREMIUMS WHEN DUE. IN THE EVENT OF LOSS, DAMAGE,
OR INJURY TO ANY INSURED COLLATERAL, THE SECURED PARTY SHALL HAVE FULL POWER TO
COLLECT ANY AND ALL INSURANCE PROCEEDS DUE UNDER ANY OF SUCH POLICIES, AND MAY,
AT ITS OPTION, APPLY SUCH PROCEEDS TO THE PAYMENT OF ANY OF THE OBLIGATIONS
SECURED HEREBY, OR MAY APPLY SUCH PROCEEDS TO THE REPAIR OR REPLACEMENT OF SUCH
COLLATERAL.
I. TAXES, LEVIES, ETC. THE DEBTOR HAS PAID AND SHALL CONTINUE TO
PAY WHEN
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<PAGE>
SENIOR SECURITY AGREEMENT -4-
DUE ALL TAXES, LEVIES, ASSESSMENTS, OR OTHER CHARGES WHICH MAY BECOME AN
ENFORCEABLE LIEN AGAINST THE COLLATERAL.
J. DISPOSITION AND USE OF COLLATERAL BY THE DEBTOR. WITHOUT THE
PRIOR WRITTEN CONSENT OF THE SECURED PARTY AND PROVIDED THE DEBTOR IS NOT IN
DEFAULT HEREUNDER, THE DEBTOR SHALL NOT AT ANY TIME SELL, TRANSFER, LEASE,
ABANDON, OR OTHERWISE DISPOSE OF ANY COLLATERAL EXCEPT IN THE ORDINARY COURSE OF
ITS BUSINESS. THE DEBTOR SHALL NOT USE ANY OF THE COLLATERAL IN ANY MANNER WHICH
VIOLATES ANY STATUTE, REGULATION, ORDINANCE, RULE, DECREE, ORDER, OR INSURANCE
POLICY.
K. RECEIVABLES. THE DEBTOR SHALL PRESERVE, ENFORCE, AND COLLECT
ALL ACCOUNTS, CHATTEL PAPER, INSTRUMENTS, DOCUMENTS AND GENERAL INTANGIBLES,
WHETHER NOW OWNED OR HEREAFTER ACQUIRED OR ARISING (THE "RECEIVABLES"), IN A
DILIGENT FASHION AND, UPON THE REQUEST OF THE SECURED PARTY, THE DEBTOR SHALL
EXECUTE AN AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO THE SECURED PARTY BY
WHICH THE DEBTOR SHALL DIRECT ALL ACCOUNT DEBTORS AND OBLIGORS ON INSTRUMENTS TO
MAKE PAYMENT TO A LOCK BOX DEPOSIT ACCOUNT UNDER THE EXCLUSIVE CONTROL OF THE
SECURED PARTY.
L. CONDITION OF COLLATERAL. ALL TANGIBLE COLLATERAL IS NOW IN
GOOD REPAIR AND CONDITION AND THE DEBTOR SHALL AT ALL TIMES HEREAFTER, AT ITS
OWN EXPENSE, MAINTAIN ALL SUCH COLLATERAL IN GOOD REPAIR AND CONDITION.
M. CONDITION OF BOOKS AND RECORDS. THE DEBTOR HAS MAINTAINED AND
SHALL MAINTAIN COMPLETE, ACCURATE AND UP-TO-DATE BOOKS, RECORDS, ACCOUNTS, AND
OTHER INFORMATION RELATING TO ALL COLLATERAL IN SUCH FORM AND IN SUCH DETAIL AS
MAY BE SATISFACTORY TO THE SECURED PARTY, AND SHALL ALLOW THE SECURED PARTY OR
ITS REPRESENTATIVES AT ANY REASONABLE TIME TO EXAMINE AND COPY SUCH BOOKS,
RECORDS, ACCOUNTS, AND OTHER INFORMATION.
N. RIGHT OF INSPECTION. AT ALL REASONABLE TIMES UPON THE REQUEST
OF THE SECURED PARTY, THE DEBTOR SHALL ALLOW THE SECURED PARTY OR ITS
REPRESENTATIVES TO VISIT ANY OF THE DEBTOR'S PROPERTIES OR LOCATIONS SO THAT THE
SECURED PARTY OR ITS REPRESENTATIVES MAY CONFIRM, INSPECT AND APPRAISE ANY OF
THE COLLATERAL.
SECTION 4. DEFAULT. THE BREACH OF ANY OF THE OBLIGATIONS SECURED HEREBY,
AND/OR THE BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT, OR AGREEMENT
CONTAINED IN THIS SECURITY AGREEMENT, SHALL CONSTITUTE DEFAULT HEREUNDER.
SECTION 5. RIGHTS AND REMEDIES. UPON THE DEBTOR'S DEFAULT AND AT ANY
TIME THEREAFTER, THE SECURED PARTY MAY DECLARE ALL OBLIGATIONS TO BE IMMEDIATELY
DUE AND PAYABLE AND MAY EXERCISE ANY AND ALL RIGHTS AND REMEDIES OF THE SECURED
PARTY IN THE ENFORCEMENT OF ITS SECURITY INTEREST UNDER THE UCC, THIS SECURITY
AGREEMENT, OR ANY OTHER APPLICABLE LAW.
<PAGE>
<PAGE>
SENIOR SECURITY AGREEMENT -5-
WITHOUT LIMITING THE FOREGOING:
A. DISPOSITION OF COLLATERAL. THE SECURED PARTY MAY SELL, LEASE,
OR OTHERWISE DISPOSE OF ALL OR ANY PART OF THE COLLATERAL, IN ITS THEN PRESENT
CONDITION OR FOLLOWING ANY COMMERCIALLY REASONABLE PREPARATION OR PROCESSING
THEREOF, WHETHER BY PUBLIC OR PRIVATE SALE OR AT ANY BROKERS' BOARD, IN LOTS OR
IN BULK, FOR CASH, ON CREDIT OR OTHERWISE, WITH OR WITHOUT REPRESENTATIONS OR
WARRANTIES, AND UPON SUCH OTHER TERMS AS MAY BE ACCEPTABLE TO THE SECURED PARTY,
AND THE SECURED PARTY MAY PURCHASE AT ANY PUBLIC SALE. AT ANY TIME WHEN ADVANCE
NOTICE OF SALE IS REQUIRED, THE DEBTOR AGREES THAT TEN DAYS' PRIOR WRITTEN
NOTICE SHALL BE REASONABLE. IN CONNECTION WITH THE FOREGOING, THE SECURED PARTY
MAY:
1. REQUIRE THE DEBTOR TO ASSEMBLE THE COLLATERAL AND ALL
RECORDS PERTAINING THERETO AND MAKE SUCH COLLATERAL AND RECORDS AVAILABLE TO THE
SECURED PARTY AT A PLACE TO BE DESIGNATED BY THE SECURED PARTY WHICH IS
REASONABLY CONVENIENT TO BOTH PARTIES;
2. ENTER THE PREMISES OF THE DEBTOR OR PREMISES UNDER THE
DEBTOR'S CONTROL AND TAKE POSSESSION OF THE COLLATERAL;
3. WITHOUT CHARGE, USE OR OCCUPY THE PREMISES OF THE
DEBTOR OR PREMISES UNDER THE DEBTOR'S CONTROL, INCLUDING WITHOUT LIMITATION,
WAREHOUSE AND OTHER STORAGE FACILITIES;
4. WITHOUT CHARGE, USE ANY PATENT, TRADEMARK, TRADENAME,
OR OTHER INTELLECTUAL PROPERTY OR TECHNICAL PROCESS USED BY THE DEBTOR IN
CONNECTION WITH ANY OF THE COLLATERAL; AND
5. RELY CONCLUSIVELY UPON THE ADVICE OR INSTRUCTIONS OF
ANY ONE OR MORE BROKERS OR OTHER EXPERTS SELECTED BY THE SECURED PARTY TO
DETERMINE THE METHOD OR MANNER OF DISPOSITION OF ANY OF THE COLLATERAL AND, IN
SUCH EVENT, ANY DISPOSITION OF THE COLLATERAL BY THE SECURED PARTY IN ACCORDANCE
WITH SUCH ADVICE OR INSTRUCTIONS SHALL BE DEEMED TO BE COMMERCIALLY REASONABLE.
B. COLLECTION OF RECEIVABLES. THE SECURED PARTY MAY, BUT SHALL
NOT BE OBLIGATED TO, TAKE ALL ACTIONS REASONABLE OR NECESSARY TO PRESERVE,
ENFORCE OR COLLECT THE RECEIVABLES, INCLUDING WITHOUT LIMITATION, THE RIGHT TO
NOTIFY ACCOUNT DEBTORS AND OBLIGORS ON INSTRUMENTS TO MAKE DIRECT PAYMENT TO THE
SECURED PARTY, TO PERMIT ANY EXTENSION, COMPROMISE, OR SETTLEMENT OF ANY OF THE
RECEIVABLES FOR LESS THAN FACE VALUE, OR TO SUE ON ANY RECEIVABLE, ALL WITHOUT
PRIOR NOTICE TO THE DEBTOR.
C. PROCEEDS. THE SECURED PARTY MAY COLLECT AND APPLY ALL PROCEEDS
OF THE COLLATERAL, AND MAY ENDORSE THE NAME OF THE DEBTOR IN FAVOR OF THE
SECURED PARTY ON ANY AND
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<PAGE>
SENIOR SECURITY AGREEMENT -6-
ALL CHECKS, DRAFTS, MONEY ORDERS, NOTES, ACCEPTANCES, OR OTHER INSTRUMENTS OF
THE SAME OR A DIFFERENT NATURE, CONSTITUTING, EVIDENCING, OR RELATING TO THE
COLLATERAL. THE SECURED PARTY MAY RECEIVE AND OPEN ALL MAIL ADDRESSED TO THE
DEBTOR AND REMOVE THEREFROM ANY CASH OR NON-CASH ITEMS OF PAYMENT
CONSTITUTING PROCEEDS OF THE COLLATERAL.
D. INSURANCE ADJUSTMENTS. THE SECURED PARTY MAY ADJUST, SETTLE,
AND CANCEL ANY AND ALL INSURANCE COVERING ANY COLLATERAL, ENDORSE THE NAME OF
THE DEBTOR ON ANY AND ALL CHECKS OR DRAFTS DRAWN BY ANY INSURER, WHETHER
REPRESENTING PAYMENT FOR A LOSS OR A RETURN OF UNEARNED PREMIUM, AND EXECUTE ANY
AND ALL PROOFS OF CLAIM AND OTHER DOCUMENTS OR INSTRUMENTS OF EVERY KIND
REQUIRED BY ANY INSURER IN CONNECTION WITH ANY PAYMENT BY SUCH INSURER.
THE NET PROCEEDS OF ANY DISPOSITION OF THE COLLATERAL MAY BE APPLIED BY THE
SECURED PARTY, AFTER DEDUCTING ITS REASONABLE EXPENSES INCURRED IN SUCH
DISPOSITION, TO THE PAYMENT IN WHOLE OR IN PART OF THE OBLIGATIONS IN SUCH ORDER
AS THE SECURED PARTY MAY ELECT. THE ENUMERATION OF THE FOREGOING RIGHTS AND
REMEDIES IS NOT INTENDED TO BE EXHAUSTIVE, AND THE EXERCISE OF ANY RIGHT AND/OR
REMEDY SHALL NOT PRECLUDE THE EXERCISE OF ANY OTHER RIGHTS OR REMEDIES, ALL OF
WHICH ARE CUMULATIVE AND NON-EXCLUSIVE.
SECTION 6. OTHER PROVISIONS.
A. AMENDMENT, MODIFICATION, AND WAIVER. WITHOUT THE PRIOR WRITTEN
CONSENT OF THE SECURED PARTY, NO AMENDMENT, MODIFICATION, OR WAIVER OF, OR
CONSENT TO ANY DEPARTURE BY THE DEBTOR FROM, ANY PROVISION HEREUNDER SHALL BE
EFFECTIVE. ANY SUCH AMENDMENT, MODIFICATION, WAIVER, OR CONSENT SHALL BE
EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH
GIVEN. NO DELAY OR FAILURE BY THE SECURED PARTY TO EXERCISE ANY REMEDY HEREUNDER
SHALL BE DEEMED A WAIVER THEREOF OR OF ANY OTHER REMEDY HEREUNDER. A WAIVER ON
ANY ONE OCCASION SHALL NOT BE CONSTRUED AS A BAR TO OR WAIVER OF ANY REMEDY ON
ANY SUBSEQUENT OCCASION.
B. COSTS AND ATTORNEY'S FEES. EXCEPT AS PROHIBITED BY LAW, IF AT
ANY TIME THE SECURED PARTY EMPLOYS COUNSEL IN CONNECTION WITH THE CREATION,
PERFECTION, PRESERVATION, OR RELEASE OF THE SECURED PARTY'S SECURITY INTEREST IN
THE COLLATERAL OR THE ENFORCEMENT OF ANY OF THE SECURED PARTY'S RIGHTS OR
REMEDIES HEREUNDER, ALL OF THE SECURED PARTY'S REASONABLE ATTORNEY'S FEES
ARISING FROM SUCH SERVICES AND ALL EXPENSES, COSTS, OR CHARGES RELATING THERETO
SHALL BECOME PART OF THE OBLIGATIONS SECURED HEREBY AND BE PAID BY THE DEBTOR ON
DEMAND.
C. NO OBLIGATION TO MAKE LOANS. NOTHING CONTAINED HEREIN OR IN
ANY FINANCING STATEMENT OR OTHER DOCUMENT EXECUTED OR FILED IN CONNECTION
HEREWITH SHALL BE CONSTRUED TO OBLIGATE THE SECURED PARTY TO MAKE ANY LOANS OR
ADVANCES TO THE DEBTOR, WHETHER PURSUANT TO A COMMITMENT OR OTHERWISE.
<PAGE>
<PAGE>
SENIOR SECURITY AGREEMENT -7-
D. REVIVAL OF OBLIGATIONS. TO THE EXTENT THE DEBTOR OR ANY THIRD
PARTY MAKES A PAYMENT OR PAYMENTS TO THE SECURED PARTY OR THE SECURED PARTY
ENFORCES ITS SECURITY INTEREST OR EXERCISES ANY RIGHT OF SETOFF, AND SUCH
PAYMENT OR PAYMENTS OR THE PROCEEDS THEREOF ARE SUBSEQUENTLY INVALIDATED,
DECLARED TO BE FRAUDULENT OR PREFERENTIAL, SET ASIDE, AND/OR REQUIRED TO BE
REPAID TO A TRUSTEE, RECEIVER, OR ANY OTHER PARTY UNDER ANY BANKRUPTCY,
INSOLVENCY OR OTHER LAW OR IN EQUITY, THEN, TO THE EXTENT OF SUCH RECOVERY, THE
OBLIGATIONS OR ANY PART THEREOF ORIGINALLY INTENDED TO BE SATISFIED SHALL BE
REVIVED AND CONTINUED IN FULL FORCE AND EFFECT AS IF SUCH PAYMENT OR PAYMENTS
HAD NOT BEEN MADE, OR SUCH ENFORCEMENT OR SETOFF HAD NOT OCCURRED.
E. PERFORMANCE BY THE SECURED PARTY. IN THE EVENT THE DEBTOR
SHALL AT ANY TIME FAIL TO PAY OR PERFORM PUNCTUALLY ANY OF ITS DUTIES HEREUNDER,
THE SECURED PARTY MAY, AT ITS OPTION AND WITHOUT NOTICE TO OR DEMAND UPON THE
DEBTOR, WITHOUT OBLIGATION AND WITHOUT WAIVING OR DIMINISHING ANY OF ITS OTHER
RIGHTS OR REMEDIES HEREUNDER, FULLY PERFORM OR DISCHARGE ANY OF SUCH DUTIES. ALL
COSTS AND EXPENSES INCURRED BY THE SECURED PARTY IN CONNECTION THEREWITH,
TOGETHER WITH INTEREST THEREON AT THE DEFAULT RATE SET FORTH IN THE LOAN
AGREEMENT OR THE NOTES (AS DEFINED IN THE LOAN AGREEMENT), OR IF NO SUCH DEFAULT
RATE IS SPECIFIED, THE THEN APPLICABLE INTEREST RATE PLUS FOUR PERCENT PER
ANNUM, SHALL BECOME PART OF THE OBLIGATIONS SECURED HEREBY AND BE PAID BY THE
DEBTOR UPON DEMAND.
F. INDEMNIFICATION, ETC. THE DEBTOR HEREBY EXPRESSLY INDEMNIFIES
AND HOLDS THE SECURED PARTY HARMLESS FROM ANY AND ALL CLAIMS, CAUSES OF ACTION,
OR OTHER PROCEEDINGS, AND FROM ANY AND ALL LIABILITY, LOSS, DAMAGE, AND EXPENSE
OF EVERY NATURE, ARISING BY REASON OF THE SECURED PARTY'S ENFORCEMENT OF ITS
RIGHTS AND REMEDIES HEREUNDER, OR BY REASON OF THE DEBTOR'S FAILURE TO COMPLY
WITH ANY ENVIRONMENTAL OR OTHER LAW OR REGULATION. AS TO ANY ACTION TAKEN BY THE
SECURED PARTY HEREUNDER, THE SECURED PARTY SHALL NOT BE LIABLE FOR ANY ERROR OF
JUDGMENT OR MISTAKE OF FACT OR LAW, ABSENT GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT ON ITS PART.
G. POWER OF ATTORNEY. THE DEBTOR HEREBY APPOINTS THE SECURED
PARTY OR THE SECURED PARTY'S DESIGNEE AS ITS ATTORNEY-IN-FACT, WHICH APPOINTMENT
IS IRREVOCABLE, DURABLE, AND COUPLED WITH AN INTEREST, WITH FULL POWER OF
SUBSTITUTION, IN THE NAME OF THE DEBTOR OR IN THE NAME OF THE SECURED PARTY, TO
TAKE ANY ACTION WHICH THE DEBTOR IS OBLIGATED TO PERFORM HEREUNDER OR WHICH THE
SECURED PARTY MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS
SECURITY AGREEMENT. IN TAKING ANY ACTION IN ACCORDANCE WITH THIS SECTION, THE
SECURED PARTY SHALL NOT BE DEEMED TO BE THE AGENT OF THE DEBTOR. THE POWERS
CONFERRED UPON THE SECURED PARTY IN THIS SECTION ARE SOLELY TO PROTECT ITS
INTEREST IN THE COLLATERAL AND SHALL NOT IMPOSE ANY DUTY UPON THE SECURED PARTY
TO EXERCISE ANY SUCH POWERS.
H. CONTINUING EFFECT. THIS SECURITY AGREEMENT, THE SECURED
PARTY'S SECURITY INTEREST IN THE COLLATERAL, AND ALL OTHER DOCUMENTS OR
INSTRUMENTS CONTEMPLATED HEREBY SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL
ALL OF THE OBLIGATIONS HAVE BEEN SATISFIED IN FULL, THE
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<PAGE>
SENIOR SECURITY AGREEMENT -8-
LENDERS THAT ARE PARTIES TO THE LOAN AGREEMENT HAVE NO COMMITMENT TO MAKE ANY
FURTHER ADVANCES TO THE DEBTOR, AND THE DEBTOR HAS SENT A VALID WRITTEN DEMAND
TO THE SECURED PARTY FOR TERMINATION OF THIS SECURITY AGREEMENT.
I. BINDING EFFECT. THIS SECURITY AGREEMENT SHALL BE BINDING UPON
AND INURE TO THE BENEFIT OF THE DEBTOR AND THE SECURED PARTY AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.
J. SECURITY AGREEMENT AS FINANCING STATEMENT AND AUTHORIZATION TO
FILE WITHOUT DEBTOR'S SIGNATURE. A PHOTOGRAPHIC COPY OR OTHER REPRODUCTION OF
THIS SECURITY AGREEMENT MAY BE USED AS A FINANCING STATEMENT. IN ADDITION, THE
DEBTOR AGREES THAT ADMINISTRATIVE AGENT MAY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, PREPARE AND FILE FINANCING STATEMENTS, AMENDMENTS THERETO, AND
CONTINUATION STATEMENTS WITHOUT THE SIGNATURE OF THE DEBTOR AND FILE ANY
FINANCING STATEMENT, AMENDMENT THERETO OR CONTINUATION STATEMENT ELECTRONICALLY.
K. GOVERNING LAW. SUBJECT TO ANY APPLICABLE FEDERAL LAW, THIS
SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF COLORADO.
L. NOTICES. ALL NOTICES, REQUESTS, DEMANDS, OR OTHER
COMMUNICATIONS REQUIRED OR PERMITTED HEREUNDER SHALL BE IN WRITING AND SHALL BE
DEEMED TO HAVE BEEN GIVEN WHEN SENT BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO THE OTHER PARTY AT THE RESPECTIVE ADDRESSES
GIVEN IN THE LOAN AGREEMENT, OR TO SUCH OTHER PERSON OR ADDRESS AS EITHER PARTY
DESIGNATES TO THE OTHER IN THE MANNER HEREIN PRESCRIBED.
M. SEVERABILITY. THE DETERMINATION THAT ANY TERM OR PROVISION OF
THIS SECURITY AGREEMENT IS UNENFORCEABLE OR INVALID SHALL NOT AFFECT THE
ENFORCEABILITY OR VALIDITY OF ANY OTHER TERM OR PROVISION HEREOF.
IN WITNESS WHEREOF, THE DEBTOR HAS EXECUTED THIS SECURITY AGREEMENT BY ITS DULY
AUTHORIZED OFFICER AS OF THE DAY AND YEAR SHOWN BELOW.
DEBTOR:
PF ACQUISITION II, INC.
DATE: FEBRUARY 22, 1999 BY: _____________________________
TITLE: __________________________
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<PAGE>
Senior Security Agreement -9-
<PAGE>
<PAGE>
SCHEDULE A
TO SECURITY AGREEMENT DATED FEBRUARY 22, 1999
EXECUTED BY PF ACQUISITION II, INC.
SET FORTH BELOW ARE THE PRESENT LOCATIONS (BY LEGAL DESCRIPTION) OF THE DEBTOR'S
EQUIPMENT, FARM PRODUCTS, AND FIXTURES.
MARION COUNTY, OREGON
SITE 4, PARCEL 1:
PARCEL 2 OF PARTITION PLAT 96-98, FILED FOR RECORD ON NOVEMBER 8, 1996 IN REEL
1353, PAGE 36, MICROFILM RECORDS, MARION COUNTY, OREGON.
SITE 6, PARCEL 1
BEGINNING AT THE NORTHWEST CORNER OF THAT CERTAIN TRACT OF LAND DEEDED TO DAVID
CLARK BY GEORGE TAYLOR AND WIFE, WHICH DEED WAS RECORDED JULY 19, 1910 ON PAGE
583, BOOK 114 OF DEED RECORDS OF MARION COUNTY, OREGON; THENCE SOUTH 32[d] 15'
WEST 22 FEET; THENCE SOUTH 59[d] 47' EAST 338.76 FEET, MORE OR LESS, TO THE EAST
BOUNDARY OF LOT 3 OF THE NORTH 1/2 OF THE DONATION LAND CLAIM OF B. S. BONNEY
AND WIFE; THENCE NORTH 32[d] 15' EAST ALONG SAID LINE 22 FEET TO THE SOUTH
BOUNDARY LINE OF THE WOODBURN-NATRON BRANCH OF THE SOUTHERN PACIFIC RAILROAD;
THENCE NORTH 60[d] 45' WEST 339 FEET TO THE PLACE OF BEGINNING, AND BEING A PART
OF LOT 3, OF THE NORTH 1/2 OF THE DONATION LAND CLAIM OF B. S. BONNEY AND WIFE
IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY,
OREGON.
SAVE AND EXCEPT, THE LAND CONVEYED TO THE STATE OF OREGON BY RAY-BROWN COMPANY,
INC., BY DEED RECORDED IN VOLUME 216, PAGE 177, DEED RECORDS OF MARION COUNTY,
OREGON.
SAVE AND EXCEPT, THAT PARCEL OF LAND SITUATE IN THE B. S. BONNEY DONATION LAND
CLAIM IN SECTION 17, TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN,
MARION COUNTY, OREGON, WHICH IS MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT AN IRON PIPE ON THE SOUTHWESTERLY RIGHT-OF-WAY LINE OF THE SOUTHERN
PACIFIC RAILROAD, FROM WHENCE THE SOUTHWEST CORNER OF LOT 4, OF THE SUBDIVISION
OF THE NORTH 1/2 OF THE B. S. BONNEY DONATION LAND CLAIM, BEARS SOUTH 32[d] 30'
WEST 221.90 FEET AND SOUTH 60[d] 45' EAST 96.90 FEET AND SOUTH 32[d] 28' WEST
308.50 FEET AND SOUTH 59[d] 26' EAST 35.76 FEET AND SOUTH 32[d] 15' WEST 434.1
FEET AND RUNNING THENCE NORTH 60[d] 45' WEST 168.00 FEET ALONG THE SOUTHWESTERLY
RIGHT-OF-WAY LINE OF THE SOUTHERN PACIFIC RAILROAD TO A 3/4" IRON PIPE; THENCE
SOUTH 32[d] 30' WEST 22.00 FEET TO A 3/4" IRON PIPE ON THE SOUTHWESTERLY
RIGHT-OF-WAY LINE OF PACIFIC HIGHWAY U.S. 99E; THENCE SOUTH 60[d] 45'
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EAST 168.00 FEET, PARALLEL TO SAID RAILROAD RIGHT-OF-WAY; THENCE NORTH 32[d] 30'
EAST 22 FEET TO THE POINT OF BEGINNING.
SITE 6, PARCEL 2
BEGINNING AT AN IRON PIN IN THE SOUTH LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY 13.22 CHAINS SOUTH 86[d] 45' WEST AND 14.12 CHAINS SOUTH 32[d] 6'
WEST FROM THE MOST EASTERLY NORTHEAST CORNER OF THE B. S. BONNEY DONATION LAND
CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION
COUNTY, OREGON; THENCE SOUTH 32[d] 6" WEST, 6.74 CHAINS TO A STONE IN THE
SOUTHEAST CORNER OF LOT 4 OF THE B. S. BONNEY SUBDIVISION; THENCE SOUTH
89[d] 47' WEST ALONG THE LINE DIVIDING SAID CLAIM IN NORTH AND SOUTH HALVES,
14.44 CHAINS TO AN IRON BOLT; THENCE NORTH 31[d] 57' EAST, 13.82 CHAINS TO AN
IRON BOLT IN THE SOUTH LINE OF SAID RIGHT-OF-WAY OF THE SOUTHERN PACIFIC
RAILROAD COMPANY; THENCE SOUTH 60[d] 58' EAST ALONG SAID RIGHT-OF-WAY, 12.26
CHAINS TO THE POINT OF BEGINNING, AND SITUATED IN THE NORTH 1/2 OF THE
B. S. BONNEY DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE
WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON.
SITE 6, PARCEL 3
BEGINNING ON THE DIVISION LINE, DIVIDING THE B. S. BONNEY DONATION LAND CLAIM
INTO NORTH AND SOUTH HALVES, AT A POINT WHICH IS 13.20 CHAINS SOUTH 86[d] 45'
WEST AND 20.92 CHAINS SOUTH 32[d] 15' WEST OF THE MOST EASTERLY NORTHEAST CORNER
OF THE SAID B. S. BONNEY DONATION LAND CLAIM AND RUNNING THENCE NORTH 32[d] 15'
EAST 435 FEET TO THE SOUTH LINE OF THE WOODBURN-SILVERTON BRANCH OF THE
SOUTHERN PACIFIC RAILROAD RIGHT-OF-WAY; THENCE SOUTH 60[d] 45' EAST ALONG THE
SOUTH LINE OF SAID RIGHT-OF-WAY 735.5 FEET TO ITS INTERSECTION WITH SAID
DIVISION LINE; THENCE WEST ALONG SAID DIVISION LINE 920 FEET TO THE PLACE OF
BEGINNING, AND BEING A PART OF LOT 5 OF THE NORTH 1/2 OF SAID DONATION LAND
CLAIM, IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF WILLAMETTE MERIDIAN IN MARION
COUNTY, OREGON.
SITE 6, PARCEL 4
BEGINNING AT A POINT ON THE SOUTH BOUNDARY LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY WHICH IS 531.2 FEET NORTH 32[d] 15' EAST OF THE SOUTHEAST CORNER OF
A 4.103 ACRE TRACT OF LAND FORMERLY OWNED BY N. F. STRAIN, SAID TRACT BEING A
PART OF LOT 3 OF THE NORTH 1/2 OF THE DONATION LAND CLAIM OF B. S. BONNEY AND
WIFE IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION
COUNTY, OREGON; THENCE SOUTH 32[d] 15' WEST 22 FEET; THENCE SOUTH 60[d] 58' EAST
PARALLEL WITH SAID RIGHT-OF-WAY 1.424 CHAINS; THENCE NORTH 32[d] 15' EAST 22
FEET TO THE SOUTH BOUNDARY LINE OF SAID RIGHT-OF-WAY; THENCE NORTH 60[d] 58'
WEST ALONG SAID SOUTH BOUNDARY LINE 1.424 CHAINS TO THE PLACE OF BEGINNING, AND
BEING SITUATED IN DONATION LAND CLAIM OF B. S. BONNEY AND WIFE IN TOWNSHIP 5
SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON.
<PAGE>
<PAGE>
SITE 6, PARCEL 5
BEGINNING AT A POINT WHICH IS NORTH 19[d] 45' EAST 13.645 CHAINS AND SOUTH
87[d] 22' EAST 32.284 CHAINS AND NORTH 19[d] 23' EAST 44.62 CHAINS FROM THE
SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND CLAIM IN TOWNSHIP 5
SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, AND RUNNING THENCE SOUTH
59[d] 55' EAST ALONG THE SOUTH BOUNDARY LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY 1.28 CHAINS; THENCE SOUTH 19[d] 23' WEST 3.54 CHAINS; THENCE NORTH
59[d] 55' WEST 1.28 CHAINS; THENCE NORTH 19[d] 23' EAST 3.54 CHAINS TO THE PLACE
OF BEGINNING, BEING SITUATED IN MARION COUNTY, OREGON.
SITE 6, PARCEL 6
BEGINNING AT A POINT WHICH IS REACHED BY BEGINNING AT THE SOUTHWEST CORNER OF
THE THOMAS FITZGERALD DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF
THE WILLAMETTE MERIDIAN, IN MARION COUNTY, OREGON, AND RUNNING THENCE NORTH
19[d] 45' EAST 13.645 CHAINS; THENCE SOUTH 87[d] 22' EAST 22.40 CHAINS; THENCE
NORTH 19[d] 45' EAST 45.80 CHAINS TO THE NORTHWEST CORNER OF THAT CERTAIN TRACT
DEEDED TO RUDOLPH ZAK, EDWARD ZAK AND ANNA ZAK, HIS WIFE, BY DEED RECORDED AT
PAGE 526, BOOK 162, RECORDS OF DEEDS FOR MARION COUNTY, OREGON; RUNNING THENCE
ALONG THE WEST LINE OF ADDITIONAL LAND OF SAID ZAK BROTHERS, SAID LAND BEING
DESCRIBED IN DEED RECORDED AT PAGE 527, BOOK 162, RECORDS OF DEEDS FOR MARION
COUNTY, OREGON, NORTHEASTERLY 184.7 FEET TO A POINT ON THE SOUTH LINE OF THE
SOUTHERN PACIFIC RAILROAD RIGHT-OF-WAY AND BEING THE BEGINNING POINT OF THE
HEREIN DESCRIBED TRACT; RUNNING THENCE ALONG SAID RAILROAD RIGHT-OF-WAY
BOUNDARY SOUTH 60[d] 26' EAST 551.2 FEET, MORE OR LESS, TO THE NORTHEAST CORNER
OF THE ABOVE DESCRIBED ZAK LAND; THENCE ALONG THE EAST LINE OF SAID ZAK LAND
SOUTH 19[d] 23' WEST 130.0 FEET; THENCE PARALLEL WITH THE SAID RAILROAD NORTH
60[d] 26' WEST 130.0 FEET; THENCE NORTH 19[d] 23' EAST 119.9 FEET; THENCE ON A
LINE PARALLEL TO AND 10 FEET FROM SAID RAILROAD RIGHT-OF-WAY BOUNDARY NORTH
60[d] 26' WEST 421.2 FEET, MORE OR LESS, TO A POINT IN THE WEST LINE OF SAID
ADDITIONAL LAND OF ZAK BROTHERS, 10 FEET SOUTHWEST OF POINT OF BEGINNING;
THENCE NORTHEAST ALONG SAID WEST LINE OF ZAK BROTHERS ADDITIONAL PROPERTY,
10 FEET TO POINT OF BEGINNING. SAVE AND EXCEPT, THE WESTERLY 25 FEET FOR A
ROADWAY.
SITE 6, PARCEL 7
BEGINNING AT AN IRON PIPE WHICH MARKS THE POINT OF BEGINNING OF A TRACT OF LAND
CONVEYED TO IRENE MCMAHAN, BY DEED RECORDED IN VOLUME 490, PAGE 3, DEED RECORDS
OF MARION COUNTY, OREGON, WHICH POINT IS 434.1 FEET NORTH 32[d] 15' EAST FROM
THE SOUTHWEST CORNER OF LOT 4 OF THE SUBDIVISION OF THE NORTH 1/2 OF THE B. S.
BONNEY DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN IN MARION COUNTY, OREGON; AND RUNNING THENCE NORTH 59[d] 26' WEST A
DISTANCE OF 35.76 FEET ALONG THE SOUTH LINE OF SAID MCMAHAN TRACT TO AN IRON
PIPE AT THE SOUTHWEST CORNER THEREOF; THENCE NORTH 32[d] 28' EAST A DISTANCE OF
308.50 FEET ALONG THE WEST LINE OF SAID TRACT AND EXTENDED TO AN IRON PIPE;
THENCE NORTH 60[d] 45' WEST A DISTANCE OF 74.90 FEET TO AN IRON PIPE AT AN ANGLE
POINT ON THE WEST LINE OF SAID TRACT; THENCE
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NORTH 32[d] 30' EAST A DISTANCE OF 199.90 FEET ALONG THE SAID WEST LINE TO THE
IRON PIPE AT THE NORTHWEST CORNER OF SAID TRACT; THENCE SOUTH 60[d] 45' EAST A
DISTANCE OF 202.98 FEET ALONG THE NORTH LINE OF SAID TRACT TO THE NORTHEAST
CORNER THEREOF; THENCE SOUTH 32[d] 15' WEST A DISTANCE OF 508.60 FEET ALONG THE
WEST LINE OF SAID TRACT TO AN IRON PIPE; THENCE NORTH 60[d] 58' WEST A DISTANCE
OF 94.3 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.
SITE 6, PARCEL 8
BEGINNING ON THE EAST BOUNDARY OF THE B. S. BONNEY DONATION LAND CLAIM IN
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY,
OREGON, AT A POINT WHICH IS 25.95 CHAINS NORTH 19[d] 40' EAST FROM THE SOUTHEAST
CORNER THEREOF; THENCE WEST 2,641.16 FEET TO THE EASTERLY LINE OF THE PACIFIC
HIGHWAY AS SAME IS LOCATED IN THE SAID TOWNSHIP AND RANGE; THENCE NORTH 32[d]
31' EAST ALONG THE EASTERLY LINE OF THE SAID PACIFIC HIGHWAY, 186.78 FEET TO THE
LINE DIVIDING THE SAID BONNEY DONATION LAND CLAIM INTO NORTH AND SOUTH HALVES;
THENCE NORTH 89[d] 52' EAST ALONG THE LINE DIVIDING THE SAID CLAIM INTO NORTH
AND SOUTH HALVES A DISTANCE OF 2,598.02 FEET TO THE EASTERLY LINE OF SAID BONNEY
DONATION LAND CLAIM; THENCE SOUTH 19[d] 20' WEST ALONG THE EASTERLY LINE OF THE
SAID CLAIM 172.42 FEET TO THE PLACE OF BEGINNING.
SAVE AND EXCEPT, A STRIP OF LAND 60.00 FEET WIDE CONVEYED TO OREGONIAN RAILROAD
COMPANY LIMITED BY DEED RECORDED IN VOLUME 26, PAGE 81, OF DEED RECORDS, MARION
COUNTY, OREGON.
SAVE AND EXCEPT, THAT PARCEL OF LAND SITUATE IN SECTION 17, TOWNSHIP 5 SOUTH,
RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY, OREGON, WHICH IS MORE
PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THAT
TRACT OF LAND CONVEYED TO TERMINAL ICE AND COLD STORAGE COMPANY BY DEED RECORDED
IN VOLUME 593, PAGE 395, MARION COUNTY RECORD OF DEEDS, SAID SOUTHEAST CORNER
BEING RECORDED AS BEARING SOUTH 19[d] 22' WEST 1,283.53 FEET FROM THE MOST
EASTERLY NORTHEAST CORNER OF THE BRADFORD S. BONNEY DONATION LAND CLAIM NO. 47,
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON; AND RUNNING THENCE FROM THE TRUE POINT OF BEGINNING; SOUTH 19[d] 22'
WEST 70 FEET, MORE OR LESS, ALONG THE SOUTHWESTERLY EXTENSION OF THE
SOUTHEASTERLY BOUNDARY LINE OF SAID TERMINAL ICE AND COLD STORAGE COMPANY TRACT
TO THE NORTHWESTERLY RIGHT-OF-WAY LINE OF THE SOUTHERN PACIFIC RAILROAD; THENCE
NORTH 60[d] 57' WEST 139 FEET, MORE OR LESS, ALONG SAID NORTHWESTERLY RAILROAD
RIGHT-OF-WAY LINE TO THE MOST EASTERLY SOUTHWEST CORNER OF SAID TERMINAL ICE
AND COLD STORAGE COMPANY TRACT; THENCE SOUTH 89[d] 45' EAST 144.54 FEET ALONG
THE SOUTHERLY BOUNDARY LINE OF SAID TERMINAL ICE AND COLD STORAGE COMPANY TRACT
TO THE POINT OF BEGINNING.
SITE 6, PARCEL 9
BEGINNING AT A STONE IN THE EAST LINE OF THE B. S. BONNEY DONATION LAND CLAIM IN
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON, SAID STONE BEING
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646.61 FEET NORTH 19[d] 38' EAST FROM THE SOUTHEAST CORNER OF SAID CLAIM; AND
RUNNING THENCE SOUTH 87[d] 52' WEST 1,087.62 FEET TO A STONE; THENCE NORTH
19[d] 39' EAST 1,091.81 FEET TO AN IRON PIPE; THENCE NORTH 89[d] 48' WEST
1,574.67 FEET TO A POINT IN THE EASTERLY RIGHT-OF-WAY LINE OF THE PACIFIC
HIGHWAY; THENCE NORTH 32[d]30' EAST 18.93 FEET ALONG SAID EASTERLY LINE, TO AN
IRON PIPE; THENCE SOUTH 89[d] 48' EAST 2,640.76 FEET TO A STONE IN THE EAST
LINE OF SAID B. S. BONNEY DONATION LAND CLAIM; THENCE SOUTH 19[d] 38' WEST
1,061.66 FEET ALONG SAID EAST LINE TO THE POINT OF BEGINNING.
SITE 6, PARCEL 10
BEGINNING AT AN IRON PIPE WHICH IS 2,092.52 FEET SOUTH 87[d] 49' WEST AND 625.00
FEET NORTH 04[d] 46' EAST AND 1,028.01 FEET NORTH 10[d] 05' EAST FROM THE
SOUTHEAST CORNER OF THE B. S. BONNEY DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH,
RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY, OREGON; AND RUNNING
THENCE NORTH 89[d] 48' WEST 247.23 FEET TO AN IRON PIPE IN THE EASTERLY
RIGHT-OF-WAY LINE OF THE PACIFIC HIGHWAY; THENCE SOUTH 32[d] 30' WEST 206.88
FEET ALONG SAID EASTERLY LINE TO AN IRON PIPE; THENCE SOUTH 82[d] 26' EAST
322.67 FEET TO AN IRON PIPE; THENCE NORTH 10[d] 05' EAST 219.51 FEET TO THE
POINT OF BEGINNING.
SITE 6, PARCEL 11
BEGINNING AT A STONE AT THE SOUTHEAST CORNER OF THE B. S. BONNEY DONATION LAND
CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION
COUNTY, OREGON; AND RUNNING THENCE SOUTH 87[d] 49' WEST ALONG THE SOUTH LINE OF
SAID CLAIM 2,092.52 FEET TO A STONE; THENCE NORTH 04[d] 46' EAST 625.00 FEET
ALONG THE EAST LINE OF THAT CERTAIN TRACT OF LAND DESCRIBED IN VOLUME 449,
PAGE 282, MARION COUNTY DEED RECORDS TO A STONE AT THE NORTHEAST CORNER
THEREOF; THENCE NORTH 10[d] 05' EAST 1,028.01 FEET TO AN IRON PIPE; THENCE
NORTH 89[d] 48' WEST 247.23 FEET TO AN IRON PIPE SET IN THE EASTERLY
RIGHT-OF-WAY LINE OF THE PACIFIC HIGHWAY; THENCE NORTH 32[d] 30' EAST 54.42
FEET ALONG SAID EASTERLY LINE TO A POINT; THENCE SOUTH 89[d] 48' EAST 1,574.67
FEET TO AN IRON PIPE; THENCE SOUTH 19[d] 39' WEST 1,091.81 FEET TO A STONE;
THENCE NORTH 87[d] 52' EAST 1,087.62 FEET TO A STONE IN THE EAST LINE OF SAID
B. S. BONNEY DONATION LAND CLAIM; THENCE SOUTH 19[d] 38' WEST 646.61 FEET ALONG
SAID EAST LINE TO THE POINT OF BEGINNING.
SAVE AND EXCEPT, A PORTION OF THAT TRACT OF LAND CONVEYED TO AGRIPAC, INC., AN
OREGON COOPERATIVE CORPORATION BY WARRANTY DEED, RECORDED IN REEL 918, PAGE 429,
MICROFILM RECORDS, MARION COUNTY, OREGON; SAID BEGINNING POINT OF THE FOLLOWING
DESCRIBED PARCEL, BEING AN IRON ROD WITH PLASTIC CAP MARKED LS 1362 AND LYING
3,589.65 FEET NORTH 16[d] 59'26" WEST OF THE SOUTHEAST CORNER OF NEIL JOHNSON
DONATION LAND CLAIM NO. 69 IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN, MARION COUNTY, OREGON; THENCE ALONG THE WESTERLY BOUNDARY OF SAID
AGRIPAC TRACT THE FOLLOWING COURSES: SOUTH 86[d] 53'16" WEST 730.83 FEET TO THE
EAST RIGHT-OF-WAY OF PACIFIC HIGHWAY 99E; THENCE NORTH 31[d] 35'00" EAST ALONG
SAID RIGHT-OF-WAY 72.98 FEET; THENCE NORTH 86[d] 53'16" EAST 702.36 FEET TO AN
IRON PIPE; THENCE NORTH 9[d] 10'24" EAST 195.00 FEET; THENCE LEAVING SAID
WESTERLY BOUNDARY NORTH 30[d] 12'00" EAST 409.00
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FEET; THENCE NORTH 0[d] 34'00" WEST 391.00 FEET; THENCE SOUTH 86[d] 37'53" EAST
494.69 FEET; THENCE SOUTH 61[d] 37'04" EAST 591.66 FEET; THENCE SOUTH
28[d] 22'56" WEST 1,030.50 FEET; THENCE NORTH 61[d] 37'04" WEST 396.67 FEET;
THENCE NORTH 85[d] 47'24" WEST 419.43 FEET TO THE POINT OF BEGINNING.
SITE 6, PARCEL 12
THAT PARCEL OF LAND SITUATE IN THE B. S. BONNEY DONATION LAND CLAIM, SECTION 17,
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON, DESCRIBED IN VOLUME 579, PAGE 486 OF THE DEED RECORDS OF MARION COUNTY,
OREGON, WHICH IS MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A 3/4"
IRON PIPE FROM WHENCE THE SOUTHWEST CORNER OF LOT 4 OF THE SUBDIVISION OF THE
NORTH 1/2 OF B. S. BONNEY DONATION LAND CLAIM BEARS SOUTH 60[d] 45' EAST 74.90
FEET AND SOUTH 32[d] 28' WEST 308.50 FEET AND SOUTH 59[d] 26' EAST 35.76 FEET
AND SOUTH 32[d] 15' WEST 434.1 FEET AND RUNNING THENCE NORTH 60[d] 45' WEST 22
FEET TO AN IRON PIPE; THENCE NORTH 32[d] 30' EAST 199.90 FEET; THENCE SOUTH
60[d] 45' EAST 22.00 FEET; THENCE SOUTH 32[d] 03' WEST 199.90 FEET TO THE POINT
OF BEGINNING.
SITE 6, PARCEL 13
THAT TRACT OF LAND SITUATE IN SECTIONS 19 AND 20, TOWNSHIP 5 SOUTH, RANGE 1 WEST
OF THE WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON, WHICH IS MORE PARTICULARLY
DESCRIBED AS FOLLOWS: BEGINNING AT AN IRON BAR ON THE SOUTHERLY BOUNDARY LINE OF
THAT TRACT OF LAND CONVEYED TO GENERAL FOODS CORPORATION BY DEED RECORDED IN
VOLUME 547, PAGE 833, MARION COUNTY RECORD OF DEEDS, SAID IRON BAR BEING ALSO
THE NORTHEASTERLY CORNER OF THAT TRACT OF LAND CONVEYED TO F AND D GESCHWILL BY
DEED RECORDED IN VOLUME 404, PAGE 152, DEED RECORDS FOR MARION COUNTY, OREGON,
IN SECTIONS 19 AND 20, TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN, MARION COUNTY, OREGON, WHICH BEARS SOUTH 89[d] 45' EAST 309.21 FEET
AND NORTH 31[d] 59' EAST 3,330.55 FEET AND NORTH 86[d] 53' EAST 1,070.32 FEET
FROM THE MOST SOUTHERLY SOUTHWEST CORNER OF THE NEIL JOHNSON DONATION LAND CLAIM
NO. 69, AND RUNNING THENCE FROM THE TRUE POINT OF BEGINNING; SOUTH 18[d] 50'
WEST 2,665.47 FEET ALONG THE EASTERLY BOUNDARY LINE OF SAID GESCHWILL TRACT TO
A 3/4" IRON PIPE; THENCE SOUTH 89[d] 39'30" WEST 1,753.47 FEET TO A 3/4" IRON
PIPE ON THE WESTERLY BOUNDARY OF THAT TRACT OF LAND CONVEYED TO F AND D
GESCHWILL BY DEED RECORDED IN VOLUME 465, PAGE 177, DEED RECORDS FOR MARION
COUNTY, OREGON; THENCE NORTH 31[d] 59' EAST 2,917.55 FEET ALONG SAID WESTERLY
BOUNDARY AND THE NORTHEASTERLY EXTENSION THEREOF TO A 3/4" IRON PIPE ON THE
NORTHERLY BOUNDARY LINE OF SAID GESCHWILL TRACT RECORDED IN VOLUME 404, PAGE
152, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 86[d] 53' EAST
1,070.32 FEET TO THE POINT OF BEGINNING.
SAVE AND EXCEPT, BEGINNING AT A POINT ON THE WEST LINE OF THAT TRACT OF LAND
CONVEYED TO FRED GESCHWILL BY DEED RECORDED IN VOLUME 288, PAGE 341, DEED
RECORDS FOR MARION COUNTY, OREGON, WHICH IS SOUTH 18[d] 50'49" WEST 1,654.33
FEET AND SOUTH 89[d] 39'30" WEST 1,053.19 FEET FROM THE NORTHEAST CORNER OF
THE NEIL JOHNSON DONATION LAND CLAIM NO. 69 IN TOWNSHIP 5
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SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON; THENCE
SOUTH 18[d] 49'55" WEST 1,064.46 FEET; THENCE SOUTH 89[d] 39'30" WEST 1,753.46
FEET TO AN IRON PIPE IN THE SOUTHWEST CORNER OF THAT TRACT OF LAND CONVEYED TO
GENERAL FOODS CORPORATION BY DEED RECORDED IN VOLUME 625, PAGE 152, DEED
RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 31[d] 59' EAST 1,189.80 FEET
ALONG THE WEST LINE OF SAID GENERAL FOODS TRACT TO A 5/8 IRON ROD; THENCE NORTH
89[d] 39'30" EAST 1,466.84 FEET TO THE PLACE OF BEGINNING.
SITE 6, PARCEL 14
BEGINNING AT THE NORTHEAST CORNER OF THE NEIL JOHNSON LAND CLAIM NO. 69 IN
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON; THENCE SOUTH 18[d] 50'49" WEST 1,654.33 FEET ALONG THE EAST LINE OF SAID
CLAIM TO 1 5/8" IRON ROD; THENCE SOUTH 89[d] 39'30" WEST 1,053.19 FEET TO A
POINT IN THE WEST LINE OF THE FRED GESCHWILL TRACT AS DESCRIBED IN VOLUME 288,
PAGE 341, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 18[d] 49'55" EAST
1,599.87 FEET TO AN IRON BAR IN THE NORTH LINE OF SAID CLAIM; THENCE NORTH
86[d] 55'04" EAST 1,072.71 FEET TO THE PLACE OF BEGINNING.
SITE 6, PARCEL 15
BEGINNING AT AN IRON PIPE IN THE WEST LINE OF THE THOMAS FITZGERALD DONATION
LAND CLAIM 13.645 CHAINS FROM THE SOUTHWEST CORNER OF THE SAME IN TOWNSHIP 5
SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, IN MARION COUNTY, OREGON; THENCE
NORTH 19[d] 45' EAST ALONG THE WEST LINE OF SAID CLAIM 45.40 CHAINS TO A STONE;
THENCE SOUTH 88[d] 17' EAST 11.26 CHAINS TO THE IRON BAR; THENCE SOUTH
19[d] 45' WEST 45.60 CHAINS TO AN IRON BAR; THENCE NORTH 87[d] 23' WEST 11.20
CHAINS TO THE POINT OF BEGINNING, BEING SITUATED IN THE THOMAS FITZGERALD
DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN IN MARION COUNTY, OREGON.
SITE 6, PARCEL 16
BEGINNING AT A POINT 13.645 CHAINS NORTH 19[d] 45' EAST AND 11.20 CHAINS SOUTH
87[d] 22' EAST FROM THE SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND
CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION
COUNTY, OREGON; THENCE NORTH 19[d] 45' EAST 9.32 CHAINS TO AN IRON PIPE; THENCE
SOUTH 87[d] 22' EAST 5.615 CHAINS TO THE SOUTHWEST CORNER OF A TRACT OF LAND
CONVEYED TO HARVEY E. MIKKELSON, ET AL, BY DEED RECORDED IN VOLUME 455, PAGE
502, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 19[d] 45' EAST 30.439
CHAINS; THENCE SOUTH 70[d] 15' EAST 5.346 CHAINS; THENCE NORTH 19[d] 45' EAST
7.672 CHAINS TO AN IRON BAR AT THE NORTHWEST CORNER OF THE FOURTH TRACT OF LAND
DESCRIBED IN DEED TO HARVEY E. MIKKELSON, ET AL, RECORDED IN VOLUME 444, PAGE
672, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE SOUTH 88[d] 17' EAST 1.09
CHAINS TO A STONE AT MOST WESTERLY SOUTHWEST CORNER OF A TRACT OF LAND DEEDED
TO MARTIN AICHER BY SEBASTIAN AICHER, ET UX, BY DEED RECORDED IN VOLUME 73,
PAGE 450, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 18[d] 44' EAST
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2.80 CHAINS TO AN IRON PIPE IN THE SOUTH LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY; THENCE SOUTH 60[d] 26' EAST 5.74 CHAINS ALONG SAID RIGHT-OF-WAY TO
THE NORTHERLY BOUNDARY OF THE FIRST TRACT OF LAND DESCRIBED IN SAID DEED TO
HARVEY E. MIKKELSON, ET AL, RECORDED IN VOLUME 444, PAGE 672, DEED RECORDS;
THENCE SOUTH 60[d] 26' EAST ALONG SAID NORTHERLY BOUNDARY A DISTANCE OF 2.62
CHAINS TO THE NORTHEASTERLY CORNER OF SAID PARCEL; THENCE SOUTH 19[d] 23' WEST
44.62 CHAINS; THENCE NORTH 87[d] 22' WEST 21.084 CHAINS TO THE PLACE OF
BEGINNING.
SAVE AND EXCEPT, BEGINNING AT A POINT WHICH IS REACHED BY BEGINNING AT THE
SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND CLAIM IN TOWNSHIP 5
SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, IN MARION COUNTY, OREGON, AND
RUNNING THENCE NORTH 19[d] 45' EAST 13.645 CHAINS; THENCE SOUTH 87[d] 22' EAST
22.40 CHAINS; THENCE NORTH 19[d] 45' EAST 45.80 CHAINS TO THE NORTHWEST CORNER
OF THAT CERTAIN TRACT DEEDED TO RUDOLPH ZAK, EDWARD ZAK AND ANNA ZAK, HIS WIFE,
BY DEED RECORDED AT PAGE 426, BOOK 162, RECORDS OF DEEDS FOR MARION COUNTY,
OREGON; RUNNING THENCE ALONG THE WEST LINE OF ADDITIONAL LAND OF SAID ZAK
BROTHERS, SAID LAND BEING DESCRIBED IN DEED RECORDED AT PAGE 527, BOOK 162,
RECORDS OF DEEDS FOR MARION COUNTY, OREGON, NORTHEASTERLY 184.7 FEET TO A POINT
ON THE SOUTH LINE OF THE SOUTHERN PACIFIC RAILROAD RIGHT-OF-WAY AND BEING THE
BEGINNING POINT OF THE HEREIN DESCRIBED TRACT; RUNNING THENCE ALONG SAID
RAILROAD RIGHT-OF-WAY BOUNDARY SOUTH 60[d] 26' EAST 551.2 FEET, MORE OR LESS,
TO THE NORTHEAST CORNER OF THE ABOVE DESCRIBED ZAK LAND; THENCE ALONG THE EAST
LINE OF SAID ZAK LAND SOUTH 19[d] 23' WEST 130.0 FEET; THENCE PARALLEL WITH THE
SAID RAILROAD NORTH 60[d] 26' WEST 130.0 FEET; THENCE NORTH 19[d] 23' EAST
119.9 FEET; THENCE ON A LINE PARALLEL TO AND 10 FEET FROM SAID RAILROAD
RIGHT-OF-WAY BOUNDARY NORTH 60[d] 26' WEST 421.2 FEET, MORE OR LESS, TO A
POINT IN THE WEST LINE OF SAID ADDITIONAL LAND OF ZAK BROTHERS, 10 FEET
SOUTHWEST OF POINT OF BEGINNING; THENCE NORTHEAST ALONG SAID WEST LINE OF ZAK
BROTHERS ADDITIONAL PROPERTY, 10 FEET TO POINT OF BEGINNING. SAVE AND EXCEPT,
THE WESTERLY 25 FEET FOR A ROADWAY.
SITE 6, PARCEL 17
BEGINNING AT AN IRON PIPE ON THE NORTH LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY AT A POINT 93 LINKS NORTH 18[d] 44' EAST FROM THE NORTH CORNER OF
THE LAST ABOVE MENTIONED TRACT; THENCE NORTH 18[d] 44' EAST 2.96 CHAINS TO THE
CENTERLINE OF THE COUNTY ROAD; THENCE SOUTH 27[d] 29' EAST ALONG THE CENTER OF
SAID ROAD 5.37 CHAINS TO AN IRON PIPE IN THE NORTH LINE OF THE SAID RAILROAD
RIGHT-OF-WAY; THENCE NORTH 60[d] 26' WEST 3.95 CHAINS TO THE POINT OF BEGINNING.
SITE 6, PARCEL 18
BEGINNING AT A CAR SPRING ON THE NORTHERLY BOUNDARY LINE OF THAT TRACT OF LAND
DESCRIBED IN CONTRACT TO A. L. STEFFEN AND E. I. STEFFEN, RECORDED IN VOLUME
460, PAGE 90, DEED RECORDS FOR MARION COUNTY, OREGON, SAID CAR SPRING MARKING
THE SOUTHEAST CORNER OF THAT TRACT OF LAND CONVEYED TO H. E. MIKKELSON AND M.
MIKKELSON, BY DEED RECORDED IN VOLUME 444, PAGE 672, DEED RECORDS FOR MARION
COUNTY, OREGON, SAID CAR SPRING IS RECORDED AS BEARING NORTH 19[d] 45' EAST
900.57 FEET AND SOUTH 87[d] 22' EAST 2,130.7 FEET FROM THE SOUTHWEST CORNER
OF THE THOMAS
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FITZGERALD DONATION LAND CLAIM NO. 54 IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE
WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON; AND RUNNING THENCE FROM THE TRUE
POINT OF BEGINNING; SOUTH 88[d] 04'10" EAST 2,865.86 FEET ALONG SAID NORTHERLY
BOUNDARY LINE OF SAID STEFFEN TRACT TO A 1/2" IRON PIPE MARKING THE
NORTHEASTERLY CORNER OF SAID TRACT; THENCE SOUTH 12[d] WEST 874.70 FEET TO A TWO
INCH IRON PIPE MARKING THE SOUTHEASTERLY CORNER OF THAT TRACT OF LAND DESCRIBED
IN CONTRACT TO A. L. STEFFEN AND E. I. STEFFEN, RECORDED IN VOLUME 520, PAGE 84,
DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 88[d] 02' WEST 1,042.05
FEET ALONG THE SOUTHERLY BOUNDARY LINE OF SAID STEFFEN TRACT TO A 1/2" IRON
PIPE; THENCE NORTH 01[d] 55'50" EAST 840.83 FEET TO A 1/2" IRON PIPE ON A LINE
PARALLEL WITH AND A PERPENDICULAR DISTANCE OF 20.00 FEET, MEASURED SOUTHERLY
FROM SAID NORTHERLY BOUNDARY LINE OF SAID STEFFEN TRACT DESCRIBED IN VOLUME
460, PAGE 90, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 88[d] 04'10"
WEST 1,697.06 FEET ALONG SAID LINE PARALLEL WITH SAID NORTHERLY BOUNDARY LINE
TO A 1/2" IRON PIPE; THENCE NORTH 08[d] 03'24" EAST 20.31 FEET TO A 1/2" IRON
PIPE ON THE SAID NORTHERLY BOUNDARY LINE; THENCE SOUTH 88[d] 04'10" EAST 22.66
FEET ALONG SAID NORTHERLY BOUNDARY LINE TO THE POINT OF BEGINNING.
SITE 6, PARCEL 19
BEGINNING ON THE WESTERLY LINE AND 6.78 CHAINS NORTH 19[d] 45' EAST FROM THE
SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND CLAIM NO. 54 IN TOWNSHIP
5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON;
THENCE NORTH 19[d] 45' EAST 6.865 CHAINS ALONG THE WESTERLY LINE OF SAID
FITZGERALD CLAIM; THENCE SOUTH 87[d] 22' EAST 2,108.08 FEET TO THE
NORTHWESTERLY CORNER OF A TRACT OF LAND CONVEYED TO GENERAL FOODS CORPORATION,
BY DEED RECORDED IN VOLUME 640, PAGE 501, DEED RECORDS FOR MARION COUNTY,
OREGON; THENCE SOUTH 08[d] 03'24" WEST 20.31 FEET TO 1/2 INCH IRON PIPE; THENCE
SOUTH 88[d] 04'10" EAST 1,697.06 FEET TO A 1/2 INCH IRON PIPE; THENCE SOUTH
1[d] 55'50" WEST TO A POINT ON THE SOUTHERLY LINE OF A TRACT DESCRIBED IN
AGREEMENT RECORDED IN VOLUME 460, PAGE 90, DEED RECORDS OF MARION COUNTY,
OREGON; THENCE NORTH 87[d] 14' WEST 3,918.00 FEET, MORE OR LESS, TO A POINT
WHICH IS 10.00 FEET FROM THE WESTERLY LINE OF SAID FITZGERALD CLAIM, AS
MEASURED PERPENDICULAR THERETO; THENCE SOUTH 19[d] 45' WEST 6.70 CHAINS TO A
POINT ON THE SOUTHERLY LINE OF SAID FITZGERALD CLAIM, WHICH IS SOUTH 87[d] 14'
EAST 10.00 FEET FROM THE SOUTHWEST CORNER THEREOF; THENCE NORTH 87[d] 14'
WEST 10.00 FEET FROM THE SOUTHWEST CORNER OF SAID FITZGERALD CLAIM; THENCE
NORTH 19[d] 45' EAST 6.78 CHAINS TO THE PLACE OF BEGINNING.
SITE 6, PARCEL 20
BEGINNING AT THE SOUTHWEST CORNER OF THE DONATION LAND CLAIM OF THOMAS
FITZGERALD AND WIFE, IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN, IN SAID COUNTY AND STATE; THENCE NORTH 19[d] 45' EAST 6.78 CHAINS
ALONG THE WEST LINE OF THE THOMAS FITZGERALD CLAIM; THENCE SOUTH 87[d] 14'
EAST 76.47 CHAINS TO THE EAST LINE OF SAID CLAIM; THENCE SOUTH 11[d]54' WEST
6.586 CHAINS TO THE SOUTHEAST CORNER OF THE THOMAS FITZGERALD CLAIM; THENCE
NORTH 87[d] 14' WEST 77.41 CHAINS ALONG THE SOUTH LINE OF THE SAID CLAIM TO
THE PLACE OF BEGINNING.
<PAGE>
<PAGE>
SAVE AND EXCEPT, THAT PORTION THEREOF INCLUDED IN DEED TO GENERAL FOODS
CORPORATION RECORDED DECEMBER 14, 1967 IN BOOK 640, PAGE 501, DEED RECORDS,
MARION COUNTY, OREGON.
SITE 6 PARCEL 21: (PLANT 8)
ALL OF MORTGAGOR'S RIGHT, TITLE AND INTEREST IN AND TO THAT CERTAIN REAL
PROPERTY FACILITY LEASE BETWEEN PF ACQUISITION II, INC., (AS ASSIGNEE TO
AGRIPAC, INC.) AS LESSEE, AND GREENFIELD PARTNERS, LTD., AN OREGON LIMITED
PARTNERSHIP AS LESSOR, PURSUANT TO AN UNDATED LEASE RELATED TO THE REAL PROPERTY
MORE PARTICULARLY DESCRIBED BELOW:
IMPROVEMENTS ONLY ON THE FOLLOWING DESCRIBED PARCEL:
A PORTION OF THAT TRACT OF LAND CONVEYED TO AGRIPAC, INC., AN OREGON COOPERATIVE
CORPORATION BY WARRANTY DEED, RECORDED IN REEL 918, PAGE 429, MICROFILM RECORDS,
MARION COUNTY, OREGON; SAID BEGINNING POINT OF THE FOLLOWING DESCRIBED PARCEL,
BEING AN IRON ROD WITH PLASTIC CAP MARKED LS 1362 AND LYING 3,589.65 FEET NORTH
16[d] 59'26" WEST OF THE SOUTHEAST CORNER OF NEIL JOHNSON DONATION LAND CLAIM
NO. 69, IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION
COUNTY, OREGON; THENCE ALONG THE WESTERLY BOUNDARY OF SAID AGRIPAC TRACT THE
FOLLOWING COURSES: 86[d] 53'16" WEST, 730.83 FEET TO THE EAST RIGHT OF WAY OF
PACIFIC HWY 99E; THENCE NORTH 31[d] 35'00" EAST ALONG SAID RIGHT OF WAY, 72.98
FEET; THENCE NORTH 86[d] 53'16" EAST, 702.36 FEET TO AN IRON PIPE; THENCE
NORTH 9[d] 10'24" EAST, 195.00 FEET; THENCE LEAVING SAID WESTERLY BOUNDARY,
NORTH 30[d] 12'00" WEST 391.00 FEET; THENCE SOUTH 86[d] 37'53" EAST, 494.69
FEET; THENCE SOUTH 61[d] 37'04" EAST, 591.66 FEET; THENCE SOUTH 28[d] 22'56"
WEST, 1,030.50 FEET; THENCE NORTH 61[d] 37'04" WEST 396.67 FEET; THENCE NORTH
85[d] 47'24" WEST, 419.43 FEET TO THE POINT OF BEGINNING.
POLK COUNTY, OREGON
SITE 2, PARCEL 1
LOTS 1, 2 AND 3, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON. SAVE AND EXCEPT A
STRIP OF LAND 25.0 FEET IN WIDTH EXTENDING EASTERLY AND WESTERLY ALONG THE SOUTH
LINE OF SAID LOTS 2 AND 3.
SITE 2, PARCEL 2
BEGINNING AT THE SOUTHWEST CORNER OF LOT 3, BLOCK "D", WEST SALEM, POLK COUNTY,
OREGON; THENCE NORTHEASTERLY ALONG THE SOUTHERLY LINE OF SAID LOT 3 AND LOT 2 TO
THE SOUTHEAST CORNER OF LOT 2 IN SAID ADDITION; THENCE NORTHWESTERLY ALONG THE
EASTERLY LINE OF SAID LOT 2 A DISTANCE OF 25.0 FEET; THENCE RUNNING SOUTHERLY
AND PARALLEL TO THE SOUTHERLY LINE OF LOTS 2 AND 3 TO A POINT ON THE WESTERLY
LINE OF LOT 3 WHICH POINT IS NORTHWESTERLY 25.0 FEET FROM THE POINT OF
BEGINNING; THENCE SOUTHEASTERLY ALONG THE WEST LINE OF SAID LOT 3 TO THE POINT
OF BEGINNING.
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<PAGE>
SITE 2, PARCEL 3
BEGINNING AT THE NORTHEAST CORNER OF LOT 4 IN BLOCK "D", WEST SALEM, POLK
COUNTY, OREGON; AND RUNNING THENCE SOUTH ALONG THE EAST LINE OF SAID LOT 4 TO
THE SOUTHEAST CORNER THEREOF; THENCE WESTERLY ALONG THE SOUTH BOUNDARY OF SAID
LOT 4, 34 FEET; THENCE NORTHERLY AND PARALLEL WITH THE EASTERLY LINE OF SAID LOT
4 TO THE NORTHERLY LINE THEREOF; THENCE EASTERLY ALONG THE NORTHERLY LINE OF
SAID LOT TO THE PLACE OF BEGINNING.
SITE 2, PARCEL 4
LOTS 17, 18 AND 19, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 5
LOT 20, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 6
LOTS 21 AND 22 IN BLOCK "D", IN WEST SALEM, POLK COUNTY, OREGON, AS SHOWN BY THE
RECORDED PLAT OF SAID WEST SALEM, IN THE OFFICE OF THE RECORDER OF CONVEYANCES
FOR POLK COUNTY, STATE OF OREGON.
SITE 2, PARCEL 7
LOTS 23 AND 24, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 8
LOT 25, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON, AS SHOWN BY THE RECORDED
PLAT OF SAID WEST SALEM, ON FILE AND OF RECORD IN THE OFFICE OF THE COUNTY
RECORDER FOR SAID POLK COUNTY, OREGON.
SITE 2, PARCEL 9
BEGINNING AT THE SOUTHWEST CORNER OF LOT 26, BLOCK "D", WEST SALEM, POLK COUNTY,
OREGON, ACCORDING TO THE DULY RECORDED PLAT NOW ON FILE AND OF RECORD IN THE
OFFICE OF THE RECORDER FOR SAID COUNTY AND STATE; THENCE EASTERLY ALONG THE
SOUTHERLY LINE OF SAID LOT, A DISTANCE OF 38.0 FEET; THENCE NORTHERLY TO A POINT
IN THE NORTH LINE OF SAID LOT, WHICH POINT IS 5.0 FEET DISTANT FROM THE
NORTHEAST CORNER OF SAID LOT; THENCE WESTERLY ALONG THE NORTH LINE OF SAID LOT A
DISTANCE OF 35.00 FEET TO THE NORTHWEST CORNER OF SAID LOT; THENCE SOUTHERLY
ALONG THE WESTERLY LINE OF SAID LOT A DISTANCE OF 125.0 FEET TO THE PLACE OF
BEGINNING.
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SITE 2, PARCEL 10
LOT 27, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON. ALSO: BEGINNING AT A POINT
ON THE SOUTH LINE OF LOT 26, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON, WHICH
IS 38 FEET EASTERLY FROM THE SOUTHWEST CORNER OF SAID LOT 26; THENCE NORTHERLY
TO A POINT IN THE NORTH LINE OF SAID LOT WHICH IS 5 FEET WESTERLY FROM THE
NORTHEAST CORNER OF SAID LOT; THENCE EASTERLY ALONG THE NORTH LINE OF SAID LOT,
5 FEET TO THE NORTHEAST CORNER; THENCE SOUTHERLY ALONG THE EAST LINE OF SAID
LOT, 125 FEET TO THE SOUTHEAST CORNER OF SAID LOT; THENCE WESTERLY ALONG THE
SOUTH LINE OF SAID LOT, 2 FEET TO THE PLACE OF BEGINNING.
SITE 2, PARCEL 11
LOT 28, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 12
LOT 29, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 13
LOT 30, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
YAKIMA COUNTY, WASHINGTON
All of Mortgagor's right, title and interest in and to that certain real
property lease between PF Acquisition II, Inc., (as Assignee to Agripac, Inc.)
the Mortgagor, as Lessee, and The Freezer Group, L.L.C., as Lessor, pursuant to
a Lease dated July 22, 1996 related to the real property more particularly
described below:
PARCEL A
The East 50 feet of Lots 11 and 12, Block 29 of Grandview, Washington, according
to the official plat thereof, recorded in Volume "B" of Plats, Page 6, Records
of Yakima County, Washington. Assessor's Property Tax Parcel/Account No.
230923-13459.
PARCEL B
All that portion of Block 15, Grandview, Washington, according to the official
plat thereof recorded in Volume "B" of Plats, Page 6, Records of Yakima County,
Washington, lying South of the Southerly right-of-way line of West 2nd Street,
as said street was conveyed to the City of Grandview by instrument recorded
under Auditor's File Number 1452522; TOGETHER WITH that portion of vacated
Warehouse Street, which, upon vacation, attached to said premises by operation
of law.
<PAGE>
<PAGE>
Assessor's Property Tax Parcel/Account No. 230923-21410.
PARCEL C
The North 16 feet of Lot 1, AND Lots 2, 3, 4, 5, 6, 7 and 8, AND Lot 9, except
the North 5 feet thereof, AND Lots 13, 14, 15, 16 and 17, all in Block 29 of
Grandview, Washington, according to the official plat thereof, recorded in
Volume "B" of Plats, Page 6, Records of Yakima County, Washington; TOGETHER WITH
that portion of vacated West "A" Street accruing thereto; AND TOGETHER WITH
those portions of vacated alley accruing thereof. Assessor's Property Tax
Parcel/Account No. 230923-13456.
PARCEL D
Lots 19, 20, 21, 22, 23 and 24, Block 28 of Grandview, Washington, according to
the official plat thereof, recorded in Volume "B" of Plats, Page 6, Records of
Yakima County, Washington; TOGETHER WITH that portion of vacated West "A" Street
and that portion of vacated West Third Street accruing thereto, situated in
Yakima County, State of Washington. Assessor's Property Tax Parcel/Account No.
230923-13526.
WALLA WALLA COUNTY, WASHINGTON
PARCEL A
Block 1 of Bowman's Addition to the City of Walla Walla, according to the
official plat thereof recorded in Volume C of Plats at Page 44, Records of Walla
Walla County. ALSO, beginning at a point in the North line of Block 2 of said
Bowman's Addition to the City of Walla Walla, which point is 56 feet West,
measured along said North line, from the Northeast corner of said Block 2; and
running thence South, parallel to the East line of said Block 2, a distance
193.86 feet to a point in the South line of said Block 2; thence West along the
South line of said Block 2 a distance of 168.7 feet to the Southwest corner of
said Block 2; thence North along the West line of said Block 2 a distance of
193.86 feet to the Northwest corner of said Block 2; thence East along the North
line of said Block 2 a distance of 168.7 feet to the point of beginning.
Assessor's Property Tax Parcel/Account No. 36-07-19-51-0100.
PARCEL B
A piece or parcel of land situate in the Northwest Quarter of Section 19,
Township 7 North, Range 36 East of the Willamette Meridian, in Walla Walla
County, Washington, described as follows, to wit: Beginning at a point on the
North line of Dell Avenue in the City of Walla Walla, that is 726 feet distant
West of the point of intersection of said North line with the West line of
Thirteenth Avenue North in said city, said point also being 30 feet North of the
East and West centerline of said Section
<PAGE>
<PAGE>
19; thence Northerly and parallel with said West line of Thirteenth Avenue North
a distance of 650 feet; thence Westerly and parallel with the East and West
centerline of Section 19 a distance of 1,000 feet; thence Southerly parallel
with the West line of Thirteenth Avenue North a distance of 650 feet to a point
that is 30 feet distant North of said East and West centerline of Section 19;
thence Easterly parallel with said East and West centerline of Section 19 a
distance of 1,000 feet to the point of beginning. Assessor's Property Tax
Parcel/Account Nos. 36-07-19-24-0010 and 36-07-19-24-0011.
End of Legal Descriptions
<PAGE>
<PAGE>
Exhibit F
TERM CREDIT FACILITY NOTE
$30,000,000.00 February 22, 1999
FOR VALUE RECEIVED, the undersigned promises to pay to the order of COBANK,
ACB (the "Bank") the principal amount of THIRTY MILLION DOLLARS ($30,000,000.00)
or such lesser aggregate amounts as may be made as Term Credit Facility Advances
under the Bank's Individual Term Credit Facility Commitment pursuant to the
Credit Agreement referred to below, payable as hereinafter set forth. The
undersigned promises to pay interest on the principal amount hereof remaining
unpaid from time to time from the date hereon until the date of payment in full,
payable as hereinafter set forth.
Reference is made to the Credit Agreement dated as of February 22, 1999, by
and among PF Acquisition II, Inc., the Banks which are parties thereto, and
CoBank, ACB, as Administrative Agent (as the same may be amended, renewed,
extended or otherwise modified from time to time, the "Loan Agreement"). Terms
defined in the Loan Agreement and not otherwise defined herein are used herein
with the meanings given those terms in the Loan Agreement. This is one of the
Term Credit Facility Notes referred to in the Loan Agreement, and any holder
hereof is entitled to all of the rights, remedies, benefits and privileges
provided for in the Loan Agreement as originally executed or as it may from time
to time be supplemented, modified or amended. The Loan Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events upon the terms and conditions therein
specified.
The principal indebtedness evidenced by this Term Credit Facility Note
shall be payable as provided in the Loan Agreement and in any event on the
Maturity Date.
Interest shall be payable on the outstanding daily unpaid principal amount
of each Term Credit Facility Advance hereunder from the date thereof until
payment in full and shall accrue and be payable at the rates and on the dates
set forth in the Loan Agreement, both before and after default and before and
after maturity and judgment, with interest on overdue principal to bear interest
at the Default Rate as set forth in the Loan Agreement, to the fullest extent
permitted by applicable Law.
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<PAGE>
The amount of each payment hereunder shall be made to the Administrative
Agent at the Administrative Agent's Office for the account of the Bank not later
than 12:00 noon (Pacific Time) on the date when due in Dollars in immediately
available funds.
The Bank shall record on its books and records or on the schedule to this
Term Credit Facility Note the amount of each Term Credit Facility Advance made
by it under the Loan Agreement, the rate or rate option and interest period
applicable thereto, all payments of principal and interest, and the principal
balance from time to time outstanding. The Bank's record thereof, whether shown
on such books and records or on the schedule to this Term Credit Facility Note,
shall be prima facie evidence as to all such amounts and shall be binding on the
undersigned absent manifest error.
The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned's obligations
hereunder or in enforcing or attempting to enforce any of such holder's rights
hereunder, including reasonable attorneys' fees and disbursements (including
allocated costs of legal counsel employed by the Administrative Agent or the
holder), whether or not an action is filed in connection therewith.
The undersigned hereby waives presentment, demand for payment, dishonor,
notice of dishonor, protest, notice of protest and any other notice or
formality, to the fullest extent permitted by applicable Laws.
THIS TERM CREDIT FACILITY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO.
PF ACQUISITION II, INC.
By ______________________________
------------------------------
[Printed name and title]
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<PAGE>
================================================================================
PF ACQUISITION II, INC.
----------------------
$12,000,000
SUBORDINATED NOTE AGREEMENT
--------------------
Dated as of February 22, 1999
================================================================================
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. LOANS; PAYMENTS AND INTEREST.........................................1
1.1 Loans....................................................................1
1.2 Obligations Several......................................................1
1.3 Repayment of Loans; Interest.............................................2
Section 2. CLOSING..............................................................2
Section 3. CONDITIONS TO CLOSING................................................2
3.1 Certain Documents.........................................................2
3.2 Other Conditions Precedent................................................4
3.3 Senior Debt...............................................................4
Section 4. REPRESENTATIONS AND WARRANTIES OF BORROWER...........................4
Section 5. AFFIRMATIVE COVENANTS................................................5
Section 6. NEGATIVE COVENANTS...................................................6
Section 7. FINANCIAL COVENANTS..................................................6
Section 8. REMEDIES ON DEFAULT, ETC.............................................7
8.1 Non-Bankruptcy Defaults...................................................7
8.2 Remedies for Bankruptcy Defaults..........................................7
Section 9. SECURITY.............................................................8
Section 10. AGENCY PROVISIONS....................................................8
Section 11. MISCELLANEOUS........................................................9
11.1 Incorporation by Reference...............................................9
11.2 Amendments, Etc..........................................................9
11.3 Assignment and Participations...........................................10
11.4 Expenses; Indemnification...............................................11
11.5 Consents................................................................12
11.6 Payments on Notes.......................................................12
11.7 Payments Due on Non-Banking Days........................................13
</TABLE>
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<TABLE>
<S> <C> <C>
11.8 Transfer of Ownership of Borrower under Certain Circumstances...........13
11.9 Jurisdiction, Immunities................................................13
11.10 Confidentiality........................................................13
11.11 Obligations Non-Recourse to Agrilink and Pro-Fac.......................14
11.12 Construction; Definitional Provisions..................................14
11.13 Other Miscellaneous Provisions.........................................15
</TABLE>
Schedules
Schedule A Lenders
Schedule B Definitions
Schedule 6.12 Environmental Matters
Exhibits
I Form of Note
II Form of Addendum to Junior Security Agreement
III Form of Addendum to Junior Oregon Mortgage
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<PAGE>
PF ACQUISITION II, INC.
SUBORDINATED NOTE AGREEMENT
February 22, 1999
TO EACH OF LENDERS LISTED ON
THE ATTACHED SCHEDULE A AND
TO COBANK, ACB, AS ADMINISTRATIVE
AGENT FOR THE LENDERS
Ladies and Gentlemen:
PF ACQUISITION II, INC., a New York corporation ("Borrower") hereby
agrees with Administrative Agent and each Lender as follows:
Section 1. LOANS; PAYMENTS AND INTEREST
1.1 Loans.
Subject to the terms and conditions of this Subordinated Agreement
and in reliance upon the representations and warranties of Borrower herein set
forth, each Lender hereby severally agrees to lend to Borrower on the Closing
Date the amount specified opposite such Lender's name on Schedule A annexed
hereto, which loan shall be evidenced by a Note made by Borrower in favor of
that Lender. All loans made pursuant to this Subordinated Agreement shall be
made on a non-patronage basis. Amounts borrowed and subsequently repaid or
prepaid may not be reborrowed. Certain capitalized terms used in this
Subordinated Agreement are defined in Schedule B annexed hereto.
1.2 Obligations Several.
All loans under this Subordinated Agreement shall be made by the
Lenders simultaneously and proportionately, it being understood that no Lender
shall be responsible for any default by any other Lender in that other Lender's
obligation to make a loan hereunder nor shall the commitment of any Lender to
make any loan
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<PAGE>
hereunder be increased or decreased as a result of a default by any other Lender
in that other Lender's obligation to make a loan hereunder.
1.3 Repayment of Loans; Interest.
Borrower shall repay the principal of the loans hereunder, and such
loan shall bear interest, as set forth in the Notes.
Section 2. CLOSING
The closing shall occur at the offices of ____________________
_____________________________ at 9:00 a.m., Oregon time, at a closing on
February 22, 1999 or on such other Banking Day thereafter as may be agreed upon
by Borrower and the Administrative Agent (the "Closing Date"). On the Closing
Date, Borrower will execute and deliver to Administrative Agent a Note for each
Lender, dated the Closing Date to evidence such Lender's loan in the principal
amount specified opposite such Lender's name on Schedule A annexed hereto and
with other appropriate insertions. Loans shall be made by delivery by wire
transfer of immediately available funds for the account of Borrower to a bank
account in the name of Borrower at ____________________________ to be advised
prior to the Closing Date.
Section 3. CONDITIONS TO CLOSING
Each Lender's obligation to make the loans evidenced by the Notes
on the Closing Date is subject to the fulfillment to Administrative Agent's
satisfaction, prior to or on the Closing Date, of the following conditions:
3.1 Certain Documents. The Administrative Agent shall have received
in sufficient copies for each Lender:
(a) The Note in favor of each Lender duly executed
by Borrower;
(b) The Junior Security Agreement duly executed by
Borrower, together with duly executed copies of such financing
statements, instruments or documents, as is necessary, in
Administrative Agent's opinion, to
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<PAGE>
perfect the Lenders' security interests in the Junior Security
Agreement Collateral;
(c) The Junior Mortgages duly executed and
acknowledged by Borrower;
(d) An ALTA lender's form of title insurance (i) with
respect to the real property interests located in the County of Marion,
State of Oregon in a face amount acceptable to the Administrative
Agent, (ii) with respect to the real property interests located in the
County of Walla Walla, State of Washington in a face amount acceptable
to the Administrative Agent and (iii) with respect to the real property
leasehold interests located in the Counties of Walla Walla and Yakima,
State of Washington in a face amount acceptable to the Administrative
Agent insuring the Junior Mortgages as a second lien on the Junior
Mortgage Collateral, subject only to those exceptions approved in
writing by the Administrative Agent;
(e) Certified copies of Borrower's articles of
incorporation and bylaws, together with documentation evidencing its
qualification to transact business in Oregon;
(f) Resolutions in form and content satisfactory to
the Administrative Agent and each Lender and certified as of the
Closing Date by the Secretary or Assistant Secretary of Borrower,
authorizing Borrower to enter into the Loan Documents and the
instruments and documents contemplated hereby;
(g) A certificate (dated as of the Closing Date) of
the Secretary or Assistant Secretary of Borrower certifying the names
and true signatures of the officers of Borrower authorized to sign the
Loan Documents and the instruments and documents contemplated hereby;
(h) The written legal opinion of Borrower's counsel,
in form and substance acceptable to the Administrative Agent;
(i) A copy of the Court Order (which shall be in form
and substance acceptable to the Administrative Agent);
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<PAGE>
(j) A copy of the Acquisition Agreement (which shall
be in form and substance satisfactory to the Administrative Agent)
certified to be in full force and effect by the Secretary or Assistant
Secretary of Borrower;
(k) A copy of the Service Agreement (which shall be
in form and substance satisfactory to the Administrative Agent)
certified to be in full force and effect by the Secretary or Assistant
Secretary of Borrower; and
(l) Such other approvals, opinions or documents as
any Lender may reasonably request.
3.2 Other Conditions Precedent. On the Closing Date:
(a) Each of the representations and warranties set
forth in Section 4 hereof shall be and remain true and correct as of
the Closing Date;
(b) No event or circumstances constituting a Material
Adverse Effect has occurred since the date of the most recent financial
statements furnished to the Lenders prior to the Closing Date; and
(c) No Event of Default or Potential Default shall
have occurred and be continuing or would result from providing the
loans contemplated hereby.
3.3 Senior Debt. On the Closing Date, the Lenders shall be
satisfied that the Senior Credit Agreement is in a position to close.
Section 4. REPRESENTATIONS AND WARRANTIES OF BORROWER.
Article VI of the Senior Credit Agreement is incorporated herein
and made a part hereof by this reference, with the following modifications:
(a) The reference in Section 6.5 (Financial Statements) to
"the Subordinated Notes" shall refer instead to "the Senior Credit Agreement".
(b) Section 6.7 (Ownership and Liens) is revised to read in full as
follows:
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<PAGE>
"Except for Permitted Liens, none of the assets of Borrower
(including its leasehold interests) are subject to a Lien."
(c) Section 6.14 (Security Interests) is revised to read in full as
follows:
"6.14 Security Interests. Upon the execution and delivery of
the Junior Security Agreement, the Junior Security Agreement will create a valid
security interest in the Junior Security Agreement Collateral described therein
securing the Obligations (subject only to Permitted Liens and to such
qualifications and exceptions as are contained in the Uniform Commercial Code
with respect to the priority of security interests perfected by means other than
the filing of a financing statement or with respect to the creation of security
interests in property to which Article 9 of the Uniform Commercial Code does not
apply) and upon the proper filing of the UCC-1 financing statements delivered to
the Administrative Agent pursuant to Section 3.1 of this Subordinated Agreement
with the appropriate governmental agency all action necessary to perfect the
security interest so created (to the extent that such security interest may be
perfected by filing) will have been taken and completed. Upon the execution and
delivery of the Junior Mortgages, the Junior Mortgages will create a valid Lien
in the Junior Mortgage Collateral described therein securing the Obligations
(subject only to Permitted Liens), and upon recordation thereof with the
appropriate governmental agency, all action necessary to perfect the Lien so
created will have been taken and completed."
Section 5. AFFIRMATIVE COVENANTS
Article VII of the Senior Credit Agreement is incorporated herein
and made a part hereof by this reference, with the following modifications:
(a) The preamble thereto is revised to read in full as follows:
"Borrower covenants that so long as the Notes shall remain
unpaid or any other amount is owing by Borrower to any Lender hereunder or under
any other Loan Document, Borrower shall:"
(b) The reference in Section 7.1 to "Section 13.17" shall refer
instead to "Section 11.8 of this Subordinated Agreement".
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(c) For purposes of this Subordinated Agreement, Borrower
shall have complied with the provisions of Section 7.9 of the Senior Credit
Agreement as incorporated herein (other than Section 7.9(C)) to the extent that
Borrower has made the required deliveries to the Banks (as defined in the Senior
Credit Agreement), provided, however, that the Banks (as defined in the Senior
Credit Agreement) are the same entities as the Lenders under this Subordinated
Agreement.
(d) Section 7.11 is revised to read in full as follows:
"7.11 Use of Proceeds. Use the loans provided for herein solely
to finance the Acquisition."
Section 6. NEGATIVE COVENANTS
Article VIII of the Senior Credit Agreement (other than Section
8.15 thereof) is incorporated herein and made a part hereof by this reference,
with the following modifications:
(a) The preamble thereto is revised to read in full as follows:
"So long as any of the Notes shall remain unpaid or any other
amount is owing by Borrower to any Lender hereunder or under any other Loan
Document, Borrower shall not:"
(b) Subsection (iv) of Section 8.1 is revised by changing the
reference to "the Subordinated Notes" therein to "the Senior Debt".
(c) Section 8.2 is revised to read in full as follows:
"8.2 Liens. Create, incur, assume, or allow to exist any mortgage,
deed of trust, pledge, lien (including the lien of an attachment, judgment, or
execution), security interest, or other encumbrance of any kind upon any of its
property, real or personal (collectively, "Liens"). The foregoing restrictions
shall not apply to Permitted Liens."
Section 7. FINANCIAL COVENANTS
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Article IX of the Senior Credit Agreement is incorporated herein
and made a part hereof by this reference, with the modification that the
preamble thereto is revised to read in full as follows:
"So long as any of the Notes shall remain unpaid or any other
amount is owing by Borrower to any Lender hereunder or under any other Loan
Document:"
Section 8. REMEDIES ON DEFAULT, ETC.
8.1 Non-Bankruptcy Defaults. Upon the occurrence of and during the
continuance of any Event of Default (other than an Event of Default described in
subsections (k) or (l) of the definition of "Event of Default" in the Notes),
the Lenders may, upon vote of the Required Lenders and upon notice to Borrower:
(a) declare the outstanding Notes, all interest thereon, and all other amounts
payable under this Subordinated Agreement and the other Loan Documents to be due
and payable, whereupon the Notes, all such interest, and all such other amounts
shall become and be due and payable, without presentment, demand, protest, or
further notice of any kind, all of which are hereby expressly waived by
Borrower; and (b) proceed to foreclose against any security, take any action or
exercise any remedy under any of the Loan Documents, or exercise any other
action, right, power or remedy permitted by Law. Without limiting the foregoing,
any Lender may exercise its right of set off with regard to any deposit accounts
or other accounts maintained by Borrower with any of the Lenders for the pro
rata benefit of the Lenders. Notwithstanding the foregoing or the definition of
"Required Lenders" set forth in Schedule B annexed hereto, if following the
occurrence of an Event of Default (other than an Event of Default described in
subsections (k) or (l) of the definition of "Event of Default" in the Notes),
the Required Lenders do not, for a period of more than 90 days, agree to either
exercise the rights provided for in this Section or (to the extent the Required
Lenders have the authority to do so under Section 11.2 hereof) waiver the Event
of Default (or amend the Notes to eliminate the Event of Default), then the term
"Required Lenders" shall, after such 90th day and only for the purpose of
electing to affirmatively exercise the Lenders' rights under this Section, mean
a majority in number of the Lenders.
8.2 Remedies for Bankruptcy Defaults. Upon the occurrence of an
Event of Default described in subsections (k) or (l) of the definition of "Event
of Default" in the Notes: (a) the Notes and all other obligations of Borrower
hereunder and under the other Loan Documents shall immediately become due and
payable without presentment, demand, protest or notice of any kind; and (b) the
Lenders may, upon vote of the Required Lenders, exercise such rights and
remedies as may be permitted
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by Law. Notwithstanding the foregoing or the definition of "Required Lenders"
set forth in Schedule B annexed hereto, in the event the Required Lenders do
not, for a period of more than 60 days, agree on how to exercise such rights and
remedies, then the term "Required Lenders" shall, after such 60th day, and only
for the purpose of determining the method of exercising those rights, mean a
majority in number of the Lenders.
Section 9. SECURITY
The loans made pursuant to this Subordinated Agreement, the Notes,
interest, fees and all other obligations of Borrower hereunder shall be secured
by a second priority security interest in the Junior Mortgage Collateral and the
Junior Security Agreement Collateral. All such security shall be held in the
name of the Administrative Agent for the benefit of the Lenders. All obligations
of Borrower to CoBank hereunder shall also be secured by an exclusive statutory
lien for the benefit of CoBank on all equities of CoBank owned by Borrower.
Section 10. AGENCY PROVISIONS
Article XII of the Senior Credit Agreement is incorporated herein
and made a part hereof by this reference, with the following modifications:
(a) Section 12.2 is revised as follows: (i) the reference to
"Advances made by it" therein shall refer instead to "loans made by it pursuant
to this Subordinated Agreement", and (ii) each reference therein to "any Loan"
shall refer instead to "any loan made pursuant to this Subordinated Agreement".
(b) The first sentence of Section 12.4 is revised to read
in full as follows:
"With respect to loans provided by it pursuant to this Subordinated
Agreement, the Administrative Agent in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Administrative Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include the
Administrative Agent in its capacity as a Lender."
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(c) Each reference in Section 12.5 to "Section 13.6" shall refer
instead to "Section 11.4 of this Subordinated Agreement".
(d) The reference in Section 12.12 to "any Advance" shall refer
instead to "any loan made pursuant to this Subordinated Agreement".
(e) Each reference in Section 12.13 to an "Advance" shall refer
instead to a "loan made pursuant to this Subordinated Agreement".
Section 11. MISCELLANEOUS
11.1 Incorporation by Reference. To the extent that any provision
of the Senior Credit Agreement is incorporated by reference into this
Subordinated Agreement, (a) each reference in such provision to a "Bank" shall
refer instead for purposes of this Subordinated Agreement to a "Lender", (b)
each reference in such provision to "Required Banks" shall refer instead for
purposes of this Subordinated Agreement to "Required Lenders", (c) each
reference in such provision to "Agreement" as an individual defined term shall
refer instead for purposes of this Subordinated Agreement to "Subordinated
Agreement", (d) each other capitalized term used therein shall be used herein
with the meaning therefor specified in Schedule B annexed hereto, and (e) unless
modified pursuant to this Subordinated Agreement, each Section or Article
reference therein shall refer to the applicable Section or Article of the Senior
Credit Agreement, as such Section or Article has been incorporated by reference
into this Subordinated Agreement.
11.2 Amendments, Etc.. No amendment, modification, termination, or
waiver of any provision of this Subordinated Agreement or of any Loan Document
to which Borrower is a party, nor consent to any departure by Borrower herefrom
or therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders, do any of the following: (a)
waive any of the conditions precedent specified in Section 3.1; (b) subject any
Lender to any additional obligations; (c) reduce the principal of, or interest
on, the Notes or any fees hereunder; (d) postpone any date fixed for any payment
of principal of, or interest on, the Notes, or the payment of any other
obligation of Borrower hereunder, including any fees hereunder; (e) change the
definition of Required Lenders; (f) release any collateral; (g) amend, modify
any Lender's rights to receive its Pro Rata Share of any payment or proceeds of
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Collateral; or (h) amend, modify or waive any provision of this Section 11.2,
and provided further that no amendment, waiver, or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent under any of the Loan Documents.
11.3 Assignment and Participations. This Subordinated Agreement
shall be binding upon, and shall inure to the benefit of, Borrower,
Administrative Agent and Lenders and their respective successors and permitted
assigns. Borrower may not assign or transfer its rights or obligations
hereunder.
Any Lender may at any time assign to one or more banks or other
financial institutions (each an "Assignee") a part of its rights and obligations
under this Subordinated Agreement and its Note, and such Assignee shall assume
rights and obligations, pursuant to an Assignment and Assumption Agreement
executed by such Assignee and such Lender, with and subject to the consent of
each of Administrative Agent and Borrower (which consent shall not be
unreasonably withheld or delayed); provided that, in each case, (1) the portion
of the Note assigned is equal to or greater than $1,000,000.00 (or such lesser
amount as shall constitute the aggregate unpaid principal balance of the Note),
and (2) the assigning Lender and Assignee shall pay Administrative Agent a
processing and recordation fee of Two Thousand Five Hundred Dollars ($2,500).
Upon execution and delivery of such instrument and payment by such Assignee to
the Lender of an amount equal to the purchase price agreed between the Lender
and such Assignee, such Assignee shall be a Lender to this Subordinated
Agreement and shall have all the rights and obligations of a Lender assigned to
it in such Assignment and Assumption Agreement, and the assigning Lender shall
be released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this paragraph, new Notes as required shall be
issued by Borrower. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall, prior to the first date
on which interest or fees are payable hereunder for its account, deliver to
Borrower and the Administrative Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 12.12 of the Senior Credit Agreement as incorporated by reference
herein.
Any Lender may at any time assign all or any portion of its rights
under this Subordinated Agreement and its Note to a Federal Reserve Bank. No
such assignment shall release the transferor Lender from its obligations
hereunder.
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With the consent of Borrower (which consent shall not be
unreasonably withheld or delayed), any Lender may at any time grant to one or
more banks or other financial institutions (each a "Participant") participating
interests in the loans evidenced by such Lender's Note. In no event shall a
Participant constitute a Lender for purposes hereof. In the event of any such
grant by a Lender of a participating interest to a Participant, whether or not
upon notice to Borrower and the Administrative Agent, such Lender shall remain
responsible for the performance of its obligations hereunder, and Borrower and
the Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations hereunder. Any
agreement pursuant to which any Lender may grant such a participating interest
shall provide that such Lender shall retain the sole right and responsibility to
enforce the obligations of Borrower hereunder and under any other Loan Document
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Subordinated Agreement or any other Loan
Document, provided that such participation agreement may provide that such
Lender will not agree to any modification, amendment or waiver of this
Subordinated Agreement described in the proviso in Section 11.2 without the
consent of the Participant.
Borrower agrees to provide all assistance reasonably requested by a
Lender (at the sole cost and expense of such Lender) to enable such Lender
either to sell participations in or make assignments of the loans evidenced by
such Lender's Note as permitted by this Section.
11.4 Expenses; Indemnification. Borrower agrees to reimburse the
Administrative Agent, on demand for all costs, expenses, and charges plus
expenses incurred by such Administrative Agent, in connection with the
preparation of the Loan Documents. Borrower agrees to reimburse Administrative
Agent and each of the Lenders on demand for all costs, expenses, and charges
(including, without limitation, all fees and charges of external legal counsel
for Administrative Agent, and each Lender) incurred by Administrative Agent, or
any Lender in connection with compliance with any of the Loan Documents, or
enforcement of this Subordinated Agreement, the Notes, or any other Loan
Document. In addition to the foregoing, Borrower agrees to reimburse the
Administrative Agent on demand for all fees and charges of external legal
counsel for Administrative Agent incurred in connection with the administration
of this Subordinated Agreement (including, without limitation, the preparation
of any amendments hereto or to the other Loan Documents or any consents
furnished hereunder or under the other Loan Documents, but excluding any costs
incurred in connection with any participation or assignment by a Lender).
Borrower agrees to and hereby does indemnify each Lender and their respective
directors,
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officers, employees and agents from, and hold each of them harmless against, any
and all losses, liabilities, claims, damages or expenses incurred by any of them
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to this Subordinated Agreement or any of the Loan
Documents or to any actual or proposed use by Borrower of the proceeds of the
loans made pursuant to this Subordinated Agreement or to any violation or
alleged violation of any Environmental Law by Borrower or any of its
Subsidiaries, including, without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified or its directors, officers,
employees or agents).
Borrower, each of the Lenders and Administrative Agent agree that
the cost of each wire transfer to be made by each such Person pursuant to the
terms of this Subordinated Agreement will be borne by the Person making such
transfer.
The obligations of Borrower under this Section shall survive the
repayment of the loans made pursuant to this Subordinated Agreement and payment
of all amounts due under or in connection with any of the Loan Documents.
11.5 Consents. Each Lender that is a party to this Subordinated
Agreement hereby consents, to the extent required under any agreement between
the Lender and Borrower, to Borrower entering into this Subordinated Agreement
and obtaining the loans provided under this Subordinated Agreement.
11.6 Payments on Notes. Borrower will pay all sums becoming due on
the Notes for principal, premium, if any, and interest by the method and at the
address specified for such purpose below the applicable Lender's signature to
this Subordinated Agreement, or by such other method or at such other address as
such Lender shall have from time to time specified to Borrower in writing for
such purpose, without the presentation or surrender of such Note or the making
of any notation thereon, except that upon written request of Borrower made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, the applicable Lender shall surrender such Note for cancellation,
reasonably promptly after any such request, to Borrower at its principal
executive office. Prior to any disposition of any Note held by any Lender or any
Lender's nominee such Lender will, at such Lender's election, either endorse
thereon the amount of principal paid thereon and the last date to which interest
has been paid thereon; provided, however, that the failure to make (or any error
in the making of) any such notation shall not limit or otherwise affect the
Obligations of
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Borrower hereunder or under such Note with respect to any payments of principal,
premium or interest on such Note.
11.7 Payments Due on Non-Banking Days. Anything in this
Subordinated Agreement or the Notes to the contrary notwithstanding, any payment
of principal of, premium or interest on any Note that is due on a date other
than a Banking Day shall be made on the next succeeding Banking Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Banking Day.
11.8 Transfer of Ownership of Borrower under Certain Circumstances.
The Administrative Agent and each Lender expressly acknowledge that Pro-Fac may
transfer or abandon all, but not less than all, of the common stock or other
ownership interests of Borrower held by Pro-Fac: (a) on June 15, 2002, provided
that the Administrative Agent has been provided with not less than eleven months
prior written notice of Pro-Fac's intention to do so, or (b) at any time prior
to the Maturity Date (and whether or not any Event of Default or Potential
Default has occurred or is continuing) if (i) Borrower is insolvent or otherwise
unable to meet its obligations as they come due (as determined by Pro-Fac in its
sole discretion reasonably exercised), or (ii) (A) any liability or liabilities
of Seller that arose prior to the Closing Date (including liabilities, e.g.,
environmental or pension fund liabilities, for which Borrower may have
independent liability) is imposed or asserted against Borrower or any Affiliate
of Borrower, and (B) Pro-Fac makes a determination in its reasonable business
judgment that, in view of such liability or costs, continuing to own common
stock or to have any other ownership interest in Borrower is not in the best
interests of Pro-Fac. Nothing in this Section 11.8 shall affect the existence of
an Event of Default under subsection (m) of the definition of "Event of Default"
in the Notes by reason of the foregoing, or the exercise by the Lenders of their
remedies provided for in the Loan Documents as a result thereof. Pro-Fac is an
expressly intended third party beneficiary of this Section 11.8 and may enforce
the terms hereof as though a party to this Subordinated Agreement.
11.9 Jurisdiction, Immunities. Section 13.8 of the Senior Credit
Agreement is incorporated herein and made a part hereof by this reference, with
the following modification: the reference to "Section 13.3" shall refer instead
to "Section 11.3 of this Subordinated Agreement".
11.10 Confidentiality. Section 13.16 of the Senior Credit Agreement
is incorporated herein and made a part hereof by this reference, with the
following
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modification: the reference to "Section 13.5" therein shall refer instead to
"Section 11.4 of this Subordinated Agreement".
11.11 Obligations Non-Recourse to Agrilink and Pro-Fac. Section
13.18 of the Senior Credit Agreement is incorporated herein and made a part
hereof by this reference, with the following modifications: (a) the reference to
"Section 13.17" therein shall refer instead to "Section 11.9 of this
Subordinated Agreement", and (b) the reference to "this Section 13.18" shall
refer instead to "this Section".
11.12 Construction; Definitional Provisions.
(a) When used in this Subordinated Agreement: (i) a
reference to a Law includes any amendment or modification to such Law;
(ii) a reference to a Person includes its permitted successors and
permitted assigns and a reference to a Person in a particular capacity
excludes such Person in any other capacity; (iii) a reference to an
agreement, instrument or document (other than the Senior Credit
Agreement) shall include such agreement, instrument or document as the
same may be amended, modified or supplemented from time to time and, if
applicable, as permitted by the Loan Documents, any reference to any
Note includes any note issued pursuant hereto in extension or renewal
thereof and in substitution or replacement therefor; (iv) reference to
any gender includes the other gender; (v) the words "herein," "hereof"
and "hereunder" and other words of similar import refer to this
Subordinated Agreement as a whole and not to any particular Article,
Section or other subdivision; (vi) unless the context indicates
otherwise, reference to any Article, Section, Schedule or Exhibit means
such Article or Section hereof or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning "include")
means including, without limiting the generality of any description
preceding such term; and (viii) any of the terms defined herein may,
unless the context otherwise requires, be used in the singular or the
plural, depending on the reference. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof. Any reference to Pacific Time shall
mean such time as in effect in the United States of America.
(b) The following sections of the Senior Credit
Agreement are incorporated herein and made a part hereof by this
reference: Sections 1.2 and 1.3.
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11.13 Other Miscellaneous Provisions. The following sections of the
Senior Credit Agreement are incorporated herein and made a part hereof by this
reference: Sections 13.2, 13.3, 13.4, 13.7, 13.9, 13.10, 13.11, 13.12, 13.13,
13.14, 13.19 and 13.20.
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IN WITNESS WHEREOF, the parties hereto have caused this
Subordinated Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first written.
Very truly yours,
BORROWER: PF ACQUISITION II, INC.
By /s/ Earl L. Powers
______________________________
Earl L. Powers, Vice President
------------------------------
[Printed name and title]
Attn: President
90 Linden Place
Rochester, New York 14625
Fax: (716) 383-1606
Telephone: (716) 383-1850
The foregoing is hereby agreed to as of the date thereof.
CoBANK, ACB,
as Administrative Agent and as a Lender
By /s/ Robert D. Bergsten
----------------------------------
Robert D. Bergsten, Vice President
----------------------------------
[Printed name and title]
3636 American River Drive
Sacramento, CA 95864
P.O. Box 13010-A
Sacramento, CA 95813
Attn: Credit Department
Fax: (916) 973-3001
Telephone: (916) 973-3033
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SCHEDULE A
LENDERS
CoBank, ACB $12,000,000.00
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SCHEDULE B
DEFINITIONS
"Administrative Agent" means CoBank, ACB, as administrative agent
for the Lenders.
"Assignee" has the meaning assigned to such term in Section 11.4.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement substantially in the form of Exhibit A to the Senior Credit
Agreement.
"Borrower" has the meaning assigned to that term in the
Introduction.
"Closing Date" has the meaning assigned to that term in Section 2.
"Collateral" means collectively the Junior Security Agreement
Collateral and the Junior Mortgage Collateral.
"Event of Default" has the meaning assigned to that term in the
Notes.
"Junior Mortgage Collateral" means the Collateral described as such
in the Junior Mortgages.
"Junior Mortgages" means, collectively (a) mortgages covering
Borrower's owned and leased real property interests in the State of Washington
to be executed by Borrower in the form attached to the Senior Credit Agreement
as Exhibit C, and (b)(i) a mortgage covering Borrower's owned and leased real
property interests in the State of Oregon to be executed by Borrower in the form
attached to the Senior Credit Agreement as Exhibit C, and (ii) an addendum to
such mortgage to be executed by Borrower in the form attached hereto as Exhibit
III.
"Junior Security Agreement" means, collectively, (a) a security
agreement in the form attached to the Senior Credit Agreement as Exhibit E to be
executed by Borrower, and (b) an addendum to such security agreement to be
executed by Borrower in the form attached hereto as Exhibit II.
"Junior Security Agreement Collateral" means the Collateral
described as such in the Junior Security Agreement.
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"Lender" and "Lenders" means the persons identified as "Lenders"
and listed on the signature pages of this Subordinated Agreement, together with
their successors and permitted assigns pursuant to Section 11.4.
"Loan Documents" means this Subordinated Agreement and all
instruments and documents contemplated hereby, including, without limitation,
the Notes, the Junior Security Agreement and the Junior Mortgages, and any
supplement thereto and the Notes.
"Maturity Date" means February 22, 2014.
"Notes" means the subordinated promissory notes executed by
Borrower in favor of Lenders substantially in the form of Exhibit I attached
hereto, as the same may from time to time be amended, supplemented or otherwise
modified.
"Obligations" means, as of any date of determination, the sum of
the aggregate principal amount of all loans made pursuant to this Subordinated
Agreement then outstanding.
"Participant" has the meaning assigned to that term in Section
11.4.
"Permitted Liens" means: (a) Liens in favor of the Lenders; (b)
Liens for taxes, assessments, or governmental charges that are not past due; (c)
Liens and deposits under workers' compensation, unemployment insurance, and
social security Laws; (d) Liens and deposits to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), and like
obligations arising in the ordinary course of business as conducted on the date
hereof; (e) Liens imposed by Law in favor of mechanics, materialmen,
warehousemen, and like persons that secure obligations that are not past due;
(f) easements, rights-of-way, restrictions, and other similar encumbrances
which, in the aggregate, do not materially interfere with the occupation, use,
and enjoyment of the property or assets encumbered thereby in the normal course
of its business or materially impair the value of the property subject thereto;
(g) liens retained by software vendors in conjunction with software license
agreements; (h) Liens securing the Senior Debt, and (i) Liens securing
indebtedness permitted by clause (v) of Section 8.1 of the Senior Credit
Agreement as incorporated by reference herein.
"Required Lenders" means, at any time, except as otherwise provided
in Sections 8.1 and 8.2 hereof, Lenders holding at least 67% in principal amount
of the Notes at the time outstanding.
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"Pro Rata Share" means as to each Lender, a fraction, the numerator
of which is such Lender's commitment set forth on Schedule A and the denominator
of which is $12,000,000.00.
"Senior Credit Agreement" means that certain Credit Agreement dated
as of the date hereof among Borrower, CoBank ACB, as Administrative Agent and
the Banks party thereto, as in effect as of the date hereof.
"Senior Debt" means the "Senior Indebtedness" as such term is
defined in the Notes.
"Specified Expenses" means (a) cash bonuses payable to former
members of Seller who become members of Pro-Fac not in excess of $6,400,000 and
(b) (i) cash payments to former members of Seller who are now retired, (ii)
severance payments to employees of Borrower who are former employees of Seller
and (iii) transactional costs related to the Acquisition Agreement and the
Senior Credit Agreement not in excess of $2,600,000 for all of the payments
described in this clause (b).
"Subordinated Agreement" means this Subordinated Note Agreement as
it may from time to time be amended, supplemented or otherwise modified.
Any and all defined terms used in this Subordinated Agreement without definition
in this Schedule B shall have the respective meanings assigned thereto in the
Senior Credit Agreement, and any and all defined terms used in such definitions
in the Senior Credit Agreement shall have the respective meanings assigned
thereto in the Senior Credit Agreement unless otherwise defined in this Schedule
B.
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A WHO IS
PURCHASING THIS NOTE FOR HIS/HER OR ITS OWN ACCOUNT OR FOR THE ACCOUNTS OF ONE
OR MORE QUALIFIED INSTITUTIONAL BUYERS IN A PRINCIPAL AMOUNT OF NOT LESS THAN
$100,000 FOR ANY SUCH ACCOUNT, OR (B) PURSUANT TO ANOTHER APPLICABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION.
SUBORDINATED PROMISSORY NOTE
$12,000,000.00 February 22, 1999
FOR VALUE RECEIVED, the undersigned, PF Acquisition II, Inc., a New
York corporation (the "Company"), promises to pay, but subject nevertheless to
all of the provisions hereof, to the order of COBANK, ACB, at its offices at
_____________________________________________or at such other office within the
United States of America as the holder hereof may from time to time in writing
appoint, the principal sum of Twelve Million Dollars ($12,000,000.00) in
quarterly installments on the last day of each calendar quarter (commencing
March 31, 2009) each equal to 1/40 (2.5%) of the principal balance hereof on
March 31, 2009 and a final payment on February 22, 2014. The Company promises to
pay interest at such office on the balance of principal from time to time
outstanding and unpaid hereon (computed on the basis of a year of 365 or 366
days, as the case may be, and the actual number of days elapsed) (i) for the
period from February 22, 2004 until February 22, 2009 at the rate of five (5)
percent per annum and (ii) for the period from and after February 22, 2009 and
until payment in full thereof at the rate of seven (7) percent per annum, such
interest to be due and payable quarterly in arrears on the last day of each
calendar quarter in each year (commencing March 31, 2004) and on the final
maturity date of this Note (the "Interest Payment Dates "). Interest accruing on
this Note during the period described in clause (i) of the preceding sentence
shall be payable solely and only through the issuance by the Company to the
holder hereof on each Interest Payment Date of a subordinated promissory note in
the amount of the interest then due and payable, each such subordinated
promissory note to be identical to this Note except for the date thereof and the
principal amount thereof. Interest accruing thereafter shall be due and payable
in cash on each Interest Payment Date. Interest shall continue to accrue hereon
notwithstanding the occurrence of any Event of Default (as hereinafter defined).
Capitalized terms used and not defined herein shall have the meanings given
such terms in that certain
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Subordinated Note Agreement dated as of February 22, 1999 among Company, the
Lenders party thereto and CoBank, ACB, as Administrative Agent for the Lenders
(the "Subordinated Agreement").
This Note may be prepaid in whole or in part (but if in part, in a
minimum amount of $100,000) at any time without premium or penalty.
This Note is subordinate and junior in right of payment to all Senior
Indebtedness of the Company, whether now existing or hereafter arising, on and
subject to the terms and conditions hereinafter set forth.
The term "Senior Indebtedness" shall mean and include all of the
following obligations of the Company, in each instance, whether now existing or
hereafter arising:
(i) all indebtedness, obligations and liabilities of the
Company under or with respect to that certain Credit Agreement dated as
of February 22, 1999 by and among the Company, CoBank, ACB as
Administrative Agent and the Banks from time to time party thereto, all
as the same may from time to time be amended, modified or restated (the
"Bank Credit Agreement") (including without limitation all liabilities
of the Company with respect to the principal of and interest (including
interest accruing subsequent to the filing of a petition in bankruptcy
or insolvency) at the rate specified in the documents relating to such
Senior Indebtedness, whether or not such interest is no longer
permitted to be enforced against the obligor under any credit facility
replacing the credit facility provided for in such Bank Credit
Agreement), provided that the aggregate principal amount of loans and
face amount of letter of credit liabilities constituting Senior
Indebtedness under this clause (i) shall not exceed $100,000,000 at any
one time outstanding; and
(ii) all obligations of the Company pursuant to interest rate
swap agreements, interest rate cap agreements and other similar
agreements or arrangements designed to protect the Company against
fluctuations in interest rates, each computed net of amounts due the
Company from the same counterparty of contracts of the foregoing types
of a type which are permitted to be netted under the Bankruptcy Code.
In the event of any distribution, division or application, partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of the assets of the Company or the proceeds thereof to the creditors
of the Company or upon any indebtedness of the Company, occurring by reason of
liquidation, dissolution or other winding up of the Company or by reason of
execution, sale, receivership, insolvency, bankruptcy, reorganization,
arrangement or other proceedings or the reorganization or
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readjustment of the Company or its debts or properties then, and in such event,
all Senior Indebtedness shall be paid and satisfied in full before any payment
or distribution of any kind or character, whether in cash, property or
securities, shall be made on or in respect of the principal of or interest on
this Note and in any such event, any such payment., dividend or distribution
which shall be made upon or in respect hereof shall be paid over to the holders
of Senior Indebtedness (but subject to any priorities between them, such that if
any Senior Indebtedness is subordinated in right of payment to any other Senior
Indebtedness, all amounts which shall otherwise be payable to the holder of the
subordinate claim shall instead be paid to the holders of the claims which are
superior thereto) for application on such Senior Indebtedness, until such Senior
Indebtedness has been fully paid and satisfied, and in the event that this Note
is declared due and payable prior to its expressed maturity the holder of this
Note shall be entitled to the payment of principal and interest only after there
shall first have been paid in full all Senior Indebtedness outstanding at the
time this Note so became due and payable or which thereafter arises.
During the continuance of any default in the payment when due (whether
by lapse of time, acceleration or otherwise) of the principal of, interest on or
any other amount in respect of Senior Indebtedness, or in the event an event of
default occurs with respect to any Senior Indebtedness permitting the holders
thereof to accelerate the maturity thereof, then and in any such event, and
until such default in payment or event of default shall have been cured or
waived by the holders of the Senior Indebtedness in question or shall have
ceased to exist, no payment of principal and interest shall be made hereon and
no other payment (whether in respect of the redemption, retirement, purchase or
other acquisition of the indebtedness evidenced by this Note) shall be made;
provided, however, that (i) the foregoing shall not prohibit the holder hereof
from receiving additional subordinated notes in payment of interest hereon as
and to the extent provided for by the first paragraph of this Note and (ii) the
foregoing shall not require the holder hereof to return any amount paid to it by
the Company hereunder if, at the time of receipt of such payment by the holder,
it did not have actual knowledge of the occurrence of one of the foregoing
events prohibiting payment to it. Any holder of Senior Indebtedness may notify
the holder of the occurrence of any event prohibiting payment hereunder by
delivering such notice to the holder by personal service or by telecopy, with
such notice to be given to the holder hereof at its address as shown herein. The
present and any successive holder of this Note may change the address to which
such notice may be sent by written notice to the Administrative Agent and/or
trustee for the holders of the Senior Indebtedness described in clause (i) of
the definition of Senior Indebtedness and to any other holder of Senior
Indebtedness that has requested the holder in writing to receive such notices.
Any one or more of the following shall constitute, an "Event of
Default" hereunder:
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(a) Failure by Company to make any principal payment required
to be made hereunder within 5 days after the date when due; or
(b) Failure by Company to make any interest or other payment
(other than a principal payment) required to be made hereunder or under any
other Loan Document within 20 days of the date when due; or
(c) Any representation or warranty made by Company in the
Subordinated Agreement or in any agreement, certificate or document related
thereto or furnished in connection therewith, shall prove to have been false or
misleading in any material respect on or as of the date made; or
(d) Failure by Company to perform or comply with any covenant
set forth in Sections 7.3 through 7.9 of the Bank Credit Agreement (other than
7.9(E) through (H)), as incorporated by reference into the Subordinated
Agreement, and such failure continues for 15 days after written notice thereof
shall have been delivered to Company by any Lender; or
(e) Company shall fail to perform or comply with any other
covenant or agreement contained in the Subordinated Agreement, including any
covenant excluded in subsection (d) above and such failure continues for 5 days
after written notice thereof shall have been delivered to Company by any Lender;
or
(f) Company shall, after any applicable grace period, breach
or be in default under the terms of any other Loan Document or of any other
agreement between Company and any Lender; or
(g) Company shall fail to pay when due any indebtedness for
borrowed money to any other Person or any other event occurs which, under any
agreement or instrument relating to such indebtedness, has the effect of
accelerating or permitting the acceleration of such indebtedness or obligations,
whether or not such indebtedness or obligations are actually accelerated or the
right to accelerate is conditioned on the giving of notice, the passage of time
or otherwise; or
(h) The Required Lenders shall have determined that an event
or circumstance constituting a Material Adverse Effect has occurred; or
(i) A judgment, decree, or order for the payment of money in
excess of $50,000 shall be rendered against the Company and either: (i)
enforcement proceedings shall have been commenced; (ii) a Lien prohibited under
Section 8.2 of the Bank Credit Agreement as incorporated by reference into the
Subordinated Agreement (and modified in the Subordinated Agreement) shall have
been obtained; or (iii) such judgment, decree,
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<PAGE>
or order shall continue unsatisfied and in effect for a period of 20 consecutive
days without being vacated, discharged, satisfied, or stayed pending appeal; or
(j) Any reportable event (as defined in ERISA) which
constitutes grounds for the termination of any Plan, or for the appointment of a
trustee to administer or liquidate any such Plan, shall have occurred and be
continuing 30 days after written notice to such effect shall have been given to
Company by Administrative Agent; or any such Plan shall be terminated; or a
trustee shall be appointed; or the PBGC shall institute proceedings to terminate
any such Plan; or
(k) Company shall (1) have entered involuntarily against it an
order for relief under the Bankruptcy Code of 1978, as amended; (2) admit in
writing its inability to pay, or not pay, its debts generally as they become due
or suspend payment of its obligations; (3) make an assignment for the benefit of
creditors; (4) apply for, seek, consent to, or acquiesce in, the appointment of
a receiver, custodian, trustee, conservator, liquidator or similar official for
it or any substantial part of its property; (5) file a petition seeking relief
or institute any proceeding seeking to have entered against it an order for
relief under the Bankruptcy Code of 1978, as amended, to adjudicate it
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, marshalling of assets, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it; (6) fail to contest in good
faith any appointment or proceeding described in subsection (l) below; or (7)
take any corporate action in furtherance of any of the foregoing; or
(l) A custodian, receiver, trustee, conservator, liquidator or
similar official shall be appointed for Company or any substantial part of its
property, or a proceeding described in subsection (5) of subsection (k) above
shall be instituted against Company and such appointment continues undischarged
or any such proceeding continues undismissed or unstayed for a period of 60
days; or
(m) Company shall cease to be a subsidiary of Pro-Fac, or
Company shall sell or transfer all or substantially all of its assets to a
Person that is not a subsidiary of Pro-Fac.
Upon the occurrence of and during the continuance of any Event of
Default described in clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j) or
(m) of the foregoing paragraph, the holder hereof may, by written notice to the
Company, declare the principal of and interest on this Note to be immediately
due and payable; provided, however, that no payment may be made hereon, and the
holder may take no steps to enforce or compel payment hereof, unless and until
all Senior Indebtedness has been fully paid and satisfied. If any Event of
Default described in clauses (k) or (l) of the immediately preceding
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<PAGE>
paragraph occurs, this Note shall be and become immediately due and payable
without notice of any kind, but no payment may be made hereon and no steps may
be taken to compel payment hereof unless and until all Senior Indebtedness has
been fully paid and satisfied.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash or cash equivalents equal to
the amount of such Senior Indebtedness then outstanding. However, if pursuant to
a bankruptcy or insolvency proceeding involving the Company, the holders of
Senior Indebtedness receive securities of the Company as reorganized and the
plan of reorganization provides for the issuance of securities to the holder of
this Note, then such holder may receive and retain such securities if the same
are subordinated in right of payment to the prior payment in full of the
securities which the holders of Senior Indebtedness receive to substantially the
same extent as, or to a greater extent than, this Note is subordinated to Senior
Indebtedness.
Nothing contained in this Note is intended to or shall impair as
between the Company and its creditors, other than the holders of Senior
Indebtedness, the obligations of the Company, which are otherwise absolute and
unconditional, to pay to the holder hereof the principal of and interest on this
Note as and when the same becomes due and payable in accordance with its terms
or otherwise affect the relative rights of the holder of this Note and creditors
of the Company other than holders of Senior Indebtedness.
The holder of this Note by its acceptance thereof agrees that it shall
have no right to offset the obligations of the Company under this Note against
any obligation of such holder owing to the Company and the Company agrees that
it shall have no right to offset any obligation of the holder of this Note to
the Company against the obligations of the Company under this Note.
The obligations of the Company under this Note are secured by a lien on
all or substantially all of the assets of the Company, which lien is, and shall
at all times be, junior and subordinate to the lien securing the Senior
Indebtedness described in paragraph (i) of the definition thereof as set forth
above. The holder of this Note recognizes and agrees that its rights to enforce
such lien are significantly limited in favor of the rights of the holders of
such Senior Indebtedness to enforce their senior lien on such assets.
The Company promises to pay reasonable attorneys' fees and court costs
of the holder hereof in enforcing payment of this Note; provided, however, that
such costs shall be subordinated in right of payment to the prior payment in
full of Senior Indebtedness on the terms hereinabove set forth.
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This Note shall be construed in accordance with and governed by the
laws of the State of Colorado.
PF ACQUISITION II, INC.
By_______________________
Its_______________________
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CoBANK, ACB
SUBORDINATE SECURITY AGREEMENT
THIS SECURITY AGREEMENT IS EXECUTED AND DELIVERED BY PF ACQUISITION II,
INC., A NEW YORK CORPORATION, (THE "DEBTOR"), HAVING ITS PLACE OF BUSINESS (OR
CHIEF EXECUTIVE OFFICE IF MORE THAN ONE PLACE OF BUSINESS) LOCATED AT 90 LINDEN
PLACE, ROCHESTER, NEW YORK 14625, AND WHOSE TAXPAYER IDENTIFICATION NUMBER IS
161562258, TO COBANK, ACB, IN ITS CAPACITY AS ADMINISTRATIVE AGENT PURSUANT TO
THE PROVISIONS OF THAT CERTAIN CREDIT AGREEMENT DATED FEBRUARY 22, 1999 (THE
"SECURED PARTY"), WHOSE MAILING ADDRESS IS 5500 SOUTH QUEBEC STREET, ENGLEWOOD,
CO 80111.
SECTION 1. GRANT OF SECURITY INTEREST. FOR VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE DEBTOR HEREBY
GRANTS TO THE SECURED PARTY A SECURITY INTEREST IN ALL OF THE FOLLOWING
PROPERTY, WHEREVER LOCATED AND WHETHER NOW EXISTING OR HEREAFTER ACQUIRED,
TOGETHER WITH ALL ACCESSIONS AND ADDITIONS THERETO, AND ALL PRODUCTS AND
PROCEEDS THEREOF:
ACCOUNTS; INVENTORY (INCLUDING, WITHOUT LIMITATION, RETURNED OR
REPOSSESSED GOODS); CHATTEL PAPER; INSTRUMENTS, INVESTMENT PROPERTY
(INCLUDING, WITHOUT LIMITATION, CERTIFICATED AND UNCERTIFICATED
SECURITIES, SECURITY ENTITLEMENTS, SECURITIES ACCOUNTS, COMMODITY
CONTRACTS, MARGIN ACCOUNTS, AND COMMODITY ACCOUNTS), DOCUMENTS;
EQUIPMENT; FIXTURES; GENERAL INTANGIBLES (INCLUDING, WITHOUT
LIMITATION, CHOSES OR THINGS IN ACTION, LITIGATION RIGHTS AND RESULTING
JUDGMENTS, GOODWILL, PATENTS, TRADEMARKS AND OTHER INTELLECTUAL
PROPERTY, TAX REFUNDS, MISCELLANEOUS RIGHTS TO PAYMENT, ENTITLEMENTS
AND INVESTMENTS, EQUITIES AND PATRONAGE RIGHTS IN ALL COOPERATIVES,
MARGIN ACCOUNTS, COMPUTER PROGRAMS, INVOICES, BOOKS, RECORDS, AND OTHER
INFORMATION RELATING TO OR ARISING OUT OF THE DEBTOR'S BUSINESS); AND,
TO THE EXTENT NOT COVERED BY THE ABOVE, ALL OTHER PERSONAL PROPERTY OF
THE DEBTOR OF EVERY TYPE AND DESCRIPTION, INCLUDING, WITHOUT
LIMITATION, INTERESTS OR CLAIMS IN OR UNDER ANY POLICY OF INSURANCE,
TORT CLAIMS, DEPOSIT ACCOUNTS, MONEY, AND JUDGMENTS (THE "COLLATERAL").
WHERE APPLICABLE, ALL TERMS USED HEREIN SHALL HAVE THE SAME MEANING AS SET FORTH
IN THE UNIFORM COMMERCIAL CODE (THE "UCC").
SECTION 2. THE OBLIGATIONS. THE SECURITY INTEREST GRANTED
HEREUNDER SHALL SECURE THE PAYMENT OF ALL PRESENT AND FUTURE OBLIGATIONS OF
EVERY KIND OR NATURE OF DEBTOR AT ANY TIME AND FROM TIME TO TIME OWED TO SECURED
PARTY, UNDER ANY ONE OR MORE OF THE LOAN DOCUMENTS (AS DEFINED BELOW), WHETHER
DUE OR TO BECOME DUE, MATURED OR UNMATURED, LIQUIDATED OR UNLIQUIDATED, OR
CONTINGENT OR NONCONTINGENT, INCLUDING OBLIGATIONS OF PERFORMANCE AS WELL AS
OBLIGATIONS OF PAYMENT, AND INCLUDING INTEREST THAT ACCRUES AFTER THE
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<PAGE>
COMMENCEMENT OF ANY PROCEEDING UNDER ANY DEBTOR RELIEF LAW BY OR AGAINST DEBTOR
(THE "OBLIGATIONS"). FOR PURPOSES OF THIS SECURITY AGREEMENT, "LOAN DOCUMENTS"
SHALL MEAN (I) THAT CERTAIN SUBORDINATED NOTE AGREEMENT DATED AS OF FEBRUARY 22,
1999 AMONG DEBTOR, THE LENDERS THEREIN NAMED, AND COBANK, ACB, AS ADMINISTRATIVE
AGENT (AS THE SAME MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME,
THE "LOAN AGREEMENT"), AND (II) ALL INSTRUMENTS AND DOCUMENTS CONTEMPLATED BY
THE LOAN AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE NOTES (AS DEFINED IN THE
LOAN AGREEMENT), THIS SECURITY AGREEMENT AND THE JUNIOR MORTGAGES (AS DEFINED IN
THE LOAN AGREEMENT), AND ANY SUPPLEMENT THERETO AND THE NOTES. FOR PURPOSES OF
THIS SECURITY AGREEMENT, "SECURED PARTY" SHALL MEAN COBANK, ACB, AS
ADMINISTRATIVE AGENT UNDER THE LOAN AGREEMENT ("THE ADMINISTRATIVE AGENT"), AND
THE LENDERS UNDER THE LOAN AGREEMENT, AND EACH OF THEM, AND ANY ONE OR MORE OF
THEM.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS. THE DEBTOR
REPRESENTS, WARRANTS AND COVENANTS AS FOLLOWS:
A. TITLE TO COLLATERAL. EXCEPT AS PERMITTED BY ANY OTHER
WRITTEN AGREEMENT BETWEEN THE PARTIES, AND EXCEPT FOR ANY SECURITY INTEREST IN
FAVOR OF THE SECURED PARTY, OR OTHERWISE PERMITTED PURSUANT TO THE LOAN
AGREEMENT, THE DEBTOR HAS CLEAR TITLE TO ALL COLLATERAL FREE OF ALL ADVERSE
CLAIMS, INTERESTS, LIENS, OR ENCUMBRANCES. WITHOUT THE PRIOR WRITTEN CONSENT OF
THE SECURED PARTY, THE DEBTOR SHALL NOT CREATE OR PERMIT THE EXISTENCE OF ANY
ADVERSE CLAIMS, INTERESTS, LIENS, OR OTHER ENCUMBRANCES AGAINST ANY OF THE
COLLATERAL. THE DEBTOR SHALL PROVIDE PROMPT WRITTEN NOTICE TO THE SECURED PARTY
OF ANY FUTURE ADVERSE CLAIMS, INTERESTS, LIENS, OR ENCUMBRANCES AGAINST ALL
COLLATERAL, AND SHALL DEFEND DILIGENTLY THE DEBTOR'S AND THE SECURED PARTY'S
INTERESTS IN ALL COLLATERAL.
B. VALIDITY OF SECURITY AGREEMENT; CORPORATE AUTHORITY. THIS
SECURITY AGREEMENT IS THE VALID AND BINDING OBLIGATION OF THE DEBTOR,
ENFORCEABLE IN ACCORDANCE WITH ITS TERMS. THE DEBTOR HAS THE CORPORATE POWER TO
EXECUTE, DELIVER AND CARRY OUT THE TERMS AND PROVISIONS OF THIS SECURITY
AGREEMENT AND ALL RELATED DOCUMENTS, AND HAS TAKEN ALL NECESSARY CORPORATE
ACTION TO AUTHORIZE THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS SECURITY
AGREEMENT AND ALL RELATED DOCUMENTS.
C. LOCATION OF THE DEBTOR. THE DEBTOR'S PLACE OF BUSINESS (OR
CHIEF EXECUTIVE OFFICE IF MORE THAN ONE PLACE OF BUSINESS) IS LOCATED AT THE
ADDRESS SHOWN ABOVE.
D. LOCATION OF COLLATERAL. ALL EQUIPMENT ARE NOW AT THE
LOCATION OR LOCATIONS SPECIFIED ON SCHEDULE A ATTACHED HERETO AND MADE A PART
HEREOF. ALL FARM PRODUCTS AND FIXTURES ARE NOW AT THE LOCATION OR LOCATIONS
SPECIFIED ON SCHEDULE A ATTACHED HERETO AND MADE A PART HEREOF.
E. NAME, IDENTITY, AND CORPORATE STRUCTURE. EXCEPT AS
OTHERWISE DISCLOSED TO THE SECURED PARTY IN WRITING, THE DEBTOR HAS NOT WITHIN
THE PAST TEN YEARS CHANGED ITS NAME,
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<PAGE>
IDENTITY OR CORPORATE STRUCTURE THROUGH INCORPORATION, MERGER, CONSOLIDATION,
JOINT VENTURE OR OTHERWISE.
F. CHANGE IN NAME, LOCATION OF COLLATERAL, ETC. WITHOUT GIVING
AT LEAST THIRTY DAYS' PRIOR WRITTEN NOTICE TO THE SECURED PARTY, THE DEBTOR
SHALL NOT CHANGE ITS NAME, IDENTITY OR CORPORATE STRUCTURE, THE LOCATION OF ITS
PLACE OF BUSINESS (OR CHIEF EXECUTIVE OFFICE IF MORE THAN ONE PLACE OF
BUSINESS), OR THE LOCATION OF THE COLLATERAL.
G. FURTHER ASSURANCES. UPON THE REQUEST OF THE SECURED PARTY,
THE DEBTOR SHALL DO ALL ACTS AND THINGS AS THE SECURED PARTY MAY FROM TIME TO
TIME DEEM NECESSARY OR ADVISABLE TO ENABLE IT TO PERFECT, MAINTAIN, AND CONTINUE
THE PERFECTION AND PRIORITY OF THE SECURITY INTEREST OF THE SECURED PARTY IN THE
COLLATERAL, OR TO FACILITATE THE EXERCISE BY THE SECURED PARTY OF ANY RIGHTS OR
REMEDIES GRANTED TO THE SECURED PARTY HEREUNDER OR PROVIDED BY LAW. WITHOUT
LIMITING THE FOREGOING, THE DEBTOR AGREES TO EXECUTE, IN FORM AND SUBSTANCE
SATISFACTORY TO THE SECURED PARTY, SUCH FINANCING STATEMENTS, AMENDMENTS
THERETO, SUPPLEMENTAL AGREEMENTS, ASSIGNMENTS, NOTICES OF ASSIGNMENTS, AND OTHER
INSTRUMENTS AND DOCUMENTS AS THE SECURED PARTY MAY FROM TIME TO TIME REQUEST. IN
ADDITION, IN THE EVENT THE COLLATERAL OR ANY PART THEREOF CONSISTS OF
INSTRUMENTS, DOCUMENTS, CHATTEL PAPER, OR MONEY (WHETHER OR NOT PROCEEDS OF THE
COLLATERAL), THE DEBTOR SHALL, UPON THE REQUEST OF THE SECURED PARTY, DELIVER
POSSESSION THEREOF TO THE SECURED PARTY (OR TO AN AGENT OF THE SECURED PARTY
RETAINED FOR THAT PURPOSE), TOGETHER WITH ANY APPROPRIATE ENDORSEMENTS AND/OR
ASSIGNMENTS. THE SECURED PARTY SHALL USE REASONABLE CARE IN THE CUSTODY AND
PRESERVATION OF SUCH COLLATERAL IN ITS POSSESSION, BUT SHALL NOT BE REQUIRED TO
TAKE ANY STEPS NECESSARY TO PRESERVE RIGHTS AGAINST PRIOR PARTIES. ALL COSTS AND
EXPENSES INCURRED BY THE SECURED PARTY TO ESTABLISH, PERFECT, MAINTAIN,
DETERMINE THE PRIORITY OF, OR RELEASE THE SECURITY INTEREST GRANTED HEREUNDER
(INCLUDING THE COST OF ALL FILINGS, RECORDINGS, AND TAXES THEREON AND THE FEES
AND EXPENSES OF ANY AGENT RETAINED BY SECURED PARTY) SHALL BECOME PART OF THE
OBLIGATIONS SECURED HEREBY AND BE PAID BY THE DEBTOR ON DEMAND.
H. INSURANCE. THE DEBTOR SHALL MAINTAIN SUCH PROPERTY AND
CASUALTY INSURANCE WITH SUCH INSURANCE COMPANIES, IN SUCH AMOUNTS, AND COVERING
SUCH RISKS, AS ARE AT ALL TIMES SATISFACTORY TO THE SECURED PARTY. ALL SUCH
POLICIES SHALL PROVIDE FOR LOSS PAYABLE CLAUSES OR ENDORSEMENTS IN FORM AND
CONTENT ACCEPTABLE TO THE SECURED PARTY. UPON THE REQUEST OF THE SECURED PARTY,
ALL POLICIES (OR SUCH OTHER PROOF OF COMPLIANCE WITH THIS SECTION AS MAY BE
SATISFACTORY TO THE SECURED PARTY) SHALL BE DELIVERED TO THE SECURED PARTY. THE
DEBTOR SHALL PAY ALL INSURANCE PREMIUMS WHEN DUE. IN THE EVENT OF LOSS, DAMAGE,
OR INJURY TO ANY INSURED COLLATERAL, THE SECURED PARTY SHALL HAVE FULL POWER TO
COLLECT ANY AND ALL INSURANCE PROCEEDS DUE UNDER ANY OF SUCH POLICIES, AND MAY,
AT ITS OPTION, APPLY SUCH PROCEEDS TO THE PAYMENT OF ANY OF THE OBLIGATIONS
SECURED HEREBY, OR MAY APPLY SUCH PROCEEDS TO THE REPAIR OR REPLACEMENT OF SUCH
COLLATERAL.
I. TAXES, LEVIES, ETC. THE DEBTOR HAS PAID AND SHALL CONTINUE
TO PAY WHEN
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DUE ALL TAXES, LEVIES, ASSESSMENTS, OR OTHER CHARGES WHICH MAY BECOME AN
ENFORCEABLE LIEN AGAINST THE COLLATERAL.
J. DISPOSITION AND USE OF COLLATERAL BY THE DEBTOR. WITHOUT
THE PRIOR WRITTEN CONSENT OF THE SECURED PARTY AND PROVIDED THE DEBTOR IS NOT IN
DEFAULT HEREUNDER, THE DEBTOR SHALL NOT AT ANY TIME SELL, TRANSFER, LEASE,
ABANDON, OR OTHERWISE DISPOSE OF ANY COLLATERAL EXCEPT IN THE ORDINARY COURSE OF
ITS BUSINESS. THE DEBTOR SHALL NOT USE ANY OF THE COLLATERAL IN ANY MANNER WHICH
VIOLATES ANY STATUTE, REGULATION, ORDINANCE, RULE, DECREE, ORDER, OR INSURANCE
POLICY.
K. RECEIVABLES. THE DEBTOR SHALL PRESERVE, ENFORCE, AND
COLLECT ALL ACCOUNTS, CHATTEL PAPER, INSTRUMENTS, DOCUMENTS AND GENERAL
INTANGIBLES, WHETHER NOW OWNED OR HEREAFTER ACQUIRED OR ARISING (THE
"RECEIVABLES"), IN A DILIGENT FASHION AND, UPON THE REQUEST OF THE SECURED
PARTY, THE DEBTOR SHALL EXECUTE AN AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY
TO THE SECURED PARTY BY WHICH THE DEBTOR SHALL DIRECT ALL ACCOUNT DEBTORS AND
OBLIGORS ON INSTRUMENTS TO MAKE PAYMENT TO A LOCK BOX DEPOSIT ACCOUNT UNDER THE
EXCLUSIVE CONTROL OF THE SECURED PARTY.
L. CONDITION OF COLLATERAL. ALL TANGIBLE COLLATERAL IS NOW IN
GOOD REPAIR AND CONDITION AND THE DEBTOR SHALL AT ALL TIMES HEREAFTER, AT ITS
OWN EXPENSE, MAINTAIN ALL SUCH COLLATERAL IN GOOD REPAIR AND CONDITION.
M. CONDITION OF BOOKS AND RECORDS. THE DEBTOR HAS MAINTAINED
AND SHALL MAINTAIN COMPLETE, ACCURATE AND UP-TO-DATE BOOKS, RECORDS, ACCOUNTS,
AND OTHER INFORMATION RELATING TO ALL COLLATERAL IN SUCH FORM AND IN SUCH DETAIL
AS MAY BE SATISFACTORY TO THE SECURED PARTY, AND SHALL ALLOW THE SECURED PARTY
OR ITS REPRESENTATIVES AT ANY REASONABLE TIME TO EXAMINE AND COPY SUCH BOOKS,
RECORDS, ACCOUNTS, AND OTHER INFORMATION.
N. RIGHT OF INSPECTION. AT ALL REASONABLE TIMES UPON THE
REQUEST OF THE SECURED PARTY, THE DEBTOR SHALL ALLOW THE SECURED PARTY OR ITS
REPRESENTATIVES TO VISIT ANY OF THE DEBTOR'S PROPERTIES OR LOCATIONS SO THAT THE
SECURED PARTY OR ITS REPRESENTATIVES MAY CONFIRM, INSPECT AND APPRAISE ANY OF
THE COLLATERAL.
SECTION 4. DEFAULT. THE BREACH OF ANY OF THE OBLIGATIONS SECURED
HEREBY, AND/OR THE BREACH OF ANY REPRESENTATION, WARRANTY, COVENANT, OR
AGREEMENT CONTAINED IN THIS SECURITY AGREEMENT, SHALL CONSTITUTE DEFAULT
HEREUNDER.
SECTION 5. RIGHTS AND REMEDIES. UPON THE DEBTOR'S DEFAULT AND AT ANY
TIME THEREAFTER, THE SECURED PARTY MAY DECLARE ALL OBLIGATIONS TO BE IMMEDIATELY
DUE AND PAYABLE AND MAY EXERCISE ANY AND ALL RIGHTS AND REMEDIES OF THE SECURED
PARTY IN THE ENFORCEMENT OF ITS SECURITY INTEREST UNDER THE UCC, THIS SECURITY
AGREEMENT, OR ANY OTHER APPLICABLE LAW. WITHOUT LIMITING THE FOREGOING:
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A. DISPOSITION OF COLLATERAL. THE SECURED PARTY MAY SELL,
LEASE, OR OTHERWISE DISPOSE OF ALL OR ANY PART OF THE COLLATERAL, IN ITS THEN
PRESENT CONDITION OR FOLLOWING ANY COMMERCIALLY REASONABLE PREPARATION OR
PROCESSING THEREOF, WHETHER BY PUBLIC OR PRIVATE SALE OR AT ANY BROKERS' BOARD,
IN LOTS OR IN BULK, FOR CASH, ON CREDIT OR OTHERWISE, WITH OR WITHOUT
REPRESENTATIONS OR WARRANTIES, AND UPON SUCH OTHER TERMS AS MAY BE ACCEPTABLE TO
THE SECURED PARTY, AND THE SECURED PARTY MAY PURCHASE AT ANY PUBLIC SALE. AT ANY
TIME WHEN ADVANCE NOTICE OF SALE IS REQUIRED, THE DEBTOR AGREES THAT TEN DAYS'
PRIOR WRITTEN NOTICE SHALL BE REASONABLE. IN CONNECTION WITH THE FOREGOING, THE
SECURED PARTY MAY:
1. REQUIRE THE DEBTOR TO ASSEMBLE THE COLLATERAL AND
ALL RECORDS PERTAINING THERETO AND MAKE SUCH COLLATERAL AND RECORDS AVAILABLE TO
THE SECURED PARTY AT A PLACE TO BE DESIGNATED BY THE SECURED PARTY WHICH IS
REASONABLY CONVENIENT TO BOTH PARTIES;
2. ENTER THE PREMISES OF THE DEBTOR OR PREMISES UNDER
THE DEBTOR'S CONTROL AND TAKE POSSESSION OF THE COLLATERAL;
3. WITHOUT CHARGE, USE OR OCCUPY THE PREMISES OF THE
DEBTOR OR PREMISES UNDER THE DEBTOR'S CONTROL, INCLUDING WITHOUT LIMITATION,
WAREHOUSE AND OTHER STORAGE FACILITIES;
4. WITHOUT CHARGE, USE ANY PATENT, TRADEMARK,
TRADENAME, OR OTHER INTELLECTUAL PROPERTY OR TECHNICAL PROCESS USED BY THE
DEBTOR IN CONNECTION WITH ANY OF THE COLLATERAL; AND
5. RELY CONCLUSIVELY UPON THE ADVICE OR INSTRUCTIONS
OF ANY ONE OR MORE BROKERS OR OTHER EXPERTS SELECTED BY THE SECURED PARTY TO
DETERMINE THE METHOD OR MANNER OF DISPOSITION OF ANY OF THE COLLATERAL AND, IN
SUCH EVENT, ANY DISPOSITION OF THE COLLATERAL BY THE SECURED PARTY IN ACCORDANCE
WITH SUCH ADVICE OR INSTRUCTIONS SHALL BE DEEMED TO BE COMMERCIALLY REASONABLE.
B. COLLECTION OF RECEIVABLES. THE SECURED PARTY MAY, BUT SHALL
NOT BE OBLIGATED TO, TAKE ALL ACTIONS REASONABLE OR NECESSARY TO PRESERVE,
ENFORCE OR COLLECT THE RECEIVABLES, INCLUDING WITHOUT LIMITATION, THE RIGHT TO
NOTIFY ACCOUNT DEBTORS AND OBLIGORS ON INSTRUMENTS TO MAKE DIRECT PAYMENT TO THE
SECURED PARTY, TO PERMIT ANY EXTENSION, COMPROMISE, OR SETTLEMENT OF ANY OF THE
RECEIVABLES FOR LESS THAN FACE VALUE, OR TO SUE ON ANY RECEIVABLE, ALL WITHOUT
PRIOR NOTICE TO THE DEBTOR.
C. PROCEEDS. THE SECURED PARTY MAY COLLECT AND APPLY ALL
PROCEEDS OF THE COLLATERAL, AND MAY ENDORSE THE NAME OF THE DEBTOR IN FAVOR OF
THE SECURED PARTY ON ANY AND ALL CHECKS, DRAFTS, MONEY ORDERS, NOTES,
ACCEPTANCES, OR OTHER INSTRUMENTS OF THE SAME OR A DIFFERENT NATURE,
CONSTITUTING, EVIDENCING, OR RELATING TO THE COLLATERAL. THE SECURED PARTY MAY
RECEIVE AND OPEN ALL MAIL ADDRESSED TO THE DEBTOR AND REMOVE THEREFROM ANY CASH
OR NON-CASH
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ITEMS OF PAYMENT CONSTITUTING PROCEEDS OF THE COLLATERAL.
D. INSURANCE ADJUSTMENTS. THE SECURED PARTY MAY ADJUST,
SETTLE, AND CANCEL ANY AND ALL INSURANCE COVERING ANY COLLATERAL, ENDORSE THE
NAME OF THE DEBTOR ON ANY AND ALL CHECKS OR DRAFTS DRAWN BY ANY INSURER, WHETHER
REPRESENTING PAYMENT FOR A LOSS OR A RETURN OF UNEARNED PREMIUM, AND EXECUTE ANY
AND ALL PROOFS OF CLAIM AND OTHER DOCUMENTS OR INSTRUMENTS OF EVERY KIND
REQUIRED BY ANY INSURER IN CONNECTION WITH ANY PAYMENT BY SUCH INSURER.
THE NET PROCEEDS OF ANY DISPOSITION OF THE COLLATERAL MAY BE APPLIED BY THE
SECURED PARTY, AFTER DEDUCTING ITS REASONABLE EXPENSES INCURRED IN SUCH
DISPOSITION, TO THE PAYMENT IN WHOLE OR IN PART OF THE OBLIGATIONS IN SUCH ORDER
AS THE SECURED PARTY MAY ELECT. THE ENUMERATION OF THE FOREGOING RIGHTS AND
REMEDIES IS NOT INTENDED TO BE EXHAUSTIVE, AND THE EXERCISE OF ANY RIGHT AND/OR
REMEDY SHALL NOT PRECLUDE THE EXERCISE OF ANY OTHER RIGHTS OR REMEDIES, ALL OF
WHICH ARE CUMULATIVE AND NON-EXCLUSIVE.
SECTION 6. OTHER PROVISIONS.
A. AMENDMENT, MODIFICATION, AND WAIVER. WITHOUT THE PRIOR
WRITTEN CONSENT OF THE SECURED PARTY, NO AMENDMENT, MODIFICATION, OR WAIVER OF,
OR CONSENT TO ANY DEPARTURE BY THE DEBTOR FROM, ANY PROVISION HEREUNDER SHALL BE
EFFECTIVE. ANY SUCH AMENDMENT, MODIFICATION, WAIVER, OR CONSENT SHALL BE
EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH
GIVEN. NO DELAY OR FAILURE BY THE SECURED PARTY TO EXERCISE ANY REMEDY HEREUNDER
SHALL BE DEEMED A WAIVER THEREOF OR OF ANY OTHER REMEDY HEREUNDER. A WAIVER ON
ANY ONE OCCASION SHALL NOT BE CONSTRUED AS A BAR TO OR WAIVER OF ANY REMEDY ON
ANY SUBSEQUENT OCCASION.
B. COSTS AND ATTORNEY'S FEES. EXCEPT AS PROHIBITED BY LAW, IF
AT ANY TIME THE SECURED PARTY EMPLOYS COUNSEL IN CONNECTION WITH THE CREATION,
PERFECTION, PRESERVATION, OR RELEASE OF THE SECURED PARTY'S SECURITY INTEREST IN
THE COLLATERAL OR THE ENFORCEMENT OF ANY OF THE SECURED PARTY'S RIGHTS OR
REMEDIES HEREUNDER, ALL OF THE SECURED PARTY'S REASONABLE ATTORNEY'S FEES
ARISING FROM SUCH SERVICES AND ALL EXPENSES, COSTS, OR CHARGES RELATING THERETO
SHALL BECOME PART OF THE OBLIGATIONS SECURED HEREBY AND BE PAID BY THE DEBTOR ON
DEMAND.
C. NO OBLIGATION TO MAKE LOANS. NOTHING CONTAINED HEREIN OR IN
ANY FINANCING STATEMENT OR OTHER DOCUMENT EXECUTED OR FILED IN CONNECTION
HEREWITH SHALL BE CONSTRUED TO OBLIGATE THE SECURED PARTY TO MAKE ANY LOANS OR
ADVANCES TO THE DEBTOR, WHETHER PURSUANT TO A COMMITMENT OR OTHERWISE.
D. REVIVAL OF OBLIGATIONS. TO THE EXTENT THE DEBTOR OR ANY
THIRD PARTY MAKES A PAYMENT OR PAYMENTS TO THE SECURED PARTY OR THE SECURED
PARTY ENFORCES ITS SECURITY INTEREST OR EXERCISES ANY RIGHT OF SETOFF, AND SUCH
PAYMENT OR PAYMENTS OR THE PROCEEDS THEREOF
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ARE SUBSEQUENTLY INVALIDATED, DECLARED TO BE FRAUDULENT OR PREFERENTIAL, SET
ASIDE, AND/OR REQUIRED TO BE REPAID TO A TRUSTEE, RECEIVER, OR ANY OTHER PARTY
UNDER ANY BANKRUPTCY, INSOLVENCY OR OTHER LAW OR IN EQUITY, THEN, TO THE EXTENT
OF SUCH RECOVERY, THE OBLIGATIONS OR ANY PART THEREOF ORIGINALLY INTENDED TO BE
SATISFIED SHALL BE REVIVED AND CONTINUED IN FULL FORCE AND EFFECT AS IF SUCH
PAYMENT OR PAYMENTS HAD NOT BEEN MADE, OR SUCH ENFORCEMENT OR SETOFF HAD NOT
OCCURRED.
E. PERFORMANCE BY THE SECURED PARTY. IN THE EVENT THE DEBTOR
SHALL AT ANY TIME FAIL TO PAY OR PERFORM PUNCTUALLY ANY OF ITS DUTIES HEREUNDER,
THE SECURED PARTY MAY, AT ITS OPTION AND WITHOUT NOTICE TO OR DEMAND UPON THE
DEBTOR, WITHOUT OBLIGATION AND WITHOUT WAIVING OR DIMINISHING ANY OF ITS OTHER
RIGHTS OR REMEDIES HEREUNDER, FULLY PERFORM OR DISCHARGE ANY OF SUCH DUTIES. ALL
COSTS AND EXPENSES INCURRED BY THE SECURED PARTY IN CONNECTION THEREWITH,
TOGETHER WITH INTEREST THEREON AT THE DEFAULT RATE SET FORTH IN THE LOAN
AGREEMENT OR THE NOTES (AS DEFINED IN THE LOAN AGREEMENT), OR IF NO SUCH DEFAULT
RATE IS SPECIFIED, THE THEN APPLICABLE INTEREST RATE PLUS FOUR PERCENT PER
ANNUM, SHALL BECOME PART OF THE OBLIGATIONS SECURED HEREBY AND BE PAID BY THE
DEBTOR UPON DEMAND.
F. INDEMNIFICATION, ETC. THE DEBTOR HEREBY EXPRESSLY
INDEMNIFIES AND HOLDS THE SECURED PARTY HARMLESS FROM ANY AND ALL CLAIMS, CAUSES
OF ACTION, OR OTHER PROCEEDINGS, AND FROM ANY AND ALL LIABILITY, LOSS, DAMAGE,
AND EXPENSE OF EVERY NATURE, ARISING BY REASON OF THE SECURED PARTY'S
ENFORCEMENT OF ITS RIGHTS AND REMEDIES HEREUNDER, OR BY REASON OF THE DEBTOR'S
FAILURE TO COMPLY WITH ANY ENVIRONMENTAL OR OTHER LAW OR REGULATION. AS TO ANY
ACTION TAKEN BY THE SECURED PARTY HEREUNDER, THE SECURED PARTY SHALL NOT BE
LIABLE FOR ANY ERROR OF JUDGMENT OR MISTAKE OF FACT OR LAW, ABSENT GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT ON ITS PART.
G. POWER OF ATTORNEY. THE DEBTOR HEREBY APPOINTS THE SECURED
PARTY OR THE SECURED PARTY'S DESIGNEE AS ITS ATTORNEY-IN-FACT, WHICH APPOINTMENT
IS IRREVOCABLE, DURABLE, AND COUPLED WITH AN INTEREST, WITH FULL POWER OF
SUBSTITUTION, IN THE NAME OF THE DEBTOR OR IN THE NAME OF THE SECURED PARTY, TO
TAKE ANY ACTION WHICH THE DEBTOR IS OBLIGATED TO PERFORM HEREUNDER OR WHICH THE
SECURED PARTY MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS
SECURITY AGREEMENT. IN TAKING ANY ACTION IN ACCORDANCE WITH THIS SECTION, THE
SECURED PARTY SHALL NOT BE DEEMED TO BE THE AGENT OF THE DEBTOR. THE POWERS
CONFERRED UPON THE SECURED PARTY IN THIS SECTION ARE SOLELY TO PROTECT ITS
INTEREST IN THE COLLATERAL AND SHALL NOT IMPOSE ANY DUTY UPON THE SECURED PARTY
TO EXERCISE ANY SUCH POWERS.
H. CONTINUING EFFECT. THIS SECURITY AGREEMENT, THE SECURED
PARTY'S SECURITY INTEREST IN THE COLLATERAL, AND ALL OTHER DOCUMENTS OR
INSTRUMENTS CONTEMPLATED HEREBY SHALL CONTINUE IN FULL FORCE AND EFFECT UNTIL
ALL OF THE OBLIGATIONS HAVE BEEN SATISFIED IN FULL, THE LENDERS THAT ARE PARTIES
TO THE LOAN AGREEMENT HAVE NO COMMITMENT TO MAKE ANY FURTHER ADVANCES TO THE
DEBTOR, AND THE DEBTOR HAS SENT A VALID WRITTEN DEMAND TO THE SECURED PARTY FOR
TERMINATION OF THIS SECURITY AGREEMENT.
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I. BINDING EFFECT. THIS SECURITY AGREEMENT SHALL BE BINDING
UPON AND INURE TO THE BENEFIT OF THE DEBTOR AND THE SECURED PARTY AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.
J. SECURITY AGREEMENT AS FINANCING STATEMENT AND AUTHORIZATION
TO FILE WITHOUT DEBTOR'S SIGNATURE. A PHOTOGRAPHIC COPY OR OTHER REPRODUCTION OF
THIS SECURITY AGREEMENT MAY BE USED AS A FINANCING STATEMENT. IN ADDITION, THE
DEBTOR AGREES THAT ADMINISTRATIVE AGENT MAY, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, PREPARE AND FILE FINANCING STATEMENTS, AMENDMENTS THERETO, AND
CONTINUATION STATEMENTS WITHOUT THE SIGNATURE OF THE DEBTOR AND FILE ANY
FINANCING STATEMENT, AMENDMENT THERETO OR CONTINUATION STATEMENT ELECTRONICALLY.
K. GOVERNING LAW. SUBJECT TO ANY APPLICABLE FEDERAL LAW, THIS
SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF COLORADO.
L. NOTICES. ALL NOTICES, REQUESTS, DEMANDS, OR OTHER
COMMUNICATIONS REQUIRED OR PERMITTED HEREUNDER SHALL BE IN WRITING AND SHALL BE
DEEMED TO HAVE BEEN GIVEN WHEN SENT BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO THE OTHER PARTY AT THE RESPECTIVE ADDRESSES
GIVEN IN THE LOAN AGREEMENT, OR TO SUCH OTHER PERSON OR ADDRESS AS EITHER PARTY
DESIGNATES TO THE OTHER IN THE MANNER HEREIN PRESCRIBED.
M. SEVERABILITY. THE DETERMINATION THAT ANY TERM OR PROVISION
OF THIS SECURITY AGREEMENT IS UNENFORCEABLE OR INVALID SHALL NOT AFFECT THE
ENFORCEABILITY OR VALIDITY OF ANY OTHER TERM OR PROVISION HEREOF.
SECTION 7. SUBORDINATION PROVISIONS.
A. PRIORITY.
(1) NOTWITHSTANDING THE OTHER PROVISIONS OF THIS
SECURITY AGREEMENT AND THE TERMS OR PROVISIONS OF ANY AGREEMENT OR ARRANGEMENT
WHICH EITHER SECURED PARTY OR SENIOR SECURED PARTY (AS DEFINED BELOW) MAY NOW OR
HEREAFTER HAVE WITH DEBTOR OR EACH OTHER, OR ANY RULE OF LAW, AND IRRESPECTIVE
OF THE TIME, ORDER OR METHOD OF ATTACHMENT OR PERFECTION OF ANY SECURITY
INTEREST OR THE RECORDATION OR OTHER FILING IN ANY PUBLIC RECORD OF ANY
FINANCING STATEMENT, ANY SECURITY INTEREST IN THE SENIOR COLLATERAL (AS DEFINED
BELOW) GRANTED TO SENIOR SECURED PARTY BY DEBTOR, WHETHER OR NOT PERFECTED, OR
ANY OTHER RIGHT, TITLE OR INTEREST IN THE SENIOR COLLATERAL NOW OR HEREAFTER
HELD BY SENIOR SECURED PARTY, ARE AND SHALL REMAIN SENIOR TO ANY SECURITY
INTEREST THEREIN NOW OR HEREAFTER GRANTED BY DEBTOR OR OTHER PERSON TO SECURED
PARTY.
(2) FOR PURPOSES OF THIS SECURITY AGREEMENT, THE
FOLLOWING TERMS SHALL HAVE THE MEANINGS RESPECTIVELY SET FORTH AFTER EACH:
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(A) "SENIOR COLLATERAL" SHALL MEAN THE
"COLLATERAL" AS DEFINED IN THAT CERTAIN SECURITY AGREEMENT DATED AS OF FEBRUARY
22, 1999 BY DEBTOR IN FAVOR OF SENIOR SECURED PARTY CONCERNING THE SENIOR
INDEBTEDNESS.
(B) "SENIOR INDEBTEDNESS" SHALL HAVE THE
MEANING ASSIGNED TO SUCH TERM IN THE NOTES (AS DEFINED IN THE LOAN AGREEMENT).
(C) "SENIOR SECURED PARTY" MEANS COBANK,
ACB, AS THE ADMINISTRATIVE AGENT UNDER THE LOAN AGREEMENT REFERRED TO IN THE
SENIOR SECURITY AGREEMENT (THE "SENIOR LOAN AGREEMENT"), THE BANKS UNDER THE
SENIOR LOAN AGREEMENT, AND EACH OF THEM, AND ANY ONE OR MORE OF THEM.
B. ENFORCEMENT OF SECURITY INTEREST. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED IN THIS SECURITY AGREEMENT, SECURED PARTY AGREES AS
FOLLOWS:
(1) SECURED PARTY SHALL HAVE NO RIGHT TO TAKE ANY
ACTION WITH RESPECT TO THE SENIOR COLLATERAL, WHETHER BY JUDICIAL OR
NON-JUDICIAL FORECLOSURE, NOTIFICATION TO DEBTOR'S ACCOUNT DEBTORS, THE SEEKING
OF THE APPOINTMENT OF A RECEIVER FOR ANY PORTION OF DEBTOR'S ASSETS, OR
OTHERWISE, UNLESS AND UNTIL ALL SENIOR INDEBTEDNESS HAS BEEN FULLY AND
INDEFEASIBLY PAID IN CASH OR OTHERWISE SATISFIED IN FULL.
(2) ANY PROCEEDS OF THE SENIOR COLLATERAL, OR
PROCEEDS THEREOF (WHETHER OR NOT IDENTIFIABLE), RECEIVED BY SECURED PARTY SHALL
BE PAID TO SENIOR SECURED PARTY ON DEMAND.
(3) IN THE EVENT SENIOR SECURED PARTY ELECTS TO
EXERCISE ITS REMEDIES IN CONNECTION WITH THE SENIOR COLLATERAL, SENIOR SECURED
PARTY MAY APPLY THE SENIOR COLLATERAL, OR FORECLOSE UPON, SELL, DISPOSE OF,
REALIZE UPON, OR ASSERT OR ENFORCE ANY RIGHT, CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION WHATSOEVER THAT SENIOR SECURED PARTY MAY HAVE IN RESPECT OF THE SENIOR
COLLATERAL, IN ANY MANNER, AT ANY TIME AND FOR ANY CONSIDERATION DEEMED
APPROPRIATE BY SENIOR SECURED PARTY. SENIOR SECURED PARTY SHALL HAVE NO
OBLIGATION TO DISPOSE OF THE SENIOR COLLATERAL IN ANY MANNER, AT ANY TIME, OR
FOR ANY CONSIDERATION THAT ENHANCES OR PRESERVES THE VALUE THEREOF FOR SECURED
PARTY. SECURED PARTY WAIVES ANY CLAIM OR CAUSE OF ACTION AGAINST SENIOR SECURED
PARTY WITH RESPECT TO ANY APPLICATION OF, FORECLOSURE UPON, SALE OR DISPOSITION
OF THE SENIOR COLLATERAL.
(4) IF SECURED PARTY OBTAINS ANY PAYMENT OR OTHER
ASSETS IN VIOLATION OF THIS SECURITY AGREEMENT, SECURED PARTY AGREES THAT IT
SHALL HOLD ALL SUCH PAYMENTS AND OTHER ASSETS IN TRUST FOR SENIOR SECURED PARTY,
AND SHALL IMMEDIATELY PAY, DELIVER AND ASSIGN TO SENIOR SECURED PARTY ANY SUCH
PAYMENTS AND ASSETS FOR APPLICATION TO THE SENIOR INDEBTEDNESS IN SUCH ORDER AND
MANNER AS SENIOR SECURED PARTY SHALL DETERMINE.
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SECTION 8. CERTAIN DELIVERIES. NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS SECURITY AGREEMENT, DEBTOR'S DELIVERY TO SENIOR SECURED PARTY OF ANY
ITEM REQUIRED TO BE DELIVERED TO SECURED PARTY HEREUNDER SHALL SATISFY THE
DELIVERY REQUIREMENT OF THIS SECURITY AGREEMENT, AND SUCH ITEMS SHALL BE DEEMED
TO BE HELD BY SENIOR SECURED PARTY FOR THE BENEFIT OF SECURED PARTY, PROVIDED,
HOWEVER, THAT THE PROVISIONS OF THIS SECTION 8 SHALL NOT APPLY IN THE EVENT THAT
COBANK, ACB CEASES TO BE THE SOLE LENDER TO DEBTOR UNDER EITHER THE LOAN
AGREEMENT OR THE SENIOR LOAN AGREEMENT, IN WHICH CASE THE LENDERS TO DEBTOR
UNDER THE LOAN AGREEMENT AND THE SENIOR LOAN AGREEMENT SHALL ENTER INTO AN
INTERCREDITOR AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO SUCH LENDERS
CONCERNING, INTER ALIA, THE MATTERS SET FORTH IN THIS SECTION 8.
IN WITNESS WHEREOF, THE DEBTOR HAS EXECUTED THIS SECURITY AGREEMENT BY ITS DULY
AUTHORIZED OFFICER AS OF THE DAY AND YEAR SHOWN BELOW.
DEBTOR:
PF ACQUISITION II, INC.
DATE: FEBRUARY 22, 1999 BY: ___________________________
TITLE: ________________________
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SCHEDULE A
TO SECURITY AGREEMENT DATED FEBRUARY 22, 1999
EXECUTED BY PF ACQUISITION II, INC.
SET FORTH BELOW ARE THE PRESENT LOCATIONS (BY LEGAL DESCRIPTION) OF THE DEBTOR'S
EQUIPMENT, FARM PRODUCTS, AND FIXTURES.
MARION COUNTY, OREGON
SITE 4, PARCEL 1:
PARCEL 2 OF PARTITION PLAT 96-98, FILED FOR RECORD ON NOVEMBER 8, 1996 IN REEL
1353, PAGE 36, MICROFILM RECORDS, MARION COUNTY, OREGON.
SITE 6, PARCEL 1
BEGINNING AT THE NORTHWEST CORNER OF THAT CERTAIN TRACT OF LAND DEEDED TO DAVID
CLARK BY GEORGE TAYLOR AND WIFE, WHICH DEED WAS RECORDED JULY 19, 1910 ON PAGE
583, BOOK 114 OF DEED RECORDS OF MARION COUNTY, OREGON; THENCE SOUTH 32[d]15'
WEST 22 FEET; THENCE SOUTH 59[d]47' EAST 338.76 FEET, MORE OR LESS, TO THE EAST
BOUNDARY OF LOT 3 OF THE NORTH 1/2 OF THE DONATION LAND CLAIM OF B. S. BONNEY
AND WIFE; THENCE NORTH 32[d]15' EAST ALONG SAID LINE 22 FEET TO THE SOUTH
BOUNDARY LINE OF THE WOODBURN-NATRON BRANCH OF THE SOUTHERN PACIFIC RAILROAD;
THENCE NORTH 60[d]45' WEST 339 FEET TO THE PLACE OF BEGINNING, AND BEING A PART
OF LOT 3, OF THE NORTH 1/2 OF THE DONATION LAND CLAIM OF B. S. BONNEY AND WIFE
IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY,
OREGON.
SAVE AND EXCEPT, THE LAND CONVEYED TO THE STATE OF OREGON BY RAY-BROWN COMPANY,
INC., BY DEED RECORDED IN VOLUME 216, PAGE 177, DEED RECORDS OF MARION COUNTY,
OREGON.
SAVE AND EXCEPT, THAT PARCEL OF LAND SITUATE IN THE B. S. BONNEY DONATION LAND
CLAIM IN SECTION 17, TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN,
MARION COUNTY, OREGON, WHICH IS MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT AN IRON PIPE ON THE SOUTHWESTERLY RIGHT-OF-WAY LINE OF THE SOUTHERN
PACIFIC RAILROAD, FROM WHENCE THE SOUTHWEST CORNER OF LOT 4, OF THE SUBDIVISION
OF THE NORTH 1/2 OF THE B. S. BONNEY DONATION LAND CLAIM, BEARS SOUTH
32[d]30' WEST 221.90 FEET AND SOUTH 60[d]45' EAST 96.90 FEET AND SOUTH
32[d]28' WEST 308.50 FEET AND SOUTH 59[d]26' EAST 35.76 FEET AND SOUTH
32[d]15' WEST 434.1 FEET AND RUNNING THENCE NORTH 60[d]45' WEST 168.00
FEET ALONG THE SOUTHWESTERLY RIGHT- OF-WAY LINE OF THE SOUTHERN PACIFIC RAILROAD
TO A 3/4" IRON PIPE; THENCE SOUTH 32[d]30' WEST 22.00 FEET TO A 3/4" IRON
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PIPE ON THE SOUTHWESTERLY RIGHT-OF-WAY LINE OF PACIFIC HIGHWAY U.S.
99E; THENCE SOUTH 60[d]45' EAST 168.00 FEET, PARALLEL TO SAID RAILROAD
RIGHT-OF-WAY; THENCE NORTH 32[d]30' EAST 22 FEET TO THE POINT OF BEGINNING.
SITE 6, PARCEL 2
BEGINNING AT AN IRON PIN IN THE SOUTH LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY 13.22 CHAINS SOUTH 86[d]45' WEST AND 14.12 CHAINS SOUTH
32[d]6' WEST FROM THE MOST EASTERLY NORTHEAST CORNER OF THE B. S. BONNEY
DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN
IN MARION COUNTY, OREGON; THENCE SOUTH 32[d]6" WEST, 6.74 CHAINS TO A STONE
IN THE SOUTHEAST CORNER OF LOT 4 OF THE B. S. BONNEY SUBDIVISION; THENCE SOUTH
89[d]47' WEST ALONG THE LINE DIVIDING SAID CLAIM IN NORTH AND SOUTH HALVES,
14.44 CHAINS TO AN IRON BOLT; THENCE NORTH 31[d]57' EAST, 13.82 CHAINS TO
AN IRON BOLT IN THE SOUTH LINE OF SAID RIGHT-OF-WAY OF THE SOUTHERN PACIFIC
RAILROAD COMPANY; THENCE SOUTH 60[d]58' EAST ALONG SAID RIGHT-OF-WAY, 12.26
CHAINS TO THE POINT OF BEGINNING, AND SITUATED IN THE NORTH 1/2 OF THE B. S.
BONNEY DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN IN MARION COUNTY, OREGON.
SITE 6, PARCEL 3
BEGINNING ON THE DIVISION LINE, DIVIDING THE B. S. BONNEY DONATION LAND CLAIM
INTO NORTH AND SOUTH HALVES, AT A POINT WHICH IS 13.20 CHAINS SOUTH 86[d]45'
WEST AND 20.92 CHAINS SOUTH 32[d]15' WEST OF THE MOST EASTERLY NORTHEAST CORNER
OF THE SAID B. S. BONNEY DONATION LAND CLAIM AND RUNNING THENCE NORTH 32[d]15'
EAST 435 FEET TO THE SOUTH LINE OF THE WOODBURN-SILVERTON BRANCH OF THE SOUTHERN
PACIFIC RAILROAD RIGHT-OF-WAY; THENCE SOUTH 60[d]45' EAST ALONG THE SOUTH LINE
OF SAID RIGHT-OF-WAY 735.5 FEET TO ITS INTERSECTION WITH SAID DIVISION LINE;
THENCE WEST ALONG SAID DIVISION LINE 920 FEET TO THE PLACE OF BEGINNING, AND
BEING A PART OF LOT 5 OF THE NORTH 1/2 OF SAID DONATION LAND CLAIM, IN TOWNSHIP
5 SOUTH, RANGE 1 WEST OF WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON.
SITE 6, PARCEL 4
BEGINNING AT A POINT ON THE SOUTH BOUNDARY LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF- WAY WHICH IS 531.2 FEET NORTH 32[d]15' EAST OF THE SOUTHEAST
CORNER OF A 4.103 ACRE TRACT OF LAND FORMERLY OWNED BY N. F. STRAIN, SAID TRACT
BEING A PART OF LOT 3 OF THE NORTH 1/2 OF THE DONATION LAND CLAIM OF B. S.
BONNEY AND WIFE IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN
MARION COUNTY, OREGON; THENCE SOUTH 32[d]15' WEST 22 FEET; THENCE SOUTH
60[d]58' EAST PARALLEL WITH SAID RIGHT-OF-WAY 1.424 CHAINS; THENCE NORTH
32[d]15' EAST 22 FEET TO THE SOUTH BOUNDARY LINE OF SAID RIGHT-OF-WAY;
THENCE NORTH 60[d]58' WEST ALONG SAID SOUTH BOUNDARY LINE 1.424 CHAINS TO
THE PLACE OF BEGINNING, AND BEING SITUATED IN DONATION LAND CLAIM OF B. S.
BONNEY AND WIFE IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN
MARION COUNTY, OREGON.
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SITE 6, PARCEL 5
BEGINNING AT A POINT WHICH IS NORTH 19[d]45' EAST 13.645 CHAINS AND SOUTH
87[d]22' EAST 32.284 CHAINS AND NORTH 19[d]23' EAST 44.62 CHAINS FROM
THE SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND CLAIM IN TOWNSHIP 5
SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, AND RUNNING THENCE SOUTH
59[d]55' EAST ALONG THE SOUTH BOUNDARY LINE OF THE SOUTHERN PACIFIC
RAILROAD RIGHT-OF-WAY 1.28 CHAINS; THENCE SOUTH 19[d]23' WEST 3.54 CHAINS;
THENCE NORTH 59[d]55' WEST 1.28 CHAINS; THENCE NORTH 19[d]23' EAST
3.54 CHAINS TO THE PLACE OF BEGINNING, BEING SITUATED IN MARION COUNTY, OREGON.
SITE 6, PARCEL 6
BEGINNING AT A POINT WHICH IS REACHED BY BEGINNING AT THE SOUTHWEST CORNER OF
THE THOMAS FITZGERALD DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF
THE WILLAMETTE MERIDIAN, IN MARION COUNTY, OREGON, AND RUNNING THENCE NORTH
19[d]45' EAST 13.645 CHAINS; THENCE SOUTH 87[d]22' EAST 22.40 CHAINS;
THENCE NORTH 19[d]45' EAST 45.80 CHAINS TO THE NORTHWEST CORNER OF THAT
CERTAIN TRACT DEEDED TO RUDOLPH ZAK, EDWARD ZAK AND ANNA ZAK, HIS WIFE, BY DEED
RECORDED AT PAGE 526, BOOK 162, RECORDS OF DEEDS FOR MARION COUNTY, OREGON;
RUNNING THENCE ALONG THE WEST LINE OF ADDITIONAL LAND OF SAID ZAK BROTHERS, SAID
LAND BEING DESCRIBED IN DEED RECORDED AT PAGE 527, BOOK 162, RECORDS OF DEEDS
FOR MARION COUNTY, OREGON, NORTHEASTERLY 184.7 FEET TO A POINT ON THE SOUTH LINE
OF THE SOUTHERN PACIFIC RAILROAD RIGHT-OF-WAY AND BEING THE BEGINNING POINT OF
THE HEREIN DESCRIBED TRACT; RUNNING THENCE ALONG SAID RAILROAD RIGHT-OF-WAY
BOUNDARY SOUTH 60[d]26' EAST 551.2 FEET, MORE OR LESS, TO THE NORTHEAST
CORNER OF THE ABOVE DESCRIBED ZAK LAND; THENCE ALONG THE EAST LINE OF SAID ZAK
LAND SOUTH 19[d]23' WEST 130.0 FEET; THENCE PARALLEL WITH THE SAID RAILROAD
NORTH 60[d]26' WEST 130.0 FEET; THENCE NORTH 19[d]23' EAST 119.9 FEET;
THENCE ON A LINE PARALLEL TO AND 10 FEET FROM SAID RAILROAD RIGHT-OF-WAY
BOUNDARY NORTH 60[d]26' WEST 421.2 FEET, MORE OR LESS, TO A POINT IN THE
WEST LINE OF SAID ADDITIONAL LAND OF ZAK BROTHERS, 10 FEET SOUTHWEST OF POINT OF
BEGINNING; THENCE NORTHEAST ALONG SAID WEST LINE OF ZAK BROTHERS ADDITIONAL
PROPERTY, 10 FEET TO POINT OF BEGINNING. SAVE AND EXCEPT, THE WESTERLY 25 FEET
FOR A ROADWAY.
SITE 6, PARCEL 7
BEGINNING AT AN IRON PIPE WHICH MARKS THE POINT OF BEGINNING OF A TRACT OF LAND
CONVEYED TO IRENE MCMAHAN, BY DEED RECORDED IN VOLUME 490, PAGE 3, DEED RECORDS
OF MARION COUNTY, OREGON, WHICH POINT IS 434.1 FEET NORTH 32[d]15' EAST
FROM THE SOUTHWEST CORNER OF LOT 4 OF THE SUBDIVISION OF THE NORTH 1/2 OF THE B.
S. BONNEY DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE
WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON; AND RUNNING THENCE NORTH
59[d]26' WEST A DISTANCE OF 35.76 FEET ALONG THE SOUTH LINE OF SAID MCMAHAN
TRACT TO AN IRON PIPE AT THE SOUTHWEST CORNER THEREOF; THENCE NORTH
32[d]28' EAST A DISTANCE OF 308.50 FEET ALONG THE WEST LINE OF SAID TRACT
AND EXTENDED TO AN IRON PIPE; THENCE NORTH 60[d]45' WEST A DISTANCE OF
74.90 FEET TO AN IRON PIPE AT AN ANGLE POINT ON THE WEST LINE OF SAID TRACT;
THENCE
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NORTH 32[d]30' EAST A DISTANCE OF 199.90 FEET ALONG THE SAID WEST LINE TO THE
IRON PIPE AT THE NORTHWEST CORNER OF SAID TRACT; THENCE SOUTH 60[d]45' EAST A
DISTANCE OF 202.98 FEET ALONG THE NORTH LINE OF SAID TRACT TO THE NORTHEAST
CORNER THEREOF; THENCE SOUTH 32[d]15' WEST A DISTANCE OF 508.60 FEET ALONG THE
WEST LINE OF SAID TRACT TO AN IRON PIPE; THENCE NORTH 60[d]58' WEST A DISTANCE
OF 94.3 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.
SITE 6, PARCEL 8
BEGINNING ON THE EAST BOUNDARY OF THE B. S. BONNEY DONATION LAND CLAIM IN
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY,
OREGON, AT A POINT WHICH IS 25.95 CHAINS NORTH 19[d]40' EAST FROM THE
SOUTHEAST CORNER THEREOF; THENCE WEST 2,641.16 FEET TO THE EASTERLY LINE OF THE
PACIFIC HIGHWAY AS SAME IS LOCATED IN THE SAID TOWNSHIP AND RANGE; THENCE NORTH
32[d]31' EAST ALONG THE EASTERLY LINE OF THE SAID PACIFIC HIGHWAY, 186.78
FEET TO THE LINE DIVIDING THE SAID BONNEY DONATION LAND CLAIM INTO NORTH AND
SOUTH HALVES; THENCE NORTH 89[d]52' EAST ALONG THE LINE DIVIDING THE SAID
CLAIM INTO NORTH AND SOUTH HALVES A DISTANCE OF 2,598.02 FEET TO THE EASTERLY
LINE OF SAID BONNEY DONATION LAND CLAIM; THENCE SOUTH 19[d]20' WEST ALONG
THE EASTERLY LINE OF THE SAID CLAIM 172.42 FEET TO THE PLACE OF BEGINNING.
SAVE AND EXCEPT, A STRIP OF LAND 60.00 FEET WIDE CONVEYED TO OREGONIAN RAILROAD
COMPANY LIMITED BY DEED RECORDED IN VOLUME 26, PAGE 81, OF DEED RECORDS, MARION
COUNTY, OREGON.
SAVE AND EXCEPT, THAT PARCEL OF LAND SITUATE IN SECTION 17, TOWNSHIP 5 SOUTH,
RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY, OREGON, WHICH IS MORE
PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THAT
TRACT OF LAND CONVEYED TO TERMINAL ICE AND COLD STORAGE COMPANY BY DEED RECORDED
IN VOLUME 593, PAGE 395, MARION COUNTY RECORD OF DEEDS, SAID SOUTHEAST CORNER
BEING RECORDED AS BEARING SOUTH 19[d]22' WEST 1,283.53 FEET FROM THE MOST
EASTERLY NORTHEAST CORNER OF THE BRADFORD S. BONNEY DONATION LAND CLAIM NO. 47,
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON; AND RUNNING THENCE FROM THE TRUE POINT OF BEGINNING; SOUTH 19[d]22'
WEST 70 FEET, MORE OR LESS, ALONG THE SOUTHWESTERLY EXTENSION OF THE
SOUTHEASTERLY BOUNDARY LINE OF SAID TERMINAL ICE AND COLD STORAGE COMPANY TRACT
TO THE NORTHWESTERLY RIGHT-OF-WAY LINE OF THE SOUTHERN PACIFIC RAILROAD; THENCE
NORTH 60[d]57' WEST 139 FEET, MORE OR LESS, ALONG SAID NORTHWESTERLY
RAILROAD RIGHT-OF-WAY LINE TO THE MOST EASTERLY SOUTHWEST CORNER OF SAID
TERMINAL ICE AND COLD STORAGE COMPANY TRACT; THENCE SOUTH 89[d]45' EAST
144.54 FEET ALONG THE SOUTHERLY BOUNDARY LINE OF SAID TERMINAL ICE AND COLD
STORAGE COMPANY TRACT TO THE POINT OF BEGINNING.
SITE 6, PARCEL 9
BEGINNING AT A STONE IN THE EAST LINE OF THE B. S. BONNEY DONATION LAND CLAIM IN
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON, SAID STONE BEING
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646.61 FEET NORTH 19[d]38' EAST FROM THE SOUTHEAST CORNER OF SAID CLAIM; AND
RUNNING THENCE SOUTH 87[d]52' WEST 1,087.62 FEET TO A STONE; THENCE NORTH
19[d]39' EAST 1,091.81 FEET TO AN IRON PIPE; THENCE NORTH 89[d]48' WEST 1,574.67
FEET TO A POINT IN THE EASTERLY RIGHT-OF- WAY LINE OF THE PACIFIC HIGHWAY;
THENCE NORTH 32[d]30' EAST 18.93 FEET ALONG SAID EASTERLY LINE, TO AN IRON PIPE;
THENCE SOUTH 89[d]48' EAST 2,640.76 FEET TO A STONE IN THE EAST LINE OF SAID B.
S. BONNEY DONATION LAND CLAIM; THENCE SOUTH 19[d]38' WEST 1,061.66 FEET ALONG
SAID EAST LINE TO THE POINT OF BEGINNING.
SITE 6, PARCEL 10
BEGINNING AT AN IRON PIPE WHICH IS 2,092.52 FEET SOUTH 87[d]49' WEST AND 625.00
FEET NORTH 04[d]46' EAST AND 1,028.01 FEET NORTH 10[d]05' EAST FROM THE
SOUTHEAST CORNER OF THE B. S. BONNEY DONATION LAND CLAIM IN TOWNSHIP 5 SOUTH,
RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY, OREGON; AND RUNNING
THENCE NORTH 89[d]48' WEST 247.23 FEET TO AN IRON PIPE IN THE EASTERLY
RIGHT-F-WAY LINE OF THE PACIFIC HIGHWAY; THENCE SOUTH 32[d]30' WEST 206.88 FEET
ALONG SAID EASTERLY LINE TO AN IRON PIPE; THENCE SOUTH 82[d]26' EAST 322.67 FEET
TO AN IRON PIPE; THENCE NORTH 10[d]05' EAST 219.51 FEET TO THE POINT OF
BEGINNING.
SITE 6, PARCEL 11
BEGINNING AT A STONE AT THE SOUTHEAST CORNER OF THE B. S. BONNEY DONATION LAND
CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION
COUNTY, OREGON; AND RUNNING THENCE SOUTH 87[d]49' WEST ALONG THE SOUTH LINE OF
SAID CLAIM 2,092.52 FEET TO A STONE; THENCE NORTH 04[d]46' EAST 625.00 FEET
ALONG THE EAST LINE OF THAT CERTAIN TRACT OF LAND DESCRIBED IN VOLUME 449, PAGE
282, MARION COUNTY DEED RECORDS TO A STONE AT THE NORTHEAST CORNER THEREOF;
THENCE NORTH 10[d]05' EAST 1,028.01 FEET TO AN IRON PIPE; THENCE NORTH 89[d]48'
WEST 247.23 FEET TO AN IRON PIPE SET IN THE EASTERLY RIGHT-OF-WAY LINE OF THE
PACIFIC HIGHWAY; THENCE NORTH 32[d]30' EAST 54.42 FEET ALONG SAID EASTERLY LINE
TO A POINT; THENCE SOUTH 89[d]48' EAST 1,574.67 FEET TO AN IRON PIPE; THENCE
SOUTH 19[d]39' WEST 1,091.81 FEET TO A STONE; THENCE NORTH 87[d]52' EAST
1,087.62 FEET TO A STONE IN THE EAST LINE OF SAID B.S. BONNEY DONATION LAND
CLAIM; THENCE SOUTH 19[d]38' WEST 646.61 FEET ALONG SAID EAST LINE TO THE POINT
OF BEGINNING.
SAVE AND EXCEPT, A PORTION OF THAT TRACT OF LAND CONVEYED TO AGRIPAC, INC., AN
OREGON COOPERATIVE CORPORATION BY WARRANTY DEED, RECORDED IN REEL 918, PAGE 429,
MICROFILM RECORDS, MARION COUNTY, OREGON; SAID BEGINNING POINT OF THE FOLLOWING
DESCRIBED PARCEL, BEING AN IRON ROD WITH PLASTIC CAP MARKED LS 1362 AND LYING
3,589.65 FEET NORTH 16[d]59'26" WEST OF THE SOUTHEAST CORNER OF NEIL JOHNSON
DONATION LAND CLAIM NO. 69 IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN, MARION COUNTY, OREGON; THENCE ALONG THE WESTERLY BOUNDARY OF SAID
AGRIPAC TRACT THE FOLLOWING COURSES: SOUTH 86[d]53'16" WEST 730.83 FEET TO THE
EAST RIGHT-OF-WAY OF PACIFIC HIGHWAY 99E; THENCE NORTH 31[d]35'00" EAST ALONG
SAID RIGHT-OF-WAY 72.98 FEET; THENCE NORTH 86[d]53'16" EAST 702.36 FEET TO AN
IRON PIPE; THENCE NORTH 9[d]10'24" EAST 195.00 FEET; THENCE LEAVING SAID
WESTERLY BOUNDARY NORTH 30[d]12'00" EAST 409.00
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FEET; THENCE NORTH 0[d]34'00" WEST 391.00 FEET; THENCE SOUTH 86[d]37'53" EAST
494.69 FEET; THENCE SOUTH 61[d]37'04" EAST 591.66 FEET; THENCE SOUTH 28[d]22'56"
WEST 1,030.50 FEET; THENCE NORTH 61[d]37'04" WEST 396.67 FEET; THENCE NORTH
85[d]47'24" WEST 419.43 FEET TO THE POINT OF BEGINNING.
SITE 6, PARCEL 12
THAT PARCEL OF LAND SITUATE IN THE B. S. BONNEY DONATION LAND CLAIM, SECTION 17,
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON, DESCRIBED IN VOLUME 579, PAGE 486 OF THE DEED RECORDS OF MARION COUNTY,
OREGON, WHICH IS MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A 3/4"
IRON PIPE FROM WHENCE THE SOUTHWEST CORNER OF LOT 4 OF THE SUBDIVISION OF THE
NORTH 1/2 OF B. S. BONNEY DONATION LAND CLAIM BEARS SOUTH 60[d]45' EAST 74.90
FEET AND SOUTH 32[d]28' WEST 308.50 FEET AND SOUTH 59[d]26' EAST 35.76 FEET AND
SOUTH 32[d]15' WEST 434.1 FEET AND RUNNING THENCE NORTH 60[d]45' WEST 22 FEET TO
AN IRON PIPE; THENCE NORTH 32[d]30' EAST 199.90 FEET; THENCE SOUTH 60[d]45' EAST
22.00 FEET; THENCE SOUTH 32[d]03' WEST 199.90 FEET TO THE POINT OF BEGINNING.
SITE 6, PARCEL 13
THAT TRACT OF LAND SITUATE IN SECTIONS 19 AND 20, TOWNSHIP 5 SOUTH, RANGE 1 WEST
OF THE WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON, WHICH IS MORE PARTICULARLY
DESCRIBED AS FOLLOWS: BEGINNING AT AN IRON BAR ON THE SOUTHERLY BOUNDARY LINE OF
THAT TRACT OF LAND CONVEYED TO GENERAL FOODS CORPORATION BY DEED RECORDED IN
VOLUME 547, PAGE 833, MARION COUNTY RECORD OF DEEDS, SAID IRON BAR BEING ALSO
THE NORTHEASTERLY CORNER OF THAT TRACT OF LAND CONVEYED TO F AND D GESCHWILL BY
DEED RECORDED IN VOLUME 404, PAGE 152, DEED RECORDS FOR MARION COUNTY, OREGON,
IN SECTIONS 19 AND 20, TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN, MARION COUNTY, OREGON, WHICH BEARS SOUTH 89[d]45' EAST 309.21 FEET AND
NORTH 31[d]59' EAST 3,330.55 FEET AND NORTH 86[d]53' EAST 1,070.32 FEET FROM THE
MOST SOUTHERLY SOUTHWEST CORNER OF THE NEIL JOHNSON DONATION LAND CLAIM NO. 69,
AND RUNNING THENCE FROM THE TRUE POINT OF BEGINNING; SOUTH 18[d]50' WEST
2,665.47 FEET ALONG THE EASTERLY BOUNDARY LINE OF SAID GESCHWILL TRACT TO A 3/4"
IRON PIPE; THENCE SOUTH 89[d]39'30" WEST 1,753.47 FEET TO A 3/4" IRON PIPE ON
THE WESTERLY BOUNDARY OF THAT TRACT OF LAND CONVEYED TO F AND D GESCHWILL BY
DEED RECORDED IN VOLUME 465, PAGE 177, DEED RECORDS FOR MARION COUNTY, OREGON;
THENCE NORTH 31[d]59' EAST 2,917.55 FEET ALONG SAID WESTERLY BOUNDARY AND THE
NORTHEASTERLY EXTENSION THEREOF TO A 3/4" IRON PIPE ON THE NORTHERLY BOUNDARY
LINE OF SAID GESCHWILL TRACT RECORDED IN VOLUME 404, PAGE 152, DEED RECORDS FOR
MARION COUNTY, OREGON; THENCE NORTH 86[d]53' EAST 1,070.32 FEET TO THE POINT OF
BEGINNING.
SAVE AND EXCEPT, BEGINNING AT A POINT ON THE WEST LINE OF THAT TRACT OF LAND
CONVEYED TO FRED GESCHWILL BY DEED RECORDED IN VOLUME 288, PAGE 341, DEED
RECORDS FOR MARION COUNTY, OREGON, WHICH IS SOUTH 18[d]50'49" WEST 1,654.33
FEET AND SOUTH 89[d]39'30" WEST 1,053.19 FEET FROM THE NORTHEAST CORNER OF
THE NEIL JOHNSON DONATION LAND CLAIM NO. 69 IN TOWNSHIP 5
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SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON; THENCE
SOUTH 18[d]49'55" WEST 1,064.46 FEET; THENCE SOUTH 89[d]39'30" WEST 1,753.46
FEET TO AN IRON PIPE IN THE SOUTHWEST CORNER OF THAT TRACT OF LAND CONVEYED TO
GENERAL FOODS CORPORATION BY DEED RECORDED IN VOLUME 625, PAGE 152, DEED RECORDS
FOR MARION COUNTY, OREGON; THENCE NORTH 31[d]59' EAST 1,189.80 FEET ALONG THE
WEST LINE OF SAID GENERAL FOODS TRACT TO A 5/8 IRON ROD; THENCE NORTH
89[d]39'30" EAST 1,466.84 FEET TO THE PLACE OF BEGINNING.
SITE 6, PARCEL 14
BEGINNING AT THE NORTHEAST CORNER OF THE NEIL JOHNSON LAND CLAIM NO. 69 IN
TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON; THENCE SOUTH 18[d]50'49" WEST 1,654.33 FEET ALONG THE EAST LINE OF SAID
CLAIM TO 1 5/8" IRON ROD; THENCE SOUTH 89[d]39'30" WEST 1,053.19 FEET TO A POINT
IN THE WEST LINE OF THE FRED GESCHWILL TRACT AS DESCRIBED IN VOLUME 288, PAGE
341, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 18[d]49'55" EAST
1,599.87 FEET TO AN IRON BAR IN THE NORTH LINE OF SAID CLAIM; THENCE NORTH
86[d]55'04" EAST 1,072.71 FEET TO THE PLACE OF BEGINNING.
SITE 6, PARCEL 15
BEGINNING AT AN IRON PIPE IN THE WEST LINE OF THE THOMAS FITZGERALD DONATION
LAND CLAIM 13.645 CHAINS FROM THE SOUTHWEST CORNER OF THE SAME IN TOWNSHIP 5
SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, IN MARION COUNTY, OREGON; THENCE
NORTH 19[d]45' EAST ALONG THE WEST LINE OF SAID CLAIM 45.40 CHAINS TO A STONE;
THENCE SOUTH 88[d]17' EAST 11.26 CHAINS TO THE IRON BAR; THENCE SOUTH 19[d]45'
WEST 45.60 CHAINS TO AN IRON BAR; THENCE NORTH 87[d]23' WEST 11.20 CHAINS TO THE
POINT OF BEGINNING, BEING SITUATED IN THE THOMAS FITZGERALD DONATION LAND CLAIM
IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY,
OREGON.
SITE 6, PARCEL 16
BEGINNING AT A POINT 13.645 CHAINS NORTH 19[d]45' EAST AND 11.20 CHAINS SOUTH
87[d]22' EAST FROM THE SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND
CLAIM IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION
COUNTY, OREGON; THENCE NORTH 19[d]45' EAST 9.32 CHAINS TO AN IRON PIPE; THENCE
SOUTH 87[d]22' EAST 5.615 CHAINS TO THE SOUTHWEST CORNER OF A TRACT OF LAND
CONVEYED TO HARVEY E. MIKKELSON, ET AL, BY DEED RECORDED IN VOLUME 455, PAGE
502, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 19[d]45' EAST 30.439
CHAINS; THENCE SOUTH 70[d]15' EAST 5.346 CHAINS; THENCE NORTH 19[d]45' EAST
7.672 CHAINS TO AN IRON BAR AT THE NORTHWEST CORNER OF THE FOURTH TRACT OF LAND
DESCRIBED IN DEED TO HARVEY E. MIKKELSON, ET AL, RECORDED IN VOLUME 444, PAGE
672, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE SOUTH 88[d]17' EAST 1.09
CHAINS TO A STONE AT MOST WESTERLY SOUTHWEST CORNER OF A TRACT OF LAND DEEDED TO
MARTIN AICHER BY SEBASTIAN AICHER, ET UX, BY DEED RECORDED IN VOLUME 73, PAGE
450, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 18[d]44' EAST
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2.80 CHAINS TO AN IRON PIPE IN THE SOUTH LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY; THENCE SOUTH 60[d]26' EAST 5.74 CHAINS ALONG SAID RIGHT-OF-WAY TO
THE NORTHERLY BOUNDARY OF THE FIRST TRACT OF LAND DESCRIBED IN SAID DEED TO
HARVEY E. MIKKELSON, ET AL, RECORDED IN VOLUME 444, PAGE 672, DEED RECORDS;
THENCE SOUTH 60[d]26' EAST ALONG SAID NORTHERLY BOUNDARY A DISTANCE OF 2.62
CHAINS TO THE NORTHEASTERLY CORNER OF SAID PARCEL; THENCE SOUTH 19[d]23' WEST
44.62 CHAINS; THENCE NORTH 87[d]22' WEST 21.084 CHAINS TO THE PLACE OF
BEGINNING.
SAVE AND EXCEPT, BEGINNING AT A POINT WHICH IS REACHED BY BEGINNING AT THE
SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND CLAIM IN TOWNSHIP 5
SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, IN MARION COUNTY, OREGON, AND
RUNNING THENCE NORTH 19[d]45' EAST 13.645 CHAINS; THENCE SOUTH 87[d]22' EAST
22.40 CHAINS; THENCE NORTH 19[d]45' EAST 45.80 CHAINS TO THE NORTHWEST CORNER OF
THAT CERTAIN TRACT DEEDED TO RUDOLPH ZAK, EDWARD ZAK AND ANNA ZAK, HIS WIFE, BY
DEED RECORDED AT PAGE 426, BOOK 162, RECORDS OF DEEDS FOR MARION COUNTY, OREGON;
RUNNING THENCE ALONG THE WEST LINE OF ADDITIONAL LAND OF SAID ZAK BROTHERS, SAID
LAND BEING DESCRIBED IN DEED RECORDED AT PAGE 527, BOOK 162, RECORDS OF DEEDS
FOR MARION COUNTY, OREGON, NORTHEASTERLY 184.7 FEET TO A POINT ON THE SOUTH LINE
OF THE SOUTHERN PACIFIC RAILROAD RIGHT-OF-WAY AND BEING THE BEGINNING POINT OF
THE HEREIN DESCRIBED TRACT; RUNNING THENCE ALONG SAID RAILROAD RIGHT-OF-WAY
BOUNDARY SOUTH 60[d]26' EAST 551.2 FEET, MORE OR LESS, TO THE NORTHEAST CORNER
OF THE ABOVE DESCRIBED ZAK LAND; THENCE ALONG THE EAST LINE OF SAID ZAK LAND
SOUTH 19[d]23' WEST 130.0 FEET; THENCE PARALLEL WITH THE SAID RAILROAD NORTH
60[d]26' WEST 130.0 FEET; THENCE NORTH 19[d] 23' EAST 119.9 FEET; THENCE ON A
LINE PARALLEL TO AND 10FEET FROM SAID RAILROAD RIGHT-OF-WAY BOUNDARY NORTH
60[d]26' WEST 421.2 FEET, MORE OR LESS, TO A POINT IN THE WEST LINE OF SAID
ADDITIONAL LAND OF ZAK BROTHERS, 10 FEET SOUTHWEST OF POINT OF BEGINNING; THENCE
NORTHEAST ALONG SAID WEST LINE OF ZAK BROTHERS ADDITIONAL PROPERTY, 10 FEET TO
POINT OF BEGINNING. SAVE AND EXCEPT, THE WESTERLY 25 FEET FOR A ROADWAY.
SITE 6, PARCEL 17
BEGINNING AT AN IRON PIPE ON THE NORTH LINE OF THE SOUTHERN PACIFIC RAILROAD
RIGHT-OF-WAY AT A POINT 93 LINKS NORTH 18[d]44' EAST FROM THE NORTH CORNER OF
THE LAST ABOVE MENTIONED TRACT; THENCE NORTH 18[d]44' EAST 2.96 CHAINS TO THE
CENTERLINE OF THE COUNTY ROAD; THENCE SOUTH 27[d]29' EAST ALONG THE CENTER OF
SAID ROAD 5.37 CHAINS TO AN IRON PIPE IN THE NORTH LINE OF THE SAID RAILROAD
RIGHT-OF-WAY; THENCE NORTH 60[d]26' WEST 3.95 CHAINS TO THE POINT OF BEGINNING.
SITE 6, PARCEL 18
BEGINNING AT A CAR SPRING ON THE NORTHERLY BOUNDARY LINE OF THAT TRACT OF LAND
DESCRIBED IN CONTRACT TO A. L. STEFFEN AND E. I. STEFFEN, RECORDED IN VOLUME
460, PAGE 90, DEED RECORDS FOR MARION COUNTY, OREGON, SAID CAR SPRING MARKING
THE SOUTHEAST CORNER OF THAT TRACT OF LAND CONVEYED TO H. E. MIKKELSON AND M.
MIKKELSON, BY DEED RECORDED IN VOLUME 444, PAGE 672, DEED RECORDS FOR MARION
COUNTY, OREGON, SAID CAR SPRING IS RECORDED AS BEARING NORTH 19[d]45' EAST
900.57 FEET AND SOUTH 87[d]22' EAST 2,130.7 FEET FROM THE SOUTHWEST CORNER OF
THE THOMAS
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FITZGERALD DONATION LAND CLAIM NO. 54 IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE
WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON; AND RUNNING THENCE FROM THE TRUE
POINT OF BEGINNING; SOUTH 88[d]04'10" EAST 2,865.86 FEET ALONG SAID NORTHERLY
BOUNDARY LINE OF SAID STEFFEN TRACT TO A 1/2" IRON PIPE MARKING THE
NORTHEASTERLY CORNER OF SAID TRACT; THENCE SOUTH 12[d] WEST 874.70 FEET TO A TWO
INCH IRON PIPE MARKING THE SOUTHEASTERLY CORNER OF THAT TRACT OF LAND DESCRIBED
IN CONTRACT TO A. L. STEFFEN AND E. I. STEFFEN, RECORDED IN VOLUME 520, PAGE 84,
DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 88[d]02' WEST 1,042.05 FEET
ALONG THE SOUTHERLY BOUNDARY LINE OF SAID STEFFEN TRACT TO A 1/2" IRON PIPE;
THENCE NORTH 01[d]55'50" EAST 840.83 FEET TO A 1/2" IRON PIPE ON A LINE PARALLEL
WITH AND A PERPENDICULAR DISTANCE OF 20.00 FEET, MEASURED SOUTHERLY FROM SAID
NORTHERLY BOUNDARY LINE OF SAID STEFFEN TRACT DESCRIBED IN VOLUME 460, PAGE 90,
DEED RECORDS FOR MARION COUNTY, OREGON; THENCE NORTH 88[d]04'10" WEST 1,697.06
FEET ALONG SAID LINE PARALLEL WITH SAID NORTHERLY BOUNDARY LINE TO A 1/2" IRON
PIPE; THENCE NORTH 08[d]03'24" EAST 20.31 FEET TO A 1/2" IRON PIPE ON THE SAID
NORTHERLY BOUNDARY LINE; THENCE SOUTH 88[d]04'10" EAST 22.66 FEET ALONG SAID
NORTHERLY BOUNDARY LINE TO THE POINT OF BEGINNING.
SITE 6, PARCEL 19
BEGINNING ON THE WESTERLY LINE AND 6.78 CHAINS NORTH 19[d]45' EAST FROM THE
SOUTHWEST CORNER OF THE THOMAS FITZGERALD DONATION LAND CLAIM NO. 54 IN TOWNSHIP
5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN IN MARION COUNTY, OREGON;
THENCE NORTH 19[d]45' EAST 6.865 CHAINS ALONG THE WESTERLY LINE OF SAID
FITZGERALD CLAIM; THENCE SOUTH 87[d]22' EAST 2,108.08 FEET TO THE NORTHWESTERLY
CORNER OF A TRACT OF LAND CONVEYED TO GENERAL FOODS CORPORATION, BY DEED
RECORDED IN VOLUME 640, PAGE 501, DEED RECORDS FOR MARION COUNTY, OREGON; THENCE
SOUTH 08[d]03'24" WEST 20.31 FEET TO 1/2 INCH IRON PIPE; THENCE SOUTH
88[d]04'10" EAST 1,697.06 FEET TO A 1/2 INCH IRON PIPE; THENCE SOUTH 1[d]55'50"
WEST TO A POINT ON THE SOUTHERLY LINE OF A TRACT DESCRIBED IN AGREEMENT RECORDED
IN VOLUME 460, PAGE 90, DEED RECORDS OF MARION COUNTY, OREGON; THENCE NORTH
87[d]14' WEST 3,918.00 FEET, MORE OR LESS, TO A POINT WHICH IS 10.00 FEET FROM
THE WESTERLY LINE OF SAID FITZGERALD CLAIM, AS MEASURED PERPENDICULAR THERETO;
THENCE SOUTH 19[d]45' WEST 6.70 CHAINS TO A POINT ON THE SOUTHERLY LINE OF SAID
FITZGERALD CLAIM, WHICH IS SOUTH 87[d]14' EAST 10.00 FEET FROM THE SOUTHWEST
CORNER THEREOF; THENCE NORTH 87[d]14' WEST 10.00 FEET FROM THE SOUTHWEST CORNER
OF SAID FITZGERALD CLAIM; THENCE NORTH 19[d]45' EAST 6.78 CHAINS TO THE PLACE OF
BEGINNING.
SITE 6, PARCEL 20
BEGINNING AT THE SOUTHWEST CORNER OF THE DONATION LAND CLAIM OF THOMAS
FITZGERALD AND WIFE, IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE
MERIDIAN, IN SAID COUNTY AND STATE; THENCE NORTH 19[d]45' EAST 6.78 CHAINS ALONG
THE WEST LINE OF THE THOMAS FITZGERALD CLAIM; THENCE SOUTH 87[d]14' EAST 76.47
CHAINS TO THE EAST LINE OF SAID CLAIM; THENCE SOUTH 11[d]54' WEST 6.586 CHAINS
TO THE SOUTHEAST CORNER OF THE THOMAS FITZGERALD CLAIM; THENCE NORTH 87[d]14'
WEST 77.41 CHAINS ALONG THE SOUTH LINE OF THE SAID CLAIM TO THE PLACE OF
BEGINNING.
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SAVE AND EXCEPT, THAT PORTION THEREOF INCLUDED IN DEED TO GENERAL FOODS
CORPORATION RECORDED DECEMBER 14, 1967 IN BOOK 640, PAGE 501, DEED RECORDS,
MARION COUNTY, OREGON.
SITE 6 PARCEL 21: (PLANT 8)
ALL OF MORTGAGOR'S RIGHT, TITLE AND INTEREST IN AND TO THAT CERTAIN REAL
PROPERTY FACILITY LEASE BETWEEN PF ACQUISITION II, INC., (AS ASSIGNEE TO
AGRIPAC, INC.) AS LESSEE, AND GREENFIELD PARTNERS, LTD., AN OREGON LIMITED
PARTNERSHIP AS LESSOR, PURSUANT TO AN UNDATED LEASE RELATED TO THE REAL PROPERTY
MORE PARTICULARLY DESCRIBED BELOW:
IMPROVEMENTS ONLY ON THE FOLLOWING DESCRIBED PARCEL:
A PORTION OF THAT TRACT OF LAND CONVEYED TO AGRIPAC, INC., AN OREGON COOPERATIVE
CORPORATION BY WARRANTY DEED, RECORDED IN REEL 918, PAGE 429, MICROFILM RECORDS,
MARION COUNTY, OREGON; SAID BEGINNING POINT OF THE FOLLOWING DESCRIBED PARCEL,
BEING AN IRON ROD WITH PLASTIC CAP MARKED LS 1362 AND LYING 3,589.65 FEET NORTH
16[d]59'26" WEST OF THE SOUTHEAST CORNER OF NEIL JOHNSON DONATION LAND CLAIM NO.
69, IN TOWNSHIP 5 SOUTH, RANGE 1 WEST OF THE WILLAMETTE MERIDIAN, MARION COUNTY,
OREGON; THENCE ALONG THE WESTERLY BOUNDARY OF SAID AGRIPAC TRACT THE FOLLOWING
COURSES: 86[d]53'16" WEST, 730.83 FEET TO THE EAST RIGHT OF WAY OF PACIFIC HWY
99E; THENCE NORTH 31[d]35'00" EAST ALONG SAID RIGHT OF WAY, 72.98 FEET; THENCE
NORTH 86[d]53'16" EAST, 702.36 FEET TO AN IRON PIPE; THENCE NORTH 9[d]10'24"
EAST, 195.00 FEET; THENCE LEAVING SAID WESTERLY BOUNDARY, NORTH 30[d]12'00" WEST
391.00 FEET; THENCE SOUTH 86[d]37'53" EAST, 494.69 FEET; THENCE SOUTH
61[d]37'04" EAST, 591.66 FEET; THENCE SOUTH 28[d]22'56" WEST, 1,030.50 FEET;
THENCE NORTH 61[d]37'04" WEST 396.67 FEET; THENCE NORTH 85[d]47'24" WEST, 419.43
FEET TO THE POINT OF BEGINNING.
POLK COUNTY, OREGON
SITE 2, PARCEL 1
LOTS 1, 2 AND 3, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON. SAVE AND EXCEPT A
STRIP OF LAND 25.0 FEET IN WIDTH EXTENDING EASTERLY AND WESTERLY ALONG THE SOUTH
LINE OF SAID LOTS 2 AND 3.
SITE 2, PARCEL 2
BEGINNING AT THE SOUTHWEST CORNER OF LOT 3, BLOCK "D", WEST SALEM, POLK COUNTY,
OREGON; THENCE NORTHEASTERLY ALONG THE SOUTHERLY LINE OF SAID LOT 3 AND LOT 2 TO
THE SOUTHEAST CORNER OF LOT 2 IN SAID ADDITION; THENCE NORTHWESTERLY ALONG THE
EASTERLY LINE OF SAID LOT 2 A DISTANCE OF 25.0 FEET; THENCE RUNNING SOUTHERLY
AND PARALLEL TO THE SOUTHERLY LINE OF LOTS 2 AND 3 TO A POINT ON THE WESTERLY
LINE OF LOT 3 WHICH POINT IS NORTHWESTERLY 25.0 FEET FROM THE POINT OF
BEGINNING; THENCE SOUTHEASTERLY ALONG THE WEST LINE OF SAID LOT 3 TO THE POINT
OF BEGINNING.
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SITE 2, PARCEL 3
BEGINNING AT THE NORTHEAST CORNER OF LOT 4 IN BLOCK "D", WEST SALEM, POLK
COUNTY, OREGON; AND RUNNING THENCE SOUTH ALONG THE EAST LINE OF SAID LOT 4 TO
THE SOUTHEAST CORNER THEREOF; THENCE WESTERLY ALONG THE SOUTH BOUNDARY OF SAID
LOT 4, 34 FEET; THENCE NORTHERLY AND PARALLEL WITH THE EASTERLY LINE OF SAID LOT
4 TO THE NORTHERLY LINE THEREOF; THENCE EASTERLY ALONG THE NORTHERLY LINE OF
SAID LOT TO THE PLACE OF BEGINNING.
SITE 2, PARCEL 4
LOTS 17, 18 AND 19, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 5
LOT 20, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 6
LOTS 21 AND 22 IN BLOCK "D", IN WEST SALEM, POLK COUNTY, OREGON, AS SHOWN BY THE
RECORDED PLAT OF SAID WEST SALEM, IN THE OFFICE OF THE RECORDER OF CONVEYANCES
FOR POLK COUNTY, STATE OF OREGON.
SITE 2, PARCEL 7
LOTS 23 AND 24, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 8
LOT 25, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON, AS SHOWN BY THE RECORDED
PLAT OF SAID WEST SALEM, ON FILE AND OF RECORD IN THE OFFICE OF THE COUNTY
RECORDER FOR SAID POLK COUNTY, OREGON.
SITE 2, PARCEL 9
BEGINNING AT THE SOUTHWEST CORNER OF LOT 26, BLOCK "D", WEST SALEM, POLK COUNTY,
OREGON, ACCORDING TO THE DULY RECORDED PLAT NOW ON FILE AND OF RECORD IN THE
OFFICE OF THE RECORDER FOR SAID COUNTY AND STATE; THENCE EASTERLY ALONG THE
SOUTHERLY LINE OF SAID LOT, A DISTANCE OF 38.0 FEET; THENCE NORTHERLY TO A POINT
IN THE NORTH LINE OF SAID LOT, WHICH POINT IS 5.0 FEET DISTANT FROM THE
NORTHEAST CORNER OF SAID LOT; THENCE WESTERLY ALONG THE NORTH LINE OF SAID LOT A
DISTANCE OF 35.00 FEET TO THE NORTHWEST CORNER OF SAID LOT; THENCE SOUTHERLY
ALONG THE WESTERLY LINE OF SAID LOT A DISTANCE OF 125.0 FEET TO THE PLACE OF
BEGINNING.
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SITE 2, PARCEL 10
LOT 27, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON. ALSO: BEGINNING AT A POINT
ON THE SOUTH LINE OF LOT 26, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON, WHICH
IS 38 FEET EASTERLY FROM THE SOUTHWEST CORNER OF SAID LOT 26; THENCE NORTHERLY
TO A POINT IN THE NORTH LINE OF SAID LOT WHICH IS 5 FEET WESTERLY FROM THE
NORTHEAST CORNER OF SAID LOT; THENCE EASTERLY ALONG THE NORTH LINE OF SAID LOT,
5 FEET TO THE NORTHEAST CORNER; THENCE SOUTHERLY ALONG THE EAST LINE OF SAID
LOT, 125 FEET TO THE SOUTHEAST CORNER OF SAID LOT; THENCE WESTERLY ALONG THE
SOUTH LINE OF SAID LOT, 2 FEET TO THE PLACE OF BEGINNING.
SITE 2, PARCEL 11
LOT 28, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 12
LOT 29, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
SITE 2, PARCEL 13
LOT 30, BLOCK "D", WEST SALEM, POLK COUNTY, OREGON.
YAKIMA COUNTY, WASHINGTON
All of Mortgagor's right, title and interest in and to that certain real
property lease between PF Acquisition II, Inc., (as Assignee to Agripac, Inc.)
the Mortgagor, as Lessee, and The Freezer Group, L.L.C., as Lessor, pursuant to
a Lease dated July 22, 1996 related to the real property more particularly
described below:
PARCEL A
The East 50 feet of Lots 11 and 12, Block 29 of Grandview, Washington, according
to the official plat thereof, recorded in Volume "B" of Plats, Page 6, Records
of Yakima County, Washington. Assessor's Property Tax Parcel/Account No.
230923-13459.
PARCEL B
All that portion of Block 15, Grandview, Washington, according to the official
plat thereof recorded in Volume "B" of Plats, Page 6, Records of Yakima County,
Washington, lying South of the Southerly right-of-way line of West 2nd Street,
as said street was conveyed to the City of Grandview by instrument recorded
under Auditor's File Number 1452522; TOGETHER WITH that portion of vacated
Warehouse Street, which, upon vacation, attached to said premises by operation
of law.
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Assessor's Property Tax Parcel/Account No. 230923-21410.
PARCEL C
The North 16 feet of Lot 1, AND Lots 2, 3, 4, 5, 6, 7 and 8, AND Lot 9, except
the North 5 feet thereof, AND Lots 13, 14, 15, 16 and 17, all in Block 29 of
Grandview, Washington, according to the official plat thereof, recorded in
Volume "B" of Plats, Page 6, Records of Yakima County, Washington; TOGETHER WITH
that portion of vacated West "A" Street accruing thereto; AND TOGETHER WITH
those portions of vacated alley accruing thereof. Assessor's Property Tax
Parcel/Account No. 230923-13456.
PARCEL D
Lots 19, 20, 21, 22, 23 and 24, Block 28 of Grandview, Washington, according to
the official plat thereof, recorded in Volume "B" of Plats, Page 6, Records of
Yakima County, Washington; TOGETHER WITH that portion of vacated West "A" Street
and that portion of vacated West Third Street accruing thereto, situated in
Yakima County, State of Washington. Assessor's Property Tax Parcel/Account No.
230923-13526.
WALLA WALLA COUNTY, WASHINGTON
PARCEL A
Block 1 of Bowman's Addition to the City of Walla Walla, according to the
official plat thereof recorded in Volume C of Plats at Page 44, Records of Walla
Walla County. ALSO, beginning at a point in the North line of Block 2 of said
Bowman's Addition to the City of Walla Walla, which point is 56 feet West,
measured along said North line, from the Northeast corner of said Block 2; and
running thence South, parallel to the East line of said Block 2, a distance
193.86 feet to a point in the South line of said Block 2; thence West along the
South line of said Block 2 a distance of 168.7 feet to the Southwest corner of
said Block 2; thence North along the West line of said Block 2 a distance of
193.86 feet to the Northwest corner of said Block 2; thence East along the North
line of said Block 2 a distance of 168.7 feet to the point of beginning.
Assessor's Property Tax Parcel/Account No. 36-07-19-51-0100.
PARCEL B
A piece or parcel of land situate in the Northwest Quarter of Section 19,
Township 7 North, Range 36 East of the Willamette Meridian, in Walla Walla
County, Washington, described as follows, to wit: Beginning at a point on the
North line of Dell Avenue in the City of Walla Walla, that is 726 feet distant
West of the point of intersection of said North line with the West line of
Thirteenth Avenue North in said city, said point also being 30 feet North of the
East and West centerline of said Section
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19; thence Northerly and parallel with said West line of Thirteenth Avenue North
a distance of 650 feet; thence Westerly and parallel with the East and West
centerline of Section 19 a distance of 1,000 feet; thence Southerly parallel
with the West line of Thirteenth Avenue North a distance of 650 feet to a point
that is 30 feet distant North of said East and West centerline of Section 19;
thence Easterly parallel with said East and West centerline of Section 19 a
distance of 1,000 feet to the point of beginning. Assessor's Property Tax
Parcel/Account Nos. 36-07-19-24-0010 and 36-07-19-24-0011.
End of Legal Descriptions.
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Return Address:
CoBANK, ACB
P.O. Box 5110
Denver, CO 80217
SUBORDINATE TERM LOAN MORTGAGE AND FIXTURE FILING
THIS MORTGAGE, made and entered into this 22nd day of February, 1999, by
PF ACQUISITION II, INC., whose address is 90 Linden Place,
Rochester, New York 14625 (hereinafter referred to as "Mortgagor"), and COBANK,
ACB, a corporation organized and existing under the laws of the United States of
America, located at 5500 South Quebec Street, Englewood, Colorado 80111, P.O.
Box 5110 Denver, Colorado 80217, as Administrative Agent for the Banks party to
the Loan Agreement referred to below (hereinafter referred to as "Mortgagee"),
W I T N E S S E T H:
This document is intended as a mortgage to secure performance of the covenants
and agreements herein contained and contained in the Loan Documents (as defined
in that certain Credit Agreement dated as of February 22, 1999 among Mortgagor,
the Banks party hereto, and CoBank, ACB, as Administrative Agent for such
Lenders (as the same may be amended, modified or supplemented from time to time,
the "Loan Agreement")), and to secure payment of the loans made by the Lenders
pursuant to the Loan Agreement in the aggregate sum of TWELVE MILLION AND NO/100
DOLLARS ($12,000,000.00) evidenced by a Subordinated Promissory Note in the
amount of $12,000,000.00 in favor of CoBank, ACB dated February 22, 1999
maturing on February 22, 2014, together with interest payable on the unpaid
balance thereof at the rate(s) specified in the foregoing promissory notes, and
any and all renewals or extensions thereof.
In consideration therefor and for value received by Mortgagor from Mortgagee,
Mortgagor does hereby mortgage, grant, bargain, sell and convey unto Mortgagee,
its successors and assigns, the following-described real property, situate in
the COUNTY OF MARION, STATE OF OREGON:
MARION COUNTY, OREGON
SITE 4, PARCEL 1:
Parcel 2 of PARTITION PLAT 96-98, filed for record on November 8, 1996 in Reel
1353, Page 36, Microfilm records, Marion County, Oregon.
SITE 6, PARCEL 1
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SUBORDINATE TERM LOAN MORTGAGE AND FIXTURE FILING Page 2
PF ACQUISITION II, INC.
Rochester, New York
Beginning at the Northwest corner of that certain tract of land deeded to David
Clark by George Taylor and wife, which deed was recorded July 19, 1910 on Page
583, Book 114 of Deed Records of Marion County, Oregon; thence South 32[d]15'
West 22 feet; thence South 59[d]47' East 338.76 feet, more or less, to the East
boundary of Lot 3 of the North 1/2 of the Donation Land Claim of B. S. Bonney
and wife; thence North 32[d]15' East along said line 22 feet to the South
boundary line of the Woodburn-Natron Branch of the Southern Pacific Railroad;
thence North 60[d]45' West 339 feet to the place of beginning, and being a part
of Lot 3, of the North 1/2 of the Donation Land Claim of B. S. Bonney and wife
in Township 5 South, Range 1 West of the Willamette Meridian in Marion County,
Oregon.
SAVE AND EXCEPT, the land conveyed to the State of Oregon by Ray-Brown Company,
Inc., by deed recorded in Volume 216, Page 177, Deed Records of Marion County,
Oregon.
SAVE AND EXCEPT, that parcel of land situate in the B. S. Bonney Donation Land
Claim in Section 17, Township 5 South, Range 1 West of the Willamette Meridian,
Marion County, Oregon, which is more particularly described as follows:
Beginning at an iron pipe on the Southwesterly right-of-way line of the Southern
Pacific Railroad, from whence the Southwest corner of Lot 4, of the Subdivision
of the North 1/2 of the B. S. Bonney Donation Land Claim, bears South 32[d]30'
West 221.90 feet and South 60[d]45' East 96.90 feet and South 32[d]28' West
308.50 feet and South 59[d]26' East 35.76 feet and South 32[d]15' West 434.1
feet and running thence North 60[d]45' West 168.00 feet along the Southwesterly
right-of-way line of the Southern Pacific Railroad to a 3/4" iron pipe; thence
South 32[d]30' West 22.00 feet to a 3/4" iron pipe on the Southwesterly
right-of-way line of Pacific Highway U.S. 99E; thence South 60[d]45' East 168.00
feet, parallel to said railroad right-of-way; thence North 32[d]30' East 22 feet
to the point of beginning.
SITE 6, PARCEL 2
Beginning at an iron pin in the South line of the Southern Pacific Railroad
right-of-way 13.22 chains South 86[d]45' West and 14.12 chains South 32[d]6'
West from the most Easterly Northeast corner of the B. S. Bonney Donation Land
Claim in Township 5 South, Range 1 West of the Willamette Meridian in Marion
County, Oregon; thence South 32[d]6" West, 6.74 chains to a stone in the
Southeast corner of Lot 4 of the B. S. Bonney Subdivision; thence South 89[d]47'
West along the line dividing said claim in North and South halves, 14.44 chains
to an iron bolt; thence North 31[d]57' East, 13.82 chains to an iron bolt in the
South line of said right-of-way of the Southern Pacific Railroad Company; thence
South 60[d]58' East along said right-of-way, 12.26 chains to the point of
beginning, and situated in the North 1/2 of the B. S. Bonney Donation Land Claim
in Township 5 South, Range 1 West of the Willamette Meridian in Marion County,
Oregon.
SITE 6, PARCEL 3
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SUBORDINATE TERM LOAN MORTGAGE AND FIXTURE FILING Page 3
PF ACQUISITION II, INC.
Rochester, New York
Beginning on the division line, dividing the B. S. Bonney Donation Land Claim
into North and South halves, at a point which is 13.20 chains South 86[d]45'
West and 20.92 chains South 32[d]15' West of the most Easterly Northeast corner
of the said B. S. Bonney Donation Land Claim and running thence North 32[d]15'
East 435 feet to the South line of the Woodburn-Silverton Branch of the Southern
Pacific Railroad right-of-way; thence South 60[d]45' East along the South line
of said right-of-way 735.5 feet to its intersection with said division line;
thence West along said division line 920 feet to the place of beginning, and
being a part of Lot 5 of the North 1/2 of said Donation Land Claim, in Township
5 South, Range 1 West of Willamette Meridian in Marion County, Oregon.
SITE 6, PARCEL 4
Beginning at a point on the South boundary line of the Southern Pacific Railroad
right-of-way which is 531.2 feet North 32[d]15' East of the Southeast corner of
a 4.103 acre tract of land formerly owned by N. F. Strain, said tract being a
part of Lot 3 of the North 2 of the Donation Land Claim of B. S. Bonney and wife
in Township 5 South, Range 1 West of the Willamette Meridian in Marion County,
Oregon; thence South 32[d]15' West 22 feet; thence South 60[d]58' East parallel
with said right-of-way 1.424 chains; thence North 32[d]15' East 22 feet to the
South boundary line of said right-of-way; thence North 60[d]58' West along said
South boundary line 1.424 chains to the place of beginning, and being situated
in Donation Land Claim of B. S. Bonney and wife in Township 5 South, Range 1
West of the Willamette Meridian in Marion County, Oregon.
SITE 6, PARCEL 5
Beginning at a point which is North 19[d]45' East 13.645 chains and South
87[d]22' East 32.284 chains and North 19[d]23' East 44.62 chains from the
Southwest corner of the Thomas Fitzgerald Donation Land Claim in Township 5
South, Range 1 West of the Willamette Meridian, and running thence South
59[d]55' East along the South boundary line of the Southern Pacific Railroad
right-of-way 1.28 chains; thence South 19[d]23' West 3.54 chains; thence North
59[d]55' West 1.28 chains; thence North 19[d]23' East 3.54 chains to the place
of beginning, being situated in Marion County, Oregon.
SITE 6, PARCEL 6
Beginning at a point which is reached by beginning at the Southwest corner of
the Thomas Fitzgerald Donation Land Claim in Township 5 South, Range 1 West of
the Willamette Meridian, in Marion County, Oregon, and running thence North
19[d]45' East 13.645 chains; thence South 87[d]22' East 22.40 chains; thence
North 19[d]45' East 45.80 chains to the Northwest corner of that certain tract
deeded to Rudolph Zak, Edward Zak and Anna Zak, his wife, by deed recorded at
Page 526, Book 162, Records of Deeds for Marion County, Oregon; running thence
along the West line of additional land of said Zak Brothers, said land being
described in deed recorded at Page 527, Book 162, Records of Deeds for Marion
County, Oregon, Northeasterly 184.7 feet to a point on the South line
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SUBORDINATE TERM LOAN MORTGAGE AND FIXTURE FILING Page 4
PF ACQUISITION II, INC.
Rochester, New York
of the Southern Pacific Railroad right-of-way and being the beginning point of
the herein described tract; running thence along said railroad right-of-way
boundary South 60[d]26' East 551.2 feet, more or less, to the Northeast corner
of the above described Zak land; thence along the East line of said Zak land
South 19[d]23' West 130.0 feet; thence parallel with the said railroad North
60[d]26' West 130.0 feet; thence North 19[d]23' East 119.9 feet; thence on a
line parallel to and 10 feet from said railroad right-of-way boundary North
60[d]26' West 421.2 feet, more or less, to a point in the West line of said
additional land of Zak Brothers, 10 feet Southwest of point of beginning; thence
Northeast along said West line of Zak Brothers additional property, 10 feet to
point of beginning. SAVE AND EXCEPT, the Westerly 25 feet for a roadway.
SITE 6, PARCEL 7
Beginning at an iron pipe which marks the point of beginning of a tract of land
conveyed to Irene McMahan, by deed recorded in Volume 490, Page 3, Deed Records
of Marion County, Oregon, which point is 434.1 feet North 32[d]15' East from the
Southwest corner of Lot 4 of the subdivision of the North 1/2 of the B. S.
Bonney Donation Land Claim in Township 5 South, Range 1 West of the Willamette
Meridian in Marion County, Oregon; and running thence North 59[d]26' West a
distance of 35.76 feet along the South line of said McMahan tract to an iron
pipe at the Southwest corner thereof; thence North 32[d]28' East a distance of
308.50 feet along the West line of said tract and extended to an iron pipe;
thence North 60[d]45' West a distance of 74.90 feet to an iron pipe at an angle
point on the West line of said tract; thence North 32[d]30' East a distance of
199.90 feet along the said West line to the iron pipe at the Northwest corner
of said tract; thence South 60[d]45' East a distance of 202.98 feet along the
North line of said tract to the Northeast corner thereof; thence South 32[d]15'
West a distance of 508.60 feet along the West line of said tract to an iron
pipe; thence North 60[d]58' West a distance of 94.3 feet, more or less, to the
point of beginning.
SITE 6, PARCEL 8
Beginning on the East boundary of the B. S. Bonney Donation Land Claim in
Township 5 South, Range 1 West of the Willamette Meridian in Marion County,
Oregon, at a point which is 25.95 chains North 19[d]40' East from the Southeast
corner thereof; thence West 2,641.16 feet to the Easterly line of the Pacific
Highway as same is located in the said Township and Range; thence North 32[d]31'
East along the Easterly line of the said Pacific Highway, 186.78 feet to the
line dividing the said Bonney Donation Land Claim into North and South halves;
thence North 89[d]52' East along the line dividing the said claim into North and
South halves a distance of 2,598.02 feet to the Easterly line of said Bonney
Donation Land Claim; thence South 19[d]20' West along the Easterly line of the
said claim 172.42 feet to the place of beginning.
SAVE AND EXCEPT, a strip of land 60.00 feet wide conveyed to Oregonian Railroad
Company Limited by deed recorded in Volume 26, Page 81, of Deed Records, Marion
County, Oregon.
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SUBORDINATE TERM LOAN MORTGAGE AND FIXTURE FILING Page 5
PF ACQUISITION II, INC.
Rochester, New York
SAVE AND EXCEPT, that parcel of land situate in Section 17, Township 5 South,
Range 1 West of the Willamette Meridian, Marion county, Oregon, which is more
particularly described as follows: Beginning at the Southeast corner of that
tract of land conveyed to Terminal Ice and Cold Storage Company by deed recorded
in Volume 593, Page 395, Marion County Record of Deeds, said Southeast corner
being recorded as bearing South 19[d]22' West 1,283.53 feet from the most
Easterly Northeast corner of the Bradford S. Bonney Donation Land Claim No. 47,
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon; and running thence from the true point of beginning; South 19[d]22' West
70 feet, more or less, along the Southwesterly extension of the Southeasterly
boundary line of said Terminal Ice and Cold Storage Company tract to the
Northwesterly right-of-way line of the Southern Pacific Railroad; thence North
60[d]57' West 139 feet, more or less, along said Northwesterly railroad
right-of-way line to the most Easterly Southwest corner of said Terminal Ice and
Cold Storage Company tract; thence South 89[d]45' East 144.54 feet along the
Southerly boundary line of said Terminal Ice and Cold Storage Company tract to
the point of beginning.
SITE 6, PARCEL 9
Beginning at a stone in the East line of the B. S. Bonney Donation Land Claim in
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon, said stone being 646.61 feet North 19[d]38' East from the Southeast
corner of said claim; and running thence South 87[d]52' West 1,087.62 feet to a
stone; thence North 19[d]39' East 1,091.81 feet to an iron pipe; thence North
89[d]48' West 1,574.67 feet to a point in the Easterly right-of-way line of the
Pacific Highway; thence North 32[d]30' East 18.93 feet along said Easterly line,
to an iron pipe; thence South 89[d]48' East 2,640.76 feet to a stone in the East
line of said B. S. Bonney Donation Land Claim; thence South 19[d]38' West
1,061.66 feet along said East line to the point of beginning.
SITE 6, PARCEL 10
Beginning at an iron pipe which is 2,092.52 feet South 87[d]49' West and 625.00
feet North 04[d]46' East and 1,028.01 feet North 10[d]05' East from the
Southeast corner of the B. S. Bonney Donation Land Claim in Township 5 South,
Range 1 West of the Willamette Meridian, Marion County, Oregon; and running
thence North 89[d]48' West 247.23 feet to an iron pipe in the Easterly
right-of-way line of the Pacific Highway; thence South 32[d]30' West 206.88 feet
along said Easterly line to an iron pipe; thence South 82[d]26' East 322.67 feet
to an iron pipe; thence North 10[d]05' East 219.51 feet to the point of
beginning.
SITE 6, PARCEL 11
Beginning at a stone at the Southeast corner of the B. S. Bonney Donation Land
Claim in Township 5 South, Range 1 West of the Willamette Meridian, Marion
County, Oregon; and running thence
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SUBORDINATE TERM LOAN MORTGAGE AND FIXTURE FILING Page 6
PF ACQUISITION II, INC.
Rochester, New York
South 87[d]49' West along the South line of said claim 2,092.52 feet to a stone;
thence North 04[d]46' East 625.00 feet along the East line of that certain tract
of land described in Volume 449, Page 282, Marion County Deed Records to a stone
at the Northeast corner thereof; thence North 10[d]05' East 1,028.01 feet to an
iron pipe; thence North 89[d]48' West 247.23 feet to an iron pipe set in the
Easterly right-of-way line of the Pacific Highway; thence North 32[d]30' East
54.42 feet along said Easterly line to a point; thence South 89[d]48' East
1,574.67 feet to an iron pipe; thence South 19[d]39' West 1,091.81 feet to a
stone; thence North 87[d]52' East 1,087.62 feet to a stone in the East line of
said B. S. Bonney Donation Land Claim; thence South 19[d]38' West 646.61 feet
along said East line to the point of beginning.
SAVE AND EXCEPT, a portion of that tract of land conveyed to Agripac, Inc., an
Oregon Cooperative Corporation by Warranty Deed, recorded in Reel 918, Page 429,
Microfilm Records, Marion County, Oregon; said beginning point of the following
described parcel, being an iron rod with plastic cap marked LS 1362 and lying
3,589.65 feet North 16[d]59'26" West of the Southeast corner of Neil Johnson
Donation Land Claim No. 69 in Township 5 South, Range 1 West of the Willamette
Meridian, Marion County, Oregon; thence along the Westerly boundary of said
Agripac tract the following courses: South 86[d]53'16" West 730.83 feet to the
East right-of-way of Pacific Highway 99E; thence North 31[d]35'00" East along
said right-of-way 72.98 feet; thence North 86[d]53'16" East 702.36 feet to an
iron pipe; thence North 9[d]10'24" East 195.00 feet; thence leaving said
Westerly boundary North 30[d]12'00" East 409.00 feet; thence North 0[d]34'00"
West 391.00 feet; thence South 86[d]37'53" East 494.69 feet; thence South
61[d]37'04" East 591.66 feet; thence South 28[d]22'56" West 1,030.50 feet;
thence North 61[d]37'04" West 396.67 feet; thence North 85[d]47'24" West 419.43
feet to the point of beginning.
SITE 6, PARCEL 12
That parcel of land situate in the B. S. Bonney Donation Land Claim, Section 17,
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon, described in Volume 579, Page 486 of the Deed Records of Marion County,
Oregon, which is more particularly described as follows: Beginning at a 3/4"
iron pipe from whence the Southwest corner of Lot 4 of the subdivision of the
North 2 of B. S. Bonney Donation Land Claim bears South 60[d]45' East 74.90
feet and South 32[d]28' West 308.50 feet and South 59[d]26' East 35.76 feet
and South 32[d]15' West 434.1 feet and running thence North 60[d]45' West 22
feet to an iron pipe; thence North 32[d]30' East 199.90 feet; thence South
60[d]45' East 22.00 feet; thence South 32[d]03' West 199.90 feet to the point
of beginning.
SITE 6, PARCEL 13
That tract of land situate in Sections 19 and 20, Township 5 South, Range 1 West
of the Willamette Meridian in Marion County, Oregon, which is more particularly
described as follows: Beginning at an iron bar on the Southerly boundary line of
that tract of land conveyed to General Foods
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Corporation by deed recorded in Volume 547, Page 833, Marion County Record of
Deeds, said iron bar being also the Northeasterly corner of that tract of land
conveyed to F and D Geschwill by deed recorded in Volume 404, Page 152, Deed
Records for Marion County, Oregon, in Sections 19 and 20, Township 5 South,
Range 1 West of the Willamette Meridian, Marion County, Oregon, which bears
South 89[d]45' East 309.21 feet and North 31[d]59' East 3,330.55 feet and North
86[d]53' East 1,070.32 feet from the most Southerly Southwest corner of the Neil
Johnson Donation Land Claim No. 69, and running thence from the true point of
beginning; South 18[d]50' West 2,665.47 feet along the Easterly boundary line of
said Geschwill tract to a 3/4" iron pipe; thence South 89[d]39'30" West 1,753.47
feet to a 3/4" iron pipe on the Westerly boundary of that tract of land conveyed
to F and D Geschwill by deed recorded in Volume 465, Page 177, Deed Records for
Marion County, Oregon; thence North 31[d]59' East 2,917.55 feet along said
Westerly boundary and the Northeasterly extension thereof to a 3/4" iron pipe on
the Northerly boundary line of said Geschwill tract recorded in Volume 404, Page
152, Deed Records for Marion County, Oregon; thence North 86[d]53' East 1,070.32
feet to the point of beginning.
SAVE AND EXCEPT, beginning at a point on the West line of that tract of land
conveyed to Fred Geschwill by deed recorded in Volume 288, Page 341, Deed
Records for Marion County, Oregon, which is South 18[d]50'49" West 1,654.33 feet
and South 89[d]39'30" West 1,053.19 feet from the Northeast corner of the Neil
Johnson Donation Land Claim No. 69 in Township 5 South, Range 1 West of the
Willamette Meridian in Marion County, Oregon; thence South 18[d]49'55" West
1,064.46 feet; thence South 89[d]39'30" West 1,753.46 feet to an iron pipe in
the Southwest corner of that tract of land conveyed to General Foods Corporation
by deed recorded in Volume 625, Page 152, Deed Records for Marion County,
Oregon; thence North 31[d]59' East 1,189.80 feet along the West line of said
General Foods tract to a 5/8 iron rod; thence North 89[d]39'30" East 1,466.84
feet to the place of beginning.
SITE 6, PARCEL 14
Beginning at the Northeast corner of the Neil Johnson Land Claim No. 69 in
Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon; thence South 18[d]50'49" West 1,654.33 feet along the East line of said
claim to 1 5/8" iron rod; thence South 89[d]39'30" West 1,053.19 feet to a point
in the West line of the Fred Geschwill tract as described in Volume 288, Page
341, Deed Records for Marion County, Oregon; thence North 18[d]49'55" East
1,599.87 feet to an iron bar in the North line of said claim; thence North
86[d]55'04" East 1,072.71 feet to the place of beginning.
SITE 6, PARCEL 15
Beginning at an iron pipe in the West line of the Thomas Fitzgerald Donation
Land Claim 13.645 chains from the Southwest corner of the same in Township 5
South, Range 1 West of the Willamette
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Meridian, in Marion County, Oregon; thence North 19[d]45' East along the West
line of said claim 45.40 chains to a stone; thence South 88[d]17' East 11.26
chains to the iron bar; thence South 19[d]45' West 45.60 chains to an iron bar;
thence North 87[d]23' West 11.20 chains to the point of beginning, being
situated in the Thomas Fitzgerald Donation Land Claim in Township 5 South, Range
1 West of the Willamette Meridian in Marion County, Oregon.
SITE 6, PARCEL 16
Beginning at a point 13.645 chains North 19[d]45' East and 11.20 chains South
87[d]22' East from the Southwest corner of the Thomas Fitzgerald Donation Land
Claim in Township 5 South, Range 1 West of the Willamette Meridian in Marion
County, Oregon; thence North 19[d]45' East 9.32 chains to an iron pipe; thence
South 87[d]22' East 5.615 chains to the Southwest corner of a tract of land
conveyed to Harvey E. Mikkelson, et al, by deed recorded in Volume 455, Page
502, Deed Records for Marion County, Oregon; thence North 19[d]45' East 30.439
chains; thence South 70[d]15' East 5.346 chains; thence North 19[d]45' East
7.672 chains to an iron bar at the Northwest corner of the fourth tract of land
described in deed to Harvey E. Mikkelson, et al, recorded in Volume 444, Page
672, Deed Records for Marion County, Oregon; thence South 88[d]17' East 1.09
chains to a stone at most Westerly Southwest corner of a tract of land deeded to
Martin Aicher by Sebastian Aicher, et ux, by deed recorded in Volume 73, Page
450, Deed Records for Marion County, Oregon; thence North 18[d]44' East 2.80
chains to an iron pipe in the South line of the Southern Pacific Railroad
right-of-way; thence South 60[d]26' East 5.74 chains along said right-of-way to
the Northerly boundary of the first tract of land described in said deed to
Harvey E. Mikkelson, et al, recorded in Volume 444, Page 672, Deed Records;
thence South 60[d]26' East along said Northerly boundary a distance of 2.62
chains to the Northeasterly corner of said parcel; thence South 19[d]23' West
44.62 chains; thence North 87[d]22' West 21.084 chains to the place of
beginning.
SAVE AND EXCEPT, beginning at a point which is reached by beginning at the
Southwest corner of the Thomas Fitzgerald Donation Land Claim in Township 5
South, Range 1 West of the Willamette Meridian, in Marion County, Oregon, and
running thence North 19[d]45' East 13.645 chains; thence South 87[d]22' East
22.40 chains; thence North 19[d]45' East 45.80 chains to the Northwest corner of
that certain tract deeded to Rudolph Zak, Edward Zak and Anna Zak, his wife, by
deed recorded at Page 426, Book 162, Records of Deeds for Marion County, Oregon;
running thence along the West line of additional land of said Zak Brothers, said
land being described in deed recorded at Page 527, Book 162, Records of Deeds
for Marion County, Oregon, Northeasterly 184.7 feet to a point on the South line
of the Southern Pacific Railroad right-of-way and being the beginning point of
the herein described tract; running thence along said railroad right-of-way
boundary South 60[d]26' East 551.2 feet, more or less, to the Northeast corner
of the above described Zak land; thence along the East line of said Zak land
South 19[d]23' West 130.0 feet; thence parallel with the said railroad North
60[d]26' West 130.0 feet; thence North 19[d]23' East 119.9 feet; thence on a
line parallel to and 10feet from said railroad right-of-way boundary North
60[d]26' West 421.2 feet, more or less,
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to a point in the West line of said additional land of Zak Brothers, 10 feet
Southwest of point of beginning; thence Northeast along said West line of Zak
Brothers additional property, 10 feet to point of beginning. SAVE AND EXCEPT,
the Westerly 25 feet for a roadway.
SITE 6, PARCEL 17
Beginning at an iron pipe on the North line of the Southern Pacific Railroad
right-of-way at a point 93 links North 18[d]44' East from the North corner of
the last above mentioned tract; thence North 18[d]44' East 2.96 chains to the
centerline of the county road; thence South 27[d]29' East along the center of
said road 5.37 chains to an iron pipe in the North line of the said railroad
right-of-way; thence North 60[d]26' West 3.95 chains to the point of beginning.
SITE 6, PARCEL 18
Beginning at a car spring on the Northerly boundary line of that tract of land
described in contract to A. L. Steffen and E. I. Steffen, recorded in Volume
460, Page 90, Deed Records for Marion County, Oregon, said car spring marking
the Southeast corner of that tract of land conveyed to H. E. Mikkelson and M.
Mikkelson, by deed recorded in Volume 444, Page 672, Deed Records for Marion
County, Oregon, said car spring is recorded as bearing North 19[d]45' East
900.57 feet and South 87[d]22' East 2,130.7 feet from the Southwest corner of
the Thomas Fitzgerald Donation Land Claim No. 54 in Township 5 South, Range 1
West of the Willamette Meridian in Marion County, Oregon; and running thence
from the true point of beginning; South 88[d]04'10" East 2,865.86 feet along
said Northerly boundary line of said Steffen tract to a 1/2" iron pipe marking
the Northeasterly corner of said tract; thence South 12[d] West 874.70 feet to a
two inch iron pipe marking the Southeasterly corner of that tract of land
described in contract to A. L. Steffen and E. I. Steffen, recorded in Volume
520, Page 84, Deed Records for Marion County, Oregon; thence North 88[d]02' West
1,042.05 feet along the Southerly boundary line of said Steffen tract to a 1/2"
iron pipe; thence North 01[d]55'50" East 840.83 feet to a 1/2" iron pipe on a
line parallel with and a perpendicular distance of 20.00 feet, measured
Southerly from said Northerly boundary line of said Steffen tract described in
Volume 460, Page 90, Deed Records for Marion County, Oregon; thence North
88[d]04'10" West 1,697.06 feet along said line parallel with said Northerly
boundary line to a 1/2" iron pipe; thence North 08[d]03'24" East 20.31 feet to a
1/2" iron pipe on the said Northerly boundary line; thence South 88[d]04'10"
East 22.66 feet along said Northerly boundary line to the point of beginning.
SITE 6, PARCEL 19
Beginning on the Westerly line and 6.78 chains North 19[d]45' East from the
Southwest corner of the Thomas Fitzgerald Donation Land Claim No. 54 in Township
5 South, Range 1 West of the Willamette Meridian in Marion County, Oregon;
thence North 19[d]45' East 6.865 chains along the Westerly line of said
Fitzgerald Claim; thence South 87[d]22' East 2,108.08 feet to the Northwesterly
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corner of a tract of land conveyed to General Foods Corporation, by deed
recorded in Volume 640, Page 501, Deed Records for Marion County, Oregon; thence
South 08[d]03'24" West 20.31 feet to 1/2 inch iron pipe; thence South
88[d]04'10" East 1,697.06 feet to a 1/2 inch iron pipe; thence South 1[d]55'50"
West to a point on the Southerly line of a tract described in Agreement recorded
in Volume 460, Page 90, Deed Records of Marion County, Oregon; thence North
87[d]14' West 3,918.00 feet, more or less, to a point which is 10.00 feet from
the Westerly line of said Fitzgerald Claim, as measured perpendicular thereto;
thence South 19[d]45' West 6.70 chains to a point on the Southerly line of said
Fitzgerald Claim, which is South 87[d]14' East 10.00 feet from the Southwest
corner thereof; thence North 87[d]14' West 10.00 feet from the Southwest corner
of said Fitzgerald Claim; thence North 19[d]45' East 6.78 chains to the place of
beginning.
SITE 6, PARCEL 20
Beginning at the Southwest corner of the Donation Land Claim of Thomas
Fitzgerald and wife, in Township 5 South, Range 1 West of the Willamette
Meridian, in said County and State; thence North 19[d]45' East 6.78 chains along
the West line of the Thomas Fitzgerald claim; thence South 87[d]14' East 76.47
chains to the East line of said claim; thence South 11[d]54' West 6.586 chains
to the Southeast corner of the Thomas Fitzgerald claim; thence North 87[d]14'
West 77.41 chains along the South line of the said claim to the place of
beginning.
SAVE AND EXCEPT, that portion thereof included in deed to General Foods
Corporation recorded December 14, 1967 in Book 640, Page 501, Deed Records,
Marion County, Oregon.
SITE 6 PARCEL 21: (PLANT 8)
All of Mortgagor's right, title and interest in and to that certain real
property facility lease between PF Acquisition II, Inc., (as Assignee to
Agripac, Inc.) as Lessee, and Greenfield Partners, Ltd., an Oregon limited
partnership as Lessor, pursuant to an undated Lease related to the real property
more particularly described below:
IMPROVEMENTS ONLY on the following described parcel:
A portion of that tract of land conveyed to Agripac, Inc., an Oregon Cooperative
Corporation by Warranty Deed, recorded in Reel 918, Page 429, Microfilm Records,
Marion County, Oregon; said beginning point of the following described parcel,
being an iron rod with plastic cap marked LS 1362 and lying 3,589.65 feet North
16[d]59'26" West of the Southeast corner of Neil Johnson Donation Land Claim No.
69, in Township 5 South, Range 1 West of the Willamette Meridian, Marion County,
Oregon; thence along the westerly boundary of said Agripac tract the following
courses: 86[d]53'16" West, 730.83 feet to the east right of way of Pacific Hwy
99E; thence North 31[d]35'00" East along said right of way, 72.98 feet; thence
North 86[d]53'16" East, 702.36 feet to an iron pipe; thence North 9[d]10'24"
East, 195.00 feet; thence leaving said westerly boundary, North 30[d]12'00" West
391.00
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feet; thence South 86[d]37'53" East, 494.69 feet; thence South 61[d]37'04" East,
591.66 feet; thence South 28[d]22'56" West, 1,030.50 feet; thence North
61[d]37'04" West 396.67 feet; thence North 85[d]47'24" West, 419.43 feet to the
point of beginning.
SITE 6 PARCEL 22: All of Mortgagor's right, title and interest in and to that
certain real property lease dated February 1, 1999, between Agripac, Inc. and
assumed by PF Acquisition II, Inc., as Lessee, and Albert J. Kowash, Trust as
Lessor, pursuant to an Lease related to the real property more particularly
described below and including all rights and benefits under that certain
Amendment to Permission to Utilize and Maintain Underground Water Lines dated
February 19, 1999, between Albert J. Kowash, Trust and Agripac, Inc. and assumed
by PF Acquisition II, Inc.:
Tract One:
Beginning 22.965 chains North 19[d]45' East and 11.20 chains South 87[d]22' East
from the Southwest corner of the Thomas Fitzgerald D.L.C. in Township 5 South
Range 1 West of the Willamette Meridian in Marion County, Oregon; thence North
19[d]45' East 36.28 chains to an iron bar; thence South 88[d]17' East 5.655
chains to a stone; thence South 19[d]45' West 36.38 chains to an iron pipe;
thence North 87[d]22' West 5.615 chains to the point of beginning in the
Thomas Fitzgerald D.L.C. in Township 5 South, Range 1 West, Marion County,
Oregon.
Tract Two:
All that portion of the following described property lying South of the Southern
Pacific Railroad right of way as follows: Beginning at a stone in the Northwest
corner of the Donation Land Claim of Thomas Fitzgerald and wife in Township 5
South, Range 1 West of the Willamette Meridian, Marion County, Oregon; thence
South 26[d]44' East 31.24 chains to an iron pipe in the center line of the
County Road; thence South 19[d]45' West 6.41 chains to the line between that
part of the wife's half of said Donation Land Claim set apart to Thomas, Henry
and Catherine I. Fitzgerald, and that part set apart to Honora and Mary
Fitzgerald; running thence North 88[d] West 23.61 chains; thence North
19 3/4[d] East 35.48 chains to the place of beginning.
Save and except that portion conveyed to the State Highway Commission by deed
recorded April 18, 1952 in Volume 288, Page 341, Deed Records of Marion County,
Oregon.
Together with the tenements, hereditaments and appurtenances now or hereafter
thereunto belonging or in anywise appertaining, and all the rents, issues and
profits arising or to arise therefrom, inclusive of all the estate, right,
title, interest and claim whatsoever, at law or in equity, which Mortgagor now
has or may hereafter acquire in or to the described real property and each and
every part and parcel thereof, inclusive of all structures, improvements,
appurtenances, fixtures, easements, rights and privileges now owned or hereafter
acquired, erected on, or used in connection with the above-
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described real property, all of which are hereby declared to be appurtenant to
the land; all waters and water rights of every kind and description and however
evidenced, and all ditches or other conduits, rights therein and rights of way
therefor, which now are or hereafter may be appurtenant to said premises or any
part thereof, or used in connection therewith; all structures, improvements and
fixtures now or hereafter acquired and placed, located, installed in, or used on
or about any premises owned, leased or operated by Mortgagor, including without
limitation the described premises, and after-acquired title to any of the
described real property resulting from purchase or the exercise of an option to
purchase, and to any streets or other public roadways abutting the described
real property resulting from any vacation by operation of law or conveyance, all
of which shall be deemed and construed as part of the realty. All property
subject to this Mortgage is hereinafter referred to as "the mortgaged premises."
TO HAVE AND TO HOLD the mortgaged premises unto Mortgagee, its successors and
assigns.
IT IS HEREBY AGREED that all covenants and stipulations in these presents
contained shall bind the successors and assigns of Mortgagor and shall inure to
the benefit of the successors and assigns of Mortgagee.
Mortgagor covenants and agrees:
1. At the time of the execution and delivery of this Mortgage, Mortgagor is well
seized of the mortgaged premises in fee simple (except as to the leasehold
interests referenced in Site 6, Parcel 21 and Site 6 Parcel 22), has good right
and authority to mortgage the same as herein provided, and the mortgaged
premises are free and clear of liens and encumbrances other than liens permitted
pursuant to the Loan Agreement.
2. Mortgagor will pay, when due, the indebtedness hereby secured in accordance
with the terms thereof.
3. Mortgagor will pay all taxes, assessments, water and other charges for
utility services that may be levied, assessed or charged upon or against the
mortgaged premises, or any part thereof, before the same become past due
according to law, and will promptly pay and satisfy any mechanic's lien or other
encumbrances that might by operation of law or otherwise become a lien upon the
mortgaged premises whether or not superior to the lien of this Mortgage, all
premiums upon insurance policies on the mortgaged property, all licenses or fees
legally owing by it, all rentals or other charges for the use of any leased
ground or premises upon which any of the mortgaged premises may be located, all
taxes or assessments which now are or which may hereafter be levied or assessed
and which are or are to become a lien upon the mortgaged premises and property,
or any part thereof, or upon this Mortgage or the debt secured thereby, or upon
the interest payable thereon, and amounts for investment in bank stock as may be
required. In case of default in payment of any
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of the foregoing, Mortgagee, its successors or assigns, may at its option pay
said insurance premiums, or reinsure the mortgaged premises and pay all premiums
therefor, and pay licenses, fees, rentals, charges, taxes and/or assessments due
or claimed to be due under any legislative power or authority or under any valid
contract; and any amounts so paid by Mortgagee, and any amount required for
investment in bank stock as aforesaid shall become part of the principle debt;
and amounts so paid by Mortgagee shall bear interest from the date of payment.
4. Mortgagor (i) will keep all improvements erected on the mortgaged premises in
good order and repair, (ii) will not permit waste of the mortgaged premises to
do or suffer anything to be done to depreciate or impair the value of the
mortgaged premises during the life of this Mortgage, (iii) will not make any
changes in or alterations to the improvements on the mortgaged premises which
will materially decrease the value of the same, and (iv) will not remove or
permit to be removed any improvements from the mortgaged premises, without the
prior written consent of Mortgagee.
5. Mortgagor will keep the building improvements now erected, or which may
hereafter be erected, on the mortgaged premises insured against loss or damage
by fire with extended coverage endorsement, written by a responsible insurance
company or insurance companies satisfactory to Mortgagee in an amount
satisfactory to Mortgagee, naming Mortgagor and Mortgagee insured parties as
their interests may appear, and will cause to be executed and attached to all
policies of insurance issued thereon a clause in form satisfactory to Mortgagee,
making loss payable to Mortgagee as its interests may appear, said policy or
policies of insurance to be delivered to Mortgagee. Any insurance funds paid to
Mortgagee as a result of damage or loss to the mortgaged premises covered may at
the option of Mortgagee be released to Mortgagor to be expended in the repair,
restoration, or replacement of the mortgaged premises so damaged or lost, or be
retained by Mortgagee and be applied toward the payment of all or such of the
items of indebtedness secured hereby as Mortgagee may elect. Mortgagor hereby
appoints Mortgagee agent to collect all amounts payable under said policies to
Mortgagor, and such amounts received after the costs of collection shall be
applied to the payment of the principal sum and interest thereon, and other sums
secured hereby.
6. Mortgagor further makes the following representations, warranties, and
covenants, all of which are subject to any exceptions that Mortgagor may have
previously disclosed in writing to Mortgagee, and which, to the extent that they
deal with representations of fact, are based on Mortgagor's present knowledge,
arrived at after reasonable inquiry.
USE OF PROPERTY AND FACILITIES.
(1) Mortgagor will (a) use, handle, transport or store Hazardous
Material as defined under any Environmental Law or (b) store or treat
nonhazardous wastes (i) in a good and prudent manner in the ordinary course of
business, and (ii) in compliance with all applicable
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Environmental Laws.
(2) Mortgagor will not conduct or allow to be conducted, in violation
of any Environmental Law, any business, operations or activity on the property,
or employ or use the property to generate, use, handle, manufacture, treat,
store, process, transport or dispose of any Hazardous Materials, or any other
substance which is prohibited, controlled or regulated under applicable law, or
which poses a threat or nuisance to public safety, health or the environment or
cause, or allow to be caused, a known or suspected release of Hazardous
Materials, on, under or from the property.
(3) Mortgagor will not do or permit any act or thing, business or
operation, that poses an unreasonable risk of harm, or impairs, or may impair,
the value of the property, or any part thereof.
(b) CONDITION OF PROPERTY.
(1) Mortgagor shall take all appropriate response action, including
any removal and remedial action, in the event of a release, emission, discharge
or disposal of Hazardous Materials in, on, under or about the property, so as to
remain in compliance with Environmental Law as hereinafter defined.
(2) Underground tanks, wells (except domestic water wells), septic
tanks, ponds, pits, or any other storage tanks (whether currently in use or
abandoned) on the property, if any, are maintained in compliance with applicable
Environmental Law.
(c) NOTICE OF ENVIRONMENTAL PROBLEM OR LITIGATION. Neither Mortgagor nor
any of its tenants have given, nor were they required to give, nor have they
received, any notice, letter, citation, order, warning, complaint, inquiry,
claim or demand that: (1) Mortgagor and/or any tenants have violated, or are
about to violate, any Environmental Law, judgment or order; (2) there has been a
release, or there is a threat of release, of Hazardous Materials from the
property; (3) Mortgagor and/or tenants may be or are liable, in whole or in
part, for the costs of cleaning up, remediating, removing or responding to a
release or threatened release of Hazardous Materials; (4) the property is
subject to a lien in favor of any governmental entity or any liability, costs or
damages, under any Environmental Law arising from or costs incurred by such
governmental entity in response to a release or a threatened release of a
Hazardous Material. Mortgagor further represents and warrants that no conditions
currently exist or are currently reasonably foreseeable, that would subject
Mortgagor to any such investigation, litigation, administrative enforcement or
any damages, penalties, injunctive relief, or cleanup costs under any
Environmental Law. In the event of such notice, Mortgagor and any tenants shall
immediately provide a copy to the Mortgagee.
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(d) RIGHT OF INSPECTION. Mortgagor hereby grants, and will cause any
tenants to grant, to Mortgagee, its agents, attorneys, employees, consultants,
contractors, successors and assigns, an irrevocable license and authorization,
upon reasonable notice, to enter upon and inspect the property and facilities
thereon, and perform such tests, including without limitation, subsurface
testing, soils and groundwater testing, and other tests which may physically
invade the property thereon, as the Mortgagee, in its sole discretion,
determines are necessary to protect its security interest, provided however,
that under no circumstances shall the Mortgagee be obligated to perform such
inspections or tests.
(e) INDEMNITY. Mortgagor agrees to indemnify and hold Mortgagee, and each
lender under the Loan Agreement, their directors, employees, agents, and their
successors and assigns, harmless from and against any and all claims, losses,
damages, liabilities, fines, penalties, charges, judgments, administrative
orders, remedial action requirements, enforcement actions of any kind, and all
costs and expenses incurred in connection therewith (including, but not limited
to, attorney's fees and expenses) arising directly or indirectly, in whole or in
part, out of any failure of Mortgagor to comply with the environmental
representations, warranties and covenants contained herein.
(f) CONTINUATION OF REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITIES.
Mortgagor's representations, warranties, covenants and indemnities contained
herein shall survive the occurrence of any event whatsoever, including without
limitation, the satisfaction of the promissory note(s) secured hereby, the
reconveyance or foreclosure of this mortgage, the acceptance by Mortgagee of a
deed in lieu of foreclosure, or any transfer or abandonment of the property.
(g) CORRECTIVE ACTION. In the event the Mortgagor is in breach of any of
its representations, warranties or agreements as set forth above, Mortgagor at
its sole expense, shall take all action required, including environmental
cleanup of the property, to comply with the representations, warranties, and
covenants herein or applicable legal requirements and, in any event, shall take
all action deemed necessary under all applicable Environmental Laws.
(h) HAZARDOUS MATERIALS DEFINED. The term "Hazardous Materials" shall mean
dangerous, toxic, or hazardous pollutants, contaminants, chemicals, wastes,
materials or substances, as defined in or governed by the provisions of any
Environmental Law.
(i) ENVIRONMENTAL LAW DEFINED. The term "Environmental Law" shall mean any
federal, state or local law, statute, ordinance, rule, regulation,
administrative order and permit now in effect or hereinafter enacted, pertaining
to the public health, safety, industrial hygiene, or the environmental
conditions on, under or about the property.
7. Should Mortgagor fail to pay any taxes, assessments, fire insurance premiums
or other charges payable by Mortgagor hereunder, before the same shall be past
due, Mortgagee may, at its
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option, make payment thereof, and the amounts so paid with interest thereon at
the rate then payable on indebtedness secured hereby shall be added to and
become a part of the debt secured by this Mortgage and shall be repaid to
Mortgagee forthwith, without waiver of any right arising from breach of any of
the covenants, and for such payments with interest the mortgaged premises as
well as Mortgagor shall be bound to the same extent as bound for the payment of
the indebtedness herein specifically described. Should Mortgagee make such
payment or payments at it option as set forth in the foregoing sentence, such
act shall not constitute a waiver by Mortgagee of any other rights it may have
arising from Mortgagor's failure as aforesaid, including but not limited to
Mortgagee's rights under paragraph 8 of this Mortgage.
8. Mortgagor hereby assigns and transfers unto Mortgagee the issues and profits,
together with full power and authority to demand, sue for and collect the same
in the name of Mortgagor, or in its own name, and to take possession of and
manage the mortgaged premises or to cause a receiver to be appointed for such
purpose and apply the income therefrom, after the costs of collection and
management, to the reduction of the indebtedness secured hereby; provided,
however, that the right to collection and management shall not apply as long as
this Mortgage is in good standing.
9. Each of the following shall constitute a default under this Mortgage, and if
any of the following shall occur, the entire unpaid balance of principal and
accrued interest secured by this Mortgage shall become immediately due and
payable at the option of Mortgagee and foreclosure proceedings may be commenced
forthwith:
The occurrence of any Event of Default under the Loan Agreement;
Failure of Mortgagor to perform or observe all the provisions of this
Mortgage;
(c) Loss or destruction of or substantial damage to a material portion of
the mortgaged premises; or
(d) Sale or other transfer of the mortgaged premises or any part thereof
without the prior written consent of Mortgagee.
The failure of Mortgagee to exercise the option given hereunder shall not be
taken or deemed a waiver of its right to exercise such option as to any such
past or subsequent violation of any of said covenants or stipulations.
10. In the event suit or action is begun to foreclose this Mortgage, Mortgagor
will pay in addition to the costs and disbursements allowed by law such sum as
the court may adjudge reasonable attorney fees in such suit or action, or any
appeal therefrom, and such sum as the court may adjudge reasonable for the
necessary examination and search of the public records respecting the title to
the
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mortgaged premises, and the plaintiff in such suit or action may take judgment
therein for such sums. Mortgagor will pay to Mortgagee all sums, including
costs, expenses and reasonable agent and attorney fees, which Mortgagee or the
lenders under the Loan Agreement may expend or become obligated for in any
proceedings, legal or otherwise, involving the title to the mortgaged premises,
or to establish, protect or sustain the lien of this Mortgage, or its priority,
or in defending against liens, claims, rights, estates, easements, or
restrictions, or for evidences of title to the mortgaged premises, or for
expenses and attorney fees incurred; together, always, with interest on all sums
at the rate then payable on the indebtedness secured hereby; and for payment of
said sums and interest this Mortgage shall stand as security in like manner and
effect as for payment of said debt.
11. If the mortgaged premises, or any part thereof, be condemned under any power
of eminent domain or acquired for public use, the damages, proceeds, and the
consideration for such acquisition, to the extent of the full amount of the
indebtedness secured by this Mortgage, including any expenses and attorney fees
incurred by Mortgagee or the lenders under the Loan Agreement on account of such
condemnation, are hereby assigned by Mortgagor to Mortgagee and shall be paid
forthwith to Mortgagee to be applied by it to the payment of such expenses and
attorney fees and any balance on account of the last maturing portion of the
indebtedness secured hereby.
As further security for the payment of all indebtedness herein mentioned,
all Mortgagor's rents and profits from the mortgaged premises and the right,
title and interest of Mortgagor in and under all leases now or hereafter
affecting the mortgaged premises, are hereby assigned and transferred to
Mortgagee. So long as no default shall have occurred under this Mortgage,
Mortgagor may collect assigned rents and profits as the same fall due, but upon
the occurrence of any default hereunder, or at such later time as Mortgagee in
its sole discretion may fix by written notice, all right of Mortgagor to collect
or receive rents or profits shall wholly terminate. No lease of the whole or any
part of the mortgaged premises involving an initial term of more than three
years shall be modified or terminated without the written consent of Mortgagee,
nor shall the surrender of any such lease be accepted nor any rental thereunder
be collected for more than two months in advance without like written consent.
In the event of any default hereunder and the exercise by Mortgagee of its
rights hereby granted, Mortgagor agrees that payments made by tenants or
occupants to Mortgagee shall, as to such tenants, be considered as though made
to Mortgagor and in discharge of tenants' obligations as such to Mortgagor.
Nothing herein contained shall be construed as obliging Mortgagee to perform any
of Mortgagor's covenants under any lease or rental agreement. Mortgagor shall
execute and deliver to Mortgagee upon demand any further or supplemental
assignments necessary to effectuate the intentions of this paragraph and upon
failure of Mortgagor so to comply, Mortgagee may, in addition to any other right
or remedy it has, declare the entire unpaid balance of principal and interest
secured by this Mortgage immediately due and payable.
The word "Mortgagor" and the language of this instrument shall, where there
is more than one mortgagor, be construed as plural and be binding jointly and
severally upon all mortgagors and
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the word "Mortgagee" shall apply to any holder of this Mortgage. All of the
covenants of Mortgagor shall be binding upon its successors and assigns and
inure to the benefit of the successors and assigns of Mortgagee. In the event of
the transfer of the mortgaged premises or any part thereof or any interest
therein, whether voluntary or involuntary or by operation of law, Mortgagee may,
without notice to Mortgagor or any one else, once or often, extend the time of
payment or grant renewals of indebtedness hereby secured for any term, execute
releases or partial releases from the lien of this Mortgage or in any other
respect modify the terms hereof without thereby affecting the personal primary
liability of Mortgagor for the payment of the indebtedness hereby secured. No
condition of this Mortgage shall be deemed waived unless the same be expressly
waived in writing by Mortgagee. Whenever any notice, demand, or request is
required by the terms hereof or by any law now in existence or hereafter
enacted, such notice, demand or request shall be sufficient if enclosed in a
postpaid envelope addressed to Mortgagor at the last address actually furnished
to Mortgagee or at the mortgaged premises and deposited in any post office,
station or letter box.
Mortgagor will, at all times during the existence of any part of the lien
herein provided for, maintain its corporate existence and operate its business
as a cooperative association qualified under the Farm Credit Act of 1971 and any
amendment thereto, and under applicable statutes of the state.
This Mortgage, without affecting its validity as a real estate mortgage, is
also executed and shall be construed as a "Security Agreement" under the Uniform
Commercial Code granting to Mortgagee a security interest in all personal
property mentioned herein, and in addition to the rights and remedies provided
herein, Mortgagee shall have all the rights and remedies granted by such Uniform
Commercial Code; and reasonable notice, when notice is required, shall be ten
(10) days.
16. (a)(1) Notwithstanding the other provisions of this Mortgage and the terms
or provisions of any agreement or arrangement which any of the Junior Parties
(as defined below) or any of the Senior Parties (as defined below) may now or
hereafter have with Mortgagor or each other, or any rule of law, and
irrespective of the time, order or method of attachment or perfection of any
security interest or the recordation or other filing in any public record of any
financing statement, any security interest in the Senior Collateral (as defined
below) granted to Senior Mortgagee (as defined below) by Mortgagor, whether or
not perfected, or any other right, title or interest in the Senior Collateral
now or hereafter held by Senior Mortgagee (as defined below), are and shall
remain senior to any security interest therein now or hereafter granted by
Mortgagor or other person to Mortgagee.
(2) For purposes of this Mortgage, the following terms shall have the
meanings respectively set forth after each:
(i) "Junior Parties" shall mean Mortgagee and the Lenders
party to the Loan Agreement.
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(ii) "Senior Collateral" shall mean "the mortgaged
premises" as defined in that certain Mortgage dated as of February 22, 1999 by
Mortgagor in favor of Senior Mortgagee concerning (i) the Senior Indebtedness
and (ii) certain real property located in the County of Marion, State of Oregon.
(iii) "Senior Indebtedness" shall have the meaning assigned
to such term in the Notes (as defined in the Loan Agreement).
(iv) "Senior Loan Agreement" shall mean that certain
Credit Agreement dated as of February 22, 1999 among Mortgagor, the Banks party
thereto and CoBank, ACB, as Administrative Agent for such Banks.
(v) "Senior Mortgagee" shall mean CoBank, ACB, as
Administrative Agent for the Banks party to the Senior Loan Agreement.
(vi) "Senior Parties" shall mean Senior Mortgagee and the
Banks party to the Senior Loan Agreement.
(b) Notwithstanding anything to the contrary contained in this
Mortgage, Mortgagee agrees as follows:
(1) Mortgagee shall have no right to take any action with respect
to the Senior Collateral, whether by judicial or non-judicial foreclosure,
notification to Mortgagor's account debtors, the seeking of the appointment of a
receiver for any portion of Mortgagor's assets, or otherwise, unless and until
all Senior Indebtedness has been fully and indefeasibly paid in cash or
otherwise satisfied in full.
(2) Any proceeds of the Senior Collateral, or proceeds thereof
(whether or not identifiable), received by Mortgagee shall be paid to Senior
Mortgagee on demand.
(3) In the event Senior Mortgagee elects to exercise its remedies
in connection with the Senior Collateral, Senior Mortgagee may apply the Senior
Collateral, or foreclose upon, sell, dispose of, realize upon, or assert or
enforce any right, claim, demand, action or cause of action whatsoever that
Senior Mortgagee may have in respect of the Senior Collateral, in any manner, at
any time and for any consideration deemed appropriate by Senior Mortgagee.
Senior Mortgagee shall have no obligation to dispose of the Senior Collateral in
any manner, at any time, or for any consideration that enhances or preserves the
value thereof for Mortgagee. Mortgagee waives any claim or cause of action
against Senior Mortgagee with respect to any application of, foreclosure upon,
sale or disposition of the Senior Collateral.
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(4) If Mortgagee obtains any payment or other assets in violation
of this Mortgage, Mortgagee agrees that it shall hold all such payments and
other assets in trust for Senior Mortgagee, and shall immediately pay, deliver
and assign to Senior Mortgagee any such payments and assets for application to
the Senior Indebtedness in such order and manner as Senior Mortgagee shall
determine.
17. Notwithstanding anything to the contrary in this Mortgage, Mortgagor's
delivery to Senior Mortgagee of any item required to be delivered to Mortgagee
hereunder shall satisfy the delivery requirement of this Mortgage, and such
items shall be deemed to be held by Senior Mortgagee for the benefit of
Mortgagee, provided, however, that the provisions of this Section 17 shall not
apply in the event that CoBank, ACB ceases to be the sole lender to Mortgagor
under either the Loan Agreement or the Senior Loan Agreement, in which case the
lenders to Mortgagor under the Loan Agreement and the lenders to Mortgagor under
the Senior Loan Agreement shall enter into an intercreditor agreement in form
and substance satisfactory to such lenders concerning, inter alia, the matters
set forth in this Section 17.
18. This Mortgage shall also be construed as a fixture filing under ORS 79.4020
as to all fixtures included in the mortgaged premises.
As used in this Mortgage, the word "transfer" means every mode, direct or
indirect, absolute or conditional, voluntary or involuntary, of disposing of or
parting with property or with an interest in property, including, but not
limited to, as sale, lease, gift, granting an encumbrance or security interest,
allowing a lien to attach, and foreclosure and the transfer of control or
ownership of an entity that owns or controls property.
After a default by Mortgagor in the payment of the indebtedness hereby secured
(the "secured debt") or in the payment of taxes, assessments, or insurance
premiums and if required in writing by Mortgagee, Mortgagor thereafter will
deposit with Mortgagee a monthly reserve for the annual payment of taxes,
assessments, and insurance premiums. The reserve payment will be made at the
same time as the monthly payment of interest and principal and each monthly
payment will be in an amount that will be sufficient to accumulate a reserve
that is sufficient to pay taxes, assessments, and insurance premiums when such
payments are due. The failure to make reserve payments when due will be an event
of default under this Mortgage.
Unless Mortgagor provides Mortgagee with evidence of the insurance coverage that
is required by this Mortgage, Mortgagee may purchase such insurance to protect
Mortgagee's interest. Such insurance may, but need not, also protect Mortgagor's
interest. If the mortgaged premises become damaged, the insurance purchased by
the Mortgagee may not pay any claim Mortgagor may make or any claim made against
Mortgagor. Mortgagor will be solely responsible for the cost of the insurance
purchased by Mortgagee and Mortgagee may add such cost to the secured debt
without
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PF ACQUISITION II, INC.
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any prior request for reimbursement of such amount. When added to the secured
debt, interest will accrue and be payable thereon. The effective date of
coverage may be the date when Mortgagor's coverage lapsed or Mortgagor fails to
provide proof of coverage. The cost of the insurance purchased by Mortgagee may
be considerably more expensive than the insurance coverage that Mortgagor can
obtain and such insurance coverage may not satisfy any need for property damage
coverage or any mandatory liability insurance requirements imposed by applicable
law. Mortgagor may require Mortgagee to cancel Mortgagee's insurance by
providing evidence that Mortgagor has obtained the required insurance coverage
elsewhere. Mortgagee has no duty to Mortgagor, a guarantor, or anyone else to
obtain insurance coverage if Mortgagor fails to do so. It is agreed that the
risk of an uninsured loss is allocated to Mortgagor and such loss will not
reduce or otherwise affect Mortgagor's liability for payment of the entire
secured debt.
Under Oregon law, most agreements, promises and commitments made by a financial
institution concerning loans and other credit extensions which are not for
personal, family or household purposes or secured solely by the Debtor's
principal residence must be in writing, for express consideration and be signed
by the financial institution to be enforceable.
IN WITNESS WHEREOF, this Mortgage is executed by Mortgagor as of the day and
year shown below but shall be effective as of the day and year first above
written.
PF ACQUISITION II, INC.
By:............................................
Its:...........................................
Date:..........................................
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PF ACQUISITION II, INC.
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STATE OF _________________________ )
:ss.
COUNTY OF ________________________ )
I DO HEREBY CERTIFY, That on this ___ day of ____________, 19____, before me,
the undersigned, a Notary Public in and for said county and state, duly
commissioned and sworn, personally appeared ____________ _, to me known to be
the ________________of the corporation that executed the within and foregoing
instrument and acknowledged the said instrument to be the free and voluntary act
and deed of said corporation for the uses and purposes therein mentioned and
that said person is authorized to execute the said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year first above written.
(SEAL) .........................................................................
.......................................... Notary Public in and for the State of
.................................................................... Residing at
........................................................ My Appointment expires:
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EXECUTION DRAFT
ASSET PURCHASE AGREEMENT
BY AND AMONG
PF ACQUISITION II, INC.,
PRO-FAC COOPERATIVE, INC.
AND
AGRIPAC, INC., DEBTOR AND DEBTOR-IN-POSSESSION
DATED FEBRUARY 12, 1999
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made February 12, 1999, by and among PF ACQUISITION
II, INC., a New York corporation ("BUYER"), and a wholly-owned subsidiary of
Pro-Fac Cooperative, Inc., a New York cooperative corporation ("PRO-FAC") and
AGRIPAC, INC., an Oregon cooperative corporation, as debtor and
debtor-in-possession ("SELLER").
Buyer has offered to buy and Seller has offered to sell substantially
all of the assets primarily related to the Frozen Food Business (as hereafter
defined) of Seller.
IT IS THEREFORE AGREED AS FOLLOWS:
ARTICLE 1
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms are defined terms
and shall have the meanings set forth below:
"AFFILIATE" means, with respect to any entity, all directors and
officers (or persons performing similar functions) of such entity, all persons
and entities controlling, controlled by or under common control with such entity
and all directors and officers (or persons performing similar functions) of
Affiliates.
"AGREEMENT" refers to this entire Agreement, including the Disclosure
Memorandum, exhibits, schedules and certificates referred to herein.
"ASSETS" means the Receivables and substantially all of the tangible and
intangible property of every kind and description of the Seller primarily
related to the Frozen Food Business. The Assets include, without limitation, all
of Seller's right, title and interest in and to the following as of Closing:
(a) all Receivables;
(b) Frozen Food Inventory;
(c) Frozen Food Equipment;
(d) Frozen Food Real Property;
(e) rights in, to and under the Frozen Food Leased Property;
(f) the Intellectual Property;
(g) rights in, to and under the Assumed Contracts;
(h) the Permits;
(i) the Intangibles; and
(j) the Business Information and Records.
provided, however, that the definition of Assets shall not include any items
defined as Excluded
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EXECUTION DRAFT
Assets.
"ASSUMED CONTRACTS" means only those contracts, leases, licenses and
agreements to which Seller is a party, which are specifically identified on
Exhibit A as being assumed by Buyer, and no others.
"ASSUMED LIABILITIES" means the obligations arising under the Assumed
Contracts subsequent to the Closing Date and no others.
"BANKRUPTCY CODE" means those provisions of the United States Code
currently codified at 11 U.S.C. 'SS' 'SS' 101 et seq. and any successor or
replacement statute or provisions.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for the
District of Oregon.
"BANKRUPTCY PROCEEDING" means that certain bankruptcy proceeding of
Seller under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court, styled
as In re Agripac, Inc., Debtor, Case No. 699-60001-fra11.
"BUSINESS" means the business of Seller, as currently conducted and
proposed to be conducted, and all activities associated therewith, including
without limitation the Canned Food Business and the Frozen Food Business.
"BUSINESS INFORMATION AND RECORDS" means all records, information, files
and papers of Seller primarily related to the other Assets or the Frozen Food
Business, including, without limitation, lock-box bank accounts relating to the
collection of the Receivables, product designs, blueprints, specifications,
drawings, recorded knowledge, surveys, real property records, engineering
reports, test reports, manuals, material standards, processing standards,
performance standards, catalogues, research data, formulae, inventions,
processes, production methods, quality control information, proprietary
information, know-how, technical data, performance data, plant service
information, trade and business secrets, sales data and other information
relating to the growing, manufacture, processing, freezing, packaging or sale or
service of products of or by Seller primarily related to the Frozen Food
Business, all art work, photographs, slides, color separations, plates and other
back-up material relating to product brochures, literature and similar materials
relating to the products of Seller primarily related to the Frozen Food
Business, and all sales and advertising materials, customer and supplier lists,
including addresses, telephone numbers and principal contacts, records of
products and quantities purchased or supplied by each customer and supplier,
other customer and supplier records and files, sales and purchase
correspondence, sales reports, copies of sales and use tax resale certificates,
personnel records and books of account primarily related to the other Assets or
the Frozen Food Business, but excluding the Corporate Records.
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EXECUTION DRAFT
"BUYER'S LENDERS" means, collectively, CoBank, ACB and St. Paul Bank for
Cooperatives, FCB.
"CANNED FOOD ASSETS" means all of Seller's right, title and interest
in and to the assets primarily related to the Canned Food Business other than
any Receivables.
"CANNED FOOD BUSINESS" means the canned food business of Seller, as
currently conducted and proposed to be conducted, and all activities associated
therewith.
"CANNED FOOD TRANSITION SERVICES" means those management,
administrative, information, support and other services requested by Seller to
be performed by or otherwise made available through the Buyer for a period
ending on the earlier of (i) six months following the Closing Date, and (ii) any
sale or other transfer of a substantial portion of the Canned Food Assets. Any
out-of-pocket cost to be incurred by the Buyer in providing Canned Food
Transition Services shall be advanced or reimbursed (at Buyer's election) by
Seller.
"CASH COLLATERAL ORDER" means, collectively, the Interim Order Re Cash
Collateral, Adequate Protection, and Debtor in Possession Financing, entered in
the Bankruptcy Proceeding on January 8, 1999; the Order Authorizing Debtor to
Obtain Credit, entered in the Bankruptcy Proceeding on January 19, 1999; and the
Second Order Approving Debtor's Use of Cash Collateral, entered in the
Bankruptcy Proceeding; as each of the same may be amended or replaced after the
date hereof.
"CLOSING" means the consummation of the purchase and sale of the Assets.
"CLOSING DATE" means the date of the Closing.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CORPORATE RECORDS" means all original copies of Seller's corporate
minute books, stock ledgers, corporate accounting journals and corporate books
of account which comprise Seller's permanent accounting or tax records and
similar books and records of a corporate nature.
"CUT-OFF DATE" means March 31, 1998.
"DISCLOSURE MEMORANDUM" means the disclosure memorandum, dated on or
before the Closing Date, delivered by Seller to Buyer.
"EQUIPMENT" means all rights of Seller in any machinery, equipment,
spare parts, vehicles, furniture, dies, molds, patterns and gauges, tools,
supplies and drawings owned, leased, licensed or otherwise possessed by Seller,
including, without limitation, any Frozen Food Equipment, excluding such items
sold, transferred, disposed of or consumed prior to the Closing
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EXECUTION DRAFT
Date in the ordinary course of business or otherwise with the written consent of
Buyer.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" means all cash, cash equivalents, including cash on
hand, in bank accounts and cash in-transit, bank accounts (other than lock-box
bank accounts pertaining to the collection of the Receivables), bank deposits,
notes, securities, refunds relating to any tax obligations of Seller, prepaid
insurance premiums, any contracts, leases, licenses or agreements not included
in the Assumed Contracts, claims or causes of action belonging to Seller's
bankruptcy estate that arise under Chapter 5 of the Bankruptcy Code, computers,
software and information systems, items sold, transferred or disposed of or
consumed in the ordinary course of business prior to Closing, Corporate Records
of Seller, title to the trademark "JACK AND THE BEANSTALK" (provided that Buyer
shall receive a non-exclusive, perpetual, royalty-free, worldwide, irrevocable
license to use the "JACK AND THE BEANSTALK" trademark in connection with the
operation of the Frozen Food Business following the Closing Date), Plant #5,
Seller's interest in Greenfield Partners, Ltd., Limited Partnership and Agripac
Cold Storage Partners Limited Partnership, and all Canned Food Assets.
"EXISTING BANK DEBT" means the pre-petition indebtedness of the Seller
owing to the Seller's Lenders in their capacity as the Seller's pre-petition
lenders.
"FROZEN FOOD BUSINESS" means the frozen food business of Seller, as
currently conducted and proposed to be conducted, and all activities associated
therewith.
"FROZEN FOOD EQUIPMENT" means all rights of Seller in any machinery,
equipment, spare parts, vehicles, furniture, dies, molds, patterns and gauges,
tools, supplies and drawings owned, leased, licensed or otherwise possessed by
Seller and used in the Frozen Food Business and located at the Frozen Food
Leased Property or the Frozen Food Real Property, and any manuals, product
literature, and manufacturer's warranties and representations that relate to the
foregoing.
"FROZEN FOOD EQUIPMENT LEASES" means any and all agreements of the
Seller included in the Assumed Contracts that relate to the possession and use
of any Frozen Food Equipment, including any such agreements styled as leases
(and whether or not such agreements constitute "true" leases, financing leases
under GAAP or disguised financings).
"FROZEN FOOD INVENTORY" means all non-obsolete inventories of Seller
relating to the Frozen Food Business and located at the Frozen Food Leased
Property or the Frozen Food Real Property, including, without limitation, raw
materials, work-in-process, finished goods, and merchandise.
"FROZEN FOOD LEASED PROPERTY" means all leasehold interests of Seller in
real property used by Seller in the Frozen Food Business listed on Exhibit A,
including without limitation the
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EXECUTION DRAFT
Greenfield Lease, together with any prepaid rent, security deposits, options to
renew or purchase, benefits, rights of way and other interests of the Seller
that may be appurtenant to the rights of Seller under such leasehold interests,
together with all buildings, improvements and fixtures existing thereon, as
identified on Exhibit A.
"FROZEN FOOD REAL PROPERTY" means all real property owned by Seller and
listed on Exhibit B, together with all buildings, improvements, and fixtures
existing thereon, as identified on Exhibit B.
"GREENFIELD LEASE" means that certain Facility Lease between Seller, as
Lessee and Greenfield Partners, Ltd., as Lessor, dated 1993 and providing for a
term of ten years commencing no later than July 15, 1993.
"HAZARDOUS MATERIAL" means any hazardous or toxic substance, material or
waste or pollutant, or contaminant, including but not limited to "hazardous
substances" and "hazardous wastes", as those terms are currently defined under
the Federal, State, and Environmental laws, including but not limited to the
Comprehensive Environmental Response Compensation and Liability Act, as amended,
the Resource Conservation and Recovery Act, the Clean Water Act, and/or any
other applicable laws or regulations, petroleum and petroleum by products, or
asbestos containing material that is or becomes regulated by any governmental
authority in any jurisdiction where any Real Property or Leased Property is
located, and lead paint or material containing lead that is or becomes regulated
by any governmental authority in any jurisdiction in which any Real Property or
Leased Property is located.
"HISTORICAL FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.5.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INSURANCE VALUE" means a value of a parcel of Real Property as
reasonably established by Buyer for purposes of title insurance.
"INTANGIBLES" means all telephone switches, telephone and facsimile
numbers primarily relating to the Frozen Food Business, all claims of every kind
and description that Seller may have against any person or entity relating to or
affecting any other Assets or the Frozen Food Business, including without
limitation, any claims against the grower/members of the Seller, and the good
will of the Frozen Food Business.
"INTELLECTUAL PROPERTY" means all rights, if any, in all United States
and foreign trademarks (common law and registered) and service marks, trademark
and service mark registrations and applications, trade names, copyrights,
copyright registrations, proprietary technology, trade secrets, know-how,
licenses, computer software, inventions, and patents, patent
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EXECUTION DRAFT
applications, utility models, utility model applications and all other patent
rights used in the Frozen Food Business and listed on Exhibit C, including
without limitation the Ore-Ida Agreement and a license for the "JACK AND THE
BEANSTALK" trademark.
"INVENTORY" means all inventories of Seller, including without
limitation, all Frozen Food Inventory, but excluding such inventories sold,
transferred, disposed of or consumed prior to the Closing Date in the ordinary
course of business or otherwise with the written consent of Buyer.
"LEASED PROPERTY" means all leasehold interests of Seller in real
property used by Seller, including without limitation the Frozen Food Leased
Property, together with any prepaid rent, security deposits, options to renew or
purchase, benefits, rights of way and other interests of the Seller that may be
appurtenant to the rights of Seller under such leasehold interests, together
with all buildings, improvements and fixtures existing thereon.
"NEW BUYER EMPLOYEES" shall have the meaning set forth in Section 5.1.
"ORE-IDA AGREEMENT" means, collectively, the following agreements
between Seller and Ore-Ida Foods, Inc.: (i) the Sales Agency Agreement, dated
April 19, 1994, as amended, (ii) the Trademark License Agreement, dated April
19, 1994 (Cob Corn Products), as amended; (iii) the Trademark License Agreement,
dated April 19, 1994 (Stew Vegetable Products), as amended; (iv) Agripac Co-Pack
Agreement, dated March 6, 1992, relating to frozen corn, and (v) Co-Pack
Agreement, dated January 20, 1995, relating to stew vegetables.
"PERMITS" means, to the full extent assignable under applicable law, all
permits, licenses, franchises, approvals and authorizations of any governmental
authority relating to or affecting the ownership or use of any Assets or the
operation of the Frozen Food Business.
"PERMITTED LIENS" means any purchase money liens on any Frozen Food
Equipment arising under Frozen Food Equipment Leases.
"PERMITTED TITLE EXCEPTIONS" means the following:
(a) Non-delinquent liens for taxes or special assessments;
(b) Utility, access and other easements and rights-of-way, restrictions
and exceptions, other than those referred to in (c) below, that counsel
rendering a title opinion, a title insurer, or an independent engineer certifies
will not materially interfere with the present use, occupation or value of the
Real Property or impair the present business operations conducted thereon;
(c) Restrictions, easements and encumbrances, if any, set forth in
Section 3.9 of the Disclosure Memorandum;
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(d) Any building, zoning, or subdivision ordinances applicable to the
premises that permit usage of the premises for the same purpose or purposes as
currently used by Seller; and
(e) the exceptions set forth on Section 3.9 of the Disclosure
Memorandum.
"PLANT #5" means the facility and real property identified as Plant #5
in Section 3.9 of the Disclosure Memorandum, which historically has been used by
the Seller in the Frozen Food Business, but which is an Excluded Asset and is
not being purchased by the Buyer.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
"REAL PROPERTY" means all real property owned by Seller, together with
all buildings, improvements, and fixtures existing thereon, including without
limitation the Frozen Food Real Property.
"RECEIVABLE" means all trade accounts receivable and other receivables
of Seller existing on the Closing Date, other than receivables from any
Affiliate of Seller.
"SALE ORDER" means an order of the Bankruptcy Court satisfying the
requirements of Section 8.3(b), pursuant to Sections 363 and 365 of the
Bankruptcy Code, approving Seller's execution, delivery and performance of this
Agreement, and authorizing the Seller to sell the Assets to Buyer free and clear
of all liens, claims and encumbrances (other than Assumed Liabilities, Permitted
Liens and Permitted Title Exceptions) pursuant to the terms of this Agreement.
"SALE PROCEDURES ORDER" means the Order on Debtor's Amended Motion to
Approve Bid Procedures, entered by the Bankruptcy Court on February 8, 1999,
which establishes the procedures for approving a sale of the Assets by the
Seller.
"SELLER LENDER LIENS" means any liens or security interests held by the
Seller's Lenders as granted pursuant to the Cash Collateral Order.
"SELLER'S LENDERS" means the financial institutions providing
debtor-in-possession financing to the Seller pursuant to the Cash Collateral
Order.
"TRANSITION SERVICES" means those administrative, information, support
and other services requested by Buyer to be performed by or otherwise made
available through the Seller for a period of up to six months following the
Closing Date. Any out-of-pocket cost to be incurred by the Seller in providing
Transition Services shall be advanced or reimbursed (at Seller's election) by
Buyer.
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ARTICLE 2
PURCHASE AND SALE
2.1 CLOSING. The Closing shall take place at the offices of Harris Beach
& Wilcox, LLP, The Granite Building, 130 East Main Street, Rochester, New York
14604, at 10:00 a.m. (local time) on February 17, 1999 or at such other place,
date or time as the parties may mutually agree ("Closing Date").
2.2 CONVEYANCE. On the Closing Date, Seller shall sell, transfer, convey
and assign to Buyer, and Buyer shall purchase from Seller, all of the Assets,
but not the Excluded Assets. Seller shall transfer to Buyer good and marketable
title to the Assets, free and clear of all liens, claims and encumbrances other
than Assumed Liabilities, Permitted Liens and Permitted Title Exceptions. Buyer
will take possession of and assume control over the Assets on and as of the
Closing Date.
2.3 SURVEY AND TITLE DOCUMENTS. Seller shall provide Buyer with the
following:
2.3.1 At Seller's expense, at least three business days prior to the
Closing Date, an instrument survey of each parcel of Frozen Food Real Property.
Such surveys shall be dated or redated subsequent to this Agreement and be from
surveyors reasonably acceptable to Buyer, shall state that they were prepared
using surveying standards acceptable to Buyer, shall contain legal descriptions
of the property surveyed, and shall locate all improvements and easements
thereon, as well as any easements beneficial to the parcel being surveyed. If
any such survey discloses matters which could reasonably be expected to
materially adversely affect the marketability of the property in question, the
Seller shall obtain title insurance over such matters. Such surveys shall be
certified both to Buyer and to the title insurance company issuing the Title
Policy (defined below).
2.3.2 At Seller's expense, at least three business days prior to the
Closing Date, a commitment (the "Title Commitment(s)") for an owner's policy of
title insurance (the "Title Policy(s)") on each parcel of the Frozen Food Real
Property prepared on the current American Land Title Association standard form
of owner's title insurance to be issued by a national title insurance company
acceptable to Buyer (the "Title Company") in an amount not less than the
Insurance Value of the Frozen Food Real Property.
2.3.3 At Seller's expense, at least three business days prior to the
Closing Date, UCC searches against the Seller in the appropriate offices of each
state and locality in which any Assets are located.
2.4 PURCHASE PRICE. Subject to the provisions of Article 11, the
Purchase Price for the Assets shall equal the sum of (a) eighty-nine percent
(89%) of the actual book value of the Receivables as of the Closing Date, (b)
eighty percent (80%) of the actual book value (adjusted
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to cost in accordance with generally accepted accounting principles) of the
Frozen Food Inventory as of the Closing Date, and (c) eighty percent (80%) of
the aggregate book value of the Frozen Food Equipment (excluding any Frozen Food
Equipment that is the subject of a Frozen Food Equipment Lease), and the Frozen
Food Real Property (excluding the $1,047,000 of capitalized maintenance on the
administrative building identified on Exhibit B) as of the Closing Date. On the
Closing Date, Buyer and Seller shall cooperate in good faith and attempt to
reach definitive agreement on each component of the Purchase Price.
2.5 DISPUTES CONCERNING PURCHASE PRICE. In the event that, despite the
cooperative efforts described in Section 2.4, the Buyer and Seller are unable to
agree on the final Purchase Price, then (a) if the total amount of the Purchase
Price that is disputed by the Buyer and Seller (the "Disputed Amount") is less
than or equal to $5,000,000, the Buyer and Seller shall; and (b) if Disputed
Amount exceeds $5,000,000, the Buyer and Seller may, but only to the extent that
the Buyer and Seller so agree in writing on the Closing Date, resolve such
dispute in accordance with this Section 2.5. Buyer shall transfer 100% of the
Disputed Amount to CoBank, ACB, as escrow agent (the "Escrow Agent") pursuant to
an Escrow Agreement substantially in the form of Exhibit D hereto (the "Escrow
Agreement"). Buyer and Seller shall work in good faith to resolve any such
dispute within ten (10) days following the Closing Date. If, despite such
efforts, a dispute continues to exist, Buyer and Seller shall jointly retain an
independent certified public accounting firm of national reputation reasonably
acceptable to both Buyer and Seller, which shall resolve the dispute within
thirty days of appointment. The determination of the accounting firm shall be
binding on both parties and non-appealable. 100% of the cost of the accounting
firm shall be borne by whichever party receives less than fifty percent 50% of
the Disputed Amount pursuant to the accounting firm's resolution of the dispute.
The parties shall split the cost of the accounting firm if they each receive 50%
of the Disputed Amount.
2.6 PAYMENT OF PURCHASE PRICE. On the Closing Date, Buyer shall deliver
(a) to Seller (but in any event in accordance with the Sale Order) by wire
transfer an amount equal to Three Million Dollars ($3,000,000), (b) to the
Escrow Agent the Disputed Amount pursuant to the terms of the Escrow Agreement,
and (c) to the Seller's Lenders by wire or other transfer acceptable to the
Seller's Lenders, the balance of the Purchase Price. Once any dispute regarding
the Disputed Amount has been resolved, the Escrow Agent shall pay or apply the
Disputed Amount, (y) to the extent it is determined to comprise a portion of the
Purchase Price, in accordance with the Sale Order, and (z) to the extent that it
is determined not to comprise a portion of the Purchase Price, as a repayment
(effective as of the Closing Date and without prepayment penalties, charges or
interest due of any kind) of Buyer's indebtedness to Buyer's Lenders incurred in
connection with the transactions described in this Agreement.
2.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price for the Assets
shall be allocated among the Assets in a manner to be agreed upon at or before
Closing. Buyer and Seller shall adhere to such allocation for the purposes of
all tax returns, whether federal, state or local, of whatever kind filed by or
on behalf of either of them or by or on behalf of their Affiliates including
Internal Revenue Service Form 8594.
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2.8 INSTRUMENTS OF TRANSFER. In connection with the sale and purchase of
the Assets, Seller shall deliver to Buyer on the Closing Date deeds, bills of
sale, motor vehicle title certificates, affidavits satisfying the requirements
of 'SS' 1445(b)(2) of the Code, assignments and consents thereto, and other
instruments of transfer and conveyance satisfactory in form and substance to
counsel to Buyer. Buyer shall pay the cost of recording such instruments of
transfer and conveyance. Seller shall, at any time and from time to time after
the Closing Date, upon the request of Buyer do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
further acts, deeds, assignments, transfers, conveyances and assurances as may
be reasonably required for the better assigning, transferring, granting,
conveying, assuring and confirming to Buyer, or to its successors and assigns,
or for aiding and assisting in collecting and reducing to possession, any or all
of the Assets.
2.9 LIABILITIES ASSUMED. Buyer shall not assume, or become obligated to
pay or perform under, any of the liabilities, obligations or contracts of
Seller, except for the Assumed Liabilities. On the Closing Date, Buyer shall
execute an instrument of assumption with respect to the Assumed Liabilities in
form and substance reasonably satisfactory to counsel to Seller. No Affiliate of
the Buyer shall assume or be liable for any liabilities of the Seller and its
Affiliates of any kind or nature, including without limitation the Assumed
Liabilities. It is a condition to Buyer's obligations hereunder that the Sale
Order expressly confirm the provisions of this Section 2.9.
2.10 EXPENSES. Except as provided in Sections 2.3, 2.5, 2.8, 2.11, 10.3,
and Article 11 hereof, Buyer and Seller shall each pay their own expenses,
(including attorneys' fees and accountants' fees) in connection with the
preparation and negotiation of this Agreement and the consummation of the
transactions contemplated herein.
2.11 CONSENT OF THIRD PARTIES. This Agreement shall not constitute an
agreement to assign any interest in any instrument, contract, lease, Permit or
other agreement or arrangement or any claim, right or benefit arising thereunder
or resulting therefrom, if an assignment or agreement to assign without the
consent of a third party would constitute an enforceable breach or a violation
thereof or affect adversely the rights of Buyer or Seller thereunder. If a
consent of a third party that is required to assign any such interest is not
obtained (or overruled pursuant to a binding and enforceable order of the
Bankruptcy Court) prior to the Closing Date, or if an attempted assignment would
be ineffective or would adversely affect the ability of Seller to convey its
interest to Buyer, Seller will cooperate with Buyer in any lawful and reasonable
arrangement to provide that Buyer shall receive the interest of Seller in the
benefits and assume all of Seller's liabilities and obligations arising after
the Closing Date under any such instrument, contract, lease, Permit or other
agreement or arrangement, including performance by Seller as agent except where
prohibited by law; and any transfer or assignment to Buyer or by Seller of any
interest under any such instrument, contract, lease, Permit or other agreement
or arrangement that requires the consent of a third party shall be made subject
to such consent or approval being obtained (or overruled pursuant to a binding
and enforceable order of the Bankruptcy Court). Notwithstanding the foregoing,
it is anticipated that the terms of the Sale Order will provide an
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effective substitute for any and all consents described in this Section 2.11
with respect to Assumed Contracts. This Section 2.11 shall not constitute a
waiver under Section 8.3. To the extent that any reasonable out-of-pocket costs
are incurred by Buyer to obtain the consent of a third party or as a result of
the failure to obtain the consent of a third party, such cost shall be paid by
Seller.
2.12 PAYMENT OF TAXES. Seller shall make all required reports and pay
directly to each and every taxing authority any and all taxes, fees and
assessments, plus any penalty or interest thereon, that arise as a result of the
sale of the Assets by Seller to Buyer under this Agreement.
2.13 PRORATION OF TAXES, RENTS AND UTILITIES. All ad valorem real
property taxes applicable to the Frozen Food Real Property, all rents payable
with respect to the Assets, and all charges for water, gas, electricity, sewer,
drainage or other utility services relating to the Frozen Food Business will be
prorated as of the Closing Date.
2.14 TERMINATION OF REPRESENTATIONS AND WARRANTIES. Upon consummation of
the transactions described in this Agreement at Closing, all of the
representations and warranties of the Seller contained in this Agreement,
including without limitation those set forth in Article 3, and all of the
representations and warranties of the Buyer and Pro-Fac contained in this
Agreement, including without limitation those set forth in Article 4, shall
terminate and be of no further force or effect. Notwithstanding the foregoing,
any and all covenants of the Buyer and Seller contained in this Agreement shall
survive the Closing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND QUALIFICATION. Seller is a cooperative corporation
duly organized, validly existing and in good standing under the laws of the
State of Oregon. Seller is qualified to do business as a foreign corporation and
in good standing in all of the states and other jurisdictions listed in Section
3.1 of the Disclosure Memorandum, which constitute all states and other
jurisdictions wherein Seller is required by law to qualify as a foreign
corporation. Seller presently is a debtor and debtor-in-possession in the
Bankruptcy Proceeding. Seller has all requisite corporate power to own, operate
and lease its properties and to carry on its business as now conducted.
3.2 AUTHORIZATION. Subject to Bankruptcy Court approval, Seller has all
requisite corporate power to execute, deliver, and perform its obligations under
this Agreement. Subject to Bankruptcy Court approval, the execution, delivery
and performance of this Agreement and the consummation by Seller of all
transactions contemplated by this Agreement, have been duly authorized by all
requisite corporate action of Seller. Subject only to Bankruptcy Court
approval
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and HSR Act approval, this Agreement constitutes a legal, valid and binding
obligation of Seller, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, reorganization, insolvency, or
similar laws affecting creditors' rights generally, and the application of
general principles of equity, regardless of whether such principles are
considered in a proceeding in equity or in law.
3.3 CONFLICTING AGREEMENTS; LIENS. Except as set forth in Section 3.3 of
the Disclosure Memorandum, the execution and delivery of this Agreement by
Seller, and the consummation of the transactions contemplated hereby:
3.3.1 Do not, and at or prior to the Closing Date will not,
conflict with, or result in a breach of, any of the terms, conditions or
provisions of the Articles of Incorporation or Bylaws of Seller.
3.3.2 On the date hereof do not, and as of the Closing Date will
not, conflict with, result in a breach of, give rise to a default under, or give
to others any right of termination, cancellation, modification of terms or
acceleration under any of the terms, conditions or provisions of any Assumed
Contract, or any mortgage, lien, lease, agreement, instrument, order, judgment
or decree by which any of the Assets may be bound, and will not result in a
declaration or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the Assets.
3.4 GOVERNMENT CONSENTS. Section 3.4 of the Disclosure Memorandum lists
all filings with, notices to, consents, authorizations, licenses, permits,
registrations and approvals of, and exemptions and other actions by, any
governmental or public body, commission or authority required in connection with
the execution, delivery or performance of this Agreement by Seller, the absence
of which could reasonably be expected to have a material adverse effect on the
Frozen Food Business or the Assets.
3.5 FINANCIAL INFORMATION. Seller has delivered to Buyer the following
financial statements, including the notes thereto (the "HISTORICAL FINANCIAL
STATEMENTS"): (a) audited balance sheets of Seller as of March 31, 1997, and
related audited statements of earnings and retained earnings and cash flows for
the years then ended; and (b) an unaudited balance sheet of Seller as of the
Cut-off Date, and related unaudited statements of earnings and retained earnings
and cash flows for the fiscal year then ended. The Historical Financial
Statements are complete and correct in all material respects (except that the
Inventory has historically been reported at "net realizable value"), are in
accordance in all material respects with all books, records and accounts of
Seller, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated (except that
the Inventory has historically been reported at "net realizable value"), and
fairly present in all material respects, the financial condition of Seller as of
the respective dates thereof and the results of its operations for the
respective periods covered thereby. Seller has delivered to Buyer a projected
balance sheet of the Seller as of January 31, 1999 (the "Projections"). The
Projections are complete and correct
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in all material respects, are in accordance in all material respects with all
books, records and accounts of Seller, have been prepared in good faith, and
fairly present in all material respects, the anticipated financial condition of
Seller as of the date thereof and the results of its operations for the period
covered thereby.
3.6 LIABILITIES. As of the date of this Agreement, Seller has no
liabilities of any nature, whether absolute, accrued, contingent or otherwise,
except liabilities disclosed in the Historical Financial Statements, liabilities
incurred by Seller in the ordinary course of business and consistent with past
practices since the Cut-off Date, liabilities disclosed in Section 3.6 of the
Disclosure Memorandum, and liabilities incurred by Seller with the prior written
consent of Buyer.
3.7 INVENTORIES. The Frozen Food Inventory consists of the inventory
reflected on the Historical Financial Statements (but adjusted to the lower of
cost or market consistent with generally accepted accounting principles), less
sales from and additions to inventory in the ordinary course of business.
Inventories of Seller consist of items of a quality and quantity usable or
saleable in the ordinary course of its business, and there are no obsolete
items, items of below standard quality or excess items that have not been
written down to a realizable value or as to which adequate reserves have not
been provided, in each case, in accordance with generally accepted accounting
principles.
3.8 TITLE TO ASSETS. Seller has good and marketable title to all the
Assets, free and clear of all liens, mortgages, pledges, encumbrances,
conditional sale agreements, security interests, restrictions on use or transfer
or other defects in or clouds on title, except as disclosed in Section 3.8 of
the Disclosure Memorandum. As of the Closing Date and subject to the Sale Order,
Seller will have, and will convey to Buyer, good and marketable title to all the
Assets, free and clear of all liens, claims and encumbrances, conditional sale
agreements and security interests of any kind or nature whatsoever excepting
only Assumed Liabilities, Permitted Liens and Permitted Title Exceptions.
3.9 REAL PROPERTY. Section 3.9 of the Disclosure Memorandum contains a
true, correct and complete list of the Real Property and Leased Property.
Section 3.9(a) of the Disclosure Memorandum contains a true, correct and
complete list of the Frozen Food Real Property and Frozen Food Leased Property.
None of the land, buildings or improvements comprising part of the Frozen Food
Real Property or Frozen Food Leased Property is the subject of any complaint
known to Seller, nor is any condemnation proceeding pending or, to the best
knowledge of Seller, threatened against any such property. To Seller's
knowledge, Seller is not in violation of any zoning ordinance, building code,
health regulation, use or occupancy restriction or similar regulation with
respect to the Frozen Food Real Property or the Frozen Food Leased Property.
3.10 CONDITION OF ASSETS. The Frozen Food Equipment and improvements to
the Frozen Food Real Property and Frozen Food Leased Property are in good repair
and operating
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condition (normal wear and tear excepted) and are suitable for the operations
for which they are being used by Seller.
3.11 ABSENCE OF CHANGES. Except as disclosed in Section 3.11 of the
Disclosure Memorandum, since the Cut-off Date there has not been:
3.11.1 Any change in the business, results of operations,
earnings, backlog, prospects, properties, assets, liabilities or condition,
financial or otherwise, of Seller other than changes in the ordinary course of
business, none of which, singly or in the aggregate, has been materially
adverse.
3.11.2 Any damage, destruction or loss (whether or not covered by
insurance) materially affecting Seller or the Assets.
3.11.3 Except in the ordinary course of business for full and
fair value received, any sale, assignment, transfer or other disposition of any
tangible or intangible asset used or useful in the Frozen Food Business.
3.11.4 Any capital expenditure or commitment to make a capital
expenditure relating to the Assets in excess of $25,000.
3.11.5 Any amendment, termination or waiver of any governmental
permit or permission or of any material right relating to the Frozen Food
Business under any contract or agreement.
3.11.6 Any material change in the business or commercial
practices customarily followed by Seller.
3.11.7 Any acquisition by Seller of any business, property or
assets other than in the ordinary course of business consistent with past
practice.
3.11.8 Any change in the accounting practices, procedures or
methods of Seller.
3.12 CONTRACTS AND AGREEMENTS. Section 3.12 of the Disclosure Memorandum
lists every agreement and contract to which Seller is a party that:
3.12.1 Is material to the continued operation of the Frozen Food
Business or any product line.
3.12.2 Involves future payments or receipts of more than $25,000
or performance over a term in excess of six months relating to or affecting the
Frozen Food Business or the Assets.
3.12.3 Relates to the borrowing of money.
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3.12.4 Involves the sale of Frozen Food Business products to the
United States government or any foreign, state or local government or any agency
or instrumentality thereof.
3.12.5 Is with an agent, consultant, engineer, advisor, salesman,
sales representative, distributor, sales agent or dealer relating to or
affecting the Frozen Food Business or the Assets.
3.12.6 Relates to any Intellectual Property.
3.12.7 Is a joint venture agreement.
3.12.8 Is a tolling agreement.
3.12.9 Is with any Affiliate of Seller.
3.12.10 Relates to any sale of fixed assets or sale, assignment,
transfer or other disposition of any contract right, governmental permit or
intangible asset relating to or affecting the Frozen Food Business or the
Assets.
3.12.11 Restricts in any way the right of Seller to compete with
any entity in any business.
3.12.12 Was not made in the ordinary course of business.
True, correct and complete copies of all written contracts referred to therein
and accurate descriptions of the material terms of all oral contracts referred
to therein are included in Section 3.12 of the Disclosure Memorandum or have
been provided to Buyer. All such contracts are valid, enforceable and in full
force and effect as to Seller, assuming the other party thereto is bound which,
to Seller's knowledge, is the case for each such contract. Except as noted in
Section 3.12 of the Disclosure Memorandum, all agreements referred to therein
were made in the ordinary course of business.
3.13 LICENSES, PERMITS. Seller has all Permits as are necessary to
enable Seller to conduct the Frozen Food Business, except where such failure to
have any of the foregoing could reasonably be expected to have a material
adverse effect on the condition or the results of operation of the Frozen Food
Business or on the Assets. All such Permits are listed in Section 3.13 of the
Disclosure Memorandum and are in full force and effect. Except as set forth in
Section 3.13 of the Disclosure Schedule, no violations have occurred within the
past twelve months or are continuing in respect of any such Permit that threaten
to cause the revocation or limitation of such Permit except where such violation
could not reasonably be expected to have a materially adverse effect on the
financial condition or the results of operations of the Frozen Food Business or
on the Assets. No proceeding is pending or, to Seller's knowledge, threatened to
revoke or limit any such Permit.
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3.14 COMPLIANCE WITH LAWS. Seller is not in violation of any law,
regulation, order or other requirement affecting the Frozen Food Business or the
Assets and promulgated by any court or federal, state, municipal or other
governmental body, department, commission, agency or instrumentality, which
violation or the correction thereof could reasonably be expected to have a
material adverse effect on the financial condition or the results of operations
of the Frozen Food Business. Seller has not received any notice of an alleged
violation of any law, regulation, order or other governmental requirement
affecting the Frozen Food Business or the Assets. To Seller's knowledge, there
is no law, regulation, order or requirement outstanding and affecting the Frozen
Food Business or the Assets that requires or will require a change in the manner
of conducting the Frozen Food Business or increased expenditures by or on behalf
of the Frozen Food Business.
3.15 TAXES. There are no unpaid taxes or assessments that are or could
become a lien on any of the Assets. Seller has withheld all federal, state and
local taxes that are required to have been withheld from wages of employees of
Seller and have paid over all such taxes in accordance with applicable statutory
provisions. Seller has paid when due all sales or other excise taxes required to
be paid and timely filed all returns required to be filed with respect thereto.
Such returns are true, correct and complete in all material respects.
3.16 LITIGATION. Except as disclosed in Section 3.16 of the Disclosure
Memorandum, there is no legal action, claim or controversy, or governmental
proceeding or investigation (including those with respect to product liabilities
and warranties, employee matters, customer complaints and environmental
matters), pending or, to the knowledge of Seller, threatened against Seller or
involving any of the Assets that individually involves a demand for greater than
$50,000 (whether or not covered by insurance), that in the aggregate involve
demands for greater than $100,000 (whether or not covered by insurance), that
would adversely affect the Frozen Food Business or the use of the Assets, or
that questions the validity of this Agreement or seeks to prohibit or enjoin or
otherwise challenge the transaction contemplated hereby.
3.17 LEASES. The leases listed and described in Section 3.17 of the
Disclosure Memorandum constitute all leases under which any Leased Property or
any leased personal property used primarily in the Frozen Food Business is used,
occupied or held. True, correct and complete copies of such leases (including
all amendments and modifications thereto) are included in Section 3.17 of the
Disclosure Memorandum or have been delivered to the Buyer. Such leases are
valid, enforceable and in full force and effect and, except as disclosed in
Section 3.17 of the Disclosure Memorandum, would not be modified, subject to
termination or otherwise affected by assignment to Buyer or by consummation of
the transactions contemplated by this Agreement.
3.18 BENEFIT PLANS. Section 3.18 of the Disclosure Memorandum contains a
true, correct and complete list of all of the following to which Seller is a
party or by which Seller is bound:
3.18.1 Contracts with officers and employees.
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3.18.2 Collective bargaining agreements, union contracts, labor
agreements, conciliation agreements or contracts with any labor union or other
representative of employees.
3.18.3 Pension, profit-sharing, bonus, commission, retirement,
stock option, other employee benefit or welfare plans or other similar plans or
arrangements.
3.18.4 Published employment policies.
Seller has furnished to Buyer true and complete copies of the contracts,
plans and policies referred to in Section 3.18 of the Disclosure Memorandum.
3.19 ERISA COMPLIANCE. Except as set forth in Section 3.19 of the
Disclosure Memorandum:
3.19.1 No corporation or other entity is a member with Seller of
a controlled group of corporations as defined in Section 414(b) of the Code, or
is under common control with Seller as defined in Section 414(c) of the Code.
3.19.2 No employee benefit plan maintained by Seller is a
"MULTIEMPLOYER PLAN" as defined in Section 3(37)(A) of ERISA.
3.19.3 (a) Seller has not terminated any plan that is an
"EMPLOYEE PENSION BENEFIT PLAN" as described in Section 3(2) of ERISA, and no
condition presently exists that could result in such termination under Section
4042 of ERISA.
(b) No "REPORTABLE EVENT" (as defined in Section 4043 of
ERISA) has occurred with respect to an employee pension benefit plan maintained
by Seller for which notice to the Pension Benefit Guaranty Corporation is
required pursuant to regulations under Section 4043 of ERISA.
(c) Seller has not engaged in any "PROHIBITED TRANSACTION"
as defined in Section 406 of ERISA (other than a prohibited transaction that is
exempt under Section 407 or 408 of ERISA).
(d) No employee, officer or director of Seller, or any
person for whom Seller is directly or indirectly responsible, whether by way
of indemnity or otherwise, has engaged in a prohibited transaction (other than
a prohibited transaction that is exempt under Section 407 or 408 of ERISA).
(e) Seller has complied in all material respects with the
reporting and disclosure requirements of Part I of ERISA.
(f) There is no accumulated funding deficiency as defined
in Section 412 of the Code with respect to any employee benefit plan maintained
by Seller.
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3.20 EMPLOYEE RELATIONS. Section 3.20 of the Disclosure Memorandum
contains a list of each salaried and hourly employee of the Seller and such
employee's years of service, salary and grade. Seller believes that its
relations with its employees are satisfactory. There have been no labor
controversies and no strikes, lockouts, work stoppages or work slowdowns or
threats thereof with respect to any group of employees during the past three (3)
years. No claim has been asserted or, to the knowledge of Seller, threatened by
an employee on account of any alleged violation by Seller of any law relating to
employment discrimination or employment practices within the last three (3)
years.
3.21 INTELLECTUAL PROPERTY. Except as set forth in Section 3.21 of the
Disclosure Memorandum, Seller owns (or possesses adequate licenses or other
rights to use without payment of royalties) all patents, copyrights, trademarks,
trade names, service marks, processes, designs, computer software, inventions,
trade secrets, know-how, technology and the like necessary to carry on the
Frozen Food Business. Section 3.21 of the Disclosure Memorandum is a list and
brief description (including, if applicable, date of application, filing or
registration and registration or application number) of all of the Intellectual
Property. To Seller's knowledge, Seller has not infringed and is not infringing,
and has not engaged and is not engaging in the unauthorized use or
misappropriation of, any patent, patent application, copyright, trademark,
service mark, trade name, process, design, computer software, invention, trade
secret, know-how or technology owned by or belonging to any third party. There
are no actual or, to Seller's knowledge, threatened claims against Seller
relating thereto. To the knowledge of Seller, no third party has infringed or in
infringing, or has engaged or is engaging in the unauthorized use or
misappropriation of, any patent, patent application, copyright, trademark,
service mark, trade name, process, design, computer software, invention, trade
secret, know-how or technology owned by or belonging to Seller.
3.22 NO DEFAULT. Except as set forth in Section 3.22 of the Disclosure
Memorandum, Seller is not in default or breach with respect to any rent or
installment purchase payments affecting the Assets, nor is Seller or, to the
knowledge of Seller, any other party to any Assumed Contract, in material
default or breach under the terms thereof, and no event has occurred that with
the passage of time or the giving of notice or both would constitute such a
material default or breach by Seller or, to the knowledge of Seller, any other
party.
3.23 NO FINDER. Seller has not paid, or become obligated to pay, any fee
or commission to any broker, finder or intermediary for or on account of the
transactions contemplated herein.
3.24 ASSETS OF BUSINESS. Except for the Excluded Assets and as set forth
on Section 3.24 of the Disclosure Memorandum, the Assets constitute all of the
assets that are used in the conduct of the Frozen Food Business as currently
conducted and include all assets required to run the Frozen Food Business as it
has historically been run.
3.25 HAZARDOUS MATERIAL. Except as set forth in Section 3.25 of the
Disclosure Memorandum:
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3.25.1 There is not now, nor has there ever been any disposal,
release, threatened release, treatment, storage and/or arrangement for the
treatment or storage of any Hazardous Material on, from, under, or in proximity
to any Real Property or Leased Property or at any other location that has or may
give rise to liability or claims for liability for remediation or remedial
activities of any kind, personal injury and /or claims for such liability or
property damage liability against the Seller or Buyer or their representatives,
agents or contractors which would reasonably be expected to have a material
adverse effect on the financial condition or results of operations of the Frozen
Food Business or the Assets. Further, neither the condition of the Real Property
or the Leased Property, nor any activities undertaken by Seller or its
employees, agents and representatives previously at or in proximity to the Real
Property or at the Leased Real Property or at any other location will result in
Seller or Buyer being named as a potentially responsible party by any
governmental entity for personal injury or property damage or claims against
Buyer or Seller for the remediation of any property, and any claim by any third
party, no matter how such claims may be denominated, concerning the condition of
the Real Property and Leased Property and any other claims as previously
identified. For purposes of this Section 3.25, the terms disposal, release,
threatened release, treatment, storage, and arrangement for the treatment or
storage shall have the definitions assigned thereto by among others the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, as well as those assigned thereto under the Resource Conservation and
Recovery Act, the Clean Water Act, and any other applicable federal law and or
regulation as well as any applicable state law and or regulation.
3.25.2 None of the Real Property or Leased Property, including
the conditions existing at any such properties, would violate or give rise to
any claims of violation of any laws, regulations, orders, consent decrees, etc.
relating to or concerning industrial hygiene, or the environmental condition on,
under, or in proximity to such properties, including without limitation the
condition of any soils, air, and or ground water at or in proximity to the
previously identified properties which would reasonably be expected to have a
material adverse effect on the financial condition or results of operations of
the Frozen Food Business or the Assets. There are no underground storage tanks
or related piping, conduits, or related structures on or in proximity to the
properties identified above. During the period that Seller has owned or leased
such properties, neither Seller nor any third party has used, generated,
manufactured, stored, and or treated on, under, or proximity to such properties
or transported to or from such properties any Hazardous Material which would
reasonably be expected to have a material adverse effect on the financial
condition or results of operations of the Frozen Food Business or the Assets.
Further, Seller warrants that there are no claims or, to Seller's knowledge,
potential claims against Seller or its agents, employees, or contractors for
treating, storing, or arranging for the treatment or storage, and or
transportation, disposal, or release of Hazardous Material, whether located on
any of the properties previously identified, or at any other location.
3.25.3 During the period of Seller's ownership or lease of the
Real Property or
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Leased Property, there has been no litigation brought or, to Seller's knowledge,
threatened to be brought against Seller, Seller's agents, contractors or
employees nor has there been any settlements concerning in any way relating to
the Seller and or its operations to properties previously referenced, alleging
or claiming the presence, disposal, release, threatened release, treatment, or
arrangement for the treatment and or disposal, of any Hazardous Material on,
from, or under any of the properties previously identified , or at any other
location.
3.26 WARN ACT COMPLIANCE. Seller has complied with, or is exempt from,
all applicable state and federal plant closing laws and regulations, including
but not limited to, the Worker Adjustment and Retraining Notification Act, 29
U.S.C. 'SS' 'SS' 2101 - 09.
3.27 DISCLOSURE. None of the information included in this Agreement
(including the Exhibits hereto) or in the Disclosure Memorandum or any other
written document furnished or to be furnished by Seller pursuant to this
Agreement is false or misleading in any material respect or omits to state a
fact necessary in order to make any of the statements therein not misleading in
any material respect. To Seller's knowledge, there is no fact that has a
material adverse affect or in the future might reasonably be expected to have a
material adverse affect with respect to the Assets or the Frozen Food Business
that has not been disclosed to Buyer in writing or set forth or referred to in
this Agreement (including the Exhibits hereto) or the Disclosure Memorandum.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER AND PRO-FAC
Buyer and Pro-Fac, jointly and severally, represent and warrant to Seller as
follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and has
all requisite corporate power and authority to own, operate and lease its
property and to carry on its businesses as now conducted. Pro-Fac is a
cooperative corporation duly organized, validly existing and in good standing
under the laws of the State of New York, and has all requisite corporate power
and authority to own, operate and lease its property and to carry on its
businesses as now conducted.
4.2 AUTHORIZATION. Each of Buyer and Pro-Fac has all requisite corporate
power to execute, deliver, and perform its obligations under, this Agreement.
The execution, delivery, and performance of this Agreement, and the consummation
by each of Buyer and Pro-Fac of all transactions contemplated by this Agreement,
have been duly authorized by all requisite corporate action of Buyer and
Pro-Fac. This Agreement has been duly executed by each of Buyer and Pro-Fac and,
subject to Bankruptcy Court approval and HSR Act approval, constitutes a legal,
valid and binding obligation of each of Buyer and Pro-Fac, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, reorganization, insolvency, or similar
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laws affecting creditors' rights generally, and the application of general
principles of equity, regardless of whether such principles are considered in a
proceeding in equity or in law. The execution and delivery of this Agreement by
each of Buyer and Pro-Fac and the consummation of the transactions contemplated
hereby, (a) do not, and at or prior to the Closing Date will not, conflict with
or result in the breach of, any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Buyer or Pro-Fac, and (b) on the date
hereof do not, and as of the Closing Date will not, conflict with, result in a
breach of, or give rise to a default under, any of the terms, conditions or
provisions of any mortgage, lien, lease, agreement, instrument, order, judgment
or decree by which Buyer or Pro-Fac or any of their assets may be bound, and
will not result in a declaration or imposition of any lien, charge, or
encumbrance of any nature whatsoever upon any of the assets of Buyer, except for
encumbrances expressly contemplated by this Agreement.
4.3 DISCLOSURE. None of the information included in this Agreement
(including the Exhibits hereto) or in any written document furnished or to be
furnished by Buyer or Pro-Fac pursuant to this Agreement is false or misleading
or omits to state a fact necessary in order to make any of the statements
therein not misleading.
4.4 KNOWLEDGE OF BUYER. Buyer has no knowledge of any information which
makes, or if known to Seller would make, any representation, warranty or
covenant of Seller contained herein untrue. Neither Buyer nor Pro-Fac has
knowledge of any facts or circumstances which would constitute a breach of any
representation, warranty or covenant of Seller contained herein, or which would,
with the passage of time or adequate notice or both, constitute such a breach,
or which would entitle Buyer to make a claim for indemnification under this
Agreement.
4.5 BUYER'S BUSINESS INVESTIGATION. Buyer has conducted such
investigation of the Frozen Food Business and the Assets as it has deemed
necessary in order to make an informed decision concerning the transactions
contemplated hereby. Buyer has reviewed all of the documents, records, reports
and other materials identified in the Disclosure Memorandum, and is familiar
with the content thereof. Buyer acknowledges that it has been given access to
and has visited and examined the Assets and the premises of the Frozen Food
Business and is familiar with the condition thereof. For the purpose of
conducting these investigations, Buyer has employed the services of their own
agents, representatives, experts and consultants. In all matters affecting the
condition of the Assets or the contents of the documents, records, reports or
other materials in connection with the transactions contemplated hereby, Buyer
is relying upon the advice and opinion offered by its own agents,
representatives, experts, consultants, employees and officers. All materials and
information requested by Buyer and Pro-Fac have been provided to Buyer and
Pro-Fac to their satisfaction.
4.6 NO FINDER. Neither Buyer nor Pro-Fac has paid, or become obligated
to pay, any fee or commission to any broker, finder or intermediary for or on
account of the transactions contemplated herein.
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ARTICLE 5
EMPLOYEES AND BENEFITS
5.1 EMPLOYEES. On the Closing Date, Buyer or its designee will offer
employment only to those administrative employees of Seller, and Frozen Food
Business production employees of Seller as Buyer deems reasonably necessary or
appropriate to operate the Frozen Food Business as the same is intended to be
operated by the Buyer. The compensation levels, benefit programs and terms and
conditions of employment offered to such employees shall be determined by market
conditions and the Buyer's business plan for the operation of the Frozen Food
Business. The term for which Buyer will continue to employ such employees will
depend upon their performance, the needs of the business and the results of
operations. Employees of Seller who become employees of Buyer or any Affiliate
of Buyer on the Closing Date are herein sometimes referred to as "NEW BUYER
EMPLOYEES". Buyer shall deliver to Seller a list of all persons that will be
offered to opportunity to become New Buyer Employees at or prior to the Closing
Date.
5.2 PLANS, BENEFITS AND POLICIES. Buyer shall adopt and provide for New
Buyer Employees such pension or retirement plans, insurance plans, vacation and
severance policies and other benefits as are appropriate, in Buyer's sole
judgment, and shall neither adopt nor assume any of the plans, policies or
agreements of Seller. Buyer's severance policies in respect of New Buyer
Employees shall include, at a minimum, those items identified on Exhibit E
hereto. Except to the extent the same are included among the Assumed Liabilities
by reason of the assignment to Buyer of the Assumed Contracts, Buyer will not be
responsible for any of the following benefits: (a) disability benefits, both
long-term and short-term, for disabilities that commenced before the Closing
Date; (b) benefits for covered confinements under medical plans of Seller that
commenced before the Closing Date; (c) health care benefits for services
rendered or materials received before the Closing Date; (d) life insurance and
survivor income benefits for deaths that occur prior to the Closing Date; (e)
worker's compensation benefits for disabilities resulting from an accident while
employed by Seller or a predecessor thereof or exposure to occupational disease
that occurred prior to the Closing Date to the extent such exposure occurred
prior to the Closing Date, and (f) post-retirement life or health insurance
benefits for all New Buyer Employees who would have been eligible under the
plans and policies of Seller to retire before Closing with post-retirement life
or health insurance benefits if they had retired on or before the Closing Date.
The employment by Buyer of any employee of Seller who is on short-term or
long-term disability on the Closing Date shall not begin, unless otherwise
specifically requested by Buyer, until the end of the period of such disability.
5.3 INFORMATION TO NEW BUYER EMPLOYEES. As soon as possible, but not
later than 30 days following the Closing Date, Buyer will deliver to each New
Buyer Employee one or more communications setting forth in detail the New Buyer
Employee's rights, benefits and status under all plans referred to in the first
sentence of Section 5.2.
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5.4 COMMISSIONS AND BONUSES. Buyer shall have no responsibility or
liability for any amounts earned under profit-sharing, commission or bonus
compensation plans and policies of Seller through the Closing Date, including
any such profit-sharing, commissions or bonuses that depend on performance
during a period that would end after the Closing Date.
ARTICLE 6
FURTHER AGREEMENTS OF SELLER
Seller covenants to and agrees with Buyer as follows:
6.1 BUYER'S INVESTIGATIONS. Buyer, at its expense, may make such
evaluations, inspections and investigations with respect to the Frozen Food
Business and the Assets as Buyer may desire provided that such evaluations,
inspections and investigations shall not unreasonably interfere with the
operations of the Frozen Food Business and the Assets are protected from
material loss or damage. Seller shall make available to all authorized
representatives of Buyer, free and full access, during normal business hours and
upon reasonable notice, to the Assets and all records of Seller. Buyer shall
keep all information it obtains as a result of such access confidential and
shall only use the same for the purposes of effectuating the transactions
contemplated by this Agreement (including obtaining the financing necessary to
purchase the Assets and operate the Frozen Food Business). Seller consents to
Buyer's disclosure of confidential information to Buyer's Lenders and any other
existing or prospective lenders of Buyer and its Affiliates.
6.2 OPERATIONS PRIOR TO CLOSING. After the date of this Agreement and
prior to the Closing Date, Seller shall use, maintain and replace the Assets in
compliance with all laws, regulations and ordinances, and in substantially the
same manner in which they have been used, maintained and replaced prior to the
date of this Agreement, and conduct the Frozen Food Business in compliance with
all laws, regulations and ordinances, and substantially as it has been conducted
prior to the date of this Agreement. Seller shall use its commercially
reasonable efforts to preserve existing relations with the employees, suppliers
and customers. Seller shall promptly notify Buyer of any material matter
affecting the Assets or the Frozen Food Business that arises from the date of
this Agreement to the Closing Date.
6.3 ENVIRONMENTAL AUDIT. At least three business days prior to the
Closing Date, Seller shall deliver to Buyer Phase I reports and limited testing
results satisfactory to Buyer and Buyer's Lenders with respect to the Frozen
Food Real Property and the Frozen Food Leased Property. Such reports and testing
results shall state that they may be relied upon by Buyer and the Buyer's
Lenders.
6.4 OBTAINING CONSENTS AND APPROVALS. Seller shall use all commercially
reasonable efforts to obtain all governmental and third party consents and
approvals, including without limitation Bankruptcy Court approval (subject to
the Sale Procedure Order), HSR Act approval,
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and satisfactory assignment of the Ore-Ida Agreement and the Greenfield Lease,
necessary to complete the transactions contemplated by this Agreement. With
respect to Bankruptcy Court approval, the Seller shall assure that all necessary
and appropriate parties receive proper notice of the sale to be approved by the
Sale Order, including without limitation: (a) all creditors of the Seller
(including persons with claims against the Seller that are disputed by the
Seller), including all unsecured, priority, secured and administrative
creditors; (b) all parties in interest; (c) all equity holders and members of
the Seller; (d) all pension and benefit plan administrators; (e) all holders
of/parties to executory contracts with the Seller; and (f) all appropriate
governmental agencies and taxing authorities.
6.5 SELLER'S RETAINED LIABILITIES. Seller agrees to remain liable for,
pay and discharge, in accordance with its normal practices as such may be from
time to time (but in any event in accordance with the terms of the Sale Order),
all liabilities other than the Assumed Liabilities.
6.6 TRUTH OF REPRESENTATIONS. From the date hereof until the Closing
Date, Seller shall, except as Buyer otherwise consents in writing, use
commercially reasonable efforts to cause all representations and warranties made
by it in this Agreement to be true and correct on and as of the Closing Date.
Seller shall notify Buyer promptly if any such representation or warranty ceases
to be true and correct.
6.7 EFFORTS TO CLOSE. Seller shall use commercially reasonable efforts
to cause the Closing to occur on the Closing Date or as soon thereafter as
practicable.
6.8 ESTOPPEL CERTIFICATES. Seller shall obtain estoppel certificates
from lessors in form reasonably satisfactory to Buyer with respect to the leases
relating to the Leased Property.
6.9 RECEIVABLES. Seller shall pay over to Buyer any amounts received by
Seller after the Closing Date on account of Receivables.
6.10 LICENSE. Seller will grant a perpetual, world-wide, royalty-free
license to Buyer to use the trademark "Jack and the Beanstalk", with respect to
products of the Frozen Food Business pursuant to a License Agreement in
substantially the form attached hereto as Exhibit F.
6.11 FURTHER ASSURANCES. Seller shall cooperate with Buyer, and take
such further action, and execute and deliver such further documents, as may be
reasonably requested by Buyer in order to carry out the terms and purposes of
this Agreement. Without limiting the generality of the foregoing, from and after
the Closing Date, upon the reasonable request of Buyer, Seller shall take such
action and deliver to Buyer such powers of attorney and further instruments of
assignment, conveyance or transfer and other documents of further assurance as
in the opinion of Buyer may be reasonably desirable to assure, complete and
evidence the full and effective transfer, conveyance and assignment of the
Assets and possession thereof to Buyer, its successors and assigns, and the
performance of this Agreement by Seller in all material respects. Seller shall
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also make all commercially reasonable efforts to provide any and all Transition
Services reasonably requested by the Buyer. Buyer shall advance or reimburse
Seller (at Seller's option) for all out-of-pocket costs incurred in connection
with providing such services.
6.12 DELIVERY OF DISCLOSURE STATEMENT. Seller shall deliver a complete
and correct copy of the Disclosure Memorandum to the Buyer prior to the Closing.
6.13 WARN ACT COMPLIANCE. Seller shall comply with the Worker's
Adjustment and Retraining Notification Act of 1988, as amended, and be solely
responsible for furnishing any required notice of any "PLANT CLOSING" or "MASS
LAYOFF", as applicable.
ARTICLE 7
FURTHER AGREEMENTS OF BUYER
Buyer hereby covenants and agrees with Seller as follows:
7.1 EFFORTS TO CLOSE. Buyer shall use all commercially reasonable
efforts to cause the Closing to occur on the Scheduled Closing Date or as soon
thereafter as practicable.
7.2 WARN ACT COMPLIANCE. Notwithstanding Seller's obligations pursuant
to Section 6.12, Buyer shall be responsible for furnishing the required notice
of any "PLANT CLOSING" or "MASS LAYOFF" which Buyer may order to take place
during the first sixty (60) days after the Closing Date.
7.3 CANNED FOOD TRANSITION SERVICES. Buyer shall make all commercially
reasonable efforts to provide any and all Canned Food Transition Services
reasonably requested by the Seller. Seller shall advance or reimburse Buyer (at
Buyer's option) for all out-of-pocket costs incurred in connection with
providing such services. In addition, for so long as Canned Food Transition
Services are being provided by the Buyer, Seller shall advance or reimburse
Buyer (at Buyer's option) for 30% of Buyer's employment costs and expenses
associated with New Buyer Employees who provide services on behalf of the Canned
Food Business. In addition, Buyer agrees to negotiate in good faith the terms on
which it would be willing to provide similar services to any purchaser of the
Canned Food Assets.
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ARTICLE 8
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions provided for
herein are subject (at its option) to the satisfaction, on or prior to the
Closing Date, of each of the following conditions precedent:
8.1 REPRESENTATIONS TRUE. The representations and warranties of Seller
contained in this Agreement shall have been true and complete in all material
respects when made and shall be true and complete in all material respects on
and as of the Closing Date as if made on and as of such date.
8.2 PERFORMANCE BY SELLER. Seller shall have performed and complied with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
8.3 THIRD PARTY APPROVALS. All licenses, authorizations, consents,
filings, waivers, approvals, including, without limitation, HSR Act approval and
Bankruptcy Court approval, or other action required in connection with the
execution, delivery and performance of this Agreement and the consummation of
transactions contemplated hereby shall have been duly made or obtained. In
particular, (a) the lenders to Agrilink Foods, Inc. shall have consented hereto;
(b) the terms of the Sale Order (i) shall be acceptable to the Buyer in its sole
discretion reasonably exercised, (ii) shall confirm the Buyer's ability and
power to acquire all of the Assets, including without limitation the Ore-Ida
Agreement and the Greenfield Lease; (iii) shall confirm that Buyer's acquisition
of the Assets shall be free and clear of liens, claims and encumbrances of any
kind other than Assumed Liabilities, Permitted Liens and Permitted Title
Exceptions; and (iv) shall confirm that neither the Buyer nor any Affiliate of
Buyer has either assumed or is liable for any liabilities of the Seller of any
kind or nature (excepting only the Buyer's liability for the Assumed
Liabilities); (c) Buyer shall have been assigned the rights under the Ore-Ida
Agreement in a manner acceptable to Buyer; and (d) the assignment of the
Greenfield Lease to Buyer shall be acceptable to the Buyer in its sole
discretion.
8.4 NO DESTRUCTION OF ASSETS. Between the date hereof and the Closing
Date, there shall be no material damage to, or destruction or diminution in
value of, the Frozen Food Business or of the Assets, it being the intent of
Buyer and Seller that Seller bear all risk of loss due to fire or other casualty
up to the Closing Date.
8.5 ADMINISTRATIVE SERVICES AGREEMENT. Buyer shall have entered into an
agreement with its Affiliate, Agrilink Foods, Inc., pursuant to which Agrilink
Foods, Inc., will provide certain administrative services to the Buyer.
8.6 FINANCING. Buyer's Lenders shall provide, on the Closing Date,
financing to
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Buyer in an amount sufficient to finance the Purchase Price and to finance the
ongoing operations of the Buyer following the Closing Date, all on such terms as
may be acceptable to Buyer in its sole discretion. Buyer's Lenders shall have
approved Buyer's contractual relationships with Pro-Fac Cooperative, Inc. and
Agrilink Foods, Inc.
8.7 SUPPORT OF AGRIPAC GROWERS. Former members of Seller (a)
representing at least two-thirds of all of the members of Seller immediately
prior to Closing Date, and (b) which members have enough acreage to satisfy the
Buyer's 1999 packing plan for the Frozen Food Business, shall have entered into
general marketing agreements with the Buyer.
8.8 ENVIRONMENTAL CONDITION. The environmental condition of the Frozen
Food Leased Property and the Frozen Food Real Property shall be acceptable to
the Buyer and Buyer's Lenders in their sole discretion.
8.9 RELEASE OF LIENS. Seller shall have received a complete release of
any and all liens encumbering any of the Assets, including without limitation,
all Seller Lender Liens.
8.10 TITLE INSURANCE. Buyer shall have received at Closing final Title
Policies or marked up Title Commitments deleting all exceptions (including
without limitation the standard exceptions) other than Permitted Title
Exceptions. The Title Policies shall insure that upon consummation of the
purchase and sale herein contemplated, Buyer shall be vested with good, fee
simple, marketable title to the Frozen Food Real Property, subject only to
Permitted Title Exceptions. Seller shall furnish the Title Company with such
affidavits and indemnities as may be required by the Title Company in order to
issue the Title Policy without any exception for unfiled and unrecorded
materialman's and mechanic's liens.
8.11 INSTRUMENTS OF TRANSFER AND OTHER DOCUMENTS. Buyer shall have
received appropriate instruments of transfer with respect to the Assets
satisfactory in form and substance to the Buyer and its counsel. Buyer shall
also have received such certificates, reasonable further assurances and related
documents relating to the transaction as it or its counsel may deem reasonably
necessary or appropriate to consummate the transaction described hereby.
8.12 NO STAY OF SALE ORDER. No order shall have been entered that stays
the effectiveness of the Sale Order.
8.13 APPROVAL OF DISCLOSURE MEMORANDUM. The contents of the Disclosure
Memorandum shall be acceptable to the Buyer in its sole discretion.
8.14 TRANSITION SERVICES. Buyer shall have satisfied itself as to the
availability of adequate Transition Services so as to enable Buyer to operate
the Frozen Food Business in the manner contemplated for its 1999 business plan.
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ARTICLE 9
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller to consummate the transactions provided for
herein are subject (at its option) to the satisfaction, on or prior to the
Closing Date, of each of the following conditions precedent:
9.1 REPRESENTATIONS TRUE. The representations and warranties of Buyer
contained in this Agreement shall have been true and complete in all material
respects when made and shall be true and complete in all material respects on
and as of the Closing Date as if made on and as of such date.
9.2 PERFORMANCE BY BUYER. Buyer shall have performed and complied with
all agreements, covenants and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing Date.
9.3 THIRD PARTY APPROVALS. All licenses, authorizations, consents,
filings, waivers, approvals, including, without limitation, HSR Act approval and
Bankruptcy Court approval, or other action required in connection with the
execution, delivery and performance of this Agreement and the consummation of
transactions contemplated hereby shall have been duly made or obtained.
9.4 OTHER DOCUMENTS. Seller shall have received appropriate
certificates, reasonable further assurances and related documents relating to
the transaction.
ARTICLE 10
TERMINATION; EXPENSES
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
10.1.1 By the mutual written consent of Buyer and Seller.
10.1.2 By Seller, if any of the Buyer's representations or
warranties contained in or made pursuant to this Agreement was not true and
complete in all material respects when made or if Buyer fails to perform or
comply in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by Buyer. Notwithstanding the
foregoing, termination of this Agreement pursuant to this Section 10.1.2 shall
not take effect (a) unless Seller notifies Buyer in writing within 24 hours
after Seller's becoming aware of the grounds for such termination and (b) until
and unless Buyer has failed to cure or remove the grounds for such termination
set forth in Seller's notice in accordance with this Section 10.1.2
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on or before the date 5 days after the date of such notice. If Seller gives
notice of termination pursuant to this Section 10.1.2, the Closing Date shall be
delayed, if necessary, to provide Buyer at least 5 days to cure or remove the
grounds for termination of this Agreement set forth in such notice.
10.1.3 By Buyer, if any representations or warranties of Seller
contained in or made pursuant to this Agreement was not true and complete in all
material respects when made or if Seller fails to perform or comply in all
material respects with all agreements and covenants required by this Agreement
to be performed or complied with by Seller. Notwithstanding the foregoing,
termination of this Agreement pursuant to this Section 10.1.3 shall not take
effect (a) unless Buyer notifies Seller in writing within 24 hours after Buyer's
becoming aware of the grounds for such termination and (b) until and unless
Seller has failed to cure or remove the grounds for such termination set forth
in Buyer's notice in accordance with this Section 10.1.3 on or before the date 5
days after the date of such notice. If Buyer gives notice of termination
pursuant to this Section 10.1.3, the Closing Date shall be delayed, if necessary
to provide Seller at least 5 days to cure or remove the grounds for termination
of this Agreement set forth in such notice.
10.1.4 By Buyer or Seller at any time after February 28, 1999,
provided that the party seeking to terminate this Agreement is not then in
breach of its obligations hereunder.
10.1.5 By Buyer or Seller at any time after February 19, 1999 if
the Bankruptcy Court has not entered a Sale Order by such date.
10.1.6 By Seller if the Bankruptcy Court orders Seller to
terminate this Agreement.
10.1.7 By Buyer or Seller if the consummation of the transactions
contemplated by this Agreement would violate any non-appealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction.
10.2 NOTICE OF TERMINATION. In the event of termination of this
Agreement pursuant to Section 10.1 hereof, notice shall promptly be given by the
terminating party to the other party to this Agreement.
10.3 EXPENSES UPON TERMINATION. If this Agreement is terminated as
provided in Section 10.1, neither Buyer nor Seller nor any Affiliate thereof
shall have any liability to any of the others for costs, expenses (including
without limitation, legal and accounting fees and expenses), loss of anticipated
profits or otherwise; it being understood that in the event of such termination,
each party shall bear its own legal and accounting and other fees, costs, losses
and expenses, provided, however, that in the event (a) (i) this Agreement is
terminated pursuant to Sections 10.1.3, 10.1.5 or 10.1.6, or (ii) Seller enters
into an agreement with another person or entity involving a merger, sale of all
or a significant portion of the Assets or other business combination with
respect to a significant portion of the Assets within six (6) months of the date
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hereof (other than a sale occurring more than one month following the shutdown
of the operation of the Frozen Food Business), then (b) Seller shall pay Buyer
the documented out-of-pocket costs and expenses of Buyer or any Affiliate of
Buyer incurred in connection with their efforts to acquire the Assets, which
expenses shall not exceed $500,000 in the aggregate.
ARTICLE 11
OVERBID PROTECTION
If (i) Seller receives one or more bids from others to purchase all or a
part of the Assets, and (ii) an auction with respect to the Assets is conducted
or ordered by the Bankruptcy Court, then (iii) Buyer shall be entitled to obtain
credit for, and shall be deemed to have increased its offer by, an amount equal
to the documented out-of-pocket costs and expenses of Buyer or any Affiliate of
Buyer incurred in connection with their efforts to acquire the Assets, but not
exceeding $500,000 in the aggregate.
ARTICLE 12
MISCELLANEOUS
12.1 CONFIDENTIALITY. Any information concerning Seller disclosed to
Buyer, its Affiliates or its representatives or concerning Buyer or its
Affiliates disclosed to Seller or its representatives that has not been publicly
disclosed shall be kept strictly confidential by them and shall not be disclosed
or used by the recipients (whether or not Closing occurs) for any purpose other
than consummating the transactions contemplated by this Agreement until publicly
disclosed by Seller and Buyer. In the event that this Agreement is terminated
pursuant to Section 10.1, all documents, if any, of a confidential nature, and
copies thereof delivered by Seller to Buyer or its Affiliates or their
respective representatives or delivered by Buyer to Seller or its
representatives shall be immediately returned. The obligations of the parties
under this Section 12.1 shall survive termination of this Agreement.
Notwithstanding the foregoing, any and all of the obligations of the parties
under this Section are subject to any order of the Bankruptcy Court and the
Sales Procedure Orders.
12.2 PUBLICITY. Subject to any order of the Bankruptcy Court or the Sale
Procedures Order, no press releases shall be issued, nor shall the terms of this
Agreement be disclosed to third parties, other than the representatives of the
parties, without the prior written consent of Seller and Buyer.
12.3 BOOKS AND RECORDS. Seller shall deliver to Buyer promptly after
Closing all correspondence, files, documents and records relating to the Frozen
Food Business. Buyer shall preserve such records for the lesser of: six years
after the Closing Date or such period as Buyer would ordinarily preserve such
records pursuant to its records retention policy then in effect; during such
period Buyer shall make the same available for examination (or for the making of
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copes or extracts), if necessary for a lawful purpose, by Seller or any
purchaser of the Canned Food Business at reasonable times so as not to interfere
with Buyer's business. In the event that prior to the end of six years after the
Closing Date, Buyer decides to destroy any such records pursuant to its records
retention policy then in effect, Buyer shall give Seller and any purchaser of
the Canned Food Business of which it is aware at least sixty days notice of such
decision during which time Seller or any purchaser of the Canned Food Business
may request and Buyer shall transfer to Seller and any purchaser of the Canned
Food Business all such records to be destroyed; if no such request is received
by Buyer, Buyer may destroy such records about which notice has been given to
Seller and any purchaser of the Canned Food Business.
12.4 MUTUAL COOPERATION. Buyer and Seller shall use reasonable efforts
to defend litigation assumed or retained, respectively, pursuant to the terms of
this Agreement. Each of Buyer and Seller, without compensation other than
reimbursement for out-of-pocket expenses (excluding expenses for salaries or
time of employees), shall cooperate fully with the other in connection with the
defense of such litigation, including, without limitation, the provision of
access to all of its records and personnel in a manner and to the extent that
such party would make its own records and personnel available internally in
connection with litigation of similar magnitude involving it.
12.5 NOTICES. All notices hereunder shall be in writing and shall be
deemed to have been given if delivered personally or by a recognized commercial
carrier or three days after being sent by certified mail, return receipt
requested, postage prepaid, to the other party to this Agreement at the
following addresses or such other address as any party to this Agreement shall
specify by notice to the others:
If to Buyer: PF Acquisition II, Inc.
90 Linden Place
Rochester, New York 14625
Attn: Dennis M. Mullen
With a copy to: Harris Beach & Wilcox, LLP
The Granite Building
130 East Main Street
Rochester, New York 14604
Attn: David M. Mehalick, Esq.
If to Seller: Agripac, Inc.
325 Patterson Street, N.W.
Salem, Oregon 97304
Attn: Charles G. Smutny, President
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With a copy to: McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attn: Michael R. Fayhee, Esq.
and a copy to: Schwabe Williamson & Wyatt
Pacwest Center, Suites 1600-1800
1211 Southwest Fifth Avenue
Portland, Oregon 97204
Attn: John G. Crawford, Jr., Esq.
12.6 ASSIGNMENT; BINDING EFFECT; BENEFITS. Buyer may assign its rights
under this Agreement to any Affiliate, any successor or purchaser of the Frozen
Food Business, and the financial institution providing financing to Buyer. Such
assignment shall not relieve Buyer of its obligations under this Agreement.
Except for the foregoing, neither this Agreement nor any right, remedy,
obligation or liability arising hereunder shall be assignable by any party to
this Agreement without the prior written consent of the other parties. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the parties to this Agreement and their respective successors and assigns.
Any purported assignment in violation of this Section shall be void and
ineffective.
12.7 WAIVER. No delay or failure of any party to exercise any right,
remedy or power hereunder shall impair the same or be construed as a waiver
thereof. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
12.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits and
Schedules hereto, and the Disclosure Memorandum embody the entire agreement and
understanding between Buyer and Seller and supersede all prior agreements
relating to the subject matter hereof. This Agreement may be amended, modified
or supplemented only by a written instrument executed by both parties hereto.
12.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
conflict of law principles thereof.
12.10 ARM'S LENGTH AGREEMENT. This Agreement has been negotiated at
arm's length and between persons sophisticated and knowledgeable in the matters
dealt with in this Agreement. In addition, each party has been represented by
experienced and knowledgeable legal counsel. Accordingly, any rule of law or
legal decision that would require interpretation of any ambiguities in this
Agreement against the party that has drafted the Agreement is not applicable and
is waived. This Agreement shall be construed without regard to the identity of
the person who drafted it or the party who caused it to be drafted and shall be
construed as if all parties had
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jointly prepared this Agreement. Each and every provision of this Agreement
shall be construed as though all of the parties participated equally in its
drafting, and any uncertainty or ambiguity shall not be interpreted against any
one party. The provisions of this Agreement shall be interpreted in a reasonable
manner to effect the purpose of the parties and of this Agreement.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above set forth.
AGRIPAC, INC., PF ACQUISITION II, INC.
Debtor and Debtor-In-Possession
By: /s/ Charles G. Smutny By: /s/ Earl L. Powers
----------------------------- ---------------------------------
Charles G. Smutny, President Earl L. Powers, Vice President
PRO-FAC COOPERATIVE, INC.
By: /s/ Earl L. Powers
------------------------------
Earl L. Powers, Vice President
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AMENDMENT TO THE MARKETING AND FACILITATION AGREEMENT
This Amendement dated as of September 23, 1998 between Pro-Fac Cooperative,
("Pro-Fac") and Agrilink Foods, Inc. ("Agrilink").
WHEREAS, Pro-Fac entered into the Marketing and Facilitation Agreement (the
"Agreement"), dated November 3, 1994 with Curtice-Burns Foods, Inc., and
WHEREAS, Curtice-Burns Foods, Inc. amended its Certificate of Incorporation
to change its name to Agrilink, and
WHEREAS, Pro-Fac and Agrilink are now desirous of amending the Agreement,
it is agreed as follows:
1. Section 7 of the Agreement is hereby amended to read as follows:
7. Borrowings by Pro-Fac. Agrilink shall to the extent requested by
Pro-Fac lend to Pro-Fac funds for use as Pro-Fac Working Capital in amounts
not exceeding $40,000,000 at any time outstanding, on which Pro-Fac shall pay
the interest to Agrilink at the same rate paid by Agrilink for seasonal
financing. Pro-Fac shall for a period of not less than 15 consecutive days
during each fiscal year repay the entire amount of Pro-Fac Working Capital.
2. Section 25 of the Agreement is hereby amended to read as follows:
25. Term. This agreement shall remain in effect until terminated by
the parties; provided, however, this agreement shall not be terminated so long
as either (a) any indebtedness remains outstanding under the Senior Subordinated
Credit Agreement (the "Credit Agreement") dated September 23, 1998 by and among
Agrilink, Pro-Fac, other Guarantors (as defined in the Credit Agreement),
Warburg Dillon Read LLC, UBS AG, Stamford Branch, and the Lenders (as defined in
the Credit Agreement) or (b) any indebtedness remains outstanding pertaining to
the Refinancing Securities (as defined in the Credit Agreement).
IN WITNESS WHEREOF, the parties have each caused this Amendment to be
entered into and executed as of the date first above written.
<TABLE>
<S> <C>
PRO-FAC COOPERATIVE, INC. AGRILINK FOODS, INC.
By: /s/ Earl L. Powers By: /s/ Dennis M. Mullen
------------------ -------------------
Title: Vice-President Title: President and CEO
----------------- -------------------
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Pro-Fac Cooperative, Inc. Form 10-Q for the period ended March 27,
1999 and is qualified in its entirety by reference to such financial
statement.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-26-1999
<PERIOD-START> JUN-28-1998
<PERIOD-END> MAR-27-1999
<CASH> 9,421
<SECURITIES> 0
<RECEIVABLES> 115,246
<ALLOWANCES> 0
<INVENTORY> 368,288
<CURRENT-ASSETS> 545,523
<PP&E> 441,716
<DEPRECIATION> 88,298
<TOTAL-ASSETS> 1,255,652
<CURRENT-LIABILITIES> 309,325
<BONDS> 200,015
286
93,353
<COMMON> 9,569
<OTHER-SE> 60,702
<TOTAL-LIABILITY-AND-EQUITY> 1,255,652
<SALES> 920,517
<TOTAL-REVENUES> 920,517
<CGS> 641,292
<TOTAL-COSTS> 641,292
<OTHER-EXPENSES> 152,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,497
<INCOME-PRETAX> 73,873
<INCOME-TAX> 28,336
<INCOME-CONTINUING> 45,537
<DISCONTINUED> 0
<EXTRAORDINARY> 18,024
<CHANGES> 0
<NET-INCOME> 27,513
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
